Frexit fever reaches heart of French establishment

Attempts to create a "European demos" have obviously failed

By Ambrose Evans-Pritchard

Calls for EMU break-up are spreading into the upper echelons of the French foreign policy establishment, and the pro-European core.

An astonishing new book by François Heisbourg – La Fin du Rêve Européen (The end of the European dream) – argues that the "euro cancer" must be cut out to save the rest of the EU Project before it is too late.

"The dream has given way to nightmare. We must face the reality that the EU itself is now threatened by the euro. The current efforts to save it are endangering the Union yet further," he writes:

There is nothing worse than having to confront the sunless mornings (matins blêmes) of an endless crisis, but we are not going to avoid it by denying the reality, and God knows denial has been for a long time, by default, the operating mode of those in charge of EU institutions.

At some time in the future, he insists, Europe's leaders should relaunch the euro, but only after they have established the necessary federalist foundations, and only among a vanguard willing to accept the full implications of a federal currency.

The call to "put the euro to sleep" for Europe's own good is a new twist. We heard a little of this from Germany's AfD anti-euro party, but they had other baggage. The Heisbourg book is a head-on challenge to the Merkel Doctrine (largely rhetorical, contradicted by Germany's actions) that a collapse of EMU would stir up all the old demons of the 20th century.

Yes, a disintegration of the euro might indeed lead to such a calamitous outcome if events are allowed spin out of control after years of festering crisis – the current course – but what kind of an argument is that? It happens only if they let it happen. It is high time somebody from within the EU elites exposed this sentimental Quatsch and misuse of history for what it is.

Prof Heisbourg is certainly an insider, a different kettle of fish from the Front National's Marine Le Pen, now leading French opinion polls with vows to kill off EMU and restore the French franc.

A product of the Quai d'Orsay, he is an ardent European federalist and long-time champion of EMU, and currently chairman of the very blue-chip International Institute for Strategic Studies (IISS).

He says Europe's leaders have lost sight of priorities, seeming to think that the European system must be convulsed and refashioned for the needs of the euro, as if – pre-Copernican – the sun rotates around earth. "You cannot create a federation to save a currency. Money has to be at the service of the political structure, not the other way around," he says.

While he would dearly love to see the great leap forward to an EU federal superstate – which he deems necessary to render monetary union workable over time – this dream is now "pure fantasy".

Attempts to create a "European demos" have obviously failed. The nations are drifting further apart. A referendum on any such concentration of power in the EU institutions would fail almost everywhere. "Integration has reached the limits of legitimacy", he writes. The EU intrusions once tolerated as "disagreeable" have now become "insupportable".

The End of the American Dream

What if the United States now offers the worst of both worlds: high inequality with low social mobility?

by Niall Ferguson

“The United States is where great things are possible.” Those are the words of Elon Musk, whose astonishing career illustrates that the American dream can still come true.

Musk was born in South Africa but emigrated to the United States via Canada in the 1990s. After completing degrees in economics and physics at the University of Pennsylvania, he moved to Silicon Valley, intent on addressing three of the most “important problems that would most affect the future of humanity”: the Internet, clean energy, and space. Having founded PayPal, Tesla Motors, and SpaceX, he has pulled off an astonishing trifecta. At the age of 42, he is worth an estimated $2.4 billion. Way to go!

But for every Musk, how many talented young people are out there who never get those crucial lucky breaks? Everyone knows that the United States has become more unequal in recent decades. Indeed, the last presidential election campaign was dominated by what turned out to be an unequal contest between “the 1 percent” and the “47 percent” whose votes Mitt Romney notoriously wrote off.

But the real problem may be more insidious than the figures about income and wealth distribution imply. Even more disturbing is the growing evidence that social mobility is also declining in America.

The distinction is an important one. For many years, surveys have revealed a fundamental difference between Americans and Europeans. Americans have a much higher toleration for inequality. But that toleration is implicitly conditional on there being more social mobility in the United States than in Europe.

But what if that tradeoff no longer exists? What if the United States now offers the worst of both worlds: high inequality with low social mobility? And what if this is one of the hidden structural obstacles to economic recovery? Indeed, what if current monetary policy is making the problem of social immobility even worse?

This ought to be grist for the mill for American conservatives. But Republicans have flunked the challenge. By failing to distinguish between inequality and mobility, they have allowed Democrats, in effect, to equate the two, leaving the GOP looking like the party of the 1 percent—hardly an election-winning strategy.

