Iraq: Deeper in Trouble or Eerie Result of US 2003 «Cakewalk»

The year 2013 has distinctively been a blessing for Islamist parties and fundamentalist Islamic governments throughout the Middle East

By Andrei AKULOV

Instability in Iraq has grown steadily over the recent months. The Iraqi government has lost control of the strategic city of Fallujah, west of Baghdad. For the first time since the American troops' withdrawal in 2011, fighters from a group affiliated with Al Qaeda and Sunni tribesmen have seized parts of the two biggest cities in Anbar province bordering Syria.

The fighting erupted after troops broke up a protest camp by Sunni Arabs in the city of Ramadi. They were protesting marginalizing the Sunnis by the Shia-led government. When Prime Minister Maliki dispatched the Iraqi army to quell a protest in Ramadi over a week ago, local tribes fought back. Maliki ordered the troops to withdraw. As a result Islamic militants appeared in Ramadi, Fallujah and Tarmiya triggering combat actions across the whole Anbar province. The Islamic State of Iraq and the Levant (ISIL) asserted control over the western Iraqi city of Fallujah on January 3 declaring an Islamic state there. They had received a boost from some local Sunni tribesmen, who had joined them to fight the forces of Iraq's Shiite-led government, while others turned against the jihadists. Local tribes, Iraqi security forces and al-Qaeda-affiliated militants fought one another for days in a kind of free-for-all messy three-way fray. Hundreds of Fallujah residents have fled. The Prime Minister reversed his decision sending army units back to Anbar. Now the Iraqi army is bracing up for a real tough fight ahead. In case of failure the whole country will be threatened with Syria-like scenario.

Root of problem

The current violence is rooted in the sectarian disputes left unresolved when U.S. troops withdrew and inflamed by the escalating conflict in neighboring Syria. Many Iraqi Sunnis claim they are being marginalized by Mr. Maliki's Shia-led government. Mr. Maliki's drive to restore control is being seen by many Sunnis as an attempt at domination and oppression, and it is taking Iraq back to the brink of a sectarian civil war. In recent months Sunni militants have stepped up attacks across the country, while Shia groups retaliated with deadly reprisals bringing the situation to the brink of full-scale sectarian conflict. On January 1 the United Nations said at least 7,818 civilians and 1,050 members of the security forces had been killed in in 2013. Islamist militants benefit from these deep-seated grievances. The upheaval testifies to the soaring capabilities of the Islamic State of Iraq and Levant (ISIL), the rebranded version of the al-Qaeda which has expanded into Syria while escalating its activities in Iraq. In the past year al-Qaeda has bounced back there killing more than 8,000 people in 2013, according to the United Nations. ISIL has become one of the main components of the so-called «rebels» fighting in the Western-backed war for regime-change in neighboring Syria. Having seized control of territory in northern Syria, it has proven capable of moving forces back and forth across the Syrian-Iraqi border to stage car bombings, assaults on military and police units, and sectarian attacks. Its stated aim is the establishment of a Sunni Muslim caliphate spanning both countries. A backdrop of near continuous urban bombings against Shi’a and government targets continues in northern Iraq and Baghdad. ISIL hopes to link its holdings in Eastern Syria with corresponding areas of control in Iraq’s majority Sunni Arab northwest. In September it bombed four key bridges linking important Iraqi border towns with urban centers closer to Baghdad. In late November, ISIL fighters paraded through a main square of Ramadi to rally support. The recent capture of positions in Ramadi and large parts of Fallujah was the first time in years that Sunni insurgents had taken ground in the province's major cities and held their positions for days.

Read more at:

http://www.strategic-culture.org/news/2014/01/10/iraq-deeper-in-trouble-or-eerie-result-of-us-2003-cakewalk.html

The Street Keynesians

Spreading the Keynesian benefits of the riots throughout the French economy and population

by Theodore Dalrymple

According to a poll carried out by the Figaro newspaper, only 17% of the French believe that 2014 will be a good year, but in fact it started very well for France. Only 1,064 cars were burned by youths in the banlieues this New Year’s Eve—about a hundred fewer than last year. Who says that there is no progress? The French Minister of the Interior congratulated the 57,000 policemen throughout the country who were on duty that night for their preventive work (one fewer cars1 burned per 570 policemen), but he still won’t publish the number of cars burned in France annually for fear of provoking youth to an attempt to beat the record. Yes, youth is the idealistic springtime of man’s life.

