Have We Become Accustomed To Dirt?

Keeping clean is expensive and complicated

by Yoani Sánchez 

A teenager writes — with his index finger — the words “Wash me” in the dust on the window of the bus. A mother asks her son what the school bathroom is like and he confirms that “it stinks so much you can’t go in there.” A dentist eats a french fry in front of her patient and with unwashed hands proceeds to extract a tooth. A passerby lets his pizza — just out of the oven — drip cheese over the sidewalk, where it accumulates in a pool of fat. A waitress cleans the tables at Coppelia Ice Cream with a smelly rag, and puts out glasses sticky with successive layers of badly scrubbed milk. A spellbound tourist drinks a mojito in which several ice cubes made from tap water are floating. A sewer overflows a few yards from the kitchen of a recreation center for kids and teens. A cockroach quickly darts along the clinic wall while the doctor listens to a patient’s chest.

An Orgy of Self-Congratulation

Good riddance to the London Olympics

by THEODORE DALRYMPLE

If there were a gold medal for vulgarity and kitsch, the closing ceremony of the London Olympics would have won it hands down. And if proof were required that modern British culture is cheap, tawdry, and relentlessly, ideologically demotic and frivolous, the ceremony certainly provided it. At least it had the merit, in its flashy and garish worthlessness, of being truly representative of the nation in which it took place, of its dreams and aspirations if not its everyday reality. Observing it for as long as was bearable, one could not help but think of the title of the late Neil Postman’s most famous book, Amusing Ourselves to Death.

When the Olympics were finally over, Britain went in for an orgy of self-congratulation. Dissenting voices were almost as few as in a totalitarian dictatorship. It seemed to escape the notice of nearly all commentators that the ceremony combined aesthetic cheapness with the utmost financial extravagance. The only aspect of the proceeding that drew widespread unfavorable comment was that George Michael, one of the aging pop singers who are now, in the view of the ceremony’s organizers, the country’s chief glory—we are, after all, approaching the era of the geriatric adolescent, or adolescent geriatric—used the opportunity to plug his new song. You would have thought from the outcry that the Olympics had previously been commercially virginal.

Who Really Benefited From The Euro ?

Hint: NOT Germany

With austerity supposedly destroying standards of living (that no real austerity has actually been implemented is a different matter entirely) across Europe's insolvent periphery, the only recourse said broke countries (here's looking at you Mario Monti and Mariano Rajoy) have is to desperately attempt to shame those countries who have money such as Germany, Austria, Finland and the Netherlands, aka Europe's AAA club, into shoveling more and more and more cash into the bottomless pit that are the PIIGS. After all, precisely this was the basis for the "hostage and extortion" strategy that Monti employed at the June 29 summit, and which has resulted in a surge in European stocks on hopes Germany will indeed bail everyone out. The reason for this is that, at least according to conventional wisdom, it was these countries that benefited the most from a decade of EUR-facilitated mercantilism, and exported inflation to their spend thrift (and 'debt-thrift') southern neighbors. 

So it is only "fair" that these countries now give back a little (or a whole lot) back (just as it is only "fair" that Germany give a helping hand in Obama's reelection chances, which as everyone knows would be negligible if the global capital markets were to tumble just before November if reality in Europe were to come back with a vengeance). Well, as virtually always happens, conventional wisdom is wrong, and as the following chart from UBS demonstrates, when one analyzes the only relevant metric that compares changes in standards of living across various income deciles- namely changes in real disposable household income - it is precisely the PIIGS that benefited, while countries such as Germany and Austria were left in the dust.

From UBS:

If we look across the larger and longer established Euro membership we can see these two patterns being replicated according to country type. Each country shows the cumulative real disposable household income growth for each of its income deciles. The lowest income decile is to the left of each country’s selection, and the highest to the right.

Austria looks to be alarmingly weak – what this actually represents is very little change in nominal disposable income growth, coupled with inflation. Germany, Ireland, most of Italy and the French middle class all experience a decline in their standards of living. In most of these countries, the highest income groups do relatively well.

