The Socialist government in France is running out of other people's money

Angry French Union So Called Workers Take Two Bosses Hostage

by Tyler Durden

Workers at a tire plant in Northern France have taken two managers hostage until Goodyear (the firm that owns the plant and has been trying to shutter it for years) meets the major unions demands, WSJ reports, as Goodyear winds down operations with the plant almost idle, French labor law requires the company to keep all workers employed, which means many of them don't work more than a couple of hours a day while still getting full salary. The situation is why Titan International's Maurice Taylor blasted that he "would be stupid" to operate the plant on that basis.

As we noted previosuly the tire factory farce escalated a year ago...

The saga of the capitalist vs the socialist goes on with Round 3, following round 1 in which the "Titan CEO Crushes Socialist "Work Ethic", Tells France "You Can Keep Your So-Called Workers" and round 2 in which "Socialist France Responds To Titan CEO, Hilarity Ensues." With the entire "developed" world now a real-time parody of itself, in which the truth about the true state of affairs is only revealed in grotesque, farcical, ad-hominem repartees between various members of the insolvent status quo plutocracy, we can only hope for many more rounds of this didactic back and forth.

Excerpted from Titan CEO Maurice Taylor's follow up letter in response to Arnaud Montebourg's letter responding to Maurice Taylor.

You letter shows the extent to which your political class is out of touch with real world problems.

You call me an extremist, but most businessmen would agree that I must be nuts to have the idea to spend millions of US dollars to buy a tyre factory in France paying some of the highest wages in the world.

Your letter did not mention why the French government has not stepped in to rescue this Goodyear tyre factory.

The extremist, Mr Minister, is your government and the lack of knowledge about how to build a business. 

Your government let the wackos of the communist union destroy the highest paying jobs. 

At no time did Titan ask for lower wages; we asked only if you want seven hours pay, you work at least six. 

France does have beautiful women and great wine. 

PS: My grandmother named my father after French entertainer Maurice Chevalier, and I inherited the name. 

I have visited Normandy with my wife. I know what we did for France. 

But now, Goodyear is entangled in legal proceedings with unions representing workers, led by the communist-backed CGT... and their actions have re-escalated... (via WSJ)

Workers at a Goodyear Tire & Rubber Co. factory in northern France prevented two managers from leaving the facility on Monday, the latest in a string of protests by union members who were accused by a U.S. executive last year of doing little work. 

...

Mickaël Wamen, a union representative, said the managers would be held until workers get a satisfactory response to their requests. He said the managers already have been informed that they will spend the night at the site. 

Goodyear, of Akron, Ohio, has been trying to shut the plant for several years, but is entangled in legal proceedings with unions representing workers, led by the communist-backed CGT. Efforts to sell the factory to U.S. tire maker Titan International Inc. hit the headlines last year, after Titan Chief Executive Maurice Taylor blasted French labor laws and work habits.

Read the rest at:

http://www.zerohedge.com/news/2014-01-06/angry-french-union-workers-take-two-bosses-hostage

By Their Fruits Shall Ye Know Them

"Obama, Obama, there are a billion Osamas"

by Angelo M. Codevilla

A New Year’s wake-up call from the International Business Times: “In their annual End of Year poll, researchers for WIN and Gallup International surveyed more than 66,000 people across 65 nations and found that 24 percent of all respondents answered that the United States “is the greatest threat to peace in the world today.” Pakistan and China fell significantly behind the United States on the poll, with 8 and 6 percent, respectively. Afghanistan, Iran, Israel and North Korea all tied for fourth place with 4 percent.”

This confirms what international travelers sense: whereas not so long ago foreigners saw Americans as the embodiment of peace and freedom, a plurality now see us as a source of trouble for themselves. For more people than not, being on America’s side now means being on the side of trouble. Why? And what is that to us?

As ever in human history, the reputation of “dangerous to peace” does not attach itself to nations that trample over others as victorious aggressors, or whose power looms ominously. Rather, it is yet one more dangerous indignity heaped upon those who are perceived as weak and inept. That perception means that more and more people are likely to deprive us of our peace.

The question for us Americans to ponder as we enter into yet another election year is: how, since 9/11, did our leaders manage to use this country’s mighty military; how did they manage to sacrifice some 10,000 American dead and 30,000 crippled for life, to kill several hundred thousand foreigners while spending between two and three Trillion dollars, in a way that earned us no peace abroad or at home and the title of “greatest threat to peace in the world” to boot? How has all this effort made more and more people hostile to us?

