Wealth Destruction Is Hidden By Government Debt

Bad debts were shifted from the private to the public sector, but they did not disappear

by Philipp Bagus

Still unnoticed by a large part of the population is that we have been living through a period of relative impoverishment. Money has been squandered in welfare spending, bailing out banks or even — as in Europe — of fellow governments. But many people still do not feel the pain.

However, malinvestments have destroyed an immense amount of real wealth. Government spending for welfare programs and military ventures has caused increasing public debts and deficits in the Western world. These debts will never be paid back in real terms.

The welfare-warfare state is the biggest malinvestment today. It does not satisfy the preferences of freely interacting individuals and would be liquidated immediately if it were not continuously propped up by taxpayer money collected under the threat of violence.

Another source of malinvestment has been the business cycle triggered by the credit expansion of the semi-public fractional reserve banking system. After the financial crisis of 2008, malinvestments were only partially liquidated. The investors that had financed the malinvestments such as overextended car producers and mortgage lenders were bailed out by governments; be it directly through capital infusions or indirectly through subsidies and public works. The bursting of the housing bubble caused losses for the banking system, but the banking system did not assume these losses in full because it was bailed out by governments worldwide.Consequently, bad debts were shifted from the private to the public sector, but they did not disappear. In time, new bad debts were created through an increase in public welfare spending such as unemployment benefits and a myriad of “stimulus” programs. Government debt exploded.

In other words, the losses resulting from the malinvestments of the past cycle have been shifted to an important degree onto the balance sheets of governments and their central banks. Neither the original investors, nor bank shareholders, nor bank creditors, nor holders of public debt have assumed these losses. Shifting bad debts around cannot recreate the lost wealth, however, and the debt remains.

The Dark Heart Of Centralized Power

This pathology is not the result of individual psychology or character; it is the result of centralized, concentrated power itself.

by Charles Hugh-Smith

It's little wonder so many sociopaths end up in positions of power: power attracts the ruthless unencumbered by empathy.No wonder the phrase pathology of power resonates: The Federal Reserve and the Pathology of Power (November 18, 2010).

There is an ontological darkness in centralized power, and it flows from the disconnect between authority, responsibility and consequence. A leader with vast centralized powers--a president, an emperor, a dictator--has the authority to send young citizens into combat in distant lands, but he does not carry an equal responsibility to ensure their lives are not lost in the vain glories of Empire. The consequences of his decisions do not fall on him; he is far from the combat and the loosed dogs of war. His concern is the domestic political squabbles of the Elites who support his centralized power.

All centralized power carries the same pathology: those with the authority are never exposed to the consequences of their authority, nor do they have any responsibility for the consequences. The president who launches an unwinnable war that chews up the nation's youth and treasure leaves office to fund-raise for his self-glorification, i.e. a presidential library.

The CEO whose strategies fail to revive the corporation and indeed send it to the brink of insolvency leaves with a "golden parachute" worth tens of millions of dollars.

This pathology is not the result of individual psychology or character; it is the result of centralized, concentrated power itself. Giving any individual or small group this kind of power--over war, over the nation's money and credit, over its healthcare--distorts the field of perception; even people who were once non-pathological become pathological once power takes hold of their being. Soon they believe they have god-like powers to "fix things;" indeed, they feel a responsibility to wield their god-like powers "to do whatever it takes."

But since there is no personal consequence of their rash policies, nor any responsibility for the devastation their powers unleash, the power becomes pathological.

Knockouts High and Low

Without self-restraint, we slip toward barbarism

By  Mark Steyn

On November 22, 1963, two other notable men died, and got relegated to the foot of page 37 — the British authors C. S. Lewis and Aldous Huxley. Lewis endures because of the Narnia books (and films), but there’s a lot more in the back of his wardrobe. In his book The Abolition of Man, he writes of “men without chests” — the chest being “the indispensable liaison” between the head and the gut, between “cerebral man” and “visceral man.” In the chest beat what Lewis calls “the trained emotions.” Without them there is no honor or virtue, but only “intellect” and/or “appetite.”

Speaking of appetite, have you played the “Knockout” game yet? Groups of black youths roam the streets looking for a solitary pedestrian, preferably white (hence the alternate name “polar-bearing”) but Asian or Hispanic will do. The trick is to knock him to the ground with a single punch. There’s a virtually limitless supply of targets: In New York, a 78-year-old woman was selected, and went down nice and easy, as near-octogenarian biddies tend to when sucker-punched. But, when you’re really rockin’, you can not only floor the unsuspecting sucker but kill him: That’s what happened to 46-year-old Ralph Santiago of Hoboken, N.J., whose head was slammed into an iron fence, whereupon he slumped to the sidewalk with his neck broken. And anyway the one-punch rule is flexible: In upstate New York, a 13-year-old boy socked 51-year-old Michael Daniels but with insufficient juice to down him. So his buddy threw a bonus punch, and the guy died from cerebral bleeding. Widely available video exists of almost all Knockout incidents, since the really cool thing is to have your buddies film it and upload it to YouTube. And it’s so simple to do in an age when every moronic savage has his own “smart phone.”

