Weidmann Says What No Politician Wants to Hear

Jens Weidmann is no longer his master’s voice

By Jeff Black and Tony Czuczka

Almost a year into his new job as the head of Germany’s Bundesbank, Weidmann, 44, has matured from Chancellor Angela Merkel’s discreet right-hand man at global economic meetings into one of the few European policy makers warning that governments are failing to do what’s needed to rescue the euro.

Après Moi, le Déluge

An awful lot of hogs at the trough

By Mark Laudin

If history has taught one certain lesson, it is that the less fettered an economy, the better humankind is able to do what it does best: run from trouble and run toward opportunity. In this way mistakes are quickly resolved and progress assured.

Conversely, the deeper the muck of regulation, mandates, taxes, subsidies and other bureaucratic meddling, the slower we humans are in following our natural instincts until the point that progress is slowed or even stopped.

It is said that history doesn't repeat itself, but it often rhymes. In the current circumstances, it appears that enough time has passed that current generations have completely forgotten the critical connection between the ability of humans to freely pursue their aspirations and economic progress.

Multiculturalism and the Melting Pot

Is Uncle Sam in real danger?

by John Derbyshire

London Mayor Boris Johnson spoke the other day about the riots that devastated London and other English cities last summer:

"The biggest shock for me from the riots was the sheer sense of nihilism—perhaps I should not have been shocked, but in my view literacy and numeracy are the best places to start. In seven particular boroughs in London one in four children are leaving functionally illiterate. In a few schools it is nearer 50%. We have to intervene at an earlier stage, and I think the mayor can help."

The Times they are A-Changin'

Democracy Could Destroy the Euro

Upcoming elections in France and elsewhere will likely show massive popular resistance to the austerity policies needed to save the common European currency

By MICHAEL SIVY

The euro has survived a string of disasters, from the banking crisis in Ireland to the real estate collapse in Spain as well as nonstop economic chaos in Greece. But now the common European currency faces an even greater threat, one that it may be unable to overcome: democracy.

Quite simply, in most of the countries that make up the euro zone, there is no longer a substantial majority willing to make the sacrifices needed to keep the euro currency system together. This has always been true to some extent. Commentators have long talked about the euro zone’s “democratic deficit,” meaning Europe’s economic system is largely the creation of powerful political and business interests and lacks transparency, accountability and a broad popular mandate. But up until now, support by the elites has been more than sufficient to keep the system intact.

Blaming Capitalism for Corporatism

Government SA

By Saifedean Ammous, Edmund S. Phelps

The future of capitalism is again a question. Will it survive the ongoing crisis in its current form? If not, will it transform itself or will government take the lead?

The term “capitalism” used to mean an economic system in which capital was privately owned and traded; owners of capital got to judge how best to use it, and could draw on the foresight and creative ideas of entrepreneurs and innovative thinkers. This system of individual freedom and individual responsibility gave little scope for government to influence economic decision-making: success meant profits; failure meant losses. Corporations could exist only as long as free individuals willingly purchased their goods – and would go out of business quickly otherwise.

How the Fed Favors The 1%

The Fed is transferring immense wealth from the middle class to the most affluent

By Mark Spitznagel

The Fed doesn't expand the money supply by dropping cash from helicopters. It does so through capital transfers to the largest banks.

A major issue in this year's presidential campaign is the growing disparity between rich and poor, the 1% versus the 99%. While the president's solutions differ from those of his likely Republican opponent, they both ignore a principal source of this growing disparity.

The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm: the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power.

Spain could ruin Europe's Economy

The Pain in Spain

By Robert Samuelson

Just when you thought the world economy might be improving, along comes Spain. It's Europe's next economic domino, struggling to cope with big budget deficits, massive unemployment and an angry public. Will it fail -- and, if so, with what consequences?

As it happens, the $80 trillion world economy splits roughly 50-50 between advanced countries (the United States, Europe, Japan and a few others) and developing countries (China, India, most of Asia, Africa and Latin America). Since the financial crisis, the advanced economies have struggled. In 2012, they will grow a meager 1.4 percent, forecasts the International Monetary Fund. Much of Europe is in recession; the United States (up 2.1 percent) and Japan (2 percent) grow slightly.

England Student Debt Unprecedented

Education is not a free good

By Oliver Staley 

When Alex Winning learned that her university tuition in England for the 2012-2013 year would be triple what her friends in college now pay, she says the idea of that much debt upset her.

