Print me a jet engine

Additive manufacturing

By The Economist

CONFIRMATION as to how seriously some companies are taking additive manufacturing, popularly known as 3D printing, came on November 20th when GE Aviation, part of the world’s biggest manufacturing group, bought a privately owned company called Morris Technologies. This is a small precision-engineering firm employing 130 people in suburban Cincinnati, Ohio. Morris Technologies has invested heavily in 3D printing equipment and will be printing bits for a new range of jet engines.Morris Technologies uses a number of 3D printing machines, all of which work by using a digital description of an object to build it in physical form, layer by layer. Among the 3D printing technologies used by Morris Technologies is laser sintering. This involves spreading a thin layer of metallic powder onto a build platform and then fusing the material with a laser beam. The process is repeated until an object emerges. Laser sintering is capable of producing all kinds of metal parts, including components made from aerospace-grade titanium.

The US has imposed protective shoe tariffs on Americans for decades, even with no domestic shoe industry to protect

We should have more legislation with an “expiration date

By Mark J. Perry 

Almost all (99%) of the footwear Americans purchase is imported, so there is no longer a domestic shoe industry that needs special-interest protectionist trade legislation to compete more successfully with lower-cost foreign competitors.  And yet remarkably, Americans are still paying protective tariff tax rates of between 37.5% and 67.5% on imported footwear as a legacy of the Smoot-Hawley Tariff Act of 1930.

Blake Krueger, chairman of the Footwear Distributors & Retailers Association, explains in yesterday’s WSJ:

Smoot-Hawley legislation set high tariffs on hundreds of products. In the decades since 1930, many of these rates have been reduced to more reasonable levels, or eliminated altogether. However, footwear tariffs have remained largely untouched. The thriving U.S. shoe-manufacturing sector of the 1930s is long gone, but what remains are protective tariff rates of 37.5%, 48% and some as high as 67.5%.

The euro lives, but unity is dead

Europe is bound to become marginal in global affairs over the next decade as the world refocuses on the Pacific

By Francesco Sisci

Greece is saved one more time and the euro sound. Yet it is the European Union that has fallen apart in the most recent round of the crisis on the old continent. 

The bet that the International Monetary Fund (IMF) made with the eurozone on Greek debt paid off. IMF chief economist Olivier Blanchard pledged an intervention by the Fund in support of Greece only as long as Europe took part. Initially, Europe wanted only the IMF to intervene, but the IMF replied that it would step in only if Europe was committed to rescuing Greece. In other words, Europe refused to save Greece on its own, and it wanted an extra-European intervention to solve Europe's most critical problem. 

This was not because Europe lacked the funds or instruments to support Greece, but because it lacked the political will necessary to rescue the euro's weakest link. In other words, Europe refused to resort to political instruments to solve the European crisis. It wanted, rather, a purely economic solution that wouldn't bring the continent closer together politically. 

Why $16 Trillion Only Hints at the True U.S. Debt

Hiding the government's liabilities from the public makes it seem that we can tax our way out of mounting deficits. We can't.

by CHRIS COX AND BILL ARCHER

A decade and a half ago, both of us served on President Clinton's Bipartisan Commission on Entitlement and Tax Reform, the forerunner to President Obama's recent National Commission on Fiscal Responsibility and Reform. In 1994 we predicted that, unless something was done to control runaway entitlement spending, Medicare and Social Security would eventually go bankrupt or confront severe benefit cuts.

Eighteen years later, nothing has been done. Why? The usual reason is that entitlement reform is the third rail of American politics. That explanation presupposes voter demand for entitlements at any cost, even if it means bankrupting the nation.

A better explanation is that the full extent of the problem has remained hidden from policy makers and the public because of less than transparent government financial statements. How else could responsible officials claim that Medicare and Social Security have the resources they need to fulfill their commitments for years to come?

