'Austerity' To Blame?

But Where's The Austerity?

By Paul Roderick Gregory

Die-hard Keynesians bemoan that, with a few exceptions, the world’s economies are drowning in the quicksand of austerity. They preach we need more government spending and stimulus, not less. Northern Europe should bail out its less-fortunate neighbors to the South so they can pay their teachers, public employees and continue generous transfers to the poor and unemployed. If not, Europe’s South will remain mired in recession. In America, Keynesians entreat the skinflint Republicans to loosen the purse strings so we can escape sub par growth. They advise Japan to spend itself out of permanent stagnation and welcome recent steps in this direction.

The stimulationists complain that they have been overwhelmed by the defeatist austerity crowd, lead by the un-neighborly Germans and the obstructionist Republicans.  If only Germany would shift its economy into high gear while transferring its tax revenues to ailing Southern Europe, and the rascally Republicans drop the sequester cuts, we would be sailing along to a healthy worldwide recovery. We don’t need spending restraint. Instead, we need stimulus, stimulus, and more stimulus to revive economic growth. We’ll deal with the growing deficits later, the stimulation crowd tells us, but we must first get our economies growing again.

The Keynesian stimulus crowd blames austerity for the world’s economic woes without bothering to examine facts. I advise them first to consult my colleague at the German Institute for Economic Research (Georg Erber, I See Austerity Everywhere But in the Statistics), who, unlike them,  has actually taken the time to examine the European Union’s statistics as compiled by its statistical agency, Eurostat.

The official Keynesian story is that the PIIGS of Europe (Portugal, Italy, Ireland, Greece and Spain) have been devastated by cutbacks in public spending. Austerity has made things worse rather than better – clear proof that Keynesian stimulus is the answer. Keynesians claim the lack of stimulus (of course paid for by someone else) has spawned costly recessions which threaten to spread.  In other words, watch out Germany and Scandinavia: If you don’t pony up, you’ll be next.

Erber finds fault with this Keynesian narrative. The official figures show that PIIGS governments embarked on massive spending sprees between 2000 and 2008. During this period, their combined general government expenditures rose from 775 billion Euros to 1.3 trillion – a 75 percent increase. Ireland had the largest percentage increase (130 percent), and Italy the smallest (40 percent). These spending binges gave public sector workers generous salaries and benefits, paid for bridges to nowhere, and financed a gold-plated transfer state. What the state gave has proven hard to take away as the riots in Southern Europe show.

Then in 2008, the financial crisis hit. No one wanted to lend to the insolvent PIIGS, and, according to the Keynesian narrative, the PIIGS were forced into extreme austerity by their miserly neighbors to the north. Instead of the stimulus they desperately needed, the PIIGS economies were wrecked by austerity.

Not so according to the official European statistics. Between the onset of the crisis in 2008 and 2011, PIIGS government spending increased by six percent from an already high plateau.  Eurostat’s projections (which make the unlikely assumption that the PIIGS will honor the fiscal discipline promised their creditors) still show the PIIGS spending more in 2014 than at the end of their spending binge in 2008.

What All Classical Economic Thinkers Can Agree About

A gold standard monetary system and stable-value monetary policy

By Nathan Lewis

There are a lot of Classical-flavored economists in the U.S., and they all have their quirks. However, they can all agree on a few things.

First: that a Classical stable-value monetary policy is superior to a Mercantilist funny-money policy.

Second: that the best practical, real-life way of achieving the Classical goal of stable money (which is really an extension of standardized weights and measures) is a gold standard system.

You can actually devise a lot of different kinds of gold standard systems. But, one thing that I think virtually all the serious Classical thinkers agree on today is that the pre-1913 world gold standard system worked exceptionally well. I call it the Most Perfect Monetary System the World Has Ever Seen. Some contemporary variant of that would also work – very well, in fact.

In the pre-1913 period, every country had its own sort of gold standard system. Probably no two were exactly alike. But, they shared certain characteristics.

