Modern Wisdom from Ancient Minds

With intellectual progress can come moral regress

by Victor Davis Hanson

The Tragic View

Of course we can acquire a sense of man’s predictable fragilities from religion, the Judeo-Christian view in particular, or from the school of hard knocks. Losing a grape crop to rain a day before harvest, or seeing a warehouse full of goods go up in smoke the week before their sale, or being diagnosed with leukemia on the day of a long-awaited promotion convinces even the most naïve optimist that the world sort of works in tragic ways that we must accept, but do not fully understand. Yet classical literature is the one of the oldest and most abstract guides to us that there are certain parameters that we may seek to overcome, but must also accept that we ultimately cannot.

You Can’t Stop Aging, Nancy

Take the modern obsession with beauty and aging, two human facts that all the Viagra and surgery in the world cannot change. I expect few readers have endured something like the Joe Biden makeover or the Nancy Pelosi facial fix (I thought those on the Left were more inclined to the natural way? Something is not very green and egalitarian about spending gads of money for something so unnatural). Most of you accept wrinkles, creaky joints, and thinning hair. Oh, we exercise and try to keep in shape and youthful, but a Clint Eastwood seems preferable looking to us than a stretched and stitched Sylvester Stallone.

The Greek lyric poets, from Solon to Mimnermus, taught that there is nothing really “golden” about old age. That did not mean that at about age 50-70 one is not both wiser than at 20 and less susceptible to the destructive appetites and passions — only that such mental and emotional maturity come at the terrible price of a decline in energy and physicality. When I now mow the lawn or chain saw, in about 10 minutes a knee is sore, an elbow swollen, a back strained — and from nothing more than a silly wrong pivot. Biking 100 miles a week seems to make the joints more, not less, painful. At 30 going up a 30-foot ladder was fun; at near 60 it is a high-wire act. There is some cruel rule that the more it is necessary at 60 to build muscle mass, the more the joints and tendons seem to rebel at the necessary regimen.

The arc of history bends toward socialism and insolvency

How Leviathan Ate the GOP

By PATRICK J. BUCHANAN

“God put the Republican Party on earth to cut taxes. If they don’t do that, they have no useful function.”

Columnist Robert Novak was speaking of the party that embraced the revolution of Ronald Reagan, who had hung a portrait of Calvin Coolidge in his Cabinet Room and set about cutting income tax rates to 28 percent.

But, to be historically precise, the GOP was not put here to cut taxes. From infancy in the 1850s, its mission was to halt the spread of slavery. From 1865 to 1929, it was the party of high tariffs. Mission: Build the nation and protect U.S. industry and the wages of American workers.

And if the Deity commanded the GOP to cut taxes, the party has had an uneven record. Warren Harding and Coolidge cut Woodrow Wilson’s wartime tax rates by two-thirds, but Herbert Hoover nearly tripled the top rate.

Under Dwight Eisenhower, when the top tax rate was 91 percent, the GOP ratified the New Deal and provided the tax revenue to balance the budget at the elevated levels of spending 20 years of Democratic rule had established.

Richard Nixon followed suit. Medicare, Medicaid, food stamps, aid to education, the Peace Corps, the arts and humanities endowments, all of the Great Society programs grew — with Nixon adding OSHA, EPA, the Consumer Product Safety Commission and Cancer Institute.

Reagan cut tax rates to 50-year lows, but also accepted new gasoline and payroll taxes. George H.W. Bush then raised the top rate back to 35 percent.

George W. cut tax rates, but put two wars, prescription drug benefits for seniors and No Child Left Behind on the Visa card. Speaker Boehner is about to sign on to higher tax rates.

Government Bloat is Not Growth

Real Gross Domestic Private Product, 2000–2011

by Robert Higgs

In the 1930s and 1940s, when the modern system of national income and product accounts (NIPA) was being developed, the scope of national product was a hotly debated issue. No issue stirred more debate than the question, Should government product be included in gross product? Simon Kuznets (Nobel laureate in economic sciences, 1971), the most important American contributor to the development of the accounts, had major reservations about including all government purchases in national product. Over the years, others have elaborated on these reasons and adduced others.

