Scandinavian Sorrows

Stigende renter? Hvad er det? Hjælp!

by Pater Tenebrarum

If we're not completely mistaken, then the above is Danish for: “Rising interest rates? What's that? Help!”  The recent bond market swoon has been a global phenomenon, and it has afforded highly indebted consumers in Scandinavian countries a brief glimpse of what could be a melancholic future in a place called  'debt slave hell'.

Bloomberg informs us of a beginning 'rate pain' attack in Denmark:

“Danish consumers, who owe banks more than three times their disposable incomes, are about to find out how sustainable that debt load is as interest rates rise.

Signals from the U.S. Federal Reserve that it’s preparing to scale back monetary stimulus have already sent mortgage costs higher as yields rise across global bond markets. The Nykredit Index of Denmark’s most traded mortgage bonds sank this week to its lowest in more than four months after investors sold assets once coveted for their haven status.

Though the government and central bank have long argued Denmark’s private debt burden is backed by some of the world’s biggest pension savings, record consumer borrowing has prompted warnings from the European Commission and the International Monetary Fund. The Systemic Risk Board in Copenhagen said this week it will investigate private debt growth in response to international concerns.

“We have decided to initiate an analysis to see if there is a risk to the systemic stability,” central bank Governor Lars Rohde, who heads the board, said in an interview. Though recent studies suggest a “significant level of robustness,” the board has “noted that others outside the country have a different understanding.” (emphasis added)

Let's see: Denmark's consumers have debt amounting to more than 300% of their income (that sounds like a world record…even Carneyfied Canada is positively thrifty by comparison). Some people say that this debt load just mightbecome a problem (not only for said consumers, but also for their creditors). The solution: we'll let a committee look into it. In that case, obviously nothing can possibly go wrong. Dodged a bullet there!

In Denmark it's Different …

Let us take a look at what arguments are forwarded in terms of 'it's different in Denmark'- as that is indeed the argument made by the central bank. 

“Mortgage holders in Denmark relied on the government’s stable AAA credit grade to finance debt at record-low rates during the fiscal crisis in Europe. While the Organization for Economic Cooperation and Development estimates Danish households owed 310 percent of disposable incomes in 2010, government debt is less than half the euro-zone average at only 45 percent of gross domestic product this year, the European Commission estimates. [….]

The yield on Denmark’s benchmark 10-year government bond soared to 1.96 percent on Monday, its highest since March last year. The yield on the Nykredit Realkredit A/S 3.5 percent mortgage bond due October 2044 soared 10 basis points on Monday to 3.72 percent, according to generic price data compiled by Bloomberg. That yield was as low as 3.33 percent last month.

Is Egypt on the verge of civil war?

If no one can rule effectively, civil war and the fragmentation of Egypt into several mini-states may become a distinct possibility

By Monte Palmer 

As the US struggles to cope with the civil wars in Syria, Libya, the Sudan and Iraq, it must also ponder the prospect of a civil war in Egypt. 

Egypt has been in a state of chaos since the Arab Spring Revolution of January 2011 and there is no end in sight. 

In addition to destroying the center of stability in in the Arab world for the past five decades, a civil war in Egypt would fuel existing civil conflicts in Libya, Yemen, Syria, the Sudan, and Iraq. 

Civil wars in Tunisia, Algeria, Lebanon, and Jordan might not be far behind. All are linked to Egypt by a vast network of Islamic fundamentalist groups ranging from the moderate Muslim Brotherhood to the ultra violent salafi-jihadists. 

The broader ramifications of an Egyptian civil war would certainly include the rekindling of a long dormant Arab-Israeli conflict and a deepening of the Muslim wars of religion being played out in Syria, Iraq, Yemen, Lebanon, and the Persian Gulf. 

Is Egypt on the verge of civil war? General Fua'd Al'lam, a general in the Egyptian Security Services and former Director of Security in Port Said, believes that it is. 

