Sunday, August 12, 2012

What Will Collapse Really Be Like?


Has The Perfect Moment To Kill The Dollar Arrived?
by Brandon Smith
The idea of “collapse”, social and financial, comes with an incredible array of hypothetical consequences ranging from public dissent and martial law, to the complete disintegration of infrastructure and the devolution of mankind into a swarm of mindless arm chewing cannibals.  In an age of television nirvana and cinema overload, I have found that the collective unconscious of our culture has now defined what collapse is based only on the most narrow of extremes.  If they aren’t being hunted down by machete wielding looters or swastika wearing jackboots, then the average American dupe figures that the country is not in much danger.  Hollywood fantasy has blinded us to the tangible crises at our doorstep.
The reality is that collapse is not a singular event, but a process.  It is a symphony of doom, composed of a series of exponentially more powerful crescendos.  If the past four years since the implosion of the derivatives bubble have proven anything, it is that catastrophe has the ability to drown a nation slowly like a river of molasses, rather than sweep it away like a flash flood.  That said, almost every recorded collapse of modern societies in the past century has been preceded by a primary trigger event; a moment in which the mathematical certainty of failure becomes clear, even if the psychological certainty is muddled. 
In 2012, we still await that trigger event, which I believe will be the announcement of QE3 (or any unlimited stimulus program regardless of title), and the final debasement of the dollar.  At the beginning of this year, I pointed out that we were likely to see such an announcement before 2012 was out, and it would seem that the private Federal Reserve is right on track.
Last month, the Fed announced that it was formulating a plan to “expand its tool kit”.  This includes an openly admitted possibility of a third round of quantitative easing starting as early as September:
This timeline appears to coincide perfectly with the breakdown of the EU, which may also see a climax event in September.  In that month, EU policymakers will return from summer holiday.  German courts will make a ruling which could put an end to any chance that the country will support a eurozone rescue fund.  The Dutch, which are anti-bailout, will vote in elections.  Greece will be attempting to renegotiate its financial lifeline.  And, the ECB will have to assess the impending chaos in Spain and Italy:
As far as the Fed’s ability to remedy the fiscal situation goes, let’s clear something up right here; the Fed has NO TOOLKIT.  Sorry, but central banks have only two options when attempting to shift the tide of the economy:  They can lower interest rates to zero, and, they can print-print-print.  That is it.  We’ve had TARP, numerous bailouts, QE1 and QE2, Operation Twist, and interests rates have been kept near zero for years!  These so called solutions have been strapped like millstones around our necks and absolutely nothing has been accomplished since 2008. 

California Dreaming


A Nation That Believes Nothing
Romney doesn't need to talk about America becoming like Europe. He needs to warn us about America becoming like California.
By PEGGY NOONAN
It's been a week marked by mistakes, some new and some continuing.
The pro-Obama Super PAC ad that essentially blames Mitt Romney for a woman's death from cancer is over the line, and if it's allowed to stand the personal attacks that have marked the presidential campaign will probably get worse. If the president rebukes the PAC and renounces the ad—and he should, and he'd look better doing it than not doing it—then we'll all know there's an ethical floor below which things can't sink. The ad was a mistake for a number of reasons, one being that it makes the president look perfidious and weak: "Mudslinging is all we've got." It also may finally injure his much vaunted likability ratings.
Conservative critics are correct that the Romney campaign's pushback was weak. When someone suggests in the public arena that you are a killer you do have to respond with some force. Since media outlets have already pointed out the ad's claim is false, no one would think it out of bounds if Mr. Romney hit back with indignation and disgust.
Actually, that would be a public service. The ad's cynicism contributes to a phenomenon that increases each year, and that is that we are becoming a nation that believes nothing. Not in nothing, but nothing we're told by anyone in supposed authority.
Everyone knows what the word spin means; people use it in normal conversation. Everyone knows what going negative is; they talk about it on Real Housewives. Political technicians always think they're magicians whose genius few apprehend, but Americans now always know where the magician hid the rabbit. And we shouldn't be so proud of our skepticism, which has become our cynicism. Someday we'll be told something true that we need to know and we won't believe that, either.
I suspect some conservative used the Romney campaign's listless response as a stand-in for what they'd really like to say to Mr. Romney himself, which is, "Wake up, get mad, be human, we're fighting for our country here!"
Mr. Romney is not over-managed by others—he isn't surrounded by what George H.W. Bush called "gurus"—but he over-manages himself. He second guesses, doubts his own instincts. Up to a certain point that's good: Self-possession is a necessary quality in a political leader. But people don't choose a leader based solely on his ability to moderate himself. They're more interested in his confidence in his own judgment, or an ease that signals the candidate has an earned respect for his own instincts.
Some of the unperturbed sunniness you see modern political figures attempting to enact may be traceable to Ronald Reagan, the happy warrior who set a template for how winners act. But the Reagan of the 1950s and '60s was often indignant, even angry. When he allowed himself to get mad, or knew he should be mad and so decided to feign anger, it was a sight to behold. "I'm paying for this microphone," he famously snapped to the moderator of the 1980 primary campaign debate in Nashua, N.H. He didn't win that crucial state by being sunny.

