Land of Pyramids Going Downhill

Arab Winter in Full Swing

by Pater Tenebrarum

We held that Mubarak surely deserved his fate, but it was always a big question what would come after him. When last we wrote about Egypt, we remarked that it had gone from 'spring to winter in one go'. The new head of government is only loosely differentiated from the old one, and the entire apparatus of repression has simply been assimilated on an 'as is' basis. 

It turns out that the country is in the meantime suffering from a vast increase in internal instability, as vigilantes and criminals battle it out. Guns have become big business, while the formal economy is spiraling down the drain ever faster.

A symptom of the malaise is the performance of the country's currency, the pound, which has crashed this year as foreign exchange reserves have dwindled by 60%.

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The Egyptian pound has crashed 

 The revolution has evidently not fulfilled its promise so far.

Bloomberg reports: 

“Artisans who make machine parts by day are turning into bootleg gunmakers at night, says Hussein, 54, who asked not to be identified by his full name for fear of prosecution. He only sells to a middleman because “trust the wrong person and you’re going to jail.” He can make as much as 3,000 pounds ($435) per gun — about 20 percent of what a legally licensed one costs.

“Fear is big business nowadays,” Hussein said. “People buy the guns because they’re afraid. People buy the guns because they want to scare others. We’re in a jungle now.”

Bernanke stole your pension

The Dysfunction Trilogy Part B

By Chan Akya  

A core aspect of the logic of folk who support stimulus programs in the name of John Maynard Keynes is that government spending to offset private sector contraction remains a victimless crime. This is completely untrue, and understanding the actual costs of Keynesian machinations by studying real-world examples of dysfunction is important to unravel this pernicious logic. 

In the first part of this series, we considered the impact of random intervention in the shipping sector, in particular the role it has played to crush profits and imperil employment in the sector globally. 

In the second part of this series, we will look at conditions in the area of retirement planning and returns. The notion of stealthy wealth transfers is part of a longer debate that goes into the core aspects of the financial crisis; to a large extent many of the issues have been raised previously in these pages but perhaps more in passing than as the core focus. 

The core function of financial markets is to connect pools of savings with the people who need money for their immediate future. In demographic terms, this can be expressed as markets being the intermediary between older people with savings and young people who need to borrow to set up house, buy cars and other utilitarian requirements. 

Construct of pensions - a quick primer

This a quick primer, and not all the nuances are or even can be covered in such a short summary. First let's quickly recap the theory here, even if parts of it will appear unrealistic to many readers who have been hardened with real-world experiences over the past few years. 

The rate of return for these old people is meant to take into account two primary factors: the cost of money and the risks entailed. The cost of money is measured by one of two factors - either as the minimum rate of return on money that keeps its purchasing power constant; or as a cumulative measure of opportunity lost by renting it out without risk. 

Typically these two rates are close to the same, or in other words, returns on local government bonds are meant to offset the loss of purchasing power while preserving the principal. Instead of local government bonds, one could consider bank deposits as a suitable alternative. 

Real world impact: if you consider the historical depreciation in the value of money - purchasing power - across the Group of Seven nations, and the needs of a comfortable existence in future, then a realistic return rate on pension portfolios would range between 5% and 10%. Remember also that this rate needs to account for capital withdrawal once people actually retire. Once we remove the periods of overly high inflation as well as stagnation or deflation (that would be you, Japan) the base (minimum) rate works out to 6%. This is the realistic minimum rate that needs to be achieved on pension portfolios, but one could also consider it a weighted average of returns before people actually retire. 

Keynes stole your ship

Dysfunction Trilogy Part A

 

By Chan Akya

Despite mounting evidence of the dysfunction being caused by Keynesian policies, rhetoric in Europe and the United States is overwhelmingly turned against austerity. Over three articles, the author will examine specific examples of the dysfunction that has been caused by such government intervention, and the very real economic pain being caused as a result with the objective of dispelling the dangerous notion that higher government spending is a victimless crime.

Here is a quick quiz: name a global industry that is as old as antiquity, employs millions of people, withstood and indeed thrived with technological change but perhaps most importantly of all with diverse supply and demand dynamics is an industry that has never been cornered by any particular group for very long in history. 