As Washington wrestles with the roughly $600 billion "fiscal cliff" and the 2013 budget, the far greater fiscal challenge of the U.S. government's unfunded pension and health-care liabilities remains offstage. The truly important figures would appear on the federal balance sheet—if the government prepared an accurate one.

The Facts About Spending & Taxes

An Overdue Book

By Thomas Sowell

If everyone in America had read Stephen Moore's new book, "Who's The Fairest of Them All?", Barack Obama would have lost the election in a landslide.

The point here is not to say, "Where was Stephen Moore when we needed him?" A more apt question might be, "Where was the whole economics profession when we needed them?" Where were the media? For that matter, where were the Republicans?

Since "Who's The Fairest of Them All?" was published in October, there was little chance that it would affect this year's election. But this little gem of a book exposes, in plain language and with easily understood facts, the whole house of cards of assumptions, fallacies and falsehoods which constitute the liberal vision of the economy.

Egypt is rocking, a new Pharaoh rises

Morsi against the New Left

By M K Bhadrakumar

Catching the tumult of a revolution on camera is virtually impossible — especially a revolution like the one Egypt which rolls on with no end in view. Another revolution in revolution is unfolding. The Chinese cameramen have caught some fantastic visuals as the banks of the Nile begin to heave again with seamless human passions. The Xinhua photo album is here. 

Egypt is rocking. The country is being torn apart. The left has become the right. The Muslim Brotherhood, which championed the underdog has become the Establishment. And a New Left has appeared, comprising, paradoxically, the western style liberals and centrists, secularists and leftists — in fact, all else except the Islamists. 

When Work Is Punished

The Tragedy Of America's Welfare State

By Tyler Drusden

Exactly two years ago, some of the more politically biased progressive media outlets (who are quite adept at creating and taking down their own strawmen arguments, if not quite as adept at using an abacus, let alone a calculator) took offense at our article "In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year." In it we merely explained what has become the painful reality in America: for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."

Asian countries ask US to Go Home

Post-US world born in Phnom Penh

By Spengler

It is symptomatic of the national condition of the United States that the worst humiliation ever suffered by it as a nation, and by a US president personally, passed almost without comment last week. I refer to the November 20 announcement at a summit meeting in Phnom Penh that 15 Asian nations, comprising half the world's population, would form a Regional Comprehensive Economic Partnership excluding the United States.

President Barack Obama attended the summit to sell a US-based Trans-Pacific Partnership excluding China. He didn't. The American led-partnership became a party to which no-one came. 

Instead, the Association of Southeast Asian Nations, plus China, India, Japan, South Korea, Australia and New Zealand, will form a club and leave out the United States. As 3 billion Asians become prosperous, interest fades in the prospective contribution of 300 million Americans - especially when those Americans decline to take risks on new technologies. America's great economic strength, namely its capacity to innovate, exists mainly in memory four years after the 2008 economic crisis.

Greece Wins Easier Debt Terms as EU Hails Rescue Formula

Constructive Ambiguity

By James G. Neuger, Stephanie Bodoni and Jonathan Stearns 

European finance ministers eased the terms on emergency aid for Greece, declaring after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health.

In the latest bid to keep the 17-nation euro intact, the ministers cut the rates on bailout loans, suspended interest payments for a decade, gave Greece more time to repay and engineered a Greek bond buyback. The country was also cleared to receive a 34.4 billion-euro ($44.7 billion) loan installment in December. Greek bonds rose.

“This has been a very difficult deal,” Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels after chairing a 13-hour meeting that ended early today. “All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path.”

After 240 billion euros in loan pledges and the biggest write down of privately held debt failed to turn Greece around, the creditor governments led by Germany proclaimed the latest fix just as they grappled with swelling financing needs in Cyprus and a potential aid request by Spain, the fourth-largest euro economy.

‘New Day’

In Athens, Prime Minister Antonis Samaras went on national television after midnight to celebrate a “new day” for Europe’s most debt-ridden country. While the financing pact rewarded the government’s budget cuts and steps to overhaul the economy, Greece will have to deliver on its commitments to earn each payout.

