Coming Attractions

Hark! The Herald Angels Aren't Singing

 “No matter where you stand, no matter how far or how fast you flee, when it hits the fan, as much as possible will be propelled in your direction, and you will not possess a towel large enough to wipe all of it off.”    -The Wizard

 By Mark J. Grant

You thought it was tough; it is going to get tougher. You thought that Europe would not affect America and that we lived in some sort of bubble over here; think again. You thought that the liquidity provided by the world’s major central banks would carry us across the divide and intact; keep dreaming. We are at the cross roads, at break point, where solvency is no longer overcome by liquidity because the politics is dysfunctional and because after you get to “unlimited” and “uncapped” there is nowhere further to go. We have arrived at that long dreaded moment where decisions will have to be made, will be forced to be made by the economic plights of Greece, Spain and Portugal that can no longer be shunned or twisted perversely under the banner of “More Europe” as Nationalism and self-preservation take root on the Continent and the effects of the austerity measures in Europe slows down and stops the economies in various nations which then impacts the earnings of American companies in a significant manner. Put succinctly; European austerity has arrived in the United States.

Who Is Fethullah Gülen?

Controversial Muslim preacher and “inspirer” of the largest charter school network in America

By Claire Berlinski

With the American economy in shambles, Europe imploding, and the Middle East in chaos, convincing Americans that they should pay attention to a Turkish preacher named Fethullah Gülen is an exceedingly hard sell. Many Americans have never heard of him, and if they have, he sounds like the least of their worries. According to his website, he is an “authoritative mainstream Turkish Muslim scholar, thinker, author, poet, opinion leader and educational activist who supports interfaith and intercultural dialogue, science, democracy and spirituality and opposes violence and turning religion into a political ideology.” The website adds that “by some estimates, several hundred educational organizations such as K–12 schools, universities, and language schools have been established around the world inspired by Fethullah Gülen.” The site notes, too, that Gülen was “the first Muslim scholar to publicly condemn the attacks of 9/11.” It also celebrates his modesty.

A Non-Divine European Comedy

Sovereign Self-Interest Versus European Hegemony

“Markets can remain irrational longer than we can remain solvent… “

By Blain's Morning Porridge
There were moments yesterday when it felt we stood at the edge of the abyss preparing to take a giant leap forwards. The morning’s fears were palatable –the lack of market direction and escalating concerns setting us up for a tumultuous slide. By the afternoon everything rosy again! Despite miserable German confidence numbers the feared sell-off has not developed. Fear is still there tho! Fed keeping long term rates low should not be a surprise. In Europe, we’re watching how the news flow develops.
Spain – more of the same. Will they, wont they take the OMT bailout? Rumours this morning say a limited Euro 60 bln is being discussed for the banks and regions, but who knows. Spain has completed 2012 funding – so what’s the rush or the need asks the Spain DMO? Perhaps Spain signing up for reasons of “prudency” could provide the market with the kind of leg up it needs to rejuvenate the rally?

Credit Crunch in Europe

Eurozone Lending Sinking Fast; Money Supply Contracts

by Mike "Mish" Shedlock

A collapse in demand for credit is underway in Europe. Bank lending is down sharply and the decline has "surprised the experts".

I wasn't surprised in the least, but nonetheless, please consider Lending in the euro zone is declining fast, courtesy of Google translate (slightly modified by Mish) from Die Welt.

In the crisis-hit euro zone, fears rise of a credit crunch. The sharp decline in bank loans to companies surprised even the experts.

The sum of bank loans to companies and households in the euro zone shrank more than expected in September. Bank lending in comparison to the same month last year shrank by 0.8 percent, said the European Central Bank (ECB). Analysts had expected a decline of only 0.6 percent.

Bailout : Too Big to Jail

Neil Barofsky on “Incestuous Orgy” Between Washington and Wall Street 

It was Bill Moyers who used the expression “incestuous orgy” in this interview with former head of SIGTARP Neil Barofsky to describe the relationship between major financial firms and the Federal government. That beats the anodyne “revolving door” all day and I hope becomes part of the lexicon for describing the capture of Washington by Wall Street.

Barofsky describes not only his experience at SIGTARP in fighting with the Paulson and Geithner Treasuries to oversee the bailout program, but also his reasons for thinking a financial crisis is inevitable

Two videos distill the meaning of a campaign, and a presidency.

