Fools Never Learn

This is all so obviously stupid that only a fool could propose it

by Mike "Mish" Shedlock

Proving that fools never learn, the Obama administration pushes banks to make home loans to people with weaker credit 

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.

Here We Go Again
Mark Hanna commented "And Here We Go Again"
Indeed. Home markets are booming again so let's get everyone in on it.
The whiners are piling on already. 

 “If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. “It is very difficult for people of low and moderate incomes to refinance or buy homes.”

Peak Oil Cult Is Proved Spectacularly Wrong

We won't hit peak oil until we hit peak imagination

By ROBERT BRYCE
These are lousy times to be in the peak oil cult.

In December, U.S. oil exports hit a record of 3.6 million barrels per day, thanks in part to soaring domestic petroleum production.

Last year, domestic natural gas production averaged 69 billion cubic feet per day, a record, and a 33% increase over the levels achieved back in 2005. That year, Lee Raymond, the famously combative former CEO of ExxonMobil, declared that "gas production has peaked in North America."

Why has the U.S. oil and gas sector recovered? How is it that last year, U.S. oil production rose by 790,000 barrels per day, the biggest annual increase since U.S. oil production began in 1859? How could Raymond, the leader of one of the world's most sophisticated companies, be so wrong?

The answer: innovation. Over the past century or so, oil and gas drilling has been transformed from an industry dominated by hunches and wildcatters to one that is more akin to the precision manufacturing that dominates aerospace and automobiles.

The convergence of a myriad of technologies — ranging from better drill rigs and drill bits to robotic rigs and nanotechnology — is allowing the oil and gas sector to produce staggering quantities of energy from locations that were once thought to be inaccessible or bereft of hydrocarbons.

Advocates of renewable energy like to point out that in 2012, some $270 billion was spent globally on "clean energy." But spending on oil and gas exploration dwarfs what is spent on renewables. Last year alone, global drilling expenditures totaled $1.2 trillion, nearly 4.5 times the amount spent on alternative energy. Trillions more were spent transporting, refining, and delivering oil and gas to consumers.

The results of all that spending can be seen in the numbers: Between 1949 and 2010, oil and gas companies drilled more than 2.6 million wells in the U.S.

Over that same period, they reduced their dry holes drilled from 34% to 11%. And the percentage of dry holes being drilled continues to fall.

Today's hydrocarbon hunters are so precise that they can drill wells that are two miles deep, turn their drill bit 90 degrees, drill another two miles horizontally, and arrive within a few inches of the targeted pay zone. The technical prowess of the drilling sector has been proved twice this month with announcements of major discoveries in the Gulf of Mexico.

Anadarko Petroleum and its partners found a huge field in what's known as the Lower Tertiary trend, containing as much as 3.7 billion barrels of oil equivalent.

The well was drilled to a depth of 31,000 feet below the ocean floor in 5,800 feet of water.

Rise of the Nuclear Greens

Some environmentalists see atomic energy as the answer to global warming

By Robert Bryce

In theory, the March 11, 2011, disaster at the Fukushima Daiichi nuclear plant should have bolstered environmentalists’ opposition to new nuclear-energy projects. But in the wake of the worst nuclear accident since Chernobyl, some of the world’s leading Greens have done just the opposite: they have come out in favor of nuclear power. Perhaps the most prominent convert is British activist and journalist George Monbiot, who even cites the disaster as one reason for his change of heart. Just ten days after Fukushima, in a column for theGuardian, Monbiot called the use of solar energy in the United Kingdom “a spectacular waste of scarce resources” and declared that wind energy was “hopelessly inefficient” and “largely worthless.” Moreover, he wrote, “on every measure (climate change, mining impact, local pollution, industrial injury and death, even radioactive discharges) coal is 100 times worse than nuclear power.” He concluded: “Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power.”

