The Coming Global Disorder

How does global order come undone?

By Bret Stephens

Woody Island is a speck of land in the middle of the South China Sea, not quite a square mile in size. Over the past 80 years it has been occupied by French Indochina, Imperial Japan, the Republic of China, the People’s Republic of China, South Vietnam, and, after a brief war in 1974, the People’s Republic again. Now known as Yongxing to the Chinese (or Phu Lam to the Vietnamese, who still lay claim to it), the island has an airstrip, a harbor, and a few hundred Chinese residents, none native-born, many of whom make their living as fishermen.

An obscure tropical island may seem an odd starting point for an essay on the coming global disorder. Yet great conflicts have been known to flare over little things in faraway places. “On the morning of July 1, [1911,] without more ado, it was announced that His Imperial Majesty the German Emperor had sent his gunboat the Panther to Agadir to maintain and protect German interests,” wrote Winston Churchill in his history of the First World War. The proximate causes of the German foray to this deserted Moroccan bay “were complicated and intrinsically extremely unimportant.” But the real purpose of the kaiser’s move was to test—and, he hoped, to break—Britain’s alliance with France and, perhaps, scope out the possibility of establishing a German naval base in the north Atlantic. “All the alarm bells throughout Europe,” Churchill recalled, “began immediately to quiver.”

The Tremendous Economic Benefits of Superstorm Sandy

The storm clouds continue to swirl and a bad moon is rising

BY JAMES QUINN

The public relations propaganda campaign to convince the ignorant masses that Sandy’s impact on our economy will be minor and ultimately positive, as rebuilding boosts GDP, has begun. I’ve been hearing it on the corporate radio, seeing it on corporate TV and reading it in the corporate newspapers. There are stories in the press that this storm won’t hurt the earnings of insurers. The only way this can be true is if the insurance companies figure out a way to not pay claims. They wouldn’t do that. Would they?

It seems all the stories use unnamed economists as the background experts for their contention that this storm will not cause any big problems for the country. These are the same economists who never see a recession coming, never see a housing collapse, and are indoctrinated in Keynesian claptrap theory.

Bastiat understood the ridiculousness of Kenesianism and the foolishness of believing that a disaster leads to economic growth.

Bastiat’s original parable of the broken window from Ce qu’on voit et ce qu’on ne voit pas (1850):

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Money laundering fears may hamper Cyprus aid

A German report may doom Cyprus aid

by Bloomberg

Cyprus's request for a bailout has created a political headache for German Chancellor Angela Merkel on concerns wealthy Russians could be the chief beneficiaries, the weekly magazine Der Spiegel said on Sunday, citing an intelligence agency report.
Cyprus is in talks with international lenders on the terms of a bailout expected to total 10 billion euros after its two largest banks incurred huge losses due to the Greek debt writedown earlier this year.
The scale of the aid is tiny compared to Greece and other struggling euro zone countries.
But a report prepared by Germany's intelligence agency (BND) on money laundering in Cyprus has laid bare the political risks involved, Spiegel said.
"The report of the BND shows who will profit most of all from the billions in European taxpayer funds - Russian oligarchs, businesspeople and mafiosi who have parked their illegal earnings in Cyprus," the magazine said.
Cyprus is a popular offshore tax haven for Russian businesses seeking protection from their country's unpredictable investment climate.
But Cyprus, which joined the European Union in 2004, says it has strengthened its regulations over the past decade against money laundering and is in full conformity with international rules.

Picking The Public Pocket

Does wind energy represent 'the greatest public subsidy bonanza of modern times'?

by Owen Spottiswoode

This week's surprise announcement from Energy Minister John Hayes, reported in the Daily Mail and the Telegraph, that the Government wouldn't give the green light to any more onshore wind farms certainly caused a stir, with Labour Leader Ed Miliband accusing the Prime Minister of having an'uncertain' energy policy.

Elsewhere the move was more warmly welcomed, with the supposedly high cost of producing wind power a popular target for its detractors. In the Daily Mail, columnist Christopher Booker claimed that Mr Hayes's announcment marked the end of "the greatest public subsidy bonanza of modern times."