The Incredible Shrinking President

By Mark Steyn

‘We’re going to have that person arrested and prosecuted that did the video,” said Hillary Clinton. No, not the person who made the video saying that voting for Barack Obama is like losing your virginity to a really cool guy. I’ll get to that in a moment. But Secretary Clinton was talking about the fellow who made the supposedly Islamophobic video that supposedly set off the sacking of the Benghazi consulate. And, indeed, she did “have that person arrested.” By happy coincidence, his bail hearing has been set for three days after the election, by which time he will have served his purpose. These two videos — the Islamophobic one and the Obamosexual one — bookend the remarkable but wholly deserved collapse of the president’s reelection campaign.

You’ll recall that a near-month-long attempt to blame an obscure YouTube video for the murder of four Americans and the destruction of U.S. sovereign territory climaxed in the vice-presidential debate with Joe Biden’s bald assertion that the administration had been going on the best intelligence it had at the time. By then, it had been confirmed that there never had been any protest against the video, and that the Obama line that Benghazi had been a spontaneous movie review that just got a little out of hand was utterly false. The only remaining question was whether the administration had knowingly lied or was merely innocently stupid. The innocent-stupidity line became harder to maintain this week after Fox News obtained State Department e-mails revealing that shortly after 4 p.m. Eastern, less than a half hour after the assault in Benghazi began, the White House situation room knew the exact nature of it.

When North Korea Collapses

Unification or Protectorate ?

By Robert Kaplan & Rodger Baker
As we have pointed out previously, in the principal divided-country scenarios of the second half of the 20th century -- North and South Vietnam, East and West Germany, North and South Yemen -- reunification was thought of for decades as only a remote possibility, before it suddenly occurred in a tumultuous, fast-moving fashion, in a way few of the experts had predicted, making a mockery of so many policy papers written on the subject. The current division of the Korean Peninsula should be seen in this light. Not only is the collapse of the regime in the northern half of the peninsula possible, but if and when it does occur, the process might be quicker than many suspect.

In a century of seamless digital communications that are remaking world politics, the survival of such a hermetic regime as North Korea, built on information control, certainly appears problematic. Behind the weird artificiality of the regime itself lies something quite ancient: The very concept of a leader in his mid- or late-20s, with no experience, made a four-star general and hailed as the "brilliant comrade" harks back to bizarre descriptions of ceremonial politics associated with the deep past. How much longer can such a situation go on?

Pro-Life Means Anti-Drone

If life is sacred, how can we justify the random killing of innocent children?

By JACK HUNTER

My pro-life position is simple: Life is sacred. Life is so sacred that for it to be taken there must be an extremely good reason—and there are few good reasons. Convenience is certainly not a good reason. This innate sanctity of human life is something virtually all civilized people recognize despite one’s politics. Even those who identify as pro-choice are only comfortable with abortion to the degree that they can downplay or dismiss the humanity of the subject at hand.

Barack Obama has never claimed to be pro-life. As the Washington Examiner’s Tim Carney writes: “President Obama has killed hundreds of civilians, including women and children, in Pakistan, Yemen and Somalia through a drone war aimed at exterminating the suspected terrorists on his unprecedented and ever-expanding ‘kill list.’”

Greek debt to badly miss target -euro zone official

More direct funding for Greece from euro zone member states looks inevitable

By Jan Strupczewski
Greek debt will be above the target of 120 percent of GDP in 2020, a preliminary report by the IMF showed on Thursday, and Athens will need more reforms before emergency credit from international lenders can start flowing again.
Excerpts from the International Monetary Fund (IMF) report were presented to the Eurogroup Working Group (EWG) - junior finance ministers and treasury officials who prepare meetings of euro zone finance ministers.
"It is clear that Greece is off track and there is no chance they will cut the debt to 120 percent of GDP in 2020 as envisaged. It will be rather 136 percent, and this would be under a positive scenario of a primary budget surplus, a return to economic growth, and privatisation," a euro zone official, who insisted on anonymity, said.
"New prior actions will be needed, on top of the existing 89," the official said, referring to a list of already agreed reforms that need to be in place before any new tranches of euro zone and IMF emergency loans to Greece can be paid.
Apart from the debt projections, representatives of the IMF, the European Commission and the European Central Bank - known as the troika - have been calculating how much more money Athens will need if it is given until 2016 rather than 2014 to reach a primary surplus of 4.5 percent, as agreed in February.
A primary surplus or deficit is the budget balance before the government services its debt. In Greece's case, it would mean government tax revenues exceeding spending, meaning Athens is beginning to get on top of its budget-deficit problems.

