The Handwriting on the Wall

Rebuilding the foundations of the political culture of the West

by GEORGE WEIGEL

In recent years, roiled as they have been by a global financial and economic crisis, the phrase "the handwriting is on the wall" has become a staple of the public conversation. It is a metaphor for the general sense of disorientation, unease, and fear for the future that seems epidemic throughout the Western world, and that is having so obvious an effect on the national cast of mind in this election season.

The phrase may be ubiquitous, but how many of those who invoke "the handwriting on the wall" have looked closely at its source — the fifth chapter of the Book of Daniel in the Hebrew Bible? The story told there is a striking one. Recalling it in full might help us come to grips with whatever is being written on the wall at this moment in our national history, and in the history of the civilization of the West. Reflecting on that story might also help us identify a prophet who, like Daniel, could help us translate "the handwriting on the wall," understand its meaning, and thus know our duty.

The scene is readily set. The place: Babylon. The time: some two and a half millennia ago, in the 6th century before our era. The Kingdom of Judah has been conquered by the Chaldean king, Nebuchadnezzar, who, the Book of Daniel tells us, ordered his chief vizier "to bring some of the people of Israel, both of the royal family and of the nobility, youths without blemish, handsome and skillful in all wisdom, endowed with knowledge, understanding, competent to serve in the king's palace, and to teach them the letters and language of the Chaldeans." The most impressive of this group of talented young Jews was named Daniel. In addition to the personal qualities specified for royal service by Nebuchadnezzar, Daniel had the power to interpret the great king's dreams — a skill that led Nebuchadnezzar to acknowledge, for a moment at least, that Daniel's God, the God of the people of Israel, was "God of gods and lord of kings, and a revealer of mysteries."

The Sovereign Central Bank

Mario Draghi is the most powerful banker in the history of the world

By WALTER RUSSELL MEAD

The European Central Bank has crossed a new frontier. Judging by the events of the last two days, it isn’t just independent. It’s sovereign.

It is certainly more sovereign than countries like Spain, Portugal and Greece. These countries will now stay afloat if their economic policies meet the approval of a majority of the members of the ECB board.

The ECB has become a new kind of central bank with a new kind of transnational power less because it is ambitious than because Europe is crippled. The European Union is home to a bewildering array of institutions. There is a European Parliament, a European Commission, a Council of Europe and a Court of Justice. Europe has a president and a (sort of) foreign minister.

Some EU institutions are capable and strong: its legislative and regulatory institutions generally are pretty effective at what they do. The European Union has no shortage of either regulations or laws, and companies like Microsoft and Google have developed a healthy respect for the ability of European regulators to enforce their decisions and police the EU market.

But the European Union is still much more of a club than a country, and its weakest institutions are part of what Americans call the executive branch. The EU’s president and its foreign minister can talk but they cannot really act and very few people inside or outside Europe remember who holds these posts—or perhaps even know that the posts exist. During the gravest crisis in the history of the Union, the EU executive officials have been almost completely irrelevant, and what political impact “Europe” has had on the unfolding crisis has come from individual commissioners rather than from Herman van Rompuy or Catherine Ashton. The worse and more urgent Europe’s problems get, the less visible these two officials become.

Enron: The Perils of Interventionism

The devil's sand box

By Robert L. Bradley Jr.

"For three decades now, the dominant strain of economics from the University of Chicago has been teaching gullible undergraduates and journalists that there is no such thing as the public interest. Efficient outcomes are just the aggregation of selfish private interests, and government's main job is to get out of the way. Well, after Enron, these theorists should learn some other useful trade." — Robert Kuttner, "Enron: A Powerful Blow to Market Fundamentalists," BusinessWeek, February 4, 2002.

"Enron should be remembered as the antithesis of a true capitalist enterprise.... Enron lived, thrived, and perished in and through the mixed economy.... The capitalist worldview is stronger, not weaker, post-Enron." —Robert L. Bradley Jr., Capitalism at Work: Business, Government, and Energy (Salem, MA: M & M Scrivener Press, 2009), pp. 293, 302.

