The Chinese Kleptocracy Is Like Nothing Ever Seen In Human History

This Is How It Works

by John Hempton

China is a kleptocracy of a scale never seen before in human history. This post aims to explain how this wave of theft is financed, what makes it sustainable and what will make it fail. There are several China experts I have chatted with – and many of the ideas are not original. The synthesis however is mine. Some sources do not want to be quoted.

The Experiment Has Failed

Finance the government, save the banks, screw the people

By Simon Black

After about an hour’s worth of air traffic congestion delays around JFK airport, I finally departed New York City yesterday evening en route for Vilnius, Lithuania… one of my favorite inconspicuous corners of Europe.

The route took me through Helsinki, Finland for a brief connection, and I was on the ground long enough to witness something truly bizarre: a complete and utter lack of people.

I could practically count on two hands the number of passengers milling around the airport this morning during peak business hours… it was almost something out of a zombie movie.

Ordinarily I would have seen hundreds, thousands of people… and I have in the past as I’ve traversed this route many times before. And no, today was not a holiday.

The Folly of ObamaCare

Is it a case of bad judgment?

By Robert Samuelson

We pay our presidents for judgment, and President Obama committed a colossal error of judgment in making health-care "reform" a centerpiece of his first term. Ahead of the Supreme Court's decision on the Affordable Care Act (ACA) -- and regardless of how the court decides -- it's clear that Obama overreached. His attempt to achieve universal health insurance coverage is a massive feat of social engineering that, by its sweeping nature, weakens the economic recovery and antagonizes millions of Americans.

Let's review why the ACA ("Obamacare") is dreadful public policy:

Energy, Democracy and Freedom

Energy Abundance vs. the Poverty of Energy Literacy

By Kenneth P. Green

Energy is all around us and we consume copious quantities of it. We only question it when it’s expensive or not there. Therein lies a challenge for politics and society

In the midst of all the debate over fossil fuels, we seem to have forgotten this fundamental role of energy in life. We think that all we need energy for is to drive our cars, fly around the world, run our electrical gadgets. But more important is that abundant energy is necessary for our way of life, for our civilization.

If that energy were to vanish, we would find ourselves once again living at the margin, and might well see the end of many things that we don’t associate with an energy supply, including democracy and the freedom and creativity that leisure makes possible. —Daniel B. Botkin

Even though energy is all around us, and we consume copious quantities of it in virtually every form imaginable, most people only really think about energy when one of two things happens: Either they open their mail one day and have an unwanted epiphany when they realize that one of their energy bills has become uncomfortably high—for diesel fuel, electricity, natural gas, heating oil, propane, and so on. Or, they suddenly have one of their energy systems or energy-dependent devices let them down, as, for example, when the electricity goes out; the alarm clock fails; the stove won’t light; the water heater breaks down; the car runs out of gas or has a flat battery; their Kindle, netbook, iPod, or Droid is powerless; or, worse, they wake up to a dead coffeemaker (something that would probably disturb many Americans most of all).

A Whole Different Kind of Innovation

New business models may not be as sexy as new technology. But their impact could be just as great.

By ELIZABETH M. BAILEY AND CATHERINE WOLFRAM

Until 2008, most people paid for their rooftop solar panels upfront, usually laying out at least $15,000 and sometimes as much as $60,000. Such a hefty cost limited the market for residential solar installations to cash-rich homeowners, restricting the potential for growth.

Then came solar leases, which allow customers to make monthly payments. Solar costs have come down, so customers with smaller systems can now pay as little as $100 per month and nothing upfront.

The result: The market has opened up to a whole new group of homeowners.

Since 2010, third-party-owned residential solar installations have taken off, while customer-owned systems have remained flat. In California, the biggest solar market, most customers are now opting for third-party installations.

Outside the Lab

Energy innovation typically calls to mind a scientist in a lab, working with new materials for solar photovoltaic cells, or a new enzyme to convert plant matter to biofuels. As important as such technology innovations are, there is another kind of innovation that is crucial to meeting the challenges associated with energy use.