There’s no economic motive. The 78-year-old in New York was laden with bags from department stores, but none were touched. You slug an elderly widow not for the 50 bucks in her purse but for the satisfaction of seeing her hit the pavement. In response, some commentators are calling for these attacks to be recategorized: As things stand, if white youths target a black guy it’s a hate crime, but vice versa is merely common assault. I doubt this would make very much difference. “No justification of virtue will enable a man to be virtuous,” wrote Lewis — and, likewise, no law can prevent a thug punching an old lady to the ground if the thug is minded to. “A society’s first line of defense is not the law but customs, traditions, and moral values,” wrote Professor Walter Williams a few years ago. “They include important thou-shalt-nots such as shalt not murder, shalt not steal, shalt not lie and cheat, but they also include all those courtesies one might call ladylike and gentlemanly conduct. Policemen and laws can never replace these restraints on personal conduct.”

Restraint is an unfashionable concept these day, but it is the indispensable feature of civilized society. To paraphrase my compatriot George Jonas, punching a spinster’s lights out isn’t wrong because it’s illegal, it’s illegal because it’s wrong. But, in a world without restraints, what’s to stop you? If a certain percentage of your population feels no moral revulsion at randomly pulverizing fellow citizens for sport, a million laws will avail you naught: The societal safety lock is off.

The Wahhabi-Likudnik war of terror

The strange new axis

By Pepe Escobar 
The double suicide bombing targeting the Iranian embassy in Beirut - with at least 23 people killed and 170 wounded - was a de facto terror attack happening on 11/19. Numerology-wise, naturally 9/11 comes to mind; and so the case of the Washington-declared war on terror metastasizing - largely conducted by oozy forms of Saudi "intelligence". 
Yet don't expect the "West" to condemn this as terror. Look at the headlines; it's all normalized as "blasts" - as if children were playing with firecrackers.
Whether carried out by a hazy al-Qaeda-linked brigade or by Saudi spy chief Bandar bin Sultan's (aka Bandar Bush's) goons, the Beirut terror attack is essentially configured as a major, Saudi-enabled provocation. The larger Saudi agenda in Syria implies getting both Hezbollah and Iran to be pinned down inside Lebanon as well. If that happens, Israel also wins. Once again, here's another graphic illustration of the Likudnik House of Saud in action. 
Nuance also applies. Bandar Bush's strategy, coordinated with jihadis, was to virtually beg for Hezbollah to fight inside Syria. When Hezbollah obliged, with only a few hundred fighters, the jihadis scurried away from the battlefield to implement plan B: blowing up innocent women and children in the streets of Lebanon. 
While Hezbollah welcomes the fight, wherever it takes place, Tehran's position is more cautious. It does not want to go all out against the Saudis - at least for now, with the crucial nuclear negotiation on the table in Geneva, and (still) the possibility of a Geneva II regarding Syria. Yet the House of Saud is not welcoming Geneva II anytime soon because it has absolutely nothing to propose except regime change. 
On Syria, the main pillar of Bandar Bush's strategy is to turn the previously "Free" Syrian Army into a "national army" of 30,000 or so fully weaponized hardcore fighters - mostly supplied by the "Army of Islam", which is nothing but a cipher for the al-Qaedesque Jabhat al-Nusra. King Playstation of Jordan, also known as Abdullah, collaborates as the provider of training camps near the Syrian border. Whatever happens, one thing is certain; expect Bandar Bush's goons to be carrying out more suicide bombings on both Lebanon and Syria. 

Xi's power grab dwarfs market reforms

Urge for control Vs people's desire to liberate their production forces

By Willy Lam 
While the recent Third Plenary Session of the 18th Chinese Communist Party (CCP) Central Committee was expected to unveil major initiatives in economic liberalization, what has struck Chinese and foreign observers most is the weight that the leadership has given to enhancing state security, particularly centralizing powers in the top echelon of the party-state apparatus. 

The plenum set up a National Security Committee (NSC) to better coordinate the work of departments handling functions that range from police and counter-espionage to the media and foreign affairs. 

Given that apart from the NSC, President Xi will most likely also head a newly established Leading Group on the Comprehensive Deepening of Reform, the already formidable powers of the party General Secretary and Commander-in-Chief will be augmented further. 

A paragraph in the plenum communique, which was released on November 12, said that the NSC was set up to "perfect the structure of state security and national-security strategies, so as to [better] safeguard national security". 

