Homeland Security set for next Wall St collapse

Next time will not be different

By Ellen Brown 
Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over 20 years. 

DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why? 

Recently revealed statements by former UK prime minister Gordon Brown at the height of the banking crisis in October 2008 could give some insights into that question. An article on BBC News on September 21, 2013, drew from an explosive autobiography called Power Trip by Brown's spin doctor Damian McBride, who said the prime minister was worried that law and order could collapse during the financial crisis. 

McBride quoted Brown as saying:

If the banks are shutting their doors, and the cash points aren't working, and people go to Tesco [a grocery chain] and their cards aren't being accepted, the whole thing will just explode.

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.

How to deal with that threat? Brown said, "We'd have to think: do we have curfews, do we put the army on the streets, how do we get order back?" 

McBride wrote in his book, "It was extraordinary to see Gordon so totally gripped by the danger of what he was about to do, but equally convinced that decisive action had to be taken immediately." He compared the threat to the Cuban Missile Crisis. 

Fear of this threat was echoed in September 2008 by then US Treasury secretary Hank Paulson, who reportedly warned that the US government might have to resort to martial law if Wall Street were not bailed out from the credit collapse. 

In both countries, martial law was avoided when their legislatures succumbed to pressure and bailed out the banks. But many pundits are saying that another collapse is imminent; and this time, governments may not be so willing to step up to the plate. 

What triggered the 2008 crisis was a run, not on the conventional banking system but in the "shadow" banking system, a collection of non-bank financial intermediaries that provide services similar to traditional commercial banks but are unregulated. They include hedge funds, money market funds, credit investment funds, exchange-traded funds, private equity funds, securities broker dealers, securitization and finance companies. Investment banks and commercial banks may also conduct much of their business in the shadows of this unregulated system. 

The shadow financial casino has only grown larger since 2008, and in the next Lehman-style collapse, government bailouts may not be available. According to President Barack Obama in his remarks on the Dodd-Frank Act on July 15, 2010, "Because of this reform, ... there will be no more taxpayer funded bailouts - period." 

Governments in Europe are also shying away from further bailouts. The Financial Stability Board (FSB) in Switzerland has therefore required the systemically risky banks to devise "living wills" setting forth what they will do in the event of insolvency. The template established by the FSB requires them to "bail in" their creditors; and depositors, it turns out, are the largest class of bank creditor. (For fuller discussion, see my earlier article here.) 

When depositors cannot access their bank accounts to get money for food for the kids, they could well start breaking store windows and helping themselves. Worse, they might plot to overthrow the financier-controlled government. Witness Greece, where increasing disillusionment with the ability of the government to rescue the citizens from the worst depression since 1929 has precipitated riots and threats of violent overthrow. 

The Population Control Holocaust

"Progressives" vs "Black Children"

Babies born in China in spite of the one-child policy are declared “black children” and have no right to food, health care, or education. If female, they are frequently killed, either at birth, or if apprehended later, at orphanages where they are gathered. Shown above is Mei Ming, a two-year-old girl tied to a chair in a “dying room.” The bucket below her is to catch her urine and feces as she dies over the next several days from starvation and neglect. The above photo was taken by a British TV crew during their filming of the 1995 documentary exposé The Dying Rooms. The Chinese government denies the existence of dying rooms.

By Robert Zubrin

There is a single ideological current running through a seemingly disparate collection of noxious modern political and scientific movements, ranging from militarism, imperialism, racism, xenophobia, and radical environmentalism, to socialism, Nazism, and totalitarian communism. This is the ideology of antihumanism: the belief that the human race is a horde of vermin whose unconstrained aspirations and appetites endanger the natural order, and that tyrannical measures are necessary to constrain humanity. The founding prophet of modern antihumanism is Thomas Malthus (1766-1834), who offered a pseudoscientific basis for the idea that human reproduction always outruns available resources. Following this pessimistic and inaccurate assessment of the capacity of human ingenuity to develop new resources, Malthus advocated oppressive policies that led to the starvation of millions in India and Ireland.

