There is no such thing as a 'free lunch'

The world always proves to be more complex and refractory than the theories of even the best economists

By THEODORE DALRYMPLE

Thus, I could not but smile a little wanly when President Barack Obama said this week that he hoped an increase in the use of generic drugs, together with an expert commission to examine the cost-effectiveness of medical treatments, would make a significant impact on the vast budget deficit of the United States. We in Britain have been there and we have done that, and our health-care costs doubled, perhaps not as a result, but certainly at the same time.

The best that might be said for these measures is that the increase in health-care costs was lower than it might otherwise have been. That is certainly not enough to save a country from a financial apocalypse, or even enough to be a major contribution to its salvation.

In Britain we have been prescribing generics for years; I cannot remember a time when I personally did not. Our National Institute for Clinical Excellence (NICE, a typically Blairite acronym) has done cost-benefit analyses of drugs and procedures, often very sensibly, for years. But despite its best efforts, our system has been highly inventive in finding other ways of wasting immense quantities of public money.

Transaction Tax: Not Only Dumb, but Illegal As Well

EU Geniuses Decide to Do it Anyway

By Pater Tenebrarum

The European Commission's own legal counsel has just presented a 14 page long legal opinion that explains that the planned financial transaction tax is actually illegal as it "exceededs member states' jurisdiction for taxation under the norms of international customary law".

The EU's legal eagles did not mention that it is economic suicide as well, and that it may well be among the dumbest ideas ever devised by the continental EU's solvency-challenged socialists.

They've been warned by a number of studies that show that without a shred of doubt the economic damage this tax will wreak will by far outweigh the paltry tax revenues it is likely to produce. They should know from the development of the euro-dollar market that there was once a time when a stupid decision by a US government along similar lines resulted in the creation of this giant off-shore market in dollar-denominated financial instruments.

Last but not least they were warned in no uncertain terms by Sweden, which fairly recently introduced such a tax on its own with predictably disastrous results, forcing it to abandon it again post-haste.

Now they are informed it is not only excruciatingly dumb to do this, but it isn't even legal. Their reaction? “We'll do it anyway!” This is of course par for the course for this sorry bunch of bumbling bunglers. The idea behind the tax is allegedly to 'make the banks pay for the damage they have wrought'. The financial crisis has of course been blamed exclusively on the bankers, with both central banks and governments doing their best to look innocent – a task in which they have been greatly helped by the hordes of anti-capitalistic demagogues populating the media.

We certainly wouldn't want to exonerate bankers, many of whom have made what can only be called moronic decisions of monumental proportions, but it should be remembered here that the system that has made it all possible was set up with the full connivance of the body politic. After all, it has realized a long time ago how the practice of fractional reserve banking in conjunction with the cartelization of the banking system and the institution of central banks can be used to fatten the coffers of the State. There can also be little doubt that politicians facing elections every few years care little about the wasting of their nation's capital stock. One could not fail to notice that the main problem, the root cause of the boom-bust sequence, namely credit expansion ex nihilo, has not been deemed worthy of debate.

US plays Monopoly, Russia plays chess

Putin's chessboard encompasses the globe

By Spengler 

Americans see individual pieces of geopolitical real estate in isolation, like hotels on the Monopoly board, while the Russians look at the interaction of all their spheres of interest around the globe. 

Syria is of no real strategic interest to Russia, nor to anyone else for that matter. It is a broken wreck of a country, with an irreparably damaged economy, without the energy, water, or food to maintain long-term economic viability. The multiethnic melange left in place by British and French cartographers after the First World War has broken down irreparably into a war of mutual extermination, whose only result can be depopulation or partition on the Yugoslav model. 

Syria only has importance in so far as its crisis threatens to spill over into surrounding territories which have more strategic importance. As a Petri dish for jihadist movements, it threatens to become the training ground for a new generation of terrorists, serving the same role that Afghanistan did during the 1990s and 2000s. 