First: they were gold standard systems. This means that the policy goal was to maintain the value of the currency at a specified gold parity. In the U.S., the parity was $20.67 per ounce of gold. In other words, the value of the dollar was to be managed such that it was exactly equivalent to 1/20.67 of an ounce of gold, or 23.2 troy grains.

In Britain, the parity was three pounds, seventeen shillings and ten pence per ounce of gold.

Second: there was a fully-functional operating mechanism designed to achieve this policy goal. This involved managing the monetary base, on a daily basis. When the supply of currency was in excess of demand, causing the value of the currency to sag beneath its gold parity value, the base money supply would be contracted in some way. When the supply of currency was in relative shortage, compared to demand, causing the value of the currency to rise above its parity value, the base money supply of currency would be expanded in some way.

There were a great many methods in use for expanding or contracting the base money supply. These included: transactions in gold bullion (known as “redemption” and “monetization”), transactions in government debt, corporate debt, or debt in foreign gold-based currencies; transactions in foreign currencies directly; changes in the quantity of direct lending; allowing base money supply to contract as a result of interest payments on assets; and allowing base money supply to contract as a result of the maturation of either bond holdings or direct lending.

I know this sounds complicated. But, these were all ways of achieving the same goal — to adjust the supply of base money, as a way to keep the value of the currency at its gold parity.

The great classical economists, such as David Ricardo and John Stuart Mill, understood that it was not strictly necessary to have gold bullion redemption (or “convertibility”) to manage a gold standard system. However, it was a political necessity: without this element, currency managers would soon start to play games with the currency, and the gold standard system would be abandoned.

Darkness envelops Pakistan

Our Man in Islamabad

By Mahboob A Khawaja

Contemporary Pakistani is divided. Its leaderless population is being exploited by neo-colonial feudal lords looting the people of their socio-economic, moral and political values. 

This year's elections didn't change a status-quo symbolized by foreign-dictated governance. Nawaz Sharif is the replacement to Asif Ali Zardari, but Sharif was an integral part of Zardari's regime. 

The nation will pay with torment and suffer the insane rages of egomaniac rulers - the political gangsters that show the "right man" syndrome in its most naked form. 

In my book Pakistan: Enigma of Change, in the late 1990s, I envisaged a new beginning led by educated and intelligent leaders from a new generation. Change can only come through men of new ideas, a new visionary leadership of integrity and a public movement for change. 

For almost two decades, Pakistan's capacity for change has been badly fractured as its moral, intellectual and political consciousness were derailed and undermined by the few. 

For several decades, military coups and interventions have eroded the moral and intellectual thread of society. Pakistan and its people are the victim of this prolonged, cruel and unending tragedy. 

The generals and their accomplices, the so-called feudal politicians live in different worlds - not able to see the urgency for change. 

The global community views them with mistrust and discord, not viable entities of the international system. The irrational system of governance propelled by the few does not offer any rational context to political change and reformation unless there is another bloody outburst challenging the insanity with more vigorous form of tragic insanity.

Nobody thinks of Pakistan, its national interests or the interests of the people. More than 40 years have been stolen from the precious lifeline of the nation of Muslim Pakistan; yet, nobody was ever charged with a crime nor punished for their treachery and monstrous actions against the freedom and integrity of the country. 

East Pakistan now Bangladesh, was lost and surrendered to India because of the plan by the then military-political rulers of the nation in 1971. But since the military took over the reins, unthinking people will come to occupy the highest offices. 

Power politics in Pakistan have become an outcome of institutionalized corruption, conspiracies, killings, and treachery to the national interests. The generals, politicians and assemblies are all the outcome of this flourishing industry. 

An Irish Tale of Austerity

A crisis of a corporatist polity than of a laissez-faire one

by Theodore Dalrymple    

Thanks to the vast increase in human productivity over the last few decades economic crises are less easy to discern than they once were. Spain, for example, has rates of unemployment that equal or exceed those of the great Depression in the United States, yet there are none of the distressing scenes, at least so far, which the photographers caught for all time.

