Bomb from Brussels

Cyprus Model May Guide Future Bank Bailouts

Should the Cypriot bailout become a model for the future? The mere suggestion sent markets tumbling last week. But increasing numbers of European politicians would like to see bank shareholders and investors bear a greater share of crisis risk. The EU may be changing its strategy. 

By MARTIN HESSE, MICHAEL SAUGA, CORNELIA SCHMERGAL and CHRISTOPH SCHULT

Jeroen Dijsselbloem's original game plan was to just keep a low profile. When the 47-year-old Dutch finance minister became head of the Euro Group three months ago, the first thing he did was deactivate his Twitter account. In meetings of the finance ministers of the 17 euro-zone states, he let his counterparts do most of the talking. And whenever he appeared before reporters in Brussels afterwards, he would start with sentences like: "Maybe it's good, if I say something."

Dijsselbloem seemed determined to become the most boring of all the boring bureaucrats in Brussels -- until last Monday, that is, when he did something no one would have anticipated: He detonated a bomb. The way that large depositors and creditors were being drawn into the bailout of Cypriot banks, he said, could become a model for the entire euro zone. In future aid packages, he said, one must look into whether bank shareholders, bond holders and large depositors could participate so as to spare taxpayers from having to foot the bill. He was announcing nothing less than a 180 degree about face.

Cyprus as a model? Dijsselbloem had hardly finished his comments before international news agencies began registering its impacts. Markets around the world nosedived, the euro sank to a four-month low and EU leaders had to rush into damage-control mode, as did the man who triggered the storm himself. Dijsselbloem backtracked by saying that Cypriot banks were obviously "a special case." Germany's top-selling daily tabloid, Bild, scoffed that Dijsselbloem would get a new nickname in Brussels: "Dusselbloem," the rough equivalent of "Dimwit-bloem."

But the ridicule might prove premature. In reality, Dijsselbloem merely expressed something that many Europeans already think. Whether at the European Parliament or in several Continental capitals, many are saying that the time is ripe for the financial sector to assume a greater share of the costs for rescuing ailing banks.

'Banks Must Save Themselves'

More is at stake than determining just how to deal with insolvent financial institutions. It is about core tenets of the bailout strategy being followed by the EU. Since the collapse of Lehman Brothers in 2008, it has primarily been EU taxpayers who have assumed liability for the fallout. Failing banks, such as Germany's Hypo Real Estate (HRE) or Spain's Bankia, were kept on artificial life support while shareholders and creditors were spared. The advantages were enjoyed not only by actors on the global financial markets, but also by major banking centers, such as those in Luxembourg and London, which could count on seeing governments prop up teetering financial institutions.

A growing number of politicians and experts are demanding an end to this arrangement. In the future, German Chancellor Angela Merkel said, "banks must save themselves." And German central bank board member Andreas Dombret is convinced that the financial sector can only regain health once there are no longer "implicit state guarantees for banks."

A Christian Catastrophe ...

... and why we should care

By RALPH PETERS

Islamist terrorists and fanatics are methodically exterminating the 2,000-year-old Christian civilization of the Middle East through oppression, threats, appropriations and deadly violence.

Our media ignore the intensifying savagery against Christians in Muslim Brotherhood-controlled Egypt. Unconfirmed reports assert that, last month, Muslim Brothers dragged Christian protesters to a mosque and tortured them — but our reporters won’t look into an Islamist Abu Ghraib.

For a century and a half, the varied strands of Middle East Christianity have faced increasingly fierce pogroms and, for the Armenians, outright genocide. But with the rise of Wahhabi and Salafist terror, the long, slow-motion Holocaust accelerated.

Western liberals romanticize barbaric cultures but have no interest in the destruction — before their averted eyes — of a great and brilliant religious civilization. It’s as if they accept the Islamist creed that Christians don’t belong in the realms of Islam.

But the Middle East was more than just Christianity’s birthplace. The faith we knowmaturedin the Middle East and North Africa, from Ephesus and Antioch to Alexandria and beyond. St. Augustine, the most influential church father after St. Paul, was a North African.