If you thought the reference above was about shipping, well done. In contrast if you thought it was about prostitution, well then, time for a cold shower. 

The typical cycle of shipping is as old as history and has always been about two contrasting and virtually uncorrelated forces: firstly the interaction of operations with risk, and secondly the boom-bust cycle. Western readers will remember learning about the exploits of sea-faring Greeks and other Mediterranean peoples as merchants far and wide seeking to profit from trade with other countries. This continued into the times of Shakespeare (examples include the Merchant of Venice and settled into modern times as shipping became the moving force of global economies post World War II. The advent of standardized containers during the Korean War and thereafter proved a boon for global trade, and with it, improved the economic fortunes of all countries involved.

For these 70 years or so of modern shipping, at least five boom-bust cycles were visible as the effects of the cold war, the oil crisis, the emerging-market crisis in the '80s, Scandinavia's sovereign debt crisis in the '90s, and the decline in the industry in the first few years of this millennium. 

Every one of these cycles has been driven by a function of overconfidence leading to an excess ordering of ships, and when a debt crisis that disallowed loans to be refinanced or an economic downturn came, demand was cut too quickly for the industry. More than once, a debt crisis came along with an economic downturn but the global nature of the industry and continued technology evolution always helped to pull the industry up. 

US plays with genocidal fire in Iraq

The forces are beginning to mass

By Mark Langfan

On January 10, 49 BCE, Roman General Julius Caesar crossed south over the red Rubicon river with his army. An all-out-to-the-death Roman civil war was inevitable. 

On April 23, 2013, Iraqi Prime Minister Nuri al-Maliki's Shi'ite tanks fired and murdered at least 23 unarmed Sunni protesters in the northern city of Hawijah as his tanks crossed red rivers of Sunni blood. An all-out-to-the-death Iraqi civil war is inevitable. 

Maliki's penchant for the mass-murder of innocent protesters shares the same religious genocidal lineage as Syrian President Bashar al-Assad: they are both Shi'ite stooges of Iran. Maliki, Assad, and their Iranian puppet-masters will stop at nothing, and murder millions of Sunnis without a single thought. 

How did we get here? Well, President George W Bush really launched two different invasions of Iraq: one announced, and one unannounced. The announced war was to take down Saddam Hussein. The unannounced war was to take down the entire Iraqi Sunni power structure. Then, instead of letting Iraq fall into three natural ethnically homogenous democratic-or-so parts, Bush laid the groundwork for a Shi'ite-Iranian dictatorship. To make matters worse, America sold the Iranian stooge billions of Abrams M1 tanks that will now be used, by Iran’s lackey, as Sunni killing machines. 

So, not only did President Obama anoint the newest Shi'ite Iranian robo-murderer, he armed him with the latest and greatest American mass-killing machines. Just wait until Maliki whips out his Obama-Apache helicopter "crowd control" Gatling guns. You won't hear a word from President Obama denouncing the use of American military equipment to mass murder innocent Muslim civilians. 

What No One Wants to Hear About Benghazi

The real lesson of Benghazi: interventionism always carries with it unintended consequences

by Ron Paul

Congressional hearings, White House damage control, endless op-eds, accusations, and defensive denials. Controversy over the events in Benghazi last September took center stage in Washington and elsewhere last week. However, the whole discussion is again more of a sideshow. Each side seeks to score political points instead of asking the real questions about the attack on the US facility, which resulted in the death of US Ambassador Chris Stevens and three other Americans.

Republicans smell a political opportunity over evidence that the Administration heavily edited initial intelligence community talking points about the attack to remove or soften anything that might reflect badly on the president or the State Department.

Are we are supposed to be shocked by such behavior? Are we supposed to forget that this kind of whitewashing of facts is standard operating procedure when it comes to the US government?

Democrats in Congress have offered the even less convincing explanation for Benghazi, that somehow the attack occurred due to Republican sponsored cuts in the security budget at facilities overseas. With a one trillion dollar military budget, it is hard to take this seriously.