While Malthus’s argument that human population growth invariably leads to famine and poverty is plainly at odds with the historical evidence, which shows global living standards rising with population growth, it nonetheless persisted and even gained strength among intellectuals and political leaders in the twentieth and twenty-first centuries. Its most pernicious manifestation in recent decades has been the doctrine of population control, famously advocated by ecologist Paul Ehrlich, whose bestselling 1968 antihumanist tract The Population Bomb has served as the bible of neo-Malthusianism. In this book, Ehrlich warned of overpopulation and advocated that the American government adopt stringent population control measures, both domestically and for the Third World countries that received American foreign aid. (Ehrlich, it should be noted, is the mentor of and frequent collaborator with John Holdren, President Obama’s science advisor.)
Until the mid-1960s, American population control programs, both at home and abroad, were largely funded and implemented by private organizations such as the Population Council and Planned Parenthood — groups with deep roots in the eugenics movement. While disposing of millions of dollars provided to them by the Rockefeller, Ford, and Milbank Foundations, among others, the resources available to support their work were meager in comparison with their vast ambitions. This situation changed radically in the mid-1960s, when the U.S. Congress, responding to the agitation of overpopulation  ideologues, finally appropriated federal funds to underwrite first domestic and then foreign population control programs. Suddenly, instead of mere millions, there were hundreds of millions and eventually billions of dollars available to fund global campaigns of mass abortion and forced sterilization. The result would be human catastrophe on a worldwide scale.

Among the first to be targeted were America’s own Third World population at home — the native American Indians. Starting in 1966, Secretary of the Interior Stuart Udall began to make use of newly available Medicaid money to set up sterilization programs at federally funded Indian Health Services (IHS) hospitals. As reported by Angela Franks in her 2005 book Margaret Sanger’s Eugenic Legacy:

These sterilizations were frequently performed without adequate informed consent....  Native American physician Constance Redbird Uri estimated that up to one-quarter of Indian women of childbearing age had been sterilized by 1977; in one hospital in Oklahoma, one-fourth of the women admitted (for any reason) left sterilized.... She also gathered evidence that all the pureblood women of the Kaw tribe in Oklahoma were sterilized in the 1970s....

Unfortunately, and amazingly, problems with the Indian Health Service seem to persist ... recently [in the early 1990s], in South Dakota, IHS was again accused of not following informed-consent procedures, this time for Norplant, and apparently promoted the long-acting contraceptive to Native American women who should not use it due to contraindicating, preexisting medical conditions. The Native American Women’s Health Education Resource Center reports that one woman was recently told by her doctors that they would remove the implant only if she would agree to a tubal ligation. The genocidal dreams of bureaucrats still cast their shadow on American soil.

Programs of a comparable character were also set up in clinics funded by the U.S. Office of Economic Opportunity in low-income (predominantly black) neighborhoods in the United States. Meanwhile, on the U.S. territory of Puerto Rico, a mass sterilization program was instigated by the Draper Fund/Population Crisis Committee and implemented with federal funds from the Department of Health, Education, and Welfare through the island’s major hospitals as well as a host of smaller clinics. According to the report of a medical fact-finding mission conducted in 1975, the effort was successful in sterilizing close to one-third of Puerto Rican women of child-bearing age.

Better Dead Than Red

However, it was not at home but abroad that the heaviest artillery of the population control onslaught was directed. During the Cold War, anything from the Apollo program to public-education funding could be sold to the federal government if it could be justified as part of the global struggle against communism. Accordingly, ideologues at some of the highest levels of power and influence formulated a party line that the population of the world’s poor nations needed to be drastically cut in order to reduce the potential recruitment pool available to the communist cause. President Lyndon Johnson was provided a fraudulent study by a RAND Corporation economist that used cooked calculations to “prove” that Third World children actually had negative economic value. Thus, by allowing excessive numbers of children to be born, Asian, African, and Latin American governments were deepening the poverty of their populations, while multiplying the masses of angry proletarians ready to be led against America by the organizers of the coming World Revolution.