To their cost, American conservatives have forgotten Winston Churchill’s famous distinction between left and right—that the left favors the line, the right the ladder. Democrats do indeed support policies that encourage voters to line up for entitlements—policies that often have the unintended consequence of trapping recipients in dependency on the state. Republicans need to start reminding people that conservatism is about more than just cutting benefits. It’s supposed to be about getting people to climb the ladder of opportunity.

Inequality and social immobility are, of course, related. But they’re not the same, as liberals often claim.

Let’s start with inequality. It’s now well known that in the mid-2000s the share of income going to the top 1 percent of the population returned to where it was in the days of F. Scott Fitzgerald’s Great Gatsby. The average income of the 1 percent was roughly 30 times higher than the average income of everyone else. The financial crisis reduced the gap, but only slightly—and temporarily. That is because the primary (and avowed) aim of the Federal Reserve’s monetary policy since 2008 has been to push up the price of assets. Guess what? The rich own most of these. To be precise, the top 1 percent owns around 35 percent of the total net worth of the United States—and 42 percent of the financial wealth. (Note that in only one other developed economy does the 1 percent own such a large share of wealth: Switzerland.)

By restoring the stock market to where it was back before the crisis, the Fed has not achieved much of an economic recovery. But it has brilliantly succeeded in making the rich richer. And their kids.

According to Credit Suisse, around a third of the world’s thousand or so billionaires in 2012 were American. But of these, just under 30 percent were not self-made—a significantly higher proportion than for Australia and the United Kingdom. In other words, today an American billionaire is more likely to have inherited his or her wealth than a British one is.

This is just one of many indications of falling social mobility in the U.S. According to research published by the German Institute for the Study of Labor, 42 percent of American men born and raised in the bottom fifth of the income distribution end up staying there as adults, compared with just 30 percent in Britain and 28 percent in Finland. An American’s chance of getting from the bottom fifth to the top fifth is 1 in 13. For a British or Finnish boy, the odds are better: more like 1 in 8.

Romanian Gypsy Gangs and Child Slavery

Europe needs to step up and address this. The question is how.

In Europe’s capitals the site of beggars and homeless children has become all too familiar in the last few years. As European economies constrict more and more people have been reduced to scavenging for a meagre life on increasingly tough streets. With increased competition for hand-outs and people prepared to give less and less to the less fortunate the underworld that controls street crime has begun to stoop to new lows. We are all used to being approached at bars and restaurants by people selling roses for a Euro or a dollar. As annoying as it is to be interrupted multiple times during the course of a night out by an adult selling innocuous flowers or asking for spare change the apparition of a small child who should be in bed approaching your table is disturbing to say the least.

The BBC has recently screened a documentary on Britain’s Child Beggars (see below). The documentary exposes the tawdry web of child slavery that some Romanian gypsy gangs have instituted all over the continent. Their criminal activities earn millions for the gangsters that control these children and have largely built the hundreds of sumptuous palaces at the seat of the gangsters in Tanderei Romania – the Gypsy Beverly Hills. The documentary shows how young children trafficked to the UK and are trained from an early age to beg and steal and grow up thinking that this is just how things are. They have no chance of getting a proper education or ever aspiring to anything other than a thief.

 Britain’s Child Beggars

 Following the fall of communism millions of Eastern Europeans went west in search of better lives in rich Western Europe. Along with those who genuinely wanted to work honestly for better lives came the gangsters who run the sex, drug and slave industries in Europe’s capital cities. It is estimated that a child can earn up to £120,000 annually beggaring and stealing on London’s streets. The children are sometimes kidnapped from other families or are the children of the gangsters. They are sent out on the streets using threats and force to swindle, steal and beg for whatever they can get. It’s tragic but so far authorities seem reluctant or incapable to counteract it.

The response to the influx of Romanian Gypsies in Western Europe has largely been criticised for being misguided and racist.France’s Sarkozy government offered money to the Gypsies to go home to Romania. Italy’s Northern League demolished their make shift camps. Spanish police are left impotent by their child protection laws which prevent them from arresting or detaining the child thieves.

 A lot has been made of the Romanian Gypsies in the Tabloid press. Frequently they are compared to a plague and it’s not unheard of for commentators to infer that Gypsies are innately thieves. This unfair characterisation of Europe’s largest minority group ignores the reality that Gypsies come from all over Europe and not just Romania. Gypsy rights groups frequently defend their community by pointing out that Slovak, Czech and Polish gypsies are usually not involved in this sort of crime in Western Europe - largely because they are entitled to work in Western Europe under European law, without a special visa, whereas Romanian Gypsies are not. On the other hand millions of Czech, Polish and Slovak Gypsies were murdered by the Nazis during WW2 so their numbers are a lot smaller than in Romania which has the largest population of Gypsies in the world (estimated to be 2 million). Whatever the case there is no denying that Europe’s Gypsies have been tortured and discriminated against since they first arrived in the continent form Northern India 1500 years ago. The level of poverty and abuse inflicted on Gypsies clearly plays a part in their association with the criminal world.

