The Heart of Financialization: Counterfeiting Risk-Free Assets

Greece is merely prelude; the global chain of risk recognition lies just ahead

By Charles Smith

Think about what is totally dependent on the counterfeiting of risk-free assets: 

1. The mortgage market and thus the housing market 

2. The derivatives market and thus the entire hedging-risk mechanism of the global financial market 

3. The sovereign debt market, i.e. government bonds that support deficit spending on a massive scale

Think about what happens in each of those markets when the real risk is recognized.

Consider housing. The housing bubble was predicated on the fabrication/ counterfeiting of risk-free assets and debt based on the phantom collateral of those assets. 

For example: a no-down payment, no-document "liar loan" mortgage is issued to an unqualified buyer for a house with an inflated appraisal--i.e. phantom collateral. The buyer's level of risk is masked, as is the collateral's inflated value. 

Given that the buyer cannot actually afford the house without a heavily gamed mortgage (interest only, etc.), the mortgage is toxic, i.e. doomed to default from its origination. 

The lender takes this high-risk mortgage and bundles it in with higher quality mortgages and then sells them as a AAA-rated, essentially no-risk mortgage-backed security (MBS). 

This risk-free asset is entirely counterfeit.

Bad Choices

The USA is in now in year three of what will prove to be a twenty-year mega-trend of an aging population

by Bruce Krasting

If two people are dying from liver disease, one 25, the other 65, and there’s only one liver available for transplant, the old one dies.

There’s one economic variable that’s highly predictable; demographics. In all of the industrial countries the aging population is now weighing on the economic outcome. Japan was the first country to go down the tubes from this phenomenon. Europe is behind Japan, but rapidly catching up.

The US has a huge headache with an aging population. The number of oldsters is big, and rapidly rising. Add to the size of the aging US population the fact that the promises made to these people are enormous. Other countries, like Canada, Russia and even China are struggling with the problem.

The USA is in now in year three of what will prove to be a twenty-year mega-trend of an aging population. These facts have been known for a long time, I’m amazed that the US has been so slow to come to grips with the implications of what is clearly in our future. Thanks to the Fiscal Cliff debate, the financial implications of the graying of America are now being discussed, and Washington is talking about “solutions”.

So what are the solutions that the deciders are zeroing in on? Simple. The proposals (and what we will get) are extensions of the ages that benefits become available. Both sides have suggested that pushing out the age for Medicare and Social Security benefits for an additional two years is appropriate. The Administration has said it would be willing to do this; John Boehner (and other big Republicans) has flat-out insisted that it happen.

Trade, geography, and the unifying force of Islam

Islam is a prime example of how geography shapes a society’s institutional and societal arrangements

By Stelios Michalopoulos, Alireza Naghavi, Giovanni Prarolo

Islam spread remarkably quickly before the era of European colonialism. This column argues that an important economic factor in determining the geographic range was spatial inequality that necessitated a politically unifying force like Islam. Regions that harbored such economic inequality were especially ripe for a system like Islam that offered progressive re distributive tenets with centralized authority to enforce them.

Both the Arab Spring and the ongoing struggles in Syria are giving a new shape to the Muslim world. The power of the state is shifting from dictators to Islamic parties. Naturally, the international community is following this transition closely. Will centralized  religiously based political forces succeed in bringing together the heterogeneous population of the region? Will it put them on a path towards embracing adequate political and economic reforms?

What’s the impact of Islam on economics and politics?

Existing evidence regarding the impact of Islam on political and economic indicators is controversial. Some studies identify a negative relationship (cf. La Porta et al. 1997, Barro and McLeary 2003), whereas others show a positive or insignificant association (cf. Pryor 2007, Sala-i-Martin et al. 2004). Such correlations are interesting, but our understanding of the Muslim world will remain limited unless we identify the forces that gave rise to the adoption of Islam across as well as within countries. Our recent research provides a first step towards that goal (Michalopoulos, Naghavi and Prarolo 2012).

The role of 'geographic inequality' and trade in the adoption of Islam

Prominent Islamic historians and scholars (e.g. Ibn Khaldun 1377, Lapidus 2002, Berkey 2003, Lewis 1993) whose research focuses on where Islam was adopted emphasize the historical role of trade routes. Whether Islam was adopted can also be explained in part by geography. Building on this work, we provide a systematic exploration of the geographic factors that help explain its adherence within as well as across countries.

