Differences put aside as Berlin and Paris seek common ground

Next Step - Banking Union 

By Quentin Peel in Berlin

Sniping between France and Germany has been almost constant in recent months.

In Paris, politicians have accused Berlin of bullying their European partners into excessive austerity at the expense of economic growth. The Germans have retorted, usually off the record, that the pusillanimous French have failed to reform their economy and revive their ailing competitiveness.

But when Wolfgang Schäuble and Pierre Moscovici, the two countries’ finance ministers, met on Tuesday to celebrate the 25th anniversary of the Franco-German economic and financial council, they came to praise the partnership, not to bury it.

“We are not here to expand on our differences,” the Francophile Mr Schäuble told a gathering of students from both countries at Berlin’s Free University. “We are here to seek common solutions.”

Can Egypt's Islamist finance minister cut a deal with the IMF?

How should the money supply be organized in Islamic thought ?

By David Kenner

The big news in Cairo is that a long-awaited cabinet reshuffle has finally become a reality. President Mohamed Morsy swore in nine new ministers today in a move that increases the Muslim Brotherhood's representation in the government. The shakeup comes as Egypt is deep in talks with the International Monetary Fund (IMF) about a $4.8 billion loan intended to help the country jumpstart its stagnant economy.

The IMF talks mean that the replacement of Egypt's finance minister is the most important change to come out of the reshuffle. The new finance minister is Fayyad Abdel Moneim, who previously worked as an economics professor at al-Azhar University, the oldest Sunni Muslim educational institution in the world.

France: End of the affair

France’s share of world trade had fallen by a third since 2002

By Hugh Carnegy 

One year into office, François Hollande’s economic management has sparked fears of a social breakdown

Hanging off lampposts, waving flags, lighting flares and cheering wildly, tens of thousands of supporters of François Hollande crammed into the Place de la Bastille in Paris at midnight to greet France’s first socialist president for almost two decades.

“I will live up to your hopes,” he promised the exuberant crowd.

How things have changed in the space of a year.

Waiting at the Bastille in a milling throng of trade unionists for the start of the traditional May Day workers’ parade, Emmanuelle, a civil servant who declines to give her family name, recalls the victory scenes with a resigned sigh.

“I was here that night,” she says. “There was an atmosphere of great hope. Now we are all very disappointed. All the promises – especially to stop companies laying off workers – have not been met.”

Amadou Diop, a student, echoes the sentiment. “I am very disappointed. His social record is bad. He hasn’t stopped the job losses. There is a feeling that the country is plunging into decline and there is a lack of hope.”

Problems have only mounted for Mr Hollande since he took power last May from Nicolas Sarkozy.

Russia's Energy Bully Takes a Fall

The energy giant -- and Putin's power base -- looks set for hard times

BY ALEXANDROS PETERSEN

After years as Eurasia's energy bully, Russia's state-controlled natural gas monopoly, Gazprom, is getting a taste of its own medicine. Even as Gazprom seeks to build the tallest skyscraper in Europe as its new headquarters in St. Petersburg, pressure from Russia's neighbors led to a 15 percent decline in the company's profits last year, eating into the state budget. Moscow's single-minded focus on gas exports in an effort to become, in the words of President Vladimir Putin, an "energy superpower" has crippled its ability to adapt to profound changes in the global energy landscape -- from the shale gas revolution in North America to the dynamism of new market players such as Azerbaijan. Having spent the last decade making enemies in Central Europe and Central Asia, Gazprom and Russian decision-makers are now reaping what they have sown.

Policymakers in European capitals could be forgiven for a little schadenfreude right now. Building on the legacy of Soviet gas exports to the Eastern Bloc and parts of Western Europe, Putin and his cohorts in the Kremlin have, for years, used Gazprom as a cudgel in Moscow's relations with European Union member states. Over the past decade, well over a third of EU gas imports have come from Russia, with a number of Eastern European states almost completely dependent on Gazprom. Bulgaria, for example, receives more than 95 percent of the natural gas it consumes from the company. Millions of European consumers shivered through the winters of 2006, 2008, and 2009 when Gazprom cut off supplies in order to squeeze middlemen in Ukraine, Belarus, Georgia, and Moldova who had had the temerity to buck Moscow's policies.