Venezuela’s Impending Collapse

After a certain amount of looting, there’s little left to steal

BY MONTY GUILD

We predicted Venezuela’s collapse when Hugo Chávez came to power, and we’ve reiterated this opinion every few years since. The movement towards economic collapse is accelerating. In addition to enriching himself from the public purse, Chávez was profoundly incompetent, and his policies have laid waste to the Venezuelan economy.

We’ve Seen It Many Times Before

A familiar pattern was repeated in Venezuela, just as it has been repeated numerous times before in Latin America and in other developing countries: ignorant and self-serving leaders sell a bill of faulty goods to the uneducated and poverty-stricken masses.

While making grandiose promises of social and economic transformation that would help the people, Mr. Chávez did nothing to lay the groundwork for real growth. For example, his policies did nothing to encourage education or inspire entrepreneurship. Rather, he squandered the national resources that he appropriated, using the national oil company to provide unsustainable handouts internationally and domestically. These handouts can’t last, as he allowed the oil company’s infrastructure to deteriorate and failed to reinvest to maintain and upgrade their facilities. His program was not about growth — it was about wealth redistribution; first to himself, his cronies, and then eventually to the poor. Without growth, the end of the redistribution is close at hand.

Why Is Venezuela’s Strategy Failing?

First, waste. Natural resources, one of the foundations of a country’s wealth and strength, have been distributed to other countries in acts of grandstanding and foolish posturing. Venezuela did this with its oil for several ideological co-travelers in Latin America.

Resources are also wasted through corruption and inefficiency. The state operation of large enterprises tends to become corrupt because the appointment of managerial staff doesn’t depend on competence, but is a matter of distributing political spoils to supporters. Competent technocrats get fired for not kowtowing to the powers that be, and they get replaced by less competent bureaucrats — whose sole qualification is unquestioning support for the regime, not the ability to excel at their job.

Thus, the state oil firm ended up saddled with managers and executives who are not geologists or petroleum engineers — and who aren’t even competent in management itself, let alone the technicalities of the business. The consequence? Falling oil production, increased handouts, and outright theft — and lo and behold, the economic surplus that could have been reinvested in the country’s economy is gone. So, the promises of social programs made to the country’s poor at the start of the whole process can’t be kept. And one of the bones tossed to them — suppressed domestic prices for energy — ensures extravagant waste of petroleum resources in the domestic economy itself. Ultimately, it has led to the squandering of the geological asset that national oil reserves represent for the nation.

Second, much of Venezuela’s program was based upon confiscation. But if you take enough from the rich, they eventually leave — taking financial, intellectual, and entrepreneurial capital with them. So after a certain amount of looting, there’s little left to steal.

I, Airplane

Made on Earth

by DON BOUDREAUX

The above nearly speaks for itself.  Many U.S. imports are indeed inputs used to make manufactured goods in the U.S. And, of course, each of these parts is itself the result of creative minds and parts and raw materials from all around the world.  As Cato’s Dan Ikenson would say, Boeing jetliners are “Made on Earth.”

‘Climate Change Deniers’ Gagged by LA Times

Al Gore Tickled Pink

The above graphic is Figure 1.4 from Chapter 1 of a draft of the Fifth Assessment Report from the Intergovernmental Panel on Climate Change. The initials at the top represent the First Assessment Report (FAR) in 1990, the Second (SAR) in 1995. Shaded banks show range of predictions from each of the four climate models used for all four reports since 1990. That last report, AR4, was issued in 2007. Model runs after 1992 were tuned to track temporary cooling due to the 1991 Mount Pinatubo eruption in The Philippines. The black squares, show with uncertainty bars, measure the observed average surface temperatures over the same interval. The range of model runs is syndicated by the vertical bars. The light gray area above and below is not part of the model prediction range. The final version of the new IPCC report, AR5, will be issued later this month.