"We must improve the ways of social governance, stimulate the energy of social organizations and bring about innovation of systems to effectively prevent and end social contradictions and improve public security," the document added. 

While the official media has given scant details about the NSC, it is expected to be a state organ whose status is on par with commissions and leading groups - such as the Central Military Commission and the Leading Group on Foreign Affairs (LGFA), which are also headed by Xi - that report directly to the Politburo Standing Committee (PBSC), China's highest ruling council. 

In his explanation of the "Resolution on Certain Major Questions regarding the Comprehensive Deepening of Reforms" (hereafter "the Resolution"), the full text of which was released on November 15, Xi noted:

The NSC's main responsibilities are to formulate and implement national security strategies, to push forward legal construction on state security, and formulate the goals and policies of national security work."

Referring to the connection between external and internal threats, Xi said: "Our country faces the double pressure of protecting national sovereignty, security and developmental interests from outside [threats] and safeguarding internal political safety and social stability.

While the NSC shares its name in Chinese with the US National Security Council, it is believed to be focused primarily on internal security. This includes combating challenges posed by "hostile anti-China forces from abroad." Within the party's highest echelons, there are already two units - the LGFA and the Leading Group on National Security - that perform roles similar to that of the American National Security Council. 

Reports in the non-official China media and the Hong Kong press have published several possible lists of ministries and ministerial-level units that will send senior representatives to the new body. 

By Eliminating Failure, The Government Robs Us Of Success

“Success by government decree” is the motto of the regulatory state

By Harry Binswanger

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

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

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

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

What Causes The Growing Wealth Gap In America?

Only the rich have benefited from the Fed’s largess

by Omid Malekan

A major issue in America today is the growing gap between the rich and the poor, and the popular narrative is that the disparity is caused by capitalism run wild and only the firm hand of government can fix the problem. But what if this narrative has it backwards? What if the growing wealth disparity in America is actually caused by the government?

Take Warren Buffet, a man often at the center of this debate, as not only is he a billionaire, but also a vocal advocate for higher income taxes on the rich. Mr. Buffet’s focus on taxes on income is curious, as he didn’t become a billionaire by earning a high income, but rather from owning assets, like shares in Berkshire Hathaway. Many are aware of his acumen in making investments that have a “margin of safety” – or minimal downside – but few are aware of the greatest source of such safety for Mr. Buffet in recent years, the US Government.

During the 2008 crisis Buffet’s investment portfolio was full of wobbly financial companies like GE and Wells Fargo. In the span of 2 months Berkshire stock – and Mr. Buffets net worth – lost half their value. In response, Buffet invested more in collapsing financial companies like Goldman Sachs, then went public demanding a bailout. The Treasury Department and Federal Reserve responded with program after program to keep troubled financial entities alive, some of them invented specifically for Buffet holdings like GE. Just two years later, thanks to the impact of the bailouts and the Fed’s programs, Berkshire stock rebounded sharply. Mr. Buffet’s investment in Goldman Sachs, which he himself admitted was a bet on the bailouts, made billions and continues to earn him a profit years later.

Mr. Buffet wasn’t the only person that benefited from the bailouts, but wealthy citizens like him, who tend to hold the majority of assets in America, benefited disproportionately. The untold narrative of how Warren Buffet and others like him “get richer” is how they managed to not get poorer, even when their bad investment choices dictated such.

Presumptions Versus Good Ideas

Losing respect for presumptions undermines society's immune system against good ideas

By Anthony de Jasay

Since 2008, sovereign indebtedness and the rolling over of charges onto the backs of generations to come has gathered momentum. The cruel "austerity" designed to reduce budget deficit from 8-9 to 3-4 per cent of national product still represents a fiscal stimulus, albeit a less feverish one than before. Nevertheless, it is now almost universally condemned as excessively severe, stifling as it does economic growth that is now practically at a standstill in Western Europe. Blaming the past for what is wrong in the present, the apparent inability to grow is now blamed on the Goldilocks years of deregulation, trade liberalisation and less progressive income taxation of the so-called Washington Consensus of the two decades prior to the 2008 crash. For the moment and maybe for some time to come, the collective wisdom trumpeted in parrot talk(1) is that salvation must lie in bringing back the strong hand of the state to impose discipline in the market that has proved incapable to look after itself. The result on the entire Western world, but most conspicuously in Europe, is an avalanche of legislation, a frenzy of regulation and a mudslide of directives supposed to bring security to all, to tame risk, to curb "non-productive" services such as finance and foster "productive" industry, and to "create" new jobs by protecting the old ones. Last but by no means least, to make social justice prevail over the "ultra" or "neo"-liberal aberrations of recent decades.