It is all too easy to be deceived, however. I have just come back from Madrid and Dublin (I am soon to leave for Lisbon) of which my view is essentially that of a visiting official delegation, driven from the airport to the center of the city and back again, having spent the intervening interval in the pleasant company of prosperous and cultivated people. And the fact is that anyone driving from Barajas Airport to the centre of Madrid would conclude that it was a much richer and better kept city than New York, Paris or London. Such signs of the downturn as I saw in Dublin were subtle and comparative. Going twice to the theatre, for example, I noticed that a third of the seats were not taken, which would certainly not have been the case at the height of the boom when I would have been lucky to get seats at all. (One of the plays was Mrs Warren’s Profession, by Bernard Shaw. What a frightful old windbag he was! That the crisis prevented some hundreds of people from being exposed to his theatrical rodomontade demonstrates that there really is a silver lining to every cloud.)

Other signs of the crisis were a few closed restaurants and the increasing neglect of a few of the magnificent Georgian terraced buildings of Merrion Square, now predominantly in use as commercial rather than residential properties: but since I recall quite vividly Dublin of the late 1960s, when I first visited it, these little signs of decline, decay and dilapidation did not impress me greatly. In those days, Dublin resembled a dark and dismal city almost of ruins, inhabited by people with little recollection or awareness of its former grandeur. Of course, the conversation in the pubs seemed better, more witty and spirited than now; the pub was then a refuge from life in a way that it no longer is, for post-crisis Dublin remains incomparably richer, materially, than it was then. Even now, several years into so-called austerity, the Irish live at a higher standard than the Germans.

The Bible tells us that of the making of many books there is no end, and that much study is a weariness of the flesh. Certainly the Irish crisis has acted as a kind of Keynesian stimulus to writers, for the bibliography of the subject is now immense, beyond the capacity of any but an obsessive to have read; but for me it is not a weariness of the flesh, but rather a refreshment of the mind, to read about this story of hubris and nemesis, greed and come-uppance, illusion and reality, especially on the plane home. On my latest visit, I bought another such book, The Big Lie: Who Profits from Ireland’s Austerity? By Gene Kerrigan, a journalist and author well-known for his exposure of the political corruption that has long been a feature, some would say the predominant feature, of Irish public life.

And The Band Played On...

The band will play on as the ship of state descends into the abyss

by Jim Quinn

A confluence of events last week has me reminiscing about the days gone by and apprehensive about the future. I’ve spent a substantial portion of my adulthood rushing to baseball fields, hockey rinks, gymnasiums, and school auditoriums after a long day at work. I’d be lying if I said I enjoyed every moment. Watching eight year olds trying to throw a strike for two hours can become excruciatingly mind-numbing. But, the years of baseball, hockey, basketball, and band taught my boys life lessons about teamwork, sportsmanship, winning, losing, hard work, and having fun. There were championship teams, awful teams and of course trophies for finishing in 7^th place. As my boys have gotten older and no longer participate in organized sports, the time commitment has dropped considerably. Last week was one of those few occasions where I had to rush home from work, wolf down a slice of pizza and head out to a school function. It was the annual 8^th grade Spring concert.

My youngest son was one of a hundred kids in the 8^th grade choir. I think it was mandatory, since none of my kids like to sing. As my wife and I found a seat in the back of the auditorium where we could make a quick escape at the conclusion of the show, neither of us were enthused with the prospect of spending the next ninety minutes listening to off-key music and lame songs. I’ve been jaded by sitting through these ordeals since pre-school. But a funny thing happened during my 30^thband concert. I began to feel sentimental about the past and sorrowful about the future for these Millennials.

