Canada rises to Top Five in world economic freedom ranking as U.S. plummets to 18th

Canada really started moving up in economic freedom under a prime minister that was supposedly from the left side

By Sarah Boesveld

Canada has taken its place among the Top 5 countries with the most economic freedom, according to a new Fraser Institute report — now leaps and bounds ahead of the United States thanks to the gradual shrinking of the Canadian government since the mid-1990s as America’s just got bigger.

The annual Economic Freedom of the World report, released Tuesday, has Canada tied in fifth place with Australia — up one spot from last year. Hong Kong remains at the top, Singapore’s next, then New Zealand.

Meanwhile, the United States, once a “standard bearer” of economic liberty among industrial nations, spiralled 10 spots from the 2011 rankings to 18th place — its lowest position ever, and a huge drop from its second place spot in 2000.

There is much more to resilience than simple strength

Whatever the weather

Antifragile: How to Live in a World We Don’t Understand, by Nassim Nicholas Taleb

by Gillian Tett

In recent weeks Mervyn King, governor of the Bank of England, has taken to quoting Nassim Nicholas Taleb, the maverick Lebanese-American trader-cum-author-cum-statistician. Taleb shot to fame five years ago with The Black Swan, which explained why modern societies are apt to be hit by low-probability surprises that can sometimes (but not always) be damaging. The timing of that book was either brilliantly canny or lucky, since it emerged just as the world was about to plunge into a financial crisis. Taleb’s work became a bestseller, a literary black swan in itself.

Now Taleb is back. Antifragile goes much further in developing his Black Swan idea. Little wonder that men such as King are paying attention: after pouring a vast amount of taxpayers’ money into the financial system, British regulators, like those elsewhere in the western world, urgently need to know whether or not the economy is any less prone to violent shocks.

So what advice can Taleb offer? His central argument is encapsulated in the title. Until now, Taleb says, modern society has generally assumed that people, systems or institutions fell into two camps: either they were fragile (and likely to break when shocks occur) or robust (and thus able to resist shocks without being impacted at all). Taleb insists there is a third category of people, institutions and systems that are resilient in a way we have been unable to articulate: they survive shocks not because they are immovable but precisely because they do change, bending in the face of stress; adapting and learning. This is the quality that he describes as “antifragile”. (In the US the book is being published with the rather more explicit subtitle “Things that Gain from Disorder”.)

An Israeli-Palestinian zugzwang

Shock the Casbah

by ADAM GARFINKLE

Again I come late to the gabfest, this time about the Hamas-IDF confrontation in and around Gaza. So much has already been said, and it falls in the usual categories: the thinly didactic, the fatuous, the banal, the shrewd and, especially, the emotional. The usual irrational Jewcentric crap, of all four sorts, too, can be readily identified: the anti-Semitic, the philo-Semitic, the chauvinist and the self-hating. For those who have endured this conflict in its several manifestations for a wilderness of forty years (or more), the whole thing—the Jewcentric mutterings very much included—is still as heartbreaking as ever. It is also something well worth ignoring for the sake of one’s sanity, which helps explain why I am so late to the keyboard. I tried mightily to resist writing this note; I failed.

So what is there to say after all? I can think of three, possibly useful, things to discuss.

First, in this age of instantaneous amnesia in the segmented American cyberswirl, where the backstory to any telegenic foreign event has long since disappeared into the historical ether, it’s useful to restate for the inexpert observer a little of the relevant history. Not knowing the basics makes it seem like both sides of the conflict are made up of a bunch of hateful and insane yet regrettably determined extremists. As appealing as this description may be to those with no dog in the fight and who have an appetite for violent entertainment, and as apt as it may seem upon substituting the words “one side” for “both sides” to pro-Israel or pro-Palestinian partisans, it is not really accurate. Knowing the history shows why what’s going on is a tragedy rather than a simple, if protracted, act of mutual madness. Both sides are adept at making highly rational tactical calculations, but they find themselves trapped in a merciless strategic framework that turns every temporary advantage into a pointless sacrifice of blood and hope.

Second, it is worth pointing out what is both new and true in essence about the current round of fighting. This round of fighting both is and is not the same ‘ol same ‘ol.

Germany and Russia: The End of Ostpolitik?