In A Paper Money System, All Assets Are Backed by the Treasury Bond

It is circular, self-referential, and it is a Ponzi scheme

By Keith Weiner

What backs the money in the present irredeemable paper system?  Start by considering this brief anecdote.  Joe buys some equipment from John, to be paid Net 30.  We say that Joe owes John $10,000.  Next month, Joe comes back and gives the money to John.  Joe is out of debt, but has the debt been extinguished? No.  The debt has been transferred.  Now the Federal Reserve owes John the money. Surprised?  Don’t be. 

In a gold-based monetary system, every asset is ultimately backed by gold.  This does not mean that every debtor (including banks) keeps the full amount of its liability in gold coin just lying around.  Why would one bother to borrow if one did not need the money?

It means that every asset generates a gold income and every asset could be liquidated for gold, if necessary.  If a debtor declares bankruptcy, the creditor may take losses.  But he can rely on the gold income stream for each asset or if need be he can sell the asset for gold.

In a gold-based monetary system, money is gold and gold is money.  Money cannot disappear; it does not go “poof”.  Bad credit can be defaulted and must be written off.  But money merely changes hands.

When Putin's Thugs Came for Me

This was a medieval show trial with no connection to the criminal code

By Garry Kasparov

The only surprise to come out of Friday's guilty verdict in the trial here of the Russian punk band Pussy Riot was how many people acted surprised. Three young women were sentenced to two years in prison for the prank of singing an anti-Putin "prayer" in the Cathedral of Christ the Savior. Their jailing was the next logical step for Vladimir Putin's steady crackdown on "acts against the social order," the Kremlin's expansive term for any public display of resistance.

In the 100 days since Mr. Putin's re-election as president, severe new laws against public protest have been passed and the homes of opposition leaders have been raided. These are not the actions of a regime prepared to grant leniency to anyone who offends Mr. Putin's latest ally, the Orthodox Church and its patriarch.

Unfortunately, I was not there to hear the judge's decision, which she took several hours to read. The crowds outside the court building made entry nearly impossible, so I stood in a doorway and took questions from journalists. Suddenly, I was dragged away by a group of police—in fact carried away with one policeman on each arm and leg.

The Generation that Lost America

Baby Boomers

by Robert J. Cristiano

Tom Brokaw named our parents The Greatest Generation. They came of age during The Great Depression and defeated Fascism, Nazism and Communism. They built the Interstate Highway System and landed a man on the moon. They built the great American middle class with safe communities and public schools that were the envy of the world. They deserve the title of The Greatest Generation. One of their few criticisms is that they spoiled us boomers, adhering to the teaching of Dr. Benjamin Spock.

I am 59 years old and a child of perhaps the most indulged and impatient generation in history. I fear we may also become known as the generation that lost the American Dream. The Baby Boomers have rejected personal responsibility and exhibited a lack of mental discipline that could have enormous implications for the future.

The United States House of Representatives, now overwhelmingly controlled by the Boomers, signed a $787 billion legislative “stimulus” package comprised of 1,071 pages and a hefty 8 pounds. Not one legislator read the bill before signing it. Months later, the same House members publicly screamed at the corrupt executives of AIG who received bonuses in 2008 – bonuses specifically allowed in the very legislation they passed without reading.

Revolution is just the beginning

‘Change’, and even full blown revolution only brings you back to where you started

By Simon Black 

rev-o-lu-tion (n)

1. a forcible overthrow of a government or social order in favor of a new system.

2. the single completion of an orbit or rotation.

On the morning of December 17, 2010, Mohamed Bouazizi started his workday like any other. The 26-year old street merchant laid out the day’s produce on his cart, greeted his colleagues, and passed the first few hours of the day without consequence.

Then the police showed up.

Is California the new Detroit?