Sergei Lavrov and the blunt logic of Russian power

Minister No

BY SUSAN B. GLASSER

In the mid-19th century, Russia was not doing well. It had just been humiliated in the Crimean War, and the other European great powers were busy intriguing about the tsarist empire's frontiers now that the Turks had stopped Russian expansion to the Black Sea. It was in response to these setbacks that Alexander Gorchakov, the prince who served as Russia's foreign minister, issued his famous diplomatic circular. "Russia is not sulking," he proclaimed. "She is composing herself."

By the late 1990s, that must have sounded like a perfect retort to a Russian nationalist whose country was on the ropes. Yevgeny Primakov, a crusty old product of the Soviet diplomatic corps elevated to foreign minister by an increasingly beleaguered President Boris Yeltsin, dusted off the tsarist history books and resurrected Gorchakov as a model for a new Russian diplomacy. He cited him in speeches, wrote a long article extolling Gorchakov's clever realpolitik maneuvers, and even installed his bust in the creaky grandeur of the Foreign Ministry, a Stalinist Gothic skyscraper filled with thousands of underemployed and barely paid bureaucrats still reeling from the Soviet Union's abrupt collapse a few years earlier and the Russian state's quick descent into financial crisis, international debt, and even, on its southern frontier, civil war. So what if we had a few setbacks, Primakov seemed to be saying; Russia can still be a great power. And to prove it: Here's our very own Bismarck.

Israel’s Three Gambles

Can Israel get away with its attacks on the Syrian regime?

BY DANIEL BYMAN, NATAN SACHS

Israel's recent attacks against Syria are the latest, dramatic development in a conflict that is already spiraling out of control. In the past few days, Israeli aircraft reportedly targeted Iranian surface-to-surface missiles headed for Hezbollah, as well as Syrian missiles in a military base in the outskirts of Damascus. Israel's strikes show, once again, its intelligence services' ability to penetrate the Iran's arms shipment route to Lebanon and its military's skill in striking adversaries with seeming impunity. But Israel is also risking retaliation and further destabilization of its own neighborhood -- in ways that may come back to haunt it.

With much of Syria outside the control of Bashar al-Assad's forces, Israel is particularly wary of chemical weapons or advanced conventional weaponry falling into the wrong hands, whether it's extremist Sunni opposition groups like Jabhat al-Nusra or, more immediately, Assad's and Iran's Lebanese ally, Hezbollah. The missiles Israel sought to hit in the first attack on Friday have a significantly larger payload, greater accuracy, and longer range than the bulk of the Lebanese Shiite group's current arsenal.

Bernanke's Neofeudal Rentier Economy

The Fed has directly created a neo-feudal rentier economy and society

by charles smith

Federal Reserve Chairman Bernanke is a Reverse Robin Hood, robbing from the lower 95% and giving to the financier class. The Real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves (August 31, 2012).

It's worth understanding the mechanisms of this wealth transfer: in essence, the Fed extends low-cost credit (i.e. "free money") to the financier class which then uses this free money to buy rentier assets, that is, assets that generate economic rents for the owners, who add no value and create no wealth.

This is of course the neofeudal model: the financial aristocracy in the manor house own the rentier assets and the debt-serfs toil away to pay the rents and taxes. The financier class (i.e. those that benefit from the financialization of the economy) are as unproductive as feudal lords; they skim the profits generated by the debt-serfs while adding no productive value to the economy. 

The collapse of liberty in Scotland

From hiding away cigarettes to hiking up the price of booze – Scotland is a world-beater in state nannying

by Stuart Waiton 

The Scottish government has enforced yet another measure designed to help us help ourselves: it has passed a law requiring that all supermarkets hide cigarettes from public view.

