Germany’s Trial Balloon Of A “Plan B”

Each country would be exclusively responsible for its own debts, and not the debts of other countries

By Wolf Richter   

Some prominent Germans have publicly expressed their doubts about the future of the euro. A few politicians have tried to jam anti-euro sound bites edgewise into the evening news. And an anti-euro party, the Alternative for Germany, is forming just in time for the September elections, hoping to garner enough votes to move into parliament.

But those close to the epicenter of power, those near Chancellor Angela Merkel, have to toe the line. And the line is that the euro is far more than just a currency, that it’s a sacred concept, a sort of religion worth saving no matter what the costs. Even much of the opposition toes that line. While the possibility that a small country might exit the euro has been accepted more or less, the euro itself has been inviolable in those circles. Until now.

“I give the euro medium-term only a limited chance of survival,” said Prof. Dr. Kai A. Konrad,Chairman of the Council of Scientific Advisors to the Ministry of Finance, an advisory body to that epicenter of power. In his day job, he is Director at the Max Planck Institute for Tax Law and Public Finance. In an interview published in the Welt, he floated a trial balloon, an alternative, a heresy for Germans, a grand compromise of sorts, an exit strategy if you will, a way out of the crisis for every country in the Eurozone, a Plan B whose very existence the government has strenuously denied.

Could Bitcoin be the money of the future?

Unelasticity is Bitcoin’s greatest strength and true genius

by DETLEV SCHLICHTER

The crypto-currency Bitcoin is still merely a speck on the global monetary landscape. It is young, experimental, and for all we know, it may ultimately fail to break into the monetary mainstream. However, on a conceptual level I am willing to call it a work of genius and arguably the most exciting development in the field of money for more than 130 years. Let’s say since the start of the Classical Gold Standard in 1879. Does this sound like hyperbole? Well, let me explain.

The Decline and Fall of Capitalist Money

The 20^th century was, broadly speaking, a period of almost constant monetary decay. At around 1900 most economists, politicians and bankers would have correctly stated that global capitalism – an international market economy facilitating the free exchange of goods and services across political borders and thus allowing extensive human cooperation through trade – required an international, apolitical, and hard form of money. Such money was gold. It was the basis of the capitalist economy and it imposed strict discipline on all market participants. Crucially, that included governments and banks. Governments had to operate pretty much like private businesses. They had to balance their books, i.e. live within the means provided by taxation, and if they borrowed money in the marketplace their lenders were at full risk of default as no government could print money (gold) to repay loans or even meet interest payments on loans. Banks, of course, issued banknotes or bank-deposits that were not backed by gold but still used by the public as if they were money proper – these were and still are ‘money-derivatives’ – but again they did so at full risk of default as nobody could ‘print’ bank-reserves (gold again) to bail out the banks in case the public tired of the ‘derivatives’ and wanted to hold gold instead.

The Last Man in Russia: The Struggle to Save a Dying Nation

Inside the soul of a drunk and bitter country

By Peter Pomerantsev

Dmitry Dudko wanted to be a priest in a violently atheistic Soviet Union. When the KGB came to arrest him in 1948, they demanded he recant poems denouncing Stalin. “I won’t sign anything,” he told them. “I spoke the truth.” He got 10 years’ hard labor in the freezing mines of the far north. In the gulag he continued to pray, continued to write, continued to insist that Christ’s law was higher than the Kremlin’s. He was given another 10 years. When he was finally released, he began to preach in a cemetery on the outskirts of Moscow. He spoke against the state’s attack on the family, chastised the Orthodox establishment for toadying to the Kremlin, denounced the KGB for destroying communities by making men report on one another, taught Jews and Russians and Tatars to huddle together in faith and hope and overcome their ethnic bitterness.