Greece Is Still Doomed And So Is The Rest Of Europe

Forget The Election Results

 

by Michael Snyder

The election results from Greece are in and the pro-bailout forces have won, but just barely.  It is being projected that the pro-bailout New Democracy party will have about 130 seats in the 300 seat parliament, and Pasok (another pro-bailout party) will have about 33 seats. Those two parties have alternated ruling Greece for decades, and it looks like they are going to form a coalition government which will keep Greece in the euro. 

On Monday we are likely to see financial markets across the globe in celebration mode.  But the truth is that nothing has really changed.  Greece is still in a depression. The Greek economy has contracted by close to 25 percent over the past four years, and now they are going to stay on the exact same path that they were before.  Austerity is going to continue to grind away at what remains of the Greek economy and money is going to continue to fly out of the country at a very rapid pace. Greece is still drowning in debt and completely dependent on outside aid to avoid bankruptcy. Meanwhile, things in Spain and Italy are rapidly getting worse.  So where in that equation is room for optimism?

Right now the ingredients for a "perfect storm" are developing in Europe.  Government spending is being slashed all across the continent, ECB monetary policy is very tight, new regulations and deteriorating economic conditions are causing major banks to cut back on lending and there is panic in the air.

Honor From Our Fathers

Happy Father’s Day!

"My father gave me the greatest gift anyone could give another person: he believed in me."- Jim Valvano

by Dr Zero

Honor is essential to the maintenance of a free society. We learn about honor from our fathers.

When the duties of fatherhood are widely dismissed, or rendered poorly, our understanding of honor is diluted… and freedom soon begins to wither.

This is not to belittle the importance of mothers. Many single mothers do a spectacular job of providing their children with an understanding of personal honor. We can respect and celebrate the achievements of extraordinary individuals, without blinding ourselves to the effect of broad trends upon vast populations. Both fathers and mothers are uniquely important. Our society is suffering from a pronounced deficit of fatherhood.

There are many ways to define honor. I suggest viewing it as an expression of faith, in both yourself and others. An honorable man or woman displays honesty and integrity because they believe others deserve such treatment. It is a sign of faith in other people that we deal honorably with them, and presume they will do the same, unless they prove otherwise. Honor is also a gesture of respect we offer to ourselves, because we have faith that we can succeed without deceit and savagery. If you truly respect yourself, you believe you can win without cheating.

A good father reveals the nature of honor to his sons and daughters through his conduct. He is loyal to his wife and children, despite the easy temptations offered by the modern world. He works to build a better future for them, rather than waiting for it to be dropped in his lap, or demanding others provide it for him. He rejoices in this task, and his joy is so obvious that his family forgives his occasional moments of weariness or frustration. Through marriage, he has chosen duty over indulgence. He sees the intricate beauty of permanence, when the flickering neon light of passing fancy is more obvious. Honor is one of the many frequencies of love.

The absence of a father is a terrible burden for children, and their mother, to bear. I know, because I’m one of the many children who grew up without my father in the house. It’s a pain that is not always easy to understand. What’s missing is too big to be seen clearly. Generations have grown up listening to the seductive lie that fathers are less than critical. They are portrayed as a dangerous accessory, prone to explosion and meltdown, easily replaced by a wad of cash or a government check. Some men have disgraced themselves by allowing this lie to spread, because it suits their convenience. Some women spread it because they have lost faith in the human race, and believe they armor themselves against an inevitable tragedy.

The opponents of freedom spread this lie because they understand honor sustains liberty, and it flows from the loyal union between fathers and mothers. Honorable people carry their freedom with dignity. They understand the difference between charity and dependence. They are energized with faith in themselves, which makes them courageous enough to take risks. Honor builds trust between individuals, enhancing the value of voluntary cooperation.

The honor we inherit from our fathers makes us adventurers, explorers, architects, and paladins. Without it, too many people become predatory, or sessile. Either way, those people are clay to be molded by the will of others. When we act in the name of our fathers, we bear the strength of history. Deprived of this strength, many are trapped forever in the present moment, with past and future beyond their reach. A good father teaches us that the past and future come as a set.

Some fathers are absent without ever leaving the house. To them, I would say that fatherhood is your greatest opportunity to testify, before all Creation, that you are not a beast. Follow its difficult path, in the company of your wife and children, and you may come to understand the true meaning of forever… and then I will envy you, until I am fortunate enough to join you. If you grew up without a father, then I hope you answer the challenge to give your children what you and I did not have. An honorable man understands the world is not fated to lose its battle against entropy. He knows he can help his children make it better. Look upon them, and understand: you are indispensable.