As mentioned earlier, competition is getting tougher on the streets of Europe. The gangsters place inordinate amounts of pressure on the children to bring back more and more money to finance their extravagant lives in Tanderei and elsewhere. As a result new methods of stealing are being noticed around the continent. The following clip shows Gypsy children stealing form ATM machines and boldly pilfering from people walking down the street.  

 Gypsy Child Thieves

Human trafficking is a huge problem in our modern world. Trafficking of young children and dragging them into the dark world of organised crime is abhorrent in the extreme. It’s Dickensian and a huge problem that needs to be addressed. While it is important not to label an entire ethnic group as being involved in this murky world, the issue of large numbers of Gypsies making a living in the underworld is unavoidable. Europe needs to step up and address this. The question is how.

Down and out: the French flee a nation in despair

The failing economy and harsh taxes of François Hollande's beleaguered nation are sending thousands packing - to Britain's friendlier shores

By By Anne-Elisabeth

A poll on the front page of last Tuesday’s Le Monde, that bible of the French Left-leaning Establishment (think a simultaneously boring and hectoring Guardian), translated into stark figures the winter of François Hollande’s discontent.

More than 70 per cent of the French feel taxes are “excessive”, and 80 per cent believe the president’s economic policy is “misguided” and “inefficient”. This goes far beyond the tax exiles such as Gérard Depardieu, members of the Peugeot family or Chanel’s owners.

Worse, after decades of living in one of the most redistributive systems in western Europe, 54 per cent of the French believe that taxes — of which there have been 84 new ones in the past two years, rising from 42 per cent of GDP in 2009 to 46.3 per cent this year — now widen social inequalities instead of reducing them.

This is a noteworthy departure, in a country where the much-vaunted value of “equality” has historically been tinged with envy and resentment of the more fortunate. Less than two years ago, the most toxic accusation levied at Nicolas Sarkozy was of being “le président des riches”, favouring his yacht-sailing CEO buddies with tax breaks and sweet deals. By contrast, Hollande, the bling-free candidate, was elected on a platform of increasing state spending by promising to create 60,000 teachers’ jobs, as well as 150,000 subsidised entry-level public-service jobs for the long-time unemployed and the young — without providing for significant savings elsewhere.

By 2014, France’s public expenditure will overtake Denmark’s to become the world’s highest: 57 per cent of GDP. In effect, just to keep in the same place, like a hamster on a wheel, and ensure that the European Central Bank in Frankfurt isn’t too unhappy with us, Hollande now needs cash. Technocrats, MPs and ministers have been instructed to find every euro they can rake in — in deferred benefits, cancelled tax credits, extra levies. As they ignore the notion of making some serious cuts (mooted at regular intervals by the IMF, the OECD and even France’s own Cour des Comptes), the result can be messy.

High Debt, Low Integrity

The state has grown into a cancer – a leveling monster that cannot be restrained

BY JR NYQUIST

The government shutdown is over. It is back to business as usual – that is, the usual business of out-of-control government spending. As of this writing, the U.S. national debt is over $17 trillion which amounts to $53,764 per citizen, $148,756 per taxpayer (according to USDebtClock.org). The six largest federal budget items are, in order: (1) Medicare/Medicaid ($860 billion); (2) Social Security ($812 billion); (3) Defense/Wars ($607 billion); (4) income security ($349 billion); (5) net interest on the debt ($261 billion); and (6) federal pensions ($229 billion). These sums are astronomical, and signal financial crisis or national degeneracy or both. 

The gross government debt (federal, state and local) to GDP ratio is currently 106.9 percent. The government spending to GDP ratio is nearly 39 percent. It is a level of spending which cannot be sustained indefinitely. It would appear that our course is set to break the dollar as the world’s reserve currency or accomplish something that is, in political terms, practically impossible; for government spending is set to rise dramatically in the coming months and years. In this regard, please note the two largest budgetary items are Medicare/Medicaid and Social Security. We have good reason to expect entitlement cost increases because of the vast number of citizens approaching retirement age.

Economic historian Niall Ferguson has written a piece touching on this subject, titled, On Knowing What I and the CBO Know, in which he states that “spending on entitlements has continued to rise – and will rise inexorably in the coming years.” Ferguson has explained the reasons for this in previous books and publications. The baby boomer generation is now entering retirement. The percentage of persons over 65-years-of-age is growing steadily. This is creating an enormous entitlement crush. As Ferguson explained, “The question that matters is whether the CBO now thinks the fiscal position is going to improve or deteriorate in the future, relative to where we are today. And the answer … is that it is almost certainly going to deteriorate unless there is a significant increase in revenues or reduction in entitlement spending.”