Rome was a latecomer to Christian authority. Through the Middle Ages, substantially more Christians lived east of Constantinople (now Istanbul) than in Europe, the faith’s backwater, whose northern reaches had yet to be evangelized.

Christianity’s greatest thinkers, greatest monuments and greatest triumphs for its first 1,000 years rose in the Middle East. Even the Muslim conquest and relative servitude could not dislodge Christianity. In the worst of times, Christianity turned the other cheek and endured. Some Christians flourished.

Today, the end is in sight.

In Iraq, cities such as Mosul and Saddam’s hometown, Tikrit, were once vital centers of Christianity. But the country’s Christian population, estimated at up to 2 million a decade ago, has fallen by half — perhaps by three-quarters.

Over 2 million Christians in Syria dread Islamist terror and religious cleansing so much, they lean toward the vicious Assad regime, which at least shielded minorities. Those who can, flee the country.

Christians were early supporters of Arab nationalism. One of the fiercest Palestinian leaders, George Habash, was a Christian, as was the wife of Yasser Arafat. Their thanks? Two-thirds of the West Bank’s and more of Gaza’s Christians have been driven out. They’re now a small minority even in Bethlehem (a situation ignored by our visiting president).

Middle East "Democracy"

Democracy in the Middle East context means majority selection of which individuals get the power to oppress

By Thomas Sowell 

The Obama administration treated the creation of "democracy" in the Middle East as a Good Thing. Ironically, those who created the United States of America viewed democracy with fear-- and created a Constitutional republic instead.

Everything depends on how you define democracy. In its most basic sense, democracy means majority rule. But there can be majority rule in a free country or in a country with an authoritarian or even a dictatorial government.

In this age of sloppy uses of words, many people include freedom in their conception of democracy. But whether democracy leads to freedom is an open question, not a foregone conclusion.

In the United States, when the Union army of occupation withdrew from the South, years after the Civil War, majority rule returned to the Southern states-- and the freedom of blacks was drastically restricted from what it had been under military rule.

Those who applauded the spread of democracy in the Middle East seemed to assume that the "Arab Spring" meant greater freedom. But there was no reason to assume that beforehand-- and certainly no reason to believe it after the fact. Christians in Egypt have already lost whatever security they had under Hosni Mubarak.

The idea that "all people want freedom" is one of those feel-good phrases that some people indulge in. But you do not get a free country just because everybody wants freedom-- for themselves. You can have a free country only when people are willing to let other people have freedom.

Nazis were free to be Nazis under Hitler and Communists were free to be Communists under Stalin and Mao. But nobody else was free.

Toleration for others is a precondition for a free society-- and it is hard to think of more intolerant societies than most of those in the Middle East. There have been female heads of state in some other Islamic countries, but not in the Middle East.

Democracy in the Middle East context means majority selection of which individuals get the power to oppress. Why would anyone have seriously believed that it would mean anything more than that? Certainly not from the history of the region.

Beyond parody

Nothing other than falling flat on their faces would inspire the correct reaction from the masses

If you are a parody of conservative values, then what the heck am I? Stephen Colbert, to a conservative television host. 

By Chan Akya

Perhaps undocumented victims of the global financial crisis for the past six years would include comedy writers, particularly those who attempt to make a living by writing slyly ironic articles about ''fake'' news that somehow echo reality but are taken to be funny because they are so very farfetched. The genre of spoof artists, in other words. Such people may still exist in particular spheres - physics and philosophy for example - but away from those, it is difficult to imagine that spoof writers could have any semblance of a career these days. 

At least in the financial world, these spoof artists have pretty much nothing to do, for their livelihoods have been stolen by the very people who they are supposed to parody - politicians, bankers and economists. If you don't believe me, take a simple test and go ahead and spot the spoof news item below: 

• Central bank vows to create inflation 
• Authorities tax savings held in bank deposits
• Governments borrow to fight debt crisis 
• Mutual funds pile into government bonds yielding less than inflation 
• Governments increase tax rates to fight recession

Turning Argentine...