This follows the enforcement of the public smoking ban in 2006; the raising of the legal age for buying cigarettes to 18 years; and a levy on cigarettes sold in supermarkets, which led some shops to stop selling them altogether. The aim is to create a smoke-free Scotland by 2035. One wonders if Scottish politicians also plan to make Scotland a heroin-, cocaine- and dope-free society, too. Good luck with that. Strangely enough, some Scots keep taking drugs despite their not coming in shiny packets or being sold at supermarkets.

With the proposed change to the voting age in Scotland, it’s possible that by 2035 16-year-olds will have the chance to elect their own government yet will be barred from buying cigarettes or even being allowed to see them.

It is not just cigarettes that Scottish officials are targeting. Alcohol prices are set to rise, again with the aim of creating a ‘healthier Scotland’. And Scotland’s public-health minister, Michael Matheson, wants to ban TV advertising of fatty foods before 9pm.

Why the political class is so scared of Farage

In the electoral successes of UKIP, Britain’s political elite glimpses its own creeping irrelevance and out-of-touchness

by Tim Black 

The UK Independence Party did well in last week’s local elections, picking up 23 per cent of the vote and 147 council seats. It certainly did better than the flailing Liberal Democrat Party which, with only 13 per cent of the vote, lost 124 seats, leaving it with just 352 seats in total.

Still, UKIP did not do as well as the Labour Party, which added 291 seats to its existing 247, on 29 per cent of the vote. And although the Conservative Party lost 335 seats, on 26 per cent of the vote, it still holds 1,116 seats in total. So, although UKIP did well, its success - it holds only the 147 seats it won on Thursday in total - needs to be put into a bit of perspective.

Since the results came in at the end of last week, however, perspective has been singularly lacking. In fact, given the hysterical response among the political and media class to UKIP’s success, you could be forgiven for thinking UKIP had actually come out on top, not third to the UK’s two struggling main parties. Rarely has an electoral success prompted such agonising. UKIP, remember, is a party with fewer actual MPs than either the Green Party or the latest George Galloway Party (they both have one each). Yet while editorials have wrung their papers’ hands, tied as they are by party-political allegiance, and commentators have tried to make sense of just what has gone wrong and rightwards, it’s the party-political establishment which seems most traumatised.

Chief among the trauma victims are the Tories who, having spent the best part of a decade desperately dismissing UKIP as fruitcakes, closet racists and clowns, are now virtually deferring to what appears to be UKIP’s awesome force. Several leading Conservative figures came out over the weekend urging prime minister David Cameron to steal UKIP’s anti-EU thunder by staging an in-out referendum before and not after the next General Election. And Cameron himself, once mocker-in-chief of UKIP, is now calling for respect for the party’s electoral achievements.

Words That Replace Thought

In doing so, they turn smart people into morons

By Thomas Sowell 

If there is ever a contest for words that substitute for thought, “diversity” should be recognized as the undisputed world champion.

You don’t need a speck of evidence, or a single step of logic, when you rhapsodize about the supposed benefits of diversity. The very idea of testing this wonderful, magical word against something as ugly as reality seems almost sordid.

To ask whether institutions that promote diversity 24/7 end up with better or worse relations between the races than institutions that pay no attention to it is only to get yourself regarded as a bad person. To cite hard evidence that places obsessed with diversity have worse race relations is to risk getting yourself labeled an incorrigible racist.

Free thinking is not free.

The Supreme Court of the United States has ruled that the government has a “compelling interest” in promoting diversity — apparently more compelling than the 14th Amendment’s requirement of “equal protection” of the law for everybody.

How does a racially homogeneous country like Japan manage to have high quality education, without the essential ingredient of diversity, for which there is supposedly a “compelling” need?