The baby-boomer death cult

The euthanasing of a Belgian Nobel laureate raises disturbing questions about attitudes to the elderly and the future

by Michael Cook 

Euthanasia claimed its most famous victim last Saturday. At the age of 95, Belgian Nobel laureate Christian de Duve was killed with a lethal injection. He died in his home, surrounded by his four children.

He had planned his death for weeks and even explained his reasons and his philosophy of life in a long interview with the Belgian newspaper Le Soir. This was published immediately after his demise.

Why Saturday? Apparently de Duve had cancer, but he had also fallen down on 1 April and spent several humiliating hours on the floor. He took it as a sign of worse to come and decided to set a date for his euthanasia – which is legal in Belgium. He waited until his son, who lives in the United States, arrived home. His daughter Anne described the final moments to Le Soir: ‘It was impressive. He was smiling, asking us not to cry, saying that it was a happy moment. I’ve never seen anyone who was so full of life at the moment of death. He left us in great serenity, refusing painkillers before the final injection. As he left us, he said farewell as he smiled at us.’

Born in 1917, de Duve was deservedly famous in Belgium as its only living Nobel laureate. He shared the 1974 Nobel for Physiology or Medicine with Albert Claude and George E Palade. His contribution was describing the structure and function of discovered peroxisomes and lysosomes, small structures within cells. In his very active retirement, he devoted himself to writing about the origin of life.

No doubt de Duve’s death will be used by the euthanasia and assisted-suicide lobbies in the UK, the US, Canada, Australia and elsewhere as an advertisement for legalisation. Belgian notables tumbled over themselves to eulogise his memory. Prime Minister Elio Di Rupo praised his exemplary career and public spirit. Leading politician Paul Magnette lauded his conviction and courage. PZ Meyers, of the popular blog Pharyngula, exclaimed: ‘What a dignified and honorable way to go!’

Non-Template Becomes Template, Continued

Asmussen’s Musings and the Orwellian EU

By Pater Tenebrarum

We have previously written about the fact that the 'depositor haircut' in Cyprus has indeed become the 'template' for dealing with bank insolvencies in the EU. As we have pointed out at the time, this is in a fundamental sense a salutary event: it should finally open the eyes of depositors as to what risks they are exposed to when keeping money at fractionally reserved banks. Moreover, there is no reason why tax payers should foot the bill for bailing out insolvent banks.

So far, so good, if only it were that easy! This week a report made the rounds   regarding German ECB board member Jörg Asmussen informing a reportedly 'astonished' EU parliament in Strasbourg about the 'new template'. The original article can be found at 'Deutsche Wirtschaftsnachrichten' in German language (a Google translation should serve to get the drift). 'Savers must bleed', as the article states. Moreover, it points out that citizens will now be asked to so to speak pay up twice: once as tax payers funding the ESM, and in individual cases as savers keeping money at banks that happen to go under.

A major bone of contention remains however the fact that in order to avert bank runs, the EU wants to make sure that the deposit insurance for deposits of less than €100,000 remains in place. It is a bone of contention mainly for the reason that a number of countries could not possibly swing even that. Hence the urge to create the so-called 'banking union', because once it is in place, German tax payers and savers will be liable for insuring bank depositors in Greece and elsewhere just as they are now doing in Germany. France is very eager to get this banking union off the ground, as are understandably Spain and Italy. It is a good bet that none of these nations have the wherewithal to bail out their own banking systems if push really comes to shove. For instance, the three largest French banks hold assets worth 240% of GDP (with the assets of the banking system as a whole clocking in at over 400% of GDP).

Orwellian Language

An article at Reuters recently also discussed these topics. It reads almost like a satire in places. Consider the beginning of the article:

“Depositors should be the very last to suffer losses when a bank collapses, according to a proposal being discussed by European Union countries and seen by Reuters, which would shield savers from the kind of losses they face in Cyprus.” 

So in other words, depositors will be liable, but it won't be like Cyprus, promise! If they are to be 'shielded' from losses akin to those suffered by depositors and savers in Cyprus, something must be different. However, nothing actually is. 

