OPEC Is Cracking, thanks to fracking

OPEC is exactly the kind of rent-seeking organization the world needs to abolish

By Walter Russell Mead

Members of the Organization of the Petroleum Exporting Countries are meeting Friday to discuss cutting production in response to the new US addition to the global oil market. But delegates have already hinted that the asymmetric impact of the shale revolution on OPEC’s member countries has weakened the bloc’s resolve and will mean no agreement on curbing supply.

That’s because US shale oil is pitting African members against Arab members. The new American oil bounty is of the light, sweet crude variety. It’s higher quality than the heavy crude produced by Gulf OPEC members. But countries like Nigeria, Algeria, and Angola have typically exported sweet crude to the US, and the shale boom is hitting them hardest. Exports from those African members dropped 41 percent from 2011 to 2012.

The countries hit hardest by this new supply source also have the least room to cut production. Their regimes need consistently high exports and oil prices to stay solvent and in power. If OPEC doesn’t cut production, the price of oil is going to drop. That’s going to hurt Venezuela and especially Iran, which is already reeling from Western sanctions on its exports.

Americans are, however, unlikely to be raising money to send to distressed OPEC countries anytime soon. As an aspiring monopoly cartel, OPEC is exactly the kind of rent-seeking organization the world needs to abolish. One of the many positive consequences of the new energy situation is that OPEC is weakening. 

Western Cultural Suicide

Falling out of love with your host can kill you both

By Victor Davis Hanson

Multiculturalism — as opposed to the notion of a multiracial society united by a single culture — has become an abject contradiction in the modern Western world. Romance for a culture in the abstract that one has rejected in the concrete makes little sense. Multiculturalists talk grandly of Africa, Latin America, and Asia, usually in contrast to the core values of the United States and Europe. Certainly, in terms of food, fashion, music, art, and architecture, the Western paradigm is enriched from other cultures. But the reason that millions cross the Mediterranean to Europe or the Rio Grande to the United States is for something more that transcends the periphery and involves fundamental values — consensual government, free-market capitalism, the freedom of the individual, religious tolerance, equality between the sexes, rights of dissent, and a society governed by rationalism divorced from religious stricture. Somehow that obvious message has now been abandoned, as Western hosts lost confidence in the very society that gives us the wealth and leisure to ignore or caricature its foundations. The result is that millions of immigrants flock to the West, enjoy its material security, and yet feel little need to bond with their adopted culture, given that their hosts themselves are ambiguous about what others desperately seek out.

Why did the family of the Boston bombers, Tamerlan and Dzhokhar Tsarnaev, even wish to come to Boston? If they really were in danger back home in the Islamic regions within Russia, why would members of the family return to the source of their supposed dangers? And if the city of Boston, the state of Massachusetts, and the federal government of the United States extended the Tsarnaevs years’ worth of public assistance, why would such largesse incur such hatred of the United States in the hearts of Tamerlan and Dzhokhar? Obviously, the Tsarnaevs had some sense that the United States was a freer, more humane, and more prosperous place than the Russia they left, but they also felt no love for it, felt no pressure from their hosts to cultivate such love — and believed that they could continue to live as Russian Muslims inside the United States. Did not the Tsarnaevs flee the Muslim hinterlands of Russia because they did not like the thought of things like pressure cookers full of ball bearings exploding and killing and maiming the innocent on the street?

This Is What Happens When You Fear Free Speech

The Decay of Free Speech in USA

By David Harsanyi 

Perhaps these Obama administration scandals (popularly referred to as "so-called scandals" in liberal media circles) lack the explosive drama of a Watergate and the entertainment value of Bill Clinton's peccadilloes, but for those who are less obsessed with the political consequences and more troubled by constitutional fallout, there's plenty to see.

To begin with, the Internal Revenue Service scandal isn't just about the abuse of power; it's a byproduct of an irrational fear of free speech, which seems to permeate much of the left these days. The unprecedented targeting of conservatives wasn't incidental to this administration as much as it was an intuitive extension of the paranoia the left has about unfettered political expression.