As a testing ground for the use of weapons of mass destruction, it provides a diplomatic laboratory to gauge the response of world powers to atrocious actions with comparatively little risk to the participants. It is an incubator of national movements, in which, for example, the newfound freedom of action for the country's 2 million Kurds constitutes a means of destabilizing Turkey and other countries with substantial Kurdish minorities. Most important, as the cockpit of confessional war between Sunnis and Shi'ite, Syria may become the springboard for a larger conflict engulfing Iraq and possibly other states in the region. 

I do not know what Putin wants in Syria. I do not believe that at this point Russia's president knows what he wants in Syria, either. A strong chess player engaging an inferior opponent will create complications without an immediate strategic objective, in order to provoke blunders from the other side and take opportunistic advantage. There are many things that Putin wants. But he wants one big thing above all, namely, the restoration of Russia's great power status. Russia's leading diplomatic role in Syria opens several options to further this goal. 

When Rationality Breaks Down, So Does the Economy

Μadmen appear to be plentiful and enjoy great prestige on every side

By JR Nyquist

Rational Choice Theory tells us that people want good things, and they want them at the lowest price possible. Therefore, economic man is a rational actor. He measures costs against benefits. Of course, men are also irrational actors and capable of willfully misunderstanding their economic interests. And today, like no other time, irrationality is becoming a power in and of itself, dictating to the economy, subverting the very grounds of rational choice by taking choice away from the individual and giving it to government bureaucrats.

Many years ago the Austrian economist, Ludwig von Mises, pointed out that nations were more or less prosperous depending on the degree to which they “put obstacles in the way of the spirit of free enterprise and private initiative.” We look around today, in both Europe and America, and find that the great economic crisis of our time has not been met with sane solutions drawn from careful study, but by an anti-capitalist prejudice that holds grimly onto ideas and methods that have long since been discredited.

In 1956 Mises wrote, 

“The people of the United States are more prosperous than the inhabitants of all other countries because their government embarked later than the governments in other parts of the world upon the policy of obstructing business. Nonetheless many people, and especially intellectuals, passionately loathe capitalism.” 

And now we are living more than half a century later, bearing witness to the triumph of that loathing. America is no longer the prosperous country it once was. Businesses are being obstructed in ways that would have been unimaginable in the 1950s. (See the Free Market America [1] video on The Big Green’s True Colors [2], or peruse the EPA’s blog on Cap and Trade [3], or read regultions.gov [4] from the perspective of a farmer, rancher or fisherman.)

Whatever happened at the end of the Cold War, it was not the defeat of socialism; for a new anti-capitalist formation predicated on environmentalism was already taking shape. Even as the hammer and sickle came down over the Kremlin, the spotted owl was becoming the battle cry of those who were seeking to smash capitalism and market freedom in the Great Northwest. Consider, for example, the evidence presented in Discover the Networks [5], which begins with the statement: “Radical environmentalist and the activist groups with which they are affiliated typically view free-market capitalism as an economic system that is inherently destructive of the natural world.” It therefore goes without saying that the environmentally preferred solution is socialist. (This is ironic, since the socialist countries have always been the greatest polluters of the environment – please see Thomas J. Dilorenzo’s “Why Socialism Causes Pollution.” [6])

Latin America and the Fed Factor

The tide will go out and we will find out who was swimming naked

By Alvaro Vargas Llosa

We recently got a glimpse of what will happen to Latin America once the Federal Reserve stops printing money like crazy. Ben Bernanke’s mere suggestion, back in May, that he might begin to slow the purchase of securities (“tapering,” in financial parlance) was enough to cause $1.5 trillion to evaporate in emerging markets as money was pulled out by investors, stock exchanges took a nosedive, and local currencies lost value. In Latin America, the combined stock exchanges of Mexico, Peru, Chile and Colombia dropped 24 percent; Brazil’s currency lost 18 percent of its value in three months, prompting the central bank to sell U.S. dollars with maniacal intensity.