“The idea comes as member countries finalize a new draft law for the European Union that could make losses for larger savers a permanent feature of future banking crises. EU officials, however, are nervous that such a regime will panic savers, prompting them to withdraw money.

IMF Admits Spain is Bankrupt

Read Between the Lines: Get Your Money Out While You Can

By Mike "Mish" Shedlock

It should be obvious to anyone reading this blog that Spain is in an economic depression as well as bankrupt. It is equally obviously that eurozone imbalances and a flawed treaty are to blame.

Finding mainstream organizations willing to admit Spain is bankrupt is another matter. Yet today, Jeremey Warner writing for The Telegraph says just that. 

Warner says Spain is officially insolvent: get your money out while you still can 

I'd not noticed this until someone drew my attention to it, but the latest IMF Fiscal Monitor, published last month, comes about as close to declaring Spain insolvent as you are ever likely to see in official analysis of this sort. Of course, it doesn't actually say this outright. The IMF is far too diplomatic for such language. But that's the plain meaning of its latest forecasts, which at last have an air of realism about them, rather than being the usual dose of wishful thinking.

Let's take the projected budget deficit first. This is expected to decline quite steeply this year to 6.6 per cent of GDP, but that's mainly because the cost of bailing out the banking sector fell substantially on last year's budget. On a like-for-like basis, there has in fact been very little fall in the underlying deficit. And nor on the present policy mix is there ever likely to be, for that's where the deficit is projected to remain until the end of the IMF's forecasting horizon in 2018.

Next year, the deficit is expected to be 6.9 per cent, the year after 6.6 per cent, and so on with very little further progress thereafter. Remember, all these projections are made on the basis of everything we know about policy so far, so they take account of the latest package of austerity measures announced by the Spanish Government.

The Red Queen Principle

The Failure of Democracy and the Rise of the Welfare State

By Camille Pecastaing 

Are political regimes fated to decay and die away, as everything in nature is?

Back in the eighteenth century, men in England, France, and the United States conceived of a new type of regime that would prevent the tyranny of the absolutist monarchies that reigned at the time. They put their hopes in a balance of power between various institutions of government, and in the periodical recourse to election to purge the system of excessive corruption and entrenched power. The democratic form of government established on those principles would work wonders for over two centuries.

But now, in its third century of existence, it is producing dysfunctional and potentially self-destructive forms of governance. The United States has been deadlocked in the monumental issue of its budget deficit and entitlements, unable to cut spending or raise taxes. Europe as a whole is no less fiscally bankrupt, and measures to restore its public finances are throwing the continent into economic depression and political upheaval. 

This is not the first test for democracies that, over the last 200 and some years, have weathered countless political crises. Throughout that period, democracies were able to mobilize so many resources, human and financial, that they won epochal wars against other regimes and were emulated on all continents. Yet, the diagnostic today is severe: with age, the democratic welfare state as we know it suffers from morbid obesity, and while the remedy is not hard to conceive—rebalancing the relationship between the public to private sector—it seems impossible to administer.

The etiology of the crisis points at the very design of the regime: the patient will not take the cure, voting out any government trying to cut public spending. Foreign donors who bail out bankrupt governments are often slapped in the face by the citizens of those countries. The recent woes of Greece and Cyprus show how the people can lack responsibility and gratitude.

Political theorists of ancient Greece were ambivalent about democracy. The Greek elite liked to rule its own affairs but, as a privileged minority in an expanding society, it had much to lose if a populist tyrant were to leverage the power of the masses. Accommodations were made with monarchy, hoping for a king powerful enough to keep the mob in check, and wise enough to protect the propertied classes.

The New European Revolt

Some young Europeans have given up on change

By tyler durden

One of the main benefits of forecasts based on demographics is the fact that they can be more precise and therefore more reliable than others. For example, the number of people aged 40 in the United States twenty years from now is roughly the same number of people aged 20 today, minus premature deaths plus new immigrants. A prediction that enjoys a similar inevitability is that welfare programs as currently defined will certainly be unaffordable a few years from now, given the aging of the population and concomitant rising dependency ratio.