Democrats, after all, hadn't been merely accusing political opponents of being radical twits the past four years; they'd been accusing them of being corrupt, illegitimate radical twits. The president endlessly argued that these unregulated groups were wrecking the process at the behest of well-heeled enablers rather than engaging in genuine debate.

Heck, some of these funders may even be foreign nationals! Senators called for investigations. Obama called out the Supreme Court during a State of the Union speech for defending the First Amendment in the Citizens United case (which prohibits the government from restricting political independent expenditures by groups). The New York Times editorial board (and others) advocated the cracking down by the IRS on conservative dissenters and getting to the bottom of the anarchy.

Live Free or Move

Economic freedom drives state job growth

by Scott Beyer

To listen to President Obama and the media, you would think America’s most pressing issues are gun control and immigration. But the issue that has plagued Obama from the start is job creation. Though unemployment has ticked down to 7.5 percent, the job numbers remain bleak when accounting for those underemployed or outside the workforce. Yet some areas of America are thriving, offering Obama a primer—if he wants it—for how to proceed.

Consider the recent Bureau of Labor Statistics data on 2012 job growth for America’s 51 largest metropolitan regions. The data include a list of the top ten, which were mostly above 3 percent job growth, and the bottom ten, which were mostly below 1 percent. Previously stagnant San Francisco made a surprise entry among the leaders, but for the most part, the list reflected longtime trends—with Houston, Dallas, and Austin remaining near the top, and even San Antonio, which didn’t crack the top ten, growing jobs at a respectable 2.27 percent rate. The fast-growing South saw three cities—Charlotte, Raleigh, and Nashville—make the top ten, while Salt Lake City represented the resource-rich Intermountain West. Oklahoma City, which led in 2011, still ranked in the upper third for 2012. Meanwhile, the bottom ten featured typical Rust Belt offenders such as St. Louis, Milwaukee, and Buffalo. Despite only documenting metro areas, the data underlay the continued shift in job growth from some regions to others. Another study shows why the shift has occurred.

Why John McCain Wants to Aid Syrian Terrorists

His trip to Syria in support of lung-eating savages

by Justin Raimondo

When John McCain slipped into Syria the other day to meet with Islamist rebels, Sen. Lindsey Graham tweeted “best wishes” to his fellow warmonger and claimed “dibs on his office if he doesn’t come back.” Leave it to Sen. Graham, who has been agitating along with McCain for the US to send weapons to the rebels, to joke about the untrustworthiness of the very people he wants to arm. But the rebels’ savagery is no joke: we are, after all, talking about people who eat the lungs of their enemies.

Sen. Rand Paul (R-Kentucky) had it kind of right when he admonished the Senate Foreign Relations Committee after it voted for a bill that would arm Syria’s Islamist insurgents:

“This is an important moment. You will be funding, today, the allies of al Qaeda. It’s an irony you cannot overcome.”

And yet irony doesn’t quite cover it: insanity is more like it. Here is a man who is the Republican party’s voice when it comes to foreign policy, a role he has appropriated due to his intimacy with those who book the Sunday talk shows, and yet when it comes to America’s relationship with the rest of the world his utter and complete ignorance is appalling.

Hiding the Unemployed

Disability and the Politics of Stats

by WENDY MCELROY

Some statistics cannot be understood without setting them within a political framework because they reflect politics as much as or more than they do reality. 

The unemployment rate is an example and a cautionary tale. 

According to the Bureau of Labor Statistics (BLS), the official unemployment rate for last February fell to a four-year national low of 7.7 percent. While the White House cautiously congratulated itself, Republicans quickly pointed to what is often called the real unemployment rate; it stood at 14.3 percent.

The BLS looks at six categories of different data, from U-1 to U-6, to analyze employment every month. U-3 includes people who have been unemployed but who have actively looked for work during the past month; this is the official unemployment rate used by the media. U-6 contains data excluded from U-3, including part-time workers and the unemployed who have unsuccessfully looked for a job in the last year; this is the real unemployment rate. 

Those politicians who want to take credit for lower unemployment thrust U-3 figures forward. Those who wish to deny them credit prefer U-6.

But matters may even be worse.

Now there is fresh reason to believe that even the 14.3 percent rate may be a considerable understatement.