Happy Father’s Day!

It’s Not a Welfare State, It’s a Special Interest State

The concept of ‘welfare’ has become an open, bottomless vessel into which every desire can be poured

By James V. DeLong

One of the most successful linguistic hijackings ever is the Left’s appropriation of the term “welfare state.”

No one opposes the most basic version of a welfare state, one that provides essential public facilities, cares for the destitute and unfortunate, educates children, and protects public health and safety. Indeed, as the Supreme Court said in 1881, during an era regarded by the Left as a dark-age trough, “It will not be denied by any one that these are public purposes in which the whole community have an interest.”

A democratic polity can bicker over the scope of these functions. Some think care for the unfortunate should go a long way in the direction of income redistribution and that protecting public health requires extensive regulation. Others are more cautious. But these disagreements, while sometimes acrid, are within the bounds of civil political contest.

Why Greece Is Still Headed for the Exits

Greek Elections: What they mean for Greece, the euro, the EU—and beyond

By James Pethokoukis

Based on final exit polls, Greece’s New Democracy party will —  narrowly — be the leading vote getter in today’s big elections in Greece, edging out  left-wing coalition Syriza.

Again, this means the Status Quo party (accept the bailout and its condition with some tweaks) has defeated the Stop the Austerity Party (reject the bailout conditions and dare the EU to stop the money) and will have a parliamentary majority. That, of course, if ND successfully enters into a coalition with Pasok, the socialist party.

Here is the breakdown based on those exit poll results:

– New Democracy 127 seats

– Syriza Party 72 seats

– Pasok 32 seats

A Greek Reprieve

The Germans might have preferred a victory by the left in Athens

By WSJ Editors

Europeans—at least the non-Germans—breathed a sigh of relief Sunday as a plurality of Greek voters took a step back from jumping out of the euro zone. Now we'll see what Europe's leaders can do with their latest reprieve.

Tallies as we went to press Sunday indicated the center-right New Democracy party won some 29.5% of the vote, up from its 18.8% showing last month. New Democracy told voters it wants to remain in the euro zone while claiming it would be better able to renegotiate the terms of the Greek bailout provided by the rest of the Europe.

Trailing New Democracy was the hard-left Syriza coalition with 27.1%—up substantially from its count from last time. The center-left Pasok, which dominated Greek politics for a generation and won the 2009 elections, was slated to take a mere 12.3%. Pasok polled only slightly more votes than the combined tally for the Communists and the neo-Nazi Golden Dawn.

New Democracy leader Antonis Samaras has a better chance at forming a government than he did two months ago—if only because failure would mean repeating the protests and violence that seem to increase with each Greek election. Pasok leaders have been coy about joining a New Democracy government, but that may change if the alternative is another election or more chaos.

Secular Religions

Early Secular Communism

by Murray N. Rothbard

During the havoc and upheaval of the French Revolution, the communist creed, as well as millennial prophecies, again popped up as a glorious goal for mankind, but this time the major emphasis was a secular context. But the new secular communist prophets were faced with a grave problem: What will be the agency for this social change? In short, religious chiliasts never had problems about agency, i.e., how this mighty change would come about. The agent would be the hand of Providence, specifically either the Second Advent of Jesus Christ (for premillennialists), or designated prophets or vanguard groups who would establish the millennium in anticipation of Jesus's eventual return (for postmillennialists). King Bockelson and Thomas Müntzer were examples of the latter. But if the Christian millennialists possessed the assurance of the hand of Divine Providence inevitably achieving their goal, how could secularists command the same certainty and self-confidence? It looked as if they would have to fall back on mere education and exhortation.

The secularist task was made more difficult by the fact that religious millennialists looked to the end of history and the achievement of their goal by means of a bloody apocalypse. The final reign of millennial peace and harmony could only be achieved in the course of a period known as "the tribulation," the final war of good against evil, the final triumph over the Antichrist.[1] All of which meant that if the secular communists wished to emulate their Christian forbears, they would have to achieve their goal by bloody revolution — always difficult at best. It is no accident, therefore, that the heady days of the French Revolution would give rise to such revolutionary hopes and aspirations.