In mainstream thought, the fall of the once-iconic Enron Corporation (1986-2001) has become "Exhibit A" against unbridled business. To capitalism's critics, its collapse was about more than one company's bad management. Enron exposed the economic truth about the deregulation movement that had begun in the late 1970s, as well as the moral truth about the ebullient profit-seeking ethos that went along with it. And that truth was: In underregulated markets, greed will shamelessly sacrifice the virtues of fairness, honesty, justice, and even legality.1

"I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society," Paul Krugman wrote in theNew York Times.2 Why? Because it will mean "ending an era of laxity, in which nobody asked hard questions as long as everything looked O.K."3And Robert Kuttner, in BusinessWeek, said that Enron "should signal the collapse of a whole economic paradigm" and "signal a whole new era of re-regulation."4

Rice University business ethicist Duane Windsor lambasted "the Enron value set" of "an extreme laissez-faire ideology of absolutely 'free' (i.e., absolutely unregulated) markets."5 Diane Swanson of Kansas State University, with Enron in mind, complained that "most MBAs will graduate without an anchor in social and environmental management," leaving them with "an amoral, even brutish theory of management [that] has long been taught in business schools."6

In short, Enron seemed to embody the Progressives' view that the "idealistic" 1960s and 1970s had been overthrown by a revivified capitalism, coming out of the right-wing think tanks with a new confidence, based on Ayn Rand's ethical individualism and Milton Friedman's libertarian economics. The result was plain to see: America's most admired company (according to Fortune magazine) turned out to be America's biggest bankruptcy, and its top executives turned out to be criminals. Textbooks immediately began to incorporate this interpretation, and ten-year retrospectives of the company have not changed it.7

A False Narrative

"I believe in God, and I believe in free markets," stated Ken Lay, the founder and chairman of Enron during its entire life.8 At a Cato Institute conference on natural-gas deregulation, Lay intoned: "Imperfect markets are often better than perfect regulation."9

Instinctive Blunders

Job Protection and Redistribution

By Anthony de Jasay

Man has some instinctive reactions to events that shake one's belief in genetically selected behaviour being favourable for the survival of the species. When caught by a storm in open country, his instinct is to seek cover under a tree, which is precisely the thing he must not do if he is weighing one outcome against the chance of a much worse one. Would he rather get wet or be struck by lightning? Experience over countless millennia should have taught him the way lightning mostly strikes, but apparently his instincts have not learnt the lesson. Likewise, when he is pushed, man's reaction is to push back. Though his best defence would be to pull the pusher on and use his very momentum to bring about his downfall. To say man learns this by taking judo lessons, if he learns it at all, is only part of the answer. Perhaps genetic selection of the behaviour best for survival should have taught him over countless millennia to use judo to defend himself. While the individual's instincts seem to lead him to blunder some of the time, government's "instincts" lead it to blunders much of the time. One very grave blunder it never avoids—a blunder denounced in this column more than once over the past few years—is to tighten the labour code and pile on ever more draconian job protection measures when unemployment is high and looks like staying high.

Collateral Damages

Jobless Greeks Resolved to Work Clean Toilets in Sweden

By Oliver Staley

As a pharmaceutical salesman in Greece for 17 years, Tilemachos Karachalios wore a suit, drove a company car and had an expense account. He now mops schools in Sweden, forced from his home by Greece’s economic crisis.

“It was a very good job,” said Karachalios, 40, of his former life. “Now I clean Swedish s---.”

Karachalios, who left behind his six-year-old daughter to be raised by his parents, is one of thousands fleeing Greece’s record 24 percent unemployment and austerity measures that threaten to undermine growth. The number of Greeks seeking permission to settle in Sweden, where there are more jobs and a stable economy, almost doubled to 1,093 last year from 2010, and is on pace to increase again this year.

“I’m trying to survive,” Karachalios said in an interview in Stockholm. “It’s difficult here, very difficult. I would prefer to stay in Greece. But we don’t have jobs.”

Greece is in its fifth year of recession, with the economy expected to contract 6.9 percent this year, the same as in 2011, according to the Athens-based Foundation for Economic and Industrial Research. Since 2008, the number of jobless has more than tripled to a record 1.22 million as of June, out of a total population of 10.8 million.

“In Greece, there was no future,” said Ourania Michtopoulou, who moved with her husband to Sweden in 2010 after both lost textile industry jobs in Thessaloniki, where they had a comfortable life with a house and car. “Here, I can hope for something good to happen. Maybe not for me -- I’m 48 -- but maybe for my children.”

‘Go Home’

Their family now crams into a small apartment, while her husband, Nikos, works for a landscaper and her teenage children struggle with Swedish lessons.

“It was not easy for them,” she said. “My daughter said lots of times, ‘I hate Sweden -- I want to go home.’”

