Those Selfish Germans

Germany, dominating the eurozone without being very keen to do so, is damned if she does and damned if she does not

by Anthony de Jasay

Innate qualities and disciplined economic management earned Germany a solid position, the envy of most of the eurozone, and accusations of selfishness for not sharing her good fortune more readily with others, notably with the Southern tier of Europe that is having a hard time under the overload of its excessive debt.

Few people pretend to be wholly unselfish—the really unselfish probably least of all. Selfishness in oneself is not really shameful where good reasons to pardon it are easy to find. It is in others that it is blame worthy and a source of deep indignation. This indignation is one part in the mixture that fuels our demand for social justice and solidarity on the part of the better off.

Envy works differently, though it works to the same end. It is one of the instincts most people have and yet very few will confess it even to themselves, let alone out in the political arena. As it is shameful to admit it, it finds expression in some more noble disguise, such as the rejection of inequalities. This sentiment, joined to the condemnation of the selfishness of others, saves the notion of social justice from running on empty. Coveting the money and goods of the more fortunate explains the persistent claim for redistribution between classes in a country and lately also between richer and poorer countries .

It does so even without supposing hypothetical social contracts or agreements on a norm of equality. Covetousness completes the amalgam that suffices to give meaning to social justice that would otherwise have to seek it in contestable metaphysical speculations.

In his classic book Envy,(1) the Austrian sociologist Helmuth Schoeck makes the somewhat unexpected point that envy is rather a good thing because it makes for social stability. The envious represent a threat to the person they envy. The latter is therefore well advised to avoid provoking them and not flaunt his accomplishments, his superior talents, and his wealth. Ostentatious consumption will breed hostility, while measure, taste, discretion, and the other hallmarks of breeding and self-discipline will blunt it. Thus envy leads to better behaviour and less strife.

When Government Cries Wolf

An overdose of "warnings" puts our lives at risk

by David R. Henderson
In the spring of 1982, when I was working in the Reagan administration, my friend Harry came to visit. He had started learning how to use kayaks and wanted to try out his skills on the Potomac River. I had never been in a kayak in my life, but I was excited also. So we rented two kayaks, tried them out on the placid C&O canal beside the Potomac and then decided that we were ready for the river. I had driven over the Potomac every day on the way to work, and it seemed like a calm enough river. How dangerous could it be?

When we walked down to the shoreline, we saw a big official sign that said, "WARNING: DANGEROUS CANOE PUT-IN."

"Yeah, right," we thought. “There goes government crying wolf again.”

Wrong. Within 50 yards of where we put in our kayaks, we were using all of our strength to navigate down a very rough river with substantial rapids. Within two minutes, I was worn out and was running on adrenaline. When I finally I got to my first bit of calm water, I relaxed slightly—and immediately tipped over. I was upside down and stuck in the kayak. I forgot what I had just learned about pulling the rope that held the “skirt” in place. I kept yanking my body for what seemed an eternity—and was probably less than ten seconds.

Finally, I yanked so hard that my body was released from the kayak. When my head got above water, I held on to the kayak—but saw that I was heading for the next big set of rapids. Fortunately, a seasoned kayaker appeared out of nowhere, told me to hold on to the strap on his kayak, and towed me to shore. I was lucky.

What had gone wrong? We had mistakenly dismissed the government’s warning. But why had we done so? Because the government so often cries wolf. The government warns us about many risks, large and small, and rarely gives any idea of the size of those risks. We have a kind of “warning pollution.” In economics, there’s something known as Gresham’s Law, which says, “Bad currency drives out good currency.” With respect to warnings, there’s a similar law, and since I’m identifying it, I’ll name it Henderson’s Law of Warnings: “Trivial warnings drown out serious warnings.”

The kayak incident happened 31 years ago, and, even then, I had become used to the government crying wolf. Since then, the warnings about trivial risks have increased substantially. In California, where I live, Proposition 65, passed by the voters in 1986, requires sellers to put warning labels on goods that contain chemicals that can cause cancer, birth defects, or other reproductive harm. Many products sold in California carry labels warning of this harm, even if the risk is tiny. Supermarkets post generic “Proposition 65 Warnings.” These warnings, generally at the entrance to a store, tell customers that the store contains goods that may cause cancer, birth defects, or other reproductive harm. Gee, that’s helpful. I’ve lived in California all the years since that 1986 law was passed and I, like virtually all Californians, have learned to tune out those Proposition 65 warnings.