The Millennial generation was born between 1982 and 2004. Therefore, they range in age from 9 years old to 31 years old. There are approximately 87 million of them, or 27.5% of the U.S. population. In comparison, the much ballyhooed Boomer generation only has 65 million cohorts remaining on this earth. The Millennials will have a much greater influence on the direction of this country over the next fifteen years than the currently in control Boomers. There has been abundant scorn heaped upon this young generation by their elders. In a fit of irrationality befit the arrogant, hubristic, delusional elder generations, they somehow blame a cohort in which 54 million of them are still younger than 21 years old for many of the ills afflicting our society. This disgusting display of hubris is par for the course among these delusional elders.

In the euro zone, desperately in need of a boost, no news is bad news

The Sleepwalkers

The Economist

YOU may have missed it, but the European Union held a summit this week. Taking in a nutritious working lunch, Europe’s prime ministers, presidents and chancellors devoted half of Wednesday to weighty issues of energy and taxation. Gone are the panic-stricken sessions of last year, dogged by talk of the euro’s imminent failure. Today, Europe’s leaders note, reform is under way across most of the euro zone and some southern European countries are regaining their competitiveness. The government-debt market is back in its box, where it belongs. And over the past year share prices are up by a quarter. Nobody could pretend that life is easy; Europeans understand that hard work and sacrifices lie ahead. But the worst of the crisis is now safely in the past.

It is a reassuring tale, and those worn down by the Wagnerian proportions of the euro saga (who isn’t?) are eager to believe it. Unfortunately, the idea that the euro is yesterday’s problem is a dangerous figment. In reality, Europe’s leaders are sleepwalking through an economic wasteland.

Someone call a somnambulance, quick.

The euro-zone economy has just endured a sixth successive quarter of shrinking GDP. The malaise is spreading to core countries including Finland and the Netherlands, which both contracted in the first quarter. Retail sales are falling. Unemployment, above 12%, is a record—with more than one in four Spaniards out of work. In spite of savage spending cuts, government deficits are persistent and high. The sum of government, household and company debt is still excessive. Banks are undercapitalised and international lenders worry about their as-yet-unrecognised losses. Although official interest rates are low, firms in southern Europe are suffering a cruel credit crunch. All this is causing economic hardship today and eating away at the prospects for growth tomorrow. The euro zone may not be about to collapse, but the calm in Brussels is not so much a sign of convalescence as of decay.

UN: Let Them Eat Bugs!

The UN continues to spread its tentacles throughout the globe

by  Alex Newman

As part of its drive for global so-called “sustainability,” the United Nations has a new suggestion for the people of the world: Eat bugs instead of burgers. The controversial recommendations come from a new report by the UN Food and Agriculture Organization touting the supposed benefits of “edible insects” and the role they might play in future “food security” — assuming the bugs are farmed in a “sustainable” way, of course. The latest UN document also outlines propaganda campaigns to persuade Westerners and shows how expanding the international regulatory regime can help bugs-as-food proponents achieve their vision.

According to the controversial 200-page study, dubbed “Edible insects: Future prospects for food and feed security,” bugs are actually nutritious and environmentally friendly. The UN also claims it is “urgent” for people to start understanding that. “Insects as food and feed emerge as an especially relevant issue in the twenty-first century due to the rising cost of animal protein, food and feed insecurity, environmental pressures, population growth and increasing demand for protein among the middle classes,” the report claims, citing an array of real and imagined problems. 

As such, according to the UN study, “alternative solutions” to conventional livestock and feed sources “urgently need to be found.” The consumption of insects — formally known as “entomophagy” — “therefore contributes positively to the environment and to health and livelihoods,” the UN FAO said in its report. It claimed, among other things, that there are numerous “environmental benefits” to rearing insects for food — especially if the bugs are fed human and animal waste. Among the potential benefits: reduced “greenhouse gases” that the UN blames for non-existent global warming, and fewer resources needed to produce insect-based food.      

Plus, as the UN and legions of its functionaries point out in the document, press releases, and other efforts to promote the eating of insects, people in some cultures already eat bugs. “Insects are often consumed whole but can also be processed into granular or paste forms,” the report notes, adding that new ways of enjoying bugs are also in the pipeline. There are, however, numerous obstacles to convincing the world to consume creepy crawlers instead of beef and chicken.  