Karachalios began his career in pharmaceutical sales after his mandatory military service, working at three different companies in the southern city of Patras. He married a Chinese woman he met at the 2004 Athens Olympics, had a daughter, and divorced.

“You can plan, you can organize, you can make plans for 10 years, 20 years, but you don’t know what life brings,” he said.

Bankrupt Cyprus And The Russian Connection

The House of Cards

By Wolf Richter   

The Republic of Cyprus, with its 840,000 people, has been in the Eurozone for less than five years. Yet it burned through mountains of euros faster than anyone could count. Now it needs a bailout whose magnitude balloons every time someone blinks.

The financial problems came to a head last year when the markets refused to go along with the country’s profligacy. So Cyprus went begging to Russia and got a €2.5 billion loan last November. Which quickly evaporated. In June, banks began to crater. Bailout time. €2.3 billion would be required for the two largest ones. The bailout Troika, the despised austerity gang from the EU, the ECB, and the IMF, took a gander at the stuff the banks called “assets.” Costs jumped to €6 billion, plus €4 billion for a government bailout. Then rumors seeped out that the banks alone would need €9 billion, for a total of €13 billion [read..... The Ballooning Cyprus Fiasco].

In early August, a hullaballoo arose when it was leaked that Central Bank Governor Panicos Demetriades had told lawmakers of an even greater fiasco. He’d been appointed only on May 2, and when he opened the closet doors of the banks, he discovered the real mess: €12 billion would be needed for the banks—70% of the country’s shrinking €17 billion economy! Plus whatever the government would need. A total of €16 trillion perhaps. 94% of GDP.

U.S. and Europe : Governments of Equal Size ?

Total U.S. spending is already roughly equivalent to European spending

e21 Editorial

There is a sense among many commentators that the United States is “becoming” more like Europe in that the government is growing beyond thresholds that could be reasonably financed by the private sector. Putting aside the merits of this view, the general description of the U.S. as “moving towards” Europe makes the distance left to be traveled seem farther than it really is. The graphic below, constructed from the International Monetary Fund (IMF) World Economic Outlook (WEO) data, compares the combined government-to-GDP ratio of the 17 countries that use the euro currency to the combined government-to-GDP ratio of the U.S.

Based solely on government outlays, the U.S. government is about 8 percentage points (or about 16%) smaller than that of the euro zone. However, this is not really an apples-to-apples comparison because it does not include the disparate accounting for health insurance premiums. In the euro zone, health insurance premiums are generally financed directly through taxation; in the U.S. employer-sponsored health insurance premiums are deducted from pay checks or contributed directly by employers. The net effect is to leave after-tax income lower to pay for health insurance.

The Terrifying New Normal

A vast transfer of wealth from those who saved to those who owe

By Victor Davis Hanson

Why Save?

The hallmark advice of retirement planning was always to scrimp, save, and put away enough money to make up for retirement’s lost salary, increasing medical bills, and the supposed good life of the “golden years.” If a couple had saved, say, $300,000 over a lifetime (again, say, putting $500 away each month for 30 years at modest compounded interest), then they might expect a so-so annual return at 5% of about $15,000 a year on their stash, or about $1,250 per month.

In other words, perhaps Mr. and Mrs. Retiree could find enough with Social Security to live okay and pass on the principal to their kids. But well aside from the fact that many Americans have been laid off, taken pay cuts, lost home equity, had their 401(k)s pruned, or had to take care of out-of-work relatives, there is no 5% any more on anything, not even 2% or  in most cases 1%.  Saving money means nothing really in terms of return, only the realization that inflation eats away the principal each year.

To earn a decent return, the retiree has had to wade into bonds, stocks, and real estate buying and selling, with all their attendant risks that loom larger after 65. The old American idea of receiving a fair so-so interest on a little money in the savings account vanished. And no one seems to care.

America’s Real Fiscal Problem

Federal Gov't Has Become a Gigantic Wealth-Transfer Machine

By mark perry

The charts above illustrate two disturbing trends that help frame the long-run fiscal challenges confronting the U.S. that far outweigh any possible near-term fallout from the pending “fiscal cliff” that the federal government faces at the end of this year. 

1. The top chart above (data here, see Table 6.1) displays the increasing share of the federal government’s spending on “payments to individuals,” based on actual data from the Office of Management and Budget (OMB) for the years 1952 to 2011 and its projections through 2017.