This election represents the last exit ramp before the death spiral


Obama the great disabler
By Mark Steyn
The other day, I passed a Republican Party county office here in my home state, its window attractively emblazoned with placards declaring "Believe in America. Romney 2012" and "New Hampshire Believes. Romney 2012." There's not a lot of evidence for the latter proposition, but I'm certainly willing to believe that Romney believes that New Hampshire believes. An hour or two later, I chanced to be passing a television set just as the station went to break. The words "WE BELIEVE" appeared on the screen, followed by youthful hands raised to a clear blue sky at the dawn of a new day, shafts of sunlight gleaming through ears of corn, a puppy gamboling across a meadow, a kitten playfully pawing, happy green t-shirted volunteers of many races unloading a recycling carton ... and I thought, despite myself, "Well, say what you like, but the reassuring vapidity of the Romney campaign is at least getting more professional." At the end, in the spot where the off-screen voice is supposed to say "I'm Mitt Romney, and I approve this message," it instead said: "Introducing Purina One Beyond: a new food for your cat or dog."
Well, what do I know? By contrast, the Obama campaign's theme is "Forward" – which, in the context of a second term for Mister You-Didn't-Build-That, I'd carelessly assumed was a poignant allusion to "The Charge of the Light Brigade":
"'Forward, the Light Brigade!Charge for the guns!' he said:Into the valley of DeathRode the six hundred."
But apparently the focus groups are oblivious to Lord Tennyson, and "Forward" is seen as sunny and optimistic rather than a deranged lemming-like march into the abyss. In that sense, "Forward" is unusually honest for the Democrats, at least compared with their recent assertions that Romney hasn't paid any taxes in 10 years and personally gives women terminal cancer. "Forward" means "Even more of the same": You can't say he isn't warning us.
Against this, Romney offers "Believe in America." It's a slogan designed not to frighten the horses and, like Purina One Beyond, appeal to both cats and dogs, Republicans and Democrats – or at least those mercurial "independents" on whose whims and fancies the fate of the republic depends. If it were up to me, the campaign slogan would be "You're screwed, losers. Steyn 2012" – or, after yielding to the consultants' internals showing that moderates want something more sunny and upbeat, maybe "Get real, you chumps. Steyn 2012." That's the reason I'm not running. Well, that and the Hawaiian birth certificate.