In the 1970s, in a late Soviet period defined by endless cynicism and conformism, when no one believed in anything (least of all communism) and submission to the Kremlin for the sake of submission became the essence of the system, Dudko became legendary. Thousands would come to his sermons. Foreign correspondents were so inspired by him, they smuggled Dudko’s works out of the U.S.S.R., and his fame spread throughout the world. He became a beacon of anti-Soviet dissidence, a religious Solzhenitsyn, a free man in a totalitarian system. In 1980 he was arrested again. This time the KGB’s approach was more subtle: “we are guilty before you, and the state is guilty before the church,” they told him; they agreed that Russia needed to find faith; they hinted that they were believers just like him; they blamed all the bad bits of communism on the Jews. Wasn’t it time for us Russians to stick together? They said they would give him a chance to preach to a much greater audience if only he would do one tiny, little thing for them.

The Poverty Lie

How Europe's Crisis Countries Hide their Wealth

By SPIEGEL

How fair is the effort to save the euro if the people living in the countries that receive aid are wealthier than the citizens of donor countries like Germany? A debate over a redistribution of the burdens is long overdue.

The images we see from the capitals of Europe's crisis-ridden countries are confusing to say the least. In the Cypriot capital Nicosia, for example, thousands protested against the levy on bank deposits, carrying images of Hitler and anti-Merkel signs, one of which read: "Merkel, your Nazi money is bloodier than any laundered money."

German Chancellor Angela Merkel was greeted by a similar scene when she visited Athens in October 2012. An older man with a carefully trimmed moustache and pressed trousers stood in Syntagma Square. The words on the sign he was carrying sharply contrasted with his amiable appearance: "Get out of our country, bitch."

Despite these abuses, the protesters and all of Merkel's other critics in Rome, Madrid, Nicosia and Athens agree on one thing: Germany should pay for the euro bailout, as much as possible and certainly more than it has paid so far.

They argue that Germany is a rich country that has benefited more than all others from the introduction of the euro, and that it has flooded other European countries with its exports, becoming more prosperous at their expense.

Germans Own Less than Those Asking for Money

But there is also a second image of Germany, one that's based on numbers, not emotions. The figures were obtained by the European Central Bank (ECB) and released last week. This image depicts a country whose households own less on average than those that are asking for its money.

In this ranking of assets, Cyprus is in second place Europe-wide, while Germany ranks much lower, even lower than two other crisis-ridden countries, Spain and Italy.

And this Cyprus, with its affluent households, is now supposed to receive €10 billion ($13.1 billion) from the European Stability Mechanism (ESM), the Euro Group's permanent bailout fund, and the International Monetary Fund (IMF), at least according to the decisions reached after dramatic negotiations, which the German parliament, the Bundestag, is expected to approve this week. But a new question is arising: Why exactly are we doing this? Isn't Cyprus rich enough to help itself?

Why can't the IMF face up to the truth about the failing euro?

How sad it is that in order to get yourself admitted to hospital you have to shoot yourself in the foot first

By Jeremy Warner

I've been in Washington most of this week for the spring meeting of the International Monetary Fund. I wish I could say there was light at the end of the tunnel, but the reality is still deeply depressing. Sorry to use cliches, but two sayings spring to mind: fiddling while Rome burns, and re-arranging deck chairs on the Titanic.

In "The Economic Consequences of the Peace", the British economist, John Maynard Keynes, wrote that his preference in any negotiation or arbitration was for "violent and ruthless truth telling" but there has been very little evidence of that in this week's discussions. Instead of addressing the underlying causes of today's economic funk – the failing euro – debate has focused on marginal fiscal and monetary issues such as whether the UK and the US are consolidating too fast.

That the IMF's chief economist, Olivier Blanchard, and his managing director, Christine Lagarde, could think some minor loosening of the fiscal purse strings in the UK either appropriate or capable of getting growth going again, when there is such a deep seated crisis going on in Europe is not just odd, it is pitiful. I've already written about the wider failings of the IMF in confronting the worst economic crisis since the second world war , but there is a lot more to say about it.