We may see part of the answer in a December 29 Wall Street Journal feature by Philip Mudd, deputy director of CIA’s counterterrorism center 2003-6 and senior intelligence adviser at FBI 2009-10.

We should take Mr. Mudd at his word that our Best And Brightest have been in charge since the beginning, and have followed a consistent plan: “We met every afternoon in the CIA director’s conference room at 5. At the FBI director’s conference room, we met every morning shortly after 7.” Nose to the grindstone, early and late.

These high officials believe that America is beset by a shadowy spider-web of international rogues, and that the path to our peace lies in mapping that network. “How best can we clarify the blurry picture of an emerging terror conspiracy overseas or in the United States? How can we identify the key players and the broader network of fundraisers, radicalizers, travel facilitators and others quickly enough so they can’t succeed? And how do we ensure that we’ve mapped the network enough to dismantle—and not merely disrupt—it?”

Their answer, since they pretend to be agnostic about that network’s composition, is to gather as much data about what everyone in the world is doing and then to sort it by sophisticated mathematical algorithms to isolate “gossamer contacts…in an ocean of seemingly disconnected data,” and then to focus their investigations. To do otherwise – to start from openly available facts about who wants to do what to whom would be “profiling” of the racist kind.

But, technology has enabled our wizards to combine socio-political agnosticism with effectiveness: “The fastest, most efficient solution to mapping a network of conspirators lies in following digital connections among people. And as digital trails expand, digital network mapping will increase in value…link cellphones, email contacts, financial transactions, travel and visa information, add in whatever else you can find, and …Bingo! Within a day, you can have the beginnings of an understanding of a complex network. Even so, an analyst has to ask other questions. Where did the conspirators travel a year ago? Five years ago? Who did they live with? Who did they sit next to on an airplane? [for that] Investigators need an historical pool of data.”

Read the rest at:

 http://www.libertylawsite.org/2014/01/05/by-their-fruits-shall-ye-know-them/

100 Years After The Outbreak Of World War I, Could The World Commit Suicide Again?

Gallup’s latest poll finds 72 percent of Americans find Washington to be the largest threat to their freedom today

By Steven Hayward,

Humans are a sentimental species, making much of anniversaries and reunions.  We’re probably not far from extending our sentimental capacities to observing anniversaries of anniversaries, like aging baby boomers who argue over which Woodstock reunion was the best because their memory of the original is fading into the mists.

Already we are seeing the first trickle of articles and books that will reach a flood by summer noting the 100^thanniversary of the outbreak of World War I.  These retrospectives come in two types.  The first is the never-ending historical argument over causation of the catastrophe whose derangements of the European equilibrium have not completely subsided today.  The various diagnostic camps formed into fixed positions decades ago: “miscalculation” (Barbara Tuchman) economic and demographic asymmetries (Marxists and other varieties of material determinists), or fear of rising rival power that spurs preemption (the various descendents of Thucydides).

The second retrospective mode comes from those who wish to dilate the famous remark that Mark Twain probably never said:

“History doesn’t repeat itself—but it rhymes.” 

Given that World War I was a surprise, a war that was thought to be impossible right up to the moment it wasn’t, could we wander into the same kind of conflagration today?  There are lots of plausible candidates for the locus of a world-splitting cataclysm, ranging from a rising China or that crucible of conflict since the beginning of recorded history—instability and ambition for conquest (or revenge) in south central Asia.  Certainly the rise of radical Islam in recent decades has taken the place of revolutionary Communist, socialist, and fascist ideologies that did so much to disrupt the 20^th century in the aftermath of World War I.

Perhaps this retrospection on causal catastrophism will represent the much wished-for inversion of Santayana’s injunction to recall history so as not to repeat it.  As was the case before World War I, there are many secular reasons for optimism beyond the fine-toothed combing and re-telling of the political mistakes of 1914.  China is probably just too large and unwieldy to become a genuine threat of global war.  North Korea would be rolled up quickly if it ever acted seriously on its belligerent rhetoric.  India and Pakistan—or Iran and everyone in its neighborhood—may come to open war at some point (or the Syrian and Libyan civil wars may spread), and bad as that prospect is it would not likely spill over beyond the region or draw in the remaining world powers.  European disarmament—the great windmill of the 1930s—is coming to pass by degrees, the result of welfare-statism more than authentic Kantian pacifism.  Before long most of Europe won’t be able to fight each other even if they wanted to.  (Better watch out for those old Russians, though.  They didn’t get the memo from Brussels.)  The terror threat will be with us for a while, but can’t by itself plunge the world into a total war.