The U.S. is an even richer country, but not so rich that a determined government cannot ruin it

by Bill Bonner

U.S stock markets were closed on Good Friday. When they reopened on Monday, investors seemed unmotivated. Neither the Dow nor the price of gold moved appreciably. Gold ended the day right on the $1,600 mark.

Not much to report, in other words.

Here in Argentina, most things were closed on Monday for the Easter holidays... and are closed again today, too.

What do these Argentines think they are? French?

We wandered the streets. Here in the Palermo Soho neighborhood of Buenos Aires, where we are staying, there were thousands of people window-shopping, eating in restaurants and drinking in outdoor cafes.

Inflation is running about 30% per year. The government is proposing to use citizens' pension funds to pay off its creditors. You get 50% more for your money if you trade your dollars for pesos on the black market. And experts are predicting another big devaluation of the peso after the October elections.

Ten Fast Facts On The Economics Of Immigration

The benefits could potentially outweigh the costs

by Nick Colas

While immigration is back on the docket in Washington, the topic has yet to capture much attention on Wall Street, taking a back seat to European troubles and the Dow rally. The inattention seems warranted, as immigration is typically cast as a simply societal issue – but I urge you to reconsider its economic importance. The reality is that immigration, and any reform thereto, has real, visible impacts on the US economy at both the micro and macro levels, from GDP to job growth:GDP is first and foremost a product of population growth and productivity – and immigration plays a role in both. Population growth in particular is attributable almost exclusively to immigration, as fertility rates among native-born citizens fall. In fact, from 2003 to 2010, 20% (4,071,000) of the more than 21 million person increase in the population was in the foreign-born population, bringing their share of the entire population from 11.9% to 12.4%.

GDP is first and foremost a product of population growth and productivity – and immigration plays a role in both. Population growth in particular is attributable almost exclusively to immigration, as fertility rates among native-born citizens fall. In fact, from 2003 to 2010, 20% (4,071,000) of the more than 21 million person increase in the population was in the foreign-born population, bringing their share of the entire population from 11.9% to 12.4%.

Immigration is also crucial to the health of the housing market. The foreign-born make up 14% of homeowners in the US, and more than half of them own their homes outright, according to Census figures. Naturalized citizens are more likely to own than rent, but the 16 million naturalized and non-citizen households – a number that is growing every year with the immigrant population – fuels a good portion of the new and existing sales we see every month.

The Nordic Mirage

An sui generis economic and social model 

By SAMUEL GOLDMAN

Scandinavia has a disproportionate role in the American political imagination. For progressives, the Nordic countries represent a postmodern Cockaigne, in which economic egalitarianism is balanced with personal autonomy in a way that communism never achieved. For conservatives, on the other hand, “Sweden” is shorthand for the fusion of an infantilizing welfare state with unusually suffocating political correctness. Either way, Americans talk much more than you’d expect about peripheral region with a combined population of only about 26 million.

A report in The Economist argues that the Nordic countries are worth special attention, but also that both sides misunderstand the reasons. According to an economist quoted in the piece, Sweden, in particular, is pursuing a “new conservative model” that combines flexible labor markets, consumer choice, and high technology with relatively generous welfare and infrastructure spending. The result is a successful capitalist economy without especially small government:

The Nordics do particularly well in two areas where competitiveness and welfare can reinforce each other most powerfully: innovation and social inclusion. BCG, as the Boston Consulting Group calls itself, gives all of them high scores on its e-intensity index, which measures the internet’s impact on business and society. Booz & Company, another consultancy, points out that big companies often test-market new products on Nordic consumers because of their willingness to try new things. The Nordic countries led the world in introducing the mobile network in the 1980s and the GSM standard in the 1990s. Today they are ahead in the transition to both e-government and the cashless economy…

Redrawing the European map

The European map is outdated and illogical. Here's how it should look

By The Economist

PEOPLE who find their neighbours tiresome can move to another neighbourhood, whereas countries can't. But suppose they could. Rejigging the map of Europe would make life more logical and friendlier.