Saturday, August 11, 2012

The Apocalyptic Vision of The Road


A chilling glimpse of a society without capital or moral order


by Ben O'Neill
What is the "means of production" and what significance does it have to society? How is it created, expanded, or merely sustained? What is the relationship between the prevailing moral order of a society and its accumulation of capital?
These are questions that economists and political philosophers have considered throughout the history of economic thought. If you have ever enquired into the differences between capitalism and socialism you will have heard of the means of production, and you will be aware that this is very important to the organization of society. You might have heard of this, but you might not have spent much thought on the relationship between capital and moral order. Indeed, why should ordinary people care about such things? Isn't the means of production just something that one reads about between bong hits in the dorm rooms at university? Or is it perhaps something that is the domain of accountants and corporate managers, concerned with the proper techniques of double-entry bookkeeping? What is its great significance?
For those who are not sure, or don't care, The Road by Cormac McCarthy gives us a chilling glimpse of a society without capital or moral order — a world without a "means of production." It is a terrifying vision, and a wake-up call to those who regard questions of capital accumulation as being merely the dry and technical subject matter of economists. The novel is set in a post-apocalyptic world devastated by a catastrophe of some kind that has destroyed the natural environment. It tells the story of a man and his young son trying to survive the dangers of the new world and retain their sense of goodness in the face of its horrors.
“The country was looted, ransacked, ravaged. Rifled of every crumb. The nights were blinding cold and casket black and the long reach of the morning had a terrible silence to it.… He walked out in the gray light and stood and he saw for a brief moment the absolute truth of the world. The cold relentless circling of the intestate earth. Darkness implacable.… Borrowed time and borrowed world and borrowed eyes with which to sorrow it.” (pp. 129–130)
The world of the novel is cold and inhospitable, and hunger is ubiquitous. Its natural capital has been devastated, and other capital goods lie useless in the abandoned homes of the dead. Aside from some surviving humans (and the occasional animal), plant and animal life on the planet has become extinct, and the environment is barren and cold. There is no way to grow crops or create food, and so humans revert to foraging through the stored goods of the old world, and preying on the only remaining source of meat — other people.
“By then all stores of food had given out and murder was everywhere upon the land. The world soon to be largely populated by men who would eat your children in front of your eyes and the cities themselves held by cores of blackened looters.” (p. 181)
1. Civilization, Capital, and Moral Order
Where do our stores of food come from? And where our civilization? Though modern civilization is a complex thing, it is also very simple in its essence, for it is built on three forms of capital that form the pillars of any civilized order. One of these is the natural and man-made physical capital that humans use to live and to sustain their production of goods — the "means of production" (and perhaps also the means of distribution of goods). In addition to this physical capital are two corresponding forms of human capital: the technical knowledge to operate physical capital and sustain production, and the moral order required to sustain organized use of scarce resources. The degree of civilized life that presently exists does so because we have inherited physical capital and technological knowledge, but also because we have some sense of a moral order needed to sustain these things.
The story of civilization is the story of capital accumulation. This has included an accumulation of physical capital, but also a corresponding accumulation of technical and moral knowledge. We are civilized only to the extent that we ask ourselves what kind of moral order is needed to sustain the accumulation of capital. What kind of moral order sustains a means of production?
“There was yet a lingering odor of cows in the barn and he stood there thinking about cows and he realized they were extinct. Was that true? There could be a cow somewhere being fed and cared for. Could there? Fed what? Saved for what?” (p. 120)
In the midst of a prosperous civilization, it is easy for people to become flippant about the moral order needed to sustain the accumulation of capital. Large stores of capital goods are already here, and it is the present concern of many people to worry about how these should be "distributed" to satisfy their managerial lust and quest for "social justice." In a situation of such abundance, moral relativism and nihilism thrive. All is subjective, and the good is whatever "the representatives of the people" determine it to be. Those who pooh-pooh the moral rules that sustain the accumulation of capital often imagine that they are acting on behalf of the weak and downtrodden. But the breakdown of capital is the breakdown of civilization, and this is of great harm to the weak and strong alike. Indeed, if there are any who are most dependent on civilized order, it is those who are the least likely to survive under the predations of the strong.
“Oh papa, he said. He turned and looked again. What the boy had seen was a charred human infant headless and gutted and blackened on a spit. He bent and picked the boy up and started for the road with him, holding him close. I'm sorry, he whispered. I'm sorry.” (p. 198, grammatical omissions in original)
