The House of Mao is Doing Well

Mao grand-daughter accused over China rich list

By Associated Press

The appearance of a grand-daughter of Mao Zedong, founding father of Communist China, on a list of the country's richest citizens prompted online accusations of hypocrisy Thursday.

Kong Dongmei, now in her early 40s, and husband Chen Dongsheng ranked 242th with personal wealth estimated at five billion yuan ($815 million) on a rich list released this month by New Fortune, a Chinese financial magazine.

Kong is the grand-daughter of Mao and his third wife He Zizhen. In 2001 she founded a book store in Beijing selling publications about Mao and promoting "Red Culture" after studying at the University of Pennsylvania in the US.

In 2011, Kong married Chen, who controls an insurance company, an auction house and a courier firm, after they had maintained an extramarital relationship for 15 years, according to the magazine, which cited other Chinese media reports.

Action Plan to Save Slovenia is Trifecta of Stupidity

Hiking taxes in a recession is the single worst thing a country can do

By Mike "Mish" Shedloc

As Slovenia struggles to avoid an inevitable bailout, it pursues a plan that will instead make the size of the eventual bailout larger.

Please consider the inane  "Action Plan" for Eurozone Straggler Slovenia. 

The new government of struggling eurozone member Slovenia is expected to announce Thursday an action plan aimed at avoiding a bailout, reportedly including privatisations, "crisis" taxes and austerity cuts.

Moody's last week cut its rating on Slovenia two notches to "junk", the economy has been in recession since 2011, unemployment stands at 13.5 percent and voters are fed up with their political leaders.

According to leaked details, Bratusek is eyeing a "crisis" levy of 0.5-5.0 percent on all wages, to hike in 2014 value-added tax (VAT), a tax on property and other measures to boost state revenues.

Trifecta of Stupidity

Is there not one bureaucrat who can be fired? What about changes to work rules to make the country more productive? Is every cent Slovenia spends necessary?

Hiking taxes in a recession is the single worst thing a country can do, yet Slovenia proposes a trio of them. When Slovenia slumps further into the gutter (and it will if they implement even a portion of these proposals), Keynesian clowns will holler "austerity ruined Slovenia".

Nothing could be further from the truth. Tax hikes in a recession are not austerity, they are stupidity, and Slovenia is going for the tax-trifecta of a tax on wages, a hike in the VAT, and a hike on property taxes.

Unemployment, already at 13.5%, will hit 20% if this plan is implemented.         

Looking for Dollars

Argentina – Another Peso Devaluation Imminent?

The Argentine Peso vs. the US dollar over the past decade, official rate

By Pater Tenebrarum

Argentina famously employs 'dollar-sniffing' dogs at its borders to keep its citizens from getting their savings out of the hands of the domestic kleptocracy to a safe haven. After years of soaring inflation, the black market rate of the peso has fallen to about half the official rate. As a result, rumors of an imminent devaluation are growing more pronounced of late.

In a new gambit to get hold of more foreign exchange, Argentina's government is offering people who bring undeclared dollars home an amnesty. This is almost like saying: 'please bring the stuff back for us to steal'. It probably won't work. 

In fact, given the strenuous denials by the government, which insists that there will never – honest injun! – be a devaluation of the peso, it is almost certain that it will be devalued, based on the 'never believe anything until it's been officially denied' principle. In typical government fashion, fingers are wagged in the direction of 'those who want to profit from a devaluation', i.e., it's all the fault of evil speculators.

Meanwhile, president Fernandez-Kirchner has become tainted by a growing scandal over a close friend of her family who apparently shipped dollars out of Argentina by the plane load. As a result, her government is threatened by new political competition from the left (just what Argentina urgently needs: more socialism!).

Here are excerpts from a recent article describing the situation: 

A warning signal for Germany and UK

ECB Ponders Buying Toxic Debt of the Periphery; Don't Worry, It Will Be "Fiscally Neutral" and Temporary

By Mike "Mish" Shedlock

In an effort to stimulate small and medium (SME) lending the ECB considers acquiring banks toxic debt of the periphery. Via mish-modified translate from Spanish Libre Mercado. 