So Many Hoaxes; So Little Time

How do you spell massacre?

by Mark J. Grant

Greece - The Hoax

“Some people can read War and Peace and come away thinking it's a simple adventure story. Others can read the ingredients on a chewing gum wrapper and unlock the secrets of the universe.”
                                                             -Lex Luthor

Regardless of the officially manipulated news stories; the truth of the Greek re-financing is not what we are told. Greece only managed to get about $20.7 billion in real buybacks done. They were shooting for around $41 billion and so the program was actually a failure. They have now extended the offering period which has just one goal which is to get the Greek banks to put up the rest of their holdings which will cause a further loss for the Greek banks. This is all politically mandated of course by the Troika and so the deal will get done and perhaps Greece will get its next aid tranche but it is really just Peter robbing Paul. You see, after the deal is completed then the Greek banks will issue more bonds that will be guaranteed by the nation and then pledged at the ECB. 

This will not be announced of course and the Troika/Greeks will “welcome, herald and praise” the success of the program and turn around and utilize the scheme that I have explained and so increase the debt of the country one more time while making a valiant effort to fool anyone who will listen. The financial reality is that a restructuring was only done on $20.7 billion and so the goals of the Troika were not met at all but the long string of hoaxes will continue unabated. 

Medicare is unsustainable in current form

Fiscal cliff negotiations are a good place to start

By Diana Furchtgott-Roth

Entitlement reform is a major sticking point in fiscal cliff negotiations. Republican House Speaker John Boehner has proposed cutting $900 billion in entitlement spending over the next decade, and President Barack Obama’s plan doesn’t include entitlement reform.

My colleague Rex Nutting wrote earlier this week that “rushing into entitlement ‘reform’ would be particularly foolish,” although America needs to keep health care costs down by changing the way doctors and hospitals are paid, just as Obamacare is going to do.

Medicare is clearly unsustainable. Rather than Obamacare, which is criticized for its system of rationing care, and paying doctors on the basis of outcomes, we need to inject more choice into Medicare, turning it into a system of competitive managed care.

Medicare is the toughest nut to crack. Social Security trust fund deficits can be solved by gradually raising the retirement age for future generations, means-testing benefits, and changing the growth path of benefits from an index based on wage growth to one based on price growth.

As for Medicaid, several states, such as Indiana and Rhode Island, have successfully reduced its growth through personal accounts and competition.

But Medicare presents the most daunting challenges. The Office of the Actuary of the Center for Medicare and Medicaid Services has estimated that without the projected Medicare spending cuts under the Affordable Care Act — cuts that may never, if history is any guide, occur — Medicare expenditures as a percent of GDP would grow from 3.7% today to 7.7% in 2050, to 10% in 2080. With the cuts, Medicare spending would be 6.7% of GDP in 2080.

Italy Trumps Greece

Italy may leap frog over both Greece and Spain as the source of angst for investors and policy makers

by Marc To Market 

News that the Greek bond buy scheme did not get sufficient takers to reach the 30 bln euro target set the commentariat ablaze.  This may prove to be a minor technicality as Greek banks initially offered 75% of the Greek bonds but were prepared to pitch them all if necessary to ensure EU aid is forthcoming, which is the source of their recapitalization funds. 

The bigger story is the fall of the Monti technocrat government in Italy.  Berlusconi's PDL party pulled support by abstaining economic reform votes at the end of last week.   After a series of consultations with the Italian president, it appears that parliament will not be dissolved until two important pieces of legislation are approved, the 2013 budget and financial stability measures.  The former is needed for obvious domestic reasons.  The latter is needed to maintain credibility in  EMU; assuring its partners. 

As the situation was unfolding on December 7, Italian bonds fared well, with the 10-year benchmark yield dropping 5 bp.  In comparison, 10-year Spanish yields fell 2 bp.  On the week, the Italian yield rose 3 bp, while Spain rose 14.  Italy's 10-year generic yield is about 93 bp below Spain's.  This is at the wider end of the  in recent months.  Recall that end of 2011, Italy was paying a 200 bp premium. 