The Road shows us the predatory nature of man in the absence of his means of production, and the degeneration of the moral order this loss entails. Though the man and his son struggle to remain "good guys" during their precarious existence, the world of the novel is mostly inhabited by "bad guys" — armed gangs who enslave unwary travelers and commit terrible atrocities.
“They passed two hundred feet away, the ground shuddering lightly. Trampling. Behind them came wagons drawn by slaves in harness and piled with goods of war and after that the women, perhaps a dozen in number, some of them pregnant, and lastly a supplementary consort of catamites [boys kept as sex slaves] ill clothed against the cold and fitted in dog collars and yoked each to each. All passed on. They lay listening.” (p. 92, grammatical omissions in original)
The man in the novel struggles to protect his little boy from the predations of other men, while at the same time struggling to maintain his sense of morality and bequeath good values to his son. He carries a gun for protection but has only two bullets, one of which he is saving to kill his own son if circumstance should require it. The boy is too young to comprehend the atrocities that will be inflicted on him if he is caught by "the bad guys," but the man is well aware. Though he devotes his life to the protection of his son, he also considers the fact that he will kill the boy as an act of mercy if they fall into enemy hands:
“Can you do it? When the time comes? When the time comes there will be no time. Now is the time. Curse God and die. What if [the gun] doesn’t fire? It has to fire. What if it doesn’t fire? Could you crush that beloved skull with a rock? Is there a being within you of which you know nothing? Can there be?” (p. 114, grammatical omissions in original)
2. Why Aren't We Eating Each Other Right Now?
Reflecting on the likely effects of massive capital destruction is a fascinating thought experiment. It is one that gives valuable insights into the nature of humanity and the fragility of our present civilization. It matters not whether the destruction is brought about by a sudden disaster, as in the book, or a slow feasting on the accumulated capital of the past. If the means of production are destroyed, or simply not sustained, then we are heading down the road to hunger and predation, as illustrated in the novel.
What stops us from eating each other right now? How long would it take people in our civilization to turn to gross acts of predation in the event of a catastrophic disaster? How long before we would see people start farming other humans?
There are essentially two reinforcing reasons that prevent present humans from treating each other in such a patently predatory way. One reason is moral: there is widespread acceptance that it is evil to enslave and eat other people in our present circumstances. The other reason is contextual: the accumulated capital of our civilization is sufficient to ensure that we simply do not need to eat other people — we already have abundant food available to us. (One other alleged reason that might be mentioned is consequential: we fear the punishment that would be imposed on us for eating other people. However, this is a very minor concern in our present society and is not really operative on most people. The vast majority of people would avoid cannibalism under present circumstances regardless of whether or not they would be caught and punished for this behavior, simply because they do not want or need to engage in this kind of depravity. We mention this motivation only to explain that it is inoperative on most people.)
These two sources of civilized behavior — moral and contextual — are not independent of one another. Our moral views on slavery and cannibalism are formed within the context of a prosperous society where these activities are not needed to supply us with our needs (i.e., our present context affects our morality). Similarly, our lack of need for this source of food is itself a result of capital accumulation generated by having an ordered system of production built on moral rules (i.e., our moral system affects our activities, which affect our context). Though the first connection is widely appreciated, the second is not so well understood, and many people are prone to treat the fruits of civilization as just being here somehow (or as a result of science and technology, which got here somehow, etc.), without any particular moral principles needed to sustain them.
The fact that people's behavior is built on a moral foundation that is itself highly dependent on their context is a scary thought — even though people think it's abominable to eat each other right now, give them a few months living in a post-apocalyptic moribund world and they might change their minds! Indeed, this is one of the main salutary lessons of The Road — it shows us the fragility of the moral principles that underlie civilized society.
3. Moral Order? What Moral Order?
Readers of The Road are likely to be struck by the strong connection between the lack of capital and the lack of moral order in the dying world. In that respect the book is an excellent instruction in the importance of capital to civilized life. But if all this is accepted, then what is the moral order required to accumulate and sustain capital?
To answer this, we must understand that capital is formed and sustained by productive efforts undertaken for future reward. By its very nature, capital accumulation requires a present refrain from consumption with a view toward expanding one's future productivity. In order for this trade-off to be worthwhile one must have property rights that function as the "boundaries of order" in our interaction with other people. This is what allows us to accumulate capital and avoid predation. It is what allows us to save for the future with the assurance that we will reap some reward, rather than having our efforts taken to feed looters and killers. The proper moral order for civilized life is one that allows cooperative action for mutual gains but eschews coercion. To the extent that this moral order has been practiced, it has allowed man to build capital and develop civilized life. To the extent that it has been violated, it has led to barriers to capital accumulation, or outright capital destruction.