The Smoke And Mirrors Are Running Out

Politicians rob from the future to hide the true conditions of the present

Those who believe the economy is recovering are ignorant of the facts. Other than the Great Depression no US recovery (and I don’t believe we are in a recovery) taken longer. Eventually it may take more than a decade like the 1930s. Or perhaps it will be like Japan which is in its third decade of “recovery.”

Politics and Economics

The truth is that our economy is spent, exhausted and filled with misallocations and distortions made much worse by government interventions. There is no recovery, nor will there be one until a massive purge (usually referred to as a depression) occurs. This event will result in bankruptcies that release scarce, misallocated physical capital from unproductive and unwanted areas to places where it is needed and can be utilized efficiently.

Rather than allow this pre-condition to an economic recovery and a growing, efficient economy, politicians want to prevent it. They use smoke, mirrors and propaganda (lies) to hide the reality of our sick economy. Their obfuscations continue, but the effective life is limited.

What politicians do to the country beyond their term in office means nothing to them. Their concern is only for themselves and the short-term that exists between elections. As a result they rob from the future to hide the true conditions of the present. Those still unborn will be paying for their criminal economic charade.

Economic Conditions

So how bad is the economy? Michael Shedlock, “Mish” is among the more prolific as well as more incisive financial analysts on the web. His site is always worth reading, but a recent post is essential. To impress upon you the seriousness of the situation and to encourage you to read his post, I quote some of his points (anything in red is my emphasis):

… we’re doing the same thing that led to the 2008 blowup — we’ve learned exactly nothing.  In real terms our GDP is in fact contracting by about $500 billion a quarter, after adjusting for debt expansion — that’s $2 trillion a year, more or less.

In terms of debt and inflation, Mish determined that:

… we’re contracting in purchasing power adjusted for new debt at more than 10% over the last four quarters.

Big Brother Says, ‘Open Your Mouth!’

Your DNA as well as your data is at risk from overreaching government

By RAND PAUL

The Bill of Rights is and should be popular. It is something most Americans overwhelmingly support. Conservatives love the Second Amendment and honest progressives defend the First Amendment. But it is sometimes harder for the public to embrace and champion the due process of the Fourth, Fifth, and Sixth amendments.

Why? Because to defend due process sometimes means defending trials, lawyers, and privacy for people accused of heinous crimes. Understandably, some don’t choose to think about the fact that the worst imaginable people in our society are still guaranteed rights as citizens—the right to trial by jury, the right to an attorney, the right to be free from suspicionless searches.

Who would want to defend the rights of awful rapists and murderers? The easy response is that we defend due process to try to ensure that the person who is punished is guilty of the crime. There have been times in our country’s history when due process was ignored or absent. The lynching of black men in the South is the most egregious. The internment of Japanese Americans during World War Ii is another stain on our history when we strayed from due process.

Last year, President Obama signed into law a bill that allows for the indefinite detention without charge of an American citizen. When I asked a fellow Senator if this meant that an American citizen could be sent to Guantanamo Bay without charge or jury trial, and be indefinitely detained for the rest of their life, he responded: “If they are dangerous.”

But this only begs the question: Who gets to decide if they are dangerous?

We have a Bill if Rights to protect us—innocent, law-abiding Americans citizens, not criminals, not terrorists, not enemies.

The Bill of Rights exists to protect citizens like Richard Jewell, the security guard whose efforts helped save lives during the bombing of the 1996 Olympics in Atlanta. After the bombing, Jewell became a suspect in the investigation and was quickly convicted in the court of public opinion. Everyone rushed to label him a terrorist.

After 88 days of media speculation and slander, Jewell was formally cleared of all charges. They eventually caught the real culprit who set the bombs. Today, one could easily imagine some calling for Jewell’s constitutional rights to be waived and for him to be indefinitely detained as an enemy combatant.