In an interview entitled, "Civil War on the Doorstep Followed by the Revolution of the Hungry," General Al'lam warns that continued chaos will result in civil war and the splintering of Egypt into several mini-states. He goes on to warn, "Civil war is very close, the revolution of hunger very, very close." [1] 

The General's warning was not without foundation. Egypt clearly possesses the preconditions for civil war. The ability of the Egyptian government to meet the basic needs of its population for food, shelter, work, and security fades by the day. Public services have followed suit as shortages of fuel and electricity have become endemic. Religious and class tensions have increased apace, as have political riots and demonstrations. All reflect an economy on the verge of collapse. 

Kierkegaard is needed more than ever

The commitment to the sanctity of the individual undergirds the institutions we inherited from the Revolution and Civil War

By Spengler 

The bicentennial of Soren Kierkegaard's birth passed on May 5 unremarked by the political caste, although a dozen scholarly festivals quietly honored his anniversary. That is a hallmark of our intellectual poverty. The casual reader knows the Danish philosopher as the midnight reading of angst-ridden undergraduates and the stuff of existential pop psychology. 

That is a sad outcome, for Kierkegaard is one of most rigorous philosophers, despite his exhortative style. He asserted the primary of passion, not in the vulgar sense of aroused emotions, but as the primary ontological substance from which our world is built. In a passion-torn world, we should ignore the pop versions and read him more closely. 

If asked, "Who is your favorite political philosopher?," as were the Republican candidates in the 1980 presidential primary, I would have answered, "Kierkegaard." (Actually, it's Franz Rosenzweig, but no-one has heard of him). 

Of course, I would have lost. Passion is passé. Kierkegaard's outlook is close to that of the radical Protestants who fought the American Revolution and the Civil War, but at odds with the main currents of modern conservative thought, that is, classical political rationalism and Catholic natural law theory. Kierkegaard still has a redoubt at St Olaf's College in Minnesota, which sponsors translations and maintains a library of scholarly materials, and a few other Protestant institutions. But one never hears his name in a political context. 

Closer to the conservative mainstream is my friend Peter Berkowitz in his 2012 book Constitutional Conservatism: Liberty, Self-Government, and Political Moderation. As Stanley Kurtz summarized his view at National Review, "By moderation Berkowitz means something a bit different than the everyday use of the word, otherwise Buckley and Reagan wouldn't qualify. Political moderation, says Berkowitz, "doesn't mean selling out causes or making a principle of pragmatism." A true understanding of moderation can even dictate strong stances and bold opposition to popular movements. Real political moderation, Berkowitz explains, means balancing worthy yet competing principles and putting them effectively into practice." As a matter of practice, Berkowitz "calls on conservatives to make a peace of sorts with both the sexual revolution and the fundamentals of the New Deal welfare state, without, on the other hand, surrendering either their fundamental principles or their core battles." 

There is much wisdom in Berkowitz's view. Still, I disagree with him on two grounds. 

Milton Friedman: Freshwater Keynesian

When Professor Friedman Opened Pandora’s Box: Open Market Operations

by David Stockman

At the end of the day, Friedman jettisoned the gold standard for a remarkable statist reason. Just as Keynes had been, he was afflicted with the economist’s ambition to prescribe the route to higher national income and prosperity and the intervention tools and recipes that would deliver it. The only difference was that Keynes was originally and primarily a fiscalist, whereas Friedman had seized upon open market operations by the central bank as the route to optimum aggregate demand and national income.

There were massive and multiple ironies in that stance. It put the central bank in the proactive and morally sanctioned business of buying the government’s debt in the conduct of its open market operations. Friedman said, of course, that the FOMC should buy bonds and bills at a rate no greater than 3 percent per annum, but that limit was a thin reed.

Indeed, it cannot be gainsaid that it was Professor Friedman, the scourge of Big Government, who showed the way for Republican central bankers to foster that very thing. Under their auspices, the Fed was soon gorging on the Treasury’s debt emissions, thereby alleviating the inconvenience of funding more government with more taxes.