Beyond the geopolitical hypotheticals, Steven Pinker and others have noted that violence in the world, as measured in open conflicts and deaths, has been declining significantly for the last several decades.  The warfare that leading nations engage in today, such as the U.S. campaigns in Iraq and Afghanistan, resemble the pre-1914 world of professional armies and remote battle plains, with conflicts that did not involve whole populations like World Wars I & II.  Perhaps the promise of modernity, which was at the root of Progressive optimism a century ago, has belatedly come to fruition?

One aspect of the Great War story of a century ago seems to be missing from the growing inventory: the changes to the idea of Progress itself, and the rise of the administrative state in its wake.  The conventional wisdom for many years in U.S. historiography is that the coming of World War I entailed the end of the Progressive Era and its momentum for reform.  It is certainly true that World War I put paid to the easygoing faith in inevitable progress that prevailed everywhere in the advanced industrial nations before the war, and gave way to the existential pessimism of the interwar period that in turn brought us fully to today’s “postmodernism” that openly disdains progress in just about every form.

But it is quite wrong to suppose that World War I ended Progressivism.  To the contrary, it accelerated the rise of the modern administrative state that is the defining feature of what goes by the label of “Progressivism” today.  The British historian A.J.P. Taylor made this point inadvertently at the time of the 50^thanniversary of World War I: “Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman.  He could live where he liked and as he liked.  He had no official number or identity card.”

The same was true of the United States, where the brand new income tax barely reached 10 percent on a small handful of the highest incomes, and regulation was confined to a few well-defined agencies overseeing a small number of national industries and markets.  But as Taylor correctly notes, “All this was changed by the impact of the Great War.”  Far from ending “Progressivism,” World War I provided the launchpad for a century of wholesale expansion of administrative government in the United States, starting with jacking up the income tax to over 90 percent and then, in World War II, extending its reach to the lowest rungs of the middle class.  Coupled with the crisis of the Great Depression, “Progressive” government hasn’t looked back.  In other words, if you’d described to Progressive reformers in 1910 the course of American government over the next century, they wouldn’t have regarded World War I as the end of their dreams, but rather as the turning point.  Not for nothing did Randolph Bourne say that “War is the health of the State.”

 Read the rest at :

http://www.forbes.com/sites/stevenhayward/2014/01/05/100-years-after-the-outbreak-of-world-war-i-could-the-world-commit-suicide-again/print/

Merry Christmas

The Free Market's Path to Peace

Having an economic incentive for embracing peace on earth, does count for something.

BY JR NYQUIST

It is the season of “Peace on earth, good will to men,” though wars continue to occur and peace is far from established. While mankind should prefer peace we have nonetheless chosen war again and again. Excepting the Pax Romana from 27 BC to 180 AD, ancient history presents us with one war after another. If we read the Roman historian Tacitus, even the Pax Romana appears to have been a series of military operations. All the tribes of the earth make war, or prepare for war. It is therefore of special interest when a scholar shows that the free market may have already reduced the number of wars that otherwise would have been fought. Professor Patrick J. McDonald has offered exactly such a thesis in a book titled The Invisible Hand of Peace: Capitalism, the War Machine, and International Relations Theory.

Under the rule of law, with private property and “competitive market structures,” modernity has arguably found a greater incentive to peace than to war. As McDonald explains in his book, “states that possess liberal political and economic institutions do not go to war with each other….” What does liberalism signify in this context? According to Austrian economist Ludwig von Mises, “The essential teaching of liberalism is that social cooperation and the division of labor can be achieved only in a system of private ownership of the means of production, i.e., within a market society, or capitalism.” Mises and McDonald would both argue that economic freedom, and the institutions which make this freedom possible, tend to promote peace. McDonald offers a caveat, however. He warns that democracy is not the guarantor of peace some have asserted it to be.

The free market and free trade are much stronger guarantors of peace. In the case of China today, McDonald argues that an autocratic Chinese regime has adopted a policy of peace for the sake of economic development. “Because conflict or even the threat of it tends to disrupt normal trading patterns, potentially large economic costs will deter dependent states from using military force to solve their political conflicts.” McDonald also noted: “As commerce grows, the incentives for plunder or conquest decrease simply because it is a more costly means of generating economic growth.” Not only does free market cooperation bring wealth to all the parties involved, it displaces national loyalties and state rivalries.

Of course, McDonald is well aware that free trade and free markets can be overridden by democratic ideological imperatives. Simply put, if economic liberalism signifies the disutility of war,democratic liberalism does no such thing. According to McDonald, “Even democratic leaders can exploit domestic institutional instability and public fears of insecurity to construct broad swaths of public support for war.” It is not the ballot box that assures peace, says McDonald. It is private property and free trade which binds nations and peoples to the cause of peace, despite cultural and political differences.