Despite their peril, the man and boy in The Road are very respectful of the moral order of private-property rights.[1] They vow not to eat other people regardless of their hunger, and they show great respect for the abandoned property of others. When they stumble onto a cache of stored food in an abandoned bunker, the boy says a makeshift prayer for the people who left it there:
“Dear people, thank you for all this food and stuff. We know that you saved it for yourself and if you were here we wouldn't eat it no matter how hungry we were and we're sorry that you didn't get to eat it …” (pp. 149–155)
Though the story of The Road is a grim and uncompromising story of societal breakdown, it is also a love story between a man and his son, and a story of the struggles of good people in a bad world. The man in the story tells his son that they are "carrying the fire," meaning that they are carrying the remains of the civilized order of the old world. They are very much like those described as "the Remnant" by Albert Jay Nock in his classic essay: "those who by force of intellect are able to apprehend [the principles of civilization], and by force of character are able, at least measurably, to cleave to them."
4. Capital, Moral Order, and Human Survival
The vision of The Road is a vision of what occurs when man loses the accumulated capital of civilization and the moral order that sustains it. The book is vague on the nature of the disaster that lands its principle characters in the final days of their species, but this is not really important. What is important is that we are presently in the process of discarding the moral order that sustains the process of capital accumulation, and there is reckless disregard by many people for any connection between an objective moral order for cooperative conduct and the capital accumulation and maintenance they take for granted to feed their abundance.
Those who concern themselves with the "distribution" of the accumulated wealth of the world are a reckless force chipping away at the foundations of civilized order. That they do so with pretentions that they are working for the benefit of the weak and disenfranchised only serves to show their naïveté, and their disregard for the nature of man without his civilization. The problem with this decline is not merely a danger of loss of physical capital, but something far deeper and more total: it is a moral rot, gradually undermining people's capacity to produce and sustain production. Every coercive measure interfering with the moral order of private property and cooperative exchange is another chip at the means of production and the civilized life it engenders.
The Road shows us what it means to lose the means of production. It is not pretty, and it is not at all to the benefit of the weak, nor anyone else.
The book has been praised as a salutation to environmentalist philosophy because it shows the consequences that a total environmental breakdown would have for humanity. I cannot comment on whether the author intended the book to convey this view, though it does not seem evident to me that he did. (The disaster in the book is clearly a sudden catastrophe, and certainly not a gradual breakdown caused by the activities of man.) In any case, I take a different lesson from the book than the alleged environmentalist message. To me, the book conveys the strong connection between capital and moral order. By depicting its absence, the book shows us the core of a civilized society, and allows us to see the importance of capital in a far more commanding way than is presented by economists and their treatises.
At root, human beings are animals, and like other animals we have a hierarchy of needs to satisfy. Despite our ability to reason about our own conduct, our mode of behavior will always reflect the necessity of satisfying those needs in some way. In the midst of our present civilization, with all its abundance, the idea of enslaving and cannibalizing other people (including children and babies) is horrific and revolting, but it is a reality of human nature that this can come about under dire circumstances. What protects us from this result is the accumulated capital of the past, and our capacity to protect that capital by formulating an appropriate moral order to guide our actions. If we are reckless about the connection between our moral order and the accumulation of capital, then we are asking for disaster.
When a person glibly tells you that moral rules are just subjective judgments, or that they are something that transcends petty concerns over material goods, ask yourself where that position leads. If man adopts such a view on a wide scale, will he still exist in another thousand years? Or will his fate have been embodied in The Road.
“On their backs were vermiculate patterns that were maps of the world in its becoming. Maps and mazes. Of a thing which could not be put back. Not be made right again. In the deep glens where they lived all things were older than man and they hummed of mystery.” (p. 287)
Notes
[1] This discussion should not be taken to mean that the moral order of private property ought to be operative irrespective of context. The proper moral principles applying to human interaction may legitimately depend on context; see, e.g., Moral Rights and Political Freedoms (1995) by Tara Smith. It is quite possible that a moral order of private property would not be legitimate in a moribund world such as in the novel, and one might even make the case that cannibalism could be morally legitimate when humans are one of the few remaining sources of food possible. I take no position on these questions in this essay, but they are worth noting to avoid misunderstanding of the source of rights. What is important is that, in the context of a world where it is possible to sustain a means of production, a moral order based on private property and nonaggression is proper and desirable.