The signs are everywhere

by Robert J. Cristiano

Most Californians live within miles of its majestic coastline – for good reason. The California coastline is blessed with arguably the most desirable climate on Earth, magnificent beaches, a backdrop of snow-capped mountains, and natural harbors in San Diego and San Francisco. The Golden State was aptly named. Its Gold Rush of 1849 was followed a century later by massive post-war growth.

There is no mystery why California’s population and economy boomed after the Second World War. Education in California became the envy of the world. California’s public school system led the nation in innovation with brand new schools and classrooms. The Community College system that fed its universities was free for its students. A college education at the UC and Cal State systems was inexpensive. UC-Berkeley, with its graduate schools, was arguably the greatest in the world while Stanford developed into the Harvard of the West. An efficient highway system moved California’s automobile driven commerce while fertile soil of the Central Valley became the fruit and vegetable basket of the world.

What went wrong?

On the 40th Anniversary of the "Limits to Growth"

by Mark Perry

It's the 40th anniversary this year of the 1972 release of the book "The Limits to Growth" from the Club of Rome, which used computer models to predict that world population growth and economic expansion would cause the Earth to "overshoot" its carrying capacity of finite resources, and eventually lead to overpopulation, mass starvation, smog disasters, pesticide-induced cancers, oceans devoid of fish, massive species extinction, and significant reductions in life expectancy among other inevitable calamities, disasters, and catastrophes.   

As George Will explains in his latest column ("Why Doom Has Not Materialized"), "We were supposed to be pretty much extinct by now, or at least miserable. We are neither."  He then asks, "So, what went wrong?" And responds (in the tradition of resource economist Julian Simon), "The modelers missed something — human ingenuity in discovering, extracting and innovating. Which did not just appear after 1972." 

The pagan god of token environmentalism

Why doom has not materialized

By George F. Will

Sometimes the news is that something was not newsworthy. The United Nations’ Rio+20 conference — 50,000 participants from 188 nations — occurred in June without consequences. A generation has passed since the 1992 Earth Summit in Rio, which begat other conferences and protocols (e.g., Kyoto). And, by now, apocalypse fatigue — boredom from being repeatedly told the end is nigh.

This began two generations ago, in 1972, when we were warned (by computer models developed at MIT) that we were doomed. We were supposed to be pretty much extinct by now, or at least miserable. We are neither. So, what went wrong?

That year begat “The Limits to Growth,” a book from the Club of Rome, which called itself “a project on the predicament of mankind.” It sold 12 million copies, staggered the New York Times (“one of the most important documents of our age”) and argued that economic growth was doomed by intractable scarcities. Bjorn Lomborg, the Danish academic and “skeptical environmentalist,” writing in Foreign Affairs, says it “helped send the world down a path of worrying obsessively about misguided remedies for minor problems while ignoring much greater concerns,” such as poverty, which only economic growth can ameliorate.

The west has just become a giant banana republic

Anyone in the west who honestly thinks he’s still living in a free society is either a fool or completely out of touch

By Simon Black 

Wikileaks founder Julian Assange has made an admirable habit of enraging western governments over the last few years, particularly the United States.

Most notably, his release of classified diplomatic documents in 2010 proved ruthlessly embarrassing, shining a spotlight on the absurd, petty little world of international relations.

Ever since, the US government has done everything it can to stop him. Short of assassination. They shut down his website, but mirror sites instantly popped up. They sought legal action, but their efforts have been impeded by the bureaucratic deftness of his attorneys. They froze his bank accounts… but donations have poured in from all over the world.

Along the way, Uncle Sam co-opted a number of allied nations to set aside their principles for the sake of US interests– Switzerland rolled over immediately and shuttered Assange’s bank accounts.

Assange Or Corzine?

Priorities are a bitch

by John Aziz

The United States won’t prosecute Corzine for raiding segregated customer accounts, but will happily convene a Grand Jury in preparation for prosecuting Julian Assange for exposing the truth about war crimes.