Why should government product be excluded? First, the government’s activities may be viewed as giving rise to intermediate, rather than final products, even if the government provides such valuable services as enforcement of private property rights and settlement of disputes. Second, because most government services are not sold in markets, they have no market-determined prices to be used in calculating their total value to those who benefit from them. Third, because many government services arise from political, rather than economic motives and institutions, some of them may have little or no value. Indeed, some commentators—including the present writer—ultimately went so far as to assert that some government services have negative value: given a choice, the people victimized by these “services” would be willing to pay to be rid of them.

When the government attained massive proportions during World War II, this debate was set aside for the duration of the war, and the accounts were put into a form that best accommodated the government’s attempt to plan and control the economy for the primary purpose of winning the war. This situation of course dictated that the government’s spending, which grew to constitute almost half of the official GDP during the peak years of the war, be included in GDP, and the War Production Board, the Commerce Department, and other government agencies involved in calculating the NIPA recruited a large corps of clerks, accountants, economists, and others to carry out the work.

The Politics of the Millenium

Kingdom Come

by Murray N. Rothbard

Christianity has played a central role in Western civilization and contributed an important influence on the development of classical-liberal thought. Not surprisingly, Christian beliefs about the "end times" are very important for us right now.

Christian Reconstructionism is one of the fastest growing and most influential currents in American religious and political life. Though the fascinating discussions by Jeffrey Tucker and Gary North (in the July and September issues of Liberty) have called libertarian attention to, and helped explain, this movement, to clarify Christian Reconstructionism fully we have to understand the role and problem of millennialism in Christian thought.

The problem centers around on the discipline of eschatology, or the Last Days, and on the question, How is the world destined to come to an end? The view that nearly all Christians accept is that at a certain time in the future Jesus will return to earth in a Second Advent, and preside over the Last Judgment, at which all those then alive and all the bodily resurrected dead will be assigned to their final places — and human history, and the world as we know it, will have come to an end.

So far, so good. A troublesome problem, however, comes in various passages in the Bible, in the Book of Daniel, and especially in the final book of Revelation, in which mention is made of a millennium, of a thousand-year reign of Christ on earth — the Kingdom of God on earth (KGE) — before the final Day of Judgment. Who is to establish that kingdom, and what is it supposed to look like?

The orthodox answer to this problem was set forth by the great Saint Augustine, in the early 5th century; this Augustinian line has been accepted by all the orthodox and liturgical Christian Churches: the Roman Catholic, the Greek and Russian Orthodox, high-church Lutheran, and Anglican, as well as by the Dutch wing of the Calvinist church (where Calvin himself stood is a matter of dispute). The Augustinian line is that the millennium, or thousand-year reign, is solely a metaphor for the creation of the Christian Church; the millennium is not something to be taken literally, as ever to take place, temporally, on earth. This orthodox position has the great virtue of disposing of the millennium problem. The answer — forget it. At some unknown time in the future, Jesus will return, and that's that.

Silvio Berlusconi's Masterplan for Power

Europe's Next Crisis?

By Hans-Jürgen Schlamp

Silvio Berlusconi is a man driven by fear, but also one whose political war coffers are flush with cash. He's in control of three TV stations and has hundreds of experts at shaping public opinion at his disposal. That's the starting point for Berlusconi's election campaign. Already, his campaign machine is running at full steam. And although this campaign can at times come across as imbecilic or insane, is actually the product of savvy media professionals. Pollsters measure the mood of the people every day and track what is and isn't working for the Berlusconi camp.

These days, the news they have to share is positive. Berlusconi's People of Freedom Party (PdL) has gained three percentage points in the polls in recent days. Of course, so far only 17 percent of Italians say they are actually prepared to elect the former prime minister again. But that number could grow once the Berlusconi Show gets into full swing.