Merkel’s “renewable energy revolution” is killing the German economy

German Firms Flee to U.S. to Avoid Staggering “Green” Energy Costs

Written by  William F. Jasper

Chancellor Angela Merkel’s “renewable energy revolution” is killing the German economy, but Obama and Greens keep pointing to Germany’s debacle as the model we should follow.

"HIGH ENERGY COSTS DRIVE GERMAN FIRMS TO US." That is the headline for an article that appeared May 22 in Duetsche Welle, or DW, Germany’s international broadcasting giant.

“Soaring German energy costs in the wake of the country’s transition to renewable energy have seen more and more firms thinking about relocating their operations,” the DW story reported. “The US looks like a sound alternative, associations claim.” 

The DW story continued:

German industry lobby associations on Wednesday sent a warning shot towards the government in Berlin, saying that rising energy costs in the country would drive away more and more German companies.

“If we don’t get on top of the country’s energy transition to renewables and are not able to rein in energy costs in the process, German industry’s competitiveness stands to suffer,” the chief of the Federation of German Industry (BDI), Ulrich Grillo, told the business newspaper “Handelsblatt.”

He said that while Germans are embroiled in a debate about the right energy mix, the US was getting more and more attractive as a business location for German firms, thanks not least to President Barack Obama’s support for the fracking technology resulting in much cheaper energy prices.

President Obama has pleasantly surprised many — and angered many of his allies in the Big Green lobby, i.e., the Sierra Club, the Environmental Defense Fund, et al — by his recent common-sense actions to allow hydraulic fracturing on federal public lands and approval of a Liquefied Natural Gas (LNG) terminal in Freeport, Texas. However, based on the administration’s history of antipathy to all fossil fuels, its use of the EPA to quash energy production, and its commitment to vastly expanding our nation’s reliance on renewable energy, the recent natural gas concessions could prove to be a temporary political move. If that proves to be the case, the German companies that are moving to America to escape Merkel’s unsustainable “renewable revolution” could find themselves facing the same predicament down the road here.

When Suckers Finally Realize

The fleecing of the American public continues

The theft takes different forms, but it all serves one purpose — to transfer wealth from the average Joe to the crony corporatists and their political lackeys. Here are but a few examples of how this has been accomplished:

1.    Bailouts for the wealthy and well-connected are paid for by the unconnected middle class.

2.    Subsidies are provided for unworkable schemes submitted by political donors and favorites. These schemes inevitably fail and the tax-payer is left holding an empty bag.

3.    Laws are routinely ignored when “friends” need help. In identical circumstances, would you receive the same treatment as Jon Corzine?

4.    Despite the biggest theft in world history, no one was prosecuted. The Savings and Loan crisis in the 1980s was trivial in comparison to the recent financial crisis. More than a thousand S&L executives were prosecuted.

5.    Ever-increasing sacrifices in the form of higher taxes from the productive sector are demanded to continue the plush living of the ruling class.

Capitalism and free markets depend upon trust, integrity, property rights and the rule of law. Without these, there are no advantages to free markets. Nor are there any incentives to create wealth. Instead, an economy becomes little more than a massive plunder scheme where the powerful exploit the weak. No economic recovery is possible under such circumstances.

As people recognize what is happening, they alter their behavior. Three reactions are to be expected:

1. Some will become discouraged when they realize the game is stacked against them. They will diminish their efforts to succeed, even perhaps dropping out of the game altogether. Given the enhanced returns to not working, it should not be surprising that this alternative has become popular.

2. Others will adopt the same behavior as the ruling class. They will exploit those lower on the food chain than themselves.  Justice Brandeis warned of the implications of government misbehavior:

In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself.  It invites anarchy.

The Fed would do well to look at Japan

The Fed's Hands Are Tied... Right as the Financial System Begins to Crack

By Graham Summers 

Japan’s Nikkei, after rallying over 70% since November, just collapsed 11% in less than two days. Looking at the chart, it’s pretty clear where this thing is heading: the same as the NASDAQ in 2000.