Conversely, why does India, one of the most diverse nations on Earth, have a record of intergroup intolerance and lethal violence today that is worse than that in the days of our Jim Crow South?

Even to ask such questions is to provoke charges of unworthy tactics, and motives too low to be dignified with an answer. Not that the true believers in diversity could answer anyway.

Among the candidates for runner-up to “diversity” as the top word for making thought obsolete is “fair.”

Apparently everyone is entitled to a “fair share” of a society’s prosperity, whether they worked 16-hour days to help create that prosperity or did nothing more than live off the taxpayers or depend on begging or crime to bring in a few bucks.

The Incredible Shrinking Monsieur Hollande

To have Mr. Normal as the new normal in France won’t wash

By Samuel Gregg 

All political leaders have their bad patches. Ronald Reagan, for example, wasn’t exactly the most popular politician in America in 1982. But few politicians have experienced as sharp a reversal of fortune as France’s embattled Socialist president, François Hollande.

May 15 marks Hollande’s first anniversary in office. Yet just one year after he defeated Nicolas Sarkozy, Hollande is scoring the lowest-ever approval ratings for any French head of state since polling began. According to one poll, if an election were held this month, Hollande would lose to the leader of France’s far-right National Front, Marianne Le Pen. “Mr. Normal,” as he was dubbed by way of contrast to his egomaniacal predecessor, is starting to look like “Mr. Irrelevant.”

So why such a rapid fall from grace? Some of it is of Hollande’s own making, such as his effort to impose a 75 percent tax on personal incomes over €1 million. Though the measure was eventually ruled unconstitutional, it managed to alienate a business community already suspicious of someone who once publicly proclaimed, “I dislike the rich.” The fact that Hollande is now trying to levy the same tax-rate on businesses that pay salaries over €1 million isn’t helping matters.

Nor did it help that the minister charged by Hollande with cracking down on tax-fraud, Jerome Cahuzac, was forced to resign after admitting he had maintained a Swiss bank account for over 20 years. Cahuzac is now under investigation for tax-fraud. The situation worsened when Hollande ordered his ministers to fully disclose all their personal holdings. Everyone in France has thus been reminded that most of the Socialist ministers who regularly rail against les riches are themselves quite wealthy. Caviar-Limousine-Champagne Socialism, anyone?

Another cause of Hollande’s woes was been his government’s insistence upon legalizing same-sex marriage. This is despite millions of French citizens regularly, loudly and insistently protesting this move on the streets of Paris and other French cities. The left’s response was to try and dismiss it all as a “Catholic thing.” But that turned out to be not so easy once it became evident that many secular-minded people, feminists, Jews, Muslims, and even some gay activists were among the movement’s leaders and marchers.

Keynes, Schumpeter, and the Economics of Childlessness

“Individualistic utilitarianism” is characteristic of modern societies

By DANIEL MCCARTHY

Perhaps for comic relief amid a news cycle otherwise full of escalation in Syria, the festering abuses of Guantanamo, and the wake of the Boston bombings, over the weekend pundits swarmed over Niall Ferguson for gay-baiting the long dead John Maynard Keynes. Tom Kostigen, who broke the story, summarized thus: “Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of ‘poetry’ rather than procreated.” Ferguson has since apologized, and as several sources pointed out, Keynes and his wife, Lydia Lopokova, did indeed try to have children, and she may have suffered a miscarriage. But Ferguson got a dose of the attention he craves, and pundits pleased themselves with their own moral fury, so everybody’s happy.

Unfortunately, the good name of Joseph Schumpeter has been dragged through the mud by this episode as well. Both Ferguson’s critics and defenders have said, in effect, “Schumpeter did it first.” Schumpeter’s 1946 American Economic Review obituary for Keynes is cited as proof: therein, Schumpeter writes of his subject, 

“He was childless and his philosophy of life was essentially a short-run philosophy.”

War Criminals in the Syrian Opposition?

US should stay out of Syria

By PATRICK J. BUCHANAN

Last week, several polls came out assessing U.S. public opinion on intervention in Syria.