So the LA Times has concluded it would be best to shut up the people who dare remind us that the actual observations say something completely different from 'AGW' models. Even if said contradictory observations can be found smack in the IPCC report, which incongruently keeps asserting that the 'models' should be take precedence over reality.

by Pater Tenebrarum

After 15 years of no 'warming', even while CO2 in the atmosphere has increased by one third (from about almost nothing to still almost nothing), what is left to do for those whose livelihood and professional pride depends on keeping the doomsday story going?

For the scientists among them it would be a good time to ponder the validity of their models, which have consistently made predictions wide of the mark since they were first created. It may be a good time to have a dialogue with the many scientists who have long proposed alternative theories of the planet's climate cycles (that these cycles do exist and that we have been in a warming cycle for  thousands of years is not denied by anyone) – alternatives to 'AGW', or 'anthropogenic global warming' that is.

However, as Thomas Kuhn pointed out in the 1960s, science tends to work within 'accepted paradigms' that are not necessarily progressing toward the truth. Revolutionary theories that are not in keeping with the accepted paradigm may be rejected for a long time, until their correctness can no longer be denied. One should not even blithely assume that all 'later' science is necessarily better than 'earlier' science. At times valuable knowledge even gets lost and must be rediscovered (economics is a case in point). 

Anyway, many supporters of the AGW theory appear eager to shut off dialogue with opponents altogether. A friend pointed us to a tweet by Al Gore in this context, in which Gore informs us gleefully that: 

The @latimes no longer prints letters that deny manmade global warming. Why? Because they're "factually inaccurate." 

In other words, the LA Times seemingly believes itself to be in possession of the scientific 'truth' and those not accepting the 'facts' it has ascertained beyond doubt have hereby been excommunicated. The 'truth' you see, needs to be protected from naysayers. 

The Arbiters of 'Truth'

The LA Times letter editor's arrogant and patronizing attempt at explaining his decision can be read here. We want to just pick out one sentence that requires instant rebuttal. In an accusing tone he thunders: 

“Many say climate change is a hoax, a scheme by liberals to curtail personal freedom”. 

The 'liberals' (which really should be called leftists or socialists for the sake of precision) are mainly what Lenin would have referred to as 'useful idiots' in this case. Most sure have swallowed the AGW story hook line and sinker.

Speaking of 'factual inaccuracies', can you spot the factual inaccuracy in what the  LA Times letter editor wrote?

Again, absolutely no-one is denying that there is 'climate change'. The planet's climate has changed since day one about four billion years ago and will never crease doing so.

What is at issue and is definitely up for debate is if there is such a thing as 'man-made global warming'. That is obviously a big difference. That proponents of the AGW theory (among them virtually every government) want to 'curtail our freedom' is undeniable. Economic freedom is just as important an aspect of freedom (in our opinion possibly the most important) as other aspects of it.

‘Sir, You Are Recreating’

'Gestapo' tactics meet senior citizens at Yellowstone

By John Macone

Pat Vaillancourt went on a trip last week that was intended to showcase some of America’s greatest treasures.

Instead, the Salisbury resident said she and others on her tour bus witnessed an ugly spectacle that made her embarrassed, angry and heartbroken for her country.

Vaillancourt was one of thousands of people who found themselves in a national park as the federal government shutdown went into effect on Oct. 1. For many hours her tour group, which included senior citizen visitors from Japan, Australia, Canada and the United States, were locked in a Yellowstone National Park hotel under armed guard.

The tourists were treated harshly by armed park employees, she said, so much so that some of the foreign tourists with limited English skills thought they were under arrest.

When finally allowed to leave, the bus was not allowed to halt at all along the 2.5-hour trip out of the park, not even to stop at private bathrooms that were open along the route.

“We’ve become a country of fear, guns and control,” said Vaillancourt, who grew up in Lawrence. “It was like they brought out the armed forces. Nobody was saying, ‘we’re sorry,’ it was all like — ” as she clenched her fist and banged it against her forearm.