The end of Japan as we know it

Japan is on its last stretch as a major global economy

By Chan Akya
A few weeks ago, my Asia Times Online colleague Spengler wrote a missive on the eve of the US elections entitled "Barack Obama and America's Decline" , which included a plaintive plea for voters to cast their ballots on issues over and above their narrow personal interests. Predictably, my cynical response to him was on the lines of "why would turkeys vote FOR Thanksgiving?"; this being a family publication I shall not delve on his response to that missive.

As it turned out, the turkeys did vote against thanksgiving, and Obama is back in the White House to give Keynesian policies another shot. Specifically, the arguments that will be aired in the next few weeks and months will echo those of Professor Paul Krugman, who has himself filched a lot of ideas from the work of Professor Richard Koo and his book, the very modestly titled The Holy Grail of Macroeconomics" which I have reviewed in this column many moons ago. (See We are all Japanese now)

The central thesis of the book is that Japan failed to enact appropriate monetary and fiscal easing to counter the collapse in leverage engendered in the household and corporate sectors after the collapse of the economy in the late eighties and early nineties. Since the late '90s though, Japan's government has run a series of deficits while the central bank has kept interest rates at below zero through the liberal use of quantitative easing measures.

In fits and starts, the strategy has allowed Japan to remain afloat; however as the most recent trade deficit numbers make clear last week (a horrifying collapse in exports) and the travails of electronics giants Sony and Panasonic (both downgraded to junk credit rating last week by the Fitch agency), the path is nowhere near smooth; and indeed results appear to run counter to the best intentions of both Koo and by extension, Krugman.

At many levels, I have a deep admiration for the Japanese people; their work ethic, aesthetic values and personal discipline all set them apart from the globalized mainstream. Equally, a lot of people have called the death of Japan already; somehow the old lady didn't notice those obituaries and has continued to plod on despite all the deprivations that two decades of economic recession bring. A cat with the proverbial nine lives, in some ways.

Economics though is an unforgiving taskmaster, and eventually extracts change from the most obdurate societies. There are in particular a few specific factors that argue that the cat's nine lives are indeed up this time around.

Bernanke's Easy Money Death Spiral

On the Road to Zero Growth

By Vince Foster

It seems that big sucking sound signaling a precipitous drop off in the demand for money that I have been warning about for a few weeks is starting to get some more attention. This past Monday, the Wall Street Journal ran a front page story headlined Investment Falls Off a Cliff:  US Companies Cut Spending Plans Amid Fiscal and Economic Uncertainty. According to the article:

Nationwide, business investment in equipment and software -- a measure of economic vitality in the corporate sector -- stalled in the third quarter for the first time since early 2009.

Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the US elections and federal budget policies also appear among the factors driving the investment pullback since midyear.

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits.

Ben’s debt binge to detonate retirement funds

Bond bubble bust

by JONATHON TRUGMAN

There goes the nest egg.

There’s a record $16.3 trillion of US debt and a good portion of that is sitting in baby boomers’ portfolios like a ticking time bomb ready to explode, and most investors know little about it.

“It’s my worst nightmare,” says a long-only bond fund manager. “There’s nothing I can do — the checks come in [from clients] every day, and I have to invest it.”

With Ben Bernanke’s debt paper floating through the market and the Fed chief vowing to keep rates low until 2015, some bond managers are hoping to get out before the bubble bursts and Armageddon hits.

And rates would not have to go through the roof to take out billions in principal for investors, most of whom are in bonds because they are nearing retirement.

“If the 10-year [bond] goes up 100 basis points, that could mean more than $35 billion is lost,” says one bond trader.

One hundred basis points is just a 1 percent increase, which would put the 10-year at about 2.6 percent. The average rate of return over the last decade is roughly 4 percent, which, if we return to that yield, could put principal losses close to $500 billion, says a bond manager.