The Beautiful City

Beauty emerges from paradox

by TROY CAMPLIN

What makes a city beautiful? It’s not its parks and architecture, decorative though they may be. It’s not the mannequins dressed in high fashion, or the creative window displays. A city’s beauty comes from its life, from how its structures keep people teeming on the sidewalks and arterials—pulsing like blood through a body. A city’s beauty comes about the same way all beauty comes about in nature: through the unity of apparently opposing phenomena.

“Neighborhood accommodations for fixed, bodiless, statistical people are accommodations for instability,” wrote the great observer of cities, Jane Jacobs. In order for a neighborhood to have staying power, Jacobs thought, the people in it must constantly change. A city only becomes stable through “a seeming paradox.” That is, to get a critical mass of people to stay put, a city has to have “fluidity and mobility of use.” And so the neighborhood itself must change and reorganize itself in order to keep its people there. Fixedness and change. Healthy cities exemplify such paradoxes.

Cities are also products of attraction and repulsion. These forces somehow find balance. Identical businesses may repel each other, but similar businesses can attract each other. You won’t typically find two hair salons next to each other, for example, but it’s not uncommon to find a nail salon, a shoe store, and a clothing store in proximity.

Russia Forces Out One of Its Best Minds

Putin's crackdown reaches into the establishment. Is anyone safe?

BY ANDERS ÅSLUND

The news that Sergei Guriev has been forced to leave Russia under legal pressure is truly shocking because he is not a member of the opposition but an eminent representative of the liberal wing of the establishment. If Guriev is compelled to leave the country, any Russian citizen can face that fate.

Guriev, 41, is a truly outstanding individual. He was trained as an economist at MIT and Princeton and has an impressive record of academic publications in the foremost international journals, with particular interest in the role of oligarchs and the economics of happiness. At the tender age of 32, he became the president of the New Economic School (NES), a distinguished graduate program in Moscow, which he has developed into the best economics education not only in Russia, but on the European continent.

When was the last time a prediction of yours was right?

We Are the Idiots

by Walter E. Williams

Dr. Henry Miller, senior fellow at the Hoover Institution, and Gregory Conko, senior fellow at the Competitive Enterprise Institute, in their Forbes article "Rachel Carson's Deadly Fantasies" (9/5/2012), wrote that her 1962 book, Silent Spring, led to a world ban on DDT use. The DDT ban was responsible for the loss of "tens of millions of human lives – mostly children in poor, tropical countries – have been traded for the possibility of slightly improved fertility in raptors (birds). This remains one of the monumental human tragedies of the last century." DDT presents no harm to humans and, when used properly, poses no environmental threat. In 1970, a committee of the National Academy of Sciences wrote: "To only a few chemicals does man owe as great a debt as to DDT. ... In a little more than two decades, DDT has prevented 500 million human deaths, due to malaria, that otherwise would have been inevitable." Prior to the DDT ban, malaria was on the verge of extinction in some countries.

The World Health Organization estimates that malaria infects at least 200 million people, of which more than a half-million die, each year. Most malaria victims are African children. People who support the DDT ban are complicit in the deaths of tens of millions of Africans and Southeast Asians. Philanthropist Bill Gates is raising money for millions of mosquito nets, but to keep his environmentalist credentials, the last thing that he'd advocate is DDT use. Remarkably, black congressmen share his vision.

Wackoism didn't end with Carson's death. Dr. Paul Ehrlich, Stanford University biologist, in his 1968 best-selling book, The Population Bomb, predicted major food shortages in the United States and that "in the 1970s ... hundreds of millions of people are going to starve to death." Ehrlich saw England in more desperate straits, saying, "If I were a gambler, I would take even money that England will not exist in the year 2000." On the first Earth Day, in 1970, Ehrlich warned: "In ten years all important animal life in the sea will be extinct. Large areas of coastline will have to be evacuated because of the stench of dead fish." Ehrlich continues to be a media and academic favorite.

Millennials Won't Be Debt Free Until They Die

The trouble starts with ever-skyrocketing student loan debt

By Brian O'Connell

How bad have things gotten for millennials?

Their financial situation is so grim that they may never get completely out of debt -- in their entire lives.

That's the conclusion of a study from Ohio State University.