With parliament likely to have been dissolved in any event by the middle of next month to prepare for spring parliamentary elections (must be held within 70 days of the dissolution of parliament), it is not exactly clear why Berlusconi chose now to pull the plug.  As in many things of this nature, the decision may have been over-determined. 

Supreme Court showdown expected over gay rights decisions

Intimate and personal choices are the right of individuals and not left up to the government

Justice Anthony M. Kennedy is a libertarian conservative who believes the Constitution protects the freedom of individuals to “make personal decisions relating to marriage, procreation, contraception, family relationships, child rearing and education.”

Conservative giants Anthony Kennedy and Antonin Scalia are likely to be on opposing sides when the justices rule on marriage and federal benefits

By David G. Savage

For more than two decades, the defining battles within the Supreme Court over social and moral controversies have been fought between two devout Catholics appointed by President Reagan.

Justice Antonin Scalia believes the law can and should enforce moral standards, including criminal bans on abortion and on "homosexual conduct" that many "believe to be immoral and destructive."

Justice Anthony M. Kennedy is a libertarian conservative who believes the Constitution protects the freedom of individuals to "make personal decisions relating to marriage, procreation, contraception, family relationships, child rearing and education."

Now the ideological fight between the conservative giants is set for another round. The two 76-year-olds are to some extent likely to be on opposite sides when the court meets in the spring to decide whether the government can refuse marriage and federal benefits to gays and lesbians.

The two have much in common. Born in 1936, they graduated from high school in the early 1950s and excelled at Harvard Law School, where they were a year apart. They were Republicans who rose through the legal ranks. When appointed to the court, both bought homes in McLean, Va.

This Is Just the Beginning

A Bloody Night With Egypt's Protesters

Amid bullets and flames, opposition activists clash with regime supporters over President Morsi's attempted expansion of executive authority

By Evan Hill

The blast echoed from somewhere near the front lines. A fragment -- probably a shotgun pellet -- ricocheted into Muhammad Abdel Aziz's face. He flinched and touched his cheek -- no wound, this time. Earlier, three or four had gashed his chin and swelled one side of his jaw, spattering his striped shirt with blood.

Shouts, explosions and gunfire echoed from all around the glass-carpeted streets. In an alley, Abdel Aziz found shelter from the chaos that had engulfed the neighborhood surrounding Egypt's presidential palace. He had come to protest against President Mohamed Morsi and was treated in a field clinic -- a café on normal days -- after being shot.

Drums of the president's opponent signaled their approach, and the two sides whipped rocks back and forth over a thin rank of riot police. Now behind the pro-Morsi lines and wary not to betray his feelings to the Islamist partisans thronging the road, Abdel Aziz, a tall, rotund, and gray-haired securities trader, confided quietly that he thought the Muslim Brotherhood was dragging Egypt down Iran's path to theocracy. "This is just the beginning," he said.

It was Wednesday night, just four days after Egypt's constituent assembly had rushed a draft constitution to completion in the face of nearly two-dozen walkouts. Protesters had been filling Tahrir Square for nearly two weeks since Morsi had declared himself and the assembly temporarily immune from judicial oversight . But the new constitution, written primarily by Morsi's Muslim Brotherhood and hardline Salafi allies, had swelled the protest's ranks on Tuesday to over 100,000 in Tahrir and, for the first time, outside the presidential palace.

The young and the jobless

Keep the Champagne corked

By The Examiner Editors

If the Obama administration has been skillful in one area, it has been convincing people that the current economy is the best they could hope for and to lower their expectations accordingly.

"No one could have fully repaired all of the damage he found in just four years," Bill Clinton said at the Democratic convention earlier this year. The message: Don't expect too much. This is the new normal.

Friday's jobless numbers indicate that message is penetrating. People are simply giving up on this economy.

Superficially, the numbers seemed good: The official rate fell from 7.9 percent to 7.7 percent, according to the Labor Department. The more expansive U-6 number, which unlike the official rate includes the underemployed jobless and discouraged, fell to 14.4 percent from 14.6 percent. Overall, employers reported a net gain of 147,000 jobs.