Another optimistic way of looking at the figures is to compare the number of cars burned with the number of cars not burned. This will put the figure into better perspective. About 19,999,000 cars in France were not burned on New Year’s Eve; that is to say, 99.995% of them. Surely this is the way the figures should be presented to improve the population’s morale? Instead of the murder rate, then, we should have the non-murder rate. The result is even better for most European countries: About 99.999% of people are not murdered in any given year.

“As Bakunin pointed out a long time ago, the destructive urge is a creative urge.”

We should always remember the story of the Soviet commissar who, when asked by a soldier in the audience he was addressing whether it was true that there were more cars in the United States than in the Soviet Union, thought for a moment and then replied, “Yes, comrade, but we in the Soviet Union have more parking spaces.”

However, we must not be too optimistic that optimism can be instilled in this way, for almost any statistic can be viewed in a dark light. From the point of view of supposedly Keynesian economics, for example, the decline in the number of cars burned in France on New Year’s Eve was a change in precisely the wrong direction. As everyone knows the European economy is in the doldrums, suffering from a lack of aggregate demand. Government spending cannot take up the slack because governments such as that of the French have been running deficits for forty years, and if they were to try to increase their expenditure yet further there would be another debt crisis (if the first such crisis has ever gone away, that is).

No, the solution can come only from real growth; that is to say, from the private sector. The French have been accused, because of their immemorial Colbertian dirigiste economic culture, of lacking economic initiative. (They were famously even once accused by a great American thinker of lacking a word for entrepreneur.) That is why the ambition of so many of them is to be a fonctionnaire, a civil servant.

This view of the French, however, is in complete contradiction with the initiative shown by youth in the banlieues. Having read Mr. Krugman in The New York Times, they have been persuaded that there is a chronic lack of demand in the French economy that they have decided to stimulate by burning cars. What better stimulation, indeed, could be imagined? The roughly 40,000 cars burned a year (as I have said, no one knows the precise figures) provide employment for thousands of people. The cars have to be replaced, so manufacturing is encouraged; service industries such as sales and insurance are likewise given a fillip. When M. (soon to be president) Sarkozy called the rabble who rioted in 2005 “scum,” he should really have thanked them for their presciently Keynesian conduct.

But M. Chirac, the then-president, was the hero of the hour. He wisely decreed that the insurance companies, whose policies had hitherto excluded damage caused by civil riot, revolution, and war as grounds for claim, that henceforth (and retrospectively in this case) these exclusions should not hold; and he thereby spread the Keynesian benefits of the riots throughout the French economy and population. Equity and justice required no less; the costs and the benefits were spread equally. Furthermore, government debts were completely unaffected by this. No more perfect way of stimulating demand could be imagined. It was not only effective; it was the very instance of liberty, equality, and fraternity in action.

I regret to say, however, that the French government, completely lacking in imagination, has since taken no advantage of the method of stimulating the economy with which it was so selflessly provided by the idealistic youth of the banlieues in 2005. Instead of encouraging those youth, it has taken measures to dissuade them—for example, by posting policemen all around the country and arresting those whom they catch in the process of stimulating the economy. Some of them it even punishes, thus discouraging the very kind of entrepreneurial activity for which it should be thankful.

Read the rest at:

http://takimag.com/article/the_street_keynesians_theodore_dalrymple/print#axzz2pj2c9564

Any Real Difference Between Keynesianism And Counterfeiting?

The Piranha Of Portugal: Greatest Counterfeiter Of All Time

By Bryan Taylor

The new US $100 bill is out, as you may have seen this holiday season. Our dear old Uncle Ben is a technological wonder with a dozen different anti-counterfeiting devices on it. Since there are more $100 bills circulating outside of the United States than inside, the U.S. Government has to insure that counterfeiters are unable to replicate the government’s most treasured export. This raises the question, who was the greatest counterfeiter of all time?

Government Counterfeiting

Although governments have done more to destroy their own currencies than all the counterfeiters in the history of mankind put together, the government is not the correct answer. Governments have debased their own currency for millennia. Historical examples of government-induced debasement include:

§     The Roman Empire replacing its silver Denarii with billon Antonininii;

§     The Khans of China creating the first paper inflation in the 1300s;

§     The United States making its first currency, the Continental Dollar, worthless;

§     Germany hyperinflating out of its debts by creating trillions of marks;

§     Or the US Federal Reserve blowing up its balance sheet.

