When Labour Planned to Turn the Army on the People

Why ‘the people's party’ discussed sending in troops during the banking crisis

By MICK HUME

There were howls of outrage earlier this year when it was revealed that a question on the scholarship exam for Eton, the UK’s top fee-paying school, had asked boys to imagine they were prime minister in 2040, a time of hypothetical economic crisis. They had to write a speech justifying their imaginary use of the army to put down pretend public unrest on Britain’s streets, shooting dead 25 invisible protesters. Labour and liberal-left commentators declared that this showed how Eton-educated ‘Tory toffs’, such as prime minister David Cameron and his chancellor George Osbourne, were being trained in the ruthless arts of oppressing the people to protect the privileges of their class.

Strangely, there have been few such protests this week over revelations that five years ago a non-imaginary Labour prime minister discussed sending real troops on to British streets to crush public ‘anarchy’. As the financial crisis broke in October 2008, New Labour premier Gordon Brown (who was ‘trained’ at Kirkcaldy High School rather than Eton) reportedly told aides that he feared ‘the whole thing will just explode’ with ‘everyone’ looting and rioting, and that they must plan to use the military to restore order.

The furore at the Labour conference has focused on Damian McBride’s revelations of how the Brown team smeared its opponents in the party. That can surely only be ‘shocking’ to the politically naive or those, such as Labour leader Ed Miliband and Ed Balls, apparently suffering from severe (self-induced?) historical amnesia. The section of the book where Brown’s former spin doctor and fixer tells the story of how Labour discussed sending the Army on to the streets has attracted rather less attention. Which is a shame, because it does more than any intra-Labour gossip to reveal the true character of the self-styled ‘people’s party’.

McBride’s memoir, serialised in the Daily Mail, tells how the Labour prime minister was ‘totally gripped’ by what he perceived as the dangers of social unrest as the public panicked in response to the banking crisis of October 2008. ‘Even if there’s a panic in another country, people will see it on the TVs, and they’ll start panicking here’, Brown told McBride. Then things went from bad to much worse in the prime minister’s mind. ‘If the banks are shutting their doors, and the cashpoints aren’t working, and people go to Tesco and their cards aren’t being accepted, the whole thing will just explode’, he said.

The prime minister apparently prophesied doom. ‘If you can’t buy food or petrol or medicine for your kids, people will just start breaking the windows and helping themselves. And as soon as people see that on TV, that’s the end, because everyone will think that’s OK now, that’s just what we all have to do. It’ll be anarchy. That’s what could happen tomorrow. I’m serious, I’m serious.’

So, what was the Labour government to do? Brown, says McBride, was ‘totally gripped by the danger of what he was about to do, but equally convinced that decisive action had to be taken immediately’. The prime minister told aides that ‘We’d have to think: do we have curfews, do we put the army on the streets, how do we get order back?’. Brown said that ‘I’d have to resign’, then apparently immediately thought better of it — ‘but I couldn’t go if there was just carnage out there: someone would have to be in charge’. The Labour premier was, it seems, bravely prepared to carry on in charge, overseeing ‘carnage out there’ on Britain’s streets.

This little vignette speaks volumes about the true character of the Labour Party today – an empty shell run by an elitist clique with little connection to a public which it fears and loathes. The backstabbing petty politicking of Labour courtiers such as McBride, like something out of a bad Elizabethan melodrama, is one side of that story. The other side is the contempt in which a ‘socialist’ leader such as Brown holds the public, and his willingness to use military force to bring the proles to ‘order’.

Moscow issues Eurasian ultimatum

All or Nothing

By M K Bhadrakumar 

In politics or diplomacy it is seldom, if ever, that anything could be reduced to a matter of "all or nothing". Yet that's how Russian Prime Minister Dmitry Medvedev saw the choice before Ukraine. 

He was laying down the stark choice Russia would give its biggest neighbor (population 46 million) in the post-Soviet space. The context was the momentous decision by the Ukrainian government to approve the text of the country's Association of Agreement with the European Union. 

Moscow had fought a rearguard battle to preempt the development. The future trajectory of Ukraine's EU enterprise is poised to become a fateful issue in Russia's troubled relations with the West. Medvedev used blunt language:

The situation is quite simple: accession to the Customs Union will be practically closed for our Ukrainian colleagues if they sign the Association Agreement with the EU states.

The Ukrainian leadership hopes to sign the Association Agreement at the EU's Eastern Partnership summit due to be held in Vilnius, Lithuania, on November 28-29. 
Ukraine is not a member of the Moscow-led Customs Union (at present composed of Belarus, Kazakhstan, and Russia), but Medvedev added that that even the grouping's special partnership regime will not apply to Ukraine after its EU integration. Moscow had envisaged that the regime would incrementally lure Ukraine into the Customs Union tent. 