The obsessive passion to govern, to tug at every steering wheel, gas pedal and brake within sight that seems to motivate the political classes and is trusted to ward off defeat at the next election, feeds on a steady flow of Good Ideas or, as the saying goes, on ideas that "looked good at the time". In the near or medium term, we are certain to have massive studies evaluating the effect of the post-2008 rush of intensive government and its breathless pursuit of Good Ideas. It is a safe bet that some of these studies, though hardly more than a half, will ascribe the coma of the European economy, its inability to put 2008 behind itself and start growing again, to the insistence of governments to regulate and direct it.

While we wait for these definitive studies to emerge there is ample time to reflect on the reasons for our readiness to gobble up what the political classes kept laying before us. Why are we so gullible as to believe that the ideas that look good today will still look good tomorrow? Has society lost its supposed conservatism, its immune system, that would resist good ideas, or at least good ideas of a certain type?

Any social order worthy of the name rests on two elementary components. One, widely recognised, is a system of rules of reciprocal behaviour, such that conforming to them is beneficial or at worst neutral to all parties. The rules are universally beneficial because any potential gain from not conforming to them is threatened by sanctions administered by those benefiting from conformity. The model is that nobody steals the neighbour's chicken and everybody is down on the eventual chicken-thief. The interaction, technically a convention, is spontaneous and has been first made clear by David Hume, who used it above all to explain the stability of property and the keeping of contracts. It is also central to game theory in the explanation of certain types of equilibria.

There are no ‘natural’ resources, only raw materials

All resources are created through human effort

by Mark J. Perry

From Don Boudreaux’s excellent post “Coming to Terms with Rhetoric“:

Take the term “natural resources” (which I’ve written about before; for example, here).  This phrase suggests that some things of value to human beings occur naturally – without any human effort or creativity.  But that suggestion is wrong.  Nothing is naturally a resource; nature alone invests nothing with resourcefulness; ultimately, resources - all resources – are created by human beings.  Nature creates raw materials, but never creates resources.  Raw materials and human artifacts are made into resources only if, and only when, and only insofar as, human creativity figures out a way (or ways) to employ those materials and artifacts in ways that satisfy genuine human desires.

The point, here, is that the term “natural resources” can be misleading about the role of nature in creating human bounty.  Nature exists, to be sure; but human bounty is created by human creativity; nature in matters economic is not the prime mover.  Nature’s role in determining who is and who isn’t materially wealthy is much smaller than we are sometimes led to believe when focusing on “natural resources.”

From another article, Don provides an example:

Take petroleum. What makes it a “resource.” It’s certainly not a resource naturally. If it were, American Indians would long ago have put it to good use. But they didn’t. I suspect that for Pennsylvania’s native population in, say, the year 1300, the dark, thick, smelly stuff that bubbled up in watering holes was regarded as a nuisance.

Petroleum didn’t become a resource until human beings creatively figured out how to use it to satisfy some human desires and other human beings figured out how to extract it cost-effectively from the ground. 

Australia Rejects UN “Socialism Masquerading as Environmentalism”

According to UN, individual liberty, free markets, national sovereignty, and more will all have to go

by  Alex Newman

The new Australian government, elected by a landslide on a platform opposing carbon taxes and “global-warming” schemes as United Nations climate theories were imploding, delivered a blunt message to UN alarmists this week: No more “socialism masquerading as environmentalism.” With the new conservative-leaning cabinet taking a stand against UN machinations and radical domestic restrictions imposed under the previous Labor Party government, Australian authorities also publicly refused to sign up for any new contributions, taxes, or charges at this week’s embattled UN global-warming summit in Poland.  

Despite the tough talk by officials and the fact that global temperatures actually stopped rising 17 years ago — debunking every one of the UN’s “climate models” — Australia is still ensnared in more than a few dubious international “climate” commitments. In a move supposedly aimed at stopping “climate change,” the nation’s previous rulers agreed to force Australians to drastically reduce their emissions of carbon dioxide — a gas exhaled by all people and critical to life on Earth, which constitutes a mere fraction of one percent of all gases in the atmosphere.

According to an official document outlined in The Australian newspaper, the new government plans to remain “a good international citizen” and is still “committed to achieving a 5 percent reduction” in CO2 emissions by 2020. However, the document, reportedly produced after a cabinet meeting last week, noted that authorities will not agree to any international “climate” agreements that involve squandering more taxpayer money or levying taxes. 

Australia “will not support any measures which are socialism masquerading as environmentalism,” the document also states. The new government, led by conservative-leaning Prime Minister Tony Abbott , also explicitly declared that it would not make any payments or accept any liabilities as part of any potential new UN global warming agreement. That means Australia will refuse to play “any role in a wealth transfer from rich countries to developing nations to pay them to decrease their carbon emissions,” the paper reported. 