The Mess We’re In

Why Politicians Can’t Fix Financial Crises
By Tim Price
“The genius of our ruling class is that it has kept a majority of the people from ever questioning the inequity of a system where most people drudge along, paying heavy taxes for which they get nothing in return.”
                                           - The late Gore Vidal.
“It’s a mess, ain’t it, Sheriff ?” suggests the deputy in the Coen brothers’ No Country For Old Men as they survey the body-strewn aftermath of a West Texas gunfight. “If it ain’t,” replies Tommy Lee Jones’ laconic lawman, “It’ll do till the mess gets here.” And our mess is already here, albeit with the likelihood of plenty more mess to follow. The latest offering¹ (The Mess We’re In: Why Politicians Can’t Fix Financial Crises) in the increasingly crowded pantheon of financial crisis porn stands apart from its competitors for at least three very specific reasons:
  • It doesn’t focus myopically on the mess in banking, but instead puts our giant international banking mess in the context of a wider analysis of budget deficits; the slow collapse of occupational pension provision; fears for economic recovery; and as its subtitle indicates, whether our political systems are even remotely fit for purpose in attempting to resolve these various crises.
  • It offers a much broader overview of the sad history of politicians in their various dealings with the economy and financial markets. (The word has already been coined: “Omnishambles.”)
  • It dares to offer some practical solutions and a way out of the swamp.
We are now five years into this crisis and there is no tangible sign of improvement. Having thrown everything at banks including the kitchen sink, governments are now starting to appreciate that all they have achieved is the loss of a kitchen sink. Which may be why the Financial Times last week reported that the full nationalisation of RBS was back on the agenda. Barclays’ discredited former CEO, Bob Diamond, was obviously ridiculously premature when he suggested that a period of banking remorse and apology needed to be over. On the contrary, given the scale of the mess, and its cost to the taxpayer and to the economy, that requisite period of remorse and apology may yet outlive us. But bashing the bankers gives only the least satisfying form of relief. As we have frequently suggested, no account of the crisis can be complete without a comparable assessment of the role played by our politicians – not just in the run-up to the events of 2007 and 2008, but in the years and decades that preceded them.

The social and economic reasons for Generation Squeezed


There are real conflicts between the young and old; so far, the young are losing
By Robert J. Samuelson
I worry about the future — not mine but that of my three children, all in their 20s. It is an axiom of American folklore that every generation should live better than its predecessors. But this is not a constitutional right or even an entitlement, and I am skeptical that today’s young will do so. Nor am I alone. A recent USA Today/Gallup poll finds that nearly 60 percent of Americans are also doubters. I meet many parents who fear the future that awaits their children.
The young (and I draw the line at 40 and under) face two threats to their living standards. The first is the adverse effect of the Great Recession on jobs and wages. Even if this fades with time, there’s the second threat: the costs of an aging America. It’s not just Social Security, Medicare and Medicaid — huge transfers from the young to the old — but also deferred maintenance on roads, bridges, water systems and power grids. Newsweek calls the young “generation screwed”; I prefer the milder “generation squeezed.”
Already, batteries of indicators depict the Great Recession’s damage. In a Pew survey last year, a quarter of 18-to-34-year-olds said they’d moved back with parents to save money. Getting a job has been time-consuming and often futile. In July, the unemployment rate among 18-to-29-year-olds was 12.7 percent. Counting people who dropped out of the labor market raises that to 16.7 percent, says Generation Opportunity, an advocacy group for the young. Among recent high-school graduates, unemployment rates are near half for African Americans, a third for Hispanics and a quarter for whites, notes the Economic Policy Institute, a liberal think tank.