The Customs Union is Ukraine's number one trade partner, with a two-way turnover of US$63 billion last year, which accounted for 36% of its overall exports. 

Evidently, Moscow is drawing new battle lines. The Russian calculus shows that the war is not yet lost, and Moscow cannot afford to lose, either. The EU is an elusive enemy, which slithers away in daylight but then is also never too far away, leaving Moscow guessing how tenacious it could be when it comes to Ukraine. Besides, the EU also happens to be Russia's partner. 

All the same, Moscow would factor in that the Ukrainian public opinion is divided over the issue. Half the population supports the EU integration but there is an ethnic and regional divide here with the Russian communities in the eastern regions bordering Russia opposed to the gravitation away from Moscow toward Brussels. 

This contrarian nature of national opinion finds reflection within the ruling Regions Party and the Communist Party and gives a plausible basis for Moscow to work on as the next presidential election approaches in 2015. Then there are the Ukrainian oligarchs who make big money in Russia and there are invisible cords that tie them to corridors of power in Moscow. 

Ukraine's geography becomes crucial for Russia's perennial need of a buffer zone vis-a-vis the West and the fear is that alongside the EU integration there could also be membership of the North Atlantic Treaty Organization (NATO). Moreover, Moscow's Eurasian Union project, which aims at integrating the former Soviet republics under its leadership, loses its shine without Ukraine's inclusion. 

Climatologists Face Inconvenient Truth

Warming Plateau?

Data shows global temperatures aren't rising the way climate scientists have predicted. Now the Intergovernmental Panel on Climate Change faces a problem: publicize these findings and encourage skeptics -- or hush up the figures.

By Axel Bojanowski, Olaf Stampf and Gerald Traufetter

For a quarter of a century now, environmental activists have been issuing predictions in the vein of the Catholic Church, warning people of the coming greenhouse effect armageddon. Environmentalists bleakly predict global warming will usher in plagues of biblical dimensions -- perpetual droughts, deluge-like floods and hurricanes of unprecedented force.

The number of people who believe in such a coming apocalypse, however, has considerably decreased. A survey conducted on behalf of SPIEGEL found a dramatic shift in public opinion -- Germans are losing their fear of climate change. While in 2006 a sizeable majority of 62 percent expressed a fear of global warning, that number has now become a minority of just 39 percent.

One cause of this shift, presumably, is the fact that global warming seems to be taking a break. The average global temperature hasn't risen in 15 years, a deviation from climatologists' computer-simulated predictions.

This is a difficult state of affairs for the Intergovernmental Panel on Climate Change (IPCC), which will release its next assessment report on global warming on Friday, Sept. 27.

None of the authors involved in the report are allowed to comment publicly on the report's contents before its official release. Only after days of closed-door negotiations -- which begin in Stockholm this Monday, Sept. 23 -- will the international forecasting body release its findings.

This much, though, is certain -- the new predictions will be essentially the same as the old ones, albeit a little more precise. The only adjustment the IPCC is expected to make is an increase in the predicted rise of sea levels. The new report is expected to forecast that coastal waters may rise by between 29 and 82 centimeters (11 and 32 inches) by the end of the century.

The crucial question, however, is: How will the IPCC address the pause in global warming? And how reliable are the computer models on which the predictions are based, if they failed to foresee the current temperature plateau?

Germany : 'More Alarmist' Voice

In the lead-up to this week's conference, tensions have been high between the IPCC's climate researchers and the IPCC's government representatives, with Germany's governmental delegates playing a particularly questionable role.

The conference's participants will negotiate the creation of a 30-page summary for policymakers from the 1,000-page full report. Governments send representatives from their relevant ministries in order to have a hand in what message that summary will contain. In Germany's case, this means delegates from the Federal Ministries for the Environment and Research.

"If you are offering the choice between 'alarmist' and 'sceptic' then the German delegation is certainly more in the direction of 'alarmist'. But this is too simple a distinction," says British climatologist Mike Hulme from King's College London, who has many years of experience with IPCC bureaucracy.

Christians protest Pakistan church killings

Identity - be it religion, ethnicity or gender - can be the difference between being allowed to live and having a permanent death sentence hanging over you

By Syed Fazl-e-Haider 

Pakistan's Christian minority on Monday demanded better protection from the government after a devastating double suicide bombing at a church killed more than 80 worshippers on Sunday. Seven children were reported to be among those killed, with 37 others among the wounded. Christians staged protest rallies in Islamabad, Lahore, Karachi, Quetta, and Peshawar and other cities and towns across the country over the deadly attack in the country's troubled northwest. 

The September 22 attack on the 130-year-old All Saints Church in Peshawar, the capital of Khyber Pakhtunkhwa province, is believed to be the deadliest ever to target Christians, who make up about 2% of the country's 180 million population and are considered by the Islamist extremists as soft targets. The dead reportedly included two Muslim police officers who had been posted outside the church. 