He will have to act fast though. Italian law limits the exposure of politicians on television during the 45 days leading up to an election, so Berlusconi only has until early January to convince Italians that he can deliver the brave new world he has promised. The big media push has to come now -- and Berlusconi is already hard at work.

Berlusconi 'Successes'

For days now, the news shows on his TV stations have been filled with reporting on the "successes" of the former prime minister and the mistakes and unfinished business of current Italian leader Mario Monti. On the popular Sunday afternoon show on the Berlusconi-owned Canale 5, Silvio appeared for close to 90 minutes. The female host dubbed the tête-à-tête an "interview," but she focused on catchwords that seemed to be tailor-made for her studio guest. "People on the streets are complaining about the burden of the property tax," she said, prompting the former prime minister to nod in agreement. Berlusconi then added that the complaints are justified because the tax has pushed many families into bitter poverty. He said he would abolish the tax immediately.

Indivisible Liberty: Personal, Political, and Economic

Strands of the same braid: liberty

by DOUG BANDOW

Almost everyone is for freedom.  At least they say they’re for freedom. Politicians wax eloquent when talking about America’s liberties in general. Advocates for free speech and civil liberties aren’t hard to find. Champions quickly rise up to battle threats against privacy. And most people intuitively understand that intimate personal and family decisions don’t belong to government.

But when it comes to economic liberty, a lot of people suddenly change their tune. It’s as if economic liberty doesn’t count. Indeed, this facet of freedom seems to stand alone, vulnerable to state regulation and control. Some of those who fervently declare their devotion to freedom disappear when property rights, entrepreneurship, or freedom of contract is under attack.

Running Your Life Through Your Wallet

Today Congress and state legislatures are far too busy dreaming up new ways to run our lives. Some of those democratic diktats are directed at both our personal and economic affairs. For instance, healthcare “reform” empowered the national government to control many more of our medical decisions, as well as how we must fund those decisions. 

So the bulk of what legislators do is manipulate the economy. They offer high-minded excuses for doing so: to create jobs, to ensure fairness, to alleviate poverty. The bottom line is that nearly everything they do requires government to violate economic liberty.

Technology: A Threat to Liberty?

Technology gives ordinary people unprecedented power

by LUCA GATTONI-CELLI

Joseph Kennedy told his boys John, Robert, and Edward not to write down anything they would not want to see on the front page of The New York Times the next morning. Even if the Times may be going out of style, Joe Kennedy’s advice is not.

David Petraeus—director of the CIA and one of the most powerful men in the world—was recently undone by Gmail. Threatening e-screeds led the FBI from a Florida socialite to General David Petraeus’ biographer.

Its monitoring easily connected the biographer to the CIA director. And if he was vulnerable, we certainly are.

Our real concern is not with the technology itself, but how its novel uses might make us more vulnerable. Most people can’t resist using cheap, powerful computing devices that channel nearly all the world’s information. Can we count on those people to use these tools in the service of truth, justice, and freedom?

The Fiscal Cliff Is A Diversion

The Derivatives Tsunami and the Dollar Bubble

By Paul Craig Roberts

The “fiscal cliff” is another hoax designed to shift the attention of policymakers, the media, and the attentive public, if any, from huge problems to small ones.

The fiscal cliff is automatic spending cuts and tax increases in order to reduce the deficit by an insignificant amount over ten years if Congress takes no action itself to cut spending and to raise taxes. In other words, the “fiscal cliff” is going to happen either way.

The problem from the standpoint of conventional economics with the fiscal cliff is that it amounts to a double-barrel dose of austerity delivered to a faltering and recessionary economy. Ever since John Maynard Keynes, most economists have understood that austerity is not the answer to recession or depression.

Regardless, the fiscal cliff is about small numbers compared to the Derivatives Tsunami or to bond market and dollar market bubbles.

The fiscal cliff requires that the federal government cut spending by $1.3 trillion over ten years. The Guardian reports that means the federal deficit has to be reduced about $109 billion per year or 3 percent of the current budget. More simply, just divide $1.3 trillion by ten and it comes to $130 billion per year. This can be done by simply taking a three month vacation each year from Washington’s wars.

