The magical money-growing trees

As France Lowers Retirement Age, Germany Better Be Ready To Pay For Austerity's Unwind

By Tyler Durden

As noted earlier, Europe has been so obviously crippled by years of brutal austerity (which, as we pointed out before never actually happened), that it has had to experience the supreme indignity - a miserable two years of plunging flat GDP growth. Because under the old normal, it appears that unless one is issuing massive debt, pardon "growing", society grinds to a halt. 

Well, it appears that France has finally had enough, and as of today, "the French government approved a measure Wednesday that will lower the retirement age to 60 from 62 for a narrow group of workers, partly reversing unpopular pension reforms made by former President Nicolas Sarkozy as he sought to improve France's public finances." Obviously, this means that more welfare funding will have to be sourced as all else equal, this means less money will be produced by the country's workforce, and more money will be consumed by its retirees.

Immoral Beyond Redemption

When you have made evil the means of survival, do not expect men to remain good

by Walter E. Williams

Benjamin Franklin, statesman and signer of our Declaration of Independence, said: "Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." John Adams, another signer, echoed a similar statement: "Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." Are today's Americans virtuous and moral, or have we become corrupt and vicious? Let's think it through with a few questions.

Suppose I saw an elderly woman painfully huddled on a heating grate in the dead of winter. She's hungry and in need of shelter and medical attention. To help the woman, I walk up to you using intimidation and threats and demand that you give me $200. Having taken your money, I then purchase food, shelter and medical assistance for the woman. Would I be guilty of a crime? A moral person would answer in the affirmative. I've committed theft by taking the property of one person to give to another.

Conspiracies and How to Defeat Them

Government is the great fiction through which everybody endeavors to live at the expense of everybody else

By Jeffrey Tucker

Someone asked me the other day if I believe in conspiracies. Well, sure. Here’s one. It is called the political system. It is nothing if not a giant conspiracy to rob, trick and subjugate the population.

People participate in the hope of making our lives better, or at least curbing the damage government does. Yet look at the results: exactly the opposite. No matter who is selected as temporary front men to “reform” the system, the regime thrives and the population withers.

It should be obvious by now that reform doesn’t happen by drawing ever more people into the ranks of the oppressor class. But somehow, people keep getting pulled in. What’s more, the regime is fully aware of this, even if the population is not. So, yes, I would call it a conspiracy.

Why This Time IS Different

The EU’s Systemic Risk

Europe will collapse before the end of the year and very likely before the end of the summer. When this Crisis hits it will be worse than 2008. And the world Central Banks will not be able to control the damage.

What makes this time different?

Several items:

1)   The Crisis coming from Europe will be far, far larger in scope than anything the Fed has dealt with before.

2)   The Fed is now politically toxic and cannot engage in aggressive monetary policy without experiencing severe political backlash (this is an election year).

3)   The Fed’s resources are spent to the point that the only thing the Fed could do would be to announce an ENORMOUS monetary program which would cause a Crisis in of itself.

Let me walk through each of these one at a time.

Why We'll Never Run Out of Oil

It is not as much a question of physics as it is one of economics

 The notion that world oil production had reached its summit and would soon begin a decline was in great vogue not so long ago.

By A. Barton Hinkle

Remember the term “peak oil”? Whatever happened to it?

The notion that world oil production had reached its summit and would soon begin a decline—bringing with it shortages, economic collapse, resource wars, and general ruination—was in great vogue not so long ago.

"Is global oil production reaching a peak?” asked the BBC in 2005. “We are approaching peak oil sooner than many people would have guessed,” said The Houston Chronicle three years later. Two years after that, The New York Times reported on a group of environmentalists who “argue that oil supplies peaked as early as 2008 and will decline rapidly, taking the economy with them.”

Is Greece European?

From the point of geography and geopolitics, Greece will be in play for years to come

By Robert D. Kaplan

Greece is where the West both begins and ends. The West -- as a humanist ideal -- began in ancient Athens where compassion for the individual began to replace the crushing brutality of the nearby civilizations of Egypt and Mesopotamia. The war that Herodotus chronicles between Greece and Persia in the 5th century B.C. established a contrast between West and East that has persisted for millennia. Greece is Christian, but it is also Eastern Orthodox, as spiritually close to Russia as it is to the West, and geographically equidistant between Brussels and Moscow. Greece may have invented the West with the democratic innovations of the Age of Pericles, but for more than a thousand years it was a child of Byzantine and Turkish despotism. And while Greece was the northwestern bastion of the anciently civilized Near East, ever since history moved north into colder climates following the collapse of Rome, the inhabitants of Peninsular Greece have found themselves at the poor, southeastern extremity of Europe.