According to the Huffington Post poll, Americans oppose U.S. air strikes on Syria by 3-to-1. They oppose sending arms to the rebels by 4-to-1. They oppose putting U.S. ground troops into Syria by 14-to-1. Democrats, Republicans and independents are all against getting involved in that civil war that has produced 1.2 million refugees and 70,000 dead.

A CBS/New York Times poll found that by 62-to-24 Americans want to stay out of the Syrian war. A Reuters/Ipsos poll found that by 61-to-10 Americans oppose any U.S. intervention.

But the numbers shift when the public is asked if it would make a difference if the Syrian regime used poison gas. In that case, opposition to U.S. intervention drops to 44-to-27 in Reuters/Ipsos.

Yet on the Sunday talk shows and cable news, the hawks are over-represented. To have a senator call for arming the rebels and U.S. air strikes is a better ratings “get” than to have on a senator who wants to stay out of the war.

In that same CBS poll, however, the 10 percent of all Americans who say they follow the Syrian situation closely were evenly divided, 47-to-48, on whether to intervene.

The portrait of America that emerges is of a nation not overly interested in what is going on in Syria, but which overwhelmingly wants to stay out of the war.

But it is also a nation whose foreign policy elites are far more interventionist and far more supportive of sending weapons to the rebels and using U.S. air power. From these polls, it is hard not to escape the conclusion that the Beltway elites who shape U.S. foreign policy no longer represent the manifest will of Middle America.

How it Ends

Slouching To Despotism

by Fergus Downie 

Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications, and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent, if, like that authority, its object was to prepare men for manhood; but it seeks on the contrary to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. The principle of equality has prepared men for these things: it has predisposed men to endure them, and oftentimes to look on them as benefits. - Alexis de Tocqueville

Part 1

Once upon a time convergence theory was all the rage in academia, with modish thinkers like John Kenneth Galbraith insisting that the bureaucratic regulation of capital and the rise of the managerial expert would render the ideological conflicts of the Cold War redundant. Like most clever people, he placed great faith in technocrats and the Keynesian idyll of the post war period was to prove a heyday for Comte’s engineers. By the seventies however markets and conviction politics were back, and in 1989 the fall of the Berlin Wall settled the ideological contest once and for all. Soviet style planners might (just) have been able to produce guns and butter, but fibre optics and semiconductors needed help from an invisible hand. The class war was over and the bourgeoisie had won.

European intellectuals, retreating ever further into their postmodern bunkers, responded with surly misanthropy and with nothing serious being added to the Marxist canon the scene was set for Francis Fukayama’s infamous article 'The End of History'. Though Fukayama is sensitive to being labeled a neo-conservative he does share the underlying Marxisant prejudices of these renegade Trotskyites and nowhere is this more apparent than in his theory of history which at times looks like historical materialism in free market drag. In this counter-intuitive slant to Marx, socialist relations of production constituted a fetter on productive forces which were forcing a new world into being; the USA presenting the world with an image of its future.

The Great California Land Rush

Boom or Bust? 

By Victor Davis Hanson 

I have lived on the same farm for 59 years and seen at least three boom-and-bust farm cycles — one in the late 1960s, another in the early 1980s, and a third right now. I’ve witnessed raisins, for example, at $1,420 a ton 35 years ago, then $410 a ton, then $700 a ton — and now almost $2,000. The old wisdom insisted that almond acreage could never exceed 200,000 acres without a crash, that prices would never go over $1 pound to the farmer, that production could not go much over 3,000 lbs. per acre.

Now? There are now 800,000 plus acres of California almonds, prices near $3 a pound, and new varieties are creeping up to 4,000 lbs. per acre. Some almond orchards remind me of alien organisms: lousy soil, undersized trees, tiny roots — and loaded with nuts to the point that props are needed to keep the trees from toppling over, as agronomy keeps these artificial creations going with daily IV fusions of water and nutrients. It is almost as if anything on the tree that is not a nut is genetically superfluous.