None of this is surprising. In recent years, the Fed’s policy of artificial money creation has generated, through the lowering of interest rates and the desperate search for yield on the part of investors, a boom in emerging capital markets. This has added to the considerable amount of money invested in regions such as Latin America where the commodities boom, itself partly a result of Fed policy, had already attracted lots of capital. The real possibility that the Fed will start to backtrack in the foreseeable future has had the opposite effect—a flight of capital out of Latin America and back into the U.S., where investors anticipate that interest rates will rise significantly.

C.S. Lewis on Tyranny “for the Good” of Its Victims

Quote of the Week

If we are to be mothered, mother must know best. . . . In every age the men who want us under their thumb, if they have any sense, will put forward the particular pretension which the hopes and fears of that age render most potent. They ‘cash in.’ It has been magic, it has been Christianity. Now it will certainly be science. . . . Let us not be deceived by phrases about ‘Man taking charge of his own destiny.’ All that can really happen is that some men will take charge of the destiny of others. . . . The more completely we are planned the more powerful they will be.

. . . .

Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. Their very kindness stings with intolerable insult. To be ‘cured’ against one’s will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals.

—                      C. S. Lewis, God in the Dock

Hollande’s Latest Epiphany

Third Industrial Revolution in Planning Stages

The shining example for Hollande's approach to the economy, Jean-Baptiste Colbert. Here shown while presumably bringing fresh instructions to his hapless subjects in the manufacturing business.

By Pater Tenebrarum

France's president Hollande has just meandered off the reservation into wonderland again. Apparently after eyeballing a chart that shows declining industrial employment in France, he decided that the time has come for a 'third industrial revolution' centered in France.

How is this miracle to be accomplished? Simple, the government will throw € 3.5 billion at the idea.

According to an article at EurActiv:  

“French President François Hollande hopes to create 470,000 jobs by injecting €3.5 billion in 34 key industrial sectors, but he will need Europe’s help.

President François Hollande and his firebrand Industry Minister Arnaud Montebourg presented a new investment strategy for 34 industrial sectors on Thursday (12 September).

The French President was following on the footsteps of Charles De Gaulle, who instigated French industrial policy in mid-late 20th century. With France preparing to cut €18 million from its 2014 budget, a €3.5 billion boost to industry may seem surprising. But it is part of a long-term project that the president deems an essential “offensive strategy”, benefiting both unemployment and France’s image.

Sowing the Seeds of the Next Crisis

Regulations Help Transform Capitalism into a Marxian Caricature

by  Pater Tenebrarum

The regulations introduced by Frank-Dodd and other laws elsewhere that are designed to mitigate the risks of the last crash, are increasingly producing new types of risks that will become manifest in the next crash. Naturally, it is completely absurd to believe that one can have five years of massive monetary inflation and at the same time 'reduce financial risks' by means of regulations. As long as fractional reserve banking exists and the banking cartel comprised of the central banks and commercial banks is able to create money and credit  ex nihilo in unlimited amounts, no amount of regulation will be able to forestall the next crisis.

In fact, there are always new regulations introduced in the wake of crises, and they tend to be focused on the features of the crisis that has just passed, a kind of 'closing the barn door after the horse has escaped' approach. Naturally, the shape of the next crisis will be completely different, so that most of these regulations are either useless or actually apt to become one of the causes of, and/or exacerbate the next crisis. For instance, Sarbanes-Oxley was supposed to forestall market crises after the Nasdaq crash by making corporate disclosure more reliable. It sure added a huge layer of bureaucracy to listed corporations and imposed huge costs on the economy, but the stock market crashed again anyway.

Ike’s Warning

Aspiring to Empire

We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals so that security and liberty may prosper together.

– Dwight D. Eisenhower’s farewell address to the nation, 1961 

by Bill Bonner

Whoa! Wednesday was another good day for the Dow. It jumped 135 points. Gold, meanwhile, was flat. We caution readers against jumping into US stocks. This trundling buggy could overturn at any moment. Margin debt is well above its peaks before the dot-com crash and the Lehman crisis. And P/Es are so high – 24% above the historical average on a 12-month reported earnings basis – it is almost certain that sellers will fare better than buyers. Moms and pops are back in the market. It’s time for serious investors to bug out.