Millennial Communism


For Marx mankind, led by a vanguard of secular saints, would establish a secularized kingdom of heaven on earth
by Murray N. Rothbard,
[This article is excerpted from volume 2, chapter 10 of An Austrian Perspective on the History of Economic Thought (1995)
The key to the intricate and massive system of thought created by Karl Marx (1818–83) is at bottom a simple one: Karl Marx was a communist. A seemingly banal or trite statement set alongside Marxism's myriad of jargon-ridden concepts in philosophy, economics, history, culture, etc. Yet Marx's devotion to communism was his crucial point, far more central than the dialectic, the class struggle, the theory of surplus value, and all the rest. Communism was the goal, the great end, the desideratum, the ultimate end that would make the sufferings of mankind throughout history worthwhile. History is the history of suffering, of class struggle, of the exploitation of man by man. In the same way as the return of the Messiah, in Christian theology, would put an end to history and establish a new heaven and a new earth, so the establishment of communism would put an end to human history. And just as for postmillennial Christians, man, led by God's prophets and saints, would establish a Kingdom of God on earth (and, for premillennials, Jesus would have many human assistants in establishing such a Kingdom), so for Marx and other schools of communists, mankind, led by a vanguard of secular saints, would establish a secularized kingdom of heaven on earth.
In messianic religious movements, the millennium is invariably established by a mighty, violent upheaval, an Armageddon, a great apocalyptic war between good and evil. After this titanic conflict, a millennium, a new age, of peace and harmony, a reign of justice, would be established upon the earth.
Marx emphatically rejected those utopians who aimed to arrive at communism through a gradual and evolutionary process, through a steady advancement of the good. No, Marx harked back to the apocalyptics, the postmillennial coercive German and Dutch Anabaptists of the 16th century, to the millennial sects during the English Civil War, and to the various groups of premillennial Christians who foresaw a bloody Armageddon at the Last Days, before the millennium could be established. Indeed, since the immediatist postmils refused to wait for gradual goodness and sainthood to permeate among men, they joined the premils in believing that only a violent apocalyptic final struggle between good and evil, between saints and sinners, could establish the millennium. Violent, worldwide revolution, in Marx's version made by the oppressed proletariat, would be the instrument of the advent of his millennium, communism.
In fact, Marx, like the premils (or "millenarians") went further to hold that the reign of evil on earth would reach a peak just before the apocalypse. For Marx as for the millenarians, writes Ernest Tuveson,
The evil of the world must proceed to its height before, in one great complete root-and-branch upheaval, it would be swept away.…
Millenarian pessimism about the perfectibility of the existing world is crossed by a supreme optimism. History, the millenarian believes, so operates that, when evil has reached its height, the hopeless situation will be reversed. The original, the true harmonious state of society, in some kind of egalitarian order, will be reestablished.[1]

Friday, August 10, 2012

IMF Pushes Europe to Ease Greek Burden


The Long Goodbye
By MATTHEW DALTON And COSTAS PARIS
The International Monetary Fund, facing discontent among its members about the huge sums it has lent to the euro zone, is pushing the currency bloc's governments to take steps to lighten the burden of the bailout loans they made to Athens, officials familiar with continuing discussions said.
The IMF pressure—which officials said has been clear in private discussions among Greece's official lenders—comes in response to mounting evidence that Greece's deep recession has thrown the country's bailout program woefully off track from targets set earlier this year.
IMF officials maintain Greece's debt must be reduced to "sustainable" levels before the fund releases billions more euros to keep Athens from running out of cash, some officials said. The most effective way to do this would be for Greece's bailout lenders to forgive some of the debts Greece owes them.
Such a step would meet fierce resistance from euro-zone governments, such as Germany, which have already lent €127 billion ($157 billion) to Greece and are adamant that it shouldn't expect any more concessions.
The German government has said repeatedly in recent weeks that it expects Greece to uphold the program it agreed to in early 2012 and that no extra German financial aid will be made available. Any move to reduce Greece's debt to the euro zone would need to be approved by Germany's parliament, where lawmakers are increasingly impatient with Greece's desire for more-forgiving bailout terms.
An IMF spokesman declined to comment.
Exactly how to define "sustainable" will be the centerpiece of a debate expected to stretch for months over how to right the bailout program and keep Greece in the euro zone. The IMF now wants to see the government debt ratio close to 100% of gross domestic product in 2020, when Greece is supposed to have finished repaying €33 billion in loans to the IMF, officials said.
That would be considerably lower than a target of 120% of GDP agreed in February, when Greece, the euro zone and the IMF signed a new bailout agreement for the country that imposed sharp losses on the Greek government's private-sector creditors. The shift reflects concerns among fund staff that even the previous target won't leave Greece in a position to repay its debts by 2020.