Raising revenues is unattractive because it signifies the strangulation of the economy. Cutting entitlements is unattractive because large segments of the population now depend on those entitlements to live. The grim alternatives are plainly set before us. Ferguson concludes that “entitlement spending is indeed the main reason for the projected increase in the federal debt….” And for all that, there is no easy way out. Even the best institutions, Ferguson noted in an interview, tend to deteriorate over time – including those based on the U.S. Constitution.

With regard to the roots of this crisis Ferguson has written a book titled The Great Degeneration: How Institutions and Economies Die which George Melloan praised in The Wall Street Journal as “A Jeremiad to Heed.” The prophet Jeremiah was right, after all, and so is Ferguson, says Melloan. Previously an optimist about the United States and its economy, Ferguson was sobered by the events of 2008. “The West is stagnating,” his book admits, “and not only in economic terms.” Ferguson asks why this is happening and who is doing it.

This question touches on a key that opens many doors, where the erosion of integrity long ago prefigured a series of intellectual and moral indecencies. It is not simply a matter of repairing our indebtedness; for this indebtedness merely serves as an outward symptom of failed vigilance, of deeply ingrained reckless tendencies. “Certainly there are few precedents for the scale of debt in the West today,” says Ferguson. “This is only the second time in American history that combined public and private debt has exceeded 250 percent of GDP.”

Why has this happened? In brief, the state has grown into a cancer – a leveling monster that cannot be restrained. It cannot be restrained because it is the product of our own making. We are the authors of this profligacy; and I fear that in our present state of degeneracy we are more likely to join the party of plunder than rally to fiscal sanity. Who is bold enough to propose austerity at the present time? How many baby boomers, now retiring, would readily forego their Medicare and Social Security in order to save the federal budget?

The answer must be a very low number indeed.

What Do We Expect To Happen?

What we can expect to happen generally happens, as the causal chain cannot be disrupted by wishful thinking

by Charles Hugh-Smith

If I go to Las Vegas and gamble with abandon, what do I expect to happen? If I wander alone through a tough part of town waving my iPhone around, what do I expect to happen? If I insist on hiking up a muddy rain forest trail in street clothes in the pouring rain, what do I expect to happen?

We all know what is likely to happen: In Las Vegas, we will lose our stake; in the tough part of town, our iPhone will be stolen, and on the tropical trail, we will get soaking wet.

These consequences are easily predictable. What we can expect to happen generally happens, as the causal chain cannot be disrupted by wishful thinking.

Yet when we re-elect the same politicos who have failed miserably for years, we somehow expect they will magically succeed in providing leadership the next time around. When we eat visibly unhealthy packaged junk food that is engineered to trigger our reward centers with massive doses of fat, salt and sugar, we somehow expect there will be no consequences of eating this "food."

We sit in front of digital devices all day and eliminate physical fitness from our schools, yet we expect there will be no consequences from this inactivity.

We create trillions of dollars from thin air and borrow trillions of additional dollars into existence, yet we expect there will be no consequences from this unprecedented monetary and credit expansion.

We borrow a third of all government expenditures, yet we expect there will be no consequences from this monumental dependence on public debt to maintain the Status Quo.

We buy the cheapest quality goods, yet complain about the poor quality.

We pursue a plan of borrowing our way to prosperity, yet we are flummoxed that prosperity is elusive.

We push everyone with any assets into risky asset bubbles with zero-interest rates, yet we are surprised when asset bubbles pop.

What do you expect to happen? The causal chain cannot be disrupted by wishful thinking. Bubbles will pop, and increasingly leveraged, fragile systems will crash. Hoping causal consequences will magically vanish is a strategy doomed to catastrophe. 

Why Have Young People In Japan Stopped Having Sex?

Is Japan providing a glimpse of all our futures?

The Guardian

Ai Aoyama is a sex and relationship counsellor who works out of her narrow three-storey home on a Tokyo back street... she did "all the usual things" like tying people up and dripping hot wax on their nipples. Her work today, she says, is far more challenging. Aoyama, 52, is trying to cure what Japan's media calls sekkusu shinai shokogun, or "celibacy syndrome".

...