The controversial German revisionist, Udo Walendy, summed up democracy’s readiness to start a global war when he wrote, “On September 3, 1939, England and France declared war on Germany. In so doing they transformed a limited territorial dispute between Poland and Germany into a world war over the city of Danzig, a matter that could easily have been resolved through negotiation.” Patrick Buchanan offered a similar judgment in his book Churchill, Hitler, and the Unnecessary War: How Britain Lost Its Empire and the West Lost the World. Arguably, in both world wars the democracies fought when they didn’t have to. About this idea George Kennan wrote: “When you total up the score of two [world] wars, in terms of their ostensible objective, you find that if there has been any gain at all, it is pretty hard to discern.”

 Read the rest at:

http://www.financialsense.com/contributors/jr-nyquist/free-market-path-peace

2013: The Year the Arab Spring Died

In the Egyptian coup, democratic hopes were snuffed out

By TIM BLACK

Back in February 2011, as angry crowds thronged Tahrir Square in Cairo, calling for President Hosni Mubarak to call time on his 30 years of military dictatorship, Western political leaders, accompanied by an assortment of the nominally liberal and sort-of leftish, could barely contain their democratic urges. This wasn’t just the Arab Spring, it was Western politicos’ spring, too. In the jubilant overthrow of decrepit, hair-dyed tyrants, they saw a chance to pose as champions of democracy.

As Mubarak stumbled from power, American president Barack Obama beamed: ‘Egypt has changed, and its future is in the hands of the people. Those who have exercised their right to peaceful assembly represent the greatness of the Egyptian people.’ The European Union’s foreign-affairs chief, Baroness Catherine Ashton, was similarly quick to pen her message of support. ‘I have called on the Egyptian authorities to embark on a transition towards genuine democratic reform, paving the way for free and fair elections’, she wrote in the Guardian. ‘The challenge is to lay down the roots of deep democracy; there, too, the EU stands ready to help.’ Even Mubarak’s mate, the ex-British prime minister, Tony Blair, was prepared to admit that ‘this is a moment of huge opportunity, and not just for Egypt’.

Pundits from the left side of the tracks were also eager to issue their undying approval of the Spring-time Arabs. A New York Times columnist wrote that ‘democracy is good for Arabs as it is for Israelis and Americans’. In the Observer, an op-ed began: ‘It must be bliss to be alive, young and Arab in this dawn of revolution.’ Laurie Penny, the faddish embodiment of middle-class leftism, enthusiastically proclaimed her solidarity with protesters in Tahrir Square. The difference between protesters overthrowing degenerate despots in the Middle East and 150 anti-cuts protesters stood outside Camden Council offices on Euston Road ‘is one of scale, not of substance’, she waxed.

But in June 2012, something terrible happened – at least in the eyes of Western politicians and pundits. The Egyptians, enjoying the freedom to vote in the first free presidential election in Egypt’s history, did something wrong. They voted for the wrong candidate, the one the West wasn’t keen on. The election of Mohamed Morsi of the conservative Muslim Brotherhood, with 52 per cent of the vote, was too much for those in the West who, just 16 months earlier, had been the biggest cheerleaders of democracy. The Arab Spring was no longer to their liking; democracy was not yielding the right results.

Yet the downbeat reaction to Morsi’s election was nothing compared with what happened in July this year. After days of anti-Morsi protests in Tahrir Square attacking the president for his Islamism and his economic failures, the army moved in and deposed Morsi. Morsi supporters launched counter protests, but they were crushed by the military. As it stands, hundreds of Morsi supporters have been beaten, tortured and killed, and Morsi now faces conspiracy charges and, if found guilty, he could be executed.

 Read the rest at:

http://www.spiked-online.com/newsite/article/2013_the_year_the_arab_spring_died/14447#.UriZddLPZ8E

Keynes and Copernicus

The Debasement Of Money Overthrows The Social Order And Governments

By Ralph Benko

The United States Senate moves toward the confirmation of Janet Yellen, now posited for next January 6th, as chair of the Federal Reserve System.   Let us in this moment of recess reflect on eerily similar observations by two of history’s most transformational figures:  John Maynard Keynes and Nicolas Copernicus.

