IMF predicts riskier and bleaker times ahead for Australia

Nothing succeeds, As planned.

by GREG JERICHO

The latest World Economic Outlook released by the IMF on Wednesday was a bit of a sobering document. Given that the IMF has been delivering pretty sober assessments for more than four years now, it's not that surprising.

This time the outlook also involved a bit of looking back at how good things were expected to be before the GFC/great recession hit, and how bad they were predicted to be once it did. What is striking is that for many countries and parts of the world, 2013 finds them in a worse position than where they were expected to be in April 2009 when the IMF issued its first bleak outlook after the tumult of the GFC.

So while there has been some joy in the UK because the IMF has revised its prediction for growth in 2013 from the meagre 0.7% expected in the April WEO up to 1.4%, it is worth remembering that back in April 2009 the IMF expected the UK to be growing about 2.8% by now. For the next three years it kept revising down that prediction. Only in the past year has the IMF been too pessimistic.

For Australia, the reverse is true. If we look at the predictions for GDP growth from 2007 onwards, the IMF in 2008, before the GFC hit, was rather buoyant about Australia's future. It expected by the end of 2013 Australia's economy would have grown 20% above where it was in 2007. When the GFC hit, the IMF got real gloomy and revised this down to a mere 9.2%. And yet on Wednesday the IMF reported Australia's economy growing by 16% since 2007.

In fact, if you look at a comparison of where the IMF expected advanced economies to be by 2014 when the GFC hit and where they are now, Australia has performed better than all but Singapore, Taiwan and Israel.

Lost in Germany

Spanish Jobseekers Lured on False Pretenses

Diego Lopez, 21, was promised a job contract and shared apartment, but they have not materialized.

By Der Spiegel

They were promised new jobs in Germany — but their hopes have now been quashed. Nearly 130 would-be Spanish workers are stranded in Erfurt after private employment agencies apparently failed to follow through.

When night falls in Erfurt, Diego Lopez has to go into the "hole." That's what the 21-year-old Spaniard calls the cellar of an old school where he and 20 of his countrymen have been sleeping in recent weeks. Bunk beds are crammed next to each other in two small rooms, which smell like sweat and dirty socks, Lopez says. The ventilation system doesn't work properly, and they all have to share a single shower, he adds.

But unlike their last accommodations, at least the heat works and they don't have to sleep on the floor. Furthermore, Lopez can still afford to stay here. A night in the "hole" costs €3.50 ($4.74).

A trained geriatric nurse, he is one of 128 Spaniards who have been stranded in Erfurt after being promised jobs that didn't come through. Full of hope, they struck out for Germany two weeks ago to take part in a program that the Federal Employment Agency calls "The job of my life." The new initiative promises young people from ailing southern European countries either dual vocational training or employment as a skilled worker, along with language courses and lodging — all subsidized by the German state. And it was this program that two private job placement agencies used to lure the Spaniards to the eastern German state of Thuringia.

From Shirtsleeves to Shirtsleeves

All in all, the shirtsleeves-to-shirtsleeves adage no longer really works

By Anthony de Jasay

Before sociology rose to the rank of intellectual respectability, we had old home truths telling us how things tended to work in certain ways and not in others. The early bird got the worm, the pounds would take care of themselves if you took care of the pence, you had to lie on the bed that you had made, and honesty was the best policy. Some of these old adages have blossomed out into research programmes, books, and creeds. "Shirtsleeves to shirtsleeves in three generations" became a doctrinal wave lapping at the rocky question of who gets what.

One strand of the great controversies about this subject is social mobility, or rather its loss of vigour. Those who believed that inequality was a moral wrong, as well as the down-to-earth utilitarians who held that it reduced aggregate material welfare and was the source of most ills from short life expectancy, poor health and delinquency, to teenage pregnancy and school failure, sought consolation in social mobility. If it was at work, inequality was condemned to gradual erosion. According to the "Shirtsleeves to shirtsleeves" doctrine, the great frequency of cases of the great wealth amassed by the grandfather was barely maintained by the son and lost by the grandson, and this lent support to the theory, advanced by Milton Friedman, that capitalism had a built-in tendency to reduce inequality. The last thirty years or so has cast much doubt on this appealing theory. Throughout the Western world income distribution was getting more skewed in favour of the top deciles of society. Oddly, this was particularly true of English speaking countries, which were less illiberal and more inclined to let markets do their work than other countries. Friedman's theory was falsified. There must have been a reason. Social mobility appears to have failed. Shirtsleeves seemed to lead to Saville Row suits but not shirtsleeves. Incomes went to the top and stayed there.