Khyber Pakhtunkhwa province, which is facing a Taliban-led insurgency, is home to about 200,000 Christians - of whom 70,000 live in Peshawar. The minority community has been the victim of extremism and discrimination throughout the country. In March this year, a frenzied mob of 3,000 set on fire more than 150 houses and several shops and a church of Christians at Joseph Colony in Badami Bagh area of Lahore city over alleged blasphemous remarks against Prophet Muhammed by Sawan Masih, a 28-year-old Christian sanitation worker. 

In 2009, the Christian community in Gojra City, 100 miles southwest of Lahore, was attacked by a mob. Eight members of the community were killed and dozens of houses burned down over an alleged desecration of pages from the Koran, the holy book of Muslims. 

The News commented,

We have become a country where identity - be it religion, ethnicity or gender - can be the difference between being allowed to live and having a permanent death sentence hanging over you. Christians are massacred while they pray, Shias are hauled out of buses and killed over belief, and women are murdered, raped and humiliated because of traditional notions of "honour". 

The Christians - as patriotic and as Pakistani as any of us - have hardly ever been involved in controversies and have generally chosen to keep a relatively low profile, speaking out only peacefully about the ceaseless social, economic and religious discrimination in their face. Have they been targeted because of their association with the "west" and the notion that they have links with the Christians in the US and other nations? Who can assume that the madness that drives some to mow down human beings like that is immune to this brand of hatred?

Thyber Pakhtunkhwa is at present governed by the Pakistan Tehreek-e-Insaf (PTI), led by Imran Khan, which came to power on May 30 after a general election that month. The security challenge it faces is becoming graver with every passing day. 

Union Leaders Denounce Affordable Care Act

The ACA is destroying our healthcare system, the 40 hour work week and the full-time employee status of middle class workers

By Richard Larsen

Contrary to what former Speaker Nancy Pelosi said, the time to find out what was in the dubiously named Affordable Care Act (ACA) legislation was before they passed it, not after. Even before full implementation next year, most Americans have recognized the threats posed by the massive, arguably worse legislation ever passed by any legislative body. Now we’re seeing the worst of those threats materialize.

Some of the most vociferous denunciation of Obamacare is coming from those who were so ardently supporting its passage, and the party that was forcing it upon the nation. Last week representatives of three of the nation’s largest unions sent a warning letter to Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi. They accurately identified some of the unintended negative consequences of their onerous legislation, declaring that the health care law would “shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”

James Hoffa, president of the International Brotherhood of Teamsters, Joseph Hansen, the international president of the United Food and Commercial Workers International Union, and Donald Taylor, president of UNITE-HERE which represents hotel, food service, textile, gaming, and airport workers, signed the letter.

They began their diatribe, “When you and the President sought our support for the Affordable Care Act, you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat…We have been strong supporters of the notion that all Americans should have access to quality, affordable health care. We have also been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision. Now this vision has come back to haunt us.”

They continued, “The unintended consequences of the ACA are severe. Perverse incentives are causing nightmare scenarios. First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.”

These observations have been validated by what’s happening with employers across the country. In April, the Society for Human Resource Management conducted a survey of small business owners. According to their study, 41% of 603 small business owners have put a hold on hiring because of Obamacare. Over 20% had already cut hours for their employees and reduced payroll.

Fear the Boom, Not the Bust

Today, we really have a dreaded choice of losing an arm now or two arms and a leg tomorrow

by Frank Hollenbeck

If you listen to TV commentators, you’ve been told the worst is behind us. Growth is picking up, and Europe is coming out of its slumber. No one seems to be concerned that this tepid below-2-percent growth is being entirely fed by the central bank’s massive money printing. It’s a “growth at any price” policy. How quickly we forget.

Back in the boom days, anyone who questioned double-digit growth in housing prices was viewed as an unenlightened Cassandra, lacking knowledge on how the new economy had fundamentally changed the law of scarcity. Austrian economists consistently warned that a boom built on foundation of easy money could only lead to a disaster. Today, most of the growth is coming from the interest rate-sensitive sectors of the economy, such as cars and housing. This should be ringing warning bells everywhere.

The conventional wisdom is that the Fed will begin to taper when growth picks up. This is a complete misreading of what is actually happening. The Fed made a monumental mistake, and does not really know how to get out of the trap it had set upon itself.

The Fed embarked on a “we know best” policy of QE3 in the fall, and induced a market bubble in the spring. The S&P 500 gained 12 percent from January to June 2013 while growth remained subdued. The Fed realized its mistake, and now wants to get out. The problem is that in economics, as with most things in life, it’s much easier to get into trouble than out of it. The FED wants to take away the punch bowl, but knows that interest rates will rise, the stock market will crash, and the economy will tank. The longer it waits, the greater will be the inevitable adjustment.