It is a fair bet that one way or another, the current generation of young people will be unwilling and/or unable to pay for Social Security and Medicare as they presently stand. Of course, Western Europe has the same problem and President Hollande of France recently got a whiff of what is coming from an open letter addressed to him by a 20-year old student named Clara G.

In summary, Clara does not believe it fair that she and her generation should be saddled with the enormous debt accumulated by Mr. Hollande’s generation. As a remedy, she is considering leaving France for friendlier pastures. She says she is not alone and cites a recent poll by Viavoice which found that a shocking 50% of French people aged 18-34 wish to leave France. Forty-five years after the upheavals of Mai 68, half of the young of France are more interested in exile than in change.

Addressing the President directly, she writes:

“This will probably shock you, but it is mainly for fiscal reasons,… simply because I do not feel like working all my life to pay taxes, a large part of which will only service the 1.9 trillion Euros of debt that your generation has kindly left us. If these borrowings had at least been invested to prepare the future of the country, if I was getting a small benefit from them, it would not be a problem for me to help repay them. But this debt only helped your generation live above its means, and assure itself a generous social safety net which I will not have. (…)

The Inconvenient Truth About Benghazi

Did the Obama administration's politically expedient story cost American lives?

By PEGGY NOONAN

The Benghazi story until now has been a jumble of factoids that didn't quite cohere, didn't produce a story that people could absorb and hold in their minds. This week that changed. Three State Department officials testifying under oath to a House committee changed it, by adding information that gave form to a growing picture. Gregory Hicks, Mark Thompson and Eric Nordstrom were authoritative and credible. You knew you were hearing the truth as they saw and experienced it. Not one of them seemed political. You had no sense of how they voted. They were professionals. They'd seen a bad thing. They came forward to tell the story. They put the lie to the idea that all questioning of Obama administration actions in Benghazi are partisan and low.

What happened in Benghazi last Sept. 11 and 12 was terrible in every way. The genesis of the scandal? It looks to me like this:

The Obama White House sees every event as a political event. Really, every event, even an attack on a consulate and the killing of an ambassador.

Because of that, it could not tolerate the idea that the armed assault on the Benghazi consulate was a premeditated act of Islamist terrorism. That would carry a whole world of unhappy political implications, and demand certain actions. And the American presidential election was only eight weeks away. They wanted this problem to go away, or at least to bleed the meaning from it.

Because the White House could not tolerate the idea of Benghazi as a planned and deliberate terrorist assault, it had to be made into something else. So they said it was a spontaneous street demonstration over an anti-Muhammad YouTube video made by a nutty California con man. After all, that had happened earlier in the day, in Cairo. It sounded plausible. And maybe they believed it at first. Maybe they wanted to believe it. But the message was out: Provocative video plus primitive street Arabs equals sparky explosion. Not our fault. Blame the producer! Who was promptly jailed.

The Jobs Crisis: Bigger Than You Think

The "glorious old days of 9 to 5 at GM", may be gone forever

by WALTER RUSSELL MEAD

Of the Big Five questions facing America today, the most pressing and urgent is the question of jobs. This is more than the problem of recovering from the last economic slump; it is more than the impact of globalization and automation on manufacturing jobs. The American economy is shedding jobs, especially long-term, well-paying jobs with good benefits, and the jobs that replace them are often less secure and less well paid. The relentless transformation of the American labor market is changing the nature of American life, calling into question some of the basic assumptions and building blocks of the last fifty years, and generating a complex mix of political and social pressures that will shake the country to its foundations.

Essentially, the problem is this: automation and IT are moving routine processing, whether that being processed is information or matter, out of the realm of human work and into the realm of machines. Factory floors are increasingly automated places where fewer and fewer human beings are needed to transform raw materials into finished products; clerical work and many forms of mass employment in business, government and management are also increasingly performed more economically by computers than by trained human beings.

The transformation is only beginning to kick in. Self driving cars and trucks may reduce the need for human beings in the transportation and freight industries.  Information processing is beginning to change the nature of the legal profession and even as law school applications fall by almost 50 percent there is much more change to come. Computer assisted diagnosis is making itself felt in health care. MOOCs are likely to change the way much of higher ed works.

