Bulgaria in no danger to become Greece

“Southern Europe Does Almost Nothing—Except Complain”

By Wolf Richter   

“While Eastern Europe is largely implementing the necessary reforms, Southern Europe does almost nothing—except complain,” said Bulgarian Finance Minister Simeon Djankov in an interview, a withering blast aimed at neighboring Greece.

And in Greece, “The risk of bankruptcy is still existent,” said Fotis Kouvelis, the leader of Democratic Left, smallest of the three parties in the coalition government. His way of reminding the bailout Troika—the EU, the European Central Bank (ECB), and the IMF—to open the money spigot all the way, or else! The Troika inspectors are scheduled to return to Athens next week to have another look [read.... Greece Flails About, Troika Inspectors Paint “Awful Picture,” Merkel Draws A Line, German Industry & Voters Back Her: It’s Almost Over For Greece].

In September, armed with the inspectors’ final report, the Troika will decide whether or not to make the next bailout payment to Greece. If the decision is no, Greece will default and most likely return to the drachma.

“We demand an extension,” Kouvelis said, summarizing eloquently the strategy since the June elections. Instead of implementing with fiendish dedication the reforms that the prior government had agreed to in exchange for the second bailout package, the new government insists on renegotiating those reforms and then delaying those renegotiated reforms, while insisting on the continuous flow of other people’s billions. He complained about the recession, and that therefore structural reforms couldn’t be implemented.

How close are we to new Great Depression?

The Broken Link

The risk of a new depression - a sustained, severe recession - has struck fear into the heart of markets and driven monetary policy in developed economies since the current financial crisis began.

By Catherine Boyle

The risk of a new depression - a sustained, severe recession - has struck fear into the heart of markets and driven monetary policy in developed economies since the current financial crisis began.

"We're in a very unfortunate position to be here," Richard Duncan, author of The New Depression, warned on CNBC's "Squawk Box Europe" Monday.

"When we broke the link between money and gold, this removed all constraints on credit creation. This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there's a very real danger that we will collapse into a new Great Depression," he argued.

"If this credit bubble pops, the depression could be so severe that I don't think our civilization could survive it."

The Caesar in DC is busy

Building roadblocks

Instead of roads and bridges, Obama-sized government funds stasis and sclerosis: The Hoover Dam of regulatory obstruction, the Golden Gateway to dependency.

By mark steyn

On the evidence of last week's Republican campaign events, President Obama's instant classic – "You didn't build that" – is to Mitt Romney what that radioactive arachnid is to Spider-Man: It got under his skin, and, in an instant, the geeky stiff was transformed into a muscular Captain Capitalism swinging through the streets and deftly squirting his webbing all over Community-Organizerman. Rattled by the reborn Romney, the Obama campaign launched an attack on Romney's attack on Obama's attack on American business. First they showed Romney quoting Obama: "He said, 'If you've got a business, you didn't build that. Somebody else made that happen.'" And then the Obama team moved in for the kill: "The only problem? That's not what he said."

Indeed. What Obama actually said was:

Exasperated lenders get blunt with Greece

The Fat Lady is on Stage

By Dina Kyriakidou

The International Monetary Fund's mission chief for Greece, Poul Thomsen, walked grim-faced into his first meeting with newly elected Prime Minister Antonis Samaras on July 5 wearing a black tie looking as if he was going to a funeral.

Whether he was making a point or not, the first meet-and-greet visit by Greece's exasperated international lenders with the new government was blunt, both sides told Reuters.

"Talking to them was like going to a doctor, who is looking over your tests shaking his head, and you're wondering if you are going to live or die," a senior Greek government official told Reuters, on condition of anonymity, after the visit.

What's So Bad About Deflation?

What's not to like?

Perhaps all the assumptions about inflation being good and deflation being bad miss the key question: cui bono (to whose benefit?)

by Charles Hugh-Smith

One of the most widely accepted truisms of our time is that deflation is bad: bad for debtors, bad for the indebted government, and therefore bad for the economy.