What is driving the decline in the jobless rate, though, is not the expansion of the economy, it is the shrinkage of the workforce. The number of Americans reporting they had jobs actually fell by 122,000 last month. The only reason the unemployment rate fell is that more than 350,000 Americans left the labor force entirely. If the labor participation rate was the same today as it was when Obama was sworn into office, the official jobless rate would be 10.7 percent, notes the American Enterprise Institute's James Pethokoukis. Those are not signs of a healthy economy.

But not everyone is suffering equally. Dig deeper into the Bureau of Labor Statistics data and you'll see that the number of employed Americans over age 55 actually grew by 177,000.

Fighting Recession the Icelandic Way

Undoing the damage caused by the crisis is a work in progress

By Bloomberg

Few countries blew up more spectacularly than Iceland in the 2008 financial crisis. The local stock market plunged 90 percent; unemployment rose ninefold; inflation shot to more than 18 percent; the country’s biggest banks all failed.

This was no post-Lehman Brothers recession: It was a depression.

Since then, Iceland has turned in a pretty impressive performance. It has repaid International Monetary Fund rescue loans ahead of schedule. Growth this year will be about 2.5 percent, better than most developed economies. Unemployment has fallen by half. In February, Fitch Ratings restored the country’s investment-grade status, approvingly citing its “unorthodox crisis policy response.”

You can say that again. Iceland’s approach was the polar opposite of the U.S. and Europe, which rescued their banks and did little to aid indebted homeowners. Although lessons drawn from Iceland, with just 320,000 people and an economy based on fishing, aluminum production and tourism, might not be readily transferable to bigger countries, its rebound suggests there’s more than one way to recover from a financial meltdown.

Nothing distinguishes Iceland as much as its aid to consumers. To homeowners with negative equity, the country offered write-offs that would wipe out debt above 110 percent of the property value. The government also provided means-tested subsidies to reduce mortgage-interest expenses: Those with lower earnings, less home equity and children were granted the most generous support.

Debt Relief

In June 2010, the nation’s Supreme Court gave debtors another break: Bank loans that were indexed to foreign currencies were declared illegal. Because the Icelandic krona plunged 80 percent during the crisis, the cost of repaying foreign debt more than doubled. The ruling let consumers repay the banks as if the loans were in krona.

Three New Deals

Why the Nazis and Fascists Loved FDR

by David Gordon

Critics of Roosevelt’s New Deal often liken it to fascism. Roosevelt’s numerous defenders dismiss this charge as reactionary propaganda; but as Wolfgang Schivelbusch makes clear, it is perfectly true. Moreover, it was recognized to be true during the 1930s, by the New Deal’s supporters as well as its opponents.

When Roosevelt took office in March 1933, he received from Congress an extraordinary delegation of powers to cope with the Depression.

The broad-ranging powers granted to Roosevelt by Congress, before that body went into recess, were unprecedented in times of peace. Through this “delegation of powers,” Congress had, in effect, temporarily done away with itself as the legislative branch of government. The only remaining check on the executive was the Supreme Court. In Germany, a similar process allowed Hitler to assume legislative power after the Reichstag burned down in a suspected case of arson on February 28, 1933. (p. 18).

The Nazi press enthusiastically hailed the early New Deal measures: America, like the Reich, had decisively broken with the “uninhibited frenzy of market speculation.” The Nazi Party newspaper, the Völkischer Beobachter, “stressed ‘Roosevelt’s adoption of National Socialist strains of thought in his economic and social policies,’ praising the president’s style of leadership as being compatible with Hitler’s own dictatorial Führerprinzip” (p. 190).

Nor was Hitler himself lacking in praise for his American counterpart. He “told American ambassador William Dodd that he was ‘in accord with the President in the view that the virtue of duty, readiness for sacrifice, and discipline should dominate the entire people. These moral demands which the President places before every individual citizen of the United States are also the quintessence of the German state philosophy, which finds its expression in the slogan “The Public Weal Transcends the Interest of the Individual”‘” (pp. 19-20). A New Order in both countries had replaced an antiquated emphasis on rights.

Mussolini, who did not allow his work as dictator to interrupt his prolific journalism, wrote a glowing review of Roosevelt’s Looking Forward. He found “reminiscent of fascism … the principle that the state no longer leaves the economy to its own devices”; and, in another review, this time of Henry Wallace’s New Frontiers, Il Duce found the Secretary of Agriculture’s program similar to his own corporativism (pp. 23-24).