It is impossible to say now how far and how fast this process will move, but more and more Americans are experiencing the kind of upheaval that blue collar workers in manufacturing began to experience in the last generation and white collar workers and journalists have felt more recently. We are seeing the greatest wave of economic transition since the mechanization of agriculture reduced the percentage of the labor force engaged in farming from more than half the American labor force in 1890 to less than two percent today.

The Benghazi Lie

Politics as Usual

By Mark Steyn

Shortly before last November’s election I took part in a Fox News documentary on Benghazi, whose other participants included the former governor of New Hampshire John Sununu. Making chit-chat while the camera crew were setting up, Governor Sununu said to me that in his view Benghazi mattered because it was “a question of character.” That’s correct. On a question of foreign policy or counterterrorism strategy, men of good faith can make the wrong decisions. But a failure of character corrodes the integrity of the state.

That’s why career diplomat Gregory Hicks’s testimony was so damning — not so much for the new facts as for what those facts revealed about the leaders of this republic. In this space in January, I noted that Hillary Clinton had denied ever seeing Ambassador Stevens’s warnings about deteriorating security in Libya on the grounds that “1.43 million cables come to my office” — and she can’t be expected to see all of them, or any. Once Ambassador Stevens was in his flag-draped coffin listening to her eulogy for him at Andrews Air Force Base, he was her bestest friend in the world — it was all “Chris this” and “Chris that,” as if they’d known each other since third grade. But up till that point he was just one of 1.43 million close personal friends of Hillary trying in vain to get her ear.

Now we know that at 8p.m. Eastern time on the last night of Stevens’s life, his deputy in Libya spoke to Secretary Clinton and informed her of the attack in Benghazi and the fact that the ambassador was now missing. An hour later, Gregory Hicks received a call from the then–Libyan prime minister, Abdurrahim el-Keib, informing him that Stevens was dead. Hicks immediately called Washington. It was 9 p.m. Eastern time, or 3 a.m. in Libya. Remember the Clinton presidential team’s most famous campaign ad? About how Hillary would be ready to take that 3 a.m. call? Four years later, the phone rings, and Secretary Clinton’s not there. She doesn’t call Hicks back that evening. Or the following day.

The Two Moralities of Ebenezer Scrooge

The stock exchange is a poor substitute for the Holy Grail 

By Dwight R. Lee

Having read Charles Dickens' A Christmas Carol several times, I have concluded that Ebenezer Scrooge was a moral man, both before and after his Christmas Eve encounters with the ghost of his former business partner, Jacob Marley, and the three ghosts of Christmas. Yet readers of A Christmas Carol invariably despise the first Scrooge and admire the second. Why? My explanation begins by considering two moralities. The first morality has, for most people, little emotional appeal and is consistent with behavior that violates the universally admired second morality.

The first Scrooge satisfied only the requirements of the first morality, which I call mundane morality, while the second Scrooge enthusiastically embraced the second morality, which I call magnanimous morality. Economists who want to make a moral case for free markets need to take both moralities into account.1

Magnanimous Morality Trumps Mundane Morality

Dickens introduces Scrooge as "[a] squeezing, wrenching, grasping, scraping, clutching, covetous old sinner! Hard and sharp as flint from which no steel had ever struck out generous fire; secret and self-contained, and solitary as an oyster." Clearly not the type who lights up your life, but there is nothing in Dickens' description to suggest that Scrooge was not a moral man. Indeed, from what we learn about Scrooge's business success, his business behavior satisfies all the conditions of mundane morality.

Briefly stated, mundane morality requires abiding by accepted rules of behavior that are generally beneficial, such as being honest, keeping your promises, honoring your contractual obligations, and not intentionally violating the legitimate rights of others. Adam Smith's term for mundane morality was "mere justice." Smith wrote:

Mere justice is, upon most occasions, but a negative virtue, and only hinders us from hurting our neighbor. The man who barely abstains from violating either the person, or the estate, or the reputation of his neighbours, has surely little positive merit. He fulfills, however, all the rules of what is peculiarly called justice, and does everything which his equals can with propriety force him to do, or which they can punish him for not doing. We may often fulfill all the rules of justice by sitting still and doing nothing.2

As Smith indicates, the person who satisfies only the requirements of mundane morality does not deserve a ticker-tape parade, but we should acknowledge that many people violate those requirements at the expense of the rest of us. Dickens' story suggests that Scrooge satisfied those requirements.