This is the problem with economic policy that focuses on pushing stocks higher: eventually the collapsing economy comes home to roost and stocks implode. We saw this in 2000 and 2008. We’re currently seeing it in Japan. And it’s only a matter of time before it his the US.

Indeed, Bernanke’s whole life work has been based on the belief that the Fed didn’t do enough during the Great Depression. So he’s opted to expand the Fed’s balance sheet to over $3 trillion and to monetize most of the US’s debt issuance via QE to battle the Financial Crisis.

Altogether, the Fed has monetized QE equal to 15% or so of the US’s GDP. Doing this has already put stocks back in a bubble and damaged the economy to no end. Marginal debt is back at record highs, housing has not bottomed, and Bernanke is still talking about a “recovery” FIVE years after the Crash. At this point based on the business cycle alone we should be in a roaring growth spurt.

QE doesn’t work. It never has. Look at Japan.

Japan has monetized an amount equal to well over 25% of its GDP via QE. And at that point its bond market began to crash. It’s not coincidence that the Fed is beginning to talk about tapering QE now that this is happening. Even a career academic can look at what’s going on in Japan and know that more QE won’t help the US.

So the Fed is essentially handcuffed at this point. Increasing QE in any way risks a Japan-bond market style rout.

Can you imagine what would happen if the financial system faces another Crisis? The Fed has already thrown everything including the kitchen sink at the system. If the system collapses now the Fed will be powerless to stop it.

America's Bubble Economy Is Going To Become An Economic Black Hole

This bubble of false hope will not last forever

by Michael Snyder

What is going to happen when the greatest economic bubble in the history of the world pops?  The mainstream media never talks about that.  They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to.  And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay.  Sadly, that is not the case at all.

Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy.  You can see this when you step back and take a longer-term view of things.  Over the past decade, we have added more than 10 trillion dollars to the national debt.  But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars.

Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks.  But the Dow does not keep setting new records because the underlying economic fundamentals are good.  Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929.  Margin debt is absolutely soaring, and every time that happens a crash rapidly follows.

But this time when a crash happens it could very well be unlike anything that we have ever seen before.  The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up.  After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.

But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term.  Things are good this week and things were good last week, so there is nothing to worry about, right?

Unfortunately, economic reality is not going to change even if all of us try to ignore it.  Those that are willing to take an honest look at what is coming down the road are very troubled.  For example, Bill Gross of PIMCO says that his firm sees "bubbles everywhere"...

The glorification of plunder

Our System Is So Flawed That Fraud Is Mathematically Guaranteed

“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it."

                                                 -  Frederic Bastiat

by Adam Taggart
Bill Black is a former bank regulator who played a central role in prosecuting the corruption responsible for the S&L crisis of the late 1980s. He is one of America's top experts on financial fraud. And he laments that the US has descended into a type of crony capitalism that makes continued fraud a virtual certainty - while increasingly neutering the safeguards intended to prevent and punish such abuse.

In this extensive interview, Bill explains why financial fraud is the most damaging type of fraud and also the hardest to prosecute. He also details how, through crony capitalism, it has become much more prevalent in our markets and political system. 

A warning: there's much revealed in this interview to make your blood boil. For example: the Office of Thrift Supervision. In the aftermath of the S&L crisis, this office brought 3,000 administration enforcements actions (a.k.a. lawsuits) against identified perpetrators. In a number of cases, they clawed back the funds and profits that the convicted parties had fraudulently obtained.

Flash forward to the 2008 credit crisis, in which just the related household sector losses alone were over 70x greater than those seen during the entire S&L debacle. So how many criminal referrals did the same agency, the Office of Thrift Supervision, make?

Zero.

Similar dismal action was taken by such other financial regulators as the Office of the Comptroller of the Currency, the Federal reserve and the FDIC. 

Where is the accountability?, you may be asking. Or perhaps, how did we allow things to get this bad?