Britain, which after its general election will have to confront its dire public finances, should move closer to the southern-European countries that find themselves in a similar position. It could be towed to a new position near the Azores. (If the journey proves a bumpy one, it might be a good opportunity to make Wales and Scotland into separate islands).

In Britain's place should come Poland, which has suffered quite enough in its location between Russia and Germany and deserves a chance to enjoy the bracing winds of the North Atlantic and the security of sea water between it and any potential invaders.

Belgium's incomprehensible Flemish-French language squabbles (which have just brought down a government) are redolent of central Europe at its worst, especially the nonsenses Slovakia thinks up for its Hungarian-speaking ethnic minority. So Belgium should swap places with the Czech Republic. The stolid, well-organised Czechs would get on splendidly with their new Dutch neighbours, and vice versa.

The Silent Majority

How should we talk about the working class?

By William Deresiewicz

Stayin’ Alive: The 1970s and the Last Days of the Working Class, by the labor historian Jefferson Cowie , chronicles the collapse of the working class, across that dim, grim decade of decline, as both a fact and idea in American life. After its emergence through the 1930s and its zenith during the heyday of postwar unionism, the working class, as a political and cultural presence, fell victim to a mixture of recession in the economy, institutional sclerosis on the part of organized labor, and the politics of white resentment as practiced successively by George Wallace, Richard Nixon, and Ronald Reagan. The Republicans turned to social issues, the Democrats to issues of identity, and that is pretty much where things have stood since then. We’ve gotten used to thinking of ourselves in terms of race, gender, and sexuality and/or our positions on abortion, guns, the flag, and so forth. If Reagan’s victories have given way to Obama’s, that’s largely because, as everyone’s been pointing out, the demographics have inexorably shifted.

The result is that now that we are finally waking up, 40 years later, to inequality, wage stagnation, and stalled social mobility, we lack an adequate vocabulary with which to talk about them. “The 99 percent” is powerful, and valid to an extent, but it isn’t enough. The depredations of the plutocracy are only part of what’s been going wrong. Put it like this: everybody talks about the creative class, the knowledge workers, how you need to be educated, innovative, and entrepreneurial if you want to do well in the new economy. And that may indeed be true. The question is, what becomes of everybody else—the uncreative class, let’s say, the bottom two-thirds? They are just as important as ever—the people who work in retail, health care, agriculture, construction, manufacturing—but they are getting less and less.

Cyprus’s Silver Lining

Bailing in the rich and reckless may be rapacious, but it beats bailing them out

By PATRICK J. BUCHANAN

“Government is theft.”

The old libertarian battle cry came to mind when the news hit, two weeks ago, that Cyprus was about to confiscate 7 percent of all the insured deposits in the island’s two biggest banks. Nicosia also planned to siphon off 10 percent of uninsured deposits, those above 100,000 euros ($130,000), and use that cash as well to finance Cyprus’ share of a eurozone bailout. 

The reaction was so scalding that the regime had to back off raiding insured deposits. The little people of Cyprus were spared. Not so the big depositors, among whom are Cypriot entrepreneurs and thousands of Russians. Their 10 percent “haircut” has now become an amputation.

Large depositors in the Bank of Cyprus, the island’s largest, face confiscation of 60 percent of their capital. In Laikι, the No. 2 bank, which is to be euthanized, the large depositors face losses of up to 80 percent. All of Laika’s bondholders will be wiped out, and all employees let go.

When the Cypriot banks opened again on March 28, capital controls had been imposed. Only 300 euros may be withdrawn daily from a bank. Folks leaving Cyprus may take only 1,000 euros.

What has this crisis to do with us? More than we might imagine.