Losing faith in state schools

A new campaign for the abolition of UK faith schools ignores the real crisis in the state education sector

by Neil Davenport 

Militant atheists, along with prominent religious leaders, have launched a campaign to ban schools from selecting children on the grounds of faith. The Fair Admissions campaign was launched last week by a coalition of groups, including the British Humanist Association, the Lib Dem education association and Muslims for Secular Democracy. In the long term, the group would like faith-based selection schools banned and, in the short term, the admissions policies of faith-based schools changed.

The charge against selection on religious grounds is that it is ‘unfair’. Children who are not members of the ‘right religion’, or who are from secular backgrounds, are effectively barred from specific schools. For Fair Admissions campaigners, this is a legalised form of discrimination. Rabbi Jonathan Romain of the Accord Coalition likened faith-based selection to ‘the idea of no Catholics to be allowed in the army, no Jews to be social workers’.

In reality, the Fair Admissions campaign is the latest assault on traditional communities in Europe. In Germany, for instance, some states have outlawed circumcision of Jewish and Muslim boys on the grounds that it is a form of ‘child abuse’. In the UK, the Equalities Act provides a mechanism through which faith schools could be prosecuted for teaching beliefs that denounced homosexuality.

There is a curious paradox here regarding faith schools. On the one hand, respect for a plurality of beliefs, values, traditions and customs are the hallmarks of official multiculturalism. Anyone old-fashioned enough to be judgmental about other cultures can find themselves publicly ostracised or even on the wrong side of the law. But on the other hand, respect for diversity starts to fade whenever faith schools are mentioned.

The Gap Between Disaster and Prosperity

Savings is the buffer which is the gap between disaster and prosperity

by Alan Greenspan

As far as your average American household is concerned, they would argue that they’re saving more than enough — or at least until recently they would have said that.

The reason [for that mind-set] is they’ve looked at their 401(k)s, and they’ve looked at the value of their homes, and they’ve looked at their assets generally — and while we economists may say that capital gains do not finance real capital investment and standards of living, the average household couldn’t care less.

When you think in terms of the economy as a whole, you have to realize that if the output of an economy — or in household terms, the amount of income [available] is all consumed, [then] we’re not accumulating the types of assets which we find productive over the years. Every advanced economy invests a significant amount of what it produces. It ploughs it back in the way of capital assets — meaning factories, equipment, all forms of capital — which essentially make the standard of living rise, because as technology and capital increase, an hour’s worth of effort on the part of a person has (over the generations) been increasing.

The comparable measure with respect to households is that if you don’t save adequately, you are wholly dependent upon the income you are getting. But as far as you’re concerned, unless you put money away for nest egg purposes, for retirement, for a variety of other purposes, you will find that you are living an extraordinarily precarious existence. Savings is the buffer which is the gap between disaster and prosperity.

By maintaining a stable financial system, a stable monetary system contributes to economic growth through enhancing stability and, most importantly, keeping inflation at a subdued level. The issue of rising wealth in the last 15 years or so is essentially a global phenomenon and one that results because of the consequences of what was seen when the Cold War came to an end.

Russia's new Middle Eastern role

Voters don't trust conservatives with guns after the disaster of the Iraq and Afghanistan nation-building campaigns

By Spengler 

Russia has thrown a monkey wrench into Western plans for Syria by promising to deliver its top-of-the-line S300 surface-to-air missile system to the Bashar al-Assad government. Exactly when the missiles might arrive remains unclear; the last word from Moscow is that the missiles are not yet in place, which means the matter is up for bargaining. 

It is humiliating for the West to trip over a game-changing Russian technology nearly a quarter of a century after the fall of the Berlin Wall. The larger scandal is that the West lacks countermeasures against the Russian system, the result of misguided defense priorities over the past dozen years. If the United States had spent a fraction of the resources it wasted in nation-building in Iraq and Afghanistan on anti-missile technology, Russia would lack the bargaining chip in the first place. That's spilt milk, however, and the pressing question is: what should the West do now? 