Diversity Does It

In Praise of Diversity

by Anthony de Jasay

Every year for the last umpteen thousand years, a million or so gnus walk a thousand miles up and down again the East African savannas, eating grass. Grazing has remained their way of life without any discernible change in its manner from one millennia to the next. Their prosperity is expressed primarily in their numbers which grows or declines as wet years follow dry ones. Their society adapts itself to their habitat. Two randomly chosen gnus of the same age and gender are so much alike that for the inexpert eye they look identical, and this must have been the case many centuries ago as well.

Unlike the herd of gnus, a flock of Merino sheep does its grazing on a more or less confined area. It is kept there by shepherds and their dogs, and depends on some human assistance at lambing and for shelter and fodder when the winter is too hostile. Man repays himself with wool and meat with some breeds being better at furnishing wool, others meat. Two Merino ewes of the same age look much the same, but a Merino is very different from a Blue-Face Leicester and from other breeds of only a little less charming names. The two breeds, and others who bear less charming names, specialise in somewhat different products and are adapted to different habitats (though the Merino can put up with almost any climate and miserable pasture).

Neither the herds of gnu nor the flock of sheep has any social structure to speak of; all individuals of the same age and gender are of equal rank and have equal access to the available grazing. Packs of wolves do have a social structures of sorts, but few animals are hierarchical. Neither species is acting purposefully to create or improve its own habitat. Apart from moles, foxes and badgers who burrow underground lodgings where the environment above ground suits then, the only habitat-builder animal is the beaver who makes lakes.

On the whole, the animal kingdom is characterised by great homogeneity, physical and behavioural uniformity within each species. This is, of course, what the evolutionary origin of the species, demonstrated by Darwin and his successors, leads us to expect. It is much less clear whether we should also expect the passive adaptation of each species to its environment and the almost total absence (except in the beaver?) of deliberate attempts to alter and control it. Improving its environment by ploughing the waste land, clearing the bush, controlling and displacing the waters, and breaking paths for others to use, is typical only of one species: mankind. So is its tendency to have a social structure that is getting more elaborate as time passes.

The world is not running out of oil - but Europe is

The Old Lady Vanishes

Petroleum geologist Wallace Pratt said, "Oil is found in the minds of men". He was referring to the theory of making discoveries. In the case of Eurocrats, however, it’s more of a practical observation

By Peter Glover

If Europe thought it had a crisis on its hands in the eurozone, it’s nothing compared to the crisis a lack of oil would inflict. Thanks to the EU’s disastrous energy policies, while the world is proving to be awash with black gold in one form or another, Europe is fast losing the security of its oil supply.

And, just for good measure, a UK House of Lords report recently published concludes that the EU will need a trillion euros of new investment if it is to stave off an energy crisis – investment its “muddled” policies are currently failing to attract.

Contrary to popular belief, peak oil alarmists and Greenpeace propaganda, the world is still largely powered by oil. It will be for some time to come. And not just for transport. An endless number of consumer goods depend on a steady supply of petroleum products for their manufacture.

As Marin Katusa, chief energy investment strategist for Casey Research points out, “A country without oil simply cannot continue to expand or even be competitive on the world stage.” Katusa explains that most of Europe’s oil comes from the North Sea region – a source where production has dropped to less than half of what it was in 2002.

Much of the rest of it comes from countries such as Libya, Saudi Arabia and Nigeria, all countries threatened by political instability and social unrest. Europe could, of course, push development of its own potential oil resources. Or at least it could if the ludicrously inept EU Energy Road Map wasn’t studded with anti-fossil fuel pot holes and renewable energy cul-de sacs that are deterring investors.

Let me give you just a taste of the type of non-joined-up euro-think that drives EU energy policies.