Japan's under-40s appear to be losing interest in conventional relationships. Millions aren't even dating, and increasing numbers can't be bothered with sex. For their government, "celibacy syndrome" is part of a looming national catastrophe. Japan already has one of the world's lowest birth rates. Its population of 126 million, which has been shrinking for the past decade, is projected to plunge a further one-third by 2060. Aoyama believes the country is experiencing "a flight from human intimacy" – and it's partly the government's fault.

...

The number of single people has reached a record high. A survey in 2011 found that 61% of unmarried men and 49% of women aged 18-34 were not in any kind of romantic relationship, a rise of almost 10% from five years earlier. Another study found that a third of people under 30 had never dated at all. (There are no figures for same-sex relationships.) Although there has long been a pragmatic separation of love and sex in Japan – a country mostly free of religious morals – sex fares no better. A survey earlier this year by the Japan Family Planning Association (JFPA) found that 45% of women aged 16-24 "were not interested in or despised sexual contact". More than a quarter of men felt the same way.

Official alarmism doesn't help. Fewer babies were born here in 2012 than any year on record. (This was also the year, as the number of elderly people shoots up, that adult incontinence pants outsold baby nappies in Japan for the first time.) Kunio Kitamura, head of the JFPA, claims the demographic crisis is so serious that Japan "might eventually perish into extinction".

...

"Both men and women say to me they don't see the point of love. They don't believe it can lead anywhere," says Aoyama. "Relationships have become too hard."

Marriage has become a minefield of unattractive choices. Japanese men have become less career-driven, and less solvent, as lifetime job security has waned. Japanese women have become more independent and ambitious.

Lessons for Health Care Reform

Socialism and Cancer

By David Gratzer

It was every parent’s worst nightmare: California teenager Nataline Sarkisyan developed leukemia and struggled with complications after a bone marrow transplantation. She had just one hope left — a liver transplant. But in addition to her grave illness, Nataline and her family had to fight a corporate behemoth, because her health insurance company refused to cover the transplant.

The seventeen-year-old’s death in December 2007 captured national media attention. Newspaper editorials raged at her story; presidential candidate John Edwards campaigned with her family; the insurance company explained that it would review its procedures. Nataline’s sad tale seemed to confirm what many Americans already believed: that U.S. health care is scandalously expensive and not particularly good.

This is a conclusion constantly bolstered by widely-respected critics who compare the American health system to the systems of other nations. To point to just a few prominent examples from the last decade: In a 2000 assessment of the world’s health systems, the World Health Organization (WHO) ranked the U.S. system thirty-seventh — lower than even that of Colombia. In Sicko, Michael Moore’s 2007 documentary comparing health care systems, the U.S. system is portrayed as broken and cruel. A Commonwealth Fund study published in early 2008 surveyed nineteen nations in terms of preventable death and ranked the United States last.

This unrelenting stream of negativity has shaped the debate over U.S. health care reform. Consumers are souring on U.S. health care; policymakers are weighing the political and economic costs of changes to the system; and, according to one recent poll, even doctors — historically the most vocal opponents of socialized medicine — now support the idea of government-run health care.

But a closer look at American medicine shows many areas of strength. Far from dismal, American health care is by some important measures the best in the world. While no one would argue that American health care is perfect, there is excellence here — excellence that must be preserved and even built upon.

Ask yourself a simple question: If your daughter had a bad cough, would you call your pediatrician — or get her on a flight to Bogota, Colombia?

To Save Europe, Free the Markets

It’s time for European leaders to take bold actions, because the alternative is a train wreck

by Frank Hollenbeck

The current European economic strategy is to kick the can down the road. Debt levels in almost all European countries continue to rise and growth seems to be a long forgotten memory. The day of reckoning is around the corner, as Rudi Dornbush once warned, “[t]he crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought, and that’s sort of exactly the Mexican story. It took forever and then it took a night.”

To get real results fast, European leaders need to ditch austerity and focus more on policies that enable the private sector to provide the right supply at the right prices.

A good first step, which may even be politically possible, would be to change the land-use laws, allowing owners of agricultural land to dispose of their assets as they see fit. Land-use legislation in France is a perfect example of the worst of Soviet-style planning. It all began with a 1967 law requiring major cities to establish zoning plans. At first, those plans were only limited to large cities, but were soon extended to most cities. The regulatory framework on land, helped by EU laws and regulations, exploded during the 1980s and 1990s with the creation of coastal laws, wet zone laws, biodiversity laws, and nature zones preservation laws. Environmentalist groups were instrumental in the enactment of many of these new laws.

All these regulations stifled construction. From 1997-2007, France had a housing bubble, but, unlike Spain, there was very little construction since zoning laws left very little land to build on. Housing prices increased 140 percent over this period which was 90% faster than households’ incomes. Yet, construction cost only increased 30 percent. This was clearly a land-oriented bubble, and the main culprit was land use regulation.