It Didn’t Have to Be This Way

Austrians Don’t Blow Bubbles

Why Boom and Bust Is Unnecessary—and How the Austrian School of Economics Breaks the Cycle

By JOHN ZMIRAK

Remember the golden days of 2007, when we were all investment prodigies? Though I couldn’t balance a checkbook or drive a car, I had raked in 25 percent increases each year on my 401k since 2001, so I felt like a bookish Donald Trump. While I worked as a college English teacher at a school with 70 students, the nice man from Fidelity showed me how I could retire in 20 years with a nest egg of $1 million—heady stuff for a doorman’s son who’d never checked his credit rating. Dinesh D’Souza had published a helpful book, The Virtue of Prosperity, which explained to America’s Christians how to gather a spiritual harvest through our era of endless prosperity, and Karl Rove was counting the chickens who would build the Republicans’ “permanent majority.” Of course, we were also bringing modern constitutional freedoms to the whole Islamic world, so news was good from the colonies.  All this, in the reign of a president for whom English was a second language. (Bush, sadly, had no first.)

We know now that all those paper profits that puffed our portfolios were as solid as tsarist rubles and that the “compassion” which briefly infused conservatism was a bribe to get a few thousand seniors to vote Republican once—in return for leaving their grandchildren eyeball-deep in debt. But wasn’t it fun while it lasted? Who could have possibly predicted that all the experts who carefully managed the investment boom, and the technocrats in academia and government who enabled and cheered them on, would wind up as deeply discredited as Bernie Madoff’s word of honor?

Yoani Sánchez: An effective voice against the Castro dictatorship

A just principle from the bottom of a cave is more powerful than an army

BY CARLOS ALBERTO MONTANER

Yoani Sánchez visits Miami. It is the most difficult stop in her long tour. Everywhere, like a bullfighter hailed after a good afternoon, she has been carried on the shoulders of the crowd. She will also triumph in Miami, but her task will be a bit harder.

I get the impression that a huge majority of Cubans like her and respect her — I count myself among them — but there’s no shortage of those who oppose her for various reasons, often totally irrational.

Yoani has made dozens of appearances, granted hundreds of interviews and has successfully confronted the mobs of supporters sent by the Cuban dictatorship in every city where she has been invited to speak.

In more than half a century of tyranny, nobody has been more effective in the task of dismantling the regime’s myths and exposing Cubans’ miserable living conditions.

It is a paradox of life that, somehow, the rude and vociferous attitude toward Yoani shown by these aggressive bullies — though unpleasant during the incidents themselves— has served to feed the interest of the communications media and foster the support of notable political and social sectors.

These maniacs, accustomed to the Cuban environment, where no vestiges of freedom exist, don’t understand that trying to silence Yoani, insulting and slandering an independent journalist, a fragile young woman shielded only by her words and her valor, is counterproductive.

Short On Credit And Long On Faith

The Puppet Master - Government

by Bill Buckler

It has been well and often said that only two types of “paper” money have ever existed in history - those that are already worthless and those that are going to be. Eventually, the physical pieces of paper or plastic which have been given a function as a medium of exchange by government order may remain - but their purchasing power on the market does not. The transition point always comes when the “promises to pay” on which the fiat money depends are exposed beyond the possibility of denial to be the LIES which they always were. History is replete with examples, yet very few ask the obvious question: “Pay? - WITH WHAT??” One of the great wonders of the twentieth century was the lengths to which the economics “profession” proved willing to go to avoid even facing that question let alone trying to answer it.

For hundreds if not thousands of years of human history, the vast majority were all too well aware that the government “lives” on the backs of the people. Today, that long-held knowledge has been astonishingly successfully reversed. Today, the perceived “wisdom” is that the people live on the back of the government. In the realm of the history of ideas, it took many centuries to bring forward the idea that a life might be lived without constant kowtowing to government. It has only taken one century - the time since WW I - to all but totally submerge that legacy in a new wave of government dependency.

The old and tired phrase - “I’m from the government and I’m here to help you” - is met by as much derision as it has ever been when people bemoan the impositions of their rulers. But those same people rely on the government to insulate them from the consequences of any action they may choose to undertake.