In holding governments accountable, we are also not talking about one government counterfeiting the currency of another government as the

§     Barbarians did of the Roman gold Aureus

§     British did of Continental Dollars and French Assignats during the 1700s

§     Germans did of British Pounds during World War II in Operation Bernhard

§     United States did of Japan’s Occupation currency of the Philippines

§     North Koreans did of US Dollars, making them one of their principle exports.

Governments have consistently destroyed their own currency and those of other countries without ever being held accountable for their “crime” the way a counterfeiter is punished. No, we are not talking about governments; we are talking about individual counterfeiters.

It is one thing for the government to expand the money supply in order to stimulate the economy and help the unemployed. It is quite another for counterfeiters to do the same – albeit on a much smaller scale – to benefit themselves. Counterfeiters provide competition to the government, and though government officials are applauded when they inflate the economy, counterfeiters are condemned to prison when caught.

A Classy Counterfeiter

Our vote for the greatest counterfeiter of all time goes to Artur Alves dos Reis whose story was recounted by Murray Teigh Bloom in The Man Who Stole Portugal. Reis was both smart and classy, and his criminal operation reflected these qualities. To my knowledge, Reis put together the most audacious counterfeiting scheme in history. He conceived his master plan while he was in jail in Oporto for embezzling the funds of a company he had taken over. Some criminals sit in jail and try to avoid repeating their misfortunes. Others, like Reis or Tony de Angelis, think-up bigger, more foolproof schemes. While he was sitting in his cell, Reis put together his master plan that would make him the richest, and possibly the most influential man in Portugal in only one year.

Counterfeiting is a very complex operation. To be successful, (i.e. not get caught), be able to spend your money, and not receive free room and board from the government, you have to do three things successfully. First, you have to create counterfeit currency that can’t be detected. Second, you need a way of laundering the money and converting it into real assets so you can enjoy the fruits of your ill-begotten labors. Third, you must make sure that you avoid the triple curse of detection, arrest and conviction. Let’s see what Reis’s solution was to this age-old problem.

Step One: Create an Undetectable Banknote

First, create a counterfeit that can’t be detected. During the 1920s, the Banco do Portugal had the exclusive right to print currency in Portugal. The bank used foreign printing companies with superior anti-counterfeiting technology to protect their banknotes. The English company, Waterlow & Sons, printed the 500 and 1000 Escudo notes (equal to about $25 and $50 in 1923) for the Banco do Portugal. So why not get Waterlow & Sons to print the notes for Reis as well?

Reis was a natural-born forger. He forged his diploma as an engineer from Oxford as a “joke,” but this helped land him a job as a government railroad inspector in Angola at the age of twenty-two. In 1924, he forged $100,000 worth of checks and used the money to take over control of Ambaca, the Royal Trans-African railway Company of Angola. He then used the money in the company’s treasury to cover his own checks. He was arrested in July 1924 for embezzlement, but was released two months later when a court decided his was a civil and not a criminal case.

It was during the two months he was the guest of the Oporto police that he conceived his infamous counterfeiting scheme. The key was to find someone with a respected name who could help him convince Waterlow & Sons to print banknotes secretly for Reis. He found three men of questionable repute, but with connections to help Reis: Jose Bandeira, Gustav Adolf Hennies and Karel Marang.

Bandeira got his brother, the Portuguese Minister to the Netherlands, to give Marang a letter introducing him as a respected Dutch citizen who had a power-of-attorney for Alves Reis to negotiate the printing of the banknotes. Marang went to Waterlow & Sons in London, and presented his letter of introduction as the “Consul General of Persia” on forged Banco do Portugal stationary to Sir William Waterlow.

Marang spun the story Reis had instructed him to give. A private syndicate was being formed to save the colony of Angola from its current dire financial condition with a $5,000,000 investment. In return for the loan, the syndicate would be allowed to print and circulate banknotes in Angola. Waterlow & Sons would print the banknotes for the syndicate, and once the notes reached Angola, the banknotes would be supercharged with the word ANGOLA so they wouldn’t be confused with notes from the mother country. The whole affair had to be kept secret lest Angola fall into further financial difficulties due to ill-placed rumors of pending economic ruin.