 The European Central Bank (ECB) could "soon" start buying bad debts of Southern European countries in an attempt to end the fragmentation in the eurozone and boost funding to SMEs, as confirmed by the German ECB representative Jörg Asmussen. 

"It's part of the debate on lending to SMEs," Asmussen said when asked about the measure, which was unveiled by the German newspaper Die Welt. The ECB has an "open mind" to do everything "within our mandate" to solve this problem, Asmussen explained in an appearance before the Economic Affairs Committee of the Parliament.

The goal, the German banker continued, is "revive the market asset-backed securities, particularly those backed by loans to SMEs, of course with strict supervision." In any case, the ECB representative stressed that "liquidity is not what is preventing banks from lending" but "the lack of capital." 

Is present monetary policy rational?

Benefits - Costs and everything in between

by DETLEV SCHLICHTER

While the stance of monetary policy around the world has, on any conceivable measure, been extreme, by which I mean unprecedentedly accommodative, the question of whether such a policy is indeed sensible and rationale has not been asked much of late. By rational I simply mean the following: Is this policy likely to deliver what it is supposed to deliver? And if it does fall short of its official aim, then can we at least state with some certainty that whatever it delivers in benefits is not outweighed by its costs? I think that these are straightforward questions and that any policy that is advertised as being in ‘the interest of the general public’ should pass this test. As I will argue in the following, the present stance of monetary policy only has a negligible chance, at best, of ever fulfilling its stated aim. Furthermore, its benefits are almost certainly outweighed by its costs if we list all negative effects of this policy and do not confine ourselves, as the present mainstream does, to just one obvious cost: official consumer price inflation, which thus far remains contained. Thus, in my view, there is no escaping the fact that this policy is not rational. It should be abandoned as soon as possible.

The policy and its aims

The key planks of this policy are super low interest rates and targeted purchases (or collateralized funding) of financial assets by central banks. While various regional differences exist in respect of the extent of these programs and the assets chosen, all major central banks – the US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan – have been engaged and continue to be committed to versions of this policy. Its purpose is to facilitate exceptionally cheap funding for banks and to affect the pricing of a wide range of financial assets, in particular and most directly government bonds but also mortgage bonds in the US and real-estate investment trusts and corporate securities in Japan. There is an ongoing debate in the UK and in the Euro Zone, too, about directly boosting prices of other, ‘private’ securities, that is, to have their prices manipulated upwards by direct purchases from the central banks.

The new EU directive: quit smoking or die

New rules from Brussels effectively banning low-risk alternatives to cigarettes, like e-cigs, will cost lives

by Rob Lyons 

In December 2012, the EU’s executive, the European Commission, announced its proposals to revise the Tobacco Products Directive (TPD), originally passed in 2001, to take account of ‘significant scientific, market and international developments’ that have taken place since. But far from improving Europeans’ health, the proposals as they stand could well lead to many thousands, perhaps millions, of unnecessary early deaths.

In a press release announcing the revision, the EU’s commissioner in charge of health and consumer policy, Tonio Borg, declared: ‘With 70 per cent of smokers starting before the age of 18, the ambition of today’s proposal is to make tobacco products and smoking less attractive and thus discourage tobacco initiation among young people.’ So, for example, the revised directive would provide for some pretty run-of-the-mill tobacco-control measures like bigger health warnings, something likely to be ineffective in persuading smokers to quit - and quite possibly attractive to young people looking for a way to ‘rebel’.

There would also be bans on the use of ‘characterising flavours’ with tobacco products. That would mean an end to menthol cigarettes, on the untested presumption that flavoured products make it easier for young people to get into smoking. In reality, flavoured cigarettes are not wildly popular. Even accounting for menthol, by far the most popular of these flavours, they make up just five per cent of the cigarette market.