The real culprit is credit card debt, which tends to stifle economic growth of younger Americans, primarily because they pay it off so slowly, the OSU study says. But millennials are paying off all their debts so slowly they may accumulate credit card debt well into their 70s and die still owing, researcher say.

"If what we found continues to hold true, we may have more elderly people with substantial financial problems in the future," says Lucia Dunn, a lead author of the study and an economics professor at Ohio State.

Perhaps -- let's go out on a limb here and say definitely -- that's a big reason millennials say debt is their "biggest financial concern" of their lives.

The fall of the last bastion of free speech in Venezuela

When all the critics are gone, officials will no longer have anyone to blame for "media conspiracies" and other such nonsense

By Juan Nage

For years, Venezuela's government has dodged accusations that it does not protect freedom of speech. Critics usually point to the frequent use of public airwaves to broadcast government propaganda, as well as the many TV and radio stations the government has shut down for playing critical content. The government usually responds by citing the continued operation of Globovisión, a sharply critical all-news station (or rather, the only critical news station). Chavistas claim that its survival throughout the Chávez era refutes any allegations of censorship.

But the government will have to find another weak alibi. As of the last few days, Globovisión's critical presentation of the news feels like a thing of the past.

Last March, Globovisión's owners announced that the station had been sold to a group of Venezuelan businessmen linked to the insurance industry. The decision did made sense both economically and politically. Globovisión has been under siege for years by being routinely fined for covering news that regulators felt would "stir public anxiety." Because of their work, Globovisión's owners and journalists are also under constant threats of being arrested.

Drowning in a Liquidity Trap?

The foundation of lending is real wealth and not money as such

by Frank Shostak

Bruce Bartlett recently lamented in The New York Times that given the current state of economic affairs we need more Keynesian medicine to fix the US economy. According to Bartlett, the core insight of Keynesian economics is that there are very special economic circumstances in which the general rules of economics don’t apply and are in fact counterproductive. This happens when interest rates and inflation rates are so low that monetary policy becomes impotent; an increase in the money supply has no boosting effect because it does not lead to additional spending by consumers or businesses. Keynes called this situation a “liquidity trap.” Keynes wrote,

There is the possibility ... that, after the rate of interest has fallen to a certain level, liquidity-preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a rate of interest. In this event the monetary authority would have lost effective control over the rate of interest.[1]

Egypt's Summer of Discontent

A Combustible Political Environment

By Eric Trager

Due to a moribund economy, fuel and food shortages, and a lack of political opportunities, Egypt faces a tumultuous summer, and conditions will likely continue to deteriorate thereafter. While Washington should encourage Cairo to undertake necessary political and economic reforms that might calm the situation and improve governance, the Obama administration should concentrate on preserving vital strategic interests in the event of renewed upheaval.

A SUMMER OF SHORTAGES

Since Egypt's 2011 revolution, persistent political uncertainty and plummeting domestic security have undermined foreign investment and harmed the country's once-vibrant tourism industry. According to the Interior Ministry, the past year has witnessed a 120 percent increase in murders, 350 percent increase in robberies, and 145 percent jump in kidnappings. Foreign currency reserves dropped from approximately $36 billion at the time of Hosni Mubarak's ouster to $14.42 billion at the end of April 2013, with a $2 billion Libyan cash deposit in late March inflating the latter figure. Meanwhile, according to the Financial Times, Egypt's public sector salary bill has risen by 80 percent since the uprising to $25 billion annually; 400,000 government jobs have been added, and an additional 400,000 will be made permanent by the end of June.

This combination of shrinking reserves and growing expenditures is threatening the government's ability to import wheat and fuel, which it sells at subsidized rates. Fuel and fertilizer shortages have also impacted domestic wheat production, which is unlikely to reach Cairo's goal of 9.5 million tons -- a benchmark intended to reduce Egypt's dependence on foreign imports. The fuel shortages have also catalyzed regular electricity outages (including multiple times in one day at Cairo International Airport), and rural areas are reporting water outages. These problems are expected to worsen as Egyptians turn on their air conditioners during the summer; the situation will become especially uncomfortable once Ramadan begins in early July, when approximately 90 percent of the population will be observing the month-long fast during daylight hours.