With rulers of poor countries demanding $100 billion per year from taxpayers in wealthier nations to deal with alleged man-made “climate change” this week in Warsaw, the Australian decision represents a potentially major blow to the UN-led extortion effort. The new leadership also refused to send senior Australian officials — Environment Minister Greg Hunt and Foreign Minister Julie Bishop — to the ongoing UN summit. Predictably, climate alarmists and wealth redistributionists were up in arms. Analysts and commentators in Australia and other Western nations, however, celebrated the move.  

The Most Despised Tax-And-Retreat French President Sinks Deeper Into Economic Quagmire

Nothing seems to work. Squeezing the French has reached its limit.

By Wolf Richter   

The French habitually appear to be on the verge of having had it. But the incidents have been getting denser, more frequent. There were the protests in the Bretagne and elsewhere, followed by "operation snail" where 2,100 heavy trucks drove side by side down major expressways at a snail’s pace, with everyone behind them going nuts. Every day, there are protests organized by different organizations. On Thursday, the farmers went to town, to Paris more specifically. They were getting there by driving their tractors on major highways, setting up roadblocks as they went, snarling traffic for miles.

They’re all protesting the relentless onslaught of new taxes. At first, buoyant from an election victory, President François Hollande and his government went after the rich then quickly hit even modest households, farmers, truckers, craftsmen, everyone who does or buys anything. Because it’s never enough. In January, the Value Added Tax hike will take effect. For the top tier of items, the VAT will only increase from 19.6% to 20%. But for some of the lower tier items, it will be jacked up massively. For example, for the equestrian industry, the VAT will jump from 7% to 20% – hence the protests the other day.

Now the farmers have had it. While at it, they’re also protesting EU rules on how they should run their businesses and anti-pollution laws that would limit the use of tractors on some days. The word "insurrection" is showing up in the media, though it's still more an exaggeration than a description. "Fiscal discontent” is better, but not broad enough.

After 18 months in office, Hollande's ratings have plunged to the lowest levels of any president since 1958, according to an Ifop/JDD poll, the only poll going back this far. A mere 20% of the French were satisfied with him; 17% among workers and employees; 15% among merchants and craftsmen. Even his erstwhile supporters have abandoned him.

And 79% were dissatisfied. Cited were "social desperation" of the people affected by his policies, but also his leadership qualities, his apparent "inability to decide," his "lack of discipline," his tendency to make decisions and then, when the volume gets too loud, withdraw them. It leaves the country rudderless.

Who could do a better job? Maybe Santa Claus.

Because no one else seems to be able to, in the eyes of the French. Turns out, 74% think that any of the major figures of the UMP, the party of former President Sarkozy, would do worse or no better. And on the right-wing where Marine Le Pen reigns with her National Front (FN)? 79% of the respondents think she’d be worse or no better than Hollande. There simply is no savior in sight. Much less a solution.

US-Afghan pact at impasse?

The Indian Ocean region will now inherit the tensions and contradictions of the new cold war

by John Holmes
Every cloud has a silver lining. When it seemed that the US-Afghan pact is all but wrapped up on Washington’s terms and nothing can now stop its signing before the end of the year — the Obama administration has even begun briefing lawmakers on Capitol Hill regarding the provisions of the pact — a glitch seems to pop up from nowhere. 

The BBC has flagged, here, that the deal is “at impasse” ahead of the Loya Jirga meeting in Kabul next week because of disagreement over a key provision concerning the prerogative of the US forces’ operational freedom to enter Afghan homes. 

Kabul apparently feels “very strongly about this,” while the American side wants to continue the practice of entering Afghan properties. The quarrel may seem a storm in a tea cup but it isn’t really, since the Afghan opinion strongly militates against the manner in which foreigners invaded the privacy of their homes. 

Yet, this could also be a clever PR ploy by President Hamid Karzai after having caved in to meet the American demands on the key provisions of the pact. Karzai is brilliant in grandstanding and he probably hopes to present himself as an honest broker in front of the 3000 tribal leaders who assemble for the jirga in Kabul. 

He’s reason to be nervous that he is ramming down the throat of the Afghan nation a deal that formalises the open-ended foreign occupation of his country — and, there are already bad omens. Having said that, it is tempting to hope that the BBC report is for real and the US-Afghan difference would prove a deal-breaker. 

World War I once more?

We are probably better protected against the outbreak of global war than they were in 1914, but not by much

By Martin Hutchinson 

In early August next year, it will have been 100 years since investors suffered a very nasty shock indeed, when the London and New York stock markets closed for some five months and many international bonds previously thought to be high-grade proved worthless. It should be remembered: for the average investor, World War I, the cause of this disruption, blew up very quickly out of a clear blue sky. 

The sky is again blue; certainly many markets, notably that for US stocks, are priced as if it were positively ultra-violet. So could such an event occur again? 