California, Illinois Completely Dysfunctional

Calpers Seeks Exemption From Bankruptcy Laws, Wants First-in-Line Payment Status

By Mike "Mish" Shedlock

Nearly every day there is another disgusting story regarding the outright parasitic behavior of public unions in California.
Today I have a pair of recent articles to present. The first is entitled Californian’s $609,000 Check Shows True Retirement Cost.
That article is part of a stunning six-part series by authors Michael B. Marois and Rodney Yap. I encourage you to click on the link and read the entire piece.

Also consider Calpers Bankruptcy Strategy Pits Retirees vs. All Others.

The California Public Employees’ Retirement System is trying to rewrite the rules for bankrupt cities, claiming that it should get paid before almost everyone else, including bondholders.
The biggest U.S. public pension fund would set a legal precedent should courts adopt Calpers’s position that, as an arm of the state, it is exempt from rules that apply to other creditors in the Chapter 9 bankruptcy cases of San Bernardino and Stockton. A Calpers victory would threaten public services in a city trying to reorganize in bankruptcy, or in an extreme case, cause a city to disincorporate, attorney James E. Spiotto said in an interview.

“Chapter 9 was never intended to cause the liquidation of a municipality or the reduction of services,” said Spiotto, who isn’t involved in the San Bernardino and Stockton cases. “What Calpers is doing is threatening the basic tenet of Chapter 9.”

Slavery's Global Comeback

What "human trafficking" really means

Slaves pan for gold in Accra, Ghana. Many have children with them as they wade in water poisoned by mercury that's used in the extraction process

By J.J. Gould

RANGOON, Burma -- Earlier this year, Ko Lin, 21 at the time, left his hometown of Bago, 50 miles northeast of Rangoon, along with a friend to look for work in Myawaddy, near the Thai border. The two found jobs there as day laborers loading and offloading goods, anything from rice to motorcycles, that were being illicitly transported by truck in and out of Thailand. After a month, Ko Lin had saved up the equivalent of about US$150 and decided to rejoin his family in Bago. Stopping first to pray at a local pagoda, the two friends met a super-amiable young woman who ended up pitching them an offer to work in Thailand. Her uncle, she said, could arrange a great job for them there.

Ko Lin was reluctant but bent to his friend's enthusiasm. The uncle turned out to be a trafficker who forced them to walk through the jungle for eight days. They ended up in weeks of forced labor in Chonburi, a city 60 miles east of Bangkok, after which Ko Lin was knocked unconscious and woke up separated from his friend on a fishing boat in the Gulf of Thailand. For months, he then rarely if ever had more than two hours of sleep a night, always on a shared, cramped bed; he was given three meals only on days when the captain felt he'd pulled in enough fish to earn it; and when he was fed, it was always dregs from a catch that couldn't be sold on the market. His arms regularly became infected from the extended exposure of minor wounds to sea water. If he complained that he was feeling unwell, the crew would beat him. He was injured multiple times by heavy blocks and booms, once having to tend to a head wound himself with a handful of wet rice. Three months out, Ko Lin was rescued in a police raid.

The New Japanese Nationalism

A once-reserved country fuels itself on indignation and catharsis

by Toshio Nishi

Japan has been apologizing since the summer of 1945; apologizing to its neighbors in the Asia-Pacific and to the United States. Have we, the Japanese, been kowtowing to the point that no nation believes our sincerity? Or do the Asia-Pacific nations demand more of our prostration? The scene is perhaps like an addict needing a more potent drug every passing day: the drug being Japan’s apology, and the addict you could easily guess.

Don’t the Japanese get sick and tired of our same miserable behavior? Yes, we do. Indeed, a proverbial swing has moved a little toward the center, and Japan has become assertive and recently proclaimed ownership for some little rocks sticking out of the water in the Sea of Japan.

China and South Korea are shocked to see Japan’s unexpected nationalistic, neo-militaristic resurgence. The United States wisely stays out of this potentially volatile shouting match. There is a very good reason for unfriendly bickering. Below the rocks, under the seabed, huge oil and natural gas deposits have been discovered.