Sir William knew that supercharging notes was normal practice for Portugal’s colonies, and that the Banco Ultramarino had the exclusive right to print banknotes for the Portuguese colonies. This was an opportunity for Waterlow & Sons to get this business away from Bradbury, Wilkinson & Co., the current printer of banknotes for the Banco Ultramarino in Angola.

Marang asked Waterlow to print the 500 Escudo note with Vasco da Gama on it. The deal was signed on January 6, 1925, and for the printing cost of $7,200, Reis and his conspirators would receive $5,000,000 in banknotes, a 70,000 percent return on their investment. Bandeira picked up the first group of notes from Waterlow & Sons on February 10, and by March 20, they had 100 million Escudos ($5,000,000) in Portuguese banknotes. Bandeira used his orange diplomatic card to transport the bills in luggage marked the “Legation of Portugal” across the borders without detection. After the first step had been successfully completed, they placed an order for an additional 190 million Escudos in banknotes ($9,500,000). Of course, the banknotes never made it to Angola.

The greatest risk in the scheme was having banknotes with duplicate numbers discovered, but this was the lesser of two evils. If Reis and Marang had requested banknotes outside the numerical range of the 500 Escudo notes, the spurious notes would have been quickly discovered. The lower risk lay in duplicating the existing serial numbers, and hoping the counterfeiters were able to successfully release all the banknotes before the law of large numbers caught up with them.

Step Two: Laundering Money with Your Own Bank

Step One of the plan was complete, now for Step Two: laundering the money. A small-scale counterfeiter can pass bills through petty criminals, but the notes Reis and friends had were equal to almost 1% of Portugal’s GDP. This was the equivalent of over $150 billion if the same amount had been released in the United States today. Even if Reis hired every petty criminal in Lisbon and Oporto, he wouldn’t be able to unload a fraction of the banknotes.

Reis was going first class with his counterfeiting scheme, and he decided the only way to launder the money was to have his own bank. Reis used his newly printed banknotes to encourage corrupt Portuguese officials and politicians to grant him his bank charter, and on June 15, 1925, the Banco Angola e Metropole’s application was approved by the government. Of course, the bank would have multiple branches in Lisbon and Oporto to speed up the distribution of their treasure.

Want to exchange foreign currency? The Banco Angola e Metropole provides the best rates. Want to borrow money for a business or mortgage? The Banco Angola e Metropole will be happy to extend you the loan in cash. Want high interest rates on your deposits? Go to the Banco Angola e Metropole? In the meantime, Reis, his wife, and their compatriots spent their money freely, buying jewelry, cars, real estate, and sending money abroad.

Reis flooded Portugal with his freshly minted banknotes, and the economy of Portugal was booming. And as Reis would rationalize, how was this any different from what a real government did? Was there really any difference between Keynesianism and counterfeiting?

Step Three: Avoid Detection (For a While)

Step Three and the most important of all was how to avoid detection, arrest and imprisonment. For this, Reis had a brilliant solution. Since they were counterfeiting Banco do Portugal banknotes, only the Bank could initiate proceedings to prosecute them. But what if – just what if – Reis controlled the shares in the Banco do Portugal? The bank had already exceeded its statutory banknote limit many times over and the directors of the Banco do Portugal had never been prosecuted, so why should they prosecute Reis? Or as Reis put it, “How can they arrest us when they’re us and we’re them?”

Like most European countries, Portugal had suffered inflation after World War I. Prices had increased 48% per annum between 1919 and 1924, and the Escudo had depreciated by 87% against the Pound Sterling. Although the Banco do Portugal was only supposed to issue banknotes thrice its capital, it had, in fact, issued banknotes a hundred times its capital. Reis’s monetary manipulations were minor by comparison. The chart below shows the depreciation of the Portuguese Escudo against the U.S. Dollar after World War I.

