Why Merkel and Hollande Will Make it Work

Overselling the Rift

By JACOB ALBERT

The leadup to the fateful meeting this past Tuesday between Francois Hollande and Angela Merkel was billed as a make-or-break moment for the foundering European Union. The European commentariat worked overtime to heighten the drama. “Berlin officials had worked feverishly behind the scenes to create the best possible impression of harmony before the visit, and tried in vain to downplay its significance,” gasped the Guardian. “But it was clearly far more than that, with two politicians who had never met before coming together to see not only if they could get on, but if they could work together to solve one of the most intractable problems Europe has faced since the second world war.” It’s hard to overstate the challenges facing the EU at the moment. But the anxious tone accompanying the summit was certainly overdone. For anyone with eyes, the chances of Merkel and Hollande being able to find a common ground always seemed like a good bet.

Big Lies in Politics

Nothing is easier for a politician than promising government benefits that cannot be delivered

By THOMAS SOWELL  

The fact that so many successful politicians are such shameless liars is not only a reflection on them, it is also a reflection on us. When the people want the impossible, only liars can satisfy them, and only in the short run. The current outbreaks of riots in Europe show what happens when the truth catches up with both the politicians and the people in the long run.

Among the biggest lies of the welfare states on both sides of the Atlantic is the notion that the government can supply the people with things they want but cannot afford. Since the government gets its resources from the people, if the people as a whole cannot afford something, neither can the government.

No ELA, No Euros! The End!

The mechanics of a Greek bank run

By David Zervos

As the Greek people begin to smell a Greek exit and a conversion of their hard earned Euro deposits back to Drachmas, they will withdraw Euros from Greek banks. So the Greek banks will head to the BoG with some dubious collateral to beg for Euros to pay depositors. The BoG takes the collateral, gives it a minuscule haircut, and draws Euros via the ELA. This of course creates an increase in BoG Target2 liabilities. The BoG then sends the Euros to the Greek bank and the Greek bank then gives the Euros to the hard working Greek depositor standing in line waiting to empty the account.

Importantly, Greek banks ONLY run out of Euros if the ECB can justify a shut down in funding to the BoG ELA facility or the Greek banks directly. Now, as we heard last week, the ECB has already stopped OMOs with 4 Greek banks (which one could safely assume are the big ones). So the ONLY thing standing between a Greek depositor and his/her Euros is the ELA. No ELA, no Euros!! And, as mentioned above, the ECB has once before threatened to turn off NCB access to Euros via the ELA in the case of Ireland. So there is a precedent for this to happen again!

The Slow Death of the Modern Nation State

The Looming Reversal of Centralization

 “Centralization induces apoplexy at the center and anemia at the extremities.” ~ Lamenais

By Paul Tuccinardi

The present political system is clearly insane. It suffers from schizophrenia. Around the world, almost no one trusts the politicians, yet almost everyone votes for incumbent politicians who promise to reform the government.

Voters now suspect (correctly) that all Western governments are headed for bankruptcy because of the pension programs and government-funded medicine, yet these two programs are politically untouchable. Voters demand them.

For four decades, soft-core critics of the pension/Medicare systems have come to voters with this announcement: “The two systems can be reformed, but we must act now. If we delay, they will bankrupt the government.” Yet the systems are never reformed.

Ratcheting Up The Crisis In Europe

Elections in Greece can’t cause as much trouble as bank runs in Barcelona or Turin

By WALTER RUSSELL MEAD

“Crisis in the eurozone” stories are getting boring and this is one two year old soap opera the world would just as soon see disappear. Nevertheless it grinds on; yesterday the German finance minister said it could go on for another two years.  Unfortunately, he’s right.

But while the news from Europe is complicated and inconclusive (they are always threatening to jump off the bridge but so far, no one has), this is still a story one has to watch. And after months and years when the crisis was mostly in the hands of elites — heads of government, central bankers and the like — in the last couple of weeks the public has been getting involved, and that makes the crisis more dangerous and harder to solve.

A Weekend At Bernie’s

Support for Greece Declared – Sort Of

By Pater Tenebrarum

The markets last week gave our vaunted policymakers on both sides of the pond something to chew over, and the G8 palaver this weekend was marked by the usual sotto voce declarations that the once again budding crisis would be stopped dead in its tracks by whatever interventions are required.