When I began farming full-time in the cresting boom of 1980, vineyard or orchard went for almost $10,000 an acre. I saw it crash three years later and prices dip as low as $3,000 an acre for what was then called “Thompson Worthless” vineyards. By the 1990s, prices were back up to between $7,000 and $10,000 per acre — only to go back down too $5,000 by 2003. And now? Bare land can go for $15,000 an acre and up; a productive vineyard or nut orchard sells for $25,000 to $30,000. “They” say $35,000 an acre is on the horizon.

I am getting old and remain a cynic (see Fields Without Dreams ^[1] and Letters From an American Farmer ^[2]). All the same, I think eventually the latest boom will likewise bust. (Most of the “rich” I know out here made their money by emulating J.Paul Getty’s de facto rule of “buy low, sell high — everything can be sold or bought, all the time.”

Israel and Turkey Near Détente

Syria, Gas and everything in between

Turkey and Israel are finally close to a reconciliation deal. Officials from both sides are meeting in Jerusalem to hammer out the details of Israeli compensation to the families of those killed in the Mavi Marmara clash of 2010, hoping to finally thaw relations between the once friendly and cooperative countries. The Times of Israel reports:

The central issue for the week’s meeting was the sum of the Israeli compensation to the families of the Turkish citizens who were killed after Israeli naval commandos were attacked with clubs and metal bars while attempting to commandeer the Marmara.

According to earlier reports, Israel has offered $100,000 to each family, while the families were asking for $1 million each. During a previous round of talks, in Turkey, a framework was said to have been devised under which payments would be based on the victims’ ages, family circumstances and other factors.

In addition to the reparations, Turkey wants Israel to ease its blockade of Gaza, while Israel wants Turkey to drop its criminal lawsuits against those involved in the Marmara fiasco. The White House, which would be the biggest beneficiary of this détente, is hoping these issues don’t prove obstacles in the coming days.

We Are All to Blame

.. or Is It the Others?

by Theodore Dalrymple 

When, many years ago, I started regularly to review books for profit and pleasure (my profit and pleasure, that is), I thought it would be fun to write destructive reviews of bad books. I was beguiled into this idea by having read Macaulay’s eviscerating essay-review, which I found delightful, of a three-volume biography of Lord Burleigh:

Compared with the labour of reading through these volumes, all other labour, the labour of thieves on the treadmill, of children in factories, of negroes in sugar plantations, is an agreeable recreation. There was, it is said, a criminal in Italy, who was suffered to make his choice between Guicciardini and the galleys. He chose the history. But the war of Pisa was too much for him. He changed his mind, and went to the oar.

(Guicciardini was a contemporary of Machiavelli and wrote a history of Italy.)

Why the Left Frequently IS Right

....And Vice Versa

by Fergus Downie 

In Arthur Koestler’s wartime novel Arrival and Departure, there is a striking scene where the author introduces a prototypically modern Nazi diplomat who expounds on the intrinsically modern and revolutionary character of the Third Reich, before descanting on a vision of Europe, in which history and tradition are rendered a junkyard. It is worth quoting at some length as it highlights a feature of the fascist imagination which is rarely explored with any intellectual rigour and consistency.

The laws of orthodox economy, customs, currency, frontiers, parliaments, churches, vested sacraments and institutions, marriage, ten commandments—all mumbo-jumbo. We start from scratch. I'll tell you how. . . Close your eyes. Imagine Europe up to the Urals as an empty space on the. map. There are only fields of energy: hydro-power, magnetic ores, coal-seams under the earth, oil-wells, forests, vineyards, fertile and barren lands. Connect these sources of energy with blue, red, yellow lines and you get the distributive network.