Not a happy partnership anymore

By LILIA SHEVTSOVA & DAVID J. KRAMER

Germany’s role in the ongoing Euro crisis is a reminder of its economic superpower status in Europe. But Germany plays another leading role: defining European policy toward Russia. Brussels and other European capitals often follow Germany’s lead when it comes to dealing with Russia. And with the United States distracted with its recent election and other priorities, and with the reset not what it used to be, Germany’s role in defining the “Eastern strategy”—and specifically the agenda toward Russia—is likely to increase (even if Berlin tries to keep a low profile).

Until recently, the German-Russian relationship was viewed as the model of a happy, albeit weird, marriage of incompatible bedfellows. No longer: German public opinion has grown increasingly critical of Vladimir Putin’s regime and its clampdown on human rights and the political opposition. While this shift in public attitude has not had a major impact on the official Berlin line, it has reinforced the push by some Bundestag deputies, especially the German Greens, the only party that has consistently raised the issue of human rights in Russia.

A Mirage of Mideast Peace

Is real peace between Palestinians and Israelis possible?

By PATRICK J. BUCHANAN

With the truce in the week-long Gaza war, Barack Obama is being prompted by right and left to re-engage and renew U.S. efforts to solve the core question of Middle East peace.

Before he gets re-involved in peacemaking, our once-burned president should ask himself some hard questions.

Is real peace between Palestinians and Israelis even possible?

Is there any treaty that could be agreed to, or imposed, that would be acceptable to Israel and the Palestinian Authority on the West Bank, let alone to Hamas, which has emerged from its defiance of one of the most intensive bombardments of modern time with new prestige?

What are the obvious impediments to such a treaty?

First, Bibi Netanyahu, who has presided over the expansion of Israel settlements and joined Avigdor Lieberman, a supporter of ethnic cleansing of Israeli Arabs, in a coalition of the Israeli hard right.

Sibel Edmonds’s Secrets

Classified Woman: The Sibel Edmonds Story

By PHILIP GIRALDI

Sibel Edmonds is no stranger to longtime TAC readers. I wrote an article exploring some of her claims back in January 2008, a blog item in August 2009, and Kara Hopkins and I did an interview with her for the November 2009 issue of the magazine. It was featured on the cover as “Who’s Afraid of Sibel Edmonds?”

Edmonds has recently written a book entitled Classified Woman detailing her journey from FBI translator to whistleblower, finally emerging as an outspoken advocate of free speech and transparency in government through her founding of the National Security Whistleblowers’ Coalition and her always informative Boiling Frogs Post website.

As Edmonds ruefully notes, her tale of high level mendacity has always found a better reception in the European and Asian media than in the United States, though her odyssey has included an appearance on “60 Minutes” in October 2002 and a feature article inVanity Fair called “An Inconvenient Patriot” in September 2005.

Greek Rescue Deal Falters on Loan Rate Cut

The show must go on

By Jonathan Stearns

The main obstacle to unlocking international loans for Greece is a plan to reduce the interest rates charged by euro-area creditors as the sides agreed to ease debt-reduction targets, a Greek official said.

A cut in interest rates would put them below the cost of funding for some euro-area countries, the official told reporters late yesterday in Brussels on the condition of anonymity. Policy makers will continue work on an updated aid package for Greece into this weekend in preparation for a Nov. 26 meeting of euro finance ministers, said the official.

An agreement, which would unlock an aid payout of at least 31 billion euros ($40 billion), may raise Greece’s debt target to 124 percent of gross domestic product in 2020 from a previous goal of 120 percent, said the official. The cost of reaching the new target from a currently projected trajectory of 129 percent of GDP that year is about 10 billion euros, according to the official.

Argentina angry at hedge fund court win

Neither a borrower nor a lender be, For loan oft loses both itself and friend

By Robin Wigglesworth and Jude Webber

Argentina has angrily criticised a US court decision that has awarded hedge fund creditors more than $1.3bn as “a kind of legal colonialism”.

“All we need now is for [Judge Thomas] Griesa to send us the Fifth Fleet,” Hernán Lorenzino, economy minister, said.