One of Keynes’s most often-cited observations, from his 1919 The Economic Consequences of the Peace, chapter VI, contains an indictment of policies very like those which the Federal Reserve System has been implementing for the past dozen, and more, years.  These policies in slow motion are, in the opinion of this columnist, at the root of  the very political, social, and cultural dysphoria — uneasiness or generalized dissatisfaction — predicted by Kaynes:

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

An almost identical point was made almost four centuries before Keynes by iconic savant and polymath Nicolas Copernicus.

Copernicus commenced a study composed for the Prussian and Polish governments around 1525, On the Minting of Money, with these words:

“ALTHOUGH THERE ARE COUNTLESS MALADIES that are forever causing the decline of kingdoms, princedoms, and republics, the following four (in my judgment) are the most serious: civil discord, a high death rate, sterility of the soil, and the debasement of coinage. The first three are so obvious that everybody recognizes the damage they cause; but the fourth one, which has to do with money, is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way.”

This does not imply plagiarism by Keynes.  The coincidence between Keynes’s “[To debauch the currency] engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose” and Copernicus’s “[The debasement of coinage] … is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way” is, however, striking.

Keynes, like Copernicus a paradigm-shifter, was himself extraordinarily erudite.  It is not impossible the young Keynes came across Copernicus’s work (which reportedly was first actually published in 1826).   The question as to whether Copernicus’s Essay may have inspired Keynes’s observation must be left to authentic scholars such as Lord Skidelsky.

The similarity may be merely that of “great minds working alike.”  This columnist has found but one direct reference by Keynes to Copernicus.

Keynes (whose thinking was mostly, although not exclusively, opposed to the gold standard) was fascinated by one of Copernicus’s most accomplished scientific successors, Sir Isaac Newton.  Newton, also, achieved iconic status, both for his contributions to physics and, as Master of the Mint of Great Britain, as the architect of the modern classical gold standard. Newton’s gold standard was designed along Copernican principles of close correlation toward nominal and intrinsic value.  It served the world very well for almost 200 years.

Keynes was to have addressed the Royal Society of London’s gathering to celebrate the tercentenary of Newton’s birth, an event delayed by the war.  Keynes died a few months before he could present his remarks.  Maynard’s remarks, Newton, the Man, were presented by his brother Geoffrey (and thus might even be characterized as Keynes’s last words).  A brief excerpt:

Why do I call [Newton] a magician? Because he looked on the whole universe and all that is in it as a riddle, as a secret which could be read by applying pure thought to certain evidence, certain mystic clues which God had laid about the world to allow a sort of philosopher’s treasure hunt to the esoteric brotherhood.

…

[H]e became one of the greatest and most efficient of our civil servants. He was a very successful investor of funds, surmounting the crisis of the South Sea Bubble, and died a rich man. He possessed in exceptional degree almost every kind of intellectual aptitude – lawyer, historian, theologian, not less than mathematician, physicist, astronomer.

…

As one broods over these queer collections [of Newton's alchemical writings, which Keynes collected], it seems easier to understand – with an understanding which is not, I hope, distorted in the other direction – this strange spirit, who was tempted by the Devil to believe at the time when within these walls he was solving so much, that he could reach all the secrets of God and Nature by the pure power of mind Copernicus and Faustus in one.

As for Copernicus, On the Minting of Money has been translated into English several times yet those translations remained difficult to obtain for students of the monetary arts and sciences.  It has remained mostly the property of elite historians.  Scant and intriguing references were limited to all-too-brief articles such as “Treatise On the Minting of Coin and Copernicus views on economics”by Leszek Zygner of  Nicolaus Copernicus University.

The full text of Copernicus’s fascinating and invaluable essay remained elusive, that is, until last month.

Laissez Faire Books published a meticulous and fresh English translation from the Latin, with prefatory remarks, bibliography, and invaluable critical apparatus by classicist Prof. Gerald Malsbary. (The volume was co-edited by this columnist and by his  fellow Forbes.com columnist Charles Kadlec, with a foreword by Reagan Gold Commissioner Lewis E. Lehrman, whose eponymous Institute this columnist professionally serves).

 Read the rest at:

http://www.forbes.com/sites/ralphbenko/2013/12/23/keynes-and-copernicus-the-debasement-of-money-overthrows-the-social-order-and-governments/2/

How Savers May Be Forced To Buy Federal Debt

Some of the worst tyrannies of the 20th Century began by expropriating the property of individual citizens

By William Tucker

As still another showdown over the national debt looms, some experts are concerned that the Obama Administration is poised to begin forcing Americans to stock their retirement accounts with low-return government bonds.