The Last Capitalist Standing

In the new normal, the USA socializes losses but the ex-USSR sticks to its new capitalist roots?

by Tyler Durden 

While most of the western developed economies become more and more centrally planned and creative destruction is avoided at all costs (for fear it will be the straw that breaks the fractionally-reserved, rehypothecated camel's back of the financial system - and therefore sovereign financing); it appears ironic that Russia is playing capitalist hardball with the losers from the Cyprus 'solution'. Russia's First Deputy Prime Minister Igor Shuvalov, announced this weekend, that"if someone gets stuck and loses money in those two biggest banks, that’s really too bad, but the Russian government isn’t planning to do anything in this case."

As Bloomberg reports, Shuvalov told reporters last month that Russia may ultimately benefit from Europe’s decision to target deposit holders. By setting that precedent, Europe has cast doubt on the reliability of its banks and makes Russia’s financial system look comparatively more attractive - but is "closely monitoring"  the situation around Russian Commercial Bank, a Cypriot unit of state-run lender VTB Group, adding that VTB's exposure in Cyprus is "absolutely manageable.

So, in the new normal, the USA socializes losses but the ex-USSR sticks to its new capitalist roots?

Via Bloomberg,

Russia won’t bail out people or companies that stand to lose money held at Cyprus’s two largest banks, First Deputy Prime Minister Igor Shuvalov said.

“If someone gets stuck and loses money in those two biggest banks, that’s really too bad,” Shuvalov said in an interview late yesterday on Russian state television. “But the Russian government isn’t planning to do anything in this case.”

Russia turned away requests from Cyprus for additional financial assistance last month after criticizing plans that would have forced losses on insured deposits.   ...

Up in smoke

The bill comes in for investors in bankrupt cajas

By The Economist

CYPRIOT depositors are not the only ones suffering the aftermath of a banking bust. People who bought shares or subordinated debt in Spain’s dodgiest cajas, or savings banks, have either been all but wiped out or forced to take hefty losses. Many small Spanish investors are among them.

Four months after Spain requested a €40 billion ($51 billion) chunk of its banking bail-out funds from its euro-zone partners, on March 22nd it delivered the blow that hundreds of thousands of retail investors feared. The FROB, Spain’s restructuring fund, imposed haircuts of up to 61% as it turned junior debt and preference shares in four nationalised banks—Bankia, Catalunya Banc, Banco Gallego and NCG Banco—into equity.

The New Despotism

In the name of education, welfare, taxation, safety, health, the environment, and other laudable ends, the new despotism confronts us at every turn

"The greatest single revolution of the last century in the political sphere has been the transfer of effective power over human lives from the constitutionally visible offices of government, the nominally sovereign offices, to the vast network that has been brought into being in the name of protection of the people from their exploiters"

by Robert A. Nisbet

When the modern political community was being shaped at the end of the 18th century, its founders thought that the consequences of republican or representative institutions in government would be the reduction of political power in individual lives.

Nothing seems to have mattered more to such minds as Montesquieu, Turgot, and Burke in Europe and to Adams, Jefferson, and Franklin in the United States than the expansion of freedom in the day-to-day existence of human beings, irrespective of class, occupation, or belief.

Hence the elaborate, carefully contrived provisions of constitution or law whereby formal government would be checked, limited, and given root in the smallest possible assemblies of the people.

The kind of arbitrary power Burke so detested and referred to almost constantly in his attacks upon the British government in its relation to the American colonists and the people of India and Ireland, and upon the French government during the revolution, was foremost in the minds of all the architects of the political community, and they thought it could be eliminated, or reduced to insignificance, by ample use of legislative and judicial machinery.

Accelerated Learning Would Add Trillions of Dollars in Wealth

In politics — as in business and private life — bankruptcy, or fear thereof, is the mother of invention

If students could complete their education a year faster, the many benefits would include increased personal wealth, decreased government spending, and more sustainable entitlement programs.

By Reuven Brenner

Political discussion today is dominated by a pessimistic tone about government deficits, taxes, and our aging population. But, surprising as it may seem, a drastic overhaul of the nation’s education system could fix many of our problems. Such changes would create a variety of benefits: decreased government spending; more sustainable entitlement programs; greater equality; and a better-disciplined younger generation; not to mention an end to the mumbo jumbo that dominates academia and policy debates today.