If we do not learn from history we are bound to repeat it. We have been here before. The depression of 1920 and Roosevelt recession of 1937 show us what happens when excessive monetary printing is followed by tepid tapering.

The 1937 Recession is a perfect example of Austrian business cycle theory. It was severe but short. Output fell by 11 percent and industrial production by 32 percent. Unemployment surged back up from 14 percent to 19 percent.

There is considerable disagreement on the cause of the recession, with some economists blaming the tightening of fiscal and monetary policy. Reserve requirements were increased and the budget deficit was reduced. Yet, spending in the 1937 fiscal year was $7.6 billion compared to $6.5 billion in 1934, and $6.4 billion in 1935: two spectacular boom years. Taxes went up about 1 percent of GDP from 1936 to 1937, but were less as a percentage of GDP than the rebound years of 1938 or 1939. Writing in 1956, E. Cary Brown found that fiscal policy changes accounted for less than a quarter of the downturn. The Fed did raise reserve requirements but banks were already holding abundant excess reserves. The new requirements had very little impact.

The American Economy is Not a Free-Market Economy

Cronyism extends far beyond the financial sector

by David Gordon

Those of us who favor the free market must confront a problem. The virtues of the market, and the vices of socialism and interventionism, have been made incontestably clear by Mises, Rothbard, Hazlitt and others. The case for the free market, as these great figures explain it, can readily be grasped and demands no esoteric knowledge. Yet many academics reject the market. They condemn capitalism for leaving many in poverty and for glaring inequalities. How can so many academics fail to grasp what seem to us obvious truths?

In Crony Capitalism, a vital book, Hunter Lewis solves our problem. Those who condemn the free market do so by considering bad features of the present economy, both in the United States and elsewhere in the world. In judging the free market in this way, they rely on an unexamined assumption. They take for granted that the present order of things is the free market in action.

As Lewis explains and documents to the hilt, this assumption is false. What we have today is not the free market but “crony capitalism,” an altogether different matter. Government and business are in a predatory partnership that extracts wealth to its own benefit. The fact that many suffer under the present system should occasion no surprise. Predatory “cronyism” has existed throughout history and has been the main block to economic progress.

Lewis states his arresting thesis in this way: “indeed it may be argued that cronyism is as old as recorded human history and has always been the dominant system. This is precisely why the human race has made so little progress in overcoming poverty. For most of human history, there has been no economic growth at all. People born poor died poor. Whenever economic capital began to be accumulated, it was generally stolen by rulers or their friends or allies.” (p. 9)

Fortunately for the world, supporters of the free market were able in the eighteenth century and after to gain important victories against the older system of predation; but now matters have been reversed, and cronyism is once more the order of the day. In the United States, we no longer live under a predominantly private market. “But taking into account companies and other organizations that are directly or indirectly controlled by the government, it becomes clear that most of the economy is in the ‘public’ sphere.” (p. 12)

Honesty and Trust

Dishonesty is costly

By Walter E. Williams

Dishonesty, lying and cheating are not treated with the right amount of opprobrium in today’s society. To gain an appreciation for the significance of honesty and trust, consider what our day-to-day lives would be like if we couldn’t trust anyone. When we purchase a bottle of 100 pills from our pharmacist, how many of us bother to count the pills? We pull in to a gasoline station and pay $35 for 10 gallons of gasoline. How do we know for sure whether we in fact received 10 gallons instead of 9 3/4? You pay $7 for a 1-pound package of filet mignon. Do you ever independently verify that you in fact received 1 pound? In each of those cases, and thousands more, we simply trust the seller.

There are thousands of cases in which the seller trusts the buyer. Having worked 40 hours, I trust that George Mason University, my employer, will pay me. People place an order with their stockbroker to purchase 100 shares of AT&T stock, and the stockbroker trusts that he’ll be paid. Companies purchase 5 tons of aluminum with payment due 30 days later.

Examples of honesty and trust abound, but imagine the cost and inconvenience if we couldn’t trust anyone. We would have to lug around measuring instruments to make sure that it was in fact 10 gallons of gas and 1 pound of steak that we purchased. Imagine the hassle of having to count out the number of pills in a bottle. If we couldn’t trust, we’d have to bear the costly burden of writing contracts instead of relying on a buyer’s or a seller’s word. We’d have to bear the monitoring costs to ensure compliance in the simplest  of transactions. It’s safe to say that whatever undermines honesty and trust raises the costs of transactions, reduces the value of exchange and makes us poorer.

Honesty and trust come into play in ways that few of us even contemplate. In my neighborhood, workers for FedEx, UPS and other delivery companies routinely leave packages that contain valuable merchandise on the doorstep if no one answers the door.