The questions to ask are:

1. Is Russia a rational actor?

2. If the answer to the first question is affirmative (as the overwhelming majority of analysts believe), what does it have to be rational about?

3. Can the United States do anything in the foreseeable future to change the present regime in Russia?

4. If the answer to the third question is affirmative, then what do we want to negotiate with Vladimir Putin? 

The right way to go about this, I believe, is to draw a bright line between Russia's opportunistic meddling in Middle Eastern affairs and existential issues for the Russian state. Much as we may dislike the way the Russians manage their affairs, it isn't within the power of the West to change the character of the Russian regime.

You have to wonder: Will Obama see out his full term?

Edward Snowden has blown the whistle on this presidency

By Damian Thompson

"They could pay off the Triads," says Edward Snowden, the NSA whistleblower interviewed by the Guardian in his Hong Kong hideout. Meaning: the CIA could use a proxy to kill him for revealing that Barack Obama has presided over an unimaginable – to the ordinary citizen – expansion of the Federal government's powers of surveillance over anyone.

Libertarians and conspiracy theorists of both Left and Right will never forget this moment. Already we have Glenn Beck hailing Snowden on Twitter:

Courage finally. Real. Steady. Thoughtful. Transparent. Willing to accept the consequences. Inspire w/Malice toward none.#edwardsnowden

Snowden will be a Right-wing hero as well as a Left-libertarian one. Why? First, he thought carefully about what he should release, avoiding (he says) material that would harm innocent individuals. Second, he's formidably articulate. Quotes like the following are pure gold for opponents of Obama who've been accusing the President of allowing the Bush-era "surveillance state" to extend its tentacles even further:

NSA is focussed on getting intelligence wherever it can by any means possible… Increasingly we see that it's happening domestically. The NSA specifically targets the communications of everyone, it ingests them by default, it collects them in its system and it filters them and it analyses them and it measures them and its stores them for periods of time … While they may be intending to target someone associated with a foreign government or someone they suspect of terrorism, they're collecting your communications to do so. Any analyst at any time can target anyone…

I do not see how Obama can talk his way out of this one. Snowden is not Bradley Manning: he's not a disturbed disco bunny but a highly articulate network security specialist who has left behind a $200,000 salary and girlfriend in Hawaii for a life on the run. He's not a sleazy opportunist like Julian Assange, either. As he says: "I'm willing to sacrifice all of that because I can't in good conscience allow the US government to destroy privacy, internet freedom and basic liberties for people around the world with this massive surveillance machine they're secretly building."

It will be very difficult for the Obama administration to portray Snowden as a traitor. For a start, I don't think US public opinion will allow it. Any explanations it offers will be drowned out by American citizens demanding to know: "So how much do you know about me and my family? How can I find out? How long have you been collecting this stuff? What are you going to do with it?"

Suddenly the worse-than-Watergate rhetoric doesn't seem overblown. And I do wonder: can a president who's presided over, and possibly encouraged, Chinese-style surveillance of The Land of the Free honestly expect to serve out his full term? 

Complex Economic Machinery

Machines can be manipulated and controlled. Real economies can’t.

by Bill Bonner.

A couple weeks ago, we gave a speech in London. In it, we quoted economist Paul Krugman. Here’s the quote, from an article in The New York Times:

“Keynesian economics rests fundamentally on the proposition that macroeconomics isn’t a morality play — that depressions are essentially a technical malfunction. As the Great Depression deepened, Keynes famously declared that ‘we have magneto trouble’ — i.e., the economy’s troubles were like those of a car with a small but critical problem in its electrical system, and the job of the economist is to figure out how to repair that technical problem.”

What kind of brain could think such a thing? How could you confuse an economy with a machine? We promise not to become earnest about it, but it is probably worth spending a few minutes exploring this claptrap.

It is the fatal flaw at the heart of modern economics. It also happens to be the foundation of the Fed’s attempt to revive the economy. Krugman, Bernanke, Summers et al. think they are technicians…

They’ve got the wrong metaphor. You may be able to describe the human body as a machine too. But don’t try to fix it with an adjustable wrench. It’s a good thing Paul Krugman isn’t a medical doctor!