Vaillancourt took part in a nine-day tour of western parks and sites along with about four dozen senior citizen tourists. One of the highlights of the tour was to be Yellowstone, where they arrived just as the shutdown went into effect.

Rangers systematically sent visitors out of the park, though some groups that had hotel reservations — such as Vaillancourt’s — were allowed to stay for two days. Those two days started out on a sour note, she said.

The bus stopped along a road when a large herd of bison passed nearby, and seniors filed out to take photos. Almost immediately, an armed ranger came by and ordered them to get back in, saying they couldn’t “recreate.” The tour guide, who had paid a $300 fee the day before to bring the group into the park, argued that the seniors weren’t “recreating,” just taking photos.

“She responded and said, ‘Sir, you are recreating,’ and her tone became very aggressive,” Vaillancourt said.

The seniors quickly filed back onboard and the bus went to the Old Faithful Inn, the park’s premier lodge located adjacent to the park’s most famous site, Old Faithful geyser. That was as close as they could get to the famous site — barricades were erected around Old Faithful, and the seniors were locked inside the hotel, where armed rangers stayed at the door.

There Is Life after Default

Treasuries are bonds just like any other bonds. There’s nothing magic, mythical, or sacred about them.

by Peter G. Klein

In following the debates over raising the US debt ceiling, I’m struck by the frequent claim that defaulting on public debt is unthinkable because of the “signal” that would send. If you can’t rely on the T-bill, what can you rely on? Debt instruments backed by the “full faith and credit” of the United States are supposed to be risk-free — almost magically so — somehow transcending the vagaries of ordinary debt markets. The Treasury bill, in other words, has become a myth and symbol, just like the US Constitution.

I find this line of reasoning unpersuasive. A T-bill is a bond just like any other bond. Corporations, municipalities, and other issuers default on bonds all the time, and the results are hardly catastrophic.

Financial markets have been restructuring debt for many centuries, and they’ve gotten pretty good at it. From the discussion regarding T-bills, you’d think no one had ever heard of default-risk premiums before. (Interestingly, this seems to be a case of American exceptionalism: people aren’t particularly happy about Greek, Irish, and Portuguese defaults, but no one thinks the world will end because of them.)

So, isn’t it time to demythologize all of this? Treasuries are bonds just like any other bonds. There’s nothing magic, mythical, or sacred about them. A default on US government debt is no more or less radical than a default on any other kind of debt.

Detroit Mayor Gets 28 Year Sentence For Corruption

The Politics of Crime in Detroit

Following his "years long scheme to shakedown contractors and reward allies," Kwame Kilpatrick - who served as Detroit Mayor from 2002 to 2008 - was this morning sentenced to 28 years in prison for corruption. Regarded by many as a key contributor to Detroit's eventual downfall, it seems Kilpatrick is somewhat repentant, stating, "the people here are suffering, they're hurting. A great deal of that hurt I accept responsibility for." Agents who pored over bank accounts and credit cards said Kilpatrick spent $840,000 beyond his salary during his time as mayor. Having resigned in 2008 over a sexting scandal, the scale of his corruption, prosecutors added, "exacerbated the crisis." 

Via Fox News (AP),

Former Detroit Mayor Kwame Kilpatrick was sentenced Thursday to 28 years in prison for corruption, the apparent last step after a series of scandals destroyed his political career and helped steer a crisis-laden city even deeper into trouble. 

Kilpatrick, who served as mayor from 2002 until fall 2008, fattened his bank account by tens of thousands of dollars, traveled the country in private planes and even strong-armed his campaign fundraiser for stacks of cash hidden in her bra, according to evidence at trial. 

"I'm ready to go so the city can move on," Kilpatrick told the judge. "The people here are suffering, they're hurting. A great deal of that hurt I accept responsibility for." 

In March, Kilpatrick, 43, was convicted of racketeering conspiracy, fraud, extortion and tax crimes. The government called it the "Kilpatrick enterprise," a yearslong scheme to shake down contractors and reward allies. He was doomed by his own text messages, which revealed efforts to fix deals for a pal, Bobby Ferguson, an excavator who got millions of dollars in city work through the water department. 