Can China ‘Win’ Without Fighting?

Why win by a knockout when you can win without fighting?

By James R. Holmes

A few weeks back I likened China’s anti-access strategy vis-à-vis the United States to the “rope-a-dope” strategy Muhammad Ali pursued during his famous Rumble in the Jungle against George Foreman. In wartime, that is, China would let an initially stronger U.S. Pacific Fleet overextend and exhaust itself getting into the theater before risking a fleet-on-fleet battle. It would overcome the Pacific Fleet in the same manner the lighter, more agile Ali beat the burlier Foreman—with a flurry of punches against a tired adversary.

Such a strategy conforms to Mao Zedong’s counsel to let the other boxer waste his energy foolishly while conserving one’s own energy for the decisive counterpunch. But what about a match in which China played the part of Foreman, the bigger, stronger contestant?

There’s a boxing metaphor for China’s peacetime strategy as well. Retired Japanese vice admiral Yoji Koda says Beijing is “shadowboxing” with fellow Asian powers in the East China Sea. Sparring with them individually makes China the stronger competitor. Because numbers are on its side, for instance, China’s leadership can keep law-enforcement ships on station near the Senkaku/Diaoyu Islands, send PLA Navy task forces through the Miyako Strait and other waterways as a matter of routine, and otherwise overtax finite Japanese military and law-enforcement resources.

Welcome to the Dark Age of Money

A global pandemic built on a world-wide system with universal powers of enforcement

by James C. Kennedy

If you often wonder why ‘free market capitalism’ feels like it is failing despite universal assurances from economists and political pundits that it is working as intended, your intuition is correct.  Free market capitalism has become a thing of the past.  In truth free market capitalism has been replaced by something that is truly anti-free market and anti-capitalistic.  The diversion operates in plain sight.

Beginning sometime around 1970 the U.S. and most of the ‘free world’ have diverged from traditional “free market capitalism” to something different.  Today the U.S. and much of the world’s economies are operating under what I call Monetary Fascism: a system where financial interests control the State for the advancement of the financial class.  This is markedly different from traditional Fascism: a system where State and industry work together for the advancement of the State.

Monetary Fascism was created and propagated through the Chicago School of Economics.  Milton Friedman’s collective works constitute the foundation of Monetary Fascism.  Knowing that the term ’Fascism’ was universally unpopular; Friedman and the Chicago School of Economics masquerade these works as ‘Capitalism’ and ’Free Market’ economics.

No hate speech, no free speech

In praise of the First Amendment

The demand to criminalise hate speech is essentially a demand to criminalise people who haven't actually done anything wrong.

by Josie Appleton 

Most European countries have laws restricting ‘hate speech’. America, with its attachment to First Amendment freedoms, has none. Jeremy Waldron, an English legal academic in America, suggests that the Americans are mistaken.

The Harm in Hate Speech is part of a debate Waldron has been having with US free-speech defenders, on the pages of various reviews of books and from the podium of New York University. Waldron argues that liberals have not sufficiently appreciated the harm done by hate speech. This is a charge he particularly directs against Anthony Lewis, author of Freedom for the Thought That We Hate, and more recently against Timothy Garton Ash on the pages of the Free Speech Debate website.

Indeed, he accuses liberals of ‘liberal bravado’, making a show of their ability to ‘bear the pain’ of ‘vicious invective’. Yet they are not the victims of hate speech, he says; it is vulnerable individuals and groups who suffer harm, while free-speech advocates stand on the sidelines quoting Voltaire.

If you aren’t the lead dog the scenery never changes

Fiction has to make sense

By Mark Grant

I stated, quite some time ago, that the recession in Europe would proceed to the United States. It was just a matter of time before the austerity demanded on the Continent began to have its affects in America. We are in earnings season and the numbers have not been pretty. China is in a slow-down, you may append what terminology that you like, but the reality of it is staring you in the face. Exports by all of Asia to Europe are not only in decline but the waterfall is a steep cascade as denoted by China whose exports to Italy are off almost thirty-seven percent. France had to inject $9 billion into Peugeot today as VW reported out profits that declined nineteen percent. I project that by the first quarter of next year that America will also be in a recession as the spillover from Europe darkens our shores.