The US Has Repeatedly Defaulted

The Last Stage of Plunder

by George Washington

Some people argue that countries can’t default.  But that’s false.

It is widely stated that the U.S. government has never defaulted.  However, that is also a myth.

Catherine Rampbell reported in the New York Times in 2011:

The United States has actually defaulted on its debt obligations before. 

The first time was in 1790, the only episode Professor Reinhart unearthed in which the United States defaulted on its external debt obligations. It also defaulted on its domestic debt obligations then, too. 

Then in 1933, in the midst of the Great Depression, the United States had another domestic debt default related to the repayment of gold-based obligations.

(Update.)

Donald Marron writes at Forbes:

The United States defaulted on some Treasury bills in 1979 (ht: Jason Zweig). And it paid a steep price for stiffing bondholders. 

Terry Zivney and Richard Marcus describe the default in The Financial Review...:

Investors in T-bills maturing April 26, 1979 were told that the U.S. Treasury could not make its payments on maturing securities to individual investors. The Treasury was also late in redeeming T-bills which become due on May 3 and May 10, 1979. The Treasury blamed this delay on an unprecedented volume of participation by small investors, on failure of Congress to act in a timely fashion on the debt ceiling legislation in April, and on an unanticipated failure of word processing equipment used to prepare check schedules.

The Law of Career Security

France's Minister Orders Telecom Companies "to be Virtuous and Patriotic" and to Use Alcatel-Lucent to Prevent Layoffs

By Mike "Mish" Shedlock

In France, companies need approval from the unions and the government to fire workers. The government gets to decide if you make too much money to lay anyone off. Moreover, the government can decide you make too much money, even if you have a loss.

Then there's the newly passed "Law of Career Security" to consider. Yes, that's the precise title.

It took me a bit to piece this story together because translations from French are particularly difficult.

Alcatel-Lucent Background

Before tackling French news reports from Wednesday, here is an Alcatel-Lucent Factbox from the Chicago Tribune, in English. 

 Paris-based telecom equipment maker Alcatel-Lucent unveiled plans on Tuesday to cut about 10,000 jobs worldwide by the end of 2015 in a cost-cutting drive to save 1 billion euros and reverse years of losses.

Alcatel mainly builds and develops telecommunications networks and related equipment for network operators - such as Verizon or AT&T - and other enterprise customers.

Alcatel-Lucent was created from the merger of France's Alcatel and U.S. firm Lucent in 2006, against a backdrop of global competitive pressures that also led to a similar tie-up between Nokia and Siemens to create Nokia Siemens Networks.

The cuts announced on Tuesday are across all regions, with 4,100 jobs to go in Europe, the Middle East and Africa, 3,800 in Asia-Pacific and 2,100 in the Americas.

It is not the first job-cuts plan at Alcatel-Lucent: in 2012, it said it would axe 5,000 jobs and in 2007 it announced 12,500 job losses.

Alcatel has only reported one year of profit since the merger, in 2011, ending every other year in the red.

Schoolkids : Prisoners of their Genes ?

Let’s bash the idea that some kids aren’t genetically cut out for learning

By FRANK FUREDI

One of the dirty secrets of the modern British educational establishment is that it lacks faith in the ability of education to make a significant difference to people’s lives. This is the most interesting thing about the publication of a document attributed to Dominic Cummings, who until recently served as a special adviser to the Tory secretary of state for education Michael Gove: it lets this secret out; it openly acknowledges the low expectations that policymakers have of children and of schools.

Cummings is unequivocal on this point. He believes that what mainly determines pupils’ performance is not the quality of teaching, but their IQ levels and genetic inheritance. He claims that up to 70 per cent of a child’s performance levels are genetically derived. That’s another way of saying that teachers and schools can have at best a marginal impact on children, whose fate is apparently bestowed on them by their genes.