A number of prominent British and American environmentalists were pronuclear before Fukushima. Among the Americans are longtime environmental activist and publisher Stewart Brand, as well as Ted Nordhaus and Michael Shellenberger, founders of the Oakland-based Breakthrough Institute, a center-left think tank. The Brits include environmentalist Mark Lynas, former British prime minister Tony Blair, and scientist and environmentalist James Lovelock. There’s also a Canadian in the group: Greenpeace cofounder Patrick Moore.

The emergence of the pronuclear Greens represents an important schism in modern environmentalism. For decades, groups like the Sierra Club and Greenpeace have pushed an antinuclear agenda and contended that the only energy path for the future is the widespread deployment of wind turbines and solar panels. But fear of carbon emissions and climate change has catalyzed a major rethinking. As Brand puts it in a new documentary, Pandora’s Promise, which explores the conversion of antinuclear activists to the pronuclear side: “The question is often asked, ‘Can you be an environmentalist and be pronuclear?’ I would turn that around and say, ‘In light of climate change, can you be an environmentalist and not be pronuclear?’ ”

Newfound support can only help the nuclear-energy sector, but it remains to be seen whether nuclear will play a major role in the burgeoning global electricity market, which has grown by about 3 percent per year since 1985. It’s already clear that the Greens’ pronuclear stance won’t have a significant impact on the American electricity market over the next decade or so, for a simple reason: the shale-gas revolution here has produced abundant supplies of low-cost natural gas. In 2010, one of the largest electric utilities in the country, Exelon, said that for new nuclear projects to be economically viable, natural gas would have to cost at least $8 per million Btu. Today, the price is about $3.50, and the shale-gas boom means that a price anywhere near $8 is exceedingly unlikely for years to come. Four nuclear reactors are now being built in the United States—the Vogtle 3 and 4 reactors in Georgia and the Summer 2 and 3 reactors in South Carolina—but the projects are going forward only because regulators in those states have allowed the utilities that own them to recover costs from ratepayers before the projects are finished.

Color Lines

How DNA ancestry testing can turn our notions of race and ethnicity upside down

By W. Ralph Eubanks

When I was a young boy, I found a photograph half-hidden in the back of my parents’ closet, leaned up behind my mother’s stacked boxes of high-heel shoes. A dandyish man in a dark suit and skinny tie stared out at me, bearing a striking resemblance to my mother. Who was he? His hair, parted neatly in the middle, peeked out under a broad-brimmed hat perched jauntily on his head. In time, I learned that the unknown man was my grandfather James Morgan Richardson. But not until I was 16, when I overheard a conversation between my parents in the middle of the night, did I learn that he was white.

My parents kept my grandfather’s portrait hidden because in 1960s Mississippi, with all its racial paranoia, displaying the picture in our living room would have been risky, if not impossible. Severe social consequences awaited any black person claiming close kinship with a white person. So the picture stayed hidden, part of my mother’s past, and my own—something I knew about but didn’t yet feel free to explore.

My mother knew that the portrait fascinated me, and when I got married, she gave it to me. I saw that gift as an invitation to learn more about the man within the borders of the frame. It has taken me 20 years, but I’ve finally begun to figure things out and better understand my own history as well.

In 21st-century America, my family would be described as multiracial. But in the world I grew up in—the American South of the 1950s and 1960s, where the idea of race and identity determined who you were and your place in the world—you were either black or white. We were first colored, later Negroes, and still later black. Claiming mixed status meant you were either trying to be white (implying that black was inferior) or trying to pass for white (a dangerous business few spoke of openly), and doing so carried the risk of being labeled a racial traitor. Consequently, my identity was shaped by the racial boundaries of the American South as well as the double consciousness that W. E. B. Du Bois speaks of in The Souls of Black Folk. I always felt that duality: “an American, a Negro; two souls, two thoughts, two unreconciled strivings; two warring ideals in one dark body, whose dogged strength alone keeps it from being torn asunder.”