“It’s a lot of money to pay back compared to people my age who won’t have that debt,” said Winning, 19, the granddaughter of Jamaican immigrants who will shell out as much as 9,000 pounds ($14,450) a year to study Korean language and politics. “It doesn’t seem fair.”

As the U.S. grapples with record-high college costs and outstanding student loans of $1 trillion, England is embarking on a plan this year that shifts much of the government’s burden of paying for higher education to students and saddles graduates with unprecedented debt.

Zwangswirtschaft Becomes Full-Blown Socialism

YPF Repsol Seized

Argentina's president Fernandez-Kirchner: enjoying the applause of her political cronies following the seizure of YPF. It may not be 'good for the country', but it is definitely going to be good for them. 

By Pater Tenebrarum

First make the company unprofitable by price controls, then blackmail it by revoking its concessions, then steal it – that seems to have been the playbook of  Argentina's government regarding YPF Repsol.

Why Stalin "Lost"

Who Is Lying? The Federal Reserve Or... The Federal Reserve?
By Robert L. Hetzel and Ralph F. Leach

When one thinks of the early 1950's, things that often come to mind are fries and milkshake, muscle cars, Little Richard, and greased hair. Things that rarely come to mind are that the US and China were openly at war over a little piece of land called Korea, that the Treasury market did not exist, that short and long end rates were "fixed" by the Fed at 0.125% and 2.5% respectively, even as inflation was at the highest it has ever been in the post war period at over 20%. What absolutely never comes to mind, is that on March 3, 1951, the world as we know it changed forever, after a little noted event known as the Fed-Treasury Accord of March 3, 1951 took place, and mutated the role of the Federal Reserve, which set off on a path that would ultimately lead to the disastrous economic state the world finds itself in today.

Is There No Escape from the Euro?

A European style divorce is both possible and probable 

By Philipp Bagus

As I discussed recently, the costs and risks of maintaining the eurozone system are already immense and rising. So is an exit possible? Intuitively, the exit from the euro should be as easy as the entrance. Joining and leaving the club should be equally simple. Leaving is just undoing what was done before. Indeed, many popular articles discuss the prospects of an exit of countries such as Greece or Germany.[1] However, other voices have rightly argued that there are important exit problems. Some authors even argue that these problems would make an exit from the euro virtually impossible. Thus, Eichengreen (2010) states, "The decision to join the euro area is effectively irreversible." Similarly, Porter (2010) argues that the large costs of an exit would make it highly unlikely. In the following we address the alleged exit problems.

Legal Problems

The Maastricht Treaty does not provide for a mechanism to exit the European Monetary Union (EMU). Thus, several authors maintain that an exit from the euro would constitute a breach of the treaties (Cotterill 2011, Procter and Thieffry 1998, Thieffry 2011, Anthanassiou 2009).[2] In an ECB working paper from 2009 Anthanassiou claims that a country that exits the EMU would have to leave the EU as well. As the Lisbon Treaty allows for secession from the EU, withdrawal from the EU would be the only way to get rid of the euro.

No, not Italy, and certainly not Spain. Egypt.

On The Forgotten Geopolitical Risk

By Art Cashin

From UBS Financial markets:

"Geo-Politics Still Ignored - Veteran traders have wondered for weeks about the markets whistling past a variety of geopolitical challenges. Yes! Yes! I know about Spain and Italy but they are potential financial crises not truly political ones.

A good example is the deteriorating situation in Egypt. The Muslin Brotherhood went back on it initial promise and backed a candidate for president. That raised the likelihood of a religious government and possible rule by Sharia law.

Live From Athens

"You've Got To Pick A Pocket Or Two"

“It's him that pays the piper.  It's us that pipes his tune  So long, fare thee well  Pip! Pip! Cheerio!  We'll be back soon.”                                          -Oliver, Be Back Soon

The focus has shifted. The all seeing orb is now focused on Spain but it may well turn back to Greece soon. The loan money is exhausted again and the Greeks have elections lined up on Sunday, May 6 which is coincidentally the same day of the French run-off elections. To answer the question of at what point Greece might leave the Eurozone and return to the Drachma is relatively simple; it will be the day when the European loan spigot is shut off. Greece will pander, promise and proclaim until that point and then they will say, “have a nice day and thanks for all the fish.”