Instead of forcing eurozone leaders to face up to the truth – that their project in its present form is failing not just them, but the whole world economy – the IMF busies itself with irrelevances such as whether the UK has the fiscal space for a little more debt fuelled demand management. Worse, it meakly goes along with attempts to sustain what is plainly in its current form a completely unsustainable endeavour.

One of the big "puzzles" under discussion this week at the IMF is why the massive degree of monetary stimulus applied to advanced economies over the past four years has gained so little traction. I would have thought the answer was obvious. You can have as much demand management as you like, but as long as underlying imbalances in the world economy go unaddressed and unresolved, companies and households are not going to have the confidence to spend and invest.

We are all Alexandrians now

Remembering Lawrence Durrell, Predictor of our Postmodern World

by Peter Pomerantsev 

Not Joyce, not Kafka, not Proust, not Pasternak, not Garcia Marquez, not Bellow. The most important 20th-century novelist for a 21st-century reader could well be Lawrence Durrell. This year celebrates the centenary of his birth. Next to nothing is taking place to celebrate it. But Durrell, whose best work came in the late 1950s and early 1960s, was the first to explore the poetry and puzzles of life in an era of globalization (a clunky term Durrell would have improved on), hyphenated identities, perpetual movement. “I think the world is coming together very rapidly,” he said in an interview in 1983, “so that within the next fifty years one world of some sort is going to be created. What sort of world will it be? It’s worth trying to see if I can’t find the first universal novel. I shall probably make a mess of it—but we shall see.”

The city at the center of his masterpiece, The Alexandria Quartet, is the prototype of the global village, of the smudged meta-city we increasingly inhabit. Published between 1957 and 1960, the Quartet is a series of interlinked novels set in Alexandria preceding and during World War II, but it’s uncanny how its political disorder anticipates our own. The Alexandria of the Quartet is run with an ever-weaker hand by Western powers losing their will to rule, and is ever-more dominated by ambitious but corrupt emerging nations, influenced by deracinated tycoon financiers, stirred on the streets by Islamic “nightmare-mystics, shooting out the thunderbolts of hypnotic personal-ity.” The state of Israel, off-stage but central to the plot, divides loyalties to the point of death and tragedy. The Quartet is an exceptional political thriller: imagine John Grisham rewritten by Joyce.

“Five races, five languages, a dozen creeds: five fleets turning through their greasy reflections behind the harbor bar,” writes Durrell. “Turks with Jews, Arabs and Copts and Syrians with Armenians and Italians and Greeks. The shudders of monetary transactions ripple through them like wind in a wheat-field ... this anarchy of flesh and fever, money-love and mysticism. Where on earth will you find such a mixture!”

What ever happened to France's voice in Europe?

What ever happened to France's voice in Europe?

By Luke Baker and Mark John

A few hours after midnight one Sunday last month, as negotiations over a rescue for Cyprus dragged into a second day, French Finance Minister Pierre Moscovici fell asleep.

Most euro zone ministers in Brussels that night failed to notice, continuing to pore over the details of the multi-billion-euro deal. It fell to Christine Lagarde, French director of the International Monetary Fund, to approach Moscovici and nudge him awake, according to witnesses at the March 24 talks.

The sight of the IMF head waking up France's top finance official in a crisis meeting neatly illustrates a question that is troubling European diplomats: what has happened to France's voice in Europe?

For decades France has been central to the European project that was born out of World War Two and now reaches from Europe's Atlantic coast to beyond the former Iron Curtain.

Straddling north and south, France has a unique perspective on Europe. It is the European Union's largest economy after Germany. One of six founders of the original European coal and steel community in 1951, it has shaped and often led, the institutions that make the EU tick.

The readiness of successive French and German leaders to work together has for decades created a consensus among two former enemies that has steered Europe through crisis and change - from the end of the Cold War and Germany's reunification, to the expansion of the EU to the east and the introduction of the single European currency in 1999.

For much of the past four years, during which the euro zone was nearly torn apart by a debt crisis, the Franco-German axis has held true. But in the past six months, questions have arisen about what France is offering in terms of fresh ideas, and how it is dealing with the rest of Europe.