We leave our “Crash Alert” flag up us a warning.

And we change the subject… 

The Most Dangerous Zombies of All

When President Eisenhower made his parting speech to the nation, many people were puzzled. Eisenhower was a career military man. How could he be so disloyal to his professional class, they wondered? But Ike knew something most people don’t. He understood warmongers. And he knew that armed zombies are the most dangerous zombies of all. We saw Ike in the flesh many years ago, just before he died. We were visiting our father in the Walter Reed military hospital in Washington. We were walking down the corridor with Dad – a World War II veteran – when he suddenly stood up straight and saluted. It had been at least 20 years since he had worn a uniform, but the reflex was still there. When General Eisenhower whisked by us in a wheelchair, Dad stood to attention. 

Now another 40 years have passed. Eisenhower’s warning, ignored and forgotten, has turned into a curse. For reasons of its own – money, power, status – the military-industrial complex pulls us into war after war.

Putin eyes Obama's Iran file

The Obama administration realizes the limits of US military power to intimidate or vanquish Iran

By M K Bhadrakumar 

When Kathleen Trola McFarland, the familiar Fox News national security analyst who served in national security posts in the Nixon, Ford and Reagan administrations and was an aide to Henry Kissinger at the White House, wrote that "Vladimir Putin is the one who really deserves the Nobel Peace Prize", she obviously had the Syrian crisis in mind. 

McFarland wrote on Tuesday, "In one of the most deft diplomatic maneuvers of all time, Russia's President Putin has saved the world from near-certain disaster." 

She went on to narrate how Secretary of State John Kerry's famous gaffe in London took wings and "the off-hand phrase was picked up by Putin, became a Kerry Proposal and ultimately the Obama peace plan..." 

Following up on her train of thought, it is easy to see how by the time this momentous week draws to a close Putin could doubly ensure his claim to a Nobel. 

The point is that a major highlight of the Shanghai Cooperation Organization's annual summit gathering in Bishkek, Kyrgyzstan, promises to be an event on Friday on its sidelines - the scheduled "bilateral" meeting between Putin and his Iranian counterpart, newly elected Hassan Rouhani. The Putin-Rouhani meeting in Bishkek is a scheduled one, planned well in advance. Both statesmen are vastly experienced in international diplomacy. 

As he winds his way back to his work station in the wooded estate of Novo-Ogaryovo after picking Rouhani's brains, Putin will begin choreographing in the privacy of his thoughts yet another peace plan - Iran. 

This will be Putin's first meeting with the newly elected Iranian president. The Rouhani presidency has aroused worldwide interest as presaging a meaningful US-Iran engagement, and Rouhani has been signaling in many ways Tehran's renewed interest in negotiating with the West - through policy pronouncements, cabinet appointments or sheer diplomatic "body language". Rouhani has pledged that the revival of the Iranian economy is his priority for which he would seek a favorable external environment. 

Kerry-Lavrov Bottom Line: Assad Has Gassed But He Will Not Go

Sometimes playing for time works out

by WALTER RUSSELL MEAD

Americans awoke to the possibility this morning that the US has found a ‘solution’ to the Syria situation. The Times is reporting that the US and Russia have reached an agreement to remove or destroy Syria’s chemical weapons by mid-2014 (the official state department framework document on this agreement is here).

If this deal goes through, two things are clear. First, for now at least, using chemical weapons worked for Assad. The Russia-US deal that the WH wants to spin as a win contains no mention of Assad leaving power, much less facing international justice for a massacre involving chemical weapons. The precedent is now set that, if it has Russia’s support at the UN, a rogue regime can gas its own people and emerge in a stronger diplomatic position. Unless something changes this new status quo, the use of chemical weapons in a civil war is no longer a grave crime against humanity. It is more of a violation, like a speeding ticket. Assad has some points on his license, but he’s still at the wheel of his car.