What all this overlooks is how wonderful mild deflation is for those who owe no debt but who own the debt and the income streams that flow from debt. What the "deflation is bad" argument ignores is who controls the financial and political systems, and what set of conditions benefits them.

The entire Survival+ critique is based on one simple but revealing question: cui bono--to whose benefit?

What exactly is the American military?

Meet America's socialist military

BY ROSA BROOKS

F. Scott Fitzgerald, meticulous chronicler of American social class, famously confided to Ernest Hemingway that "the rich are different from the rest of us."

"Yes," was Hemingway's laconic reply. "They have more money."

These days, the same could be said of the American military. Is the military different from the rest of us? Yes -- it has more money.

How new technology is driving a U.S. industrial comeback.

The Future of Manufacturing Is in America, Not China

BY VIVEK WADHWA

A furor broke out last week after it was reported that the uniforms of U.S. Olympians would be manufactured in China. "They should take all the uniforms, put them in a big pile, and burn them," said an apoplectic Sen. Harry Reid. The story tapped into the anger -- and fear -- that Americans feel about the loss of manufacturing to China. Seduced by government subsidies, cheap labor, lax regulations, and a rigged currency, U.S. industry has rushed to China in recent decades, with millions of American jobs lost. It is these fears, rather than the Olympic uniforms themselves, that triggered last week's congressional uproar.

But Ralph Lauren berets aside, the larger trends show that the tide has turned, and it is China's turn to worry. Many CEOs, including Dow Chemicals' Andrew Liveris, have declared their intentions to bring manufacturing back to the United States. What is going to accelerate the trend isn't, as people believe, the rising cost of Chinese labor or a rising yuan. The real threat to China comes from technology. Technical advances will soon lead to the same hollowing out of China's manufacturing industry that they have to U.S industry over the past two decades.

Several technologies advancing and converging will cause this.

First, robotics. The robots of today aren't the androids or Cylons that we are used to seeing in science fiction movies, but specialized electromechanical devices run by software and remote control. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. Several companies, such Willow Garage, iRobot, and 9th Sense, sell robot-development kits for which university students and open-source communities are developing ever more sophisticated applications.

Black America & The Marriage Gap

From “family values” to “collective action”

By ROD DREHER

As an addendum to the earlier discussion of America & hip-hop, consider this story from The New York Times. It begins with an anecdote about two white women, friends from childhood, who have ended up in very different places economically:

But a friendship that evokes parity by day becomes a study of inequality at night and a testament to the way family structure deepens class divides. Ms. Faulkner is married and living on two paychecks, while Ms. Schairer is raising her children by herself. That gives the Faulkner family a profound advantage in income and nurturing time, and makes their children statistically more likely to finish college, find good jobs and form stable marriages.

Ms. Faulkner goes home to a trim subdivision and weekends crowded with children’s events. Ms. Schairer’s rent consumes more than half her income, and she scrapes by on food stamps.

The Rule of Law

What do we do about it?

by Andrew P. Napolitano

The greatest distinguishing factor between countries in which there is some freedom and those where authoritarian governments manage personal behavior is the Rule of Law. The idea that the very laws that the government is charged with enforcing could restrain the government itself is uniquely Western and was accepted with near unanimity at the time of the creation of the American Republic. Without that concept underlying the exercise of governmental power, there is little hope for freedom.

The Rule of Law is a three-legged stool on which freedom sits. The first leg requires that all laws be enacted in advance of the behavior they seek to regulate and be crafted and promulgated in public by a legitimate authority. The goal of all laws must be the preservation of individual freedom. A law is not legitimate if it is written by an evil genius in secret or if it punishes behavior that was lawful when the behavior took place or if its goal is to solidify the strength of those in power. It also is not legitimate if it is written by the president instead of Congress.

Happy interventionists

The economist’s attack on your property

Pieter Brueghel the Younger, 'Paying the Tax (The Tax Collector)' 

by DETLEV SCHLICHTER

Last week, the Deutsches Institut für Wirtschaftsforschung (DIW), or German Institute for Economic Research, an influential think tank, proposed an ingenious solution to the Euro Zone debt crisis. The German government should issue a Zwangsanleihe, a compulsory bond that every German with savings of €250,000 or more should be compelled to underwrite with 10 percent of his or her own money. Such measures could help the German state grab another €230 billion in resources from the private sector to support its bailout commitments, the DIW economists announced with apparent satisfaction.