Spain Capitulates

The Reign In Spain Is Over

By Mark Grant

Spain has now officially asked the European Union for aid for its banks. The markets seem to be responding as if the bank issue is isolated. It is not isolated. We are following the same schematic as we did with Ireland; first it was the banks and then it was the country and then the “Men in Black” showed up to take over. Spain says it is a 50 billion Euro problem and the reality is probably more like a 400 billion Euro problem. 


There is all kinds of cross lending between the banks in Spain and while Spain’s largest two banks have tried everything they could to isolate themselves; I predict there will be no escape for anyone. Now that Spain has asked for a bailout of their banks the European auditors will show up and I would bet large money that the values of many loans and the value of Real Estate and the securitizations tied to it will be found to have been vastly overstated. Then it will be the regional governments and their debts and the house of cards will implode. The Spanish Finance Minister kicked off the first domino this morning and we can all just stand by now and watch the rest fall.

The We-Fixed-Nothing Chickens Are Coming Home to Roost

Paying interest on debt that wasn't invested in productive assets and that has no collateral to back it is a fiscal black hole

When the real problems are masked with fake "solutions," the chickens eventually come home to roost, and we wake up to the reality that the fake "solutions" have only made things much worse.

by Charles Hugh Smith

The reality that the global Status Quo has fixed absolutely nothing in four years is finally coming to roost in the global economy. Though there is an endless array of complexity to snare the unwary, the source of instability is both visible and easily understood: too much debt that will never be paid back. Making matters much worse, much of the money that was borrowed--by sovereign governments, local governments, households and private enterprises--was squandered on consumption or malinvestments, and so there are precious few assets or collateral underlying the debt.

Even when there is an asset--for example, a vacant house in a vacant development in Spain, or a Greek bond--the market value is considerably lower than the purchase price.

The essence of our values is the rule of law, not the rule of presidents.

Obama's Secret Kill List

By Andrew Napolitano 

The leader of the government regularly sits down with his senior generals and spies and advisers and reviews a list of the people they want him to authorize their agents to kill. They do this every Tuesday morning when the leader is in town. The leader once condemned any practice even close to this, but now relishes the killing because he has convinced himself that it is a sane and sterile way to keep his country safe and himself in power. The leader, who is running for re-election, even invited his campaign manager to join the group that decides whom to kill.

Capitalist haven

British traditions boost the de facto state of Somaliland

By Lawrence Solomon

It’s the only African country that doesn’t rely on foreign aid from the world’s rich governments. It’s a Muslim country in Africa that has had a functioning democracy for two decades. It’s an oasis of relative peace in one of the most vicious regions of the world, with a growing free-market economy, low inflation and a currency that has been appreciating against the U.S. dollar.

This anomaly of a country, Somaliland, is unrecognized by any other country in the world, even though the World Bank’s chief economist for Africa touts it as a “success story” and the World Bank itself doesn’t formally recognize it. Somaliland’s story is all the more astonishing given that it is officially part of Somalia, a failed state best known for its piracy at sea and al-Shabaab terrorists on land, and given that it declared independence in 1991 after surviving a brutal repression by Somalia’s Marxist dictator that dispersed much of its population to the U.K., Canada and other safe havens.

The Ugly Truth About Social Security Is Revealed

The money is no longer yours. Deal with it

By John Tamny

A recent front page USA Today story inadvertently exposed the lie that is Social Security. Though the article was ostensibly about budget deficits, and how unfunded liabilities of the Social Security variety were not properly being accounted for in deficit calculations (they quadruple taxpayer liability), a staff expert at a liberal think tank shed light on why.

Sure enough, and despite the protests for years from big government apologists that our Social Security funds are secure, it turns out they’re not. We know this now not because we’re logical, or because some libertarian said so, but because Jim Horney at the liberal Center on Budget Priorities told us exactly that.

An amazing example of why this country is headed in the wrong direction

Honor student placed in jail for tardiness and truancy at school

By Simon Black

This past Friday, Barack Obama was at a Minneapolis-area Honeywell plant touting his economic recovery credentials to cheering disciples. One of the excited faithful was a young boy, fifth-grader Tyler Sullivan, who took the day off from school to hear the President speak.

The President was full of the usual bombast about how Congress needs to work with him to 'build a strong economy', and how he wants to get $3,000 to everyone in the American middle class so that people can go out and buy 'thingamajigs'.

Europe’s Screwed Generation and America’s

It Can Happen in US 

As the boomers have held on to generous jobs and benefits, their children have given up on raising families

by Joel Kotkin  

In Madrid you see them on the streets, jobless, aimless, often bearing college degrees but working as cabbies, baristas, street performers, or—more often—not at all. In Spain as in Greece, nearly half of the adults under 25 don’t work.