MacArthur’s Legacy

Something is going on under the surface of a polite Japanese society that previously enjoyed unprecedented wealth and now is suffering from two decades of recession (but is still without much crime). Granted, the largest earthquake and tsunami in our memory and the four nuclear meltdowns never before experienced in our history have wrecked our daily lives. Yet, on its surface, Japan remains calm and collected. The people’s indignation, however, is heating up within.

Through our recent history, we have learned victory in war lasts only a moment, and the misery of defeat remains for a lifetime. Born in Osaka five days after Pearl Harbor, I grew up in the terrible aftermath of Japan’s first, crushing defeat. Like all other children who survived it, I know hunger and poverty, and the burden of the defeat.

Japan's No Exit Strategy

Debt and deficits can no longer be brought under control

by Wolf Richter

One of my sources in Japan was told about a yearend Bonenkai party where an official from the Ministry of Finance, the most powerful ministry at the core of Japan Inc., had let slip some things, perhaps after one too many drinks. He confirmed the view propagated by the Liberal Democratic Party, the victor in Sunday’s election, that the Bank of Japan wasn’t doing its job, that it was just giving away money to the banks which then bought Japanese government bonds instead of channeling it into the real economy.

“That’s why the Ministry of Finance is trying to gain control over the Bank of Japan,” he said. “The Ministry of Finance has pride in its ability and is much more qualified to run things than the Bank of Japan.”

Turf war. For him and his ilk, independence of the central bank is a non-sequitur. And elected politicians, when they try to bring the powerful bureaucracy under democratic control, are a nuisance. Prime Minister Yoshihiko Noda and his Democratic Party of Japan had attempted to do that. Now they’re out.

So a new government is being formed by the party that ran the show for fifty years after World War II and is responsible for building the very institutions and structures that got Japan to where it is today. With a new prime minister, Shinzo Abe—who’d already been through the annually revolving prime-ministerial door in 2006/2007. This “new” government is going to fix whatever ails Japan by spending even more money and by wrestling control over the printing press away from the Bank of Japan.

Alas, Japan engaged in “quantitative easing” on a massive scale long before the term had been invented. It has followed the most profligate Keynesian stimulus policies for two decades. Well over half of its current budget is paid for with borrowed money. The country is drowning in liquidity. Interest rates have been at zero or near zero for over a decade. And by the end of this fiscal year, gross national debt will hit 240% of GDP, the highest in the world [for how the MoF plans to deal with that debt, read.... Japanese Ministry of Finance To Bondholders: You’re Screwed!].

Rajoy Drives Spanish Revolution With Low-Cost Manufacture

Spain is adjusting its current account deficit without devaluing its currency for the first time in its economic history

By Angeline Benoit, Manuel Baigorri & Emma Ross-Thomas

Spain’s turn toward wage cuts to restore competitiveness without leaving the euro is starting to bear fruit. At least that’s how it seems for Pablo Garcia, a 34- year-old autoworker who just got hired after a year out of work.

“This has been the best Christmas gift I could ever have imagined,” Garcia said as he prepared to enter a PSA Peugeot Citroen (UG) plant on the Madrid outskirts for the afternoon shift. “In the factory there’s a good atmosphere; people are optimistic about the future.”

As labor costs fall and Prime Minister Mariano Rajoy’s legislation makes it easier for companies to cut wages and reorganize staff, carmakers including Ford Motor Co. (F), Renault SA (RNO) and Peugeot are boosting production in Spain. Rajoy says the increase in investment and rising exports will translate into jobs as he battles an unemployment rate of 26 percent, the highest in Europe.

A surge in exports and foreign corporate investment indicates Spain is quietly being transformed within the constraints of the single currency. Rajoy is emulating the policies Germany carried out a decade ago to overhaul its then- sluggish economy, and the euro’s chances of hanging together may hinge on his success.