Friedman also said democracy would thrive better under a régime of free markets, and he was entirely correct. Yet his preferred tool of prosperity promotion, Fed management of the money supply, was far more anti-democratic than Keynes’s methods. Fiscal policy activism was at least subject to the deliberations of the legislature and, in some vague sense, electoral review by the citizenry.

By contrast, the twelve-member FOMC is about as close to an unelected politburo as is obtainable under American governance. When in the fullness of time, the FOMC lined up squarely on the side of debtors, real estate owners, and leveraged financial speculators—and against savers, wage earners, and equity financed businessmen—the latter had no recourse from its policy actions.

The greatest untoward consequence of the closet statism implicit in Friedman’s monetary theories, however, is that it put him squarely in opposition to the vision of the Fed’s founders. As has been seen, Carter Glass and Professor Willis assigned to the Federal Reserve System the humble mission of passively liquefying the good collateral of commercial banks when they presented it.

Consequently, the difference between a “banker’s bank” running a discount window service and a central bank engaged in continuous open market operations was fundamental and monumental, not merely a question of technique. By facilitating a better alignment of liquidity between the asset and liability side of the balance sheets of fractional reserve deposit banks, the original “reserve banks” of the 1913 act would, arguably, improve banking efficiency, stability, and utilization of systemwide reserves.

The Fog That’s Yet to Lift

QE Must End, But Bernanke's Plan May Be Too Hasty

By William H. Gross

June Gloom, the fog and clouds that often linger here over the Southern California coast this time of year, appears to have spread to the Federal Reserve. At his press conference last week, Fed Chairman Ben Bernanke said the central bank may begin to let up on the gas pedal of monetary stimulus by tapering its asset purchases later this year and ending them in 2014. 

We agree that QE must end. It has distorted incentives and inflated asset prices to artificial levels. But we think the Fed’s plan may be too hasty.

Fog may be obscuring the Fed’s view of the economy – in particular, the structural impediments that will inhibit its ability to achieve higher growth and inflation. Mr. Bernanke said the Fed expects the unemployment rate to fall to about 7% by the middle of next year. However, we think this is a long shot.

Mr. Bernanke’s remarks indicated that the Fed is taking a cyclical view of the economy. He blamed lower growth on fiscal austerity, for example, suggesting that should it be removed from the equation the economy would suddenly be growing at 3%. He similarly attributed rising housing prices to homeowners who simply like or anticipate higher home prices, as opposed to emphasizing the mortgage rate, which is really what provided the lift in the first place. 

Our view of the economy places greater emphasis on structural factors. Wages continue to be dampened by globalization. Demographic trends, notably the aging of our society and the retirement of the Baby Boomers, will lead to a lower level of consumer demand. And then there’s the race against the machine; technology continues to eliminate jobs as opposed to provide them. 

Mr. Bernanke made no mention of these factors, which we think are significant forces that will prevent unemployment from reaching the 7% threshold during the next year. Falling below “NAIRU” (the non-accelerating inflation rate of unemployment – usually estimated between 5% and 6%) is an even more distant goal.

The End of the American Dream

How rising inequality and social stagnation are reshaping us for the worst

At the ages of 4 to 5, children from the poorest fifth of homes in the U.S. are already 21.6 months mathematically behind children from the richest homes.

By Niall Ferguson

“The United States is where great things are possible.” 

Those are the words of Elon Musk, whose astonishing career illustrates that the American dream can still come true.

Musk was born in South Africa but emigrated to the United States via Canada in the 1990s. After completing degrees in economics and physics at the University of Pennsylvania, he moved to Silicon Valley, intent on addressing three of the most “important problems that would most affect the future of humanity”: the Internet, clean energy, and space. Having founded PayPal, Tesla Motors, and SpaceX, he has pulled off an astonishing trifecta. At the age of 42, he is worth an estimated $2.4 billion. Way to go!