We all know that the US shale gas revolution has cut US gas prices in half, rejuvenating the US manufacturing industry. It is even threatening to prove to be an economy-turner. But what many do not understand is that where there is gas there is often oil.

The EU and the spider in the Italian labyrinth

Giulio Andreotti was a role model for the European system of decision-making 

By Tom Gallagher

Giulio Andreotti, the man who symbolised the tortured politics of post-war Italy, died on May 6^th, aged 94. This great survivor had been elected to Italy’s constituent assembly in 1946 as the Christian Democrats were emerging as the main successors to the defeated Fascists of Benito Mussolini. After being Prime Minister on five occasions, he was made a Life Senator in 1991, continuing to influence the fate of governments well into his eighties.

He was an enigmatic figure, respected because of his uncommon political skills but feared due to his associations with the Mafia. These led him to spend years as a defendant in trials and in 2003, he was actually convicted of terrorist links, resulting in the issuing of a 24-year jail sentence, one that was later quashed on appeal.

His major domestic legacy was to defeat the reformist wing of post-war Christian Democracy (DC), associated with Alcide de Gasperi, the party’s founder. Andreotti helped build up a crony-ridden party that believed in little except staying near the centre of power. Bribery and corruption flourished, with the DC immoveable because most Italians distrusted the alternative, the Italian Communists.

One of his neatest tricks was to push the Social Democrats, under Bettino Craxi, down the same seedy path. The Christian Democrats felt able to stay in the background as the bombastic Craxi held sway in the 1980s.

But so unrestrained were the appetites of the Socialists that a crisis of the whole party system was triggered. Italy had been on the frontline in the Cold War but after the fall of the Berlin Wall, the DC and Craxi’s party were swept away in a tide of pent-up fury. Unfortunately, it would be Silvio Berlusconi who filled the resulting power vacuum and a genuine clean-up of a murky political world proved as far away as ever.

Andreotti was prime minister in August 1991 when he was informed that Mikhail Gorbachev had been topped by hardline enemies. Along with Francois Mitterand, his response indicated that he thought the West just had to learn to live with what was thankfully a short-lived power shift.

He had been foreign minister for much of the 1980s, devoting much attention to cultivating ties with a range of Arab regimes. It was from Andreotti that Colonel Gaddafi learned, a day in advance, of American plans to mount aerial attacks on Libya in April 1986 due to his promotion of terrorism.

Margaret Thatcher got to know Andreotti well at EU summits and she would later write how he projected “a positive aversion to principle, even the conviction that a man of principle is doomed to be a figure of fun”.

Argentina’s Deadbeat Special - Buy a 4% Bond or Go to Jail

Argetine's Dictators are Getting Desperate

By Pablo Gonzalez and Katia Porzecanski 

President Cristina Fernandez de Kirchner wants tax evaders hiding about $160 billion in dollars to help finance Argentina’s oil-producing ambitions. Her offer: Buy a 4 percent bond or face the prospect of jail time.

The tax authority announced the plan May 7, highlighting its information-sharing agreements with 40 nations and warning Argentines who don’t use the three-month amnesty window that they risk fines or arrest. Evaders have two options for their cash and the only one paying interest will be a dollar bond due in 2016 to finance YPF SA (YPF), the state oil company. The 4 percent rate is a third the average 13.85 yieldon Argentine debt and less than the 4.6 percent in emerging markets.

A year after seizing YPF, Fernandez is funneling more money into the nation’s energy industry as the government struggles to boost production from the world’s third-biggest shale oil reserves. With Argentina already committed to pumping $2 billion of central bank reserves into a fund for energy investments and the highest borrowing costs in emerging markets keeping it from issuing debt abroad, the government is eyeing the billions of undeclared dollars that Argentines hold to help shore up reserves that have dwindled to a six-year low.

“The authorities need to take steps to open up external resources in the energy sector and to finance the Treasury and local governments,” said Sebastian Vargas, a New York-based analyst at Barclays Plc. “The amnesty is not negative for markets but it’s disappointing because they do little to solve balance-of-payment difficulties.”

Hidden Assets

A press official from the federal tax agency declined to comment in an e-mail on how much the government expects to collect through the amnesty.