“Circumstances may be more dramatic in Spain now but it is going through the same kind of internal devaluation as Germany did,” said Nicolas Doisy, an economist at CA Cheuvreux in Paris and a former French Treasury official.

Merkel Advice

German Chancellor Angela Merkel, who has reaped the rewards of the measures that cost her predecessor Gerhard Schroeder his public support, advised Rajoy to learn from her country’s experience. She said in a Sept. 6 press conference with Rajoy in Madrid that while “no country wants to impose anything on another for the sake of it,” Germany’s efforts had cut its ranks of jobless to fewer than 3 million from 5 million.

The Money Monopoly

The MIT Cabal

By Pater Tenebrarum

Many of our readers have probably seen this widely circulated article at the WSJ: “Secret Talks Behind Central Banks' Bets”, in which the Fed's favorite  press mouthpiece Jon Hilsenrath talks about the 'secret meetings' the world's central bankers regularly hold in Basel at the BIS (the Bank for International Settlements, the nexus of global central banking).

So these unelected bureaucrats, who are among the most powerful men in the world due to their control over the fiat money system, hold 'secret meetings' where they discuss their policy steps and agree on coordinated actions far away from the glare of the public eye.

As is usually the case with mainstream articles of this sort, Hilsenrath's article is actually a kind of promotion: it is in not exactly critical of the fact that these men make decisions affecting the lives of billions of people in secret with no accountability whatsoever. After all, we are supposed to accept the State's monopoly on money without questioning, including the manner in which it is organized. As Hans-Hermann Hoppe writes on this topic:

“You can reach the desired independence of taxpayers and tax payments and of banks, if only you establish yourself first as a territorial monopolist of the production of money. On your territory, only you are permitted to produce money. But that is not sufficient. Because as long as money is a regular good that must be expensively produced, there is nothing in it for you except expenses. More importantly, then, you must use your monopoly position in order to lower the production cost and the quality of money as close as possible to zero. Instead of costly quality money such as gold or silver, you must see to it that worthless pieces of paper that can be produced at practically zero cost will become money. (Normally, no one would accept worthless pieces of paper as payment for anything. Pieces of paper are acceptable as payment only insofar as they are titles to something else, i.e., property titles. In other words then, you must replace pieces of paper that were titles to money with pieces of paper that are titles to nothing.)

What rough beast is being born in France?

Slouching Toward Dhimmitude

By Joseph A. Harriss

FRANCE’S LATEST BOUT OF JIHAD JITTERS came in September when two small homemade bombs were thrown into a crowded Jewish grocery store in suburban Paris. The attack was largely symbolic—windows were broken, a few patrons injured—but it was yet another wake-up call to a country still in denial about the extent of the Islamist threat. Police tracked the bomb-thrower to Strasbourg, where he welcomed them to his apartment with fire from a .357 Magnum before being shot. Raids in Paris, Nice, and Cannes netted 11 others ready to kill for love of Allah, one of them arrested as he returned home from his local mosque carrying a loaded rifle. Along with a list of targets and jihadist literature preaching war against France, the police found a small arsenal for that purpose: an assault rifle, a 12-gauge shotgun with 800 cartridges, and materials for making time bombs. An investigator said it all amounted to “an operational unit that was much more dangerous than we had thought.”

The authorities’ surprise at the extent of Islamist determination to take down France is itself surprising. Only a few months before, Mohamed Merah, a 23-year-old Frenchman of Algerian descent, had shot three French soldiers in the south of France, then slaughtered a teacher, the man’s two young sons, and an 8-year-old girl at a Jewish school in Toulouse before gendarmes satisfied his desire for a martyr’s death. Despite his declared goal of “bringing France to its knees,” his proclaimed affiliation with al Qaeda, and his training trips to Afghanistan, Egypt, Turkey, Syria, Lebanon, and Jordan, the government preferred to describe him as a lone fanatic. “For heaven’s sake,” it said in effect, “don’t blame terrorism on France’s peace-loving Muslim community.” The dozen jihadists arrested in the raids knew better: They praised Mohamed Merah as their role model.