The local supermarket leaves plants, fertilizer and other home and garden items outdoors overnight unattended. What’s more, the supermarket displays loads of merchandise at entryways and exits. In neighborhoods where there’s less honesty, deliverymen’s leaving merchandise on doorsteps and stores leaving merchandise outdoors unattended or at entryways and exits would be equivalent to economic suicide.

Why Not Talk to Tehran?

Talk to the man, Mr. President.

By PATRICK J. BUCHANAN

In the fall of 1956, Nikita Khrushchev threatened to rain rockets down on London for the British invasion of Suez and sent his tanks into Budapest to drown the Hungarian Revolution in blood.

He blew up the Paris summit in 1960, banged his shoe at the UN, and warned Americans, “We will bury you!”

He insulted John F. Kennedy in Vienna, built the Berlin Wall, and began secretly to place missiles in Cuba capable of annihilating every city in the Southeast, including Washington.

Those were sobering times and serious enemies.

Yet in the Eisenhower-Kennedy years, living under a nuclear Sword of Damocles unlike any the world had ever known, we Americans were on balance a cool, calm and collected crowd.

How then explain the semi-hysteria and near panic in circles of this city over the possibility President Obama might meet with President Hassan Rouhani and hold negotiations over Iran’s nuclear program?

We hear talk of Hitler in the Rhineland, of a new Munich, of America failing to act as Britain failed to act, until, back to the wall, it had no choice but to fight. The old Churchill quotes are heard once again.

But is the Ayatollah Hitler? Is Rouhani von Ribbentrop? Is Iran the Fourth Reich? Should we be very very afraid?

Iran, we are told, is the most dangerous enemy America faces.

But is this true?

Depending on one’s source, Iran’s economy is 2 to 4 percent of ours. After oil and gas, its big exports appear to be caviar, carpets and pistachio nuts. Inflation is unbridled and Iran’s currency is plummeting.

Here is the New York Times last month:

“Rouhani’s aides describe Iran’s economic situation as the worst in decades. … The signs of woe abound.

“Lacking money, Iran’s national soccer team scrapped a training trip to Portugal. Teachers in Tehran nervously awaited their wages, which were inexplicably delayed by more than a week. Officials warned recently that food and medicine imports have stalled for three weeks because of a lack of foreign currency.”

Should Iran start a war, the sinking of its coastal navy would be a few days’ work for the Fifth Fleet. Its air force of U.S. Phantoms dating to the Shah and few dozen MiGs dating to the early 1990s would provide a turkey shoot for Top Gun applicants.

In 30 days, the United States could destroy its airfields, missile sites and nuclear facilities, and impose an air and naval blockade that would reduce Iran to destitution.

And Iran is not only isolated economically.

How Europe's Economy Is Being Devastated By Global Warming Orthodoxy

That sucking sound of European business going to the US

By Jim Powell

Many Europeans complain about their high energy costs, largely due to their increasing dependence on renewables — the most costly energy sources.  But European political parties as well as a majority of people still want government to promote costly options, especially wind and solar power.

This is killing European economies.  Electricity costs in Europe are more than double the cost of electricity in the U.S.  High electricity costs make it difficult for businesses to operate if they need a lot of electricity.  Their cost of electricity is high, and they might not be able to pass it on to consumers when consumers are free to patronize businesses operating where electricity costs are much lower.  Many businesses under pressure are likely move to a lower-cost location, and jobs will go with them.  Antonio Tajani, European Commissioner for Industry and Entrepreneurship, warned: “We face a systemic industrial massacre.”

The Germans probably have done more than anyone else to promote high-cost wind and solar power.  Other types of renewable energy, like hydropower and geothermal power, usually are limited to a small number of suitable sites. The Germans want to have renewables account for 80 percent of their electricity.  Their experience illustrates consequences of such a policy.

The most obvious consequence is lots of subsidies and taxes.  The German government has arranged for renewable energy producers to sell the power grid their electricity at more than 6 times the wholesale electricity market rate.  Nature reported that in 2012 renewable energy producers “cashed in an estimated €20 billion for electricity worth a mere €3 billion.”  Counting the costs of electricity from all sources, the Institute for Energy Research reported that “Germans pay 34 cents a kilowatt hour compared to an average of 12 cents in the United States).”

Big gap between low U.S. energy costs and high European energy costs

Americans, of course, benefit from the fracking revolution, despite President Obama’s efforts to discourage it.  Fracking is responsible for natural gas prices that are one-third to one-quarter of what Europeans pay for Russian gas.  As we know, fracking has boosted oil production in America, too.  Since 2005, U.S. electricity rates have remained substantially the same, while European electricity rates have jumped about 40 percent.  The expansion of pipelines from Canada, along existing permitted routes, will make it possible to tap larger continental reserves, even if Obama continues to block or severely restrict the Keystone pipeline.  Cheap, reliable American energy helps cover sins like the world’s highest corporate income taxes.   By contrast, in Europe mere talk about fracking can be enough to set off riots.