How the United Nations could ruin the Internet

Imposing a tax on Web publishers can severely distort what Internet is all about

By John C Abell

The Internet has sustained some pretty intense assaults in the past couple of years. There was the heavy-handed attempt to stamp out content piracy with SOPA/PIPA, the Federal Communications Commission’s Net neutrality ruling, which many saw as splitting the baby, and that whack job who claimed to own a patent on the World Wide Web.

It is again open season on the Internet in Dubai, where the International Telecommunication Union, a United Nations agency ‑ whose mandate includes global communications ‑ is weighing proposals from many of its 193 member nations. Some of these proposals ‑ such as decentralizing the assignment of website names and eliminating Internet anonymity ‑ would make enormous changes to the organization and management of the Internet.

The ITU meeting, which began on Monday, runs through Dec. 14. Its agenda, and even the fact the proceedings are taking place at all, set off alarms among the Internet’s guardian angels.

Among the most vocal critics are a founder of the Internet, Vint Cerf, and of the Web, Tim Berners-Lee. Theirs is not some misplaced paternal instinct or senior graybeard moment or cry for attention. These guys are worried. And if they are worried, we all should be.

Still not sure this is serious business? The U.S. House of Representatives, which cannot agree on anything, voted unanimously to ban ITU regulation of the Internet before it even happens. The European Union did that last month, before the ITU even met.

Whether or not any policy directive emerges (or is abided by anyone) is not the point. The danger is in allowing any country to entertain the notion that Internet protocols can be put up for a vote.

The era of Reagan is over for good

A Republican Retreat – or Rout?

by Patrick J. Buchanan

Given the expectations raised by the Republican punditocracy – that Mitt was headed for a big victory – the jolt of defeat hit especially hard.

Now, what had seemed an orderly retreat has taken on the aspect of a rout, with Beltway Republicans calling for abandonment of fixed positions all along the line.

After Senate candidates Richard Mourdock in Indiana and Todd Akin in Missouri bollixed the question of abortion in cases of rape, Republicans are being counseled to downgrade or dump the social issues. As young people seem to support same-sex marriage, why not be good libertarians and get on board?

As Romney got 27 percent of the Hispanic vote, we must stop this talk of border fences, ID cards, employer sanctions and "self-deportation," and reconsider amnesty and a path to citizenship.

The party is being urged to shed positions dear to loyalists, to win over folks who voted for Obama. And those who urge the ditching of positions dear to the base are rewarded with indulgent media portrayals as Republican leaders who have "grown."

But there are two problems with this panicky reaction to defeat.

First, while the defections depress and dishearten the faithful, they rarely attract the disbelievers whom the switch is designed to appease. Second, such maneuvers are the indelible mark of the opportunist.

Which bring us to John Boehner's concessions to Obama to save us from going over the fiscal cliff.

Though a tax increase would violate party principle and a commitment to constituents just a month ago, and though Lord Keynes himself would argue that raising taxes in a limp economy is risky business, Boehner has offered Obama $800 billion in new tax revenues.

Yet, though Boehner is capitulating, the White House has backhanded his offer. The Clinton tax rates on the rich must be restored or no deal, says Treasury Secretary Tim Geithner. Obama takes a more moderate position. We must raise both rates and revenues.

Anti-Science Climate Deniers On The Retreat In Germany

Scientific Method versus Climate Deniers

By James Taylor,

The Scientific Method struck a valiant blow against climate denialism in Germany this week, as scientists from around the globe gathered to sort out climate change facts from fiction. The climate change conference, hosted by the European Institute for Climate and Energy (known by its German acronym EIKE) and cosponsored by the Heartland Institute, attracted nearly 200 attendees and marks ongoing global momentum in favor of sound science and against factually unsupported alarmism.