Richard Cordray, director of the Consumer Financial Protection Board, told Bloomberg News that his new regulatory agency was mulling a move to control the $20 trillion that Americans have invested for retirement. He specifically mentioned 401(k) plans and IRAs.

“That’s one of the things we’ve been exploring,” Cordray told Bloomberg reporter Carter Dougherty in January. Cordray’s seemingly stray comment was largely ignored by mainstream and financial media, but won the attention of fund managers and economists.

Cordray suggested that “mismanagement” of individual retirement accounts by the nation’s major financial institutions could leave investors exposed, just as those who bought subprime mortgages were left in the lurch during the 2008 housing crisis.

Cordray’s agency is already moving toward regulating 401(k)s and IRAs. In April the CFPB issued a report questioning the “senior designations” that are awarded to individual financial advisors who manage retirement accounts. “In recent years, federal and state regulators, financial industry representatives and consumer groups have been reporting that some financial advisers with senior designations are targeting older consumers and selling them inappropriate and sometimes fraudulent financial products,” warned the report.

Although four financial companies – Fidelity Investments, JPMorgan Chase & Co., Charles Schwab Corp. and the T. Rowe Price Group – handle the largest portion of individual IRAs and companies manage their employees’ 401(k)s, a small portion of financial individual retirement accounts are handled by independent financial advisers.

The April report claimed that the CFPB had jurisdiction under the 2010 Wall Street and Consumer Protection (Dodd-Frank) Act, which directed it to “make recommendations to Congress and the Securities and Exchange Commission (SEC) on best practices.”

“CFPB will be clearly overstepping its bounds if it makes a blatant political move to present itself as a protector of senior citizens,” says Mark Calabria, director of financial regulation studies at the Cato Institute. “Congress chose to leave oversight for retirement products at the SEC and Department of Labor. With the creation of the CFPB, Dodd-Frank is attempting to do for the rest of consumer finance what the federal government has done to the mortgage market — to completely politicize it and subject it to twisted incentives that ultimately cost both consumers and the taxpayer.”

Michelle Muth Person, an officer in the CFPB communications office, declined to be comment on plans to regulate retirement accounts but said that CFPB has “no immediate plans” for intervening in the management of individual accounts.

Despite the reassurance, economists and industry officials are still worried. “The runaway, unaccountable regulators at the Consumer Finance Protection Bureau would like to ‘protect’ the IRAs of U.S. citizens by making them into a $20 trillion ATM for the government,” says economist George Gilder.

Critics fear that the CFPB would claim regulatory authority over IRAs and self-employed person pensions (SEPPs) on the grounds that seniors aren’t capable of handling their accounts and are being defrauded by the firms that manage them.

Then it would argue that corporate stocks and bonds are too risky and funds should be instead in the one safe instrument that is the equivalent of cash –- Treasury bonds, backed by the full faith and credit of the United States. Of course, the returns paid by the federal government are far lower. Treasuries pay low interest rates and when combined with inflation, usually provide a negative real rate of return over time.

For now, almost every dollar in America’s individual retirement accounts is invested in the private sector — which earns higher returns than government debt. “I wouldn’t put it past the government to go after some of that money, almost all which is invested in corporate stocks and bonds or real estate,” says Curtis De Young, founder and CEO of American Pension Services, a leading financial advisory company.

 Read the rest at:

http://www.forbes.com/sites/realspin/2013/12/23/financial-repression-from-the-obama-administration-how-savers-may-be-forced-to-buy-federal-debt/2/

Dinosaurs and Debt

Public Pensions and Social Security

by Michael S. Greve

Public pension systems and Social Security were built decades ago, under very different economic and demographic conditions. Alas, our political institutions are lousy at modernizing the system—even when ruin is just around the corner. A few quick fun facts:

Public Pensions

Andrew G. Biggs (American Enterprise Institute) reports that state and local pensions systems aren’t just woefully underfunded; they’ve also come to pose much graver risks to state and local budgets.

First, pension assets are now about 143% of state and local outlays, up from 49% in 1975. Thus, it’s become three times more expensive for legislatures to amortize funds in down years. Note, in passing, that the system are no better funded than they used to be. Rather, they have “matured.” In the 1970s, there were 4.5 public employees per retiree. Now, the number is 1.75, and falling. Would the last public employee please turn off the lights? Thank you.

Second, as returns in the bond markets have evaporated, pension funds have turned to far riskier investments. Increased volatility means increased risk to state and local budgets. All told, Andy Biggs estimates that the pension risk has increased tenfold over the past four decades.

