Europe's borrow-and-spend train rolls on

What austerity?

There has been a lot of talk about the EU countries tightening their belts. The data indicate profligacy instead of prudence

By NEIL REYNOLDS

In a 2011 review of government spending in the countries known as Euro27, the European statistical agency tracked public expenditures from 2006, before the Crash, through 2010. Among other conclusions, Eurostat determined that austerity - whatever it was - had yet to reduce government spending. Only by the merest of margins, the agency said, could it document any real, absolute reduction in spending. Indeed, Euro27 governments spent €6.2-trillion ($8-trillion) in 2010: 50.8 per cent of Europe's GDP. Four years earlier, they had spent only 45.6 per cent. By this measure, European austerity has increased public spending by 12 per cent in four years.

How Sweden and Switzerland handle debt, taxes and spending

Heading for Taxmaggedon

by Keith Chrostowski

It’s just never-ending, this standoff in America over taxes, spending and deficits.

For three decades, we’ve stood firm on our particular ideological ramparts, seeing any solution that tilts even slightly toward the opposing philosophy as total surrender.

But other countries have picked their budgetary deadlocks. And they didn’t go all in on austerity or continue bottomless spending that pushed their countries off the debt cliff.

In sensible Switzerland, 85 percent of voters in 2001 approved a “debt brake.” It requires that spending by the central government grow no faster than trendline revenue.

Recession and Recovery

Six Fundamental Errors of the Current Orthodoxy

by Robert Higgs

As the recession has deepened and the financial debacle has passed from one flare-up to another during the past seven or eight months, commentary on the economy’s troubles has swelled tremendously. Pundits have pontificated; journalists and editors have reported and opined; talk-radio jocks have huffed and puffed; public officials have spewed out even more double-talk than usual; awkward academic experts, caught in the camera’s glare like deer in the headlights, have blinked and stumbled through their brief stints as talking heads on TV. We’ve been deluged by an enormous outpouring of diagnosis, prognosis, and prescription, at least ninety-five percent of which has been appallingly bad.

How smokers’ rights are being vapourised

The anti-smoking lobby has now targeted electronic cigarettes in order to crack down even on the ‘notion’ of smoking

by Jason Walsh 

In the battle for smokers’ rights, it is fair to say that those who like to indulge in the ‘evil weed’ have been on the losing side so far. Few people want to stick up for smokers and those who do argue for free choice are frequently accused of harbouring a sinister commercial agenda.

It’s not hard to see why smoking may not exactly be popular. Many people find tobacco smoke fairly unpleasant and the health dangers of active smoking are certainly real. In the absence of a real commitment to freedom in society, no permanent compromises with smokers are possible, no matter how much they segregate themselves from the rest of society. As such, the strictures on smoking have long passed from simple public-health measures and into the territory of behavioural control via legislation. How else can anyone describe the crazed idea of  (previously known as the lingering smell of burnt tobacco)?

An energy policy for dimwits

The UK government’s new energy strategy is about muddling through, not powering society forward

by Rob Lyons 

Yesterday, the UK government published a draft Energy Bill. The bill’s measures would mean rising energy costs and greater encouragement for new nuclear power and renewables, but underpinning it all is the aim of making us use less not do more.

Things used to be so much simpler. The name of the game was to provide energy as cheaply as possible - and that meant fossil fuels, which were not only cheap but abundant, easy to use, flexible and reliable. In reality, not much has changed. According to the International Energy Agency (IEA) report, World Energy Outlook 2011, in 2009 the world was powered by oil (33 per cent of total energy), coal (27 per cent), gas (21 per cent), biomass and waste (10 per cent) and nuclear (about six per cent) (1). Renewables - including not only wind and solar but hydro power, too - provided just three per cent. ‘Dirty’ fossil fuels thus provided 81 per cent of the world’s energy.

Sitting at the Edge of the World

Fighting against windmills

“Very few beings really seek knowledge in this world. Mortal or immortal, few really ask. On the contrary, they try to wring from the unknown the answers they have already shaped in their own minds -- justifications, confirmations, forms of consolation without which they can't go on. To really ask is to open the door to the whirlwind. The answer may annihilate the question and the questioner.”

                                -Anne Rice.

By Mark Grant

One way or another, left or right, the funder or the funded; Greece is going. The situation is just not sustainable and $1.3 trillion in debt is going to be refuted and refuted with consequences that one only hopes the European Union acknowledges and is prepared for past the drivel that they spew out in the Press like Mount Vesuvius throwing up the phlegm of the world on some ashen afternoon in Rome. Sovereign debt, bank debt, municipal debt, $90 billion in derivatives, corporate debt and other obligations of the government left out to dry as Germany reeks with the stench of boars head gone bad.  This is about to be the way of it.

Interpreting India to the West

“Sorrow and the release from sorry.” 

By IRVING BABBITT

Buddhism, as is well known, has practically disappeared from the land of its origin. The older and more authentic form of the doctrine known as the Hīnayāna, or Little Vehicle, is found to-day chiefly in Ceylon, Burma, and Siam; the less authentic form of the doctrine known as the Mahāyāna, or Great Vehicle, which is less a religion than a system of religions, is found chiefly in Tibet, China, and Japan. Dr. Coomaraswamy has undertaken to give an account of both forms of the doctrine as well as to sketch the development of Buddhist art through the ages. His volume may be found useful by those who wish to get a first rapid impression of a vast and difficult subject. But from this point of view it is only a compilation, and the author does not claim anything more for it. His book, he says, “is designed not as an addition to our already overburdened libraries of information, but as a definite contribution to the philosophy of life.” It is as such that I propose to consider it.

"Growth" = Spending Other Peoples Money

The EU Political Game of Growth Vs Austerity is Akin to Polishing the Brass on the Titanic

By Graham Summers

France and other, weaker EU members have begun pushing for “growth.” This in of itself reveals how clueless the political elite in the EU are (economic growth in Europe is synonymous with living beyond one’s means and/or living off of others… the very policies that have lead to the EU Crisis).

Indeed, this shift from focusing on austerity to growth is really just a switch from one side of a coin to the other… without actually addressing the fact that the coin itself has no value as a concept.

Let me explain.

Predictions are mostly about the past

Feedback, Unintended Consequences and Global Markets

by Charles Smith

We cannot know that unintended consequences will always be destructive. Neither models nor projections have accurate track records in predicting the future. 

It seems an appropriate time to re-examine why our ability to predict the future of complex systems is so poor. A significant number of well-informed, smart people believe the Euro Experiment is unraveling in a positive feedback (i.e. self-reinforcing) death spiral.

What Are the Purposes of a Foreign Policy?

Liberty and Peace

By ROBERT A. TAFT

No one can think intelligently on the many complicated problems of American foreign policy unless he decides first what he considers the real purpose and object of that policy. In the letters which I receive from all parts of the country I find a complete confusion in the minds of the people as to our purposes in the world — and therefore scores of reasons which often seem to me completely unsound or inadequate for supporting or opposing some act of the government. Confusion has been produced because there has been no consistent purpose in our foreign policy for a good many years past. In many cases the reason stated for some action — and blazoned forth on the radio to secure popular approval — has not been the real reason which animated the administration.

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.