How Partisans Fool Themselves Into Believing Their Own Spin

Science shows that we often allow our moral judgment to overshadow factual arguments

By Alesh Houdek

This month's presidential election was between two fairly centrist candidates. And yet political discourse between ordinary Republicans and Democrats is more contentious and hostile than it's been in decades. I bet you strongly agree with one of these statements:

• If you're a Democrat: The Obama campaign for reelection was run largely based on telling the truth. The Romney campaign was laregely based on lies.
• If you're a Republican: All political campaigns stretch the facts from time to time to make a point. Romney and Obama both did.

I'd like to suggest that both these statements are false. 

Let's first take on the claim that the Obama reelection team did not lie. During the campaign President Obama said, directly and through campaign advertising, that Romney opposed gay adoption, opposed abortion even in cases of rape or incest, and that Romney's plan could take away middle-class tax deductions. He claimed that during his first term we doubled our use of renewable energy, doubled exports, and that 30 million Americans are going to get health care next year because of Obamacare. And that's before we even get to how the campaign twisted the facts around when Romney left Bain Capital to make him look bad.

Is the Enemy Us?

Fat Studies For Thin Minds

BY CLAIRE BERLINSKI

In his new book, Bruce Bawer has proposed an answer to vexing questions: Why has our culture become degraded? Why have our politics become polarized? And why has our public debate coarsened? Bawer locates the source of these misfortunes in the changes that have taken place in American higher education over the last generation—above all, the emergence of multicultural “identity studies.” The academy, he observes, is “the font of the perfidious multicultural idea and the setting in which it is implanted into the minds of American youth.”

In what must be reckoned a martyrdom operation, Bawer has spent countless hours not only reading the collective oeuvre of the leading luminaries in Black, Women’s, Gender, Queer, Fat, and Chicano Studies, but also traveling America to attend their conferences. At a gathering of the Cultural Studies Association at the University of California, Berkeley, for instance, Bawer encounters the young Michele, who’s “like, a grad student at UC Davis?” She’s “sort of reviving a Gramschian-style Marxism,” involving the idea that global warming is “sort of, like, a crisis, in the human relationship to nature?” Bawer claims that his heart goes out to her. (His heart is bigger than mine.)

Texas Schools Teaching Boston Tea Party As Terrorist Act

Neither Liberty Nor Security

By CBS News

The most historical instance of protesting against taxation without representation is now being taught in Texas schools as a terrorist act.

As recently as January of this year, the Texas Education Service Center Curriculum Collaborative included a lesson plan that depicted the Boston Tea Party, an event that helped ignite the American Revolution, as an act of terrorism. TheBlaze reports that in a lesson promoted on the TESCCC site as recently as January, a world history/social studies class plan depicted the Boston Tea Party as being anything but patriotic, causing many people to become upset with the lack of transparency and review for lessons.

Your Perception Is Your Reality

Capital Formation and the Fiscal Cliff 

By John Mauldin

There’s a very interesting article in The Atlantic this week, called “How Partisans Fool Themselves Into Believing Their Own Spin.”  While the author, Alesh Houdek, engages in some spin of his own, he makes some very good points that we should keep in mind not only as we look at the potential effects of a tax increase but as we tackle new ideas and accompanying “facts” in general. And he has pointed us to a very interesting study, or at least it’s interesting for those of us who are fascinated by behavioral psychology and behavioral economics:

We weigh facts and lines of reasoning far more strongly when they favor our own side, and we minimize the importance and validity of the opposition's arguments. That may be appropriate behavior in a formal debate, or when we're trying to sway the opinion of a third party. But to the extent that we internalize these tendencies, they injure our ability to think and see clearly. And if we bring them into the sort of open and honest one-on-one political debates that we'd like to think Americans have with each other, we strain our own credibility and undermine the possibility of reaching an understanding.