"You can see a shrinking presence, a progressive disappearance of France on most issues that concern the economic agenda," said Fredrik Erixon, director of the European Centre for International Political Economy, a Brussels think tank.

We've Become a Society of Self-Deluded Children

We've Dug A Pretty Damn Big Hole For Ourselves

by James H. Kunstler

The diminishing returns of technology are insidious, and they are ever with us. By this I mean the slow erosion of the quality of life, despite the impression that technological wonders only make our lives better.

The most obvious example is what happened to the telephone over the past thirty years. We computerized every phone system in America to “improve communications.”  The net effect is that after all that time and expense (billions of capital investment), it is now nearly impossible to get a live human being on the phone, whether you are calling a Fortune 500 corporation, a non-profit charity, or your best friend. Has that improved communication? What you get instead are robots that waste big chunks of your time forcing you to listen to complex call-routing menus – often ending in futility.

Companies and institutions assume that they benefit from the “efficiency” of not having to pay gangs of human receptionists. But they only succeed in annoying their customers and clients, who are treated as pests to be avoided. In effect, phone systems became firewalls, not communication enhancers.

Add to that the more recent phenomenon of cell phones and smart phones, which, for all their charms, 1) don’t work in all locations, 2) drop calls frequently, 3) have lousy sound quality, 4) feature time delays that make people talk over each other constantly, 5) erode real-time social relations with distracting apps and web features, and 6) possibly harm people’s brains by constantly rinsing them in microwaves.

A larger issue of technology’s effect on culture is the erosion of a shared sense of what is going on in the world based on reality. Increasingly and insidiously, the consensus about how the world operates is based on things that constitute unreal cultural constructions, especially TV shows, the daily Web-flow, computer games, and pseudo-informational memes based on gossip, make-believe, and wishes. The self-referential nature of this process, by the way, is what generates the cultural mood of irony, especially among young people, who are the most thoroughly and immersively hostage to a cognitive field of rapidly degenerating show-biz artifacts that become more ridiculous with each iteration, self-reference, or mutation – until daily life seems like little more than a continuous Gong Show of implausible made-up spectacle. You might end up thinking that Federal Reserve Chair Khloe Kardashian is releasing a new cologne which can be used as an alternative fuel one hundred times more powerful than gasoline and exported worldwide to reduce the trade deficit, save Social Security, and make America energy-independent.

This is a time in history when it’s hard to take anything seriously, including our fate.

Confidence in European project slowly destroyed

SaxoBank CEO: "We Must Re-Evaluate The European Union"

by Lars Seier Christensen

I have been interested in politics since I was a kid. That is why I remember Denmark’s European Economic Community (EEC) referendum, although I was only nine years old. Election nights were always exciting and I was allowed to stay up a little longer than I otherwise would be allowed to in our home in Loegstrup, outside of the town of Viborg in the western part of Denmark. Here, we had supper at 5pm, I then did my homework and went to bed at a proper time. It was a bourgeois home; my father was, by most accounts, conservative, but voted for The Liberal Party, as did most people in the countryside.

I remember the referendum on October 2, 1972, in a positive light. Denmark stepped onto the main stage and the support of the people was absolutely clear. Voter turnout was over 90 percent and almost two out of three Danes voted for Denmark’s entry into the EEC.

The EEC was perceived as something positive in our home, as it was in most of bourgeois Denmark. I stayed unconditionally positive for many years to come. Even in the Young Conservatives, we were supporters of a European union and some of us even wore blue and yellow EU socks as a symbol of this attractive, long-term plan. But despite this very positive starting point for our view of the EU, I must confess that, over time, this support and optimism evaporated. Massive central bureaucracy, European arrogance and lack of respect for the independence, history and culture of the national states slowly destroyed confidence in the project.

When I look back, I must admit that it took me too long to recognise what the European project really was. But I also have to state that this recognition came much later to many others and some of our career politicians obviously still do not get it. But the Danes, the citizens, the people have smelled the rat. From this point on, it will just be more and more uphill for the EU supporters when new measures need to be adopted, although there is no reason to believe that they will not be trying over and over again.