France – Growing Despair, Clueless Politicians

No Future

President Hollande's three musketeers, from left to right: Pierre Moscovici, the would-be reformer, Jean-Marc Ayrault the procrastinator, and Arnaud Montebourg, the knight-tilting-against-the-windmills-of-globalism

By Pater Tenebrarum

Young people have it very difficult in France. Many have no future, as youth unemployment has soared to 26%. German news magazine Der Spiegel gets it right when it fingers the culprit as follows:

“Youth unemployment in France has been high for some time, but it has now climbed to 26 percent. For decades, regardless of their political affiliation, lawmakers have been promising to create a better situation for young people. But exactly the opposite has happened. Labor laws protect those who already enjoy steady jobs, while the economic crisis and recession have limited the number of new jobs created. Meanwhile, housing has become both scarcer and pricier.

"Something must finally be done," says Didier Dugast, director of the Mission locale in Moissy, who reports that the number of those seeking his assistance has been jumping by some 10 percent each year.

A new program from Socialist President François Hollande for the creation of "future jobs" has been in effect since November. It targets people much like Affram [an unemployed youth whose fate the article discusses, ed]. But he just shrugs his shoulders and says: "We're used to politicians constantly coming up with new ideas." (emphasis added)

Of course we cannot expect Mr. Hollande to abandon the sacred 'code du travail'. The unions would be up in arms over it. It goes against the grain of socialist ideology to abandon these laws that are allegedly 'protecting' workers.  Of course they do protect someone, namely those already ensconced in a job. However, even this protection is an illusion. As the economy spirals into the abyss, the code will protect none of those employed by firms that go bankrupt. Once they join the ranks of the unemployed, they will find out that the 'code' has quietly priced them out of the market. Politicians are coming up with 'new ideas', but none of them work, because they all attempt to skirt the laws of economics by pretending that somehow, the problem of institutional unemployment can be solved while the very causes of it are left in place unaltered.

Impotence, Leverage and Central Banking

Deleveraging can occur much more quickly than any central bank can monetize debt

By Nicole Foss

Some of our readers have been wondering why we spend so much time covering the situation in Europe. The relevance of the European situation is not perhaps immediately obvious to those geographically far removed, with a temptation to ascribe the problems of the European periphery to locally-specific conditions.

However, the global economy is exceptionally integrated, and what happens in one location all too readily leads to financial contagion - the spread of fear, from one asset class to another, or from one country to another in the case of sovereign debt risk.

Europe is the epicentre of phase II of the credit crunch, from which waves of financial contagion can be expected to emanate for the next several years. Several member states are effectively at, or near, sovereign debt default, with the potential to trigger credit events in the credit default swap market. Banks are over-leveraged, often highly disproportionate in comparison with their host economies and intertwined with the sovereign debt issue.

In many EU member states there are housing bubbles far larger than the American one that began to burst in phase I of the credit crunch (October 2007-March 2009). Bubbles in some states have already burst, while in other countries, housing markets are going illiquid and prices are beginning to decline. As the value of collateral falls, and economies slide deeper into recession and high unemployment, the leveraged debt will be unsupportable. Personal debt is often sky-high, even in countries which are currently considered wealthy and stable.

What is unfolding in Europe is highly relevant to the future of the whole global financial system, and where Europe is leading - into debt deflation, liquidity crunch and depression - many other countries will follow over the next few years. We are in the process of crashing our global operating system, as we did on a smaller scale in the 1930s. Our global credit bubble has peaked, and the debt created in the expansion years - excess claims to underlying real wealth - will not be able to be repaid.

Cooling Down the Fears of Climate Change

Evidence points to a further rise of just 1°C by 2100. The net effect on the planet may actually be beneficial

By MATT RIDLEY

Forget the Doha climate jamboree that ended earlier this month. The theological discussions in Qatar of the arcana of climate treaties are irrelevant. By far the most important debate about climate change is taking place among scientists, on the issue of climate sensitivity: How much warming will a doubling of atmospheric carbon dioxide actually produce? The Intergovernmental Panel on Climate Change has to pronounce its answer to this question in its Fifth Assessment Report next year.