Read more at:

http://www.testosteronepit.com/home/2014/1/8/the-piranha-of-portugal-greatest-counterfeiter-of-all-time-o.html

"Bubbles Always Pop"

An Austrian Wolf In Keynesian Sheep's Clothing

by Guy Haselmann

The world has been kept on life support mostly by government spending of trillions of dollars  and central bank printing of trillions more. Both have boosted asset prices and given the allure of economic progress. Over-zealous regulators, market rule changes, and aggressive policy stimulus have temporarily stabilized markets. Market vigilantes have been hibernating, because unclear investment rules and uncertainties around the ultimate magnitude of stimulus have prevented them from attacking bad policies or distorting asset price valuations.

It is difficult to know the extent that markets and the global economy have benefited from official policy stimulus; however, five years after the crash, economic growth and the labor recovery remain subpar. Strong growth should have been ignited by now.

Most economists still believe in the ‘official position’ that growth is edging sustainably higher and that interest rates will slowly rise to reflect it. They could be correct, but should it fail to unfold as expected, confidence in the efficacy of official policy will diminish and the social contract will break down further. Since markets require confidence, they will also react accordingly.

Some argue that economic benefits to stimulus have run its course, while the costs from looming unintended consequences have not yet been unleashed. Many believe (and I am one) that the risks and costs of current Fed policy outweigh the benefits.

Most economists still believe in the ‘official position’ that growth is edging sustainably higher and that interest rates will slowly rise to reflect it. They could be correct, but should it fail to unfold as expected, confidence in the efficacy of official policy will diminish and the social contract will break down further. Since markets require confidence, they will also react accordingly.

Some argue that economic benefits to stimulus have run its course, while the costs from looming unintended consequences have not yet been unleashed. Many believe (and I am one) that the risks and costs of current Fed policy outweigh the benefits.

* * *

The Fed’s asset purchase program (QE) and Zero Interest Rate Policy (ZIRP) are the foremost factors that have widened wealth inequalities. The richest few have benefited the most, simply because the 10% richest Americans own 80% of US stocks. The FOMC believe that its asset-price-inflation-trickle-down-policy leads to spending which ultimately leads to job creation, especially for the poor.

However, several FOMC members themselves have questioned Fed policies, citing that they have not worked as well as had been hoped, and pointing out that aggregate demand has been weak throughout the recovery. To his credit Fed Governor Jeremy Stein broached the subject of unintended consequences of Fed policies when he mentioned in his February paper, “A prolonged period of low interest rates, of the sort we are experiencing today, can create incentives for agents to take on greater duration or credit risk, or to employ additional financial leverage in an effort to ‘reach for yield’”.

Zero interest rates have incentivized corporations to issue debt in order to capitalize on the historically low interest rates; however, corporations have primarily used the money to pay greater dividends, buyback shares, or modernize plant and equipment. There is a strong case to be made that holding interest rates at zero for a prolonged period is actually counter-productive to the Fed’s efforts to achieve either of its dual mandates. This is because increasing productivity through modernization typically exposes redundancies: it allows firms to lay-off workers, while the improvement in competitiveness allows firms to drop prices.

Furthermore, and as I referenced in my 2013 paper, “Should the marginal propensity to consume of creditors exceed that of debtors, the net effect of redistribution could be to lower household spending rather than raise it. There are some conservative savers who have a predetermined goal in mind for the minimum amount of savings they wish to accumulate over time. Those investors may refuse to move out the risk curve in search of higher yields (likely widening the wealth divide). To them, lower interest rates simply mean a slower rate of accumulation, which likely will jeopardize their minimum goal. The only recourse for this investor is to save more, which is the exact opposite intention of the Fed’s policy. For example, if interest rates fall from 4% to
3%, an investor would have to increase savings by more than 20% each year to reach the same goal over 30 years.”

Another negative result of ZIRP is that banks and other lenders are discouraged from lending due to puny return levels; and, therefore, the Fed’s desire to expand lending is compromised. Are lower (or negative) interest rates supposed to increase the incentive to lend money? To assume such is absurd. Although somewhat counter-intuitive, if interest rates rose, then the supply of money willing to be lent would increase due to wider interest margins.

Policies are so unprecedented and unproven that it is possible that the Fed itself has now become a source of financial instability. This could be the case either through the potential fueling of asset bubbles, through its compromised ability to conduct future monetary policy (due to it  unwieldy $4 trillion balance sheet), or due to “unknown unknowns.”