IPCC In A Stew

How They Cooked Their Latest Climate Books

Activists gather outside the the United Nation's Intergovernmental Panel on Climate Change dressed as scientists in lab coats on one side of a giant 12 meter seesaw to give a visual image of the IPCC report's key finding that there is 95% scientific certainty that humans cause climate change on September 27, 2013 in Stockholm. The UN's Intergovernmental Panel on Climate Change publishes the first volume of its Fifth Assessment Report, dealing with the scientific evidence for global warming

By Larry Bell

I have asked my friend Dr. Vincent Gray from New Zealand, who has served as an expert reviewer for all five of the reports issued by the UN Intergovernmental Panel on Climate Change (IPCC), to comment on the latest Summary for Policymakers (AR5) report.  Dr. Gray holds a Ph.D. in physical chemistry from Cambridge University and is the author of a book The Greenhouse Delusion.

Vincent, as a climate scientist and long-standing IPCC expert reviewer, what is your opinion regarding the science offered behind the “greenhouse delusion” in this latest report?

Larry, they have found that the public will believe almost anything that is represented as being agreed by “scientists”, provided that you have enough of them and they are backed up by the requisite number of celebrities and public figures.

Unfortunately for their message, there is no evidence that human-emitted greenhouse gases have a harmful influence on the climate. So it becomes necessary to use spin, distortion, deception and even fabrication to cover up this absence of evidence with a collective assertion of belief in their cause to an increased level of certainty. In the end they must rely merely upon collective opinions within their selected ranks, of which they once again claim high levels of certainty. However, they run into the problem of imposing such severe discipline on so many people, most whom have been trained to think independently.

So how do they attempt to impose discipline like this?

2000+ Reasons Why GMOs Are Safe To Eat And Environmentally Sustainable

Genetically modified foods are among the most extensively studied scientific subjects in history

A popular weapon used by those critical of agricultural biotechnology is to claim that there has been little to no evaluation of the safety of GM crops and there is no scientific consensus on this issue. Those claims are simply not true.

by Jon Entine

“The science just hasn’t been done.” - Charles Benbrook, organic researcher, Washington State University.

“There is no credible evidence that GMO foods are safe to eat.” - David Schubert, Salk Institute of Biological Studies

“[The] research [on GMOs] is scant…. Whether they’re killing us slowly— contributing to long-term, chronic maladies—remains anyone’s guess.” - Tom Philpott, Mother Jones

“Genetically modified (GM) foods should be a concern for those who suffer from food allergies because they are not tested….” - Organic Consumers Association

The claim that genetically engineered crops are ‘understudied’—the meme represented in the quotes highlighted above—has become a staple of opponents of crop biotechnology, especially activist journalists. Anti-GMO campaigners, including many organic supporters, assert time and again that genetically modified crops have not been safety tested or that the research done to date on the health or environmental impact of GMOs has “all” been done by the companies that produce the seeds. Therefore, they claim, consumers are taking a ‘leap of faith’ in concluding that they face no harm from consuming foods made with genetically modified ingredients.

That is false.

Genocidal Impulses & Human Depopulation

Human Exceptionalism

By Wesley J. Smith

There is a difference between voluntary family planning and radical Malthusian depopulation misanthropy. Alas, I fear the latter is subsuming the former.

A review of a book in the New York Times shows the extent of human loathing among the Davos set. (This commentary is about the review, not the book, which I haven’t read.) Alan Weisman, who last described how wonderful earth would become if humans ceased to exist–but who would know if we were gone?–now has written an apparently apocalyptic tome about the need to radically reduce our numbers.

The most effective way to kill off humans is to allow too many of us to exist. From the review of Countdown:

As Alan Weisman’s “Countdown” amply demonstrates, we are well on our way. Some seven billion people are alive today; the United Nations estimates that by the end of the century we could number as many as 15.8 billion. Biologists have calculated that an ideal population — the number at which everyone could live at a first-world level of consumption, without ruining the planet irretrievably — would be 1.5 billion.

That’s Deep Ecology anti-human talk–which alas, has become mainstream within the environmental movement.