The Boston Consulting Group affirmed that electricity is one of the biggest factors that determine manufacturing costs.  The cost of U.S. natural gas has come down by half since 2005, and more and more utilities are switching to natural gas, so the outlook is for U.S. electricity rates to remain steady or decline further, whereas European electricity costs seem likely to go higher as more wind turbines and solar panels are installed.

Because crude oil costs less in the U.S. than in Europe, feedstocks are cheaper for companies manufacturing plastics, pharmaceuticals, industrial chemicals and other products.  Neither wind nor solar power produce feedstocks.  IHS, an international market research firm, projects that by 2020 U.S. chemical production will double, but European chemical production could fall by about a third.

The Association of German Chambers of Industry and Commerce (DIHK) reported that its surveys indicated many German business executives would rather move operations to the US than remain handicapped by high European electricity costs as they try to remain competitive in world markets.  DIHK Chief Executive Martin Wansleben acknowledged that “The U.S. has become much more attractive to companies than Europe.”

It’s no wonder more European companies are opening or expanding facilities in the U.S., and more U.S. multi-nationals are shifting overseas operations back home:

·                     Airbus is building an aircraft assembly plant in Mobile, Alabama.  It will produce A320 jets for the American market.  Der Spiegel noted that Airbus “could save on manufacturing costs compared to its plants in Hamburg, Germany, and Toulouse, France.”

·                     Siemens, a German multi-national engineering and electronics company, is making turbines for fossil fuel power plants in Charlotte, North Carolina.

·                     BASF, the German chemical company, has opened a $33 million facility expansion in Research Triangle Park, North Carolina.

·                     Michelin, the French tire producer, is developing a $750 million facility in Greenville, South Carolina.

·                     BMZ GmbH, a German company, opened its U.S. facility in Virginia Beach, Virginia for research, development, assembly and distribution of lithium ion rechargeable batteries.

Some Plain Talk About Rights

Disaster: Import an underclass, then give it with the free meal ticket the right to vote.

By George Handlery 

The right to vote is a key feature of the democratic order. This is so self-evident that one fears to state it. Now, a reason emerges to commit in favor of the sensible application of the principle. The reason is as stunning as it is threatening. This practice is now under attack by the multiculturalists and the Left. 

The right to vote is the ability to decide a group’s future. True, this right is not limited to balloting. The concept assumes that a choice is offered. When the writer was young, the police came to herd voters to the local “Council House”. There one was to vote for Our Beloved Party. Thus, the right to vote deteriorated into an obligation to legitimize oppression. There was no right to abstain or to vote “wrong”, that is for the “Class Enemy”, and against the Soviet “Camp of Peace”.

As mentioned, an attack upon the system of voting, as defined by tradition and common sense, is emerging. Those that think their region will be immune to this threat will be disappointed.

In Western Europe an idea spreads that will not stop at the water’s edge. It is to extend to aliens the right to vote on the local level. This goes beyond voting in private associations. For instance, the writer has been a member of a Swiss village gun club and voted on matters of its governance. Newly, Green – Red projects wish to give the vote to foreigners in local government. This is not a voluntary association but a component of a system that peaks as a sovereign state. 

The power conferred by this right depends on the entity’s system. Centralized France represents a pole and Switzerland illustrates the other extreme. There principled “decentralization” is the fitting term as, in official parlance, “sovereign” means “people” and not the executive. Accordingly, government is built from the bottom to the top. The central government, whose authority flows from “below”, is the executive of local organs.  

In some systems, local government is significant, especially if the parameters of daily life are drawn locally. Thus, local institutions are more than a cog in an aggregate. Whoever controls local government is not in charge of a minor agency but empowered to regulate a key gear. 

Those that propose that the right to vote in local matters be exercised without citizenship imply that the power conferred is insignificant. This empowerment in local politics insinuates that the integration of non-citizens is facilitated through their inclusion in decision-making. This contradicts a traditional approach, which is (a) controlled immigration, (b) residency, (c) integration. Naturalization admits to membership in a community. It is to follow integration - the internalization of the community’s values. 

Germany Elects Mama – The Real Winner is Socialism

Mrs. Merkel's CDU/CSU Trounces Rivals 

Political scientists in Germany call it the 'Mutti factor' – as German news magazine Der Spiegel writes:

 “Germans like their quiet. Should a couple raise their voices such that they can be heard in the courtyard of a city apartment building, it is a sure bet that before long, the phrase "Ruhe da!" ("Quiet!") will come ringing out of an open window. Even in big metropolises like Berlin, most flat seekers yearn for silence and tranquility, far removed from the chaotic noise emanating from the busy streets.