From the New York Times:

A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

One Thing Romney and Obama Agree On

Big Government

By Brendan Greeley 

 “We need to stop spending money we don’t have,” said Paul Ryan at the Iowa State Fair on Monday. “President Obama has given us four years of trillion dollar-plus deficits. He is making matters worse, and he is spending our children into a diminished future.”

It’s a slippery word, “spending.” As Paul Ryan understands it—as do almost all of the Republicans in office—”spending” means writing a check. The federal government takes in money through taxes, then spends it on programs. This makes intuitive sense. It’s also wrong.

It’s been wrong since 2002, when the United States, after a one-year dip into the black, began running deficits again. You might argue that the Bush tax cuts, extended by the Obama administration, caused these deficits. Or that the wars in Iraq and Afghanistan did, or Medicare Part D, or reduced revenue from the dot-com bust or the Great Recession, or Barack Obama’s check-writing and tax-cutting stimulus passed in 2009. You would be right about all of these things. Once in deficit, if the federal government takes in less money, it makes up the difference by borrowing money. If it writes bigger checks, it does the same. Until the budget is balanced, it’s all Treasury bills. It’s all spending.

Did the free market ruin British railways?

Squeezing the debate about Britain’s railways into the tired free market vs nationalisation script makes no sense

by Tim Black 

Britain’s privatised railways are once again in the public firing line. It’s not hard to see why.

On Monday, it was announced that our already relatively expensive train fares would rise by up to 11 per cent next year. And then, to add a wallet-shaped insult to each consumer’s injury, it was revealed that the rail operator FirstGroup, the object of a high level of customer complaints, was to take over the running of the lucrative West Coast Main Line franchise from Virgin Trains – a feat it had achieved by bidding £5.5 billion for the 14-year contract compared to Virgin’s £4.8 billion. Quite how FirstGroup was to pay for its outlay without cutting back on services and staff has been open to question. Virgin chief Sir Richard Branson called the bid ‘insane’.

In Search of 'Why'

The lone-wolf sociopath returns

By mark steyn

The media conventions are pretty much chiseled in concrete by now. If a guy guns down large numbers of people while shouting "Allahu akbar!" don't worry, it's a one-off, part of no broader pattern, just a "lone wolf" who succumbed to "workplace violence" (Major Hasan at Fort Hood) or worries about impending foreclosure (the Times Square bomber) or any of the other highly specific, individual, customized circumstances to which card-carrying members of the Amalgamated Union of Lone Wolves are prone. But if a genuine "lone wolf" guns down large numbers of people without shouting "Allahu akbar!" the media herd stampedes to ask the obvious question:

Why?

Be Careful What You Wish For

The Game is Rigged

By Mark E. Grant

Rick Santelli at CNBC asked the question and he asked me for a simple answer so I gave it to him. Rick wanted to know how Greece had raised almost $5 billion in a Treasury Bill auction and I explained; simply. The debt was almost entirely bought by the Greek banks, who are bankrupt and funded by the government of Greece through the EU and the ECB in various ways, and they pledged the Bills right back to the ECB and they got their money back. It was a Ponzi scheme of sorts, which I stated, which allowed the ECB to lend money to Greece through the Greek banks. Greece is out of money and Germany is deciding what to do about Greece so in the meantime the ECB funded the country. Rick went on to state that “the game was rigged” and he is one thousand percent correct; the game was rigged.

At least we didn’t have to listen to the Greek Prime Minister calling it a great victory for Europe like we did with the Spanish one but that may be the best thing that can be said for the situation. The ECB violated their rules and strictures and did it at the behest of the European Union you may be sure which only proves, once again, that the ECB is about as independent as a three year old is of his mother. You can say the three year old is his own person but I assure you that each and every mother on the planet would roll her eyes at you. This then is one of the main problems with Europe these days; there are laws and regulations that are defined to be exactly what the EU wants them to mean at any point in time so that there are in effect no laws and no regulations and just political expediency.