* * *

In a low to zero interest rate policy (ZIRP) environment, investors desperately search for yield. This frequently chases investors into assets to which they are ill-suited and to which they will miscalculate liquidity and downside potential. Under ZIRP paradigms, riskier assets become the best-performing. Credit spreads collapse and equities soar.

Massive monetary ‘printing’ by global central banks has not just emboldened investors, but these actions have collectively changed their behavior and psychology. There is evidence that policies have led to mis-allocation of resources. Investors are emboldened to take what many critics believe is inappropriate or reckless levels of risk. The motto, “Don’t fight the Fed” has taken on added meaning. Moral hazard and a deep-seated bullish psychology have become rampant.

Extended Fed promises of lower rates and a continuation of asset purchases even as the economy heals, are conspiring to propel prices ever-upward. Investing today has become mostly about seeking relative yield, rather than assessing value or determining if the investment’s return is sufficient compensation for the risk.

Simply stated, investors and speculators receive ever-lower returns for ever-higher levels of risks. Over time, the ability of an investor to assess an asset’s fundamental value becomes ever-increasingly impaired. It should a warning sign to portfolio manager’s fiduciary responsibility to maximize return per unit of risk (see market liquidity section).

There have been persistent cycles of asset booms (bubbles) that eventually turned to ‘busts’. Very low or negative real rates (seen recently) always create economic distortions and the mispricing of risk, thereby creating asset bubbles. Each ‘boom’ had some differences, but the common factor has always been easy money which the Fed was too slow to withdraw. Providing liquidity is always easier than taking it away, which is one reason why the Fed has hit the “Zero Lower Bound” in the first place.

Eventually (un-manipulated) asset prices always return to their fundamental value, which is why bubbles always pop. The FOMC has backed itself into a corner. Current changes in policy are being designed around efforts to manage the unwind process seamlessly. Central bank (and government official’s) micro-management appears based on a belief that they can exert an all-encompassing central control over markets and peoples’ lives. Those in power have come to believe that policies have a precise effect that can be defined and managed. This is highly unlikely.

In ‘normal’ times there is a more discernable connection between cause and effect. However, the usual relationships particularly break down during periods of over-indebtedness, unprecedented regulatory changes, and official rates reaching the zero lower bound. Today, the world is far from ‘normal’. It is not difficult to imagine the looming fallout from policies that have promoted asset price inflation, and which have materially compromised market liquidity.

Read more at:

http://www.zerohedge.com/news/2014-01-07/austrian-wolf-keynesian-sheeps-clothing

Pimping the Empire, Conservative-Style

"Conservatives" and "Progressives" alike are pimping for the Empire when they support the Central State's essentially unlimited powers

By CHARLES HUGH SMITH

(I say "so-called" because the "Progressives" are not actually progressive, and the "Conservatives" are not actually conservative. Those labels are Orwellian double-speak, designed to mask the disastrous consequences of each ideology's actual policies.)

Let's begin by stipulating that ideology, any ideology, is an intellectual and emotional shortcut that offers believers ready-made explanations, goals, narratives and enemies without any difficult, time-consuming analysis, study or skeptical inquiry. This is the ultimate appeal of ideology: accepting the ideology relieves the believer of the burdens of analysis, skeptical inquiry, uncertainty/doubt and responsibility: all the answers, goals and narratives are prepackaged and mashed together for easy consumption.

This is one of the core messages of Erich Fromm's classic exploration of ideology and authoritarianism, Escape from Freedom.

And what is the essential foundation of authoritarianism? A central state. This is not coincidental.

What few grasp is the teleology of the centralized state: by its very nature (i.e. as a consequence of its essentially unlimited powers), the central state is genetically programmed to become an authoritarian state devoted to self-preservation and the extension of its reach and power.

This is why the Founding Fathers were so intent on limiting the powers of the Central State. They understood the teleology of the centralized state: by its very nature (i.e. as a consequence of its essentially unlimited powers), the central state is genetically programmed to become an authoritarian state devoted to self-preservation and the extension of its reach and power.

You can't cede unlimited, highly concentrated powers to the central state and then expect the state not to fulfill its teleological imperative to protect and extend its powers. The state with unlimited powers will be ontologically predisposed to view any citizen that seeks to limit its expansion of power as an enemy to be suppressed, imprisoned or marginalized.