Unlike a machine, an economy was neither designed by anyone nor built in a factory. There are no plans… no owner’s manual… no guide to troubleshooting problems… and no website where owners go to talk about the problems they’ve had and the tricks they’ve used to fix them.

Not made by man… it cannot be repaired by man. But let’s look at why this is so.

US Demographics - Glass Half Full Or Half Empty?

Measuring How Births Swell the Population Isn't Child's Play

Pew Research Center says the birth rate is at its lowest level since at least 1920. But the U.S. fertility rate, an estimate of how many children a woman will have in her lifetime, is well above record lows, says the Population Reference Bureau

By Cark Bialik

A recent report said the U.S. birth rate has dipped to a record low level. But another measure of the nation's fertility remains comfortably above its historic low. The mismatch shows that even in a country with comprehensive birth statistics, summarizing population trends is far from straightforward.

Last week, Pew Research Center said the birth rate last year fell to 63.2 per 1,000 women age 15 to 44. That's the lowest level since at least 1920, the earliest year for which reliable data are available. The report made headlines and even spurred calls for Americans to get procreating lest they fall behind economically.

But the U.S. fertility rate, an estimate of how many children a woman will have in her lifetime, is well above record lows. According to the Population Reference Bureau, a Washington, D.C., research center, it fell in 2011 to just below 1.9 per woman, down from 2.12 in 2007—the highest in the last 40 years—but above a record low of 1.74 in 1976.

Demographers disagree on which measure is best for tracking births' contribution to population growth. The distinction matters because birth trends are monitored closely. A record-low level of fertility could augur problems for future economic growth, while a slight drop from a 40-year high may have less serious implications—particularly because fertility often declines during economic slowdowns.

"Births are at a record low, but it's a much more complex story," said Brady Hamilton, a statistician at the Centers for Disease Control and Prevention's National Center for Health Statistics. "The devil is in the details."

Simply computing a per capita birth rate is flawed, researchers say, as it is skewed by the age and gender structure of a population. A country with a disproportionately high share of older men could have a much lower birth rate than one with a large population of women of child-bearing age, even if women in each country have the same average number of children. Calculating the rate of births per women age 15-44, as Pew and the NCHS do, improves on the raw birth rate as it accounts for the share of the overall population most likely to have children. But the measure—called the general fertility rate by demographers—is still subject to quirks in the distribution of women in that age range.

All sides are feeling sore but divorce seems unlikely

Euro bailout Troika nears end of road with patchy record

By Paul Taylor

If the Troika that handles bailouts of distressed euro zone countries were a soccer team, it would probably be looking for a new manager after achieving a track record of one win, one loss and one draw.

The uneasy trio of European Commission, International Monetary Fund and European Central Bank was assembled in haste in March 2010 after Greece's public debt and deficit exploded and it was about to lose access to market funding.

Last week's IMF "mea culpa" report about the failures of the Greek program blew the lid off the fiction that the three institutions saw eye-to-eye on the rescue packages they designed and are enforcing in Greece, Ireland, Portugal and now Cyprus.

Behind closed doors, they clashed over whether Greece should restructure its debt, forcing investors to take losses, and whether Ireland should make bondholders in its shattered banks share the cost of a financial rescue.

They still differ over whether European governments should write off some loans to Athens to make its debt sustainable in the long term, an idea that is politically explosive before a German general election in September.

Gazprom’s Demise Could Topple Putin

Putin’s Incomprehension may cost him more than euros

By Anders Aslund

No large company in the world has been so spectacularly mismanaged as Russia’s state-dominated natural-gas corporation Gazprom OAO. (GAZP) In the last decade, its management has made every conceivable mistake.

Even so, Russian President Vladimir Putin denies the very existence of a crisis and maintains his support for Alexei Miller, the chief executive officer since 2001. Gazprom’s situation is serious not only because it is Russia’s biggest company by market value, but because Putin is its real chairman. Where Gazprom goes, so does Russia and the Putin government.