The closure of the New York market at the outbreak of World War I had surprisingly little effect; the Dow Jones Industrial Average opened on December 12, 1914, at 54.3, somewhat above the 52.6 at which it had closed on July 30. The market then went into a steady upward march, so that by the peak in November 1916, after Woodrow Wilson had won re-election on the slogan "He kept us out of war", it had more than doubled to 110. 

Needless to say, the US actually entering the war was a dreadful shock to the investor class, and fighting the battles proved much less profitable than supplying munitions for them, so that by the nadir of Allied fortunes in May 1918, the index had dropped by about a third to the mid-70s. 

Nevertheless, at the end of 1919, it was once again at the 1916 peak, although wartime inflation meant that investors who had held since 1914 had achieved little profit in real terms, had received some nice juicy dividends, but had paid some unpleasant taxes, at ordinary income tax rates, on capital gains that were purely the result of inflation. 

The London Stock Exchange had no index before the Financial Times established one in 1935, reflecting the greater amateurishness of London equity markets compared with New York. Even though London was the center of world finance in 1914, and the London merchant banks were the world's most sophisticated, they played little role in equity financing, which was handled by stock brokers and dubious company promoters unconnected with the better end of the business. 

Stock prices, which had been sluggish during the Edwardian period, declined sharply during World War I, while inflation soared so by 1919 real prices were less than half what they had been in 1914. In France, stock prices declined even more than they did in Britain, while in Germany, stocks were little protection against the virulent inflation that took hold during the war, before giving way to the hyperinflation of 1923. Thus for investors as a whole, World War I was an unmitigated disaster, with only American investors and those in some of the neutral countries such as Sweden managing to preserve their wealth more or less intact in real terms. 

The economic causes of World War I have been largely neglected. Much modern scholarship, notably Christopher Clark's The Sleepwalkers published earlier this year, has shown that the major protagonists in World War I were not very aggressive in their outlook, that the system of alliances which Britain fatally joined with the 1904 Entente Cordiale was inherently destabilizing, and that the assassination of the Archduke Frank Ferdinand was merely one of a number of possible triggers, albeit a trigger that with better diplomacy by Britain in particular need never have resulted in conflagration. 

The neglected causes of conflict however were the barriers to trade in the pre-1914 world, which was not fully globalized and had economic rivalries at least as destabilizing as political ones. Whereas travel between the major countries was freer than today, with passports unnecessary to visit most countries, the trade system was highly protectionist. 

What’s behind 21st-century anti-Semitism?

More and more people project their disdain for the modern world on to ‘the Jew’

By Frank Furedi’s

First, a health warning. For some time now it has been difficult to have a grown-up discussion about anti-Semitism. In post-Second World War Europe, this issue, perhaps more than any other, has provoked powerful memories and emotions. The debate about what constitutes anti-Semitism, and where it is being expressed, can be a moral minefield, and it can impact both positively and negatively on European attitudes towards Jewish people. As a result, there are frequently controversies about whether or not a certain statement or act is anti-Semitic.

For example, in early January an appeals court in Cologne, Germany, ruled that Henryk Broder, a German-Jewish journalist, could describe the statements made by a fellow Jew, Evelyn Hecht-Galinski, as anti-Semitic. ‘Even German courts are beginning to understand that it is not enough to be Jewish in order not to be anti-Semitic’, boasted Broder (1). This court case highlighted another difficulty in understanding the nature of anti-Semitism today. In recent times, how Jews are perceived has become closely bound up with the issue of Israel. So Broder had denounced the Jewess Hecht-Galinski as anti-Semitic because she had equated Israel’s policies with those of Nazi Germany. As far as Hecht-Galinski was concerned, Broder’s claim that her criticism of Israel in such a fashion was ‘anti-Semitic’ represented defamation against her character.

Disputes such as this one should remind us that there is a powerful subjective and interpretative element to how we characterise another individual’s words and behaviour – and these acts of interpretation can be influenced by unstated cultural and political assumptions. Today, there are at least four important trends that complicate our understanding of how anti-Semitism works.

First of all, contemporary Western culture continually encourages groups that perceive themselves as victims to inflate the wrongs perpetuated against them. As a result, we are always being told that racism is more prevalent than ever before, or that homophobia and Islamophobia are rising, or that sexual discrimination is more powerful than in the past. It is unthinkable today for advocacy groups to concede that prejudice and discrimination against their members have decreased, and that the status of their community or people has improved. Such groups are acutely sensitive to how they are represented in the media, and to the language in which they are discussed and described. And this identity-based sensitivity is shared by Jewish organisations, too, which in recent decades have often been all-too-willing to interpret what are in fact confused and ambiguous references to their people as expressions of anti-Semitism.