Earth Day's good news

We need a dose of realism about real environmental challenges 

By Bjørn Lomborg
Shale gas revolution has curtailed U.S. carbon dioxide emissions.

Year after year, we are treated to a message of environmental doom and gloom and admonitions on Earth Day. On the back of this sentiment in wealthy countries, governments have invested billions of dollars in inefficient, feel-good policies such as subsidizing solar panels and electric cars.
But there are far better ways to improve environmental prospects for humanity and our planet. On Earth Day, we need more fracking, more wealth, smarter investments and fewer inefficient subsidies.

German taxpayers have poured $130 billion into subsidizing solar panels, but ultimately by the end of the century, this will postpone global warming by a trivial 37 hours. The electric car is even less efficient. Its production consumes a vast amount of fossil fuels, and mostly it utilizes fossil fuel electricityto be recharged. Even if the U.S. did reach the lofty goal of 1 million electric cars by 2015 — costing taxpayers more than $7.5 billion — global warming would be postponed by only 60 minutes.

These beguiling policies cost a fortune but make little difference to the environment because the technologies are still not ready. That's why we need to invest more in long-term research and development for green innovation. This would be much cheaper than current environmental policies and would end up doing more good for the climate.

If we could make solar panels 2.0 or 3.0 cheaper than fossil fuels, we could get everyone, including the Chinese and Indians, on board for a greener future.

Moreover, our focus on solar and electric cars diverts us from the world's most deadly environmental problems. In wealthy countries, most environmental indicators are getting better. We have cleaner air and cleaner water, and we suffer fewer environmental risks. But air and water pollution kill 6 million people each year and harm billions worldwide.

Wealthy countries largely solved these problems through economic development.

Poor countries should have the same opportunity to develop — so they, too, can have clean drinking water and switch to cleaner energy sources, instead of using dung and twigs for fuel.

We can also directly intervene in poor countries. Many charitable organizations are involved in solving these problems by improving access to clean water and sanitation. By addressing these challenges, we do far more good for our planet.

Earth Day also presents an opportunity to recognize our own environmental achievements. In spite of decades of political wrangling, which failed to produce a meaningful global climate policy, it was ultimately the shale gas revolution that curtailed U.S. carbon dioxide emissions.

Fracking has caused a dramatic transition to natural gas, a fuel that emits 45% less carbon dioxide than burning coal. Data from the U.S. Energy Information Administration showed that in 2012, carbon dioxide emissions was 12% lower than the peak in 2007. The shift from coal to natural gas is alone responsible for a reduction of between 8%-9% of the entire U.S. CO2 emissions. In fact, it amounts to twice the reduction that the rest of the world has achieved over the past 20 years.

All energy projects have risks, and though the dangers of well contamination from fracking have probably been exaggerated, tighter regulation would reduce risks further. Also, natural gas is not the ultimate energy breakthrough because it is still a fossil fuel. Even so, fracking is likely the best green option of this decade. And if fracking happened worldwide, emissions would likely decline substantially by 2020. Over the coming decades, we need to drive down the cost of green energy through smart investments in green innovation.

This Earth Day, we need a dose of realism about real environmental challenges — such as the air and water pollution that make life so miserable for billions — and the real opportunities that exist for environmental innovation, to make our planet a better place.

Boston: what turns nice guys into nihilists?

It isn't the lure of foreign jihad but rather the confusions and self-loathing of Western society itself that can turn youngsters violent

by Frank Furedi 

Everybody is asking the same question: what turned these apparently ordinary brothers into cold-blooded Islamic terrorists? By all accounts, Tamerlan and Dzhokar Tsarnaev were, as Americans say, ‘regular guys’. They were two young men who grew up in the United States and, in the words of President Obama, lived ‘as part of our communities and our country’.