My mother was seven years old when her mother died. The town doctor who pronounced my grandmother dead offered to help the family start over as a white family, far away from their small town in rural, isolated south Alabama. Even though my grandmother Edna Howell Richardson was black, all her children’s birth certificates said they were white. So, this “transformation” would have been easy. But in the end my grandfather, the man whose portrait had been hidden in the closet, chose not to hide his children’s mixed race. Instead, my mother and her sister grew up going to black schools and identifying as black. When they married black men, they had to have their race officially changed on their birth certificates in order to get legal marriage licenses.

I grew up hearing my mother say, “You can always tell when someone is passing.” Since she could pass for white, my mother spoke from a position of authority. Racial passing, once a common subject of discussion in the black community, has faded from American consciousness with the emergence of racial and multiracial pride. But even today, with six multiracial grandchildren of her own, my mother stands by her statement: “You can always tell.”

The Netherlands Falls Prey to Economic Crisis

Underwater

By Christoph Schult and Anne Seith

The Netherlands, Berlin's most important ally in pushing for greater budgetary discipline in Europe, has fallen into an economic crisis itself. The once exemplary economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs.

Michel Scheepens is familiar with risk. The 41-year-old oversees the energy market for the Dutch bank ING, and it's his job to determine whether his employer should finance such projects as a wind farm in Cyprus or a gas-fired power plant in Turkey. Until now, it was always other people's money that was involved.

For some time, however, Scheepens has been experiencing what a poor investment feels like on a personal level. Six years ago, the father of three bought half of a duplex for his family in the commuter town of Nieuw-Vennep, near the North Sea coast. The red brick building cost €430,000 ($552,000), but the bank generously offered him a loan of €500,000, so that there was enough money left over for renovations, along with notary and community fees. Scheepens had intended to resell the house after a few years, as is common in the Netherlands. But then prices tumbled following the Lehman bankruptcy. If the family were to sell the house today, it would have to pay the lender €60,000. His house is "onder water," as Scheepens says.

"Underwater" is a good description of the crisis in a country where large parts of the territory are below sea level. Ironically, the Netherlands, once a model economy, now faces the kind of real estate crisis that has only affected the United States and Spain until now. Banks in the Netherlands have also pumped billions upon billions in loans into the private and commercial real estate market since the 1990s, without ensuring that borrowers had sufficient collateral.

Private homebuyers, for example, could easily find banks to finance more than 100 percent of a property's price. "You could readily obtain a loan for five times your annual salary," says Scheepens, "and all that without a cent of equity." This was only possible because property owners were able to fully deduct mortgage interest from their taxes.

Instead of paying off the loans, borrowers normally put some of the money into an investment fund, month after month, hoping for a profit. The money was to be used eventually to pay off the loan, at least in part. But it quickly became customary to expect the value of a given property to increase substantially. Many Dutch savers expected that the resale of their homes would generate enough money to pay off the loans, along with a healthy profit.

An Economy on the Brink

More than a decade ago, the Dutch central bank recognized the dangers of this euphoria, but its warnings went unheeded. Only last year did the new government, under conservative-liberal Prime Minister Mark Rutte, amend the generous tax loopholes, which gradually began to expire in January. But now it's almost too late. No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books.

Consumer debt amounts to about 250 percent of available income. By comparison, in 2011 even the Spaniards only reached a debt ratio of 125 percent.

The Netherlands is still one of the most competitive countries in the European Union, but now that the real estate bubble has burst, it threatens to take down the entire economy with it. Unemployment is on the rise, consumption is down and growth has come to a standstill. Despite tough austerity measures, this year the government in The Hague will violate the EU deficit criterion, which forbid new borrowing of more than 3 percent of gross domestic product (GDP).

It's a heavy burden, especially for Dutch Finance Minister Jeroen Dijsselbloem, who is also the new head of the Euro Group, and now finds himself in the unexpected role of being both a watchdog for the monetary union and a crisis candidate.

Even €46 billion in austerity measures are apparently not enough to remain within the EU debt limit. Although Dijsselbloem has announced another €4.3 billion in cuts in public service and healthcare, they will only take effect in 2014.

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.