Consequently, the charge that a certain statement is ‘anti-Semitic’ should not be accepted at face value. Statements and acts need to be analysed and interpreted in the context in which they were made or carried out. It is particularly important to resist the temptation to characterise speech or behaviour as anti-Semitic by second-guessing its real meaning. An objective assessment demands analysis of what was actually said, rather than speculation about its ‘true’ or ‘hidden’ meaning. Just as we already have the irrational concept of ‘unwitting racism’ in the UK, we may soon end up with charges of ‘unwitting anti-Semitism’ being made against those individuals judged by other people’s interpretive wits to be anti-Semitic.

The second complication is that, in recent decades, the defenders of Zionism have developed the unfortunate habit of labelling criticisms of Israel as a form of anti-Semitism. The aim of these rhetorical attacks is to devalue the moral standing of Israel’s critics, and thus avoid having to deal with their often difficult, persuasive arguments. The cumulative impact of this very defensive response to criticism of Israel is to undermine the moral weight of charges of anti-Semitism. Those who are anti-Zionist are often able to accuse Israeli politicians and their supporters of ‘hiding behind’ the charge of anti-Semitism. Worse still, the pro-Israel movement’s propagandistic association of anti-Zionism with anti-Semitism has encouraged others to erode the conceptual distinction between Zionism and Jews.

B-H Levy and the destruction of Libya

Neither morality nor philosophy has much to do with Levy and his unending quest for war

By Ramzy Baroud 
While Israeli Prime Minister Benjamin Netanyahu is "the world's most influential Jew", Bernard-Henri Levy is number 45, according to an article published in the the Jerusalem Post, on May 21, 2010. Levy, per the Post's standards, came only two spots behind Irving Moskowitz, a "Florida-based tycoon considered the leading supporter of Jewish construction in east Jerusalem". 

To claim that at best Levy is an intellectual fraud is to miss a clear logic that seems to unite much of the man's activities, work and writings. He seems obsessed with "liberating" Muslims, from Bosnia to Pakistan, to Libya and elsewhere. However, this would not qualify as a healthy obsession stemming from overt love for and fascination with their religion, culture and myriad ways of life. 

Throughout his oddly defined career, Levy has done much harm by at times serving as a lackey for those in power, and at others leading his own crusades. He is a big fan of military intervention, and his profile is dotted with references to Muslim countries and military intervention from Afghanistan to Sudan and finally Libya. 

Writing in the New York magazine on Dec 26, 2011, Benjamin Wallace-Wells spoke of the French "philosopher" as if he were referencing a messiah that was not afraid to promote violence for the greater good of mankind. 

In "European Superhero Quashes Libyan Dictator", Wallace-Wells wrote of the "philosopher [who] managed to goad the world into vanquishing an evil villain". The villain in question is, of course, Muammar Gaddafi, the Libyan leader who was ousted and brutally murdered after reportedly being sodomized by rebels following his capture in October 2011. 

A detailed analysis by Global Post of the sexual assault of the leader of one of Africa's most prominent countries was published in CBS news and other media. 

Levy, who at times appeared to be the West's most visible war-on-Libya advocate, has largely disappeared from view within the Libyan context. He is perhaps stirring trouble in some other place in the name of his dubious philosophy. His mission in Libya, which is now in a much worse state it has ever reached during the reign of Gaddafi, has been accomplished. The "evil dictator" has been defeated, and that's that. 

Never mind that the country is now divided between tribes and militias, and that the "post-democracy" Prime Minister Ali Zeidan was recently kidnapped by one unruly militia to be freed by another. 

The President of Mongolia preaches freedom to North Korea – in North Korea

I believe in the power of freedom

A speech given at Kim Il Sung University in Pyongyang by the president of Mongolia late last month has caused raised eyebrows for its starkly critical portrayal of the follies of tyrannical rule and the repression of human rights.

President Tsakhiagiin Elbegdorj delivered the speech on the final day of his visit to North Korea. Mongolia has traditionally maintained friendly relations with the North, but the tenor of the speech is bound to have caused surprise even though it was delivered before an audience of relative loyalists.

Relative loyalists. Now there’s a choice phrase. I’m guessing it does not mean people who are literally blood relatives of the ruling dynasty.

Under this report, Daily NK reproduces the full text of the President’s speech, and it is well worth a read.

Quote (and it is very quotable):

I believe in the power of freedom. Freedom is an asset bestowed upon every single man and woman. Freedom enables every human to discover and realize his or her opportunities and chances for development. This leads a human society to progress and prosperity. Free people look for solutions in themselves. And those without freedom search for the sources of their miseries from outside. Mongols say, “better to live by your own choice however bitter it is, than to live by other’s choice, however sweet”.

See what I mean about quotable?

No tyranny lasts forever. It is the desire of the people to live free that is the eternal power.

You surely do now.