The state with unlimited powers will be ontologically predisposed to protecting its powers by cloaking all the important inner workings of the state behind a veil of secrecy, and pursuing and punishing any whistleblowers who reveal the corrupt, self-serving workings of the state.

The state with unlimited powers will be ontologically predisposed to view any other nation or alliance as a potential threat, and thus the state will pursue any and all means to disrupt or counter those potential threats.

The state with unlimited powers will be ontologically predisposed to create and distribute propaganda to mask its self-serving nature and its perpetual agenda of extending its powers, lest some threat arise that limits those powers.

Democracy and a central state with unlimited powers are teleologically incompatible.

Though they piously claim to desire a limited State, conservatives cede it essentially unlimited powers because they want that state to be powerful enough to impose their agenda on others and reward their constituencies.

Conservatives are masters at projecting a preachy devotion to a limited state, democracy, liberty and free enterprise while their support of the Central State undermines every one of these values. Conservatives are like the preacher who issues stern sermons on righteousness every Sunday while skimming big money from pimping sordid, destructive policies Monday through Saturday.

Conservatives claim to want to limit the Central State, but their slavish support of Medicare, Social Security, the Pentagon, the National Security State, the Federal Reserve (and thus interest on the national debt), farm subsidies to Big Ag, law enforcement and the War on Drugs Gulag means they support virtually 100% of the Central State's unlimited powers. Their proposed "cuts" are farcically tiny slices designed for propaganda purposes--out of $4 trillion Federal budget, conservatives preach "austerity" while leaving the Empire and their crony-capitalist cartels entirely intact.

Conservatives claim devotion to national defense while actually having no interest in actual defense. Their sole interest is supporting their favored cartels and projecting a politically useful facade of being pro-national defense. In the real world, they support the revolving door between the Pentagon and defense contractors and profitable but ineffective weapons systems. Conservatives happily shove weapons systems down the nation's throat the Pentagon doesn't even want, all the while masking their crony-capitalist agenda behind pious claims of supporting the military.

That is particularly Orwellian: ignore the military's true needs in favor of funneling profits to your crony-capitalist pals. The same Orwellian agenda powers conservative support of the banking sector (conservatives never met a banking subsidy they didn't love), Big Ag, Big Pharma, Big Everything--conservatives will support any Big Business at the expense of the taxpayers and the national commons.

The one essential tool conservatives need to force their crony-capitalism on the citizenry is an powerful Central State--and so they support the essentially unlimited powers of the Central State with gusto, even as they bleat piously about the Founding Fathers.

The Founding Fathers had two primary concerns: foreign entanglements and the dangers of an unlimited Central State. So-called Conservatives are blind to the gap between the reality of their support of a Global Empire and an all-powerful Central State and the fantasy that they even understand the Founding Fathers' concerns, much less actively pursue them.

Conservatives are against Big Government except when Big Government benefits their constituencies. Boost the Pentagon budget by 10% a year, rain or shine, to counter every possible threat to the Empire, boost the National Security State (Homeland Security, NSA, etc.) every year, boost the War on Drugs Gulag annually, leave Medicare, Social Security and interest on the national debt as sacrosanct, and guess what--you've created a self-liquidating monster State.

Behind their preachy facade, conservatives have turned democracy into an auction of political favors. As they belly up to the limitless trough of central State revenues and power, conservatives have embraced the auction as the true mechanism of governance: banking statutes are written by banking lobbyists and then signed into law.

What is the difference between a so-called Progressive who tells us Congress has to pass a crony-capitalist healthcare law to find out what's in it and a so-called Conservative who pushes a banking law penned by lobbyists? There is none: both are pimps.

Read more at:

http://charleshughsmith.blogspot.gr/2014/01/pimping-empire-conservative-style.html

Pimping the Empire, Progressive-Style

Supporting the central state to protect your favored cartels is simply pimping for the Empire

By Charles Hugh Smith

The central illusion of both Left (so-called Progressives) and Right (so-called conservatives) is that the Central State's essentially unlimited powers can be narrowly directed to further their agenda.

(I say "so-called" because the "Progressives" are not actually progressive, and the "Conservatives" are not actually conservative. Those labels are Orwellian double-speak, designed to mask the disastrous consequences of each ideology's actual policies.)