Second, the deal a weakened Kerry accepted as the best he could get under the circumstances confirms the loss of prestige for Obama in the Middle East— again, for now. Assad must go, said Obama. Assad must not gas, said Obama. Assad has gassed and he will not go. This is big. The White House wants everyone to focus on the prospects for getting Syria’s chemical weapons under control, but this effort to distract attention from a diplomatic climbdown won’t work with the hard eyed realists who calculate power realities in the Middle East — and in Beijing and Pyongyang, for that matter. If the WH had forced a comparably humiliating step down on Putin’s part, the MSM would be full of hosannas and alleluias to the wisdom and greatness of the brilliance of US diplomacy. Andrew Sullivan’s joy would truly know no bounds—evil gay-bashing dictator humiliated by the gay-friendly, now fully evolved Obama.

But this defeat is not irreversible, if US policy is still to get rid of Assad. Whether from internal dissension within the regime, pressure from rebels, or a combination of both, Assad can still go down. That would turn a diplomatic defeat into a real world win. Obama would make his point, and Putin would be left playing air guitar.

How Detroit went broke

The answers may surprise you

By Nathan Bomey and John Gallagher

Detroit is broke, but it didn’t have to be. An in-depth Free Press analysis of the city’s financial history back to the 1950s shows that its elected officials and others charged with managing its finances repeatedly failed — or refused — to make the tough economic and political decisions that might have saved the city from financial ruin.

Instead, amid a huge exodus of residents, plummeting tax revenues and skyrocketing home abandonment, Detroit’s leaders engaged in a billion-dollar borrowing binge, created new taxes and failed to cut expenses when they needed to. Simultaneously, they gifted workers and retirees with generous bonuses. And under pressure from unions and, sometimes, arbitrators, they failed to cut health care benefits — saddling the city with staggering costs that today threaten the safety and quality of life of people who live here.

The numbers, most from records deeply buried in the public library, lay waste to misconceptions about the roots of Detroit’s economic crisis. For critics who want to blame Mayor Coleman Young for starting this mess, think again. The mayor’s sometimes fiery rhetoric may have contributed to metro Detroit’s racial divide, but he was an astute money manager who recognized, early on, the challenges the city faced and began slashing staff and spending to address them.

And Wall Street types who applauded Mayor Kwame Kilpatrick’s financial acumen following his 2005 deal to restructure city pension debt should consider this: The numbers prove that his plan devastated the city’s finances and was a key factor that drove Detroit to file for Chapter 9 bankruptcy in July.

The State of Michigan also bears some blame. Lansing politicians reduced Detroit’s state-shared revenue by 48% from 1998 to 2012, withholding $172 million from the city, according to state records.

Decades of mismanagement added to Detroit’s fiscal woes. The city notoriously bungled multiple federal aid programs and overpaid outrageously to incentivize projects such as the Chrysler Jefferson North plant. Bureaucracy bogged down even the simplest deals and contracts. In a city that needed urgency, major city functions often seemed rudderless.

When all the numbers are crunched, one fact is crystal clear: Yes, a disaster was looming for Detroit. But there were ample opportunities when decisive action by city leaders might have fended off bankruptcy.

If Mayors Jerome Cavanagh and Roman Gribbs had cut the workforce in the 1960s and early 1970s as the population and property values dropped. If Mayor Dennis Archer hadn’t added more than 1,100 employees in the 1990s when the city was flush but still losing population. If Kilpatrick had shown more fiscal discipline and not launched a borrowing spree to cover operating expenses that continued into Mayor Dave Bing’s tenure. Over five decades, there were many ‘if only’ moments.

“Detroit got into a trap of doing a lot of borrowing for cash flow purposes and then trying to figure out how to push costs (out) as much as possible,” said Bettie Buss, a former city budget staffer who spent years analyzing city finances for the nonpartisan Citizens Research Council of Michigan. “That was the whole culture — how do we get what we want and not pay for it until tomorrow and tomorrow and tomorrow?”