Like the so-called Times Square bomber, Faisal Shahzad – another nice guy turned terrorist – the Tsarnaev brothers appeared to have flourished in their new home of America, where their family had moved after fleeing Chechnya. Yet these young men harboured a deep-seated hatred towards the American way of life, with Tamerlan in particular making no secret of his contempt towards his adopted home. As far back as 2009, he stated in a local newspaper interview that he was concerned about the breakdown of ‘values’ and the excesses of Americans. ‘People can’t control themselves’, he said. ‘I don’t have a single American friend… I don’t understand them.’

Since the phenomenon of homegrown terrorism was discovered, expert profilers have focused on young, first-generation immigrant men with so-called ‘identity issues’. Unfortunately, this emphasis on individual identity crises provides little insight into what turns young men into nihilistic murderers. In particular, it does not explain why an individual enduring identity crises should become an individual who hates the community in which he resides.

‘Why do they hate us?’

With the rise of so-called homegrown terrorism, the question ‘why do they hate us?’ has morphed into questions like ‘what is it about us that they hate?’ and ‘why don’t they want to be like us?’. Throughout the West, officials and analysts are perplexed to discover that a significant section of Muslim youth has become sympathetic to a radical Islamic outlook. Press reports frequently discuss the way in which young people, living the lives of typical Western teenagers, suddenly become radicalised and turn into bitter enemies of their country; observers always seem confused and alarmed by this speedy process of what they refer to as ‘radicalisation’.

Take the following account of the life of Hasib Hussain, one of the men responsible for the London bombings on 7 July 2005: ‘He liked playing cricket and hockey, then one day he came into school and had undergone a complete transformation almost overnight… He started wearing a top hat from the mosque, grew a beard and wore robes. Before that he was always in jeans.’

America declared war on two losers

Why did the most powerful military nation on Earth freak out over a 19-year-old idiot in a backward baseball cap? 

by Sean Collins 

Soon after the bombs exploded at the Boston Marathon, pundits on the left and right started speculating about the culprits. Both projected their prejudices and fantasies, in the hope that the identity of the attacker would in itself discredit their political opponents. As it happens, both got it wrong.

Liberals were hoping the bombers would turn out to be right-wing, Tea Party-loving nutcases. Dina Temple-Raston of National Public Radio ventured: ‘April is a big month for anti-government, and right-wing, individuals. There’s the Columbine anniversary. There’s Hitler’s birthday. There’s the Oklahoma City bombing. There’s the assault on the Branch Davidian compound in Waco.’ David Sirota in Salon blurted out: ‘Let’s hope the Boston Marathon bomber is a white American.’ Sirota turned out to be correct – the bombers were white (Caucasians, literally) and Americans (one a naturalised citizen, the other a long-time resident) – but clearly not in the way he and other liberals had hoped for.

Conservatives had also leapt to a conclusion – that the perpetrators were Islamic terrorists. The day after the bombs went off, the Wall Street Journal referenced the botched car-bombing attempt by Faisal Shahzad in New York’s Times Square in 2010, and warned: ‘The Boston bombing is above all a reminder of the continuing need for heightened defences against terror threats. As the years since 9/11 without a successful homeland attack increased, the temptation was to forget how vulnerable the US is, and to conclude that the worst is over.’ Did conservatives guess correctly? Well, many thought so when it was revealed that the bombers, the Tsarnaev brothers, were Muslims, but two brothers with a family background in Chechnya certainly wasn’t expected or predicted in advance.

Emboldened by discovering the bombers’ ties with Islam, conservatives have been the most vocal in the aftermath of last Friday’s manhunt, eagerly slotting the bombers into an old motif: the global war against Islamist terrorism. Michael Mukasey, former attorney general under George W Bush, announced: ‘Make no mistake, it was jihad.’ Republican congressmen Peter King and Lindsey Graham rushed to claim that the Tsarnaevs are ‘enemy combatants’ (who can be denied legal rights), rather than common criminals.