“There are some people who live in a dream world, and there are some who face reality; and then there are those who turn one into the other.”        -Douglas Everett

The equity markets went up, bonds compressed, as the never ending printing presses rolled on in Europe, in China, in Britain and in America. Printing trumped the European recession until the spigots were either turned off or became ineffective. What else is that you can promise the markets after “limitless” and “uncapped” play out? The world’s financial markets have lived off of the largesse of the world’s central banks while the financial projections of each nation in Europe and the IMF churned out numbers, relied upon by many, that were absolute fantasies as proven by the subsequent quarters when real numbers appeared to the gasps of those in the various marketplaces that had expected something else entirely.

Moving Beyond Free-Market Minimalism

Trust is a prerequisite for learning

By Sandy Ikeda

The “economic point of view” means, to a lot of people, assuming people are nothing but cost-cutting opportunists—economizers who wouldn’t hesitate to gain at someone else’s expense if they could get away with it. Such bloodless calculators, though perhaps staying within the law, wouldn’t miss a chance to charge the highest price possible, offer the poorest quality acceptable, and on the meanest terms tolerable. “Let the buyer (or the seller) beware!” is their creed. I’m afraid many economists would agree with this characterization—or, more accurately, caricature. Often, it sours general opinion toward advocates of the free market, who after all are the ones always saying how important economics is for understanding how the real world works.

Free-market minimalism wouldn’t work very well and it isn’t realistic to boot

In a free market, “Scrooge-like behavior” is certainly permissible as long as it doesn’t initiate violence or fraud. But where do the high quality, low price, and innovation we associate with the free market come from? Well, as most economists will tell you, much of it comes from the fear of competition. If you cut corners and charge consistently high prices, even though you may be within your rights to do so, many free-market advocates would rightly point out that free entry and hungry entrepreneurs will tend to keep you in line. That’s important, but it’s not the whole story; not by a long shot.

The mother of all trade pacts is in the making

Get Ready For U.S.-Europe Free Trade

The Editor

Europe's Parliament has moved to revitalize the continent's weak economy by clearing the way for a free-trade agreement with the U.S. A baby step, yes, but if it succeeds, it'll be the mother of all trade pacts.

By a vote of 526-94, the European Parliament approved its first resolution calling for talks on a U.S.-European free-trade agreement, starting in the first half of 2013.

"We wanted to send a strong political signal in favor of opening negotiations with the United States in order to create a real trans-Atlantic market with enormous opportunities for growth," said EU's Vital Moreira before the vote.

It was a smart move coming from a continent that has long protected its industries through high tariffs and tangled regulations. It also comes just as a bill urging U.S.-EU free trade, "The Economic Freedom Alliance Act," is gaining support in Congress.

It will take time, but uniting the world's two largest advanced economies will pay huge dividends.

Another Win-Win for the Oligarchs

Obamneycare 

By Robert S. Dotson, M.D.

“Mitt Romney is a wolf in a wolf’s clothing. Barack Obama is a wolf in a sheep’s clothing, but they both essentially have the same agenda.” – Jill Stein

“Bipartisan usually means that a larger-than-usual deception is being carried out.” – George Carlin

“But we have to pass the bill so that you can find out what is in it away from the fog of controversy.” — Speaker of the House Nancy Pelosi, remarks at the 2010 Legislative Conference for the National Association of Counties prior to passage of PPACA

October has brought the mini-series that accompanies our quadrennial exercise in faux democracy, the Presidential Debates. As has been usual for many decades, the public was entertained by carefully vetted corporatist representatives of War Party A and War Party B via the televised game show format that is sold as “serious debate” here at the End of Empire. Nothing illustrated the silliness and irrelevance of such spectacle better than the inane exchanges between Obama and Romney concerning healthcare. The charade was played out yet again when the Vice Presidential candidates, Biden and Ryan, performed in another non debate on October 11th.

The Safety Nazis and the Mileage Mussolinis

How Government Just Made Your Next Car Less Safe

By eric peters

An epic bout is in the making – and we’ll all have a ringside seat.

In this corner, the Safety Nazis – who have inadvertently made the average new car several hundred pounds heavier (and much more expensive) than it would otherwise be via the piling on of keep-you-safe government mandates, from air bags to telescoping bumpers to crumple zones. In the far corner, we have the MPG Mussolinis. Their obsession is mileage uber alles, which they try to impose via government “fleet average” fuel economy requirements (CAFE).

Up to lately, these two antagonists have not butted heads, if only because the engineering talent in the car industry has been able to figure out at least partial work-arounds that (temporarily) satisfy both sides.

Sort of.