Ultimately, Detroit ended up with $18 billion to $20 billion in debt and unfunded pension and health care liabilities. Gov. Rick Snyder appointed bankruptcy attorney Kevyn Orr as the city’s emergency manager, and Orr filed for Chapter 9 on July 18.

 For this report, the Free Press examined about 10,000 pages of documents gathering dust in the public library’s archives. Since most of those documents have never been digitized, the Free Press created its own database of 50 years of Detroit’s financial history. Reporters also conducted dozens of interviews with participants from the last six mayoral administrations as well as city bureaucrats and outside experts. Among the highlights from the review:

■ Taxing higher and higher: City leaders tried repeatedly to reverse sliding revenue through new taxes. Despite a new income tax in 1962, a new utility tax in 1971 and a new casino revenue tax in 1999 — not to mention several tax increases along the way — revenue in today’s dollars fell 40% from 1962 to 2012. Higher taxes helped drive residents to the suburbs and drove away business. Today, Detroit still doesn’t take in as much tax revenue as it did just from property taxes in 1963.

EU's democracy problem goes all the way down

The creation of a bureaucratic European order has become as transcendent a cause as loyalty to the Soviet Union was for many a last century West European Marxist 

By Tom Gallagher

It is natural that Jose Manuel Barroso should last week have expressed his displeasure at the British Conservative contingent in the European Parliament for faltering in their commitment to the European cause. He presumably sought to embarrass them by warning that they were in danger of becoming another UKIP.

In 2008, he unwisely remarked that the Eurosceptic views of the British public didn’t really count because ‘the people who matter in Britain’ want to adopt the Euro. A super-bureaucrat who wags his finger at whoever dares to break the top-down European consensus is a gift for those who wish to tilt the balance back to a Europe of democratic nation-states.

Barroso will be gone by next spring; his hopes of becoming the next secretary-General of NATO hopefully staying unfulfilled.

On the morning of his ‘State of the Union’ address, I happened to be attending a conference on the campus in the Portuguese capital where, back in 1975, he had organized student unrest in his days as a Maoist law student.

I listened to a group of Ph.D students with enquiring minds explain why for many of their generation the only option was to leave as quickly as possible. The country is in the grip of a devastating economic crisis that has produced record youth unemployment and business closures. But the instinct of the dominant political blocs on the rhetorical left and centre-right is to sit out the crisis and postpone change indefinitely.

The Labour elite's secret problem... they can't stand the working class

Labour, like the Tories, no longer speaks for any major part of the British people

Hating the working class? Then Labour Prime Minister Gordon Brown talks with resident Gillian Duffy ahead of the 2010 General Election

By PETER HITCHENS

How long does it take for the penny to drop? It is amazing how slow voters  have been to see  that the two major parties have been stolen from them, and are now their enemies.

I spend a lot of time here pointing out that the Tory Party is a now a nest of anti-British, anti-family liberals. But Labour is just as bad.

The Labour Party of 1945 was pretty Left-wing. But it was patriotic, Christian and genuinely working-class. It hated cheats and it loathed crime. Several members of the Labour Cabinet of 1948 voted to keep the death penalty.

It did not support immigration. It set up the NHS to care for hard-working people whose illnesses were in many cases caused by that hard work. It was (rightly) deeply suspicious of the first steps towards creating what is now the EU.

It supported grammar schools, seeing that they gave the children of the poor a ladder out of that poverty. It favoured strong national defences.

I suspect that millions of Labour voters still feel roughly the same way. But the party does not. Like the Tory top deck, Labour’s London elite loathe and despise their members.

We have absolute proof of this thanks to the meeting between Gordon Brown and Mrs Gillian Duffy during the last Election, when Mr Brown responded to Mrs Duffy’s completely reasonable fears about mass immigration by calling her a bigot behind her back. He apologised – for being caught – but who can doubt it was his real view?

This week we saw two more examples of the problem. 

One was the absurd shadow Minister Chris Bryant, trying to be strong on immigration.