In May 2008, Gazprom was one of the world’s most valuable companies with a market capitalization of $369 billion. Miller boasted that it would be the first global company to reach $1 trillion. Today, its market value has plummeted to $83 billion and the decline continues. Although it claimed the largest net income of any global company in 2011 at $44.5 billion and still at $38 billion in 2012, its price-earnings ratio has dropped to a fatally low 2.4 for 2013. It has no credibility with shareholders.

At the heart of Gazprom’s mismanagement lies extreme inertia; reluctance to absorb new information; corruption and outlandish arrogance. Its managers are used to exercising Soviet-style monopoly over consumers, not having realized that the market has taken over. The company has traditionally varied prices by countries for opaque reasons. For example, Lithuania pays 15 percent more for Gazprom gas than neighboring Latvia.

Supply Cutoffs

When consumers behave inappropriately in its eyes, Gazprom cuts off supplies, as it did to Ukraine and much of eastern Europe in January 2006 and 2009. As a result, these dismayed customers have reduced their dependence on Gazprom, by cutting consumption, building converters and storage, and developing alternative supplies.

The Gazprom business model is as simple as old: to produce conventional gas from giant fields in West Siberia and pump it through pipelines to Europe. In the last decade, the company has missed three big revolutions in the industry: the shale-gas expansion in the U.S., the global liquefied-natural-gas boom, and the rise of Chinese demand.

'I Do Not Expect To See Home Again'

NSA Whistleblower on the run

By Marc Pitzke

He was once a cog in the US intelligence apparatus, but 29-year-old ex-CIA employee Edward Snowden has admitted to making one of the biggest intelligence leaks in history. He now faces severe consequences -- but President Obama also has a lot to answer for.

Edward Snowden sits in a hotel room in Hong Kong. He is pale and unshaven, his voice quiet but firm. For fear of spies, he has sealed off the door with cushions. He says he's only gone outside three times in the past three weeks. When the fire alarm went off, he suspected that someone was trying to lure him out of hiding.

Snowden is on the run. The scene, as depicted by London newspaper the Guardian , is the latest and most dramatic chapter of a spy thriller that in recent weeks has kept the United States and much of the world in suspense. Snowden is the highly sought-after man who notified the press about the infamous US surveillance program Prism -- probably one of the biggest leak scandals in the history of espionage.

Snowden didn't have to reveal the fact that he is the whistleblower behind the story. But he decided to out himself voluntarily in a 12-minute video interview that the Guardian posted on its website on Sunday night.

Snowden puts a moral spin on his protest against state data surveillance: "I don't want to live in a society that does these sort of things," says the 29-year-old former CIA technical assistant who was last employed by the defense contractor Booz Allen Hamilton. "I don't want to live in a world where there's no privacy and therefore no room for intellectual exploration and creativity," he continues.

But for that, it may already be too late. The debate that Snowden hoped to initiate has revealed that the US's virtual surveillance network is nearly all-encompassing -- and that citizens are powerless against it. "Welcome to the future," writes Ross Douthat in the New York Times. "Just make sure you don't have anything to hide."

A Historical Coup in Hawaii

Snowden, too, fears this future. The US government, he says, "are intent on making every conversation and every form of behavior in the world known to them."

Answer not a fool to his folly.....

A reflection that is at once comforting and depressing

By Theodore dalrymple

It astonishes me how many people take insult for refutation. They think that if they call someone a name – fool, for example, or dupe – they have successfully disposed of his arguments. For having decided that the person is, say, a fool, they go on to obey the Biblical injunction to 

‘Answer not a fool according to his folly, lest thou also be like unto him.’ 

The internet seems to have reinforced the human tendency to resort to the ad hominem. I cannot claim never to have resorted to it myself, in fact it is one of my chief pleasures in life; but I hope that I never use it as my sole method of argument. I am still intellectually conscientious enough to believe that something must first be shown to be mistaken before one begins to speculate (oh so enjoyably) as to why anyone is so foolish at to believe it. 

The spread of education has done little to raise the tone of argument, or the internet to improve its temper. The power of immediate response that the internet confers upon readers encourages them to give vent to their first and usually violent emotions on reading something with which they disagree. People would never have committed to paper what they are willing to commit to cyberspace; and since the way in which one expresses oneself becomes habitual, the internet causes a decline in civility. One longs for the calmer, slower, more civil world of books and hand-written letters.