Naming a nameless war

The Eternal War

By Andrew J Bacevich 

For well over a decade now the United States has been "a nation at war". Does that war have a name? 

It did at the outset. After 9/11, George W Bush's administration wasted no time in announcing that the US was engaged in a "Global War on Terrorism", or GWOT. With few dissenters, the media quickly embraced the term. The GWOT promised to be a gargantuan, transformative enterprise. The conflict begun on 9/11 would define the age. In neoconservative circles, it was known as World War IV. 

Upon succeeding to the presidency in 2009, however, Barack Obama without fanfare junked Bush's formulation (as he did again in a speech at the National Defense University last week). Yet if the appellation went away, the conflict itself, shorn of identifying marks, continued. 

Does it matter that ours has become and remains a nameless war? Very much so. 

Names bestow meaning. When it comes to war, a name attached to a date can shape our understanding of what the conflict was all about. To specify when a war began and when it ended is to privilege certain explanations of its significance while discrediting others. Let me provide a few illustrations. 

With rare exceptions, Americans today characterize the horrendous fraternal bloodletting of 1861-1865 as the Civil War. Yet not many decades ago, diehard supporters of the Lost Cause insisted on referring to that conflict as the War Between the States or the War for Southern Independence (or even the War of Northern Aggression). The South may have gone down in defeat, but the purposes for which Southerners had fought - preserving a distinctive way of life and the principle of states' rights - had been worthy, even noble. So at least they professed to believe, with their preferred names for the war reflecting that belief. 

Schoolbooks tell us that the Spanish-American War began in April 1898 and ended in August of that same year. The name and dates fit nicely with a widespread inclination from president William McKinley's day to our own to frame US intervention in Cuba as an altruistic effort to liberate that island from Spanish oppression. 

Yet the Cubans were not exactly bystanders in that drama. By 1898, they had been fighting for years to oust their colonial overlords. And although hostilities in Cuba itself ended on August 12, they dragged on in the Philippines, another Spanish colony that the United States had seized for reasons only remotely related to liberating Cubans. Notably, US troops occupying the Philippines waged a brutal war not against Spaniards but against Filipino nationalists no more inclined to accept colonial rule by Washington than by Madrid. 

So widen the aperture to include this Cuban prelude and the Filipino postlude and you end up with something like this: the Spanish-American-Cuban-Philippines War of 1895-1902. Too clunky? How about the War for the American Empire? This much is for sure: rather than illuminating, the commonplace textbook descriptor serves chiefly to conceal. 

Karl Marx Was a Tea Partier

Karl Marx, were he alive today, would approve

By Ronald Woods

The first view (held mostly by its detractors) is that Marxism is little more than the politics of resentment — a philosophical justification for the hatred of success by those who failed to achieve it. The politics of resentment offers three different methods for bringing its program of economic jealousy to fruition: Under socialism, the unsuccessful use the power of government to forcibly extract wealth and possessions from the successful, bit by bit until there is nothing left; under the more extreme communism, the very notion of wealth or success is eliminated entirely, and anyone who seeks individual achievement is punished or eliminated; and finally under anarchy, freelance predators would be allowed to steal or destroy any existing wealth or possessions with no interference from the state. Marx himself saw pure communism as the ultimate goal, with socialism as a necessary precursor, and perhaps just an occasional dash of anarchy to ignite the revolutionary fires.

But there is another, more intriguing and less noxious, view of Marxist thought that gets less attention these days because its anachronistic roots in the Industrial Revolution seemingly render it somewhat irrelevant to modern economics. Marx posited that factory workers should own the factory themselves and profit from its output, since they’e the ones actually doing the work — and the wealthy fat cat “capitalists” should be booted out of the director’s office since they don’t really do anything except profit from other people’s labor. Marx generalized this notion to “The workers should control the means of production,” and then extended it further to a national scale by declaring that the overall government itself should be “a dictatorship of the proletariat,” with “proletariat” defined in this context as “someone who actually works for a living.” The problem with this theory in the 21st century is that very few people actually work in factories anymore due to exponential improvements in automation and efficiency, and fewer still produce handicrafts, and the vast majority of American “workers” these days don’t actually create anything tangible. Even so, there is an attractive populist rationality to this aspect of Marxism that appeals to everyone’s sense of fairness — even to those who staunchly reject the rest of communist theory. Those who do the work should reap the benefits and control the system; hard to argue with that.