The victory for several hedge funds against Argentina has sparked fears that the country could be plunged into yet another debilitating sovereign default and threatens to make government restructurings more difficult in the future.

In what has been dubbed the “trial of the century” for sovereign debt restructurings, a US District Court judge on Wednesday ordered Argentina to pay the hedge fund creditors – led by Elliott Associates and Aurelius Capital – in mid-December.

The Biggest Winners From President Obama's Re-Election: Crony Capitalists

Some people never seem to lose no matter what the result of the election

By Joel Kotkin

President Obama’s re-election does not, as some conservatives suggest, represent a triumph of socialism. Instead, it marks the massive endorsement of an expanding crony capitalism that ultimately could reshape the already troubled American economic system beyond recognition.

Nowhere is this clearer than in the President’s victory in the Great Lakes states of Ohio, Michigan, Ohio and Wisconsin. All four of these states are highly dependent on manufacturing and, in particular, the auto industry. Without the bailout, it seems doubtful that Obama — who lost the white working class decisively in most of the country — could have won these critical states.

The auto bailouts have resulted in industrial production growth since February 2010. Furthermore, there has been an industrial revival in the Ohio River valley, with rising output of steel, although much of this has to do with expansion of oil and gas production, which Obama has also taken credit for.

Thanksgiving & Capitalism

The message of Thanksgiving is more timely than ever

by Richard Ebeling

In good economic times or bad, Thanksgiving is when Americans gather with their families and friends and enjoy the most special meal of the year. The event remembers those early Pilgrim Fathers who crossed the uncharted ocean from Europe to make a new start in Plymouth, Massachusetts.

What is less appreciated is that Thanksgiving also is a celebration of the birth of free enterprise in America.

The English Puritans, who left Great Britain and sailed across the Atlantic on the Mayflower in 1620, were not only escaping from religious persecution in their homeland. They also wanted to turn their back on what they viewed as the materialistic and greedy corruption of the Old World.

Prospects for 2013 look ominous for Europe

Euro zone faces deepest downturn since early 2009

By Andy Bruce

The euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November.

Service sector firms like banks and hotels that comprise the bulk of the economy fared particularly badly this month, and laid off staff at a faster pace.

While the monthly rate of decline that manufacturers reported eased far more than economists anticipated, Markit's latest Purchasing Managers' Indexes (PMIs) pointed to little change overall for a recession-hit euro zonethis month.

The flash service sector PMI fell to 45.7 this month, its lowest reading since July 2009, the survey showed on Thursday, failing to meet the expectations of economists who thought it would hold at October's 46.0.

It has been rooted below the 50 mark that divides growth and contraction for 10 months now, and survey compiler Markit said it was too soon to say if this marked the nadir.

With more austerity on the way, and a reminder of the festering sovereign debt crisis in this week's failure of lenders to agree more aid for Greece, prospects for next year look ominous.

IMF and Eurocrats in Clinch

Wrangling Over Greece

by Pater Tenebrarum

Make no mistake, they are doing everything they can to keep Greece in the euro area. There have after all been many opportunities to just say 'game over' and they were never taken. We suspect there is a good reason for this: if Greece were to default and leave the euro zone, it would be proof that the euro is not 'irreversible'. It may well result in a chain reaction, with others leaving as well. So apparently the decision has been made to just keep bailing Greece out.

However, an unexpected delay has popped up. Greece still hasn't received its €31.5 billion aid tranche, in spite of fulfilling all the 'troika' demands – some of which almost caused the new coalition government to break apart.

The problem in a nutshell is this: everybody, including the IMF, knows that Greece cannot reach the long term debt targets that were set out in its bailout. It 'needs more time', but that means it also needs more money. Even if it gets both, it will under no circumstances be able to reach the debt/GDP ratio targets set out, even though the initial long term target is twice as high as the maximum level allowed according to the Maastricht treaty. In other words, not even that farcical target is anywhere near the realm of the possible.

Why Russians and the World Dislike the Ruble

It takes time to build credibility once it has been lost

By Martin Gilman

Russians have long had an ambivalent relationship with the ruble. Even now, Russian companies and individuals by and large seem to prefer to save in dollars or euros, carry out large financial operations offshore and minimize their exposure to ruble assets when they can.