Didn’t economists once use to explain the importance of clearly delineated and legally protected private property, of free and voluntary exchange, and of true market prices? By explaining how capitalism works, these economists also demonstrated the limits and dangers of state interference, which is the reason why those who rather put their faith in strong political leadership and governmental design than the spontaneous order of free markets called economics – after Thomas Carlyle – the ‘dismal science’.

The Seen and the Unseen in Our Social Liberation

Masking risk and suppressing feedback do not restore resiliency or vitality

By Theodore Dalrymple

The slightest and most seemingly insignificant utterance may in fact be a window on an entire world-view, and therefore worthy of reflection. For example, when leafing through a literary magazine recently that consisted entirely of book reviews, my eye alighted on a brief notice of a recently-discovered pre-World War II crime novel by C S Forester, best-known for his Hornblower stories.

The review was only 113 words long, and contained the following:

It is the story of a brutal husband who is murdered by his wife and mother-in-law. It’s not really credible, but grippingall the same – and a salutary portrait of marriage beforewomen’s liberation.

We've Decoupled, Alright--From Reality

Masking risk and suppressing feedback do not restore resiliency or vitality
by Charles Hugh Smith

Forget decoupling from Europe--we've been decoupled from reality since 2008.

Have we decoupled from the global slowdown? Doubtful. Have we decoupled from reality? Undoubtedly--and have been since 2008.One key attribute of reality is feedback: actions have consequences, and various forces reinforce or resist each other in a dynamic interplay of positive and negative feedback.

Another key attribute of reality is risk. Risk is as ever-present as gravity, and it cannot be eliminated; it can only be shared or transferred.

When you overwhelm feedback with massive interventions that mask risk, you decouple from reality. With feedback suppressed and risk hidden, the system's resilience and resourcefulness both atrophy. Participants start making decisions not on risk assessment and feedback from reality but on the results of the intervention.

The Financial Crisis Was Foreseeable

… Thousands of Years Ago

by George Washington

We’ve known for 4,000 years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 2,500 years that prolonged war bankrupts an economy.

We’ve known for 1,900 years that rampant inequality destroys societies.

We’ve known for thousands of years that debasing currencies leads to economic collapse.

We’ve known for hundreds of years that the failure to punish financial fraud destroys economies, as it destroys all trust in the financial system.

Liberty and Community After Progressivism

The soft tyranny of the progressive administrative state

BY Ted McAllister   

Robert Nisbet’s most important and yet neglected insight is that modern individualism and collectivism are the twin movements of modern democratic despotism.  The first liberates individuals from myriad forms of authority (e.g., family, church, guild, local community) that characterize most pre-modern social orders.  The second represents a new, equalitarian order based on the consolidation of isolated (liberated) particles into a new administrative regime that promises solidarity and community.  In a previous essay I suggested that the dominant species of modern community, the democratic administrative state, faces severe—perhaps existential—threats to its hegemony because the financial burden faced by modern states makes it impossible for them to sustain the necessary level of provision for their citizens. The resulting austerity should open social space between the individual and state.  The question now is whether new patterns of authority as well as richer conceptions of the person will emerge in this new social space. 

Ignorance Is Bliss

So Go Back To Sleep

Whenever the legislators endeavor to take away, and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any farther obedience.

                                                                                          - John Locke

by Mike Krieger

Most of you that are taking the time to read this have already experienced some level of “waking up” over the past several years or longer.  Most of you have also probably felt from time to time that the knowledge you possess is a burden and have fully appreciated the meaning of “ignorance is bliss.”  I know this because I have felt these very same emotions at times.  The most important thing to remember; however, is that we are just awake individuals within a wave or cycle of awakening.  There were those that came before us and there will be many, many more to come after us.