Defending the right to mock JM Keynes

Why on earth is historian Niall Ferguson being dragged over the coals for having a pop at a dead economist?

by Tim Black 

I’ll tell you what is really shocking about Niall Ferguson, Harvard professor of history, author of countless forgettable books, and sometime man-ont’-telly. It’s that so many insist on considering him some sort of towering intellect, be it Time magazine, which put him in its ‘top 100 most influential people in the world today’, or Prospect, which did something similar in terms of global thinkers. If ever there was an indictment of the contemporary world of thought, it’s that: the thoughtless elevation of this spectacularly vain shock-jockademic.

But I’ll also tell you what’s not shocking: Ferguson’s less than admirable view of prominent twentieth-century economist, and famed Bloomsbury Groupie, John Maynard Keynes. Yet that is precisely what twisted quite a few right-thinking knickers over the weekend and even prompted an ‘unqualified apology’ from the not-so-great man himself.

The phoney border war over immigration

The fallout from the Queen’s Speech confirms that today neither right nor left views immigrants as real, breathing human beings

by Brendan O’Neill 

The fuss that followed yesterday’s Queen’s Speech reveals what a weird turn the debate about immigration has taken. In the past, the clash over migrants’ rights tended to pit border-fortifying nationalistic types against left-leaners who believed in the right of foreigners to move around the globe and work and live in various places. Today, if the reaction to PM David Cameron’s proposed new immigration measures is anything to go by, there’s little more than a pseudo-spat over immigration, with hamstrung anti-immigrant politicians on one side and a ‘pro-immigration’ lobby that is increasingly elitist on the other. What’s most striking is how neither side treats immigrants as actual human beings, the anti-immigrant side treating them as spectres of destabilisation and the pro-immigrant lot treating them as the ciphers for a new, post-borders, shallowly cosmopolitan political dawn.

Cameron’s proposals, ironically unveiled by our German-descended queen, led to outraged headlines about how he was pandering to xenophobic attitudes and taking Britain back to the bad old days of immigrant-bashing. In truth, the most remarkable thing about his plans is how chaotic they are, and also how much they concede in terms of the security of Britain’s borders. Cameron is proposing effectively to outsource authority over immigration to various non-state actors. Landlords will be charged with checking the immigration status of their tenants, and will face fines if they let their properties to illegal migrants. Employers will have to check passports and papers or risk getting a severe slap on the wrists for ‘hiring illegal workers’. The Driver and Vehicle Licensing Agency will have to ensure that only legit immigrants get driving licences.

'All Will Profit from New Wave of Immigrants'

World from Berlin

By Daryl Lindsey

This week, Germany announced it received more immigrants in 2012 than it has in almost two decades. Yet rather than sounding the alarm, newspaper commentators are welcoming the trend. Most of the newcomers are well-educated and come from other countries in Europe.

The trend has been building for some time. As the economic downturn in Southern Europe tightens its grip, increasing numbers of people are heading north -- many to Germany -- looking for work. On Tuesday, Germany announced that almost a million foreigners came to Germany in 2012, more than have arrived in any year since 1995. Furthermore, the preliminary figures indicate that last year saw a 15 percent jump in immigration over 2011.

The last time the country saw waves of immigration this large was during the Balkan wars in the late 1990s and at the peak of the guest worker movement during the 1970s, which saw hundreds of thousands of Turks, Greeks, Spaniards and Italians move to Germany.

The majority of the newcomers are leaving behind countries in impoverished southeastern Europe or debt-crisis plagued euro-zone countries in Southern Europe, where joblessness is rampant, particularly among youth.

German Central Bank Head Blasts France

'Can't Call That Savings'

By Spiegel

German central bank head Jens Weidmann has strongly criticized French efforts to reduce its budget deficit, just days after the European Union granted Paris more time to meet EU requirements. He warns that French delays could damage the credibility of euro-zone rules.

France needs more time to get its budget deficit under control. That much was made clear last Friday when the European Commission announced it was granting Paris until 2015 to bring its budget deficit below the maximum 3 percent of gross domestic product allowed by European Union rules ensuring the stability of the euro.