... 

Agents who pored over bank accounts and credit cards said Kilpatrick spent $840,000 beyond his salary during his time as mayor. Defense attorneys tried to portray the money as generous gifts from political supporters who opened their wallets for birthdays or holidays. 

...

Kilpatrick, a Democrat, quit office in 2008 in a different scandal that was extraordinary at the time but seems smaller compared with the sweeping federal probe that has led to the convictions of more than 30 people. Sexually explicit text messages revealed that Kilpatrick had lied during a trial to cover up an affair with his top aide, Christine Beatty, and to hide the reasons for demoting or firing police officers who suspected wrongdoing at city hall. 

... 

"Kilpatrick is not the main culprit of the city's historic bankruptcy, which is the result of larger social and economic forces at work for decades. But his corrupt administration exacerbated the crisis," prosecutors said in a court filing last week.

The breakup of the US leviathan

Is Red State America Seceding?

By Patrick J. Buchanan

In the last decade of the 20th century, as the Soviet Empire disintegrated so, too, did that prison house of nations, the USSR.

Out of the decomposing carcass came Russia, Belarus, Ukraine, Lithuania, Latvia, Estonia and Moldova, all in Europe; Georgia, Armenia and Azerbaijan in the Caucasus; and Tajikistan, Uzbekistan, Turkmenistan, Kyrgyzstan and Kazakhstan in Central Asia.

Transnistria then broke free of Moldova, and Abkhazia and South Ossetia fought free of Georgia.

Yugoslavia dissolved far more violently into the nations of Serbia, Slovenia, Croatia, Bosnia, Montenegro, Macedonia and Kosovo.

The Slovaks seceded from Czechoslovakia. Yet a Europe that plunged straight to war after the last breakup of Czechoslovakia in 1938 and 1939 this time only yawned. Let them go, all agreed.

The spirit of secession, the desire of peoples to sever ties to nations to which they have belonged for generations, sometimes for centuries, and to seek out their own kind, is a spreading phenomenon.

Scotland is moving toward a referendum on independence from England, three centuries after the Acts of Union. Catalonia pushes to be free of Madrid. Milanese and Venetians see themselves as a European people apart from Sicilians, Neapolitans and Romans.

Dutch-speaking Flanders wants to cut loose of French-speaking Wallonia in Belgium. Francophone Quebec, with immigrants from Asia and the Third World tilting the balance in favor of union, appears to have lost its historic moment to secede from Canada.

What are the forces pulling nations apart? Ethnicity, culture, history and language — but now also economics. And separatist and secessionist movements are cropping up here in the United States.

Watch Glenn Greenwald Tear a BBC Presstitute to pieces

Glenn Greenwald Full Interview on Snowden, NSA, GCHQ and Spying

Emjoy Glenn Greenwald ripping apart the comrade from English Pravda

BBC Newsnight Oct 03, 2013

Pauline Neville Jones in debate with Glenn Greenwald

My Marxist father was wrong, too

Memo to Ed Miliband

Eric Hobsbawm could not admit that supporting an ideology behind the deaths of scores of millions was an error of judgment

By Theodore Dalrymple

Edward Miliband and I have something (not much) in common: we both had Marxist fathers. In my case, however, it turned me against all that my father stood, or pretended to stand, for. I saw that his concern for the fate of humanity in general was inconsistent with his contempt for the actual people by whom he was surrounded, and his inability to support relations of equality with others. I concluded that the humanitarian protestations of Marxists were a mask for an urge to domination.

In addition to the emotional dishonesty of Marxism, I was impressed by its limitless resources of intellectual dishonesty. Having grown up with the Little Lenin Library and (God help us!) the Little Stalin Library, I quickly grasped that the dialectic could prove anything you wanted it to prove, for example, that killing whole categories of people was a requirement of elementary decency.