Fraud is both a civil wrong and a crime and it's when I get you to trust me and then I betray your trust in order to steal from you. As a result, there’s no more effective acid against trust than fraud and, in particular, elite fraud, which causes people to no longer trust folks, economies break down, families break down, political systems break down and such if you don’t have that kind of trust. So that’s what fraud is.

The Rich Actually Are Different

Every year there are different wealthy people

With the long-weekend rapidly approaching, ConvergEx's Nick Colas takes a trip to the Hamptons, but through a time warp back to the Great Depression.  Examining the social registers (colloquially called the “Blue Book”) from 1927 and 1940, he finds that “The great and the good” of the day had real trouble holding their status during the social upheavals of the late 1920s and 1930s.  Only 32% of the families appearing in the Blue Book in 1927 were still there in 1940.  The ratio was even worse, at 29%, for the ultra-elite who belonged to the Meadow Club in Southampton.  It’s too early to tell what the last few volatile years will do to the upper crust of East Coast society, of course.  Or what may still be in store.  But when the hedgie in the Bentley cuts you off on Route 27 this weekend, take some solace in knowing he may not be there in a few years.

Via Nick Colas:

F.Scott Fitzgerald is known for the phrase “The rich are different from you and me.”  The full quote, from a 1925 short story, actually goes like this:

“Let me tell you about the very rich.  They are different from you and me.  They possess and enjoy early, and it does something to them, makes them soft when we are hard, and cynical when we are trustful, in a way that, unless you were born rich, it is very difficult to understand.  They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves.  Even when they enter deep into our world or sink below us, they still think that they are better than we are.  They are different.”

Ernest Hemingway had a famous retort to “The rich are different” in his story “The Snows of Kilimanjaro”: “Yes, they have more money.  But that was not humorous to Scott.  He thought they were a special and glamorous race and when he found they weren’t it wrecked him as much as any other thing that wrecked him.”  Yes, these two great American writers were friends.  Sort of.

I think about this exchange regularly, given the extremely high levels of personal wealth generation the world has seen over the last 30 years.  Hedge fund billionaires in the US.  Russian oligarchs in Moscow.  Super wealthy Indian businessmen snapping up nine figure houses in London.  And China…  Even Chairman Mao’s granddaughter, Kong Dongmei, is reportedly worth over $500 million.  And the list goes on…

Europe’s Latest Anti-American Bogeyman

The Tea Party Movement 

By Soeren Kern 

European anti-Americanism is coming back into vogue. It reached a fever pitch during the presidency of George W Bush, but was held in temporary abeyance after Barack Obama pledged to recreate the United States in Europe’s image. Now that the American Tea Party movement is poised to dash elite hopes for a more Europeanized (i.e., sophisticated) America, a prolonged new wave of anti-Americanism seems inevitable.

In the run-up to the American midterm elections, European newspapers and magazines as well as radio and television programs have been chock full with sensational reporting, disparaging editorials, and derogatory commentary about America, American voters, and the American political system.

European news media have been especially obsessed with the Tea Party phenomenon, evidently worried that a “government of the people, by the people, and for the people” might be replicated on European soil and thus upset the big government/high taxes status quo of European politics. (In fact, European Tea Party movements ^[1] have already emerged in several European countries, as have popular uprisings against multiculturalism ^[2] and runaway Muslim immigration ^[3].)

Rather than commend the Tea Party movement as a refreshing and enviable display of American political energy, European media elites have launched an all-out propaganda assault on the movement and its supporters. The main tactic has been to seek to discredit Tea Party sympathizers as poor, uneducated, unsophisticated, bigoted, and right-wing, i.e., the exact opposite of ideal European citizens and their elite masters.

The Manhood of the West

We remove the organ and demand the function

by Richard Fernandez

A British soldier was decapitated a few hundred yards from a UK Army base by two men with large knives saying: “We swear by almighty Allah we will never stop fighting you.” The men were shot when police responded 20 minutes later. The photo above shows a scene:

This is the dramatic moment a woman appears to remonstrate with a man carrying a knife following a brutal attack in Woolwich.