But here’s the thing: You can’t go from 7 billion (or 9 billion, or 15 billion) to 1.5 billion through voluntary, non-lethal means. China’s tyrannical one-child policy has not reduced the number of people in that populous country, only slowed the rate of growth. If female infanticide, forced abortion, and eugenics don’t do the job, imagine what it would take!

And where would the human cancer-on-the-earth coming Apocalypse be without global warming hysteria?

In our own time, there are a few mitigating indicators. Much of the current population growth comes in the developing world, where carbon consumption remains low, so the environmental effect is relatively muted. The next thousand Americans will do more than twice as much damage as the next hundred thousand Nigeriens, though that is hardly a cause for celebration…

Ignorance, Intelligence, and War-Making

By trying to fit the world’s manifold terrorists into the concept of al Qaeda, US intelligence dumbs itself down

by Angelo M. Codevilla

Last week, US special forces captured one Abu Anas Al-Libi, suspected of having taken part in the 1998 bombing of US embassies in Africa that killed 224 and injured some four thousand. Good. But the US government treated the event much as The New York Times and especially The Wall Street Journal described it, “a major victory” especially for US intelligence in the “war against al Qaeda.” The Journal went on to describe Al-Libi as “an intelligence gold mine” who can tell us “the ways that al Qaeda is decentralizing and expanding in Africa,” and to urge the government to get this war-winning information out of him by…well, you know… This is fantasy. It shows deadly misunderstanding of intelligence and of the war we are in.

There is no reason to doubt that Al-Libi is someone whose death would benefit mankind, and, in his case, some reason to regret our Constitutional prohibition against cruel and unusual punishment. But pressuring him is most unlikely to yield important intelligence.

The least reason is that his interrogators will quickly demonstrate that they know very little about the matters about which they will be questioning him. The first rule of interrogation is to ask only about things of which one is absolutely certain that the prisoner knows. Letting the prisoner “know that you know” makes fruitful interrogation possible. There can be zero bluffing. The moment that interrogators show that they are either mistaken, or working from unconfirmed reports, or just trying to get an education, they discredit themselves. The prisoner can safely weave narratives of truth and tendentiousness. He can lead them on wild goose chases, at best. Pressure is irrelevant, or worse. The prisoner can better mislead the interrogators by giving the deepest disinformation only after “enhanced interrogation.”

By now, the targets of US intelligence know very well that US intelligence is so starved for knowledge, its operatives so eager to please superiors, that it tends to call good whatever comes its way. They remember – better than the US media – that CIA discovered that one of its main sources in Afghanistan was an enemy agent only after that agent had blown himself up along with seven CIA officers.

Environmentalism As Religion

We risk entering the Internet version of the dark ages, an era of shifting fears and wild prejudices, transmitted to people who don't know any better

by Michael Crichton 

We must daily decide whether the threats we face are real, whether the solutions we are offered will do any good, whether the problems we're told exist are in fact real problems, or non-problems. Every one of us has a sense of the world, and we all know that this sense is in part given to us by what other people and society tell us; in part generated by our emotional state, which we project outward; and in part by our genuine perceptions of reality. In short, our struggle to determine what is true is the struggle to decide which of our perceptions are genuine, and which are false because they are handed down, or sold to us, or generated by our own hopes and fears. 

As an example of this challenge, I want to talk today about environmentalism. And in order not to be misunderstood, I want it perfectly clear that I believe it is incumbent on us to conduct our lives in a way that takes into account all the consequences of our actions, including the consequences to other people, and the consequences to the environment. I believe it is important to act in ways that are sympathetic to the environment, and I believe this will always be a need, carrying into the future. I believe the world has genuine problems and I believe it can and should be improved. But I also think that deciding what constitutes responsible action is immensely difficult, and the consequences of our actions are often difficult to know in advance. I think our past record of environmental action is discouraging, to put it mildly, because even our best intended efforts often go awry. But I think we do not recognize our past failures, and face them squarely. And I think I know why. 

I studied anthropology in college, and one of the things I learned was that certain human social structures always reappear. They can't be eliminated from society. One of those structures is religion. Today it is said we live in a secular society in which many people---the best people, the most enlightened people---do not believe in any religion. But I think that you cannot eliminate religion from the psyche of mankind. If you suppress it in one form, it merely re-emerges in another form. You can not believe in God, but you still have to believe in something that gives meaning to your life, and shapes your sense of the world. Such a belief is religious. 