Social Security

Since 2010, Social Security has been running a sizeable cash-flow deficit, and it will continue to do so from here to eternity. The deficit is covered from a “trust fund,” consisting of something like $2.7 trillion in special-issue Treasury bonds. That money was credited to Social Security in years when the fund ran a surplus, plus interest. When Social Security runs a deficit, Treasury redeems bonds in sufficient amounts and sends the money along. As most everyone knows, this technical account is very misleading: the $2.7 trillion has long been spent; so we’re really talking about new debt. But there you have it.

What happens, though, when the so-called trust fund (or funds—there are two of them, for old age and disability) run out? According to current CBO projections, that will happen around 2031. (It could be sooner—e.g., if something bad happens to the economy.) What then?

What won’t happen is that Social Security stops cutting checks altogether. It will keep collecting payroll taxes and benefit taxes. That will suffice to pay around 77% of benefits. (For details seehere.) What of the rest, though?

It can’t be paid. That’s because the Antideficiency Act (codified in here relevant part at 31 U.S.C. 1341) prohibits the expenditure of money that Congress hasn’t appropriated. So, come to think of it, does the Constitution. That’s what the fictional “trust fund”actually does: it obviates the need to appropriate funds on an annual basis.

 Read the rest at:

http://www.libertylawsite.org/2013/12/23/public-pensions-and-social-security-dinosaurs-and-debt/

There is no such thing as the Mafia

Crony Capitalists Seek Protection

by Angelo M. Codevilla

Mitch McConnell, Senate Republican leader, confessed to big business bureaucrats that he and other Establishment Republicans want to remain their link to government money and favors. According to a Wall Street Journal story (December 16), he asked them to open their wallets lest his kind be overwhelmed — not by Democrats, but by those smelly little Tea Party conservatives — the real threats to the government spending and regulations by which big business thrives.

The confession was almost that forthright: “said one person at the McConnell fundraiser, held at a Capitol Hill townhouse. ‘The main message he was pushing was: Get involved, mainly to teach those who are primarying incumbents that it is not helpful to run against incumbents who are champions for the industry.’”

McConnell is just one of the dozen Republican Establishment senators who are facing challenges by conservatives, who are backed by organizations such as the Club for Growth and the several pro-life organizations. These challengers, always underfunded by huge margins, nevertheless frighten the well-heeled likes of McConnell because they bring to politics a source of votes that money can’t buy: credible commitment to substance. According to John Boehner, House Republican speaker and a stalwart of that Establishment, such challengers or merely the prospect that they might appear, have convinced many Republican congressmen to pay more attention to issues than to the Establishment’s priorities.

Money is the Establishment’s main weapon against challengers with small bank accounts but big followings based on issues. And indeed, big business is stepping up its defense of threatened Republican Establishmentarians.

Big money is forthcoming from classic sources for classic reasons. The Journal story continues: “The U.S. Chamber of Commerce and other business groups have been stepping in to help business-friendly Republicans aligned with the GOP leadership… a sign of worries that tea party-aligned candidates might try to eliminate tax breaks and spending favored by businesses.”

The bargain is classic, and classically corrupt: Politicians vote taxpayer money to cronies, who then recycle part of the money back to the politicians. The corruption is especially evident in McConnell’s case. He made his confession and plea to representatives of the defense industry, who told the Journal’s reporter that their cooperation with the Establishment against the conservatives was all about mutual support for national defense: more money means more defense. But the corruption inherent in such back-scratching bargains is especially obvious and noxious in the case of national defense.

Consider: In 2013, the military budget is an inflation-adjusted $642 billion. In 1988, in the same dollars, it was $515 billion. Yet whereas in 1988 we had an army of twenty divisions, today we have one of ten “division equivalents” – barely able to handle insurgents armed with improvised weapons. Back then we had a six hundred ship navy. Now, the US Navy has 280. Today, we have half the fighter planes of a quarter century ago, and their average age is over a quarter century. In short, the Defense industry is taking more taxpayer money to the bank than ever while delivering far less than half the product.

Industry is not nearly so much to blame for this as are the politicians that write its orders and sign its checks. Rich corporations take money on the easiest terms, as naturally as do poor welfare recipients. Corporate welfare, crony capitalism, is as corrupting as any other kind of welfare. But it is more deadly to America, especially when the cronies on both sides of the table are dealing with military matters.