My complaints about humanity’s indifference to proper argument, however, are nothing new. I happened the other day to be reading Bishop Butler’s Sermons (edited, incidentally, by Gladstone after his retirement from politics – if only our modern politicians would confine themselves to such noble tasks after their disappearance from national life). I came across the following passage, written nearly 300 years ago:

 Arguments are often wanted for some accidental purpose: but proof as such is what [people] never want for themselves…

Not to mention the multitudes who read merely for the sake of talking, or to qualify themselves for the world, or some such kind of reasons…

Several have no sort of curiosity to see what is true…

The great number of books and papers of amusement…

Have in part occasioned…this idle way of reading and considering things.     

Man does not change very much, then, a reflection that is at once comforting and depressing. 

Decisive Days for Euro

High Court Considers ECB Bond Buys

By Melanie Amann, Thomas Darnstädt and Dietmar Hipp

Germany's highest court is currently reviewing the European Central Bank's controversial bond-buying program to shore up euro-zone crisis countries. A decision in Karlsruhe could determine the common currency's fate.

Somebody at the European Central Bank (ECB) must have pressed the wrong button. A fire alarm went off at the bank's high-rise headquarters in Frankfurt, everything was shut down, including the elevators, and firefighters rushed to the scene.

The false alarm hit the monetary watchdogs last September shortly before ECB President Mario Draghi made the dramatic announcement that he would purchase sovereign bonds in "unlimited quantities" to help debt-ridden countries like Italy, Spain and Greece.

Now, alarm bells are again ringing inside the ECB tower -- only this time it's no drill. On Tuesday and Wednesday of this week, Germany's Constitutional Court in Karlsruhe will rule on the euro crisis aid measure that Draghi announced last fall. As Draghi and his monetary experts on the executive floor of the bank were told by their constitutional experts long ago, this court decision could have an enormous impact on the bank's policies -- and potentially spell the end of the euro.

Over the past few months, Draghi and the heads of government in the European capitals have felt confident about the outcome of the impending ruling. After all, the judges in Karlsruhe have always ultimately endorsed Germany's contributions to euro-zone bailout programs. Nevertheless, the list of questions compiled by the judges for this week's deliberations indicates that everything may be at stake this time around.

When Draghi recently visited French President François Hollande in Paris, the main topic of discussion was not the state of the French economy or Southern Europe, but rather the question of what will happen in Karlsruhe. Only one hour by train away from Frankfurt, a conflict is brewing that already appeared to have been resolved last autumn.

"This is good, very good news," then-Italian Prime Minister Mario Monti said in response to the announcement that the Federal Constitutional Court had refused to issue a temporary injunctionagainst the European Stability Mechanism (ESM), the permanent European bailout fund, and the fiscal pact. Over the following days, the euro climbed to its highest exchange rate in months. The court still had to decide on the main constitutional complaint, but a pragmatic decision in favor of the bailout measures seemed to be nothing more than a technicality.

Now, it appears they were celebrating too soon.

'People at the ECB Are Really Afraid'

The plaintiffs in Karlsruhe -- led by euroskeptic Peter Gauweiler, a member of parliament with the conservative Christian Social Union, the Bavarian sister party to Chancellor Angela Merkel's Christian Democrats -- returned with a more comprehensive constitutional challenge to Draghi's unlimited bailout pledge. The battle over the euro resumed. For the last few days, ECB head Draghi has constantly consulted with his aides on the latest developments in the debate in Karlsruhe and what people in Germany are saying about it. Insiders in the southwestern German city have picked up on this frantic need for information: "The people at the ECB are really afraid," says an official in Karlsruhe.

Egypt's Assault on the Arts

Brotherhoodization of the Opera

Artists and staff of the Cairo Opera House declare a strike prior to a performance of Aida in May of 2013.

By Vivian Salama

As the curtains swept open on the stage of Cairo's historic Opera House in late May, spectators held their breath waiting to be regaled by Giuseppe Verdi's classic Aida, which opens with the Egyptians bracing for invasion by Ethiopians seeking to rescue their princess, Aida, from a lifetime of servitude. What they got, however, may have left Verdi himself on the edge of his seat.