The two alleged attackers are thought to have waited around for 20 minutes until Metropolitan Police officers arrived and then tried to attack them — but were swiftly shot by armed policemen, including a woman.

“Remonstrate.” Now there’s a word to conjure with.
The Telegraph describes the behavior of the onlookers — the attackers asked the crowd to take their photo, which they apparently did:

“There was only a few people at first then traffic began to build up because people were getting out of their cars to shout at them they were taking no notice, they were standing there, I think they were proud of what they were doing.

“When they dumped the body in the road, these two black guys had the opportunity to hurt other people if they wanted to because there were brave women with the dead guy on the floor, they were shielding and covering him. The attackers with the knives were standing over these women.

“The guy with the gun, the tall guy with the beanie cap on, even a bus had pulled up — he was going over to the bus and asking people to take his photo.”

Then the killers allowed only women to come forward to succor the dead or dying man:

He said: “My friend and her mum were walking up the hill and the mum came straight to the victim.

She asked the black guys can I help him? And one of them said he was already dead but she could go.

Then one of them said ‘No man is coming near this body, only women’.”

To the Slaughter

British lions come up lambs in Woolwich

By Mark Steyn

On Wednesday, Drummer Lee Rigby of the Royal Regiment of Fusiliers, a man who had served Queen and country honorably in the hell of Helmand Province in Afghanistan, emerged from his barracks on Wellington Street, named after the Duke thereof, in southeast London. Minutes later, he was hacked to death in broad daylight and in full view of onlookers by two men with machetes who crowed “Allahu akbar!” as they dumped his carcass in the middle of the street like so much road kill.

As grotesque as this act of savagery was, the aftermath was even more unsettling. The perpetrators did not, as the Tsarnaev brothers did in Boston, attempt to escape. Instead, they held court in the street gloating over their trophy, and flagged down a London bus to demand the passengers record their triumph on film. As the crowd of bystanders swelled, the remarkably urbane savages posed for photographs with the remains of their victim while discoursing on the iniquities of Britain toward the Muslim world. Having killed Drummer Rigby, they were killing time: It took 20 minutes for the somnolent British constabulary to show up. And so television viewers were treated to the spectacle of a young man, speaking in the vowels of south London, chatting calmly with his “fellow Britons” about his geopolitical grievances and apologizing to the ladies present for any discomfort his beheading of Drummer Rigby might have caused them, all while drenched in blood and still wielding his cleaver.

If you’re thinking of getting steamed over all that, don’t. Simon Jenkins, the former editor of the Times of London, cautioned against “mass hysteria” over “mundane acts of violence.”

That’s easy for him to say. Woolwich is an unfashionable part of town, and Sir Simon is unlikely to find himself there of an afternoon stroll. Drummer Rigby had less choice in the matter. Being jumped by barbarians with machetes is certainly “mundane” in Somalia and Sudan, but it’s the sort of thing that would once have been considered somewhat unusual on a sunny afternoon in south London — at least as unusual as, say, blowing up eight-year-old boys at the Boston Marathon. It was “mundane” only in the sense that, as at weddings and kindergarten concerts, the reflexive reaction of everybody present was to get out their cell phones and start filming.

Once, long ago, I was in an altercation where someone pulled a switchblade, and ever since have been mindful of Jimmy Hoffa’s observation that he’d rather jump a gun than a knife. Nevertheless, there is a disturbing passivity to this scene: a street full of able-bodied citizens being lectured to by blood-soaked murderers who have no fear that anyone will be minded to interrupt their diatribes. In fairness to the people of Boston, they were ordered to “shelter in place” by the governor of Massachusetts. In Woolwich, a large crowd of Londoners apparently volunteered to “shelter in place,” instinctively. Consider how that will play when these guys’ jihadist snuff video is being hawked around the bazaars of the Muslim world. Behold the infidels, content to be bystanders in their own fate.