Understanding the forces that govern their own lives

The Illogic in Fractional Reserve Banking

by James E. Miller

If there was one business venture the leftist and forgotten “Occupy” movement was right to distrust, it was the banking industry. In the wake of the 2008 financial crisis and subsequent bailing out of the world’s financial system by fascist states, taxpayers – especially the progressive types – were correct to feel amiss. But rather than take a scrutinizing look into the privilege afforded to the banking class, the outraged took to political action in the callow hope of correcting a wrong.

Like any popular uprising, the goal was quickly smothered in favor of further rent-seeking. Instead of aiming consternation at the incestuous relationship between government and the money-changers, occupiers wanted the quick-fix of redistribution. The cries of “this is what democracy looks like” might as well have been “this is what panhandling looks like.” Centralized banking went unquestioned. The nature of fractional reserve practices was ignored – or likely not understood by the pea-brained philosophers. Still, the radical levellers who set-up camp in Zuccotti Park were on to something by asking why their precious public officials voted to shore up the balance sheets of a disproportionately small member caste.

Banking is, to put it bluntly, a strange and unique business. The industry is centuries-old, and the legality of its operations has been questionable since inception. I am referring specifically to the practice of bankers lending out claimed reserves – a contentious issue among libertarian theorists. If the larger public were to become privy to this business model, it may spark a troubling curiosity in the less-moneyed class. But then again, this author never ceases to be amazed by the bounds of common apathy.

Trying To Stay Sane In An Insane World - Part 3

Parasite on a Parasite on a Parasite

by Jim Quinn

In Part 1 of this article I documented the insane remedies prescribed by the mad banker scientists presiding over this preposterous fiat experiment since they blew up the lab in 2008. In Part 2 I tried to articulate why the country has allowed itself to be brought to the brink of catastrophe. There is no turning back time. The choices we’ve made and avoided making over the last one hundred years are going to come home to roost over the next fifteen years. We are in the midst of a great Crisis that will not be resolved until the mid-2020s.

The propagandists supporting the vested interests continue to assure the voluntarily oblivious populace the economy is improving, jobs are plentiful, inflation is under control, and housing is recovering. Bernanke and his band of merry money manipulators, Obama and his gaggle of government apparatchiks, and their mendacious mainstream media mouthpieces have enacted radical measures in the last five years that reek of desperation in their effort to give the appearance of revival to a failing economic system. Stimulating the net worth of bankers and connected corporate cronies through engineered stock market gains has not trickled down to the peasants. Our owners try to convince us it’s raining, but we know they’re pissing down our backs. Our Crisis mood is congealing.

“But as the Crisis mood congeals, people will come to the jarring realization that they have grown helplessly dependent on a teetering edifice of anonymous transactions and paper guarantees. Many Americans won’t know where their savings are, who their employer is, what their pension is, or how their government works. The era will have left the financial world arbitraged and tentacled: Debtors won’t know who holds their notes, homeowners who owns their mortgages, and shareholders who runs their equities – and vice versa.” - The Fourth Turning – Strauss & Howe – 1997

The core elements of this Crisis have been discernible for decades. The accumulation of private and public debt; the civic, moral, and intellectual decay of our society; the growing power of the corrupt corporate fascist surveillance state; growing wealth inequality created by crony capitalist skullduggery; the peak in cheap easily accessible oil; and global disorder caused by overpopulation, scarce resources, religious zealotry, and war; combine in a toxic brew of unimaginable pain, anguish and tragedy. The Crisis began in September 2008 and the sole purpose of the deceitful establishment has been to avert a catastrophe that is destined to extinguish the wealth, power and control they’ve treacherously procured over the last few decades.

And then there was one

The dark matter of global power

By Tom Engelhardt

In an increasingly phantasmagorical world, here's my present fantasy of choice: someone from General Keith Alexander's outfit, the National Security Agency, tracks down H G Wells's time machine in the attic of an old house in London. Britain's subservient Government Communications Headquarters, its version of the NSA, is paid off and the contraption is flown to Fort Meade, Maryland, where it's put back in working order. Alexander then revs it up and heads not into the future, like Wells, to see how our world ends, but into the past to offer a warning to Americans about what's to come. 