My father only followed the intellectual fashion of his youth, when the catastrophe of the Great War had been followed by economic problems on a vast scale. That the world urgently needed improvement was obvious. But Marxism was not just an economic doctrine showing the right policy to follow in hard circumstances; it was a religion. The crisis of the Twenties and Thirties was an apocalypse that would finally lead Man, after the revolution, to a heaven on earth, in which all Man’s contradictory desires would be resolved in eternal bliss. No more hatred, no more jostling for position: Man would become selfless as well as permanently contented. Compared with this, the Book of Revelation is pure social realism.

Marxism was also replete with heresies and excommunications that tended to become fatal whenever its adherents reached power. There was a reason for this. Marx said that it is not consciousness that determines being, but being that determines consciousness. In other words, ideas do not have to be argued against in a civilised way, but rather the social and economic position of those who hold them must be analysed. So, disagreement is the same as class enmity – and we all know what should be done with class enemies.

No field of intellectual life in Britain was untouched by it. The great crystallographer, JD Bernal, the biochemist, Joseph Needham, the historian of the English civil war, Christopher Hill, the economist Maurice Dobb, the art historian Anthony Blunt, were all Marxists. The barrister, DN Pritt, ferociously defended the judicial rectitude of the Moscow show trials, a defence that would be comic were it not so vile.

Iceland – the Dark Side of Devaluation

Devaluing Oneself to Prosperity Proves Harder than Expected

by Pater Tenebrarum

Readers may recall that we have always argued that the mere fact that a number of countries in the euro area use a common medium of exchange is not the region's major problem. It should be easy to see why this cannot be the case. For a very long time almost the whole world used a common medium exchange, namely gold. During that time both the world's economies and trade between them were growing at very high rates (today such growth rates are but a distant dream).

The euro area's problem is rather that the euro is a centrally planned fiat currency and that the central bank aided and abetted a credit bubble of stunning proportions. The European cocktail of socialism and easy money proved unsustainable and the boom has undoubtedly caused capital consumption on a grand scale. The reaction to this discovery was that ways were sought to cover this fact up by engaging in a raft of interventionist measures that will eventually come back to haunt Europe. 

Anyway, the purveyors of the idea that the best way back to riches was to impoverish oneself by devaluation have often held Iceland up as a shining example of the miracles this strategy would produce. It turns out that things are not that easy, as many Icelandic companies now find themselves with their backs to the wall as they are unable to service their foreign currency denominated debts: 

“Iceland’s private sector is running out of cash to repay its foreign currency debt, according to the nation’s central bank.

Non-krona debt owed by entities besides the Treasury and the central bank due through 2018 totals about 700 billion kronur ($5.8 billion), the bank said yesterday. The projected current account surpluses over the next five years aren’t estimated to reach even half of that and will equal a shortfall of about 20 percent of gross domestic product.

The nation faces a “repayment risk of foreign debt by private entities in the economy, who don’t have access to foreign financial markets,” Sigridur Benediktsdottir, head of financial stability at the Reykjavik-based central bank, said yesterday in an interview. “We view this as being exacerbated or made worse by the fact that our current account is actually declining.” 

(Emphasis added)

'Access to foreign financial markets' means access to debt rollovers in the same currencies the debts were incurred in. This access is lacking precisely because Iceland has adopted capital controls. Iceland is certainly a good example for the utter ruination a credit boom can bring. There is one additional reason foreign creditors have no interest in rolling over loans: they simply no longer believe that Iceland's wealth creation ability will suffice to service or repay them – too much wealth has been decimated by the boom. Unless there's a sudden jump in the price of codfish, that is likely to remain the case for a while yet, as it will take time to rebuild the wealth that was lost. 

Hannah Arendt: battling the banality of evil

A new biopic explores the power of ideas and the courage required to challenge orthodoxy

By Neil Davenport

Hannah Arendt was a political thinker famous for coining the phrase ‘the banality of evil’ to describe the Nazis’ faceless bureaucrats who planned and carried out industrial-scale genocide. To Arendt, it seemed that evil resided, not in psychopathic monsters, but in unthinking administrators carrying out routine tasks. The phrase evolved from Arendt’s reporting at the 1961 trial in Jerusalem of one of the putative architects of the Holocaust, Adolf Eichmann.