Although the “factory” is no longer the basic building block of the American economy, Marx’s notion that “The workers should control the means of production” can be rescued and made freshly relevant if it is re-interpreted in a contemporary American context.

Visualize the entire United States as one vast “company,” with citizens as employees and politicians and bureaucrats as managers. Everybody, in theory, works together to make the company successful. But there are two realities which shatter this idealized theory: first, only about half the employees actually ever do any work, while the rest seem to be on permanent vacation or sick leave; and second, our bureaucratic “managers” — just like the wealthy fat cats in Marx’s vision — simply benefit from the labor of others without ever producing anything of value themselves.

Israel and Russia At Odds Over Syria

A dangerous proxy war is developing in Middle East

By John Aziz

Times of global economic disruption or depression have often historically been preludes to war. So too have been periods of geopolitical instability, where new economic powers are rising, and old ones falling. Back in 2008 the United States’ tenture as the sole global superpower appeared to be endangered, and we appeared to be on the cusp of a new multipolar world order.  And at the same time a new demand-side depression bearing some eerily similar characteristics to the Great Depression surfaced. So — even though we were sitting on the back of a huge trend of decreasing war and violence — I was to a small degree worried that this slump might be a prelude to another global conflict.

Luckily — with the exception of a few skirmishes in the middle east following the Arab spring — no such wide-scale global conflict has broken out. The forces of peace have kept the forces of war and chaos mostly at bay. No direct war between the great powers has broken out. Given the high level of trade interdependency and global economic integration that now exists — factors which play a great role in discouraging conflict — that is very good news. Avoiding a new global conflict should be a top priority for policymakers, corporations, and individuals worldwide.

Hopefully, then, the latest friction in the middle east — this time between Israel and Russia — will amount to nothing:

 Israel’s defense chief said Tuesday a Russian plan to supply sophisticated anti-aircraft missiles to Syriawas a “threat” and signaled that Israel is prepared to use force to stop the delivery.

The warning by Defense Minister Moshe Yaalon ratcheted up tensions with Moscow over the planned sale of S-300 air-defense missiles to Syria. Earlier in the day, a top Russian official said his government remained committed to the deal.

There's No Magic Keynesian Bullet That'll Save Europe

The sooner the underlying reality is made transparent and recognized, the lower the long-run cost will be

By Kenneth Rogoff

There is no magic Keynesian bullet for the eurozone’s woes. But the spectacularly muddle-headed argument nowadays that too much austerity is killing Europe is not surprising. Commentators are consumed by politics, flailing away at any available target, while the “anti-austerity” masses apparently believe that there are easy cyclical solutions to tough structural problems.

The eurozone’s difficulties, I have long argued, stem from European financial and monetary integration having gotten too far ahead of actual political, fiscal, and banking union. This is not a problem with which Keynes was familiar, much less one that he sought to address.

Above all, any realistic strategy for dealing with the eurozone crisis must involve massive write-downs (forgiveness) of peripheral countries’ debt. These countries’ massive combined bank and government debt – the distinction everywhere in Europe has become blurred – makes rapid sustained growth a dream.

This is hardly the first time I have stressed the need for wholesale debt write-downs. Two years ago, in a commentary called “The Euro’s Pig-Headed Masters,” I wrote that 

“Europe is in constitutional crisis. No one seems to have the power to impose a sensible resolution of its peripheral countries’ debt crisis. Instead of restructuring the manifestly unsustainable debt burdens of Portugal, Ireland, and Greece (the PIGs), politicians and policymakers are pushing for ever-larger bailout packages with ever-less realistic austerity conditions.”