Today, one of the most powerful religions in the Western World is environmentalism. Environmentalism seems to be the religion of choice for urban atheists. Why do I say it's a religion? Well, just look at the beliefs. If you look carefully, you see that environmentalism is in fact a perfect 21st century remapping of traditional Judeo-Christian beliefs and myths. 

There's an initial Eden, a paradise, a state of grace and unity with nature, there's a fall from grace into a state of pollution as a result of eating from the tree of knowledge, and as a result of our actions there is a judgment day coming for us all. We are all energy sinners, doomed to die, unless we seek salvation, which is now called sustainability. Sustainability is salvation in the church of the environment. Just as organic food is its communion, that pesticide-free wafer that the right people with the right beliefs, imbibe. 

Eden, the fall of man, the loss of grace, the coming doomsday---these are deeply held mythic structures. They are profoundly conservative beliefs. They may even be hard-wired in the brain, for all I know. I certainly don't want to talk anybody out of them, as I don't want to talk anybody out of a belief that Jesus Christ is the son of God who rose from the dead. But the reason I don't want to talk anybody out of these beliefs is that I know that I can't talk anybody out of them. These are not facts that can be argued. These are issues of faith. 

And so it is, sadly, with environmentalism. Increasingly it seems facts aren't necessary, because the tenets of environmentalism are all about belief. It's about whether you are going to be a sinner, or saved. Whether you are going to be one of the people on the side of salvation, or on the side of doom. Whether you are going to be one of us, or one of them. 

Am I exaggerating to make a point? I am afraid not. Because we know a lot more about the world than we did forty or fifty years ago. And what we know now is not so supportive of certain core environmental myths, yet the myths do not die. Let's examine some of those beliefs. 

There is no Eden. There never was. What was that Eden of the wonderful mythic past? Is it the time when infant mortality was 80%, when four children in five died of disease before the age of five? When one woman in six died in childbirth? When the average lifespan was 40, as it was in America a century ago. When plagues swept across the planet, killing millions in a stroke. Was it when millions starved to death? Is that when it was Eden? 

The IMF Proposes A 10% Supertax On All Eurozone Household Savings

It all hangs on the IMF's notion - or hope - that it can be implemented by stealth, before people have the chance to put their money somewhere else

by Raul Ilargi

This is a story that should raise an eyebrow or two on every single face in Europe, and beyond. I saw the first bits of it on a Belgian site named Express.be, whose writers in turn had stumbled upon an article in French newspaper Le Figaro, whose writer Jean-Pierre Robin had leafed through a brand new IMF report (yes, there are certain linguistic advantages in being Dutch, Canadian AND Québecois). In the report, the IMF talks about a proposal to tax everybody's savings, in the Eurozone. Looks like they just need to figure out by how much.

The IMF, I'm following Mr. Robin here, addresses the issue of the sustainability of the debt levels of developed nations, Europe, US, Japan, which today are on average 110% of GDP, or 35% more than in 2007. Such debt levels are unprecedented, other than right after the world wars. So, the Fund reasons, it's time for radical solutions.

The Science of Politics and the Conquest of Nature

Some Questions with No Very Good Answers

By Patrick J. Deneen

For the ancients, man was bound by but not wholly defined as part of nature. The studies of natural phenomena and human affairs had to be distinct disciplines, for all of the reasons that nature and man are distinct in kind. On this view, “political science” was a distinct form of study from that of natural phenomena, requiring very different assumptions and approaches. The inauguration of the modern period was marked, among many other things, by the belief that human beings could be wholly understood through the same methods as natural things; thus, a new “science of politics” based upon the ideals of predictability and even control and manipulation of human beings was seen not only as possible but greatly desirable. The modern period also saw the reason for scientific inquiry shift from merely understanding how nature was governed to understanding how human beings could master it. Nature became not subject but object; and human inquiry was set not only in service of understanding politics, but manipulating nature for political ends.