In 1952, less than one out of every six dollars spent by the federal government represented payments to individuals.  By 2010 payments to individuals had increased so dramatically over time that roughly two out of every three dollars (66.1 percent) spent by the federal government in that year were payments to individuals for programs like Social Security, Medicare and Medicaid, public assistance, food and housing assistance, and unemployment assistance.  Last year, payments to individuals as a share of federal spending decreased slightly to 65 percent, and that category was more than three times larger than the share of 2011 federal spending on defense (20.1 percent), and more than ten times larger than the share spent by the federal government on interest payments for the national debt (6.4 percent).  The OMB estimates that payments to individuals will exceed 68 percent of federal spending in 2014, 2015 and 2016, before falling slightly to 67.5 percent in 2017 when payments to individuals will exceed $3 trillion for the first time.

False Choices and the True Dilemma

The only choice is Liberty

by Daniel James Sanchez

In 1789 a group of men gathered in Paris to sound the death knell for the ancien regime, and to inaugurate the modern political world. But there were some differences among them. Some wanted to abolish the old order more completely. Others wanted to retain some vestiges of the old privileges. In this "National Constituent Assembly" of France, the ideological birds of a feather sat together: the more radical members on the left, the more conservative members on the right.

On that day, on the eve of the French Revolution, not only was the modern political world born, but so was its terminology.[1] To this day, politics is bisected into a "left wing" and "right wing." Much digital ink is daily spilled in vain on the web over the "best" distinction between "right" and "left." Now, with regard to specific, fleeting political agendas, vague distinctions like this make sense. Movable umbrella terms are necessary, because legislation involves shifting coalitions of people who do not agree on every single point. The trouble starts when the terminology of the political moment is imported wholesale into the language of science, in which precise, fixed distinctions are called for. The left/right divide is downright confusing for social science.

Where this confusion is most pronounced is in intellectual discussion of Western society following World War I. According to common opinion, there are two politicoeconomic extremes: communism (or socialism) on the left, and fascism (or Nazism) on the right. Sound policy, then, is considered a balancing act between two opposite forms of totalitarianism. If one leans too far to the left toward the interests of the poor and weak, one arrives at communism/socialism. Veer too far to the right toward the interests of the rich and strong, and you get fascism. This political taxonomy is entirely unscientific. Neither fascism nor Nazism has ever been scientifically identifiable social orders. They are party platforms, and thus are assemblages of often-contradictory ideas and slogans. Calling fascism a "social order" makes as little sense as calling "Tea Partyism" or "Blue Dog Democrat-ism" a social order.

Earth To Conservatives

Immigrant Amnesty Is A Conservative Policy

"I believe in the idea of amnesty for those who have put down
 roots and lived here, even though sometime back they may have  entered illegally."  - Ronald Reagan.

By Jerry Bowyer

Latinos are religious, morally conservative and tend disproportionately to join the military. They also tend to be hard working and entrepreneurial. Do we really have too many of them?

Do we really want to pack them up, forcibly, by the millions in the greatest forced migration in human history? How many are there, 15, maybe 20 million? No one has ever moved 15 million people against their will. No one has ever moved half that many without concentration camps, forced marches of one form or another and mass death through plague.

If there’s another way to do it, please tell me what it is. But I haven’t heard one. What I hear is slogans like ‘what part of illegal don’t you understand’ and attacks on ‘amnesty.’  Slogans move callers to dial in to talk radio, but they don’t move 20 million people voluntarily back into poverty and squalor. Soldiers do that (unhappy ones); box cars full of people do that. Camps surrounded by barbed wire do that. In the end you either let them stay or you herd them out. If you want to call it amnesty, go ahead.

After all, what’s wrong with amnesty? The idea has a well-worn legal tradition, one strongly associated with the Christian faith. It means forgiveness. After the Civil War, Lincoln offered amnesty to rebel soldiers. Was he wrong to do so? They had taken up arms against their own government; they had killed hundreds of thousands.  But Lincoln (as opposed to the radical republicans) had the wisdom to offer forgiveness. What about runaway slaves after emancipation? They had broken the law, shouldn’t they have had to pay the price even after the laws were changed? Of course not. Why should immigration laws be any different? If we liberalize them, which seems well overdue, should we still punish the people who violated the law which we later deemed too harsh?