A defense attorney presents the best case for his client's innocence in court, but he's realistic with himself about what he believes the truth of the matter is. Too often in political arguments we have drunk our own Kool-Aid.”

Stop the Madness

Washington is spending the country into economic decline

By PETE DU PONT

Summer is almost ended, and Americans are growing more and more skeptical about the coming fall--about our lack of jobs, our bigger and more expensive government, the higher taxes that will be coming soon, more expensive and less personal health care, and, most important, our declining economy.

A look at specific trends makes it seem very bad indeed. As Mortimer Zuckerman recently wrote in The Wall Street Journal: "Now there are at least 14.5 million Americans still searching for work: 1.4 million of them have been jobless for more than 99 weeks, 6.5 million have been jobless for over 27 weeks."

Pessimism is on the increase, and people are losing confidence in the president. In health care, while 39% of people believe Barack Obama's performance is up to expectations, 55% say that he has fallen short. Regarding our economy it is 29% positive and 66% negative. And the budget deficit? Only 25% of people think the government has done well controlling the deficit, while 67% believe it is too big and will not be cut.

Privatizing Greece, Slowly but Not Surely

Greece demands philanthropy, not investment

By LIZ ALDERMAN

THE government inspectors set out from Athens for what they thought was a pristine patch of coastline on the Ionian Sea. Their mission was to determine how much money that sun-kissed shore, owned by the Greek government, might sell for under a sweeping privatization program demanded by the nation’s restive creditors.

What the inspectors found was 7,000 homes — none of which were supposed to be there. They had been thrown up without ever having been recorded in a land registry.

“If the government wanted to privatize here, they would have to bulldoze everything,” says Makis Paraskevopoulos, the local mayor. “And that’s never going to happen.”

Athens agreed. It scratched the town, Katakolo, off a list of potential properties to sell. But as Greece redoubles its efforts to raise billions to cut its debt and stoke its economy, the situation in Katakolo illustrates the daunting hurdles ahead.

'Smart Austerity' and the Latvian Turnaround

Smart austerity is economic stimulus, but not of the "borrow and print money" sort

An economic policy that combines growth—setting correct incentives—and austerity—getting rid of wrong and excessive spending—was key to our economic recovery

By DANIELS PAVLUTS

The recent trend-defying economic growth in Latvia is good news for our country. It is not good news for those who decry the Latvian government's policies of radical fiscal consolidation and sweeping structural reforms as too focused on "austerity" and not focused enough on "growth."

I think "smart austerity" is a much more accurate description of our policy. Smart austerity is economic stimulus, but not of the "borrow and print money" sort. Smart austerity means reviving the business environment by making it more competitive. It means creating a macroeconomic framework that restores confidence and directs the economy away from debt-driven financial services and construction. It also means safeguarding social stability and protecting education spending from cuts, thereby preserving our long-term competitiveness.

If deficit spending were stimulus, France would be king

Les Moody Blues

Moody's stripped France of its triple-A rating last week, citing "deteriorating economic prospects," the "long-standing rigidities of its labor, goods and services markets" and "exposure to peripheral Europe." And it could get worse: "We would downgrade the rating further in the event of an additional material deterioration in France's economic prospects," says Dietmar Hornung, Moody's lead analyst for France.

Don't think, however, that the French government is unduly alarmed. Finance Minister Pierre Moscovici insisted that the downgrade did not "call into question the economic fundamentals of our country." We've never made a fetish of the opinions of the ratings agencies, which tend to be lagging indicators. Nonetheless, the "fundamentals" Mr. Moscovici points to are worth a closer look.

In 1981, when the Socialist government of Francois Mitterrand took office, France's national debt amounted to 22% of GDP. In the intervening years France's economy has grown by an inflation-adjusted 73%, while the national debt—now at 90% of GDP—grew by 609% in real terms. In raw numbers, that comes to about €1.7 trillion in additional debt. At no time in those 31 years did any French government balance a budget, much less run a surplus.