It ought to come as no surprise, then, that these ideas might be carried further, so that human beings, as merely part of nature, could also be regarded as natural objects for manipulation. Man, too, could become no longer just subject but object. Many of the great horrors of the last century — from economic failures of all sorts to eugenics and worse — arose from this understanding. But a new movement today, calling itself transhumanism, carries these notions to their logical conclusion: human beings are not only manipulable objects, but raw, manipulable material; man himself, his very form, might be tinkered with, enhanced, and “reengineered,” like a species of crop or livestock. What becomes of the political animal when politics seeks not to meet his ends but to unravel them — not to serve him but to remake him?

Classical Political Science

Science, by the dictionary’s reckoning, has several meanings. One of those is very familiar: “the observation, identification, description, experimental investigation, and theoretical explanation of phenomena.” This is the kind of science we associate with men and women in lab coats, wearing thick glasses and surrounded by test tubes. Another definition reads that science means “knowledge, especially that gained through experience.” This latter definition does not preclude the first, but it seems to be more comprehensive, including experience that we might gain in settings outside the laboratory, and settings that are less than entirely controlled. In both these meanings — which are similar but distinct in crucial ways, as we will see — the stress is upon knowledge. This emphasis reflects the etymological root of our word science in the Latin word scientia and its forebear, the Greek word episteme, both of which mean knowledge. The meanings of both words embrace acomprehensiveness of human knowing: human inquiry of every kind is said to aim at scientia orepisteme. Thus, broadly speaking, for the ancients, philosophy, theology, history — even the study of politics — were all forms of scientia.

They’re Coming For Your Savings

After 2000 years, the "Proscription" rule is making a comeback

by John Rubino

Another of history’s many lessons is that governments under pressure become thieves. And today’s governments are under a lot of pressure.

Before we look at the coming wave of asset confiscations, let’s stroll through some notable episodes of the past, just to make the point that government theft of private wealth is actually pretty common.

Ancient Rome had a rule called “proscription” that allowed the government to execute and then confiscate the assets of anyone found guilty of “crimes against the state.” After the death of Julius Caesar in 44 BC, three men, Mark Anthony, Lepidus, and Caesar’s adopted son Octavian, formed a group they called the Second Triumvirate and divided the Empire between them. But two rivals, Brutus and Cassius, formed an army with which they planned to take the Empire for themselves. The Triumvirate needed money to fund an army of its own, and decided the best way to raise it was by kicking the proscription process into overdrive. They drew up a list of several hundred wealthy Romans, accused them of crimes, executed them and took their property.

In the mid-1530s, English king Henry VIII was short of funds, so he seized the country’s monasteries and claimed their property and income for the Crown. As historian G. J. Meyer tells it inThe Tudors: The Complete Story of England’s Most Notorious Dynasty:

“By April fat trunks were being hauled into London filled with gold and silver plate, jewelry, and other treasures accumulated by the monasteries over the centuries. With them came money from the sale of church bells, lead stripped from the roofs of monastic buildings, and livestock, furnishings, and equipment. Some of the confiscated land was sold – enough to bring in £30,000 – and what was not sold generated tens of thousands of pounds in annual rents. The longer the confiscations continued, the smaller the possibility of their ever being reversed or even stopped from going further. The money was spent almost as quickly as it flooded in – so quickly that any attempt to restore the monasteries to what they had been before the suppression would have meant financial ruin for the Crown. Nor would those involved in the work of the suppression … ever be willing to part with what they were skimming off for themselves.”

Soon after the French Revolution in 1789, the new government confiscated lands and other property of the Catholic Church and used the proceeds to back a new form of paper currency called assignats. The resulting money printing binge quickly spun out of control, resulting in hyperinflation and the rise of Napoleon.

During the US Civil War, Congress passed laws confiscating property used for “insurrectionary purposes” and of citizens generally engaged in rebellion.

In 1933, in the depths of the Great Depression, president Franklin Roosevelt banned the private ownership of gold and ordered US citizens to turn in their gold. Those who did were paid in paper dollars at the then current rate of $20.67 per ounce. Once the confiscation was complete, the dollar was devalued to $35 per ounce of gold, effectively stealing 70 percent of the wealth of those who surrendered their gold.

In 1942, after entering World War II, the US moved all Japanese citizens within its borders to concentration camps and sold off their property. The detainees were released in 1945, given $25 and a train ticket home – without being reimbursed for their losses.