So just how large is the taxpayer's subsidy to the wind energy sector, and how does it compare to other public subsidies?

What is a subsidy?

This isn't necessarily easy to pin down. A 2004 report from the Office of Fair Trading (OFT) noted that:

"At the simplest level, any intervention by government that provides assistance to a firm or group of firms is a subsidy. However, this is a very broad definition that would include government actions that would not be expected to affect competition, such as the provision of public education and general infrastructure."

Big Government, Big Business, Big Rip-off

If you want to whack big corporations, aim at Washington first

By MICHAEL BRENDAN DOUGHERTY

The Right has gone mad, it’s true. The conservative head, already suffering traumatic brain injury after insisting that pre-emptive war, waterboarding, and debt are enduring Western values, finally went blank when Barack Obama ascended the federal throne. Tea-party activists say that a Kenyan Nazi is readying a death panel for Sarah Palin. Fascism is liberal nowadays; communism, too. It’s all connected. Glenn Beck is chalking lines between Keith Olberman, Levi Johnston, and Leon Trotsky. How can the Right fight an enemy that will not release its birth certificate?

Fortunately, Timothy P. Carney has a cure for such dementia: muckraking journalism, of the sort he ably exhibits in Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses. Don’t let the Fox-appearance-fetching title throw you: George W. Bush comes in for nearly as much abuse as Obama. A reporter for the Washington Examiner and a protégé of the late Robert Novak, Carney has carved out a career of picking apart Washington’s latest regulations on industry and exposing the lobbyists and corporations getting rich in the name of public interest.

China 'Addicted To Credit'

Just everybody else

by James Parker

Whilst the economic data shows at least some signs of an anaemic turnaround, China’s corporate results are demonstrating just how difficult things have been.   China’s companies are busy reporting their 3^rd quarter 2012 results and there have already been some disappointing results – pretty much explained by the general slowdown. Connected to this however, a worrying trend is developing on many companies’ balance sheets.

Some big names have already seen disappointing profit growth. State owned-Sinopec,  China’s (and Asia’s) largest oil refiner, saw its 3^rd quarter profit fall 9.4% and January-September profits slump by 30%. Sinopec is trapped between high crude costs and government mandated price ceilings on sales to consumers.  Oil giant PetroChina also suffered, with its 3^rd quarter net profit down 33% compared to last year, driven in part by a $6 billion refining loss over the year-to-date (YTD), and part by a similar squeeze on its natural gas import business (in which its YTD profits have fallen 93% compared to 2011).

China Southern Airlines saw third quarter (3Q) net profit fall 29%, whilst China Life, the largest Chinese insurer measured by premiums, swung to an outright loss in the July-Sept. period.  Meanwhile Sany Heavy Industry Co. Ltd, China’s largest maker of heavy machinery and construction equipment, was hit by 59% fall in 3Q net profit.  Baosteel, one of the largest producers of the metal, saw net profit down 4.88% from a year earlier.

To Infinity and Beyond

Is the Fed Too Big to Fail?

BY JOHN R ING

America is more bankrupt, leveraged and vulnerable than Europe. And to finance its debt, one branch of the state (Treasury) borrows money from another branch of the state (the Federal Reserve) and everybody thinks this is the norm – they call it quantitative easing (QE) as the Fed embarks on a third round which could eclipse the first one’s trillion dollar cost pushing America closer to the fiscal cliff on their mountain of debt. America’s debt as a share of GDP excluding the debt of Fannie Mae and Freddie Mac is already over 100 percent. Although the cost of servicing that debt is only 1.4 percent of GDP because of low interest rates, half of America’s debt is in foreign hands and so interest rate levels around the world are important. If America had to pay the rate of comparable sick countries, say six percent, the debt burden alone would exceed the spending on Social Security, Medicare or national defense.