China, Europe export gangsters and low wages to Africa

The most dangerous challenge for Africa in terms of foreign criminal penetration is coming from Europe

By Emanuele Scimia

Africa is a battleground for the geopolitical interests of China and Europe. But despite Beijing's and Brussels' claims about the distinctive features of their respective approaches to developing countries, Chinese and European companies treat African workers badly in equal measure. Meanwhile, transnational crime syndicates and criminal gangs are spreading from the Old Continent and the Middle Kingdom to many African regions. 

Thirty-four miners shot dead by police at a British-owned platinum mine in South Africa; a Chinese manager killed by local workers at a coal mine in Zambia. Alongside the emerging heft of "Made in China" criminality in Africa's Chinatowns are the dramatic advances of criminal organizations from Europe throughout the African continent. Notwithstanding theoretical disputes over distinctions between Western colonialism and Chinese neo-colonialism, it seems that Europe and China alike are exporting to Africa some of their worst pathologies. 

Demands for better pay
At the Marikana platinum mine in Rustenburg, South Africa, miners were killed during a strike over pay on August 16, while asking for an increase in their minimum wage from US$545 to $1,500 a month. The strike had begun a few days earlier and 10 people, including two police officers, had already died after fierce clashes. 

The Marikana mine is owned by London-based Lonmin, the world's third-largest platinum producer. South Africa is the largest platinum producer and its mining sector is worried that the latest unrest could affect the national output in the short run. Apart from the Marikana situation, Johannesburg-based Anglo American Platinum, the world's top producer of the metal, is also grappling with demands for pay raises. Similar pleas have come from workers at the Royal Bafokeng platinum mine just north of Rustenburg.

German politicians will make their country pay

Euro victim, not winner

By Gunnar Beck 

Germany has been the principal beneficiary of the euro, and for this reason ought to show solidarity with eurozone members in crisis. Once the eurozone is back on its feet, Germany will be the main beneficiary again. This is the familiar view of Germany’s position in the eurozone, which is simple enough. The truth, alas, it is not. 

Those who think that Germany has profited greatly from the euro almost always rest their case on Germany’s export surpluses. The euro created economic stability; it eliminated exchange rate risks; appreciated less than the Deutschmark would have, and thus aided German exports. But has the euro benefited Germany more than other countries? 

It is true that between 1998 and 2011, German exports grew by 117%, according to the German Statistical Office. But if the euro was so vital to Germany's external trade, then the increase in exports to eurozone members would have been greater than the increase to other countries. In fact, the reverse is the case.

The Myth of British Austerity

The cuts Paul Krugman thinks caused a double-dip recession don't exist

By ROBERT P. MURPHY

One of the problems with economic policy analysis is that pundits on both sides create their own versions of reality. A good example of this is economist Paul Krugman’s treatment of the British government’s spending since the financial crisis. As a Keynesian, Krugman of course thinks that massive government budget deficits are necessary in these times of depressed demand and a “liquidity trap.”

To ostensibly demonstrate how right he is, Krugman has repeatedly pointed to the British experience. According to Krugman, the Brits did what all the right-wingers wanted, and slashed spending in order to rein in deficits. Yet this led to a double-dip recession, just as Krugman warned. There’s just one problem with this argument: The British didn’t actually cut spending, and their fiscal pattern is quite similar to that of the U.S.

Desperate Maladies Require Desperate Measures

Acts of Desperation

“Government has no other end, but the preservation of property.”

                                                                                 -John Locke

By Mark J. Grant

One of the primary purposes of a government, any government, is to sustain itself. In its final hours it will do almost anything possible for its self-preservation. If the rumors are to be believed and Draghi is going to propose unlimited bond buying in the short end of the curve for the nations of Europe in maturities up to three years then it must be said that Mario Draghi, personally, has re-written the treaties for the European Union which specifically forbids what he is apparently about to undertake. In my mind, this is an act of desperation that makes me quite nervous because my thinking extends out past the announcement that will be made later today as I consider its consequences, ramifications and where the focus will shift which will be to the recession in Europe and to the fundamental financial health of the nations in the European Union and then to the fundamental financial health of the European Central Bank itself.