But for every Musk, how many talented young people are out there who never get those crucial lucky breaks? Everyone knows that the United States has become more unequal in recent decades. Indeed, the last presidential election campaign was dominated by what turned out to be an unequal contest between “the 1 percent” and the “47 percent” whose votes Mitt Romney notoriously wrote off.

But the real problem may be more insidious than the figures about income and wealth distribution imply. Even more disturbing is the growing evidence that social mobility is also declining in America.

The distinction is an important one. For many years, surveys have revealed a fundamental difference between Americans and Europeans. Americans have a much higher toleration for inequality. But that toleration is implicitly conditional on there being more social mobility in the United States than in Europe.

But what if that tradeoff no longer exists? What if the United States now offers the worst of both worlds: high inequality with low social mobility? And what if this is one of the hidden structural obstacles to economic recovery? Indeed, what if current monetary policy is making the problem of social immobility even worse?

This ought to be grist for the mill for American conservatives. But Republicans have flunked the challenge. By failing to distinguish between inequality and mobility, they have allowed Democrats, in effect, to equate the two, leaving the GOP looking like the party of the 1 percent—hardly an election-winning strategy.

To their cost, American conservatives have forgotten Winston Churchill’s famous distinction between left and right—that the left favors the line, the right the ladder. Democrats do indeed support policies that encourage voters to line up for entitlements—policies that often have the unintended consequence of trapping recipients in dependency on the state. Republicans need to start reminding people that conservatism is about more than just cutting benefits. It’s supposed to be about getting people to climb the ladder of opportunity.

Inequality and social immobility are, of course, related. But they’re not the same, as liberals often claim.

Let’s start with inequality. It’s now well known that in the mid-2000s the share of income going to the top 1 percent of the population returned to where it was in the days of F. Scott Fitzgerald’s Great Gatsby. The average income of the 1 percent was roughly 30 times higher than the average income of everyone else. The financial crisis reduced the gap, but only slightly—and temporarily. That is because the primary (and avowed) aim of the Federal Reserve’s monetary policy since 2008 has been to push up the price of assets. Guess what? The rich own most of these. To be precise, the top 1 percent owns around 35 percent of the total net worth of the United States—and 42 percent of the financial wealth. (Note that in only one other developed economy does the 1 percent own such a large share of wealth: Switzerland.)

By restoring the stock market to where it was back before the crisis, the Fed has not achieved much of an economic recovery. But it has brilliantly succeeded in making the rich richer. And their kids.

The Secret Sauce Of Iceland's Success Story

Debt Liquidation?

by Tyler Durden

That Iceland is so far the only success story in the continent of Europe, which continues sliding into an ever deeper depressionary black hole, as a result of the complete destruction of its financial sector and its subsequent rise from the ashes, is by known to most. What is still not exactly clear is what conditions have allowed success and growth to flourish in a barren wasteland where 60% youth unemployment is increasingly the norm, and where economic "outperformance" is measured in shades of red. As it turns out, perhaps the biggest jolt to Icelandic economic growth is what we said was the correct prescription for resolving not only the US but global growth malaise that struck in 2008: debt liquidation.

Of course, instead the powers that be opted for merely masking unsustainable debt with more debt in the hope of preserving the global financial equity tranche, where some $50 trillion, or two-thirds of total, in US household wealth is concentrated, by drowning out hundreds of trillions in global debt through controlled debt inflation - which four years later still has yet to take hold, and which  with every incremental dollar, yen, franc or pound printed threatens to spillover into uncontrolled hyperinflation, i.e., loss of fiat.

Alas, no debt liquidation is possible without making the equity below it worthless: a fact of restructuring known all to well to most which is precisely why it will not happen as long as the status quo is in control. Yet in those places which dared to bite the bullet and do the right thing - namely liquidate untenable debt - growth is back, and the future is truly bright without everyone asking "just how much longer will a few Keynesian voodoo acolytes provide a reprieve from the poverty effect?."