Instead, the cast and crew stood shoulder to shoulder, some in costume, many with placards in hand, denouncing what they called the "Brotherhoodization of the Opera" and declaring the country's Muslim Brotherhood-led government "illegitimate." As the crowd shot to its feet cheering "Bravo!" and chanting "Long Live Egypt," conductor Nayer Nagui announced:

"In a stand against a detailed plan to destroy culture and fine arts in Egypt, we decided as artists and management to abstain from performing tonight's Opera Aida."

It was, for artists and art-lovers alike, a declaration of war.

The move followed the dismissal of the highly respected head of the Cairo Opera, Enes Abdel Dayem, which prompted hundreds to take to the streets in protests that continue even today. Her dismissal came only weeks after President Mohamed Morsi appointed Alaa Abdel-Aziz, a professor of film editing, as the new minister of culture. Abdel Aziz said the decision was in an effort to inject "new blood" into Egypt's art world, which he said is growing increasingly corrupt. That same week, the country's upper house of parliament recommended budget cuts for the Opera, which has been reeling from a drawback of funds in recent years. On Wednesday, prominent artists and intellectuals stormed the Egyptian Ministry of Culture, vowing to stay there until the minister steps down.

"My dismissal has sparked a new revolution -- a cultural revolution," Abdel Dayem, a flute player with a PhD at the Ecole Normale de Musique in Paris, said in an interview. During the past year of fighting, "I refused to close the opera during all of this because the complex is a symbol of our strength and our history as a nation. This is why the people rose up against their decision. They see the effort we are doing to preserve cultural scene in Egypt."

Further heightening fears among many that the government is trying to impose Islamist restrictions on the arts, a lawmaker with the ultra-conservative Nour Party noted last month that ballet performances should be canceled altogether because they encourage "immorality" and "nude art."

The minister has not commented on the protests and calls to the Ministry of Culture were not immediately returned.

The stagnant Mediterranean

Short of a Muslim embrace of the modern, there’s no hope for the future

By Victor Davis Hanson

From the heights of Gibraltar, you can see Africa about nine miles away to the south — and gaze eastward on the seemingly endless Mediterranean, which stretches 1,500 miles to Asia beyond. Mare Nostrum, “our sea,” the Romans called the deep blue waters that allowed Rome to unite Asia, Africa and Europe for half a millennium under a single prosperous, globalized civilization.

Yet the Mediterranean has not always proved history’s incubator of great civilizations — Greek, Roman, Byzantine, Ottoman, Florentine and Venetian. Sometimes, the ancient “Pillars of Hercules” at the narrow mouth of the Mediterranean here at Gibraltar marked not so much a gateway to progress and prosperity as a cultural and commercial cul-de-sac.

With the rise of the Ottoman Empire, and before the construction of the Suez Canal, the old classical city-state powerhouses in Italy and Greece faded from history, as the Mediterranean became more a museum than a catalyst of global change. In contrast, the Reformation and Enlightenment energized Northern European culture, safely distant from the exhausting frontline Mediterranean wars with Islam.

By the early 17th century, Northern Europeans more easily and safely reached the rich eastern markets of China and India by maritime routes around Africa. The discovery of the New World further shifted wealth and cultural dynamism out of the Mediterranean.

For a while, the Mediterranean seemed to roar back after World War II. Huge deposits of petroleum and natural gas were found in North Africa. The Suez Canal was a shortcut to the newly opulent and strategically vital Persian Gulf. With the unification of Europe, and ongoing decolonization of Africa and the Middle East, there was the promise of a new, resource-rich, democratic and commercially interconnected Mediterranean.

Not now. The Arab Spring has brought chaos to almost all of North Africa. The bloodbath in Syria threatens to escalate into something like the Spanish Civil War — sucking in Lebanese militias, Iranian mercenaries, Turkey, the Sunni sheikdoms, Israel and the Palestinians, along with surrogate arms suppliers such as China, Europe, Russia and the United States.