American atmospheric physicist S. Fred Singer, whose resume of scientific accomplishments runs longer than Al Gore’s obscene electricity usage (seehere), explained how natural variance accounts for most of the global warming of the past century. The German attendees treated Singer like a rock star. Nils-Axel Morner, former head of the Paleogeophysics and Geodynamics Department at Stockholm University, documented a dramatic deceleration of sea level rise during the past 40 years. Nir Shaviv, a professor of astrophysics at the Hebrew University of Jerusalem, showed how cosmic rays account for much recent global warming. Journalist Donna Laframboise related how she discovered an appalling prevalence of incompetence and bias among lead authors for the United Nations Intergovernmental Panel on Climate Change.

The conference’s unmistakable lesson was that the scientific evidence is woefully short of supporting alarmist assertions that humans are causing a global warming crisis. To the extent the scientific evidence leads to a particular conclusion, the conclusion is that humans are modestly enhancing a natural warming cycle that fortunately rescued the planet from the Little Ice Age.

Was blind but now I see

Blinding ourselves by our own liberal delusions

Survivor: Nurbanu's husband threw acid in her face
eight days after she divorced him for being unfaithful

By Vox Clamantis in Deserto

Grisly criminal acts are as old as humanity, but this story encapsulates the greatest evil of our time.

The title sums it up: “Woman forced to remarry the husband who threw acid in her face after she divorced him for being unfaithful.”

This woman’s horrific scars serve as a cruel and permanent reminder of the moment her husband of 18 years flung acid into her face.

Nurbanu had divorced her unfaithful and violent spouse after catching him with another woman.

Eight days later, she was cooking at home in Bangladesh when he pulled up on a motorbike and doused her with acid, leaving her blind and disfigured.

The 36-year-old now has to endure living with her former spouse again after his mother forced her to sign an affidavit to have him released from prison following the attack.

Horrific and sickening.

Monira Rahman, CEO of the Acid Survivors’ Foundation (ASF) in Bangladesh, has worked with the victims of acid and petrol attacks in the country for the past 14 years.

In a blog for the Huffington Post, she said the majority of the girls and women she had worked with had suffered at the hands of men who viewed them as ‘commodities’, and ‘believed they were justified in disfiguring them and violating their rights’.

That there is even a need in this world for an NGO like Acid Survivors’ Foundation is heart-wrenching alone. Tragically, Nurbanu’s suffering is far too typical in certain parts of the world. Wikipedia even has an article on acid throwing.

An illness of acute ideological diarrhea

A meta language has taken over our lives and no word is what it seems

By Yoani Sánchez

Don’t worry, reader, this article isn’t about what you think it is. It’s not a call from the Royal Academy of the Spanish Language to expedite the process of accepting new terms, nor even a demand to reduce the complexity of Spanish spelling. None of that. It’s been quite a while since I hung up the robes of a philologist, and I now understand more about bytes than syllables, more about tweets than conjugations. I am speaking, rather, of those peculiar twists used in Cuba to describe economic, political and social phenomena. The “reforms” that we are experiencing seem to be happening more in the field of linguistics and semantics than in concrete reality. I will offer up some examples… don’t despair.

In our country there has been a call to “update the socialist model” through measures that are simply adding elements of a market economy to the system. What is called “self-employment” is known in other parts of the world as the “private sector.” Nor are the unemployed designated with the corresponding word, but rather given the label of “available workers,” a very smooth way to describe the drama of unemployment. In hospitals, when they greatly reduce the number of X-ray and ultrasound technicians, it’s explained as a chance to “enhance the clinical diagnosis.” Which, translated into a truthful statement, means that the doctor must discover with her eyes and her hands everything from a fracture to an internal hemorrhage.

The Alarming “Sense Of Pauperization” In France

In France, poverty is linked to the private sector that is atrophying and shedding jobs

By Wolf Richter   

In France, 48% of the people considered themselves either living in poverty or on the way to living in poverty. The sobering results of a survey released just ahead of the National Conference of the Fight against Poverty. It’s going to be a big conference—a sign the government is taking poverty seriously. Prime Minister Jean-Marc Ayrault had announced it in September under the motto, “Imagine the social policies of the 21st century.”

It will take place in Paris on December 10 and 11 at the Iena Palace, home of the Economic and Social Council, which advises the National Assembly and the Senate on social and economic policies. President François Hollande himself will kick it off. Ayrault will close it. Sandwiched between them will be ministers, representatives of anti-poverty associations, and even people who live in poverty. The goal: a roadmap for social questions in Hollande’s five-year term.