From Bloomberg:

Iceland’s lenders have forgiven household debt equal to about 12.4 percent of gross domestic product since the island’s 2008 financial collapse.

Lenders had written off 212.2 billion kronur ($1.7 billion) in household debt through the end of 2012, the Icelandic Financial Services Association said in a letter to parliament. The group estimated a further 35.3 billion kronur will be forgiven this year after they recalculate loan agreements to meet a Supreme Court ruling.

About 141.2 billion kronur of that follows a ruling from the island’s top court stating that mortgage loans indexed to foreign exchange rates were illegal, it said.

Where Are We Now? - A World View

Entropy never sleeps

by James Howard Kunstler

Wondering why the money world got its knickers in a twist last week? The answer is simple: the global economy is breaking apart and its constituent major players are doing face-plants on the downhill slope of a no-longer-cheap-oil way of life.  Let’s look at them case by case.

     The USA slogs deeper into paralysis and decay in a collective mental fog of disbelief that its own exceptionalism can’t overcome the laws of thermodynamics. This general malaise precipitates into a range of specific quandaries. The so-called economy depends on financialization, since it is no longer based on manufacturing things of value. The financialization depends on housing, that is, a particular kind of housing: suburban sprawl housing (and its commercial accessories, the strip malls, the box stores, the burger shacks, etc.). Gasoline is now too expensive to run the suburban living arrangement. It will remain marginally unaffordable. Even if the price of oil goes down, it will be because citizens of the USA will not have enough money to buy it. Lesson: the suburban project is over, along with the economy it drove in on.

     But so is the mega-city project, the giant metroplex of skyscrapers. So, don’t suppose that we can transform the production house-building industry into an apartment-building industry. The end of cheap oil also means we can’t run cities at the 20^th century scale. That includes the scale of the buildings as well as the aggregate scale of the whole urban organism. Nobody gets this. For one thing, there will be far fewer jobs in anything connected to financialization because that “industry” is imploding. The recent action around the Federal Reserve illustrates this. When chairman Bernanke’s lips quivered last week, the financial markets had a grand mal seizure. He floated the notion that his organization might “taper” their purchases of US government issued debt and mortgage-backed securities — the latter being mostly bundled debt originated by government-sponsored entities and agencies. That’s the “money” that supports the suburban sprawl industry.

The banking shenanigans that cost Ireland its sovereignty

Tapes reveal the lies and deception that led to the bank bailout

The Irish people, who sacrificed their sovereignty and billions of Euros, are waking this morning to a stunning revelation that the bailout to save Anglo-Irish was engineered by the Bank's leadership to game as much money as possible from the central bank. The Irish Independent has secret recordings from the period in 2008 - below - that show senior management luring the State into giving it billions as they admit the EUR 7 billion number was "picked out of my arse."

The bottom-line is that the bank knew they were in trouble and so decided to game the Central Bank and their regulators knowing that once the State began the flow of money, it would be unable to stop: 

"If they (Central Bank) saw the enormity of it up front, they might decide they have a choice. You know what I mean? They might say the cost to the taxpayer is too high . . . if it doesn't look too big at the outset... if it looks big, big enough to be important, but not too big that it kind of spoils everything, then, then I think you have a chance. So I think it can creep up... [once] they have skin in the game." Will there be an Irish Spring as the conspiracy theory of the banking bailout now become conspiracy fact?

Via The Irish Independent,

Taped telephone recordings (from the bank's own systems) from inside doomed Anglo Irish Bank reveal for the first time how the bank's top executives lied to the Government about the true extent of losses at the institution.

...

Anglo itself was within days of complete meltdown – and in the years ahead would eat up €30bn of taxpayer money. Mr Bowe speaks about how the State had been asked for €7bn to bail out Anglo – but Anglo's negotiators knew all along this was not enough to save the bank.