Europe's Beggars


Bluffing Their Way To Unity And Propserity Via Hijacking And Extortion
by Tyler Durden 
Ten days ago, when predicting what may and likely will be the outcome of the August ECB announcement, we said that it is virtually certain that it will follow in the trailblazing footsteps of what Mario Monti did at the June 29th meeting. To wit: "The bottom line here is that Draghi most likely pulled a Mario Monti (and his hanger on Mariano Rajoy), and spoke up before pre-clearing with Buba's Weidmann. Draghi thinks that, like Monti with Merkel at the June 29 summit, he can bluff the Bundesbank into submission, and Germany will agree to monetization, especially if markets have risen enough where nothing out of the ECB next week leads to a market plunge. The problem is that as we patiently explained, Monti got absolutely no concessions our of Merkel, as was seen in the bond yields of Spain after the June 29 summit." Sure enough, the market soared in the days after June 29 as well, giddy with optimism that Germany would never settle for being bullied publicly and had implicitly agreed with the Monti and Rajoy. Euphoria promptly turned to despair as it became quickly clear that Monti had bluffed without preclearing with Merkel and Buba. Fast forward one month, and what we expected to happen is precisely what did happen.
During an all-night European summit in June, Mario Monti, the Italian Prime Minister, gave German Chancellor Angela Merkel an unexpected ultimatum: He would block all deals until she agreed to take action against Italy's and Spain's rising borrowing costs. 
Ms. Merkel, who has held most of the euro's cards for the past two years, wasn't used to being put on the defensive.
"This is not helpful, Mario," Ms. Merkel warned, according to people present. Europe's leaders were gathered on the fifth-floor of the European Union's boxy glass headquarters in Brussels, about to break for dinner.
"I know," Italy's premier replied.
The nine-hour confrontation between Italy and Germany that night led to a compromise that wasn't the sweeping action Mr. Monti wanted. But it has helped pave the way for a possible intervention by the European Central Bank to stabilize the teetering bond markets of Italy and Spain—a high-risk step that could be Europe's last chance to save the euro.
The Italian-German conflict has also exposed a deep philosophical fissure at the heart of the euro zone: Are painful reforms and austerity in countries such as Italy and Spain enough to restore confidence in the common currency, as Germany has insisted? Or do they need Europe's collective financial support while they fix their economies, as Mr. Monti argues?

Draghi and friends just want your money


Why Europe's Plan Is Doomed
By Bill Gross
The very vocal head of the world's largest bond fund has long been critical of the global ponzi system better known as the "capital markets." Now, finally, he shifts his attention to Europe, where the interests of his parent - Europe's largest insurance company Allianz are near and dear to the heart, and deconstructs not only the biggest challenge facing Europe: getting access to your money, but also the fatal flaws that will make achieving this now impossible. To wit: "Psst! Investors – do you wanna know a secret? Do you wanna know what Angela Merkel, François Hollande, Christine Lagarde and Mario Draghi all share in common? They want your money!" .... but... "private investors are balking – and for what it seems are good reasons – because policy makers’ efforts have been, until now, a day late and a euro short, or more accurately, years late and a trillion euros short." And so they will continue failing ever upward, as permissive monetary policy which allows failed fiscal policy to be perpetuated, will do nothing about fixing the underlying problems facing the insolvent continent. Then one day, the ECB, whose credibility was already massively shaken last week, will be exposed for the naked emperor it is. Only then will Europe's politicians finally sit down and begin doing the right thing. It will be too late.
From the FT:
Draghi and friends just want your money
Psst! Investors – do you wanna know a secret? Do you wanna know what Angela Merkel, François Hollande, Christine Lagarde and Mario Draghi all share in common? They want your money!
They’ve wanted it for years now but you are resisting by holding on to it or investing it at negative interest rates in Switzerland, Germany and a growing number of other countries considered to be European Union havens. They want you to be less frugal and more risk-seeking. They want your money as a substitute for theirs in Spain, Italy and, of course, Greece, but they don’t mention that any more. The example would be too off-putting. “Investors,” they plead, “show us your money!”

The ultimate goal of monetary and fiscal policy in the EU is to re-engage the private sector. The EU needs the private sector as a willing (but not necessarily equal) partner in funding its economy. This often gets lost in the noisy details of all too frequent promises such as the one to defend the euro made by Mr Draghi, European Central Bank president.