Of course it does- you’re in a crisis

Realizing unpleasant realities

By mpersianis 

IMF, Troika and the Austerity mess

Consensus has it, the austerity drive has been harmful for economies in the European South. Indeed, this conclusion is so widely held by so many reasonable people, that one can hardly cast doubt on it. Mistakes made -sometimes silly ones, other times infuriating ones- are being admitted and they are slowly being ticked off in the “lessons learnt” list.

But at the same time, there is a lot to be asked about the effectiveness of PIGS’ programs. The latest discussions, in Cyprus and elsewhere, draw a dreadful picture.

1) Productivity was the problem, it is said, but internal devaluations and wage cuts didn’t do anything for exports and GDP growth. Worse, unemployment is still growing.

2) States were told they couldn’t borrow, and they moved into austerity mode. This, in its turn, put pressure on GDP and on fiscal revenues, essentially backfiring.

3) Another point made, is that, as programs are being implemented, gini coefficients worsen and economies are becoming more unfair.

None of this is strictly speaking wrong. Even in Ireland, the “success story” that others hope to emulate, the “end of the crisis” has come at immense suffering among the country’s citizens.

In Defence of Free Will

Waging war against modern determinism

By Tim Black

Does marriage depend on your DNA?’ asks one headline. ‘How to spot a murderer’s brain’, advises another. These are not isolated stories; they are just a couple of examples of a thoroughly deterministic worldview that has gained ascendancy in recent years. Everywhere you look, you can see its traces: our adult lives are determined by whether we were breastfed as babies; our evaluation of art is determined by our neural pathways; society’s future is determined by the laws of climate change. In this view, man is no longer the subject of history, no longer the locus of free will; rather, he is the object of history, at the mercy of forces beyond his control, his free will an illusion determined by his brain.

And it is because we at spiked have a far more modern view of man, of our capacity to shape our future rather than be shaped by it, that we have published five essays debunking determinism in several of its most prominent guises.

In the launch essay, ‘Standing up to the white-coated gods of fortune’, editor Brendan O’Neill noted the religious and superstitious form in which deterministic attitudes appeared in pre-modern times. Today, things are different. Our fate is not said to lie in the hands of a god, but in our genes or our brains or some external law of nature. The scientist, not the priest, has become our guide to the future. As O’Neill argues, ‘Fate has been brought back from the dead and she’s been dolled up in pseudoscientific rags’.

In ‘Never mind the neuro-bollocks’, Stuart Derbyshire took on the current leader in the field of scientistic determinism: neuroscience. He looked at the extent to which not only neuroscientists themselves, but professors, politicians and philosophers have thoroughly embraced the view that everything, from our behaviour to our political opinions, can be explained by looking at the workings of our grey matter. We do not consciously choose to do anything; our brains do all of that for us. In a thoroughgoing critique of this position, Derbyshire showed that while neuroscience can potentially tell us some useful things - mainly about the brain - there is much it will never be able to explain away, not least the nature of consciousness and, ultimately, free will.

When Hyman Minsky Runs For The Hills

Japan Central Bank To "Own" 100% Of GDP In 5 Years

By Tyler Durden

Over a year ago, in "Japan's WTF Chart" we showed where Japan lies on the sovereign debt-to-tax revenue continuum. The "where", with a WTF-inducing 1900% sovereign debt/revenue, was essentially off the chart as it was nearly 5 times greater than the first runner up: Greece, with 400%. Naturally, that ratio is absolutely unsustainable and the second rates begin creeping higher, all bets are off, however the day of reckoning could be delayed if as we said two years before Japan's berserko QE was unveiled, the BOJ entered "hyprintspeed" and started monetizing debt at a pace that would make Hyman Minsky and Rudy von Havenstein both break out in a lunatic cackle.

One look at the chart below, which shows JPM's estimate for various central bank holdings as a percent of host nation GDP, is enough to explain why that distant giggling is Hyman Minsky warming up... and he is running for the hills.

The reason: while as a result of its recent decision to double its monetary base in (every) two years Japan's central bank now holds about 40% of local GDP on its books, it has precommited to seeing this percentage hit 60% over the next two years. But that's jst the beginning.

As JPM's Mike Cembalest points out, the "contingent" line is where the BOJ's asset holdings as a % of GDP will rise to should Japan's 2% inflation goal prove elusive. Did we say "contingent" - we meant definite. And as the line shows, the Bank of Japan will, for the first time in history, "own" all of Japan's GDP on its balance sheet some time in 2018 when its "assets" as a percentage of GDP surpass 100%, and then proceed in linear fashion to add about 10% of GDP to its balance sheet with every passing year until everything inevitably comes crashing down.