A Blueprint for the De-Socialization of Western Europe

How and How Not to Desocialize

by Murray N. Rothbard

Introduction

It is generally acknowledged that bureaucrats are obstructing the process, but confusion abounds among free-market proponents themselves. Matters are scarcely helped by the fact that Western economists, to whom the former Eastern bloc is looking for wisdom, have themselves done virtually nothing to study, let alone solve, this problem during the sixty years since Stalin established socialism in the Soviet Union and the half-century since the Soviets imposed it on Eastern Europe.

For ever since the mid-1930s, almost all Western economists have accepted the view that there is no calculation problem under socialism, and most have accepted the subsequent notion that the Soviet economy has been successful and growing, and would shortly overtake that of the United States.[1]

How Not to Desocialize

We may first clear the way on how to desocialize by examining various paths that have become popular, and yet are decidedly not the way to arrive at our presumably common goal.

How not to go about desocialization may be highlighted by the story of a friend of mine, who told me recently about a Soviet colleague in his department, who came to the United States to study diligently the problem of how to create a futures market in the USSR. He has been stymied by the fact that he cannot seem to figure out what laws or edicts the Soviet state should lay down, so as to replicate the futures market in the United States. In short, he cannot find a way to plan a futures market.

Here then is a crucial point: you cannot plan markets. By their very nature, you can only set people free so that they can interact and exchange, and thereby develop markets themselves. Similarly, several of the socialist countries, seeing the importance of the capital markets in the West, have been trying to develop stock exchanges, but with little success. First, again, because stock markets cannot be planned, and, second, because, as we will see further, you cannot have markets in titles to capital if there are still virtually no private owners of capital in existence.

The Pandering And Politics Of The Fed's Punch-Bowl

What’s really driving everything is the American electoral cycle

By Daniel Cloud

People at the Fed are people in politics, who need to promote their allies and maintain their patronage networks. So perhaps it’s significant that the last two times the Fed tightened, it was in a President’s second term. It’s safer to anger an incumbent who is leaving, and dangerous to anger one who may have another six years in office. The party that lost the Presidency after one term, as a result of a crash in financial markets, would never forgive the Fed for its intervention. So if you are in the business of blowing up bubbles to win points with incumbents, and popping them at times when that is less of a concern, of course the President’s second term is when you do the popping.

But why not wait another year or two? The Fed’s mistake, last time, was to believe its own hype, and wait too long. The result was that the crash coincided with the presidential election, and actually decided it in favor of one party, at a time when it was otherwise uncertain who would win. That looked a little too much like direct tampering, and it ended up threatening the Fed’s “independence” (immunity from democratic oversight) by really angering the Republicans, who did little to block an audit they could have stopped if they’d wanted to. The Fed, as an institution, doesn’t really want to do that again. Better to get the crisis out of the way now, while there is still time for people to forget who they are really angry at before the next Presidential election, and sink back into the pointless search for vulnerable scape-goats that is the political parties’ bread and butter.

The FED lacks ‘escape velocity’

End of QE? – I don’t buy it.

by DETLEV SCHLICHTER

A new meme is spreading in financial markets: The Fed is about to turn off the monetary spigot. US Printmaster General Ben Bernanke announced that he might start reducing the monthly debt monetization program, called ‘quantitative easing’ (QE), as early as the autumn of 2013, and maybe stop it entirely by the middle of next year. He reassured markets that the Fed would keep the key policy rate (the Fed Funds rate) at near zero all the way into 2015. Still, the end of QE is seen as the beginning of the end of super-easy policy and potentially the first towards normalization, as if anybody still had any idea of what ‘normal’ was.

Fearing that the flow of nourishing mother milk from the Fed could dry up, a resolutely unweaned Wall Street threw a hissy fit and the dummy out of the pram.

So far, so good. There is only one problem: it won’t happen.