It was in January of 2010 when the yield on the Greek ten year was a 4.38% that I first stated that Greece was going bankrupt. It was several months later that I added Portugal, Ireland and Spain to the list. Three have gone and Spain is about to go and now I would add Italy to my list. The firewalls that were supposed to protect the Continent have failed miserably as exemplified by the current financial condition of both Spain and Italy. Now, in what I consider to be an act of desperation, the ECB is not only violating its mandate but putting the economics of the Continent in a perilous state and the markets are totally focused on the next few hours and not at all upon the consequences of the ECB’s decision. I am not surprised by this but I am reminded of the moments before the Lehman disaster when the relative calm did not predict the firestorm which was to ravage the world. The echoes remain; “WE SHOULD HAVE KNOWN,” and I am fearful that we may have another of these moments as people consider the consequences of the ECB’s actions incorrectly.

It's Time to Ask the People What They Think

A Referendum on Europe

The Germany democratic system has suffered as a result of the euro crisis, but it has also made fighting the crisis harder. Now it's time to hold a referendum on European integration. Only then will Berlin have the democratic legitimacy it needs to take effective action.

By Dirk Kurbjuweit

After World War II, the West gave Germany two great gifts. The first gift was democracy; the second gift was being integrated into a Europe of free nations. This also included the overriding vision that one day both gifts could be combined to create a democratic United States of Europe. But there was a lack of determination and strength to accomplish this. To make matters worse, both gifts have suffered from the attempt to use a common currency to integrate Europe. Postwar German democracy has never been in such a sorry state as today. It has been a long time since the peoples of Europe eyed each other with so much mistrust.

That is the current situation. Next week, Germany's Federal Constitutional Court will issue another ruling on Germany's euro policy. This is not expected to clear the air or fundamentally improve the situation. A court decision cannot accomplish that. But something must happen. We cannot allow both democracy and Europe to go to rack and ruin. Democracy and European integration form the foundations of our country. The problem is that they have come into contradiction with each other. Assuming the debt mania doesn't continue to spiral out of control, it's a fact that democracy impedes a rapid rescue for the euro, while a rapid rescue for the euro undermines democracy.

Such a contradiction begs a decision. What is more important to the Germans: their democracy or Europe? Or is there a way to reconcile the two, democracy and Europe? It isn't easy. It cannot be done without risks. But there is a way.

The State Of Democracy

The rescue policy for the euro has changed the country's power structure. The winner is the executive, in other words, the government. German Chancellor Angela Merkel negotiates in Brussels with the other heads of state and government. This is the body where the major decisions are made, decisions which are usually hammered out in advance during bilateral talks. What's more, the executive has the strongest apparatus behind it. In Germany, it is only the experts in the Chancellery and the Finance Ministry who have any idea what is happening and what needs to happen.

$16 Trillion Dollars Of Moral, Cultural And Political Decay

The National Debt  is but a symptom of a corrupt polity, divided nation and decadent culture

by Bill Flax

Wow! We’ll soon cross Sixteen Trillion Dollars in Federal Debt! S-i-x-t-e-e-n T-r-i-l-l-i-o-n D-o-l-l-a-r-s. That’s a lot of vote buying even for Washington. Is this ruin? Have we indentured our children into servitude? Solomon warned borrowers will be slaves to their lenders. Add $120 plus trillion in unfunded forthcoming liabilities and, well, we’re doomed.

Yet, as significant as this looks, and sixteen trillion of anything cannot be insignificant, the economic repercussions are the least of America’s worries. We still finance this cheaply. Rates on Treasuries remain low. Moreover, America endures as the world’s preeminent economic engine.

Obviously, debt weighs heavily on markets, especially the spending which spurred annual deficits exceeding $1 trillion. Government intervention smothers more gainful private pursuits. As Washington nonchalantly politicizes capital the economy suffers. Private actors would invest far better than politicians bribing the electorate.

As resources filter through the state’s machinations, liberty and prosperity are sacrificed to political ends. Massive debt is economically bad, really bad, and perhaps even hopeless; but much, much worse is what this reveals about America’s moral, cultural and political decay.

Battle of Columbus

Fast and Furious scandal gets a sequel in New Mexico

Pancho Villa

By ED WARNER
“Where are my guns?” demanded Pancho Villa, flamboyant bandit-warrior of the Mexican revolution. Though he had paid for them, the store across the U.S. border in the town of Columbus, New Mexico hadn’t delivered. He had other grievances as well. So in the early morning of March 9, l916, Villa led some 500 troops in an attack on Columbus that lasted until dawn, without doing too much damage. Next day, General John J. Pershing, of World War I fame, accompanied by George Patton, hero of World War II, arrived to drive out the Villistas and pursue their leader into Mexico. They didn’t catch him. He was eventually assassinated by other Mexicans in some kind of political intrigue.