Considering the fact that the financial markets are nowadays seemingly mainly populated by traders suffering from a special form of attention deficit disorder (this includes the mindless computer trading programs of various types that are active in the markets),  we can imagine that these declarations may create a short term bounce in 'risk' – whether it lasts for mere hours or a few days remains to be seen.

Italy And The Great Tax Revolt

The only difference between shakedowns by private thugs and those employed by the state is the badge

mark-2-16 "...why does he eat with tax collectors and sinners?"

by James Miller
Taxation is theft.
There is no denying this.  If I and a few brutes appeared at the door of an unsuspecting individual and demanded monetary compensation less we drag him off to jail, this would be a clear cut case of robbery.  It is a common tactic used by mobs or street gangs to offer protection with the barrel of a gun.  The only difference between shakedowns by private thugs and those employed by the state is the badge.  The badge legalizes extortion and imprisonment.

A Lifetime Of Serfdom

Spain's Public Servants

by J. Luis Martin 

They are cast as lazy and inefficient bureaucrats who don't work hard, take long coffee breaks and enjoy too many perks for being on the taxpayers' payroll. Indeed, the cliché is as universal as unfair. However, the Spanish civil service system exemplifies many of the things that are utterly wrong in the way the country is managed.

The Spanish public sector at a glance

Spain's civil service (función pública) remained virtually unchanged until the 1960s, when its rigid nineteenth-century French fonction publique mold was broken to allow for a more open Anglo-American model. In essence, this meant that access to the civil service was no longer exclusive to competitive examination and merit, as other schemes of recruitment were introduced. 

Η ομαδική αυτοκτονία ως μέσο γεωπολιτικής πίεσης

Πού θα οδηγήσει μια επιστροφή στη δραχμή

Νίκος Καραμούζης

Αγωνιούμε όλοι σήμερα για την πορεία της χώρας. Το εξωτερικό περιβάλλον επιδεινώνεται, σε συνάρτηση με την αύξηση της αβεβαιότητας στην Ελλάδα, ιδιαίτερα μετά το πρόσφατο εκλογικό αποτέλεσμα και την προκήρυξη νέων εκλογών. Το εκλογικό σώμα απέρριψε και τιμώρησε τα δύο πρώην μεγάλα κόμματα εξουσίας για τα πεπραγμένα δεκαετιών, αποδίδοντάς τους την ευθύνη για τη σημερινή κρίση και τον διεθνή διασυρμό της χώρας.

Παράλληλα όμως απέρριψε το εφαρμοζόμενο πρόγραμμα δημοσιονομικής και οικονομικής προσαρμογής, το μνημόνιο, γιατί δεν πείστηκε ότι προσφέρει ελπίδα και προοπτική έγκαιρης εξόδου από την κρίση, ότι οδηγεί στην επανεκκίνηση της οικονομίας, στη δημιουργία θέσεων εργασίας και στη διατηρήσιμη ανάπτυξη. Δηλαδή απέτυχε να πείσει ότι οι θυσίες των εργαζομένων θα πιάσουν τελικά τόπο, εξέλιξη που μας υποχρεώνει να επαναδιαπραγματευθούμε πτυχές του μνημονίου.

US Taxation Myths

The U.S. tax code is more progressive and European than you think

By Veronique de Rugy 

Americans often tout the contrast between the bloated, tax-funded welfare states of the Old World and our leaner, cheaper government. But the data reveal that the U.S. may be closer to Europe than we think.

Contrary to common belief, the American tax system is more progressive than those of most industrialized democracies. A 2008 report by the Organization for Economic Cooperation and Development (OECD), titled “Growing Unequal,” gave two different estimates of the progressivity of tax systems in 24 industrialized countries. One ranking found that the U.S. has the most progressive tax structure; in the other Ireland beat America by a nose. France, which has a notoriously generous welfare state, ranked 10th out of 24 in both of the OECD progressivity indexes.

Other countries have higher tax rates than the U.S. but manage to be less progressive overall. How can this be? The answer is that the rate structure alone doesn’t necessarily tell you much about the progressivity of a country’s tax system. The top rates kick in at much lower income levels in Europe than in the United States, making E.U. tax codes more regressive than ours. 