Now I am the first to declare that the Fed SHOULD abolish QE, and not only in the autumn of this year or the summer of next, but right now. Pronto. Why? –Because a policy of QE and zero interest rates is complete madness. It distorts markets, sabotages the liquidation of imbalances, prohibits the correct pricing of risk, and encourages renewed debt accumulation. It numbs the market’s healing powers – by enabling more ‘pretend and extend’ in the financial industry – and it adds new imbalances to the old ones that it also helps to maintain.

This policy may have prevented – for now – debt deflation but maybe debt deflation is what is needed.

QE is nothing but heavy-handed market intervention. It is destructive. It doesn’t solve the underlying problems. It creates new ones.

Larry Summer’s getaway car

However, none of these objections even register at the Fed. The Fed has a completely different perspective: This policy was a roaring success and as it has worked so well it can now be faded out. Soon there will be no need for it. Larry Summer’s dreadful phrase captures that thinking probably best: The economy will soon have achieved ‘escape velocity’.

Most analogies are somewhat poor but this one is particularly inept. Ironically, though, the reference to mechanics captures beautifully the logic of Keynesians and other interventionists: the economy is like a physical object moving through space and is occasionally in need of a little push to get moving again at an appropriate speed. Policy provides the push.

How Bureaucrats Captured Government

As always with human affairs, self-interest rules

By John Steele Gordon

Like reforming the spoils system of the 19th century, dealing with today’s incompetent, lazy, and corrupt public employees is a good deal easier said than done.

In government, last year’s reform has a bad habit of causing this year’s problem.

For instance, take the federal civil service, that vast army of government workers (in 2011 there were 2,756,000 employees in the executive branch). It has been much in the news lately, thanks to burgeoning scandals at the IRS and elsewhere.

The civil service has been around since the Constitution took effect in 1789, when there were 40 employees in the Treasury Department and only five in the State Department. But there were no rules regarding the hiring and firing of civil servants at that time. They all served at the pleasure of the president.

When Thomas Jefferson became president in 1801, he discovered that most federal employees, having been appointed by presidents Washington and Adams, were members of the opposition Federalist Party. In the last two weeks of the Adams administration, Congress — still in Federalist hands until Inauguration Day on March 4 — had taken advantage of that fact to pursue Federalist self-interest. It had passed the Judiciary Act of 1801, establishing 10 new district courts, 3 new circuit courts, and 42 new justices of the peace, who were to serve 5-year terms. On March 3, Adams filled the newly created posts and the Senate confirmed them en masse. But the acting Secretary of State John Marshall (who had already been appointed chief justice) was simply unable to issue all the commissions before his power to do so evaporated at noon the next day. This gave rise to one of the most important cases in Supreme Court history.

The Helots Revolt

Brazil's Woes Are The Wages Of Socialism

Brazil's rulers have been taken aback by the millions of countrymen surging up against them, venting their fury. What we have here is a fresh example of why socialism fails.

Up until now, a million Brazilians in the streets usually had something to do with a soccer match or, perhaps, a samba festival.

This time, it wasn't about festivities.

What started as a protest against a 9-cent fare hike on public transport fireballed into a gigantic public protest against political corruption, high taxes and lousy public services — and the government itself.

Protesters stormed state legislatures and set at least one on fire. The capital was stormed as well, and President Dilma Rousseff canceled her trip to Japan to call an emergency meeting with her Cabinet.

The New York Times reported that Brazil's leftist ruling Workers Party — full of 1960s-era guerrillas, community organizers, academics and radicals — "finds itself perplexed by the revolt in its midst."

After all, hadn't they been good socialists, shoveling pork to the poor, protecting local industries from foreign "predators," employing bureaucrats and taxing "the rich"? Yes, they did, and the result is a nation awash in corruption, angry at special interests, poorer from protectionism and beset by high taxes.

Now the people are marching. And the Workers' Party (PT) philosophy of rule by special interests is at least one reason why.