This seems odd. Generally in the modern world, most people have sufficient confidence in their own currencies to keep most of their assets denominated in them. It is sometimes called a home-currency bias. For example, Japanese residents hold yen despite low interest rates. Usually, it is only when significant risks are perceived that people flock to monetary hedges such as gold. The phenomenon was also evident in the case of Greece, when the collapse in domestic bank deposits signaled a fear that people's euros would soon become drachmas.

Regulators R Us

Feds Crank Up Regulations — on Everything

by  William F. Jasper

Get set for the Obama administration’s post-election tsunami of business-killing, job-killing, economy-killing federal regulations. It’s already begun. Take a look at www.regulations.gov, the administration’s regulatory website. The home page informs us that in the last 90 days, the administration has posted 5,934 new regulations.

Yes, our federal bureaucrats have been very diligent. The above-mentioned website informs us of their daily productivity of regulations over the past 90 days:

Today (121)

Last 3 Days (274)

Last 7 Days (371)

Last 15 Days (826)

Last 30 Days (1,915) 

Last 90 Days (5,934)

How will these regulations affect you, your family, your job, business, ranch, or farm? You may not have federal SWAT teams descend upon you, as has happened to dairy farmers and natural food store operators who dared to sell raw milk products not approved by the federal Food & Drug Administration (see here and here) or the hundreds of other Americans subjected to Gestapo-type treatment for running afoul of the volumes of murky and convoluted regulations that fill the 169,301 pages of the Code of Federal Regulations (CFR) published in the Federal Register. 

The Route to Transformative Growth

How Sub-Saharan Africa Is Evolving Into A Global Economic Powerhouse

Growth in sub-Saharan Africa has accelerated since 2000. And the potential for further growth is enormous given its positive demographics and natural resources.

by David Cowan

The potential for economic growth in Sub-Saharan Africa (SSA) is enormous given the continent’s positive demographics and the abundance of natural resources, but historically, infrastructure, political and policy challenges have stood in the way. Without question, there has been a sharp pick up in real GDP growth in the region in the 2000s compared to the previous two decades, when SSA was often seen as a development disaster. This pick-up has led to a marked change in how many investors think about SSA, and has facilitated a switch from decades of Afro-pessimism to the new wave of Afro-optimism.

To give an idea of the potential impact of growth, Citi’s February 2011 long-term growth projection paper, Global Growth Generators: Moving Beyond ‘Emerging Markets’ and ‘BRIC’ , argued that Africa could move from accounting for only 4% of world GDP in 2010 to 7% by 2040 and 12% by 2050. In this new report we examine in much greater depth the prospects for growth in SSA and ask what steps need to be taken to generate truly transformational development that can unlock the potential of the continent's demographic and resources dividend. Critically, to unlock the full potential policymakers must find a path from the current growth model to one which achieves greater global economic integration.

EU Game Changer

Austerity Hits The Core

BY RAUL ILARGI MEIJER

Here's what may be a useful angle to explain to people what is happening in Europe right now, and what's yet to come. It's not about Greece, which shoved another "Deal" through its besieged parliament this week, a deal that itself is also still under siege. It's not about Spain either, which managed to borrow a few billion more, enough to stay alive till Christmas, but sees its bond yields enter the land of ugly (yawn) again.

We all know the stories of the eurozone periphery by now, we've read a thousand chapters. And the core likes it that way, since this keeps us from looking its way. The situation allows for Germany, France and Holland to sit pretty and pretend they're doing fine. They're not.

Some ugly numbers have come out of Germany lately. We’ll get back to that later. More interesting is the report that German Finance Minister Schaeuble has asked a "wise men" committee to draw up a picture of what's really happening with France economically, a picture that should serve as a counterweight to the portrait French President Hollande paints, and which Germany no longer has confidence in.

However, the more poignant sign of what's to come in Europe emanates from Holland.

Thanksgiving, 1789

George Washington's proclamation was not without controversy

By MELANIE KIRKPATRICK

It is hard to imagine America's favorite holiday as a source of political controversy. But that was the case in 1789, the year of our first Thanksgiving as a nation.