165 Million Americans Are Dependents of the State

Is Tyranny Next?

By Bill Wilson

 Is America descending into a dependency state, where the majority uses its voting power to demand government services from taxpayers?

New research from Ranking Member of the Senate Budget Committee Jeff Sessions (R-AL) reveals that this reality may already be here, with more than 107 million Americans on some form of means-tested government welfare.

Add to that 46 million seniors collecting Medicare (subtracting out about 10 million on Supplemental Security Income, Medicaid, and other senior-eligible programs already included in Sessions’ means-tested chart) and 22 million government employees at the federal, state, and local level — and suddenly, over 165 million people, a clear majority of the 308 million Americans counted by the U.S. Census Bureau in 2010, are at least partially dependents of the state.

Since President Obama took office in 2009, eligibility for Medicaid, food stamps, the earned income tax credit, the making work pay tax credit, and unemployment benefits has increased by roughly 10 million. To add insult to injury, Obama then unilaterally dismantled the work requirements that were the heart of the 1990’s welfare reform via an arbitrary executive order.

But it’s even worse than that. In fact, most voting-age Americans do not pay income taxes — approximately 50.6 percent.

Abundance vs. Scarcity

by Frédéric Bastiat

Which is best for man and for society, abundance or scarcity? What! you exclaim, can that be a question? Has anyone ever asserted, or is it possible to maintain, that at the foundation of human well-being?

Yes, this has been asserted, and is maintained every day; and I do not hesitate to affirm that the theory of scarcity is the most popular by far. It is the life of conversation, of the newspapers, of books, and of political oratory; and, strange as it may seem, it is certain that political economy will have fulfilled its practical mission when it has established beyond question, and widely disseminated, this very simple proposition: "The wealth of men consists in the abundance of commodities."

Do we not hear it said every day: "The foreigner is about to inundate us with his products?" Then we fear abundance.

Did not Mr. Saint-Cricq exclaim: "Production is excessive"? Then he feared abundance.

Do workmen break machines? Then they fear an excess of production, or abundance.

Paul Ryan’s Fairy-Tale Budget Plan

The Wall Street Lawn Chair

By David Stockman

PAUL D. RYAN is the most articulate and intellectually imposing Republican of the moment, but that doesn’t alter the fact that this earnest congressman from Wisconsin is preaching the same empty conservative sermon.

Thirty years of Republican apostasy — a once grand party’s embrace of the welfare state, the warfare state and the Wall Street-coddling bailout state — have crippled the engines of capitalism and buried us in debt. Mr. Ryan’s sonorous campaign rhetoric about shrinking Big Government and giving tax cuts to “job creators” (read: the top 2 percent) will do nothing to reverse the nation’s economic decline and arrest its fiscal collapse.

Two Prisms for Looking at China’s Problems

China’s Solution - Keynes or Mises?

This piece on China comes from the NY Times and is written by George Mason University professor Tyler Cowen. Professor Cowen famously has written why he is not an “Austrian” economist yet he hews closely to its ideas. In this piece he compares the Austrian economic theory analysis of China to Keynesian theory’s analysis. His criticism of Austrian theory, below, is that Austrians have a hard time explaining massive malinvestment during a boom yet at the same time they say markets allocate goods efficiently. This is completely erroneous, of course. Austrians explain well the result of monetary distortions of markets caused by central banks. Austrians don’t say economic actors are perfect, only that the market tends to correct mistakes. Other than that, it’s a good comparative analysis of China’s problems. Mainly, they still have a largely top-down command economy that misallocates capital (malinvestment) on a massive basis. My views are not as optimistic. 

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Two Prisms for Looking at China’s Problems

By TYLER COWEN

CHINA is confronting some serious economic problems, and how Beijing does — or doesn’t — respond to them could bend the course of the global economy.

First, China’s real estate bubble is deflating. But its economy also seems to be suffering from what we economists call excess capacity — an overinvestment in capital goods, whether in factories, retail stores or infrastructure.