Read the rest at:

http://www.libertylawsite.org/2013/12/22/crony-capitalists-seek-protection/

Why Greece Will Leave the Euro

As Greece's political and economic conditions worsen, the conventional wisdom about Greece never abandoning the euro will be sorely tested

By Desmond Lachman

According to an old Wall Street adage, when the winds are strong even turkeys fly. If ever there was a case to which this adage would apply, it would be that of the market’s present favor for Greek government bonds. Over the past year, as the market has stretched for yield in a low interest rate global environment, the Greek government’s long-term borrowing cost has declined from over 18 percent to its present level of 8.5 percent. And it has done so despite increased signs that Greece lacks the political willingness to resolve the many deep-seated problems that still characterize the Greek economy. 

Anesthetized by ample global liquidity, markets are simply choosing to ignore many warning signals emanating out of Greece about that country’s political and economic future. They certainly seem to be turning a blind eye to the Greek government’s insistence that Greece has reached the social and political limits as to how much more budget austerity and painful structural economic reform the country can tolerate. They also seem to be disregarding Greece’s stalled IMF-EU negotiations and increased signs that its foot-dragging on real economic reform is causing Berlin’s patience to run out.

A troubling indication that Greece may now be on a collision course with its official creditors was the Greek government’s recent presentation of its 2014 budget without the blessing of either Brussels or the International Monetary Fund. According to the IMF, Greece’s 2014 budget has an unfinanced gap of around €1.5 billion. The IMF also notes that Greece’s efforts at structural economic reform have fallen far short of the country’s commitments under its IMF-EU program, especially in the areas of public sector layoffs and privatization policy. This lack of progress would seem to make it highly improbable that Greece’s official creditors would agree to yet more bailout funds.

Markets also seem to be totally discounting the possibility that the Greek government could fall next year and that the far-left Syriza party, which is not known for supporting the IMF-EU policy prescriptions, could be swept to power. They do so despite the deep divisions that are now clearly apparent in the Samaras coalition government, which has already seen its majority in Greece’s 300-member parliament whittled down to only three members. They also do so despite the very real likelihood that the Greek government will suffer a humiliating defeat in the May 2014 European parliamentary elections that would make it difficult for it to continue governing.

Equally surprising is the market’s apparent equanimity about Greece’s dismal economic outlook, which seems to be driving its political fragmentation. Despite the fact that Greece’s economy has contracted by almost a quarter over the past six years and that Greece’s unemployment rate is around 28 percent, both the OECD and Moody’s are forecasting another small decline in Greek GDP in 2014. They are doing so in recognition of the additional budget tightening that Greece has to undertake to put its public finances on a sounder footing as well as of the ongoing domestic credit crunch that is making it difficult for households and companies to obtain much-needed bank financing.

Read more at:

http://american.com/archive/2013/december/why-greece-will-leave-the-euro

The going rate for sexual assault is just 5.000

America, here’s your cruel, senseless, immoral Drug War….

By Mark J. Perry 

About six weeks ago, I reported the disturbing case of David Eckert (“America’s cruel Drug War now includes forced anal probing of innocent victims by law enforcement agencies“), who was anally raped by law enforcement officials in New Mexico and their medical accomplices in a futile search for drugs that escalated through multiple cavity searches, enemas, and X-rays, and ended up with a forced colonoscopy.

Jacob Sullum reports today in Reason (“Drug Warriors Kidnap and Sexually Assault a Woman After Getting Permission From a Dog“) on another disturbing drug search case that produced no drugs, this time of an innocent 54-year old New Mexican woman who was victimized (kidnapped, sexually/medically assaulted, and raped to be specific) by law enforcement officers and their medical professional accomplices. In a failed attempt to find drugs following a false positive alert by a dog, the victim was subjected to multiple invasive body cavity searches of her vagina, buttocks and rectum by two different doctors, a forced enema, a forced X-ray, and an forced CT scan.

Result: No contraband. Then to add insult to injury, the victim refused to sign a consent form and is now being billed $5,000, apparently the “going rate for sexual assault and gratuitous radiological bombardment” as Jacob Sullum aptly describes it.

Jacob provides all of the gory details and then ends with this insightful commentary:

This kind of abuse tends to draw attention only when the victim is “innocent,” meaning he or she is not in fact smuggling drugs. But how can any society call itself civilized when it allows human beings to be treated this way in the name of locating arbitrarily proscribed substances? Having arrogated to itself the authority to regulate what people put into their own bodies, the government ends up forcibly delving into those bodies in search of the chemicals it has anathematized. To enforce politicians’ pharmacological prejudices, the government’s agents and their medical accomplices become kidnappers and rapists. There is nothing noble or decent about this immoral crusade, and anyone associated with it ought to be ashamed of himself.

 Read more at:

http://www.aei-ideas.org/2013/12/america-heres-your-cruel-senseless-drug-war/