Greece—What matters and What does Not

Dealing with incorrect facts leads to incorrect conclusions

By Mark Grant

The bond market is heading East while the equity markets heads West because they have two totally different focuses at present. I have seen this often enough in my almost four decades on Wall Street and I am always amused when this differentiation takes place. It is really just a reaction to what either market is staring at that causes this phenomenon to take place and, eventually, one market proves to be correct while the other gallops along to catch up. The stock markets seem buoyed by the possibility of the more EU friendly government to win this Sunday’s election and they are taking comfort in the hope for support of the world’s major central banks and the possibility of more easing; a new or redefined QE3. The fixed income people are concentrating on the possibility of a systemic financial shock, the recession in Europe that will affect the United States and the plight of the European banks. In my experience the bond markets generally get it right and get there first and I expect nothing different this time.

On war in Europe

The optimists were wrong

By Daily Collateral

“Even on the eve of world war I, however, there was still considerable optimism that the peace would hold. Europe had experienced several decades without a major war, and in the meantime, industrialization and relatively free international trade had produced rapidly rising standards of living. A war that would destroy the fruits of this progress seemed irrational.

Many people believed, moreover, that the rising international solidarity of the labor movement would undermine support for a war entered into by imperialistic capitalist powers. Although financial markets were retrenching, they gave no sign that a cataclysm lay ahead. The optimists were wrong.”

                             – Gary M. Walton and Hugh Rockoff, History of the American Economy, Eleventh Edition, p. 380

The Bang! Moment is Here

It's either a Fiscal Union or a Break Up

By John Mauldin

The Distant End Game

"All folly must end eventually. Greece's ELA folly will end with the cash gone abroad and the collateral turning out worthless.

"Along the way, the rest of Europe will grow increasingly nervous. ELA loans are guaranteed by the Greek central bank, which is in turn guaranteed by the Greek government. And the Greek government already can't pay its debts without help from the rest of Europe.

"As the pile of ELA loans grows, northern European governments will likely begin agitating for limits to be placed on Greek use of ELA, or to cut it off altogether. If the Greek government threatens to default on its debts to Europe, the question of cutting off Greek ELA would likely be raised at the same time.

Greece will be forced out of the euro regardless of who wins the Sunday elections

The Greek Civil War. Old against Young.

By Daily Collateral

New Democracy. Syriza. Doesn't matter. 

According to Citi's senior political analyst Tina Fordham, chief economist Willem Buiter, and global economist Ebrahim Rahbari, "any new Greek government, regardless of its composition, will struggle with implementation challenges related to the imposition of further austerity measures demanded by the Troika in exchange for further assistance," and as a result, they "consider it likely that a new troika deal would ultimately fall apart and lead to Grexit."

Citi notes that there is growing sense among European leaders that "promotion of economic growth can no longer be subordinated completely, even in fiscally unsustainable euro area member states, to the requirements of fiscal austerity," but no one has any idea what that means.

This seems to be the current thinking, according to Citi:

The only operational, practical consensus on growth is that austerity policies should not be unnecessarily pro-cyclical. If a deficit target is overshot because of bad luck (economic activity and government revenues are weaker than expected despite full adherence to all conditionality) rather than bad faith (there has been a failure to implement agreed measures or policies), the shortfall will not have to be made up immediately – in the original time frame. More time will be given to achieve the original objectives without the need for deeper and faster austerity than originally envisaged. Bad faith (non-compliance) will, for incentive-compatibility or moral hazard reasons, continue to be punished with demand for enhanced and faster austerity.

Never In Doubt

We are at the tail end of a forty year credit bubble

By Chris Martenson

What has never been in doubt in my mind is that thin-air money printing and the bailing out of banks and financial institutions would be tried and tried again.  The alternative is unthinkable to those in power, because it involves living within one's means and letting those who took the risks eat the losses. 

Here we are at the tail end of a forty year credit bubble in which everybody participated (although China and India were late to the event) and nobody wants that party to end.  It is simply so much easier to simply borrow, spend and kick the can down the road.