For example, new cars are reasonably, even remarkably, fuel-efficient – despite their massive and ever-increasing bulk. Kind of a like a strong lineman who, though 30 pounds overweight, is still pretty quick on his feet. Cylinder deactivation technology, variable cam/valve timing, direct-injection, seven and eight-speed transmissions with deep overdrive gearing – they counteract the bulk, at least somewhat. Without these technologies, the average new car of 2012 would be a real gas pig.

A disaster that science brought upon itself

The sad conclusion to the scientific community’s depiction of itself as soothsayer

by Brendan O’Neill 

The jailing of six Italian scientists and a government official for failing to predict an earthquake has caused uproar in the scientific community. The men were convicted of manslaughter on the basis that they failed to give an adequate risk assessment of the 2009 earthquake in the central Italian city of L’Aquila, which killed 300 people. Outraged by the court’s verdict, the CEO of the American Academy for the Advancement of Science wrote to the president of Italy to tell him ‘there is no accepted scientific method for earthquake prediction that can be reliably used to inform citizens of an impending disaster’. The verdict is ‘perverse’ and ‘ludicrous’, says the science journal Nature.

That’s true - the verdict is perverse. It has a strong whiff of the Middle Ages about it, except instead of dunking witches for bringing about a harsh winter and destroying crops, we lock up scientists for failing to foresee a fatal earthquake. But at the same time, isn’t the verdict also the tragically logical conclusion to the scientific community’s feverish adoption in recent years of the role of soothsayer, predictor of the world’s end and proponent of solutions for how to prevent it? Over the past decade, leading scientists have repositioned themselves as modern-day diviners, particularly in the climate-change debate, where they insist that not only can they tell us what the world will look like in 50 years’ time, but also what minute changes all of us must make now if we want that future world to be different. And their predictions are treated as unchallengeable credos, as all those awkward, anti-green question-askers who have been branded ‘deniers’ will know.

In such a climate, is it really surprising that scientists who fail to predict a natural disaster, who do not fulfil the role of saviour of mankind that the science community has carved out for itself, can be demonised? If scientists play God, it’s also possible for them to be treated as the Devil.

A Great Victory For Windmills

Hangover is when you open your eyes in the morning and wish you hadn't

By Mark J. Grant

There are two countries that are going to give you a whopper of a headache in the coming months. I am leaving Greece to the side for a moment because that country could provide a heart attack and necessitate bypass surgery as the Troika fiddles while Athens burns. I am just waiting to see what is agreed to for Greece and then how the citizens of that country respond but the home of Democracy is not the only place that could ratchet out of control; keep your eyes on Spain and France. Yes, France, while no one has paid particular attention to the antics in Paris and Monsieur Hollande scurries about siding with the troubled nations and advocating a 75% tax burden and leaving Berlin to wallow in schemes of their own making; they are on the verge of getting in real trouble.

“It is better to open your eyes and say you don't understand, than to close your eyes and say you don't believe.”     -The Wizard

 Spain-The Fighting with the Windmills Continues

They have announced that they are going to build their “bad bank” based upon the findings of Oliver Wyman’s stress tests. What we find here is garbage in---garbage out---and a bad bank built upon the garbage dump they have created. Oliver Wyman verified nothing, audited nothing and was paid to sit idly by and accept the data provided by the Spanish banks and the government of Spain. It is good work if you can get it. Then they took the rubbish and constructed complicated economic models based upon them and presented them to the world as factual. What we actually have here is a fairy tale created by the Hermanos Grimm; and the end of the fairytale will be grim indeed if you rely upon their findings. I recall Prime Minister Rajoy’s “A great victory for Europe speech” and I state that the last time Europe had such a victory it was at Waterloo!

Subjective Value and Government Intervention

Acting as if value were objective is a dangerous practice

By Arnold Kling

Since the 1870s, economists have agreed that value is subjective, but, following Alfred Marshall, many argued that the cost side of the equation is determined by objective conditions. Marshall insisted that just as both blades of a scissors cut a piece of paper, so subjective value and objective costs determine price...But Marshall failed to appreciate that costs are also subjective because they are themselves determined by the value of alternative uses of scarce resources.

               —Peter J. Boettke, "Austrian School of Economics", Concise Encyclopedia of Economics.

The doctrine that all value is subjective raises some important issues. It appears to create a bias against government intervention. Therefore it may explain the correlation between the methodological outlook of Austrian economists and their typically libertarian policy orientation. Put another way, do non-Austrian economists believe that value can be calculated objectively, and are such calculations important for interventionist policies?