The Cyprus Bank 'Bail-In' Is Another Crony Bankster Scam

The cronies get 100% or more; the non-cronies get a kick in the guts 

By Nathan Lewis

A new strategy has been unveiled around the world, with the first test run in Cyprus. Despite early denials, the “bail-in” strategy for insolvent banks has already become official policy throughout Europe and internationally as well.

At first glance, the “bail-in” resembles the normal capitalist process of liabilities restructuring that should occur when a bank becomes insolvent. Equity investors and most-junior creditors lose everything; less-junior creditors get a debt/equity conversion, and senior creditors get 100%. The bank can remain in operation, and does not have to liquidate any assets. No public money is required.

I have been an advocate of restructuring insolvent banks according to these basic capitalistic principles, which requires no public funds.

The difference with the “bail-in” is that the order of creditor seniority is changed. In the end, it amounts to the cronies (other banks and government) and non-cronies. The cronies get 100% or more; the non-cronies, including non-interest-bearing depositors who should be super-senior, get a kick in the guts instead.

Here’s what it looked like in Cyprus:

All insured deposits (individuals and legal entities) up to €100.000 have, as of 26 March 2013, been transferred from Laiki Bank to the Bank of Cyprus. In addition, the entire amount of deposits belonging to financial institutions, the government, municipalities, municipal councils and other public entities, insurance companies, charities, schools, educational institutions, and deposits belonging to JCC Payment Systems Ltd have been transferred to the Bank of Cyprus.

All other deposits exceeding €100.000 remain in the ‘bad’ Laiki Bank.

A Tale of Two Oil States

While the shale boom lifts Texas, California sits on vast resources

WSJ Editorial

Texas and California have been competing for years as U.S. growth models, and one of the less discussed comparisons is on energy. The Golden State has long been one of America's big three oil producing states, along with Texas and Alaska, but last year North Dakota surpassed it. This isn't a matter of geological luck but of good and bad policy choices.

Barely unnoticed outside energy circles, Texas has doubled its oil output since 2005. Even with the surge in output in North Dakota's Bakken region, Texas produces as much oil as the four next largest producing states combined. The Lone Star State now pumps nearly two million barrels a day, and Texas Railroad Commissioner Barry Smitherman (who is also oil commissioner) says "total production could double by 2016 and triple by the early 2020s." The entire U.S. now produces about seven million barrels a day.

Pulling Down Germany to ‘Rescue’ the EU?

Bizarre Economic Theories On the Rise

By Pater Tenebrarum

It is really astonishing what passes for 'economic logic' these days. A favorite mainstream meme regarding the euro area is the perverse plan to make things better for everyone by making them worse for Germany. You would think that our bien pensants should be happy that Germany's economy is fairly strong, considering that it is supposed to bail out all and sundry. Not so. Instead it is held that Germany's success, especially in terms of foreign trade, comes at the expense of  everybody else and therefore represents everybody else's loss.

The tenacity with which such mercantilist fallacies are clinging to the minds of people is simply incredible. First of all, 'nations' don't trade with each other – people do. National borders are entirely incidental to this fact and possess no particular economic significance. Secondly, there are no 'losers' in voluntary trade; every trade is mutually beneficial. If it were not, the parties concerned would not engage in trade with each other. What's so hard to grasp about this? 

Keeping the above in mind, here is what the EU's social affairs commissar Laszlo Andor thinks, according to Der Spiegel: 

“European Union Social Affairs Commissioner László Andor is calling on Germany and other euro-zone donor countries to change course in combating the European debt crisis. Austerity in Southern Europe alone will not fix the problem, Andor told the German daily Süddeutsche Zeitung in an interview published Monday — the north also needs to spend more. He suggests shifting the focus from reforms, austerity and consolidation of national budgets toward economic stimulus."Saving alone does not create growth. That requires additional investment and demand," said Andor […]

Erdogan drags heavy bag to Washington

As long as Assad stays in office, Erdogan loses power in Turkish politics and risks losing at elections in 2014

By Egemen B Bezci 

Turkish Prime Minister Recep Tayyip Erdogan will be greeted by Barack Obama at the White House today after waiting more than six months for an appointment since the US president was elected for a second term in November. Weighty issues accompany Erdogan into the meeting between the two heads of state. 