Seventy Two Hours

Modern civilization is a product of laissez faire. It cannot be preserved under the ideology of government omnipotence

by Richard Fernandez

 “A Pyrrhic victory is a victory with such a devastating cost that it is tantamount to defeat. Someone who wins a Pyrrhic victory has been victorious in some way; however, the heavy toll negates any sense of achievement or profit.”

That about describes the academic achievement of Heinz Dietrich, one of the leading exponents of the Socialism of the 21st Century who is now distancing himself from the economic disaster about to overtake Venezuela, a country which conscientiously followed his advice.

The man credited with pioneering the idea of 21st Century socialism, which was championed and put into application in Venezuela under Hugo Chávez, recently made a damning condemnation of current Venezuelan President Nicolás Maduro.

German sociologist and political analyst Heinz Dieterich said Maduro has a “complete inability to deal with the serious problems of the country.” He added that if the Venezuelan president doesn’t do something to rectify the economic and political problems facing his country soon, he could be out of office by April of 2014.

Foreign Policy sums up it up succinctly. “Venezuela’s economy is in an endless state of disarray.” It took Dietrich’s medicine and died.

Inflation is soaring, and basic staples are increasingly harder to find. Electricity blackouts are frequent, and crime presents an enormous problem for citizens and companies crazy enough to do business there.

The problem for Venezuelans is that their government has no clue as to what to do. …

Venezuela’s persistently high inflation has several root causes. Because of repeated elections and populist tendencies, the government continues to spend much more than it earns via taxes. Since it has few options to finance its deficit, it has been forced to devalue the currency twice this year, and this means producers – who mostly rely on imports to supply the market – are forced to pass this on to consumers.

Taming inflation would require the government to order their finances, but the administration seems reluctant to do so. For example, according to government sources, giving away gasoline for (practically) nothing costs Venezuelan taxpayers $24 billion in direct subsidies and lost revenues. This amount represents roughly a quarter of all spending included in the 2013 budget. But regardless of how dire the situation is, the government refuses to consider decreasing subsidies because it is fearful of a public backlash.

It almost sounds like Socialism in the 21st century isn’t doing too well, though doubtless Dietrich will claim the fault lies in the bumbling Venezuelans not faithfully following his program. People like him inevitably try again and again and again … Thank God this can’t happen in America.

Yet we are often advised to be careful of what we want, lest we get it. And for many years people have wanted a society where, like Julia, government takes care of you. Peak Oil has an article which describes the welfare system the Obama administration has victoriously managed to enshrine at the center of American life. Now it has the permission to expand indefinitely, via the removal of caps on the debt limit. To appreciate the magnitude of Obama’s achievement Peak Oil describes how the Food Stamp shutdown was averted.

… this past weekend when a “temporary system failure” caused food stamp cards to stop working in 17 U.S. states. Within hours, there were “mini-riots” at Wal-Marts and other retailers that rely heavily on food stamp users … if Congress had not pushed through a “deal”, the USDA would have started cutting off food stamp benefits on November 1st …

According to Reuters, the state of North Carolina had already cut off some welfare benefits for the month of November … And as Mac Slavo recently detailed, the USDA was already planning to cut off food stamp assistance to millions of Americans on November 1st … It may not happen this month, or even this year, but food stamp riots are coming to America.

But riots won’t come … if the Food Stamps can be kept flowing without interruption. Welfare is the oxygen of social peace.  With it everything seems fine. Without it, asphyxiation begins almost immediately.

The transition between apparent normalcy and desperation is abrupt because, as Mike Adams writing in Natural News explains, welfare dependents have no financial or logistical reserves to speak of. Poor people live from welfare check to welfare check. The system has to keep on going. If money runs out then government has to borrow. Anything is possible except stopping the flow. Once the trickle halts then there’s literally nothing to eat, not even the possibility of foraging or growing supplementary food, a fallback which was long mankind’s strategy when facing hard times.

Green Bridge to Nowhere

A bridge leading someplace nobody would really want to go.

By Jonathan H. Adler

James Gustave “Gus” Speth is the consummate environmental insider. For over thirty years he has played a key role in the development of environmentalist organizations and agendas. He was present at the founding of the Natural Resources Defense Council in 1970 and later launched the World Resources Institute, a $27 million enterprise that may be the most influential environmental think tank in the world. He served on, and eventually chaired, President Carter’s Council on Environmental Quality, where he oversaw production of the apocalyptic Global 2000 report. During the 1990s he worked on President Clinton’s transition team and headed up the United Nations Development Program, and he is now dean of the Yale School of Forestry and Environmental Studies.