But the evidence that the Tsarnaevs are soldiers in a war is lacking, to put it mildly. They are Muslims, their family is ethnically Chechnyan, and they watched and posted a few jihadist videos. The older one, Tamerlan, spent six months overseas in 2012, and was considered suspicious by Russian intelligence and America’s FBI. That’s about it. No evidence of being part of a coordinated effort, nor of having membership in a group like al-Qaeda. It seems pretty clear that the Tsarnaevs were the ones who were responsible for setting the bombs off, and represent no one but themselves.

Slap the label ‘global terrorism’ on a violent act, and all sorts of fearful images and associations are generated, but the reality of the Tsarnaevs was much more mundane. How can anyone take the two brothers as serious ‘combatants’? Their bomb was crude (gunpowder and metal parts in a pressure cooker), the target site was ‘soft’ and not terribly spectacular in symbolic value, and the number killed by the bombs (three), while deeply tragic, was not exceptional when comparedwith death rates in American cities like Chicago, which averaged about three homicides every two days last year.

The brothers’ amateurism was revealed during the events of Thursday evening, when they bragged to the owner of the car they hijacked: ‘Did you hear about the Boston explosion? I did that.’ They then stole $45 from the driver and, failing to get cash out of his ATM (and getting caught on the bank camera in the process), robbed a small convenience store. Then, following a shootout with police, one brother drove over the other’s body as he escaped. Not exactly the most organised or well-funded of global conspiracies.

A city shut down, liberty surrendered

‘A bomb can’t beat us’ rings hollow

by Wendy Kaminer 

Some of the stories we tell about ourselves in the aftermath of terror such as the Boston bombings are true. Many people react reflexively with bravery and compassion, rushing towards an attack to aid its victims. Many open their homes to strangers.

Some of the stories we tell are naive: ‘This is a progressive town, the People’s Republic’, a teacher at the Cambridge, Massachusetts high school attended by the Tsarnaev brothers remarked. ‘How could this be in our midst?’ he wondered, as if progressivism were a cure for all evil. DzhokhorTsarnaev was ‘not an outcast; he was not bullied’, the Cambridge school superintendent stressed, as if bullying were the cause of all evil.

Some of the stories we tell are bravado. When people praise Boston’s proverbial toughness, I shrug. Boston is home to over 600,000 individuals; some are resilient and others are not. Bravado has its virtues though, in times of grief and terror. It’s self-medicating. Maybe acting tough can help you feel tough. Maybe you can approximate the person you wish yourself to be.

But not all our bravado is helpful or harmless. Some of the stories we tell about the nation are delusions that cloak weaknesses and wrongs, which fester unacknowledged. Red Sox player David Ortiz brags that ‘nobody is going to dictate our freedom’, and I assume he hasn’t heard of the Patriot Act or wholesale warrantless wiretapping, much less the Cyber Intelligence Sharing and Protection Act. Crime novelist Dennis Lehane can be excused for declaring that ‘they messed with the wrong city’, but don’t take seriously his confidence that not much will change. ‘Trust me’, he adds implausibly, ‘we won’t be giving up any civil liberties to keep ourselves safe because of this’.

Of course we will. We’ve been surrendering liberty in the hope of keeping ourselves safe for the past decade. The marathon bombings will hasten our surrender of freedom to the watchful eye of law enforcement. The Boston Globe is already clamouring for additional surveillance cameras, which are sure to be installed to the applause of many Bostonians. You can rationalise increased surveillance as a necessary or reasonable intrusion on liberty, but you can’t deny its intrusiveness, or inevitable abuses.

You shouldn’t deny the fear that drives the diminution of freedom. You’ll only end up looking foolish. ‘A bomb can’t beat us’, President Obama assured Bostonians three days after the attack. ‘We don’t hunker down… we don’t cower in fear.’ Yes we do. Less than 24 hours after Obama left town, hundreds of thousands of us were ‘sheltering in place’.