Beyond Austerity

We must liberalize labor markets, not rely on macroeconomic “fixes.”

by Richard A. Epstein 

Grim is the right word to describe the latest economic news from both the European Union and the United States. Throughout the European Union, austerity programs have failed both politically and economically. In Spain, unemployment rates have soared above 24 percent. The Dutch government is on the edge of collapse because of the popular and political unwillingness to accept the austerity program proposed by its conservative government. Romania is not far behind. Greece, Italy, and Portugal remain in perilous condition. France faces the free-spending socialist candidate Franciose Hollande. On the American front, the decline of GDP growth to 2.2 percent rightly raises fears that our sputtering domestic recovery is just about over.

Fiscal Austerity And Rational Morality

What is the proper purpose, size, and scope of government?

By Richard M. Salsman

Boring as it sounds, “fiscal austerity” has been a hot topic of debate among pundits and political economists in recent weeks, and  I for one think that’s terrific. This is an important debate, well worth having. First, it invites us all to look beyond the mindless histrionics of this year’s campaigning and legislating, and instead to examine a question far more relevant to our long-term security, prosperity and happiness, namely: What is the proper purpose, size, and scope of government? What is government’s nature and what should it be doing, or perhaps more crucially, not be doing? Second, the debate asks how we should be financing the government we have, and whether its spending, taxing, borrowing, and money-printing are moral or not, and practical or not. People should pay attention to this debate, as its outcome will surely affect them.

When Kafka met Orwell

A nightmare in Tewksbury

by George F. Will

Russ Caswell, 68, is bewildered: "What country are we in?" He and his wife Pat are ensnared in a Kafkaesque nightmare unfolding in Orwellian language. 
     
This town's police department is conniving with the federal government to circumvent Massachusetts law -- which is less permissive than federal law -- in order to seize his livelihood and retirement asset. In the lawsuit titled "United States of America vs. 434 Main Street, Tewksbury, Massachusetts" the government is suing an inanimate object, the motel Caswell's father built in 1955. The U.S. Department of Justice intends to seize it, sell it for perhaps $1.5 million and give up to 80 percent of that to the Tewksbury Police Department, whose budget is just $5.5 million. The Caswells have not been charged with, let alone convicted of, a crime. They are being persecuted by two governments eager to profit from what is antiseptically called the "equitable sharing" of the fruits of civil forfeiture, a process of government enrichment that often is indistinguishable from robbery.      

Europe finally awakes from its utopian dream

A defiant Angela Merkel is doing no more than defending the interests of her own electorate

By Janet Daley

Let’s say this again, just in case a single sentient being on the planet has missed it: Germany cannot simply decide to bail Greece (or Spain, or Italy, etc) out of its debts. OK? However much Angela Merkel is nagged, berated, bullied and patronised by Barack Obama, David Cameron, or the BBC/Guardian axis that regard the preservation of the euro project as critical to their own interests, she cannot just revoke, in a unilateral act, the rules of German government or of the Bundesbank.

Her persistent refusal to “take decisive action” of the kind that would suit the purposes of all those clamorous voices at the G8, is not “dithering”, as it is so often described. In fact, it is not (or not entirely) to be explained in any of the mildly contemptuous ways that her tormentors suggest. It does not arise from an unthinking, superstitious terror instilled in her by the Weimar nightmare of hyper-inflation. Nor is it a narrow-minded expression of the German hausfrau’s values of thrift and self-discipline. What Mrs Merkel is doing, quite appropriately, is defending the integrity of her national constitution, the economic principles on which her country’s economic success has been built, and the interests of her own electorate.

The Age of Innocence

The customer is always right

By DAVID BROOKS

The people who pioneered democracy in Europe and the United States had a low but pretty accurate view of human nature. They knew that if we get the chance, most of us will try to get something for nothing. They knew that people generally prize short-term goodies over long-term prosperity. So, in centuries past, the democratic pioneers built a series of checks to make sure their nations wouldn’t be ruined by their own frailties.

The American founders did this by decentralizing power. They built checks and balances to frustrate and detain the popular will. They also dispersed power to encourage active citizenship, hoping that as people became more involved in local government, they would develop a sense of restraint and responsibility.