Until now this was Columbus’s main claim to fame. Today, it’s been overtaken by another gun sale. In March last year federal agents drove into Columbus and arrested virtually all its top officials, including the mayor and police chief, for selling weapons to the Mexican cartels, who thereafter used them to kill other Mexicans, which is their habit. The arrests were no real surprise to Columbus citizens, who wondered why Mayor Eddie Espinoza had been driving a $50,000 car on a $700-a-month salary. Police Chief Angelo Vega already had a criminal record. In this town, says Addison Bachman, who runs a website reporting on local events in Columbus, “You get a job with a rap sheet, not a resume.”

Hope in a new kind of union

The EU is ending because it is hopeless

By Francesco Sisci 

The European Union is at a dead end. This is not because the Germans, Italians, and French and the failing Spanish and Greeks are at loggerheads about how to improve their national accounts. The EU is ending because it is hopeless: there is no hope, no program, and no real plan to hold the union together or to demonstrate why countries with different traditions, laws, and senses of identity - countries that have been at war with one another for most of the past three centuries - should now merge and embrace the future together rather than repelling it. 

The cultural and political debate has not moved to the real question about the future of the continent and its people. It is stuck in petty bean-counting, constantly sustained by the lack of a thrust for common trust in the union. 

Certainly, here the southern countries didn’t live up to their part of the bargain when they signed on for the euro 20 years ago. For two decades, some, like Italy, made no real effort to improve their national accounts, and others, like Greece, went as far as falsifying their bills to suck more support from Berlin, via Brussels. Others again, like Spain, Ireland, or Portugal, were innocent enough to believe that a real estate binge was as real as the bricks they used to build their houses. 

These are certainly true and grave faults, issues whose solution has been delayed for almost a generation. However, there is also a flip side to this, which doesn’t excuse the guilty PIIGS but does put the current European difficulties into perspective. 

Will The Federal Reserve Create The New Socialist Man?

A permanent state of adolescence

"Government cannot make man richer, but it can make him poorer." – Ludwig von Mises

by Karen De Coster and Eric Englund, June 26, 2006

Personal character and money are linked. No, we are not implying that a person of great wealth is necessarily an individual with high character. All one needs to do is look at the moral sewer known as Wall Street in order to comprehend how a whole host of elites have traded their souls for mind-boggling sums of money.

The linkage between character and money has everything to do with self-ownership. Aside from one's body, the most personal property one may possess is the fruit of one's labor. In a capitalist society, typically, this labor gets rewarded in the form of money — a paycheck. Hence, a person's sense of value and self-worth is significantly influenced by how society values his labor — with money not only being that most personal asset, but also being the measuring rod. In days gone by, an individual developed character by learning that an honest day's work would be rewarded with honest money (i.e., gold). Never has there been a more stable measure of value than gold.

In 1913, at the behest of the richest and most powerful banking elites in the world, an agent of social decay was established in the United States. Indeed, the Federal Reserve was founded. The stabilizing influence of gold money, gradually, was replaced by government fiat. Consequently, the character of Americans depreciated in lockstep with its fiat currency.

Paul Cantor describes this phenomenon in his provocative essay Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics. To wit:

"Inflation is that moment when as a result of government action the distinction between real money and fake money begins to dissolve. That is why inflation has such a corrosive effect on society. Money is one of the primary measures of value in any society, perhaps the primary one, the principal repository of value. As such, money is a central source of stability, continuity, and coherence in any community. Hence to tamper with the basic money supply is to tamper with a community's sense of value. By making money worthless, inflation threatens to undermine and dissolve all sense of value in a society."

Over the past ninety-three years, since the founding of the Federal Reserve, the dollar has depreciated by over 95%. With money no longer being a stable repository of value – thanks to inflation –  a predictable shift in the American character has occurred. Gone are the low-time-preference days where hard work and savings paved the road to a better life for parents and children.

As our fiat money perniciously lost value, time preferences shifted upwards as it made more sense to spend a depreciating currency today than save for the future. And, better yet, what is more seductive than to borrow ever-depreciating fiat money –  as heavily encouraged by the Federal Reserve –  and pay the principal back with money that has become worth even less? Gradually, savings becomes a vice, profligacy a virtue, and the character of a people regresses to a permanent state of adolescence — as all sense of value is forgone in favor of instant gratification.