Angela Merkel, more than any other politician on the campaign trail this year, has understood her flock's desire for calm.

[…]

The chancellor has even gone so far as to directly appeal to the electorate's longing for quiet. As Reuters correspondent Alexandra Hudson noted in a recent article, the election manifesto for Merkel's party includes the assertion: "One in two Germans feels troubled by noise" and suggests that her party would seek to improve the situation.

[…] a chancellor who prefers to wait before making decisions and a leader who is sometimes difficult to pin down. It has also helped propel her popularity to dizzying heights. Her followers have taken to affectionately calling her "Angie." The German press has dubbed her "Mutti," the word children in Germany use to address their mothers.”

 (emphasis added)

 Angela Merkel delivered the biggest victory for her party since Helmuth Kohl's post-reunification heyday, and only barely missed attaining an absolute majority of parliamentary seats (although her party only gathered 42% of the vote, up a respectable 8.2% from the last election according to initial estimates, parties that fail to take the 5% hurdle won't get any seats). 

And herein lies the problem. You may be wondering why we are claiming that 'socialism was the real winner', given that a nominally conservative party clearly won the election. We explain the reason below.  

Sole Voice in Favor of Free Market Capitalism Gone

It would be an exaggeration to equate the FDP with classical liberalism, but as far as German politics goes, it is the party that comes closest to its ideals. It definitely was the sole advocate of free market capitalism in the German political landscape. While it has always been a small party, it was a famed 'kingmaker' through most of the post WW 2 era, managing to influence both social democratic and nominally conservative governments by entering into coalitions with them.

Global Warming and the chilling of Politics

The aim of the IPCC is to freeze political debate

By Tim Black

This Friday, the Intergovernmental Panel on Climate Change (IPCC) is set to publish the first instalment of its three-part, 2,000-page draught-excluder, the memorably titled Fifth Assessment. This, like its predecessor, which was published at the height of climate-change mania in 2007, will tell us ‘unequivocally’ that climate change is happening, that the situation is perilous, and that there is a sliding scale of bad scenarios awaiting us in the warmed-up future.

As such, the prophecies leaked from the draft version sound a comfortably familiar note of terror, like the ever-resurrected bad guy in a tired horror-movie franchise. We’ll be told that the glaciers are melting quicker than thought, that sea levels could rise by three feet and that temperatures could rise up to 4.8 degrees Celsius this century. And, on the back of The Science, the old alarmist lags have once again been demanding that we do something. In the words of Lord Stern, author of the environmentally friendly The Stern Review in 2006, we need to decide what ‘kind of world we want to present to our children and grandchildren’. That is, one scorched by our present greed or saved by our cutting back.

That’s the point of the IPCC’s infrequent assessments. They constitute the Word of a very secular God, the expert, the scientist. They tell us what we ought to do. No questioning. No debate. And therefore, no politics.

But there’s one big fat sceptical fly stuck in the IPCC’s ointment. And that’s the small matter of a distinct absence of global warming over the past 15 years, despite the IPCC’s models insisting otherwise. In December 2012, for instance, the UK Met Office released a forecast suggesting that not only have global temperatures not risen for over a decade but that they are unlikely to rise significantly in the period up to 2017. Likewise, earlier this year, even someone as committed to climate-change alarmism as James Hansen, the recently retired head of NASA’s climate-change research arm, admitted that the ‘five-year-mean global temperature has been flat for the last decade’.

In the draft version of the report, the IPCC does acknowledge that the ‘the rate of warming over the past 15 years is smaller than the trend since 1951’. In fact, the IPCC now admits that the rate of warming between 1998 and 2012 was about half the average rate since 1951. And as it stands, no one is quite certain why this is, with everything from the oceans’ ability to absorb heat to the solar cycle being blamed.

It Has Begun in Italy

Monte Paschi "Bails In" Bondholders, Halts $650 Million In Coupon Payments

by Tyler Durden

Recall that three weeks ago we warned that "Monti Paschi Faces Bail-In As Capital Needs Point To Nationalization" although we left open the question of "who will get the haircut including senior bondholders and depositors.... given the small size of sub-debt in the capital structures." Today, as many expected on the day following the German elections, the dominos are finally starting to wobble, and as we predicted, Monte Paschi, Italy's oldest and according to many, most insolvent bank, quietly commenced a bondholder "bail in" after it said that it suspended interest payments on three hybrid notes following demands by European authorities that bondholders contribute to the restructuring of the bailed out Italian lender. Remember what Diesel-BOOM said about Cyprus - that it is a template? He wasn't joking.