Director Margarethe von Trotta focuses the bulk of Hannah Arendt - a solid, if a little staid, film - on Arendt’s reporting of the trial and the subsequent fallout from her controversial articles for the New Yorker (which later became the book,Eichmann in Jerusalem). As demonstrated in her classic, The Origins of Totalitarianism, Arendt often displayed a dazzling intellect and a talent for unpicking how malignant social forces can develop and engulf normality. She applied this line of thinking to Eichmann and argued that, with the collapse of any moral order in Europe, a paper-thin line developed between victim and persecutor. Shockingly for survivors of the Holocaust, Arendt implied that, as with so many other major figures during Europe’s darkest hour, Jewish leaders had become passive collaborators in their own community’s destruction.

The film dwells on the genesis of her ideas and the explosive impact her articles had afterwards. In the film, the New Yorker receives mountains of hate mail and hate calls. The principals of the New School of Social Research, where Arendt worked, attempt to bar her from lecturing. Neighbours in her swish Manhattan apartment send notes saying ‘die, you Nazi-loving whore’ while lifelong friends denounce and desert her one by one. In the film’s closing scenes, Arendt publicly defends herself by saying that her writing was a serious attempt to understand exactly what happened. She was determined to unearth the unthinkable process of the Holocaust by rational means, even if that meant causing upset along the way.

The Two-Party Swindle

Once a politician gets you to identify with them, they pretty much own you

By Eliezer_Yudkowsky

The Robbers Cave Experiment had as its subject 22 twelve-year-old boys, selected from 22 different schools in Oklahoma City, all doing well in school, all from stable middle-class Protestant families.  In short, the boys were as similar to each other as the experimenters could arrange, though none started out knowing any of the others.  The experiment, conducted in the aftermath of WWII, was meant to investigate conflicts between groups. How would the scientists spark an intergroup conflict to investigate? Well, the first step was to divide the 22 boys into two groups of 11 campers -

- and that was quite sufficient.  There was hostility almost from the moment each group became aware of the other group's existence. Though they had not needed any name for themselves before, they named themselves the Eagles and the Rattlers.  After the researchers (disguised as camp counselors) instigated contests for prizes, rivalry reached a fever pitch and all traces of good sportsmanship disintegrated.  The Eagles stole the Rattlers' flag and burned it; the Rattlers raided the Eagles' cabin and stole the blue jeans of the group leader and painted it orange and carried it as a flag the next day.

Each group developed a stereotype of itself and a contrasting stereotype of the opposing group (though the boys had been initially selected to be as similar as possible).  The Rattlers swore heavily and regarded themselves as rough-and-tough.  The Eagles swore off swearing, and developed an image of themselves as proper-and-moral.

Consider, in this light, the episode of the Blues and the Greens in the days of Rome.  Since the time of the ancient Romans, and continuing into the era of Byzantium and the Roman Empire, the Roman populace had been divided into the warring Blue and Green factions.  Blues murdered Greens and Greens murdered Blues, despite all attempts at policing. They died in single combats, in ambushes, in group battles, in riots.

From Procopius, History of the Wars, I:

In every city the population has been divided for a long time past into the Blue and the Green factions [...] And they fight against their opponents knowing not for what end they imperil themselves [...] So there grows up in them against their fellow men a hostility which has no cause, and at no time does it cease or disappear, for it gives place neither to the ties of marriage nor of relationship nor of friendship, and the case is the same even though those who differ with respect to these colours be brothers or any other kin.

Edward Gibbon, The Decline and Fall of the Roman Empire:

The support of a faction became necessary to every candidate for civil or ecclesiastical honors.

Who were the Blues and the Greens?

They were sports fans - the partisans of the blue and green chariot-racing teams.