Since the 2008 financial crisis, various kinds of capital controls and asset confiscations have become common. A few examples:

Iceland required that firms seeking to invest abroad get permission from the central bank and that individual Icelanders get government authorization to buy foreign currency or travel overseas.

The Italian Job

The path of perpetual violence, perpetual war, and perpetual insecurity

By David Vine

The Pentagon has spent the last two decades plowing hundreds of millions of tax dollars into military bases in Italy, turning the country into an increasingly important center for U.S. military power. Especially since the start of the Global War on Terror in 2001, the military has been shifting its European center of gravity south from Germany, where the overwhelming majority of U.S. forces in the region have been stationed since the end of World War II. In the process, the Pentagon has turned the Italian peninsula into a launching pad for future wars in Africa, the Middle East, and beyond.

At bases in Naples, Aviano, Sicily, Pisa, and Vicenza, among others, the military has spent more than $2 billion on construction alone since the end of the Cold War -- and that figure doesn’t include billions more on classified construction projects and everyday operating and personnel costs. While the number of troops in Germany has fallen from 250,000 when the Soviet Union collapsed to about 50,000 today, the roughly 13,000 U.S. troops (plus 16,000 family members) stationed in Italy match the numbers at the height of the Cold War.  That, in turn, means that the percentage of U.S. forces in Europe based in Italy has tripled since 1991 from around 5% to more than 15%.

Last month, I had a chance to visit the newest U.S. base in Italy, a three-month-old garrison in Vicenza, near Venice. Home to a rapid reaction intervention force, the 173rd Infantry Brigade Combat Team (Airborne), and the Army’s component of the U.S. Africa Command (AFRICOM), the base extends for a mile, north to south, dwarfing everything else in the small city. In fact, at over 145 acres, the base is almost exactly the size of Washington’s National Mall or the equivalent of around 110 American football fields. The price tag for the base and related construction in a city that already hosted at least six installations: upwards of $600 million since fiscal year 2007.

There are still more bases, and so more U.S. military spending, in Germany than in any other foreign country (save, until recently, Afghanistan). Nonetheless, Italy has grown increasingly important as the Pentagon works to change the make-up of its global collection of 800 or more bases abroad, generally shifting its basing focus south and east from Europe’s center. Base expert Alexander Cooley explains: “U.S. defense officials acknowledge that Italy’s strategic positioning on the Mediterranean and near North Africa, the Italian military’s antiterrorism doctrine, as well as the country’s favorable political disposition toward U.S. forces are important factors in the Pentagon’s decision to retain” a large base and troop presence there. About the only people who have been paying attention to this build-up are the Italians in local opposition movements like those in Vicenza who are concerned that their city will become a platform for future U.S. wars.

Base Building

Most tourists think of Italy as the land of Renaissance art, Roman antiquities, and of course great pizza, pasta, and wine. Few think of it as a land of U.S. bases. But Italy’s 59 Pentagon-identified “base sites” top that of any country except Germany (179), Japan (103), Afghanistan (100 and declining), and South Korea (89).

Frankenstein in Havana

Fidel's Cuba is a case study in the tragic waste of opportunity and life that is inevitable under a Caudillo Messiah with a paternalist utopian domestic agenda

By William Ratliff

Is Raúl Castro simply a clone of his elder brother Fidel? Answering that question is a step toward ending what may be the most prolonged and divisive dispute in the history of modern U.S. foreign policy.

During the Cold War, trying to isolate Cuba served American security interests since Cuba was an ally of the Soviet bloc. But since the fall of the Soviet Union, U.S. policy toward Cuba has focused on "nation building" and mild agitation to eliminate the Castros. Analysts who reject these as adequate grounds for foreign policy can also critique the current policy on its own terms. In other words, has it been successful in nation building? And more importantly now, have Raúl's reforms since taking the top office in 2006 really begun to change conditions in the country?

Distinguished analysts differ on the merits of Raúl's reforms. Economist Carmelo Mesa-Lago calls them "the most extensive and profound" changes on the island in decades, though still inadequate, while Carlos Alberto Montaner calls them "token gestures." In May, I made a two-week visit to Cuba, my sixth since 1983 as a journalist and lecturer, to see what I could learn on the ground. I found the prospects for meaningful reforms were encouraging but preliminary.