Central banks around the world have also flooded an already flush financial system with more cash presumably to give their respective politicians more time to sort out our problems. The world has gone on a “liquidity binge” heading towards an economic cliff. Yet each time substantive issues are glossed over, they return to petty infighting. Real issues? Later. Simply there is a lack of leadership. And worse, the blanket monetisation of government debt debases currency, distorts capital markets and calls into question the viability of sovereign debt. As a consequence, currencies have weakened so much that a tide of offshore money seeking higher returns are taking bigger and bigger risks, similar to what happened in the Great Depression when a currency war was a prelude to hyperinflation. Too much money simply chased too few goods. Our central banks have created a new bubble. What ballasts the world’s monetary system is debt. The problem is that we simply live in a debt-laden world with fiat currencies propping up failing economies and central bankers continue to believe that the debt crisis of today can be solved with more debt. The financial system is broke.

Ancient Spartan Communism

A state that is at war, or that is perpetually organized for war, dare not tolerate individual liberties

by Alexander Gray, 1945

At what point a history of socialism should begin is a question which might give occasion to high argument. There are some who hold that we merely becloud our judgment if we allow ourselves to speak of socialism before the middle of the 18th century, or perhaps even somewhat later. On this view socialism is essentially a manifestation of the proletarian spirit; or, if socialism is not necessarily proletarian in character and origin, it at least postulates a society which tends to be comprehensive in its membership. Accordingly, it is suggested that a society which assumes for its efficient working the existence of a slave population, denied all rights, may at times speak a language suggestive of socialism, but it can know nothing of socialism as that word has been understood in the 19th and 20th centuries. The existence of a serf or slave population may in certain respects add a complication to life; but in other directions it quite obviously enormously simplifies the social and political problems of existence, as these are presented to that section of the population who are not slaves. On this view, a history of socialism should probably begin among these first ripples and disturbances which presaged the deluge of the French Revolution.

As against this view, which looks on socialism as something which cannot be dissociated from the social and political conditions of the last century and a half, there are some who carry their excavations for the roots of socialism not merely to ancient Greece, but to ancient China and to the early days of the children of Israel, and who accord a place in the socialist temple to Moses, in virtue of certain provisions in the Mosaic Law; and to Isaiah, in virtue of his poetic sensitiveness to the wrongs of this world.

Exposing the Elites

Promoting a politics of social pity, today’s super-elites revive an old strategy of coercion

BY MICHAEL KNOX BERAN

In 1997 George Soros, writing in The Atlantic, declared: “The main enemy of the open society, I believe, is no longer the communist but the capitalist threat.”

The words marked the beginning of a decade and a half of plutocratic progressivism. In July 2003, AFL-CIO political director Steven Rosenthal conferred with some of America’s richest tycoons at El Mirador, Soros’s estate in Southampton, to figure out how to defeat George W. Bush. In August 2004, the president of the Service Employees International Union, Andy Stern—the “most important labor boss in America”—traveled to Aspen to plot strategy in a moneyed conclave that included savings and loan moguls Herbert and Marion Sandler, Progressive Insurance founder Peter Lewis, and businessman John Sperling. Warren Buffett, de facto chairman of the country’s billionaires’ club, endorsed the candidacy of presidential aspirant Barack Obama, while the Democracy Alliance, which Matthew Vadum and James Dellinger dub “Billionaires for Big Government,” bankrolled progressive groups like ACORN and the Center for American Progress.

Is there something novel in these alliances which, Demos scholar David Callahan observes, have brought some of the nation’s most notable elites together during the last decade to make common cause with some of the country’s most progressive leaders? Hardly: pacts between munificent plutocrats and progressive reformers are one of the oldest tricks in oligarchy’s playbook.

More than a century and a half ago, Benjamin Disraeli, affecting to believe that Britain’s Tory elite was “the really democratic party of England,” showed that the well-to-do could more easily maintain their ascendancy if they became paternalist champions of working people. By adopting socially progressive policies, they could “dish the Whigs” and stave off free-market reformers like Richard Cobden and John Bright. In a no less duplicitous spirit, Otto von Bismarck invited Ferdinand Lassalle, founder of the General Union of German Workers, to the Wilhelmstrasse, where the two explored an alliance between Bismarck’s Junker ministry and the working classes. Bismarck did not “promote social reform out of love for the German workers,” historian A. J. P. Taylor wrote. Following, by turns, Marx and Metternich, Bismarck sought to make workers “more subservient” to the Junker-dominated state.