As noted here repeatedly, we have an exponential credit system which, by extension, gives us an exponential money system.  Until and unless the credit markets can be coerced back onto an exponential trajectory, nothing will work quite right to the point that systemic financial collapse is a distinct possibility.

Given that possibility, nobody in power has even the slightest wish to test out the odds and so they will opt to print, print, print.

Just yesterday the UK opted for another round of printing but look how they applied it:

£100bn plan for UK economyJun 14, 2012George Osborne on Thursday night announced plans for a £100bn support programme for the British economy, as he battened down the hatches for a worsening  “eurozone debt storm”.

Monday Will Not Be The End Of The World, Sorry

The European Union is sinking under its own weight

By Mark Grant

It was January 13, 2010 when I first wrote in my commentary that I thought Greece would go belly up. It was in May 2010 when they first needed to be bailed out. This small country with a giant debt of $1.3 trillion has engaged the markets ever since. Sunday the country votes and whoever wins I expect no massive explosion in the short term. The new Greek government will try to renegotiate the terms and conditions of their bailouts and we shall see just how far anyone is willing to go. It will be a game of chicken with Germany in the end and a solution perhaps will be found but no good one as Greece could not pay back their current debts if Hercules arrived to help; much less any new debts which will be required to keep the country afloat. Any “Big Bang,” if it comes, will not come on Monday morning as that will just be the beginning of the process to scream and shout and dance around like some Opa bar with Ireland, Portugal and Spain demanding equal terms and, oh yes, Spain will be in the hand-out line soon enough along with their banks. 

Just government, and bureaucracy, and regulation, unto national bankruptcy

Earthly woes mount as Obama's rhetoric soars

By Mark Steyn

Round about this time in the election cycle, a presidential challenger finds himself on the stump and posing a simple test to voters: "Ask yourself – are you better off now than you were four years ago?"

But, in fact, you don't need to ask yourself, because the Federal Reserve Board's Survey of Consumer Finances has done it for you. Between 2007 and 2010, Americans' median net worth fell 38.8 percent – or from $126,400 per family to $77,300 per family. Oh, dear. As I mentioned a few months ago, when readers asked me to recommend countries they could flee to, most of the countries worth fleeing to Americans can no longer afford to live in.

Hayekian Moments in Life

Joining the Dots

By Jeffrey Tucker

I never tire of looking out the windows of airplanes. For all of human history until just about the day before yesterday, no living person saw the world like this. People could climb up to the top of mountains and see the valleys below. But to see that whole view looking straight down was the privilege of birds and God. Then about 100 years ago, this changed and we could see what we never really experienced directly.

It’s not raw nature that enthralls me. It’s cities. It’s the small towns. It’s the lights. It’s the vast, cultivated farmland. It’s the seeming orderliness of human civilization that was no one’s plan, but rather emerges through the bit-by-bit creation of minds. Everything we see was once an idea, and then it was made real through action.

Despite all the pretense by the government and the arrogance of its officials and the planning mindset of its bureaucrats, what you see out the window of a plane is essentially ordered anarchy, the evidence of what millions of explosive units of creativity (also known as people) can build when they are all cooperating in pursuit of their own self-interest.

I’m also intrigued by the gargantuan swaths of seeming nothingness that stretch between east and west in the U.S., and it causes me to marvel about the talk over “overpopulation” or how we are running out of room. Under the right conditions, the whole planet could fit in this space with plenty of breathing room. Oh, and remember that talk some years ago about how we are running out of landfill space? Nuts!

That’s not the only lesson to be drawn to this bird’s-eye view. There is a scene in the 1949 movie The Third Man, set in Vienna after the Second World War, when the criminal bandit Harry Lime and the visiting author Holly Martins are at the top of a Ferris wheel. They look down, and Holly asks Harry if he has ever seen one of his victims. Harry answers as follows:

“Victims? Don’t be melodramatic. Look down there. Tell me. Would you really feel any pity if one of those dots stopped moving forever? If I offered you 20,000 pounds for every dot that stopped, would you really, old man, tell me to keep my money, or would you calculate how many dots you could afford to spare?”

The Ultimate Resource

Human Mind

By Mark Perry
Here's a good example of the "ultimate resource": human ingenuity, innovation, know-how and creativity, which is the one resource that is truly infinite and unlimited.