The controversy began on Sept. 25 in New York City, then the seat of government. The inaugural session of the first Congress was about to recess when Rep. Elias Boudinot of New Jersey rose to introduce a resolution. He asked the House to create a joint committee with the Senate to "wait upon the President of the United States, to request that he would recommend to the people of the United States a day of public thanksgiving and prayer to be observed by acknowledging, with grateful hearts, the many signal favors of Almighty God."

The congressman made special reference to the Constitution, which had been ratified by the requisite two-thirds of the states in 1788. A day of public thanksgiving, he believed, would allow Americans to express gratitude to God for the "opportunity peaceably to establish a Constitution of government for their safety and happiness."

Another take on Fethullah Gülen

US law professor has no doubt Gülen trial in Turkey was political

 

By AKIN KARAGÜLLE

James C. Harrington, director of the Texas Civil Rights Project and a law professor at the University of Texas, wrote a book titled “Wrestling with Free Speech, Religious Freedom, and Democracy in Turkey: The Political Trials and Times of Fethullah Gülen” on the trial of renowned Islamic scholar Fethullah Gülen in Turkey, which ended with his acquittal being upheld by the Supreme Court of Appeals in 2008.

In an indictment he drafted on Aug. 30, 2000, then-Ankara State Security Court (DGM) Chief Prosecutor Nuh Mete Yüksel filed a lawsuit against Gülen with the Ankara 2nd DGM requesting his conviction under Article 7/1 of Counterterrorism Law No. 3713.

Yüksel claimed that Gülen had since 1989 been involved in activities to establish an illegal organization to create a state based on religion by changing the secular state structure. The indictment made no reference whatsoever to any concrete action constituting a crime as spelled out in the Counterterrorism Law. Instead, the charges in the indictment were based on Gülen’s views as expressed in print and visual media as well as his social activities. In other words, his ideas and beliefs constituted the basis for the charges against him. The Ankara 11th High Criminal Court on May 5, 2006, decided to acquit Gülen following the trial due to unsubstantiated claims. An appeal was filed with the 9th Chamber of the Supreme Court of Appeals, which unanimously upheld Gülen’s acquittal by the Ankara 11th High Criminal Court on March 5, 2008. The Office of the Prosecutor at the Supreme Court of Appeals objected to this verdict on April 4, 2008, under Article 308 of the Code on Criminal Procedure (CMK). The chamber, however, dismissed the objection by the office of the prosecutor on June 24, 2008. In this way, the acquittal was approved and finalized.

Is Congress Guilty of the Largest Insider-Trading Scheme Ever?

The most lucrative tip of all time

by  Bob Adelmann

Mathew Martoma, age 38, was arrested at his home in Boca Raton, Florida, early Tuesday morning by the FBI and charged with insider trading. U.S. Attorney Preet Bharara, whose face appeared on the cover of Time magazine last February as the “man who is busting Wall Street,” was positively joyful in announcing the bust:

The charges unsealed today describe cheating coming and going — specifically, insider trading first on the long side, and then on the short side, on a scale that has no historical precedent.

As a result of the blatant corruption of both the drug research and securities markets alleged, the hedge fund [for whom Martoma worked at the time] made profits and avoided losses of a staggering $276 million, and Martoma himself walked away with a $9 million bonus for his efforts.

UN Demands Obama Smash State Marijuana Legalization

Crossing a line in the sand

by  Alex Newman

In a move likely to further alienate the already unpopular United Nations from the American people, a top official with the global body put his ignorance about the U.S. constitutional system on full display by calling on the Obama administration to lawlessly quash recent marijuana legalization initiatives in Washington State and Colorado. Voters in both states approved the decriminalization of the controversial plant on November 6, nullifying unconstitutional federal statutes and a dubious UN narcotics agreement at the heart of the global “war on drugs.”  

While the international organization obviously has no power to enforce its dictates, UN “International Narcotics Control Board” (INCB) boss Raymond Yans said he hoped disgraced U.S. Attorney General Eric Holder would ignore state laws, the U.S. Constitution, and the will of voters by “challenging” the successful referendums. Similarly, a coalition of former federal “drug warriors,” citing UN agreements, called on Obama to speak out against the legalization measures before they were adopted by the electorate. The administration, meanwhile, has suggested that it would continue to enforce unconstitutional federal statutes in those states despite the nullification measures.