In 1990 Mongolia made a dual political and economic transition, concurrently, without shattering a single window and shedding a single drop of blood. Let me draw just one example. Over twenty years ago, the sheer share of the private sector in Mongolia’s GDP was less than 10%, whereas today it accounts for over 80%. So, a free society is a path to go, a way to live, rather than a goal to accomplish.

As I say, remarkable. Pessimists may say: it’s just words. But words matter. Why would any of us bother with reading and writing the stuff here if words did not matter?

I never used to like those Mongols much. Now, I find myself warming to them.

Europe’s Bank Money Blues

Faced with intense regulatory pressures, banks in Europe have been deleveraging big time

BY STEVE HANKE

Well, it’s official, the economic talking head establishment has declared war on Germany. The opening shots in this battle were fired by none other than the United States Treasury Department, which had the audacity to blame Germany for a weak Eurozone recovery in its semi-annual foreign exchange report. The Treasury’s criticisms were echoed by IMF First Deputy Managing Director David Lipton, in a recent speech in Berlin — a speech so incendiary that the IMF opted to post the “original draft,” rather than his actual comments, on its website. Things were kicked into a full blitzkrieg when Paul Krugman penned his latest German-bashing New York Times column.

The claims being leveled against Germany revolve around nebulous terms like “imbalances” and “deflationary biases.” But, what’s really going on here? The primary complaint being leveled is that Germany’s exports are too strong, and domestic consumption is too weak. In short, the country is producing more than it consumes. Critics argue that “excess” German exports are making it harder for other countries (including the U.S.) to recover in the aftermath of the financial crisis.

While a review of international trade statistics is all well and good, the ire against Germany actually comes down to one thing: austerity. Despite Germany’s relatively strong recovery, the international economic establishment is none too happy about the country’s tight fiscal ship. If only Germany would crank up government spending, then Germans would buy more goods, and all would be right in the Eurozone, and around the world - the argument goes.

Yes, the anti-austerity crowd has found a convenient way to both slam austerity and scapegoat one of the few countries to successfully rebound from the crisis. I would add that it is hardly a coincidence that this line of argument fits nicely into the fiscalist message of Germany’s Social Democratic party, with whom Chancellor Angela Merkel is currently trying to arrange a governing coalition.

Meet the miserabilists who think Filipinos bred themselves into disaster

We have to shoot down the storm of Malthusian and modernity-bashing bullshit that now follows every natural disaster that takes place

By PATRICK HAYES

All environmental problems become harder, and ultimately impossible, to solve with ever more people.’ So said Sir David Attenborough, the highest profile patron of Population Matters (PM), formerly the Optimum Population Trust, the campaigning organisation dedicated to curbing population growth. The Attenborough outlook infuses all of PM’s propaganda. Everything PM pumps out contains the same brutally reductive message: that people’s fecundity, all their casual breeding, makes everything from natural disasters to poverty worse than it needs to be.

Malnutrition in the Yemen? ‘A root cause is too many people’, says PM. Famine in Ethiopia? ‘The underlying cause is population growth.’ Drought in England? ‘Too many people for the water available.’

So no prizes for guessing what PM believes was a major contributor to the destruction caused by Typhoon Haiyan in the Philippines last week. Yep, too many bloody Filipinos. Under the headline, ‘Big families and typhoons’, PM tells us: ‘The sheer numbers of people mean that more suffer when storms… strike.’ It’s classic victim-blaming – you are suffering because you had too many children and allowed your towns and cities to swarm with human beings.

According to PM, the suffering in the Philippines was exacerbated by a condition that afflicts more than 80 per cent of Filipinos: Catholicism. ‘While family planning is now legal [in the Philippines]’, says PM, ‘decades of rearguard action by the conservative local Catholic hierarchy means that access and use is limited’. The result is that the average birth rate remains at ‘around three per woman’, causing the nightmarish scenario (in PM’s view anyway) of a fivefold increase in the Filipino population since 1950, from 19 million back then to nearly 100 million today. And this is what made Haiyan so destructive, apparently – the massive numbers of Catholic-lectured people having more and more babies put ‘pressure on space and resources’, making the nation more ‘vulnerable to storms’. In a nutshell: these poor Catholic baby machines have bred themselves into disaster.

But how true is it that the Philippines has peculiar ‘pressures on space’, with loads of people crammed into small places? It’s actually the fortieth most population-dense country in the world, with 329 people per square kilometre. There are many far more densely populated countries that do not suffer the same problems as the Philippines, even when big natural disasters occur. Belgium, for example, has 366 per sq km. Holland has almost 500. Hong Kong has 6,516. Which rather puts paid to PM’s claim that numbers of people and amount of space necessarily make natural disasters worse when they hit. What people in the Philippines need is not ‘help [to] manage their family size’, as PM proposes, but rather industry, development, more economic growth; if the Philippines were more like Hong Kong, it would be better prepared to deal with natural problems that arise.