Brazil's rulers have been widely praised by everyone from Bill Clinton to Hugo Chavez for their handouts to the poor, in the name of "social justice." But they have done very little to create opportunity to enable poor people to get off handouts and earn a living.

What's more, they've forced others to pay for it and live with its bad effects, leaving all sides pretty angry.

66 More Ways The U.S. Government Is Blowing Your Hard-Earned Money

The Waste List

by Michael Snyder

Why did the U.S. government spend 2.6 million dollars to train Chinese prostitutes to drink responsibly?  Why did the U.S. government spend $175,587 "to determine if cocaine makes Japanese quail engage in sexually risky behavior"?  Why did the U.S. government spend nearly a million dollars on a new soccer field for detainees being held at Guantanamo Bay?  This week when I saw that the IRS was about to pay out 70 million dollars in bonuses to their employees and that the U.S. government was going to be leaving 7 billion dollars worth of military equipment behind in Afghanistan, it caused me to reflect on all of the other crazy ways that the government has been wasting our money in recent years.  So I decided to go back through my previous articles and put together a list.  I call it "The Waste List". 

Even though our politicians insist that there is very little that can still be cut out of the budget, the truth is that the federal budget is absolutely drowning in pork.  The following are 66 crazy ways that the U.S. government is wasting your hard-earned money...

#1 The IRS is about to pay out 70 million dollars in bonuses to employees even though discretionary bonuses are supposed to be cancelled due to the sequester.

#2 According to the Washington Post, the U.S. government is going to leave 7 billion dollars worth of military equipment behind in Afghanistan.

#3 It is being projected that the trip that the Obamas will be making to Africa will cost U.S. taxpayers $100,000,000.

#4 The NIH plans to spend $509,840 on a study that "will send text messages in 'gay lingo' to methamphetamine addicts to try to persuade them to use fewer drugs and more condoms."

#5 The National Science Foundation has given $384,949 to Yale University to do a study on “Sexual Conflict, Social Behavior and the Evolution of Waterfowl Genitalia”.  Try not to laugh, but much of this research involves examining and measuring the reproductive organs of male ducks.

The Disabling of America

The utopian task of redesigning society to eliminate the disadvantages of disability

By Mario Loyola & Richard A. Epstein

The bucolic town of Julian, California, has had a rough decade. Tucked away in the hills above San Diego, Julian has an historic ambience that has long made it a regional tourist attraction. In 2005, it was still rebuilding from a forest fire that had destroyed 500 homes when tragedy struck again—this time in the form of a San Diego attorney named Theodore Pinnock. 

Paraplegic and wheelchair-bound, Pinnock threatened most of the businesses in Julian with lawsuits if they did not quickly install accommodations for the disabled, in compliance with Title III of the 1990 Americans with Disabilities Act (ADA). He also demanded that they reimburse him for certain “research fees” averaging about $2,500 per business. Pinnock had his legal tactics down to a science; by the time he was disbarred last year (for unrelated reasons) he had filed more than 1,000 lawsuits in Federal court and hundreds more in state court. 

Little Julian got busy giving its gold-rush-era storefronts a massive architectural makeover in keeping with Justice Department dictates, spending buckets of money and destroying buckets of quaintness and appeal in the process. Many of Julian’s mom-and-pop storeowners were stunned by Pinnock’s flurry of demand letters. Harry Horner, owner of a pizza parlor who later testified to Congress on the abuses of the ADA, said that Julian’s businesses had long served customers in wheelchairs: “They seem to be accommodated and there’s never even been a complaint.”

Julian is far from alone in its encounter with the ADA. Hundreds of thousands of lawsuits have been filed in state courts under the ADA’s accessibility rules for establishments that serve the public. Under the ADA’s separate employment discrimination provisions, more than 350,000 complaints have been filed with the Equal Employment Opportunity Commission (EEOC), accounting for about 20 percent of its caseload.