Christmas Trees and the Logic of Growth

"Black Swan" Fund Creator Explains Why Central Planning Has Doomed Us All

By Tyler Durden

In a must read Op-Ed in the WSJ, Mark Spitznagel, founder of "fat tail" focused hedge fund Universa, where Nassim Taleb has been known to dabble on occasion, explains the fundamental flaw with central planning, and specifically why "moral hazard" or the attempt to avoid the destructive part of natural cycles, is the greatest unnatural abomination ever conceived by man. His visual explanation should be sufficient for even such grizzled academics who have no clue how the real world works, as the Chairsatan, to comprehend why what he is doing is an epic abomination of every law of nature: "Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of growth, which then invites greater destruction. 

Grope and Change

Hookers bring Secret Service to its knees

By mark steyn

Unlike the government of the United States, I can't claim any hands-on experience with Colombian hookers. But I was impressed by the rates charged by Miss Dania Suarez, and even more impressed by the U.S. Secret Service's response to them.

Cartagena's most famous "escort" costs $800. For purposes of comparison, you can book Elliot Spitzer's "escort" for $300. Yet, on the cold, grey fiscally conservative morning after the wild socially liberal night before, Dania's Secret Service agent offered her a mere $28.

Senator Church’s Prophetic Warning

"We are, like, that far from a turnkey totalitarian state"

By George Washington

Senator Frank Church – who chaired the famous “Church Committee” into the unlawful FBI Cointel program, and who chaired the Senate Foreign Relations Committee – said in 1975:

“Th[e National Security Agency's]  capability at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything: telephone conversations, telegrams, it doesn’t matter. There would be no place to hide.  [If a dictator ever took over, the N.S.A.] could enable it to impose total tyranny, and there would be no way to fight back.“

Now, the NSA is building a $2 billion dollar facility in Utah which will use the world’s most powerful supercomputer to monitor virtually all phone calls, emails, internet usage, purchases and rentals, break all encryption, and then store everyone’s data permanently.

The former head of the program for the NSA recently held his thumb and forefinger close together, and said:

"We are, like, that far from a turnkey totalitarian state"

The American Experiment In Liberty Has Failed

Farmers in human cattle

By Lawrence Hunter

"It is, perhaps, a fact provocative of sour mirth that the Bill of Rights was designed trustfully to prohibit forever two of the favorite crimes of all known governments: the seizure of private property without adequate compensation and the invasion of the citizen’s liberty without justifiable cause…It is a fact provocative of mirth yet more sour that the execution of these prohibitions was put into the hands of courts, which is to say, into the hands of lawyers, which is to say, into the hands of men specifically educated to discover legal excuses for dishonest, dishonorable and anti-social acts."

                           H. L. Mencken, Prejudices: A Selection, pp. 180-82

The American experiment in liberty has failed.  It is only a matter of time before people realize it. Official dogma exulting over the U.S. Constitution, which for so long was propagated through public schools, churches and government mouthpieces, will not forever withstand the exposure of the truth about American democracy now readily available on the Internet.

As France Goes, so Goes Europe?

Europe is coming apart

By Patrick J. Buchanan

When survival is at stake, one may hear from a politician not what he believes — but what he thinks the people deciding his fate wish to hear.

By that standard, what do the people of France, in the final weeks of their presidential election, wish to hear from their candidates?

President Nicolas Sarkozy seems to believe his countrymen are in a deeply nationalistic frame of mind.

Earth Day’s dark side

Guardians of Earth, persecutors of humankind

By Robert Zybrin

Sunday was Earth Day, the annual jamboree of the green movement held worldwide since 1970. Unfortunately, a review of the accomplishments of the advocates of environmentalism and population control since that spectacular debut shows very little reason to celebrate.

The seminal scriptures of modern-day environmentalism were Rachel Carson’s “Silent Spring,” Paul R. Ehrlich’s “Population Bomb” and the publications of the Club of Rome. While stylistically quite different, these books all served to rally the public around a core anti-human philosophy. As the Club of Rome put it, 

“The Earth has cancer, and the cancer is man.” 

Such misanthropic views could only have the most horrific consequences.

Crony Capitalism and the Expansive Central State

Crony Capitalism flourishes in an economy dominated and controlled by a Central State

By Charles Smith

Crony capitalism arises when an expansive Central State dominates the economy. The Central State can then protect crony-capitalist perquisites, cartels, quasi-monopolies and financialization skimming operations of the sort which now dominate the U.S. economy's primary profit centers.

If we step back, the larger context is the purpose and role of establishing a State to protect its citizens from foreign and domestic predation and exploition.