But on Wednesday evening, Jens Weidmann, the president of Germany's central bank, the Bundesbank, said he is adamantly opposed to the move. "You can't call that savings, as far as I am concerned," he told the daily Westdeutsche Allegemeine Zeitung in an interview. "To win back trust, we can't just establish rules and then promise to fulfil them at some point in the future. They have to be filled with life," Weidmann said.

France had originally hoped to reduce its budget deficit below the 3 percent limit this year, but with its economy suffering, the deficit is likely to be closer to 4 percent and slightly higher in 2014.

The Number Of US Citizens On Disability Is Now Larger Than The Population Of Greece

There are only 13 Americans working full-time for each worker on disability

By Jim Quinn's 

The number of people on SSDI now exceeds the entire population of Greece. The aging of the population has nothing to do with the increase. In 1968 there were 51 workers for every person on disability. Today there are 13 workers for every person on disablity. Even the most pollyanna would agree that medical advancements since 1968 have been significant. These medical advancements would argue for less people being on disability and unable to work.

Workplace safety measures have been increased exponentially since 1968, so that also argues for less disabled workers. The good old ADA law forced all workplaces to become disabled friendly. That argues for less people on disability. The country has transitioned from a manufacturing society to a service society. Workers don’t work on dangerous assembly lines anymore. Robots do the dangerous stuff. This should have dramatically reduced worker injuries and disabilities.

Cosmetic Surgeries Skyrocket in Greece

Crisis Lifting

By Kerstin Kullmann

The economic crisis has forced thousands in Greece to rely on volunteers for even basic health care services. Meanwhile, wealthier Greeks are having more facelifts and breast implants than anywhere in the world. Why?

In Glyfada, an upper-income suburb of Athens with palm-lined streets and a view of the Mediterranean, cosmetic surgeon Athanasios Athanasiou presents his latest accomplishment. A flawlessly beautiful woman wearing a tight-fitting tracksuit and sporting a bobbing ponytail walks into the room, dangling her car keys from her right hand. Athanasiou says: "A complete mommy makeover." He laughs, and the woman laughs along with him. She sits down and says: "Oh, Athi."

The woman prefers not to mention her name because she is a well-known TV personality in Greece. She says that after having her second child, she had Athanasiou perform many cosmetic enhancement procedures: adding new silicon to her breasts, a tummy tuck, liposuction, a lip enhancement, Botox and hyaluronic acid filler treatments and laser procedures. She adds that she has been going to a cosmetic surgeon for almost 20 years, but that the quality of the work has improved considerably in recent years. "I don't want it to be too extreme," she says. "It should look natural. Athi knows how to do that." And now she is looking forward to her birthday. She turns 45 in a week.

Fed's rise to tyranny has no end in sight

The Fed is not the solution, it is the problem

By Noureddine Krichene 

A country needs a constitution for the sole purpose to protect citizens against totalitarian government. Confiscating wealth of citizens via money inflation is totalitarian power. To protect against this power, the US Constitution entrusted congress with the authority to coin and regulate the value of money. The US Constitution sought to protect citizens against totalitarian power of government. 

The US Federal Reserve, founded in late 1913, acquired the power to create money. Its original purpose was modest; namely to provide an elastic money supply for the economy. Soon after, it monetized the US debt; it extended its powers to subsidize traders in capital markets, abolish the gold standard, and then to assume the mandate of full-employment of labor. 

Now it is the central planner of the economy with unlimited power to create money and manage all segments of the economy. It observes no rules. It bails out banks at the expense savers and workers. It is a tool of politicians seeking votes. Speculators in capital markets earn fortunes on Fed's cheap liquidity and the government relies on it to force near-zero interest rate and monetize monumental fiscal deficits. 