Renewable Energy - Part 2

The Global Clean Tech Bubble 

By Nicole Foss

Those who advocate for a complete shift to renewables often state that it would be possible if only the political will to fund the transition were available. In fact, funding programmes have been introduced in many jurisdictions, often on a very large scale. Capital grants and long term Feed-In Tariff (FIT) contracts have been introduced in many European countries and in other regions. Feed-In Tariffs, which typically offer a twenty year guaranteed income stream in order to overcome the investment risk, have often been the economic tool of choice. Some of these have been very generous, and the subsidy regimes have driven large investments in renewables for many years. The costs have been in the hundreds of billions of dollars, with projections for many times that much in the future, both for generation capacity and for the necessary infrastructure to service it:

In 2005, VC investment in clean tech measured in the hundreds of millions of dollars. The following year, it ballooned to $1.75 billion, according to the National Venture Capital Association. By 2008….it had leaped to $4.1 billion. And the [US] federal government followed. Through a mix of loans, subsidies, and tax breaks, it directed roughly $44.5 billion into the sector between late 2009 and late 2011. Avarice, altruism, and policy had aligned to fuel a spectacular boom….

I….Investors were drawn to clean tech by the same factors that had led them to the web, says Ricardo Reyes, vice president of communications at Tesla Motors. "You look at all disruptive technology in general, and there are some things that are common across the board," Reyes says. "A new technology is introduced in a staid industry where things are being done in a sort of cookie-cutter way." Just as the Internet transformed the media landscape and iTunes killed the record store, Silicon Valley electric car factories and solar companies were going to remake the energy sector. That was the theory, anyway.

Renewable Energy Part 1

The Vision And A Dose Of Reality 

By Nicole Foss

In recent years, there has been more and more talk of a transition to renewable energy on the grounds of climate change, and an increasing range of public policies designed to move in this direction. Not only do advocates envisage, and suggest to custodians of the public purse, a future of 100% renewable energy, but they suggest that this can be achieved very rapidly, in perhaps a decade or two, if sufficient political will can be summoned. See for instance this 2009 Plan to Power 100 Percent of the Planet with Renewables:

A year ago former vice president Al Gore threw down a gauntlet: to repower America with 100 percent carbon-free electricity within 10 years. As the two of us started to evaluate the feasibility of such a change, we took on an even larger challenge: to determine how 100 percent of the world’s energy, for all purposes, could be supplied by wind, water and solar resources, by as early as 2030.

See also, as an example, the Zero Carbon Australia Stationary Energy Plan proposed by Beyond Zero Emissions:

The world stands on the precipice of significant change. Climate scientists predict severe impacts from even the lowest estimates of global warming. Atmospheric CO2 already exceeds safe levels. A rational response to the problem demands a rapid shift to a zero-fossil-fuel, zero-emissions future. The Zero Carbon Australia 2020 Stationary Energy Plan (the ZCA 2020 Plan) outlines a technically feasible and economically attractive way for Australia to transition to a 100% renewable energy within ten years. Social and political leadership are now required in order for the transition to begin.

The Vision and a Dose of Reality

These plans amount to a complete fantasy. For a start, the timescale for such a monumental shift is utterly unrealistic:

Perhaps the most misunderstood aspect of energy transitions is their speed. Substituting one form of energy for another takes a long time….The comparison to a giant oil tanker, uncomfortable as it is, fits perfectly: Turning it around takes lots of time.

Socialism is by now part of the French DNA

Denial as a national sport

By Wolf Richter

In France, socialism isn’t a political movement that swept the elections this year, and it isn’t an economic philosophy that moved once again to the forefront, but it’s part of the DNA of much of the population. And it produces classic knee-jerk reactions to the current economic morass—such as the nationalization of tottering automaker Peugeot.

French automakers are in a death spiral, within a market that is morose. In October, auto sales fell 7.8% from prior year, and a breath-taking 15.8% once the two extra selling days this October (23 instead 21) are taken into account. Year to date, sales are down 13.3%.

PSA Peugeot Citroën dropped 5% for the month and 17.2% for the year. Its captive finance subsidiary, Banque PSA Finance, was bailed out by the taxpayer last week to the tune of €5 to €7 billion. More bailouts are on the horizon. Layoffs loom, but political resistance is enormous, and it might be impossible to shrink PSA’s capacity down to reality.