He arrives in Washington on October 23, 1962, in the middle of the Cuban Missile Crisis, a day after president Kennedy has addressed the American people on national television to tell them that this planet might not be theirs - or anyone else's - for long. ("We will not prematurely or unnecessarily risk the costs of worldwide nuclear war in which even the fruits of victory would be ashes in our mouth, but neither will we shrink from the risk at any time it must be faced.")

Greeted with amazement by the Washington elite, Alexander, too, goes on television and informs the same public that, in 2013, the major enemy of the United States will no longer be the Soviet Union, but an outfit called al-Qaeda in the Arabian Peninsula (AQAP), and that the headquarters of our country's preeminent foe will be found somewhere in the rural backlands of ... Yemen. 

Our Cages and Labyrinths

The major barriers to social advancement today are the systems of government human beings created

By Jeff Tucker

Over the last year, I’ve had some sense that certain themes are emerging in pop literature and film—themes that are different from dominant strains of the past. I struggled to put my finger on it, but it finally it hit me what these themes are and why they matter.

The plot lines are highly suggestive of what it is like to live in (and overcome) an age of pervasive government control—an age pretty much like our own.

Five shows illustrate the point: Breaking Bad on AMC; Orange Is the New Black and House of Cards, both of which are currently making Netflix a mint in new subscribers; the insanely popular Hunger Games series of novels and films; and Boardwalk Empire, from HBO. Let’s look at what they have in common.

All students of literature and film are trained to find the core source of drama in a story. What is it that is stopping the main characters from achieving their goals, and how do the characters work around those difficulties? In the nineteenth and early twentieth centuries, the sources were predictably natural: terrible weather (Grapes of Wrath), privation and the struggle with poverty (Dickens), caste and class (the Brontë sisters), moral upheaval (Frankenstein, Dr. Jekyll), the reversion to the state of nature as a result of accident (Robinson Crusoe), and so forth.

But times have changed. And twenty-first century popular culture reflects those changes. Given all the progress we’ve made, the obstacles in our world tend no longer to be material but political. In most places in the world today, disease, hunger, shelter, plagues, and natural disaster aren’t the overriding issues affecting daily life as they once were. Something different afflicts today’s generation.

These are the artificial barriers of law and legislation as contrived by bureaucrats and politicians.

The Remaking of the Middle East

The entire Arab state system is being challenged and may be unraveling

By Shlomo Avineri

The Middle East’s descent into extreme violence – with mass killings of Muslim Brotherhood demonstrators in Cairo followed closely by Bashar al-Assad’s use of chemical weapons in Syria’s civil war – has dashed the hopes raised by the Arab Spring in 2011. The question now – and in terms of the future – is how to account for what is shaping up to be a profound historical failure.

In the 1990’s, when communist regimes collapsed in Central and Eastern Europe, and dictators fell in Latin America, Sub-Saharan Africa, and Southeast Asia, the Arab world stood out for its lack of popular, anti-authoritarian movements and developments. And, while the “Arab Spring” demonstrations in 2011 brought down or seriously challenged dictators in Tunisia, Egypt, Libya, Yemen, and Syria, the result has been instability, violence, and civil war, not democratization. Why?

The Arab Spring did not affect all 22 Arab countries equally. The regimes that were brought down, or challenged, were military dictatorships cloaked in republican garb. None of the dynastic monarchies, some of them far more repressive (like Saudi Arabia) were confronted by serious popular challenges, with the exception of small Bahrain, owing to a sectarian divide between its Shia majority and Sunni rulers.

The reasons seem obvious: the military regimes lacked legitimacy and were ultimately based on force and intimidation, while the monarchical dynasties seem to be anchored in history, tradition, and religion. In Morocco and Jordan, the king is considered a descendant of the Prophet, and Saudi Arabia’s king is the Custodian of the Two Holy Mosques in Mecca and Medina, Islam’s most sacred sites.