Moral Preening and Capital Punishment

We always have to make a choice

By Theodore Dalrymple       

A feeling of moral superiority is often compensation for the lack of any other kind of superiority, and has the advantage that it can never be decisively disproved. With respect to capital punishment, Europeans feel morally superior to Americans because they have abolished it as a relic of judicial barbarism. So complete has been the revolution in moral sensibility that they speak as if the French foreswore the guillotine before the Roman invasion rather than in 1981, against the majority opinion of the public.

The question of capital punishment has long agitated the minds of intellectuals, and recently I had the good fortune to find and buy The Punishment of Death by Henry Romilly, published in 1886, an anti-capital punishment tract. Romilly was the son of the lawyer and politician, Sir Samuel Romilly, one of the early abolitionists; Henry is therefore a case of hereditary abolitionism. He is not, of course, to be despised on that account.

Unintended Consequences of Intervention

Αn emerging crisis that could engage the world for years

By David Henderson

Many libertarian and conservative economists I know are good at pointing out the unintended, and usually negative, consequences of domestic government policy. But a smaller subset of these people seem willing to look at foreign policy with the same skeptical eye. As I have written elsewhere [gated], they should be even more skeptical when looking at foreign policy, for two reasons:

1. The information problem: It's often hard for citizens to get information about the effects of government's actions on the domestic front. It's even harder for citizens to get information about the effects of their government's actions in other countries.

2. The incentive problem: One of the things that makes government domestic intervention less harmful than otherwise is that the politicians need to take account of voters. But the main victims of a government's foreign policy are usually not the people who live in the country that government governs. The main victims live in foreign countries--and they don't get to vote.

The Growing Pressures Likely To Blow The Eurozone Apart

Politics in a planned economy are always more important than economics - until reality intervenes

by Chris Martenson

There was yet another European Union summit at the end of June, which (like all the others) was little more than bluff. Read the official communiqué and you will discover that there were some fine words and intentions, but not a lot actually happened. However, there are some differences when compared with past meetings that need explaining:

1.   The European Council is being asked to consider permitting the European Central Bank to have a regulatory role alongside national central banks “as a matter of urgency by the end of 2012.” When this new super-regulator is eventually established, perhaps the ECB might be able to recapitalize banks directly. This was needed three years ago; the Eurozone will be lucky not to have a new banking crisis in the next few months, let alone by the year-end.

Obama Shrugs

The Core Of American Values

By Jeff Harding

I read President Obama’s stump speech given on Friday, July 13 at Roanoke, Virginia. I urge you to read it; it’s not too long. It is a kind of manifesto of current left-wing thought in America; it describes almost every policy and concept that leftists support and are working to implement. In general it is wrong, based on a wrong, long discredited philosophy, on wrong and disproven social concepts, on wrong economic ideas, and on mostly wrong facts stated as truths. One could say they were lies, but I think we all understand that this is what politicians do and it is why they are held in such low esteem.

I rarely get hyperbolic, and I don’t intend to start here. So when I say that this speech represents an attack on the philosophy, ideals, and economics that made America great, I don’t think this is stepping over the line, rather it is a statement of fact. Read it yourself and make your own decision and let me know where I am wrong. 

An Exchange Of Wealth For Income

The Loan

by Keith Warner

As the title of this essay suggests, a loan is an exchange of wealth for income. Like everything else in a free market (imagine happier days of yore), it is a voluntary trade.  Contrary to the endemic language of victimization, both parties regard themselves as gaining thereby, or else they would not enter into the transaction.

In a loan, one party is the borrower and the other is the lender.  Mechanically, it is very simple.  The lender gives the borrower money and the borrower agrees to pay interest on the outstanding balance and to repay the principle.

As with many principles in economics, one can shed light on a trade by looking back in history to a time before the trade existed and considering how the trade developed.

It is part of the nature of being a human that one is born unable to work, living on the surplus produced by one’s parents.  One grows up and then one can work for a time.  And then one becomes old and infirm, living but not able to work.  If one wishes not to starve to death in old age, one can have lots of children and hope that they will care for their parents in their old age.  Or, one can produce more than one consumes and hoard the difference.