Through its negative real interest rate and money expansion it inflicted severe financial crises in the 1930s, 1970s, 1980s, and recently the 2008 financial crisis. It has impoverished masses of people and pushed food prices to forbidden levels - in 2013, close to 50 million US citizens live on food stamps. It caused trillions of dollars in fiscal deficits to cope with bailouts and welfare spending caused by the crisis. 

At present, its policy of massive money printing and near-zero interest is setting off bubbles in the stock markets, housing markets, and a currency war among leading industrial countries. Its pillar achievements are: debauching money, impoverishing workers and fixed-income recipients, economic disintegration, and financial crises and disorders. 

The mathematical menace

Mathematical models, far from being tools to increase knowledge and understanding, can be tools of obfuscation

By Martin Hutchinson 

Far from being tools to increase knowledge and understanding, mathematical models are tools of obfuscation. 

The brouhaha about the spreadsheet error in Carmen Reinhart and Kenneth Rogoff's 2010 paper "Growth in a time of debt" brings home an important economic truth. Not that Reinhart and Rogoff were in error; their overall conclusion is clearly true, not to say obvious, and correction of the error in their spreadsheet merely softened the conclusion without invalidating it. However the economic truth is that the invention of computer modeling has for the last 40 years allowed charlatans to peddle spurious models in the service of their political agendas, and policy makers and the general public are all too ready to be fooled by these devices.

The attempt to model mathematically complex scientific and sociological interactions is popularly thought to have begun with the computer model of nuclear interaction used in the 1942-45 Manhattan Project, but the techniques and thought processes involved go back well beyond this. Perhaps the most significant pre-computer use of model theorizing came from Rev Thomas Malthus, who postulated that the increase over time in food supply was arithmetical, that in population geometrical, and therefore population would always outrun the food supply. 

Multiculti U.

The budget-strapped University of California squanders millions on mindless diversity programs

by Heather Mac Donald

In the summer of 2012, as the University of California reeled from one piece of bad budget news to another, a veteran political columnist sounded an alarm. Cuts in state funding were jeopardizing the university’s mission of preserving the “cultural legacy essential to any great society,” Peter Schrag warned in the Sacramento Bee:

Would we know who we are without knowing our common history and culture, without knowing Madison and Jefferson and Melville and Dickinson and Hawthorne; without Shakespeare, Milton and Chaucer; without Dante and Cervantes; without Charlotte Brontë and Jane Austen; without Goethe and Molière; without Confucius, Buddha, Gandhi and Martin Luther King, Jr.; without Mozart, Rembrandt and Michelangelo; without the Old Testament; without the Gospels; without Plato and Aristotle, without Homer and Sophocles and Euripides, without Tolstoy and Dostoyevsky; without Gabriel García Márquez and Toni Morrison?

Schrag’s appeal to the value of humanistic study was unimpeachable. It just happened to be laughably ignorant about the condition of such study at the University of California. Stingy state taxpayers aren’t endangering the transmission of great literature, philosophy, and art; the university itself is. No UC administrator would dare to invoke Schrag’s list of mostly white, mostly male thinkers as an essential element of a UC education; no UC campus has sought to ensure that its undergraduates get any exposure to even one of Schrag’s seminal thinkers (with the possible exception of Toni Morrison), much less to America’s founding ideas or history.

Cop out

New York pays more police in retirement than to patrol our streets

By NICOLE GELINAS

Last week, Mayor Bloomberg scolded the NYPD’s critics, from The New York Times to the Democratic mayoral candidates. The mayor said that “the attacks most often come from those who play no constructive role in keeping our city safe.”

The mayor is right — but there’s another threat to the NYPD’s crime-fighting success, too. We now have more retired cops than active police officers, and the multibillion-dollar bill for their pension and health benefits harms our ability to hire new ones.

In December 2001, a month before Bloomberg took office, New York had 39,297 cops. Today, the city has 34,510 to protect us — and by the time the mayor leaves office in eight months, we’ll have 34,483 — a cut of nearly 5,000 pairs of eyes.

Yet spending has increased. During Bloomberg’s final year, city will spend $8.7 billion on the police department, nearly double the 2002 figure and more than three times the rate of inflation.