Think Again: Austerity

The big spenders are wrong: Maintaining sustainable budgets is essential to economic growth

BY ANDERS ASLUND

In the current global financial crisis, austerity has become a term of abuse -- one that connotes unnecessary pain and suffering on the part of already-hurting citizens. But that couldn't be further from the truth. What austerity actually means is "measures to reduce a budget deficit" or responsible fiscal policy. And that's hardly the only misconception that has clouded our economic thinking of late.

Although you'd never know it, the so-called global financial crisis is really a public debt crisis -- and the countries that have reigned in their spending are now growing briskly while the profligate founder. Here are five other myths about austerity that have muddied the waters.

1. "Growth Requires Fiscal Stimulus."

Wrong. In fact, the opposite is true. Sustainable long-term economic growth requires sound public finances as well as capital, labor, human capital, technology, and strong institutions. British economist John Maynard Keynes, the original proponent of stimulus spending, argued in The General Theory of Employment, Interest and Money that classical economic theory is "applicable to a special case only" and "that the duty of ordering the current volume of investment cannot safely be left in private hands." But stagflation in the 1970s taught us that the relevance of Keynesianism was limited to brief periods of recession. Even Keynes envisaged that budgets should be balanced over the course of the business cycle.

For a fiscal stimulus to be permissible there must be what economists call "fiscal space" for it. In other words, the public debt accrued through stimulus spending must be sustainable. The trouble is, fiscal space is difficult to establish, and it's typically much smaller than we think. During a severe financial crisis, moreover, public debt usually doubles, meaning that there is virtually no fiscal maneuverability. By the end of 2011, for example, eurozone public debt averaged fully 98 percent of GDP, and by the end of 2012, the six biggest Western economies had the following debt-to-GDP ratios: 83 percent in Germany, 89 percent in Britain, 90 percent in France, 107 percent in the United States, 126 percent in Italy, and 237 percent in Japan. None of these countries has any fiscal space.

We may be witnessing an African economic miracle

By almost every measure and in most countries, life is getting better in Africa

By dan o’ brien

This week the Government and an organisation run by former president Mary Robinson hosted a conference in Dublin on some of the problems and challenges in the developing world. Quite rightly, the event focused on what has yet to be done. But in so doing it may have downplayed progress.

There has been a sustained surge in economic growth across Africa. There is a strong link between economic and political progress, and the two tend to be mutually reinforcing. For decades, bad economics and bad politics fed off each other in Africa. The continent appeared to be trapped in a vicious circle of decline. Now it looks to be in the early stages of a virtuous cycle as the institutional, political and security underpinnings of economic growth strengthen.

A foundation stone for the African renaissance has been greater security in a region that has been plagued by violence since wars of independence began in the middle of the last century.

Now the continent is becoming less bloody. In the 1990s, there were 328,000 fatalities in conflict in sub-Saharan Africa, according to the Conflict Data Program at Sweden’s Uppsala University. In the 2000s, fatalities were down by between a half and two-thirds.

The Beginning of the End for Hezbollah

The camel passes, but the desert remains

By Michael J. Totten

The Middle East taught me pessimism. Much of the region goes in circles instead of progressing, and I’ve seen one country after another circle the drain.

Optimism is very American. It’s not exclusively American, and of course we have our own setbacks and failures, but things have generally trended toward the better in American life since the nation was founded.

The Middle East, though, teaches another way of looking at history’s trajectory. My own naïve optimism was dashed on the rocks in Lebanon and Iraq and hasn’t recovered. I never even bothered with optimism in Egypt. There’s nothing there to be optimistic about.

And I rarely meet anybody who actually lives over there who isn’t a pessimist. Expecting the best while everyone around you is expecting the worst is a difficult thing to pull off. It probably isn’t advisable even to try.

But I’m finding a bit of homegrown optimism in some quarters of Lebanon now, despite the fact that the economy is on its back and the Syrian war threatens to blow the country to pieces again, and I’d be remiss if I didn’t report it. The place has a serious case of the jitters and everyone knows this summer will be the third bad one in a row, but the medium and long term might be a little bit better, at least for some.