As Bloomberg reports, Monte Paschi "said in a statement that it won’t pay interest on about 481 million euros ($650 million) of outstanding hybrid notes issued through MPS Capital Trust II and Antonveneta Capital Trusts I and II." Why these notes? Because hybrid bondholders have zero protections and zero recourse. "Under the terms of the undated notes, the Siena, Italy-based lender is allowed to suspend interest without defaulting and doesn’t have to make up the missed coupons when payments resume." Then again hybrids, to quote the Dutchman, are just the template for the balance of the bank's balance sheet.

Why is this happening now? Simple: the Merkel reelection is in the bag, and the EURUSD is too high (recall Adidas' laments from last week). Furthermore, if the ECB proceeds with another LTRO as many believe it will, it will force the EURUSD even higher, surging from even more unwanted liquidity. So what to do? Why stage a small, contained crisis of course. Such as a bail in by a major Italian bank. The good news for now is that depositors are untouched. Unfortunately, with depositor cash on the wrong end of the (un)secured liability continuum it is only a matter of time before those with uninsured deposits share some of the Cypriot pain. After all, in the brave New Normal insolvent world, "it is only fair."

To wit:

“In the new world we’re in, bondholders pick up the tab when they can be forced to,” said John Raymond, an analyst at CreditSights Inc. in London. “State aid rules impose losses where possible.”

European Union Competition Commissioner Joaquin Almunia told reporters on Sept. 7 the bank should receive final approval for its restructuring plan within two months. The lender, which received a 4.1 billion-euro bailout, submitted a revised plan that more than doubles the amount of new capital it intends to raise to 2.5 billion euros as it seeks to repay the aid.

Almunia recommended that “cash outflows from the beneficiary to hybrid capital holders and subordinated debt holders be prevented to the maximum extent possible,” in a letter sent to Italian Finance Minister Fabrizio Saccomanni dated July 16 and seen by Bloomberg News.

More importantly, this is just the start:

Monte Paschi’s 108 million euros of undated, non-cumulative trust preferred stock issued through Antonveneta Capital Trust II fell 5 cents on the euro to 41 cents, according to Bloomberg bond prices. That’s the lowest price since April 23, data compiled by Bloomberg show. 

While the bank is halting payments on the bonds that make up its Tier 1 capital, the most-junior layer of debt capital instruments, it also has the equivalent of about 2.6 billion euros of more-senior Upper Tier 2 debt in three issues in euros and pounds. 

While Monte Paschi is making payments on these notes, it isn’t clear that it will be able to go on doing so, said Raymond.

Expect an update from the bank on Wednesday when it will hold a conference call. 

Failure has been outlawed

By Eliminating Failure, the Government Robs Us Of Success

By Harry Binswanger,

Where does the Left get its power? From one source at root: a wrong standard of morality, of good and evil. Self-sacrifice is said to be the good, self-interest the evil. The Left blames every social and economic disaster on “selfish greed.” What caused the financial meltdown, according to the Left? The selfish greed of Wall Street bankers. Why was Obamacare passed? Because people are in need, and the greedy must serve the needy.

Those on the Right should be pointing out that “selfish greed” is a smear-term: it blackens ambitiousness and the desire to produce wealth, which are virtues, by associating them with mindless gluttony. But Rightists don’t expose the smear because they share the anti-self-morality, or at least fear to challenge it.

So far, most public defenders of capitalism have lacked the courage to say, in the words of John Galt in Atlas Shrugged, “your life belongs to you and the good is to live it.”

But, as a small step in the right direction, pro-capitalists are beginning to answer the absurd leftist claim that greed caused the financial crisis. They are pointing out this obvious fact: “greed”–as the desire to get rich–is a constant. It did not suddenly come into being, or flower, in the period leading up to the financial meltdown.

For instance, a Wall Street Journal editorial (April 25, 2013) observed that “the crisis had several causes other than the greed that is found at all times on Wall Street and every other street.”

Indeed. But something does change, psychologically, in the boom preceding a crash. The change is not an increased desire for wealth. Nor is it that people become fixated on the short range. What changes is people’s assessment of risk. People do not become more greedy, they become over-optimistic. Seeing stocks and real-estate go up and up, they imagine that this is the new normal and that a decline in prices is not in the cards.

By the same token, during the panic and bust phase, people become overly pessimistic. They imagine that there is no bottom, that investments are all super-risky, and that doom is at hand.

As the boom is not an excess of greed, so the bust is not a greed-deficit.

Beneath the psychological swings lies the root cause: the boom-bust cycle is due to government manipulation of the money supply, as the Austrian school of economists have demonstrated. The Fed’s injection of ever-more money into system is what creates the ever-rising prices and thus the over-optimism.

Another government policy fuels the over-optimism: failure has been (almost) outlawed. In a free economy, there are always some firms that are failing. In a regulated economy, the government props up failing firms, thereby creating the moral hazard that adds to the over-optimism.

“Too big to fail” is supplemented by “too small to fail” and “too medium to fail.” Myriad government interventions act to protect businesses, large and small, from failure.