Erdogan's visit to Washington follows frequent visits to Turkey by US Secretary of State John Kerry since took the post in February. Since then, rapid developments in the Middle East have brought new opportunities and threats. The most recent one was last weekend's car bomb attack in the Turkish town of Reyhanli near the Syrian border that claimed the lives of more than 50 Turkish citizens. The incident created more stress on a Turkish government that is already searching for a solution to the already complicated Syria problem. 

In the light of all these developments, three important issues mark Erdogan's agenda during his time in the White House; namely, the Syrian issue, relations with Israel and, significantly, energy politics. It is remarkable to note that for the first time in contemporary Turkish politics, a prime minister will not have to push the Kurdish issue. Erdogan's recent democratic initiative has resulted in a ceasefire with Kurdish militants. 

The ceasefire secured on March 21 between the Kurdistan Workers' Party (PKK) and Ankara is one of the key factors for understanding the puzzle of energy politics in the Middle East. The three-decade-long struggle between the PKK, a Kurdish armed secessionist organization that long-operated across Turkey, Iraq, Iran and Syria as it pursued the establishment of an independent Kurdish state, had claimed more than 30,000 lives and has been a source of instability along the trajectory of Turkey's border with Iraq, Iran and Syria. 

Keynes stole your ship

Dysfunction Trilogy Part A

By Chan Akya

Despite mounting evidence of the dysfunction being caused by Keynesian policies, rhetoric in Europe and the United States is overwhelmingly turned against austerity. Over three articles, the author will examine specific examples of the dysfunction that has been caused by such government intervention, and the very real economic pain being caused as a result with the objective of dispelling the dangerous notion that higher government spending is a victimless crime.

Here is a quick quiz: name a global industry that is as old as antiquity, employs millions of people, withstood and indeed thrived with technological change but perhaps most importantly of all with diverse supply and demand dynamics is an industry that has never been cornered by any particular group for very long in history. 

If you thought the reference above was about shipping, well done. In contrast if you thought it was about prostitution, well then, time for a cold shower. 

The typical cycle of shipping is as old as history and has always been about two contrasting and virtually uncorrelated forces: firstly the interaction of operations with risk, and secondly the boom-bust cycle. Western readers will remember learning about the exploits of sea-faring Greeks and other Mediterranean peoples as merchants far and wide seeking to profit from trade with other countries. This continued into the times of Shakespeare (examples include the Merchant of Venice and settled into modern times as shipping became the moving force of global economies post World War II. The advent of standardized containers during the Korean War and thereafter proved a boon for global trade, and with it, improved the economic fortunes of all countries involved.

What Austerity?

Debunking the Liberal Narrative

By J.T. Young

The emperor’s new clothes were invisible; in Washington’s fiscal fairy tale, austerity is too. Although an increasing number of people are expressing concern that federal spending cuts are endangering the economy, it begs a fundamental question: What austerity?

It is understandable why last week’s 2.5 percent real GDP growth figure troubled many. First, it was below the consensus 3 percent expectation. More importantly, the economy has been dismal for so long that America’s conditioned reflex is despondency.

Even though America’s last negative growth quarter was 2009’s Q2, the economy’s annual real growth rate has underperformed thusly: 2009, minus-3.1 percent; 2010, 2.4 percent; 2011, 1.8 percent; and 2012, 2.2 percent. If the Blue Chip consensus forecast is correct, this year growth will also be just 2.2 percent -- something last week’s figure made much more likely.

After four-years-going-on-five of such economic anemia, liberals sorely need a new culprit -- especially with their favorite whipping boy, George W. Bush, now far removed from office. Enter Europe, stage left. Or rather, Europe’s “austerity,” to be more precise.