A shrinking share of the population is carrying an ever-expanding army of dependents

As the Boomers Head for the Barn

by Patrick J. Buchanan

When the April figures on unemployment were released May 4, they were more than disappointing. They were deeply disturbing.

While the unemployment rate had fallen from 8.2 percent to 8.1 percent, 342,000 workers had stopped looking for work. They had just dropped out of the labor market.

Only 63.6 percent of the U.S. working age population is now in the labor force, the lowest level since December 1981.

During the Reagan, Bush I and Clinton years, participation in the labor force rose steadily to a record 67 percent. The plunge since has been almost uninterrupted.

Here is a major cause of the economic malaise of the 21st century, a condition over which a president has little control. A shrinking share of our population is carrying an ever-expanding army of dependents.

Read the rest at: http://takimag.com/article/as the boomers head for the barn

Judge Katherine Forrest is a Modern American Hero

It is the right of the people to alter or abolish any government that becomes destructive to liberty

by John Aziz

Sometimes, the greatest deeds are done by those who are just doing their jobs, like Judge Katherine Forrest who last week struck down the indefinite detention provision (§1021) of the National Defense Authorization Act (NDAA).

It would be all too easy in this age of ever-encroaching authoritarianism in America for a judge ruling on a matter like this to just go with the government line and throw water over the plaintiffs. After all, telling truth to power has consequences. Forrest was appointed by Obama, but after this ruling one wonders whether she is about to meet a career dead-end. Power — especially narcissistic power — does not like being told uncomfortable truths.

Pictures from our own future Horror novel

The Clash of Generations

Prologue: The Last Straw

The day was coming for years, decades, really.

Warnings had been sounded, loud, clear, and often.

Most heard, few listened. The problem was distant, its size unclear.

"No worries. We'll fix it. The next election, the next party, the next leader."

There was time.

There wasn't.

The contract was simple: 100,000 barrels of oil, delivered to this country, at this port, on this day. Payment in Chinese yuan.

The seller was big and always insisted on dollars.

Not that day.

European Illusions

Naming and Shaming the "Guilty Men"

By David Pryce-Jones

The level of unreality created by the masters of Europe is reaching new heights. It is like hallucinating to observe the politicians driving in expensive cars to meet one another, inspecting guards of honor, arranging for ministerial get-togethers, and all the while the construct that put them into office is collapsing all around them. These same politicians chatter extensively about saving the euro and the European Union, about bailouts and firewalls and fiscal pacts, as though words were deeds.

No satirist could do justice to the sight of German Chancellor Angela Merkel and newly elected French President François Hollande shaking hands and vowing to work together to save the union and its currency. Insofar as this pair has any coherent ideas, they disagree. All they have in common is the precariousness of their position. Just trounced in local elections, Mrs. Merkel and her party are well on the way to joining the gathering crowd of electoral rejects. As for Hollande, he believes that growth comes from higher taxes and hundreds of thousands more state jobs, and all in arch-protectionist France. It can’t be long before such socialist illusion comes back to haunt that country.

Will Merkel allow her electorate to become the slaves of Europe?

The Sack of Berlin

"Cries for the ECB to provide liquidity or for debt mutualisation are cries for Germans to work till they’re 67 so Greek crimpers can retire at 50" 

By John Phela

Behind the current rebellion against ‘austerity’ lies the idea that we can carry on as before if only we can screw the money to pay for it out of someone else. But if the bond markets won’t continue to fund them, who do the anti-austerity activists think will?

The most popular answer is ‘the rich’, AKA ‘the 1 percent’. Musing on the Sunday Times Rich List recently, eccentric Labour MP, Michael Meacher observed that 

“the richest 1,000 persons... increased their wealth over the last three years by £155bn. That is enough for themselves alone to pay off the entire current UK budget deficit and still leave them with £30bn to spare.” 

Meacher clearly doesn’t know or doesn’t care how wealth works; the £155bn might not be in the form of cash but (more likely) in the form of assets which would have to be sold for cash which could only then be used to plug the deficit. However, there is no guarantee that these asset values would hold up if these 1,000 rich folks tried to sell £155bn worth at once.

But you also wonder how closely Meacher scrutinized this list