A common sense solution to immigration

Lets Cut Benefits, Not Immigration

By Diana Furchtgott-Roth

A misleading Heritage Foundation report by economists Robert Rector and Jason Richwine concludes that legalizing undocumented workers will cost America $6.3 trillion over the immigrants' lifetimes.

The report is deceptive because it assumes, contrary to empirical evidence, no increased economic efficiency from immigration and no economic mobility. It doesn't discuss numerous benefits to national security from legalizing and making it easier to track America's11 million undocumented workers.

Yes, as the authors point out, America has a welfare problem. Over 47 million people, the vast majority native-born Americans, are on food stamps almost four years after the beginning of the economic recovery. Means tested benefits, healthcare under the Affordable Care Act, and retiree benefits are increasingly expensive, and these costs need to be brought under control for everyone.

But that's not the same as an immigration problem. If we're concerned that benefits are keeping people in poverty and impeding upward mobility, we should cut benefits, not immigrants.

Guess Who Is A Shocking Fan Of Austrian Economics

One also wonders just how they really feel about gold...

By Tyler Durden

The statement below, coined by Friedrich Hayek in his 1931 "Prices and Production", is well-known by any fans of the Austrian school of economics (and by implication, loathed by all Keynesians):

“There can be no doubt that besides the regular types of the circulating medium, such as coin, notes and bank deposits, which are generally recognised to be money or currency, and the quantity of which is regulated by some central authority or can at least be imagined to be so regulated, there exist still other forms of media of exchange which occasionally or permanently do the service of money. Now while for certain practical purposes we are accustomed to distinguish these forms of media of exchange from money proper as being mere substitutes for money, it is clear that, other things equal, any increase or decrease of these money substitutes will have exactly the same effects as an increase or decrease of the quantity of money proper, and should therefore, for the purposes of theoretical analysis, be counted as money.”

One may usually find it in letters of the few renegade hedge fund managers who dare to call out the Chairsatan for his utter bubble pumping insanity, in the writings of those who have not been indoctrinated into the fallacies of the Keynesian pseudo-religious dogma, and generally discussed by those who actually do understand real credit and thus, monetary creation.

Of Owls and Richard the Third

The law of unintended consequences is one of the hardest for people to learn

by Theodore Dalrymple 
Not long ago at a conference I was asked whether I thought that boredom was an important cause of bad, and worse than bad, behaviour. I said that I thought that it probably was, though I could not positively prove it. At any rate, those who behave badly often claim to do so because they are bored, and no one claims to behave well because he is bored.

But even if it is accepted that boredom causes, or rather explains, bad behaviour, it cannot be the final explanation: for why are people bored? Is not the world interesting enough for them? What would a world be like that they found sufficiently interesting to keep them on the straight and narrow path that leads to good behaviour? It is a terrible fate for a creature endowed with consciousness and self-consciousness to find the world uninteresting.

My problem is the opposite: I find the world too interesting. This means that I am all too easily distracted, like a child confronted with too many good things to eat. I pursue things that interest me until something else distracts me, which means that I master nothing. But at least I am not bored.

They’re all Mr Less- Than-Ten-Per-Cent

No UK party won even 30 % of the votes last week marking a new low of the old order

by Mick Hume 

The most remarkable result in last week’s local elections was not that the United Kingdom Independence Party (UKIP) achieved 23 per cent of the votes cast. It was that, for the first time, none of the major parties managed to claim even 30 per cent of the total vote.

On an estimated overall turnout of about 31 per cent, that means no party persuaded even 10 per cent of those eligible to vote that it was worth ticking their box on the ballot paper.

Britain is not in a new era of multi-party politics so much as no-party politics. The Conservatives, Labour and Liberal Democrats are all suffering a terminal-looking crisis. None of them has a clear set of political principles to stand on or a solid base of support. They are political parties in name alone. The sudden emergence of UKIP is simply a symptom, the rash that expresses the sickness at the heart of the body politic.