His prominence within the environmental establishment means that when Gus Speth speaks, environmentalists listen. He is not only an academic dean but, in many respects, the dean of contemporary environmental thinkers. Like others, he advocates ambitious and far-reaching environmental programs; unlike many, he has held positions in which to make such things happen. Few with his green bona fides have his currency in the halls of power or connections with global leaders. Yet like so many celebrated environmental thinkers, he lacks a clear or compelling vision of how to reconcile contemporary civilization with the need for environmental protection.

In The Bridge at the Edge of the World, Speth argues that all the environmental progress of the past thirty to forty years may be for naught, as an environmental crisis of global proportions is still with us. The resource shortfalls and ecological ruin predicted by the Global 2000 report may not have come to pass on schedule, but they are imminent nonetheless. Thus, he seeks radical change to our economic, political, and social systems. “The end of the world as we have known it” is inevitable; the only question is whether we will suffer planetary ruin or a radically transformed civilization. Speth’s hope is to point the way to the latter course.

Speth’s eco-pessimism is not particularly new or original, but his critique of the modern environmental movement could be. In his view, the modern environmental establishment has proven itself impotent. It has accomplished much, but not nearly enough. Working within the system failed, he maintains, because it did not seek sufficiently radical change. Saving human civilization from collapse requires more than minor adjustments, he warns, as environmental degradation is but a symptom of broader social problems, and is “linked powerfully with other social realities, including growing social inequality and neglect and the erosion of democratic governance and popular control.” Reversing course will require a “transformative change in the system itself,” including an “assault on the citadel of consumption” and the remaking of corporations. “Our duty,” Speth proclaims, is “to struggle against the contempocentrism and anthropocentrism that dominate modern life.” A “bridge” to a sustainable society requires revisiting democratic capitalism, remaking industrial civilization, and reorienting human consciousness; “we must return to fundamentals and seek to understand both the underlying forces driving such destructive trends and the economic and political system that gives these forces free rein.” Nothing less will do.

Potemkin Parliament

Washington’s governing systems are in a bad way

By Mark Steyn

The least dispiriting moment of another grim week in Washington was the sight of ornery veterans tearing down the Barrycades around the war memorials on the National Mall, dragging them up the street, and dumping them outside the White House. This was, as Kevin Williamson wrote at National Review, “as excellent a gesture of the American spirit as our increasingly docile nation has seen in years.” Indeed. The wounded vet with two artificial legs balancing the Barrycade on his Segway was especially impressive. It would have been even better had these disgruntled citizens neatly lined up the Barrycades across the front of the White House and round the sides, symbolically Barrycading him in as punishment for Barrycading them out. But, in a town where an unarmed woman can be left a bullet-riddled corpse merely for driving too near His Benign Majesty’s palace and nobody seems to care, one appreciates a certain caution.

By Wednesday, however, it was business as usual. Which is to say the usual last-minute deal just ahead of the usual make-or-break deadline to resume spending as usual. There was nothing surprising about this. Everyone knew the Republicans were going to fold. Folding is what Republicans do. John Boehner and Mitch McConnell are so good at folding Obama should hire them as White House valets. So the only real question was when to fold. They could at least have left it for a day or two after the midnight chimes of October 17 had come and gone. It would have been useful to demonstrate that just as the sequester did not cause the sky to fall and the shutdown had zero impact on the life of the country so this latest phoney-baloney do-or-die date would not have led to the end of the world as we know it. If you’re going to place another trillion dollars of debt (or more than the entire national debts of Canada and Australia combined) on the backs of the American people in one grubby late-night deal, you might as well get a teachable moment out of it.

The GOP was concerned about polls showing their approval ratings somewhere between Bashar Assad and the ebola virus, but it’s hard to see why capitulation should command popularity: The late Osama bin Laden’s famous observation about the strong horse and the weak horse has some relevance to domestic politics, too. Republicans spent a lot of time whining that, if Obama was prepared to negotiate with the Iranians, the Syrians, and the Russians, why wouldn’t he negotiate with the GOP? Well, the obvious answer is Rouhani, Assad, and Putin don’t curl up in a fetal position at the first tut-tut from Bob Schieffer or Diane Sawyer.

The thesis of my recent book After America is stated on page six thereof — “that the prevailing political realities of the United States do not allow for any meaningful course correction.” That’s what the political class confirmed yet again this week. Which brings me to the sentence immediately following: “And, without meaningful course correction, America is doomed.”