Renault crashed. October sales were down a catastrophic 26.4%, for a decline of 20.5% so far this year. All hopes rest on the arrival of its miracle car, the new Clio 4, which would not only stimulate Renault’s sales but goose the entire market. Good luck. In a few days, the company will start discussions with unions on how to improve its “competitiveness”—and everyone knows what that means for the hapless workers.

The killer? In October, the French brands together plunged 15.2% ... but foreign brands rose 2.5%. For the year, the market is down 13.3%, a horrid figure, but PSA is down 17.2% and Renault 20.5%. They’re getting killed at home! You can blame the decomposing market on the government or on the debt crisis or on the weather, but if your market share is plummeting, you can only blame yourself—and if you don’t fix the problem, you become irrelevant.

The German bloc will have to take its bitter medicine in Greece

A Plan Gone Horribly Wrong

By Ambrose Evans-Pritchard

Every detail of the Greek economy is worse than officially forecast just weeks ago.

1. The budget unveiled this morning estimates that public debt will reach 189pc of GDP next year (not 179pc).

2. The budget deficit will be 5.2pc (not 4.2pc).

3. The economy will shrink 4.5pc next year (not 3.8pc). 

4. Unemployment is already 25.1pc and 55.6pc for youth.

Just for the record:

The EU-IMF Troika originally said that the economy would contract by just 2.6pc in 2010, before growing by 1.1pc in 2011, and 2.1pc in 2012.

In fact Greek GDP contracted by 4.5pc in 2010, 6.9pc in 2011, and will shrink 6.5pc this year, and now 4.5pc next year.
The cumulative error is colossal.

The IMF's former deputy chief John Lipsky told an HSBC forum in London earlier this month that it was impossible for the Fund to make any accurate forecast, given the crazy circumstances in Greece.

I don't wish to be unduly harsh on the IMF – a superb organisation – but actually the Greek Labour Institute and the think-tank IOVE did predict this level of contraction.

All totalitarian ideologies are anti-gold and pro-paper money and central banks

All power to the state! – Money madness at the IMF

by DETLEV SCHLICHTER

You cannot escape an all-pervasive sense of crisis these days. Impending doom does not only announce itself in actual events but also via the proliferation of ever more hair-raising schemes that claim to solve our problems. Maybe it should not surprise us if, at a time when the world’s most powerful central banks keep interest rates at zero for years on end and keep printing quantities of money that are simply outside the facilities of human imagination (trillions? quadrillions?), bravely hoping it will end differently this time, people get the impression that economics holds no certainties, that it is merely an exercise in limitless creativity. In his excellent speech to the New York Fed, Jim Grant reminded us that when the Financial Times first explained to their readers what QE was, back in 2009, one of those readers wrote in a letter to the editor: “I can now understand the term ‘quantitative easing, but . . . realize I can no longer understand the meaning of the word ‘money’.” – This gentleman is not alone. The basics of monetary economics have been tossed out the window and a merry ‘anything goes’ of policy proposals has descended on us. Otherwise sane-looking men and women now propose that, although years of zero interest rates have not solved our problems, everything will change once interest rates are negative. We should all get checks from the central bank with free money to spend, and government bonds at the central bank should be cancelled. Grown men dream of money from helicopters and money buried in bottles in the ground.

“Whom the gods would destroy, they first make mad.”

Just when you thought it could not get any madder there comes a policy proposal that sets a new low in monetary policy discussion. Of course, in the current climate it is being hailed as ‘epic’ and ‘revolutionary’. The easily excitable Ambrose Evans-Pritchard, a tireless campaigner for man’s exploration of the unknown in the field of money, could not believe his eyes: “So there is a magic wand after all,” he writes in the Daily Telegraph, “one could eliminate the net public debt of the US at a stroke and, by implication, do the same for Britain, Germany, Italy or Japan.” It gets better all the time. No longer are we confined to debating arduous strategies for crawling slowly back to sustainable growth, no, we can now simply wipe out all our debt.