Some much-debated solutions to our country’s problems include increasing the retirement age, raising taxes, diminishing Social Security benefits and other entitlements, and attracting qualified immigrants. But what if students could complete their education, including undergraduate study, in less time by a year or even two? Or, in the case of community colleges, three or four fewer years? Consider first a “Fermi” calculation about the monetary consequences of such a change:

There are at least 16 million youngsters enrolled in post-secondary education, with approximately 4 million graduating every year. Assume that from now on, each year, 4 million students join the labor force a year earlier. Each generation would stay one year longer in the labor force. How much annual income and how much wealth would this generate?

It’s payback time for our insane energy policy

An obsession with CO2 has left us dangerously short of power as coal-powered stations are forced to close

Wind farms deliver a tiny percentage of the power that we need

By Christopher Booker

As the snow of the coldest March since 1963 continues to fall, we learn that we have barely 48 hours’ worth of stored gas left to keep us warm, and that the head of our second-largest electricity company, SSE, has warned that our generating capacity has fallen so low that we can expect power cuts to begin at any time. It seems the perfect storm is upon us.

The grotesque mishandling of Britain’s energy policy by the politicians of all parties, as they chase their childish chimeras of CO2-induced global warming and windmills, has been arguably the greatest act of political irresponsibility in our history.

Three more events last week brought home again just what a mad bubble of make-believe these people are living in. Under the EU’s Large Combustion Plants Directive, we lost two more major coal-fired power stations, Didcot A and Cockenzie, capable of contributing no less than a tenth to our average electricity demands. We saw a French state-owned company, EDF, being given planning permission to spend £14 billion on two new nuclear reactors in Somerset, but which it says it will only build, for completion in 10 years’ time, if it is guaranteed a subsidy that will double the price of its electricity. Then, hidden in the small print of the Budget, were new figures for the fast-escalating tax the Government introduces next week on every ton of CO2 emitted by fossil-fuel-powered stations, which will soon be adding billions of pounds more to our electricity bills every year.

Latins Rally to Restore Human Rights Panel

Hope for Latin America is on the Rise

By Roger F. Noriega

Latin American countries have finally rallied and rejected a bid by leftist regimes to silence the region’s human rights watchdog. Now regional democracies must restore the organization’s credibility after years of yielding to Chavistas.

In what might be remembered as the end of the line for Chavismo as a regional political force, last week key Latin American countries soundly rejected a bid by leftist regimes to silence the region’s human rights watchdog. Those democratic nations – along with the United States – must now retake some of the momentum that they ceded to Venezuelan caudillo Hugo Chávez’s destructive agenda.

Left-wing leaders – principally Chávez and Ecuador’s Rafael Correa – spent much of the last decade waging a bitter feud with the Inter-American Commission on Human Rights (IACHR) because it dared to criticize brazen and systematic rights abuses in countries governed by authoritarian populists.

Chávez hurled personal insults at the commission’s members and staff, and even engineered the election of a panel member who brought the regime’s thuggish tactics into the commission’s chambers. The secretary general of the Organization of American States (OAS), Chilean socialist Jose Miguel Insulza, ran for cover rather than defend a body that championed human rights in the Pinochet era.

The latest assault on the commission came as Ecuador, Venezuela, and like-minded states proposed “reforms” that would have severely restricted the IACHR’s budget and taken away tools that it has long used to hold governments accountable for rights violations. Many democratic governments sat on the sidelines rather than be bullied by Chávez’s rabid rabble, but human rights groups and free press advocates resisted valiantly. Members of the U.S. Congress from both parties weighed in forcefully to defend the commission, and the Washington Post helped ensure that the attack received prominent attention in the U.S. print media.

State-Wrecked: The Corruption of Capitalism in America

The American machinery of monetary and fiscal stimulus has reached its limits

By DAVID A. STOCKMAN

The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.

Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.

Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.

So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.

When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.

THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.

As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.