Schaeuble Warns Of "Revolution" If Welfare Model Threatened

This Time Will Not Be Different

by Tyler Durden

Over the weekend, when discussing the latest casualty of Bernanke's disastrous monetary policy, the US corporate pension plan, we touched on a topic that has been a recurring theme on these pages: "the start of the unwind of the welfare myth, if only in the private sector for now, made worse by Ben Bernanke's endless tinkering in what was formerly a free market, should be making the guardians of the status quo very, very nervous... and certainly has the disciples of the Bismarckian welfare state delusion on their toes, because they can see very well what is coming down the road." Moments ago none other than Germany's finance minister, Schrodinger Schaeuble, explained just why this observation is at the core of all modern problem, going so far as using the R-word in the context of Europe (first, and then everywhere else).

From Reuters:

German Finance Minister Wolfgang Schaeuble warned on Tuesday that failure to win the battle against youth unemployment could tear Europe apart, while abandoning the continent's welfare model in favour of tougher U.S. standards would cause "revolution".

Germany, along with France and Italy, backed urgent action to rescue a generation of young Europeans who fear they will not find jobs, with youth unemployment in the EU standing at nearly one in four, more than twice the adult rate.

"We need to be more successful in our fight against youth unemployment, otherwise we will lose the battle for Europe's unity," Schaeuble said.

While Germany insists on the importance of budget consolidation, Schaeuble spoke of the need to preserve Europe's welfare model.

How 3D printing could take over the manufacturing industry

Imagine a machine that could disassemble old unwanted objects, and use the materials to print new objects — all in the comfort of your own home

By John Aziz

The laptop I typed this article on is the culmination of a vast, sprawling, and elaborate process over many continents, using many resources, many people, and many machines.

My laptop's construction incorporates plastics built out of crude oil, metals mined in Africa and forged into memory in Korea and semiconductors in Germany, and an aluminium case made from bauxite mined in Brazil. Gallons and gallons of refined oil were used to ship all the resources and components around the world, until they were finally assembled in China, and shipped out once again to the consumer. That manufacturing process stands upon the shoulders of centuries of scientific research, and years of product development, testing, and marketing.

The manufacturing industry today is a huge mesh of complex processes. Capitalism and the systems that it builds are the product of an evolutionary process gradually adjusting around consumer demand and the imperative of maximizing profit. Just as the internet has revolutionized communications and the distribution of information, new technologies already exist that if widely adopted may do the same thing for manufacturing.

3D printers allow physical objects to be designed digitally and printed using physical materials — mostly plastic, but increasingly almost anything (including human cells). Designs can be shared — or bought and sold — through the internet. Already, there are schematics for cars,homes, guns, sex toys, and all manner of trinkets and household items.

The technology is about 30 years old, but with the costs of the machinery rapidly falling — entry-level, fully assembled 3D printers are now for sale for under $500 — 3D printing is poised to move into the mainstream.

The New Deal Origins of Fannie Mae and the Government-Housing Complex

The Great Deformation

by David Stockman

Fannie Mae is a classic crony capitalist progeny of the New Deal that began life in 1938, quite innocently, as still another ad hoc New Deal program to boost the depression-weakened housing market. It grew into something quite different: a monster that deeply deformed and corrupted the nation’s entire financial system seventy years later.

The policy aim of Fannie Mae was “forcing water to flow uphill” in the residential mortgage market so that low-rate thirty-year home mortgages became available to wage-earning households of modest means. Such mortgages did not then exist for a good reason: they were not economic. No prudent local bank or thrift would take the underwriting risk.

Fannie Mae would thus override the market’s veto by turning local banks and thrifts into government contractors or agents, rather than mortgage debt underwriters. Accordingly, they would be relieved of their aversion to the risk of default loss by means of a Washington-funded “secondary market.” The latter would purchase these commercially unappealing mortgage loans for cash, enabling local bankers to reloan this cash again and again in a government-supported rinse and repeat cycle.

Meanwhile, the default losses that the market refused to underwrite would be shifted to taxpayers, since Fannie Mae’s funding would implicitly depend on the public credit of the United States. The slowly recovering residential housing sector would thus receive the kind of booster shot much favored by the New Dealers.

What Fannie Mae also did, unfortunately, was to start the home mortgage market down a slippery slope. This included separating the loan origination process from the long-term servicing and ownership of the resulting mortgage, in an alleged financing “innovation” that would give rise to predatory mortgage-broker boiler rooms a few generations down the road.