A Tale of Two Crises

Whether or not to get serious is the choice facing the electorate

By Mark Steyn

In political terms, Hurricane Sandy and the Benghazi-consulate debacle exemplify at home and abroad the fundamental unseriousness of the United States in the Obama era. In the days after Sandy hit, Barack Obama was generally agreed to have performed well. He had himself photographed in the White House Situation Room nodding thoughtfully to bureaucrats (“John Brennan, Assistant to the President for Homeland Security and Counter-terrorism  Tony Blinken, National Security Advisor to the Vice President; David Agnew, Director for Intergovernmental Affairs”) and tweeted it to his 3.2 million followers. He appeared in New Jersey wearing a bomber jacket rather than a suit to demonstrate that when the going gets tough the tough get out a monogrammed Air Force One bomber jacket. He announced that he’d instructed his officials to answer all calls within 15 minutes because in America “we leave nobody behind.” By doing all this, the president “shows” he “cares” — which is true in the sense that in Benghazi he was willing to leave the entire consulate staff behind, and nobody had their calls answered within seven hours, because presumably he didn't care. So John Brennan, the Counter-terrorism guy, and Tony Blinken, the National Security honcho, briefed the president on the stiff breeze, but on September 11, 2012, when a little counter-terrorism was called for, nobody bothered calling the Counter-terrorism Security Group, the senior U.S. counter-terrorism bureaucracy.

Meanwhile, FEMA rumbles on, the “emergency-management agency” that manages emergencies, very expensively, rather than preventing them. Late on the night Sandy made landfall, I heard on the local news that my state’s governor had asked the president to declare a federal emergency in every New Hampshire county so that federal funds could be “unlocked.” A quarter-million people in the Granite State were out of power. It was reported that, beyond our borders, 8 million people in a dozen states were out of power.

Don't cry for me, François

France no longer has its own currency and sovereign monetary control levers. It is at the mercy of others

By Ambrose Evans-Pritchard

French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking.

The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left.

"The election promises of the French president are going to shatter on the walls of economic reality," he said in Paris.

The backsliding in the retirement age is indefensible and "cannot be financed". Two or three more blunders of this kind and "reality will catch up with out French friends".

Mr Schröder knows what it takes to claw back competitiveness. He lost his chancellorship on the Hartz IV labour reforms.

This tale of political sacrifice can be exaggerated of course. The Hartz IV reforms are not the chief reason why Germany is super-competitive today within EMU. The country’s hiring and firing laws are among the least reformed in the OECD to this day.

The Teutonic machine regained a labour edge by screwing down wages for year after year (as companies like VW threatened to relocate plant to Eastern Europe). It was an internal devaluation. Hartz IV was the icing on the cake.

Empty Promises and Diminishing Trust

Anticipating the Devolution of Big Government

by Charles Hugh-Smith

With the US elections approaching next week, as well as the threat of another fiscal cliff showdown looming, we asked contributing editor Charles Hugh Smith to revisit his earlier work on how the expansive Central State has come to dominate both private society (i.e., the community) and the marketplace, to the detriment of the nation’s social and economic stability. In this updated installment, we will examine six critical dynamics that will lead to the devolution of Peak Government.

Massive Borrowing

In a misguided attempt to maintain an unsustainable Status Quo, the Federal government is borrowing unprecedented amounts of money that then must be serviced.  And the Federal Reserve is expanding its balance sheet by trillions of dollars (“printing money”) and intervening in stock, bond, and other markets for the purposes of managing perception (“the recovery is here!”)

These government funds are not just paying the government’s bills – they are being used to guarantee loans and mortgages that subsequently enter default, transferring what was private debt to the public and subsidizing politically powerful special interests.

Guarantees and subsidies both incentivize what is known as moral hazard: the separation of risk from consequence.  This can be summarized very simply.  People who are not exposed to risk act completely differently than those who are exposed to risk.  When risk has been transferred to the taxpayers by guarantees, give-aways, and subsidies, then speculation and mal-investment are incentivized.  If the bet pays off, I get to keep the gain, but if it loses, then I personally lose nothing, as the loss is transferred to the taxpayers.