Call them the screwed generation, the victims of expansive welfare states and the massive structural debt charged by their parents. In virtually every developed country, and increasingly in developing ones, they include not only the usual victims, the undereducated and recent immigrants, but also the college-educated.

The End of the Euro

A Survivor's Guide

The ECB has always vehemently denied that it has taken an excessive amount of risk despite its increasingly relaxed lending policies. But our estimate says differently.

By Peter Boone and Simon Johnson

In every economic crisis, there comes a moment of clarity. In Europe soon, millions of people will wake up to realize that the euro-as-we-know-it is gone. Economic chaos awaits them.

To understand why, first strip away your illusions. Europe’s crisis to date is a series of supposedly “decisive” turning points that each turned out to be just another step down a steep hill. Greece’s upcoming election on June 17 is another such moment. While the “pro-bailout” forces may prevail in terms of parliamentary seats, some form of new currency will soon flood the streets of Athens. It is already nearly impossible to save Greek membership in the euro area. Depositors flee banks, taxpayers delay tax payments, and companies postpone paying their suppliers — either because they can’t pay or because they expect soon to be able to pay in cheap drachma.

The Cause of Inequality: Family Breakdown

American Caste

By Kay S. Hymowitz
When Charles Murray’s best-selling Coming Apart: The State of White America, 1960–2010 appeared a few months ago, the book’s fictional working-class neighborhood, Fishtown, became one more battleground in America’s 50-year-old culture war. Fishtown was representative, Murray argued, of a new white underclass in America—one produced by cultural decline, especially the collapse of marriage. Critics objected that the real source of misery in the nation’s Fishtowns wasn’t a lack of marriages; it was the extinction of manufacturing jobs. The disagreement was familiar to culture-war veterans: conservatives versus liberals, family breakdown versus dearth of good jobs, culture versus economics, David Brooks versus Paul Krugman.

A Continental Fantasy

Simple-mindedness and megalomania characterize the “European project”

By Theodore Dalrymple

On a flight from Copenhagen to Brussels, I read two publications that I see infrequently: the International Herald Tribune and Le Soir, the principal Belgian newspaper in French. Both, not surprisingly, had much coverage of the European crisis, and both used an expression that, to me, has a sinister ring: the European project.

As it happens, I was once interviewed by one of Le Soir’s best-known journalists, who asked me whether I was in favor of the European project. I said that I would answer if she would tell me what it was. She did not, and we moved on to other subjects. Whatever the European project may be, those who don’t embrace it wholeheartedly—with a fervor that can only be described as mystical, considering that no one can explain or define it in simple terms— are depicted not as skeptics, but as enemies. Thus in Le Soir, we read: “Only the enemies of the Euro and of the European political project, notably the City of London, dream of such a cataclysm [the break-up of the single currency]!”

We're saved!

Official Panic Hymn Intoned by Famous Out-of-Tune Choir

by Pater Tenebrarum

In Europe, everybody seemed eager to get his 2 cents in as the crisis once again intensified.

Alexis Tsipras again promised his followers the impossible – namely that he alone could square the circle and deliver both more spending by the government by 'canceling the bailout' and let Greece retain the euro – whereby it should be noted that no-one can be 100% sure if he will or won't be able to blackmail the rest of the euro-group, but our guess remains that the answer is actually no.

War by Other Means

Stuxnet and Flame 

By PHILIP GIRALDI

I was one of the first to report about the source of the Stuxnet computer virus in The American Conservative magazine back in December 2010.  It was created in an Israeli laboratory at its Dimona nuclear facility. The New York Times picked up the story over a year later.  We have now learned, from a deliberate leak, that the US National Security Agency and Department of Energy helped the Israelis to develop the virus and that an infected component was placed in the Iranian computer network with the assistance of the CIA (apparently using an agent affiliated with the Mujaheddin e Khalq supplied by the Israelis).

Doves or Pigeons?

Strictly for the Birds

by Theodore Dalrymple 

From the window in my study I can see the bird table in our small garden. Although I am no ornithologist, I can tell a hawk from a handsaw, or rather a thrush from a jackdaw, and the behaviour of the birds amuses me greatly. It sometimes distracts, or perhaps I should say diverts, me from what I should be doing.

Every morning and evening I put out seeds for them. We have reached such a state or refinement of consumerism that even seed mixture sold for the birds is now attractive and even appetising; it looks like muesli for very small people, and is no doubt fortified with all kinds of minerals and vitamins. I think there have probably been times in human history when people were given worse to eat.

Repudiating the National Debt

Paying off a national debt would quickly bankrupt the entire country

by Murray N. Rothbard, June 1984

In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of one trillion dollars. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles.