Why is Italy in political stalemate?

Italy is still looking for its De Gaulle

BY FRANCESCO GIUMELLI AND DAVIDE MANESCHI

International observers are looking at the Italian political situation with the same sense of wonder one might have when looking at a Picasso.

On the face of it, it does not make sense: how could political parties refuse to co-operate when Italy is at risk of economic disaster?

The February elections have produced a stalemate: an almost equal split between the centre-left, led by the Democratic Party (PD), the centre-right, led by the People of Freedom (PdL) party and the 5Star Movement (M5S) of Beppe Grillo.

In normal times, the political parties would co-operate to bring the country out of the quagmire, but these are not normal times for Italy.

PD won the majority of the seats in the lower house, but it does not control the senate and further support is needed.

The PD says that it does not intend to ally with the PdL because its leader, Silvio Berlusconi has a bad reputation, even though both parties have jointly supported the technocratic government of Mario Monti for the past 18 months.

At the same time, M5S does not want to enter into a coalition with the PD and such an alliance was never proposed during the recent electoral campaigns.

Why is it so difficult to form a government?

Understanding a Picasso painting requires patience and imagination, to look past one's first impression and to see the meaning behind it.

The three parties are the product of a special historical moment.

Europe's Quantitative Easing

The singular hope here is for growth and when none commences very bad things could happen

by Mark J. Grant

Most people do not think that Europe engages in Quantitative Easing. They know that the United States engages in it, that Britain engages in it and now that Japan engages in it but they think that Europe has so far refused to be involved. They think this because this is what they have been told. Unfortunately this is inaccurate.

The European Quantitative Easing takes place every day just not in the manner utilized by America and others. However, it takes place all the same and it is done in a manner to circumvent the rules of the European Union. This is also why the ECB has such a massive balance sheet.

What Europe has done is gotten around their own regulations which forbid the ECB from lending money directly to nations. This is supposed to be handled by the ESM and approved by the various parliaments. Since this is either politically impossible in some countries or politically a nightmare in others the ECB has concocted a scheme to bypass the political rules with all of Europe’s politicians blinking and nodding in silent agreement.

In Spain, as one example, the ECB lent the banks $172 billion. This was done by the country of Spain guaranteeing the debt of the banks and various bank securitizations and then the bank debt and the bank securitizations were pledged to the ECB who handed them back the cash. The money, in large part, has been used to buy the debt of Spain which, in fact, hands the sovereign back the cash. A good trick, an interesting ruse which is the major reason, perhaps the only reason, why the yield of Spain’s debt has declined.

In Greece, as another example, the same game has gone on. Not only does the EU not count contingent liabilities as part of a country’s debt to GDP ratio, where Greece has guaranteed the debt of their banks, but no inclusion is made of the money handed to the sovereign as a result of assets pledged at the ECB and funneled back to the sovereign nation. One more good trick!

“Terminal State of Broken”

Terminally, as hopelessly, as in unfixable

By Monty Pelerin

As markets continue to confound, it is useful to reflect on this quote from Jim Sinclair, particularly the last sentence:

The world has taken on a “virtual reality” with no reference to what really is. This is the biggest market power play of smoke and mirrors in history. It is happening because the financial system is in a terminal state of broken.

I could not agree more. This same view has been expressed since the inception of this website (over three and a half years ago). Mr. Sinclair’s wonderfully clever and colorful phrase,”terminal state of broken,” captures matters well. He used it with respect to financial markets, but it applies to much more.

The terminal state of broken also applies to government and the institutions contained therein. Furthermore, these areas have infected non-governmental institutions, especially those which derive their existence and/or success from a close association with government. These include the educational system, defense industry, highly regulated industries like medicine and finance and a host of others.

The common denominator in all of this is government. It is the modern day equivalent of typhoid Mary, infecting all that it comes in contact with duplicity, dishonesty and corruption. This “brokeness” now infects the very morality and civility of society. Institutional behavior provides the moral guidelines (or lack thereof) for society. Corruption, deceit and theft are not virtues, yet if they are practiced openly they cease to become vices.

Immorality in higher institutions weakens the social and moral fabric of a society. Incivility and coarseness is the least of the problems. Justice Brandeis commented on the “trickle down” effect of institutional behavior, focusing on that of government itself:

In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy.

Brandeis’ warning was early enough to head off our current condition, but it went unheeded. Instead, our “omnipotent teacher” chose to ignore ethics and morality as they stood in the way of the desire for power and wealth.

Government increasingly took on the Nockian (Albert J. Nock) description:

Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators and beneficiaries from those of a professional-criminal class.

From boxing to jihad.

Jihad Abhors a Vacuum

By mark steyn

Post-9/11, we in the omniscient pundit class were all Afghan experts. Post-Boston, we are all Chechen experts.
Strictly between us, I can count what I know about Chechens on one leg. A couple of years ago, while I was in Copenhagen picking up an award from the Danish Free Press Society, a one-legged Chechen prematurely self-detonated in the Hotel Jørgensen while assembling a bomb. His device, using the same highly volatile TATP as in the London Tube bombings, was intended for my friends at Jyllands-Posten, publishers of the famous Mohammed cartoons, to whom I chanced to be giving an interview. All things considered, I'm glad the poor fellow pre-activated in his hotel room rather than delivering his package in the midst of my photo shoot. His name was Lors Doukaiev, and he had traveled from his home in Liège, Belgium, in order to protest the Mohammed cartoons by exploding a bomb on September 11. Got that? A citizen of Belgium is blowing up a newspaper in Denmark on the anniversary of a terrorist attack on America.

So whatever was bugging him didn't have a lot to do with Chechnya. In Boston, before he was run over by his brother and found himself committing the jihadist faux pas of greeting his 72 virgins with tire tracks from head to toe, young Tamerlan Tsarnaev had apparently put on his Amazon wish-list the book The Lone Wolf and the Bear: Three Centuries of Chechen Defiance of Russian Rule. Yet while the Chechen-nationalist struggle has certainly become more Islamic in the last two decades, it's a bit of a mystery what it has to do with Jutland newspapers and Massachusetts marathons. Lors Doukaiev and Tamerlan Tsarnaev were young men in their mid twenties who had lived in the West for much of their lives. Both were boxers. Aside from the fact that Lors was one-legged and Tamerlan wasn't, the quotes their friends and neighbors offered in the wake of their sudden notoriety are more or less interchangeable: "He was perfectly integrated. He was jovial and very open." That was Fabian Detaille, young Doukaiev's trainer at the Cocktail Boxing Club in Droixhe, speaking to Belgian radio, but it could just as easily have been one of Tamerlan's boxing buddies on NPR in Boston.

The Washington Post covered much of the Tsarnaev narrative under the headline "A Faded Portrait of an Immigrant's American Dream." The story is about what you'd expect from the headline but the "faded portrait" is fascinating — a photograph of the family before they came to America: young Mr. and Mrs. Tsarnaev with baby Tamerlan, and Uncle Muhamad with a Tom Selleck moustache and Soviet military uniform. If you only know Ma Tsarnaeva from her post-Boston press conferences as a head-scarfed harpie glorying in her sons' martyrdom and boasting that she'll be shrieking "Allahu akbar!" when the Great Satan takes her out too, the "faded portrait" is well worth your time: Back then, just before the U.S.S.R. fell apart, the jihadist crone looked like a mildly pastier version of an Eighties rock chick — a passable Dagestan doppelgänger for Joan Jett, with spiky black hair and kohl-ringed eyes. She loves rock 'n' roll, so put another ruble in the jukebox, baby!

The Lessons of the Berlin Wall

Berlin Wall story shows people are key to democracy

by Nina Khrushcheva

History's milestones are rarely so neatly arrayed as they are this summer. Fifty years ago this month, the Berlin Wall was born. After some hesitation, Nikita Khrushchev, the Soviet Union's leader, allowed his East German counterpart, Walter Ulbricht, to erect a barrier between East and West Berlin in order to ensure the survival of communism in the entire Soviet bloc.

By that point, East Germany had lost three million people - including many of its most talented - as hundreds each day peacefully walked into the zones of Berlin that were controlled by the United States, Great Britain and France.

And 20 years ago this month, hardliners in the Soviet government attempted to overthrow president Mikhail Gorbachev, who, two years after US president Ronald Reagan called on him to "tear down this wall," had done just that.

Mr Gorbachev's hard-line Politburo adversaries were determined to preserve the decrepit system that the Wall symbolised.

But, in August 1991, ordinary Muscovites stood their ground. They defied the coup makers, and in the end carried with them much of the Russian Army. With their defiance, the coup was doomed.

Berliners never stood a similar chance in the face of Soviet power. Mr Khrushchev had assented to Mr Ulbricht's plea that only a physical barrier would maintain the viability of the East German state.

Mr Khrushchev's response was reminiscent of how he dealt with the Hungarian Revolution of 1956, a time when he was consolidating his rule and needed to keep Kremlin hardliners at bay.

A bug-eyed view of culinary pleasure

Eating beetles and wasps to save the planet is enough to put you right off your food

by Rob Lyons 

Entomophagy. We should, apparently, be doing more of it - at least according to a report published last week by the UN Food and Agriculture Organisation (FAO). The trouble is that the case the report makes for entomophagy - eating insects - is hardly inspiring.

Apparently, lots of people around the world eat bugs. In Mexico, there are 250 different kinds of insects consumed. In Thailand, the FAO report assures us, crispy-fried locusts and beetles are popular, adding:

More than 1,900 insect species have been documented in literature as edible, most of them in tropical countries. The most commonly eaten insect groups are beetles, caterpillars, bees, wasps, ants, grasshoppers, locusts, crickets, cicadas, leaf and planthoppers, scale insects and true bugs, termites, dragonflies and flies.’

The thought of eating bugs will make many people want to barf. Even if they taste okay - my limited experience suggests that they are a bit nutty but don’t really taste of very much - they sure don’t look appetising. That said, squeamishness should be no barrier to trying something new. My first experience of eating octopus was in a Hong Kong sushi bar. Looking down at the three mini octopi in the dish I had mistakenly selected, their little rubbery tentacles wobbling, was utterly unappealing. But, being a Brit alone in a strange town, I forced them down, almost gagging at the thought of chewing through their bodies.

How times change. The day the FAO report came out, I found myself in a trendy new eaterie in London’s grimy-but-fashionable Hoxton district ordering… octopus. And it was delicious. The problem wasn’t the wriggly sea creature, it was me.

Eating insects isn’t that far removed from eating crustaceans, either. Prawns, crayfish and other crustaceans are arthropods. Just like insects, they are all jointed legs, exoskeletons and segmented bodies. If you’ve scoffed a prawn cocktail, maybe you should consider trying some chunky caterpillar in a marie rose sauce instead.

The Show Trial State

Why Russia's ludicrous attempt to silence Alexey Navalny is a throwback to the bad old times of Stalin and Khrushchev

BY NINA KHRUSHCHEVA

"Russia is like a tub full of dough. You push your hand all the way to the bottom, pull it out, and right before your eyes, the hole disappears, and again, it is a tub full of dough," Nikita Khrushchev once said, assessing the country he ruled.

The former premier -- my great grandfather -- who 60 years ago denounced Joseph Stalin and his pervasive security apparatus, must be turning in his grave. Russia's legal institutions are still run along the lines of Stalin's "show trials."

Following the politically motivated prosecutions of former Yukos CEO Mikhail Khodorkovsky and feminist punk rock agitators Pussy Riot, the latest of these affairs is the ongoing sham trial of anti-corruption lawyer, opposition activist, and blogger Alexey Navalny. A few years ago, Navalny began speaking out against Russia's ruling party of "crooks and thieves" -- President Vladimir Putin's United Russia. A charismatic leader, Navalny headlined protests against rigged parliamentary elections in 2011 and Putin's presidential victory in 2012. Once an advisor to the governor of the Kirov Region with alleged access to state property, in April Navalny was charged with defrauding state-run Kirovles timber company of 16 million rubles ($530,000) and now faces up to ten years in prison. Last year, the investigators deemed the charges bogus, but recently reinstated them, perhaps because of Putin becoming increasingly fearful of Navalny's growing political clout. His popularity now stands at almost 40 percent and last month Navalny announced he would run for president in at attempt to unseat Putin. No doubt the current president is not pleased. And it seems he's resorted to the old handbook: after all, accusing anti-corruption activists of corruption has long been a favorite Kremlin tactic.

The trial has been on and off for the past month, but the last few days of the procedure have been an embarrassment for the prosecution -- featuring a damning testimony from its own witness, a Kirov region official, who said that Navalny could not have stolen lumber from Kirovles as he didn't have the power to do so. The court in turn declined Navalny's request to declare last week's warrantless search of his Kirov office illegal. Another witness, the company's former deputy director, said Navalny was guilty of advising on the unfair contracts, but once again (in testimony humiliating to the state) admitted that Kirovles voluntarily agreed to his proposals. As the audience began to chuckle, the ex-director angrily replied, "Are you in the circus?" Most in the room indeed felt they were, as several other witnesses had already testified they could not remember dealings with Navalny at all. In any law-abiding state, one such statement should have been enough to drop charges.

Oklahoma: a swirling storm of anti-human prejudice

As people in Oklahoma heroically dealt with their tornado disaster, observers were busy pinning the blame for it on greedy mankind

by Sean Collins 

A huge, 190 miles-per-hour tornado hit the suburbs of Oklahoma City on Monday afternoon, killing 24, injuring hundreds, and leaving the area looking like a wasteland. Survivors may have their lives, but not their homes, cars or belongings.

People across America were stunned to see such images of devastation. We watched heroic rescue workers search under rubble to try to find people feared trapped. It seemed especially cruel that the epicenter of the destruction was in Moore, Oklahoma, whose people had suffered one of the most violent tornadoes not that long ago, in 1999.

The discussion in response to this natural disaster was revealing of a prevailing doom-and-gloom tendency to expect the worst today, as well as a strange desire to blame ourselves for the destruction brought about by nature.

The sense from the media coverage was that Oklahoma showed that the US is exceptionally vulnerable to, and unprepared for, violent weather disasters. Terms like ‘post-apocalyptic’ were used to describe the post-storm situation in Oklahoma. Many seemed to jump to the conclusion that it was the worst tornado of all time. The original report of the number dead on Monday was 91, but then we learned by Tuesday that this was overstated, and the number was reduced to 24. Of course, even one death is tragic, and the toll may rise over time, but it seems somewhat odd that there was an expectation of much worse than actually occurred.

Almost on cue, environmentalists and politicians tried to pin the blame for the tornado on human-caused climate change, and started calling for their favoured actions to address it, such as cutting emissions (in other words, de-industrialisation).

California Democratic Senator Barbara Boxer said to the Senate floor after hearing of the Oklahoma tornado, ‘This is climate change. We were warned about extreme weather, not just hot weather but extreme weather.’ Another Democrat, Senator Sheldon Whitehouse, made similar comments, and later apologised.

This has now become the kneejerk response to any storm. After Hurricane Sandy, New York state governor Andrew Cuomo said he told President Obama it seemed like ‘we have a 100-year flood every two years now’. He added: ‘These are extreme weather patterns. The frequency has been increasing.’

Except they haven’t been increasing - neither hurricanes nor tornadoes. ‘Tornado data does not reveal any clear trends in tornado occurrence or deaths that would suggest a clear tie to global warming, at least not yet’, writes Andrew Freeman of Climate Central. Even Rajendra Pachauri, head of the UN-backed Intergovernmental Panel on Climate Change, and not one to be shy about promoting climate change fears, said of the Oklahoma tornado: ‘One really cannot relate an event of this nature to human-induced climate change. It’s just not possible. Scientifically, that’s not valid.’

Undoing the Brainwashing

The young are the future, and the propaganda of today can become the government policies of tomorrow

By Thomas Sowell

This time of year, as college students return home for the summer, many parents may notice how many politically correct ideas they have acquired on campus. Some of those parents may wonder how they can undo some of the brainwashing that has become so common in what are supposed to be institutions of higher learning.

The strategy used by General Douglas MacArthur so successfully in the Pacific during World War II can be useful in this very different kind of battle. General MacArthur won his victories while minimizing his casualties — something that is also desirable in clashes of ideas within the family.

Instead of fighting the Japanese for every island stronghold as the Americans advanced toward Japan, MacArthur sent his troops into battle for only those islands that were strategically crucial. In the same spirit, parents who want to bring their brainwashed offspring back to reality need not try to combat every crazy idea they picked up from their politically correct professors. Just demolishing a few crucial beliefs, and exposing what nonsense they are, can deal a blow to the general credibility of the professorial pied pipers.

For example, if the student has been led to join the crusade for more gun control, and thinks that the reason the British have lower murder rates than Americans have is because the Brits have tighter gun control laws, just give him or her a copy of the book Guns and Violence by Joyce Lee Malcolm.

As the facts in that book demolish the gun control propaganda fed to students by their professors, that can create a healthy skepticism about other professorial propaganda.

From the Obama Ministry of Truth

When does it ever stop?

By Ben Stein

Monday. Now, let’s see what we are supposed to believe today from the Obama Ministry of Truth….

First, that Hillary Rodham Clinton could possibly be taken seriously as a Presidential contender or a President. This is the woman who traveled one million miles with no positive accomplishments as Secretary of State. This is the woman who masterminded one of the great foreign policy catastrophes of all time… aiding the “Arab Spring” in which governments friendly to the west in Egypt, Libya, and Tunisia were replaced with Islamists bent on destroying all human rights and the main repository of human rights on earth, The United States of America.

This is the woman who said, in what was supposedly total stone cold sobriety, “What does it matter how four Americans died in Benghazi? Whether they were killed by people walking down the street or by terrorists? They’re dead. So, what?” That’s a paraphrase.

Apparently, this future first female President does not realize that it matters because 1.) The killings themselves show that Mrs. Clinton was not doing her job properly, and 2.) Her lying about it was contempt of Congress and perjury and obstruction of justice.

So, we are supposed to believe that a supposedly non-inebriated person made these comments and they are worthy of a President.

What else.…

Well, we are supposed to believe that a massive assault by the IRS on a popular uprising called the Tea Party was known to the higher ups at the IRS, at the Justice Department, and at the White House.

Restrain the Abusive Administative State

Reforming the IRS won’t make sense otherwise

By Doug Bandow

Few Americans dread anything more than receiving a letter from the IRS. But imagine a full field audit, with intrusive questions about your activities and spending habits. From suspicious agents convinced that you’ve violated the law. That’s essentially what political activists on the Right have been enjoying recently, courtesy the Obama administration.

Who knew what when is the question du jour, but political abuse by the IRS is not new. As investigative journalist Jim Bovard has detailed, Franklin Delano Roosevelt and John F. Kennedy did not let their public-spirited rhetoric interfere with their use of public institutions for partisan benefit. Richard Nixon more recently directed the agency to target his enemies. As White House Counsel John Dean explained, the objective was to “use the available federal machinery to screw our political enemies.”

President Barack Obama undoubtedly remembers the latter example — as well as Nixon’s fate — and is not so stupid to similarly set himself up for criminal charges. The scandal likely will claim a few mid-level scalps and divert the administration’s attention from some of its more harmful initiatives. But the crisis will be wasted, to paraphrase Rahm Emanuel, if it is not used to advance the cause of liberty. 

Far more than partisan politics is at stake in the latest scandal. The real issue is the expansive, expensive bureaucratic state and its inherent threat to any system of limited government, rule of law, and individual liberty. Obama adviser David Axelrod blamed big government for the controversy, but in order to absolve the president of responsibility: “Part of being president is that there’s so much beneath you that you can’t know because the government is so vast.”

That’s true, but it also was true ten and 50 and probably 100 years ago. More relevant is the fact that the broader the government’s authority, the greater its need for revenue, the wider its enforcement power, the more expansive the bureaucracy’s discretion, the increasingly important the battle for political control, and the more bitter the partisan fight, the more likely government officials will abuse their positions, violate rules, laws, and Constitution, and sacrifice people’s liberties.

Cameron outmaneuvered by Merkel

Berlin plans to streamline EU but avoid wholesale treaty change 

By Peter Spiegel and Quentin Peel in Berlin

Berlin is drawing up plans for treaty changes to streamline decision-making in the eurozone, while stopping short of any wholesale renegotiation that would allow the UK to repatriate powers from Brussels.

Although Angela Merkel, German chancellor, has expressed her desire to keep the UK inside the EU, the move being discussed in Berlin would thwart a plan by David Cameron, UK prime minister, to piggyback on eurozone reforms to renegotiate the British relationship with Brussels.

The strategy would take as a model two recently adopted standalone treaties – one creating the new €500bn eurozone rescue fund and the other enshrining budget discipline in a “fiscal compact” – that were written and ratified in a matter of months.

Mr Cameron had hoped to exploit renewed interest in Berlin for wholesale EU treaty changes as a way to renegotiate the UK’s membership terms. But Berlin’s strategy for a new, narrowly focused treaty could force the UK premier into a repeat of the dilemma he faced in December 2011, when Mr Cameron rejected the fiscal compact treaty but most other EU countries went along without him.

Wolfgang Schäuble, the German finance minister, has been increasingly public about his desire to change the EU treaties to provide better legal underpinning for the bloc’s new “banking union” – particularly a new Europe-wide bank bailout system, which Mr Schäuble said cannot be completed without a treaty-based shift in power to Brussels.

Spain's Angry and Unemployed Young Men

Time is running out

By George Friedman

Spain invites endless historical considerations, but on this trip I was struck by something more immediate and prosaic. We were on the road from Granada, near the coast, to Madrid, the capital in the center of the country. It was a four-lane highway, what Americans would call an interstate. The road was clean, well maintained and, as we moved north, nearly empty. Every few kilometers a car would pass in the opposite direction, or we would run alongside another car heading north.

It was not the paucity of cars that struck me; it was the almost complete absence of trucks. This was, after all, the road from the coast to the capital, not the only road but still a significant one. It was early afternoon on a weekday. The oddest moment came when we reached a tollbooth not too far from Madrid. There was only one booth open and when we pulled up there was no one in it and no coin or credit card slot. We waited, then we left. Perhaps the attendant was in the bathroom. Perhaps the revenue didn't justify paying a toll taker. Perhaps this was one of the austerity measures they had taken.

I will never know. What I do know is that the drive had a sort of post-apocalyptic feel, except that it was very clean. We marveled at it and then realized that there was nothing that ought to have surprised us about it. The unemployment rate in Spain is more than 27 percent. Gasoline costs 1.4 euros a liter (more than $6.50 a gallon). At that price, a drive is no longer a casual undertaking; it has to justify itself. As for trucks, when that many people are out of work -- and have been for many months -- the demand for goods declines to the point that trucks will be rare on the road.

Youth Unemployment and Desperation

I should have been prepared for this. We stayed in a very nice hotel in Granada. In the morning when we left the hotel, there was a beggar sitting on the sidewalk, his back to the wall, to our right. We paid little attention. Beggars are not uncommon in Europe or the United States. But there is an aesthetic to beggars. They look a certain way, owing to alcohol, madness or a very long time in trouble. When we returned in the late afternoon, he was still there. He was in his mid-to-late 20s, wearing glasses and reading a book. He was dressed in khakis and a decent shirt. He wasn't mad, he wasn't drunk and he wasn't like the hippies of my youth. He wasn't playing an instrument. He was sitting, absorbed in a book and begging. There were other beggars in Granada of the more conventional sort but also several more who looked like this one.

Death by Media

President Obama’s current woes and his cozy relationship with the press

by Clark Whelton

Revelations concerning Benghazi, the IRS, and government probing of the Associated Press make it increasingly clear that Barack Obama was led astray by his friends in the media. They intended no harm to the president, needless to say. But by withholding the criticism that prods public officials into doing a better job, by choosing not to print negative stories and commentaries about the Obama administration, the press corps tempted the president and his staff with visions of invincibility. The pro-Obama news crew—with a boost from the Nobel Peace Prize committee—confirmed the president’s exalted view of himself. They are in part responsible for encouraging Obama to think that he could tamper with the truth about Benghazi and get away with it.

Through two presidential campaigns and Obama’s first term, mainstream editors, editorial writers, and journalists served as de facto auxiliaries for the White House press office. Certain that they were serving a noble cause, they soft-pedaled bad news about the economy and ignored or played down the president’s gaffes. Aided by one-liners from late-night talk-show hosts, they attacked and ridiculed Fox News or any reporter, radio commentator, writer, or blogger not riding Obama’s bandwagon. They hounded and harassed Sarah Palin—author Joe McGinnis even moved next door to her home—determined to destroy someone they perceived as a threat to Obama’s power. They rode shotgun as Obamacare made its way through Congress. And they led the chorus of derision that greeted early reports of political corruption inside the IRS.

Last September, when Mitt Romney raised questions about Benghazi, the mainstream media accused the Republican presidential challenger of “politicizing” the issue. Taking their leads from Democratic press releases, they kept the spotlight on Romney’s supposed missteps, giving the Obama administration time to camouflage a murderous terror attack as a spontaneous riot. And with each alibi they provided, with each news story they slanted to assist Obama at the polls, they deprived the president of the honest feedback that public officials may not want but desperately need. A biased press corps steadily pushed the president closer to the precipice where he now precariously stands.

It feels like the Right has split irrevocably

Cameron’s carelessness has mixed with public contempt for politicians to create a toxic brew

There is now a serious chance that Nigel Farage will smash the existing party system and usher in a very different structure at Westminster

By Iain Martin

Nigel Farage is a most unlikely revolutionary. In his covert coat and pinstripes, with a pint in one hand and a fag in the other, the leader of Ukip looks like a Conservative archetype: the over-taxed Tory of the shires who has nipped outside for a smoke before he begins the long commute home after toiling all day in the City.

Yet he stands on the verge of pulling off a remarkable coup. If he succeeds in his mission – if Ukip does not blow up on the launch pad before the next general election – there is now a serious chance that Mr Farage will smash the existing party system and usher in a very different structure at Westminster.

Of course, the realignment of the British party system has been predicted, wrongly, on many occasions since the Second World War. Most commonly, the mooted redrawing of the tribal map has involved the parties of the centre-Left reconfiguring themselves in order that they might stand a better chance of defeating the once-mighty Tory machine.

There was even a time, in the late 1980s and early 1990s, when it was fashionable to say that there might never be another Labour government, and that to stand a chance the party would require a pact with the Liberals and (for a while) their erstwhile colleagues in the SDP.

Indeed, the creation of the SDP, a breakaway of moderates from embattled Labour in the early 1980s, was said to have “broken the mould”. The new party scored the kind of stratospheric poll ratings of which Mr Farage can only dream. It did have a major influence, although not in the way that its four founders intended: its main contribution was to create the climate in which Tony Blair could emerge as Labour leader. Then the SDP vanished. Labour, written off for more than a decade, came roaring back in 1997 and won three successive general elections. Once again, one of the two old parties had reasserted itself following an existential crisis.

The French Start to Quit France

Forget Paris: Stymied by Socialist Policies, the French Start to Quit France

By Vivienne Walt

Ernest Hemingway once described Paris in spring as a time when “there were no problems except where to be happiest.” Clearly Hemingway did not foresee the springtime of 2013. For many of Paris’ residents right now — in fact, for many French in general — the answer to the question of where to be happiest is: pretty much anywhere but France.

The French, to be sure, are famous for their grumbling, regularly ranking near the bottom of global happiness indexes. Malaise, after all, is French for ill at ease. Yet even given the usual predilection to gloom, this year has been a standout. For months now, there has been a steady rumbling of people packing up and moving out. There are few reliable figures of the numbers of people leaving, in part because many are moving within the E.U., where there are no immigration requirements for Europeans. Yet for those of us living in France, the exodus has been notable. Around New Year, a moving truck rolled up to our building and loaded the worldly possessions of the couple and four children living below us as they headed off to Singapore where better prospects awaited the father of the family. Earlier last week, a woman flopped on to a bench next to me in the schoolyard of the school our children both attend, fatigued from apartment-hunting in London, where she is moving with her family next month — driven out by what she describes as the aggravation of running a small business with 35-hour work weeks and by tax hikes introduced by President François Hollande, who was elected last May. “I resisted the move, but it’s become impossible,” she says.

Centralization And Sociopathology

Concentrated power and wealth are intrinsically sociopathological by their very nature

by Charles Hugh-Smith

I have long spoken of the dangers inherent to centralization of power and the extreme concentrations of wealth centralization inevitably creates.

The Master Narrative Nobody Dares Admit: Centralization Has Failed (June 21, 2012)

The Solution to Concentrated Power: Decentralize, Diffuse and Devolve Power (June 22, 2012)

To Fix Healthcare, Let 100 Solutions Bloom (February 26, 2013)

Longtime contributor C.D. recently highlighted another danger of centralization: sociopaths/psychopaths excel in organizations that centralize power, and their ability to flatter, browbeat and manipulate others greases their climb to the top.

In effect, centralization is tailor-made for sociopaths gaining power. Sociopaths seek power over others, and centralization gives them the perfect avenue to control over millions or even entire nations.

Even worse (from the view of non-sociopaths), their perverse abilities are tailor-made for excelling in office and national politics via ruthless elimination of rivals and enemies and grandiose appeals to national greatness, ideological purity, etc.

As C.D. points out, the ultimate protection against sociopathology is to minimize the power held in any one agency, organization or institution:

After you watch these films on psychopaths, I think you'll have an even greater understanding of why your premise of centralization is a key problem of our society. The first film points out that psychopaths generally thrive in the corporate/government top-down organization (I have seen it happen in my agency, unfortunately) and that when they come to power, their values (or lack thereof) tend to pervade the organization to varying degrees. In some cases, they end up creating secondary psychopaths which is kind of like a spiritual/moral disease that infects people. 

If we are to believe the premise in the film that there are always psychopaths among us in small numbers, it follows then that we must limit the power of any one institution, whether it's private or public, so that the damage created by psychopaths is limited. 

Oil! Price Discovery and Regulation

There is a growing disconnect between the price of oil and the price and supply of retail fuels 

by JACOB BORDEN

Market signals about the relative value of available materials are paramount for widely dispersed people to make rational decisions. Such was the solution to the “knowledge problem” elaborated by F. A. Hayek. A topical example of Hayek’s theory in practice is the decade-long adjustment in the prices of oil and products refined from petroleum. Oil is generally considered to be a fungible global commodity, and one frequently hears reference to global oil prices as reflecting global supply and demand. But a combination of factors over the past decade has substantively reduced the fungibility of this once-standard product. 

Increasingly, oil is a design-specific product and the price you pay at the pump for a gallon of fuel more often reflects local design characteristics than the underlying price of a global commodity. These local design characteristics are exacerbated by regulations that disrupt the market’s price-discovery process. 

As recently as December 2001, oil was still trading at the 20-year average of $20 per barrel, even despite the September 11 attacks and the ongoing recession. Over the next seven years, a series of disruptions drove the price up. It became more expensive to do business with the countries that held most of the world’s proven reserves, which two oil-intensive wars did nothing to help. Moreover, oil politics in Venezuela and surging demand from China and other developing nations helped push prices to record highs—over $130 per barrel—by 2008.

Politically Correct Lending

When loans are made for political considerations as opposed to financial ones, capital is wasted and we are all made poorer

by DOUGLAS FRENCH

There seems to be only one kind of loan that bankers want to make—SBA loans. SBA stands for Small Business Administration, a federal agency that guarantees certain loans made by banks that operate within its guidelines.

Lawmakers portray SBA lending as a boost for small businesses. The program is actually a form of corporate welfare for some of America’s largest banks. While banks reap profits, taxpayers cover the losses.

SBA lending is especially lucrative because, with a government guarantee, there are plenty of buyers for these loans in the secondary market. Borrowers are paying interest rates of 6 percent or more and the government is standing behind the majority of the loan balance. Buyers will pay large premiums for that kind of risk-free yield.

As hard as it has been to pry funds from lenders since the financial crash, the SBA had record years in 2011 and 2012, writing over $30 billion in loans each year. Making a profit and collecting interest and principal are not included in the SBA’s goals. Instead, the agency’s three strategic initiatives for 2012 were as follows:

1. Growing businesses and creating jobs.

2. Building an SBA that meets the needs of today’s and tomorrow’s small businesses.

3. Serving as a voice for small businesses.

The agency’s flagship loan product is the 7(a) program that funds business loans. More than $15 billion in SBA 7(a) loans was disbursed in 2010. The two years following were brisk as well, nearly matching the boom years of ‘04 through ‘07. These loans were used, per SBA guidelines, “to establish a new business or to assist in the operation, acquisition, or expansion of an existing business.” 

Why, in particular, was there a surge in 7(a) loans?  The Congressional Research Service reports,

Congressional interest in the 7(a) program has increased in recent years because of concerns that small businesses might be prevented from accessing sufficient capital to enable them to assist in the economic recovery. Some, including President Obama, argue that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations with the expectation that in so doing small businesses will create jobs.

Somehow, people like those cited above have come to believe that small businesses are at a disadvantage in obtaining credit. It’s a “market failure,” if you will. So the Small Business Act of 1953 created the 7(a) loan guarantee wherein 85 percent of a loan’s principal up to $150,000 is guaranteed by the government; the guarantee drops to 75 percent for loans more than $150,000. During 2010 and 2011, the guarantee was bumped to 90 percent.

When A Money-Printing Butterfly Flaps Its Wings In Japan, This Is What Happens In Greece

This is beyond Parody

Since the BoJ enunciated its actions on April 4th, the world has decided that consuming risk assets (the riskier the better) is the path to salvation.

While it makes perfect sense that some level of inspiration for a global recovery makes sense (though hardly) given Japan's actions, it beggars belief that the most broke of broke peripheral European nations would see equity moves of such magnitude.

On the 50th anniversary of Chaos Theory, it is perhaps worth remembering its central lesson – that complex interrelated systems create unexpected outcomes from seemingly benign inputs.

It appears the complex inter-related world in which we live is becoming more and more chaotically unstable at the margin and this current euphoria does not approximately determine the future.  There are more than enough variables out there – the butterflies flapping away – which can change outcomes in an instant.