Conditions and Changes

I surveyed Raúl's specific responses to Cuba's challenges last January in an essay titled "Cuba's Tortured Transition," so here I will focus on the individual, cultural, and institutional factors that now complicate substantive reform on the island.

Raúl and the Cuban Communist Party speak of "updating the economic model," which is either a feel-good phrase devised to mask criticism of Fidel's economic failures while changes are slipped through, or an admission that those in charge are not serious reformers. Changes are explicitly made in the service of "socialism," which begs the question: Despite some promising new policies, will change still be inhibited by Cuba's official ideology and ideologues?

Former high-level Cuban officials who worked closely with Raúl and coauthored articles with me note his early interest in serious, systematic, long-term economic reforms like those that have been undertaken under authoritarian regimes in China and Vietnam. If Cuban leaders were free to think outside the socialist box, their best reform model would be Taiwan, which is a democratic market economy. Realistically, however, Cuba will not now move toward democracy and thus it's more likely China and Vietnam are models for its future. Raúl's current presumptive heir apparent, Vice President Miguel Diaz-Canel, visited both China and Vietnam in June.

The Castros have never respected individual rights, though they claim to do so with education and preventive health programs for all. But in these and other socio-economic fields, Cuba ranked high among the Latin American nations before the Castros hit the scene, and this was despite an imbalance between urban and rural sectors. Since then, Cuba has fallen in the rankings. The United Nations Development Programme's 2013 Human Development Index rates Cuba fifty-ninth in the world and sixth in Latin America, a respectable but not stunning record. The 2013 Human Rights Watch World Report concluded that Cuba "represses virtually all forms of political dissent." Economic freedoms are just beginning to sprout.

Frankenstein in Havana

Cuban professor Carlos Alzugaray has underlined the gravity of Cuba's economic problems today by using what he calls the "Frankenstein metaphor." Speaking recently at Stanford University, he said Fidel's economic policies were meant to be a gift to mankind, like Frankenstein's creature. But like the scientist's creation, they turned out to be "monsters." Though Alzugaray did not openly criticize "Father" Fidel, he noted the latter's flawed insistence on state control of all economic policy and his long opposition to the free market, individual initiative, and entrepreneurship.

St. Yellen’s Ascension to the Throne

The Road to Ruin

by Pater Tenebrarum

Most stories about central banking and central bankers in the mainstream financial press follow a certain pattern. For instance, the idea that these central planning institutions may not only be superfluous but may be downright harmful is considered utterly beyond the pale of debate. The only topics falling within 'allowed' discourse are discussions about various plans (should there more money printing?  More forward guidance? Bla, bla, bla…), while the literal impossibility of central planning is simply ignored.

In the US, the economics profession has been thoroughly bought off by the Fed to boot (for details, see this article), so not a peep of fundamental critique will ever emanate from it, with proponents of the Austrian school representing the lone exception to this rule.

As the age of unanchored pure fiat money has progressed, central bankers, instead of being tarred and feathered and run out of town for the ever greater boom-bust cycles, the growing inequality, and the stagnation of real incomes their policies have produced, have increasingly begun to be hailed as the equivalent of superheroes in the media propagating the statist quo.

Once they were thought of as gray bureaucrats, whose main job it was to 'take away the punch bowl just as the party gets going', as former Fed chairman William McChesney Martin put it. However, once the system had been set on a course of unfettered growth in credit and fiduciary media following Nixon's gold default (the 'temporary' suspension of the dollar's gold convertibility that has become permanent without an announcement to that effect), it soon became impractical and impolitic for them to 'take away the punch bowl'. 

Even Paul Volcker, whose job it was to rescue and preserve the fiat money system, implemented a tight policy for only about two years as measured by developments in the true money supply. Once those two years had passed, money supply growth received its biggest year-on-year goosing of the entire post WW2 era – yes, under the 'tough' Mr. Volcker. However, the medicine of high interest rates he had prescribed for a while, did succeed in rooting out malinvested capital and as a result, the economy was on a fairly sound footing at the time. Unfortunately, on account of credit expansion starting to run wild thereafter, this situation didn't last long.