It was one of his campaign promises. “The first time that the poverty has become a political topic that a President seizes,” said Bruno Grouès, coordinator of Alerte, an umbrella organization of 35 anti-poverty associations.

The largest consumer companies are already reacting to “the logic of pauperization,” as L’Oréal CEO Jean-Paul Agon had called it. Unilever, the third largest consumer products company in the world, was adjusting its commercial strategy by redeploying to Europe what had worked in poor countries of the developing world. E.Leclerc, the number one retailer in France, confirmed that poverty is a new commercial reality [read.... The “Pauperization of Europe”].

What I Worry About

Vignettes of Socialism

By Yoani Sánchez

I worry about this old man who, after working all his life, now sells cigarettes on the corner. Also the girl who looks in the mirror and values her body for “the sex market,” where she could meet a foreigner to get her out of here. I worry about the black man with leathery skin who, no matter how early he gets up, can never rise to a position of responsibility because of the racism — visible and invisible — that condemns him to a lower position. The deeply wrinkled forty-something who pays her dues to the union, but senses that at the next meeting they will announce that she is out of work. The provincial teenager who dreams of escaping to Havana, because in his village all that is waiting are material shortages, a badly-paid job and alcohol.

I worry about the girlfriends I grew up with and who now — with the passing of decades — have less, suffer more. The taxi driver who has to carry a machete hidden under the seat because crime is increasing even though the papers never report it. I worry about my neighbor who comes over in the middle of the month to ask for a little rice, despite knowing she’ll never be able to return it. Those people who race to the butcher shop just when the chicken arrives in the ration market, because if they don’t buy it that same day their families will never forgive them.

Startling Look at Job Demographics by Age

Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages

ZeroHedge had an interesting set of charts of BLS data in his post Number Of Workers Aged 25-54 Back To April 1997 Levels.

I picked up on that theme and put together the above chart of BLS data showing various age groups.

Demographic Points of Note

·        Employment in age group 25-54 is 94,063,000

·        Employment in age group 25-54 was 94,167,000 in April 1997

·        Total employment is 143,257,000

 ·        Total employment was  143,449,000 in February 2006

·        The low employment for age group 25-54 was 93,356,000 in October 2011, 28 months after the recovery began

·        Total employment at the start of the recovery in June 2009 was 140,074,000

 ·        Age 55 and up employment at the start of the recovery was 27,105,000 

·        Age 25-54 employment at the start of the recovery was 95,264,000

·        Age 55 and up employment is now 31,119,000

·        Age 25-54 employment is now 94,063,000

·        Reflections on the Recovery

·        Since the start of the recovery, the economy added 3,183,000 total jobs

·        Since the start of the recovery, the economy added  4,014,000 jobs in age group 55+

·        Since the start of the recovery, the economy lost 831,000 jobs of those between 16-54

·        Since the start of the recovery, the economy lost 1,201,000 jobs of those between 25-54

The mandatory stupidity of politicians

Ministers announcing minimum sentences for high-profile crimes looks tough, but is bound to lead to injustice

by Rob Lyons 

Politicians do love mandatory sentences. They really put the Something into Something Must Be Done.

When there seems to be regular outcry at the fact that a killer or rapist has been let off lightly by some supposedly bleeding-heart judge, the announcement of a new mandatory sentence ‘sends out a message’ that society disapproves of particular crimes so much that there are no shades of grey: conviction must lead to draconian punishment.

To that end, a new set of offences and mandatory sentences has come into force this week in England and Wales. There is now a ‘two strike’ system for serious violent or sexual offences. Someone convicted of such an offence for a second time would now receive an automatic life sentence ‘unless to do so would be unjust’. Extended determinate sentences (EDS) will apply to dangerous criminals who might otherwise be allowed to leave prison on parole after serving just half their sentence (which is normal practice). Under EDS, such prisoners could be forced to serve at least two thirds or even all their original sentences.

There will also be a new offence of aggravated knife possession. For anyone who carries a knife and wields it in a threatening or dangerous manner in a public place or school, there will be a minimum six-month sentence for adults and four months detention for 16- and 17-year-olds.