The general public is not privy to the IPCC debate. But I have been speaking to somebody who understands the issues: Nic Lewis. A semiretired successful financier from Bath, England, with a strong mathematics and physics background, Mr. Lewis has made significant contributions to the subject of climate change.

He first collaborated with others to expose major statistical errors in a 2009 study of Antarctic temperatures. In 2011 he discovered that the IPCC had, by an unjustified statistical manipulation, altered the results of a key 2006 paper by Piers Forster of Reading University and Jonathan Gregory of the Met Office (the United Kingdom's national weather service), to vastly increase the small risk that the paper showed of climate sensitivity being high. Mr. Lewis also found that the IPCC had misreported the results of another study, leading to the IPCC issuing an Erratum in 2011.

Mr. Lewis tells me that the latest observational estimates of the effect of aerosols (such as sulfurous particles from coal smoke) find that they have much less cooling effect than thought when the last IPCC report was written. The rate at which the ocean is absorbing greenhouse-gas-induced warming is also now known to be fairly modest. In other words, the two excuses used to explain away the slow, mild warming we have actually experienced—culminating in a standstill in which global temperatures are no higher than they were 16 years ago—no longer work.

The case against growth and freedom

The Face of Genocidal Eco-Fascism

by John Aziz 

I am not exaggerating.

This is Finnish writer Pentti Linkola — a man who demands that the human population reduce its size to around 500 million and abandon modern technology and the pursuit of economic growth — in his own words.

He likens Earth today to an overflowing lifeboat:

What to do, when a ship carrying a hundred passengers suddenly capsizes and there is only one lifeboat? When the lifeboat is full, those who hate life will try to load it with more people and sink the lot. Those who love and respect life will take the ship’s axe and sever the extra hands that cling to the sides.

He sees America as the root of the problem:

The United States symbolises the worst ideologies in the world: growth and freedom.

He unapologetically advocates bloodthirsty dictatorship:

Any dictatorship would be better than modern democracy. There cannot be so incompetent a dictator that he would show more stupidity than a majority of the people. The best dictatorship would be one where lots of heads would roll and where government would prevent any economical growth.

The Children of Hannibal

The rich heritage of Tunisia, maybe the only place where the Arab Spring stands a chance

By Michael J. Totten

The Arab Spring began in Sidi Bouzid, a small Tunisian town, at the end of 2010. In a desperate protest against the corrupt and oppressive government that had made it impossible for him to earn a living, food-cart vendor Mohamed Bouazizi stood before City Hall, doused himself with gasoline, and lit a match. His suicide seeded a revolutionary storm that swept the countryside and eventually arrived at the capital, Tunis, where it toppled dictator Zine El Abidine Ben Ali in January 2011. Just weeks later, Hosni Mubarak was thrown from his palace in Egypt. Muammar el-Qaddafi was lynched later that year in Libya. Syria’s Bashar al-Assad may be the next to fall.

For the most part, the Arab Spring isn’t going well. In the post-Mubarak parliamentary elections, Egyptians voted for radical Islamists by a two-to-one margin. The Libyan state, totalitarian under Qaddafi, is now so weak that it barely exists, as the September terrorist attack that killed the American ambassador demonstrated. In Syria, the revolt against the tyrannical house of Assad may be only the opening chapter in a long civil war. But things look different in Tunisia. True, a mob of radical Salafists rioted at the U.S. embassy in the capital, but the police did their job and protected our diplomatic staff and property. President Moncef Marzouki even dispatched hundreds of his own presidential guards to the scene. The Islamist party Ennahda won more votes in the election last year than any rival, but it still won fewer than half and was forced into a coalition government with secular liberal parties. In Tunisia, no one person or party has its hands on all the levers of power. Citizens are free, and so is the press.

Why is the Arab Spring looking sunnier in the country in which it began? The answer has much to do with Tunisia’s remarkable 3,000-year history.