Lonely leftists vs fantasy fascists

The far right is falling apart, but leftists keep on scaremongering about these ‘bloody nasty people’

by Patrick Hayes 

In the conclusion to his book Bloody Nasty People: The Rise of Britain’s Far Right, Daniel Trilling lists ‘10 myths about Britain’s far right’, and begins first and foremost with the ‘myth’ that ‘the threat has passed’. His attempt to puncture this myth is lame – the British National Party (BNP), he acknowledges, is now a ‘failed project’. It has been all but wiped out in elections and is riddled with internal divisions. All he can do is point to the English Defence League’s (EDL’s) declaration of support for the recently formed British Freedom Party (BFP) in April this year as evidence of a ‘new vehicle’ for the far right.

Unfortunately for Trilling, EDL leader Tommy Robinson has already quit the BFP and currently languishes in jail, accused of entering the US under a false identity. The EDL itself is now having problems mobilising more than a couple of hundred people for a demo and its central Facebook page, with its 79,000 ‘supporters’ that Trilling cites as evidence of its ascendancy, has shut down.

A reader of Trilling’s book may then be puzzled. Why is a left-wing journalist dedicating his time to writing a book subtitled ‘the rise of the far right’ at a time when the far right in Britain is in no way on the rise? The only way Trilling’s subtitle is accurate is if you see it as giving a historical account of the rise of the BNP following the collapse of the National Front. But Trilling is no historian. A far more interesting phenomenon to discuss at the moment would be the decline of far-right groups in the UK at present and their failure to gain significant purchase with the public. 

The Invisible Hand in Popular Culture

Screening Liberty

By JORDAN BLOOM

It’s easy to flip through television channels today and see a wasteland, from the redneck voyeurism of “Here Comes Honey Boo Boo” to forgettable crime shows and bad suburban comedies. Critics gush over the latest high-budget network drama, while the real heavyweight ratings battle is duked out between the likes of Merv Griffin, Judge Judy, and Dr. Phil. There’s a temptation to view television, as well as most movies, as too compromised to commercial pressure to be a legitimate artistic medium.

The critical establishment generally adopts some version of this pose. As Paul Cantor puts it in his new book, The Invisible Hand in Popular Culture, critics inside and out of the academy tend to “treat culture as a realm of unfreedom, dwelling on the constraints under which would-be creative people necessarily operate.” Or worse, they hold the view—inherited from poststructuralists or the cultural Marxists of the Frankfurt School—that pop culture is actively deceptive, giving people a false sense of satisfaction while “producing forms of debased entertainment to numb the American people into submission to their capitalist masters.”

All that is what Cantor—by day a Shakespeare scholar at the University of Virginia—seeks to refute. In addition to his literary scholarship, he’s harbored an enduring interest in Austrian Economics and libertarian thought, ever since as a young man he attended lectures by Ludwig von Mises in New York City. His latest project has been to draw these literary and libertarian pursuits together, first producing a book on television entitledGilligan Unbound and then co-writing the more highbrow Literature and the Economics of Liberty. The Invisible Hand in Popular Culture is the next step, an episodic libertarian history of film and television.

Changing the way sovereign debt works

Victory for a US vulture fund that could make solving the euro crisis even more difficult

By Tim Fernholz

When bankers and public officials huddle around tables in Brussels and Athens, trying to figure out how to keep Greece in the euro, their problems might be compounded by a lawsuit brought by an ornery US investment fund.

Whether seizing an historic Argentine naval vessel or trying to take the gold Argentina keeps in the New York Federal Reserve, the efforts of the New York hedge fund Elliott Associates and its subsidiaries  to recoup money the country owes them are relentless. Thanks to an Oct. 26 decision (pdf) in a federal circuit court, they are more likely than ever to get paid—and change the way sovereign debt works.

In 2001, Argentina defaulted on its debt. It eventually went through two restructurings, in 2005 and 2010, to begin paying consenting bond holders between 25 and 29 cents on the dollar value of its bonds (i.e., a “haircut” of up to 75%). Elliott, earning the moniker of “vulture fund,” had bought up the country’s debt on the cheap and did not participate in these restructurings, holding out and suing the country in US court for the $1.33 billion face value of its bonds.