Let's begin by stipulating that ideology, any ideology, is an intellectual and emotional shortcut that offers believers ready-made explanations, goals, narratives and enemies without any difficult, time-consuming analysis, study or skeptical inquiry. This is the ultimate appeal of ideology: accepting the ideology relieves the believer of the burdens of analysis, skeptical inquiry, uncertainty/doubt and responsibility: all the answers, goals and narratives are prepackaged and mashed together for easy consumption.

This is one of the core messages of Erich Fromm's classic exploration of ideology and authoritarianism, Escape from Freedom.

And what is the essential foundation of authoritarianism? A central state. This is not coincidental.

What few grasp is the teleology of the centralized state: by its very nature (i.e. as a consequence of its essentially unlimited powers), the central state is genetically programmed to become an authoritarian state devoted to self-preservation and the extension of its reach and power.

The central illusion of Progressives is that an all-powerful central state will not become a self-serving expansive empire, but will be content to wield its vast powers to protect its favored cartels/monopolies and distribute money skimmed from the citizenry to Progressive constituencies such as public unions, healthcare and education.

This is an absurd fantasy. Once you give a central state essentially unlimited power to stripmine income and wealth from its citizens, create and/or borrow essentially unlimited sums of money, protect private (and politically powerful) cartels from competition and project military, financial and diplomatic power around the globe, the state will pursue Authoritarianism and Empire as a consequence of possessing those powers.

You can't cede unlimited, highly concentrated powers to the central state and then expect the state not to fulfill its teleogical imperative to protect and extend its powers. The state with unlimited powers will be ontologically predisposed to view any citizen that seeks to limit its expansion of power as an enemy to be suppressed, imprisoned or marginalized.

The state with unlimited powers will be ontologically predisposed to protecting its powers by cloaking all the important inner workings of the state behind a veil of secrecy, and pursuing and punishing any whistleblowers who reveal the corrupt, self-serving workings of the state.

The state with unlimited powers will be ontologically predisposed to view any other nation or alliance as a potential threat, and thus the state will pursue any and all means to distrupt or counter those potential threats.

The state with unlimited powers will be ontologically predisposed to create and distribute propaganda to mask its self-serving nature and its perpetual agenda of extending its powers, lest some threat arise that limits those powers.

Democracy and a central state with unlimited powers are teleologically incompatible.

Progressives worship the central state and cede it essentially unlimited powers because they want that state to be powerful enough to impose their agenda on others and reward their constituencies.

But it doesn't work that way. Once you cede unlimited, highly concentrated power to the central state, you get an authoritarian empire that is driven to protect itself from any threat at all costs--including democracy, though the state may maintain a facade of carefully managed "democracy" as part of its propaganda machinery.

Read more at:

http://www.oftwominds.com/blogjan14/pimping-empire1-14.html

Whither Chile?

The malaise of success can be a much worse enemy of the free society than its ideological foes

By Alvaro Vargas Llosa

With just under 47 percent of the vote, former President Michelle Bachelet obtained a resounding victory in the first round in November’s elections in Chile, inflicting a heavy blow to the right and opening the door to a new left-wing government that, unlike the last time she was in office, will be based on a coalition that includes members of the Communist Party. She also went on to win the second round in mid-December and is now the president-elect.

This is the culmination of a process that has left observers dumbfounded. Chile’s outgoing center-right government under President Piñera has been among the most successful in the country’s history, if we judge it by the statistics that serve to measure these things. And yet the center-right has been going through a traumatic identity crisis. Its candidate, Evelyn Matthei, who obtained 25 percent of the vote, was the third figure to lead that ideological family after two previous candidates had to drop out. Several outsiders also ran in this election. One of them, Franco Parisi, a populist economist who comes from the right, took many votes from Matthei, who represented the well-established parties National Renovation and the Independent Democratic Union.

A quick look at some of the achievements of President Piñera is enough to place him among the best performers in Latin America. The economy grew at an average rate of more than 5 percent in his first three years and is growing more than 4 percent this year—against a 3.3 average rate under Bachelet’s previous government. Poverty has been reduced to 14 percent of the population and almost one million jobs have been created. Under Piñera’s predecessor, unemployment had grown substantially. Behind this success is an investment rate that nears 25 percent of GDP, four points higher than in the days of Bachelet. Foreign investors poured US$ 30 billion into the country last year, almost half of what Brazil took in despite an economy that is nine times bigger.

So, what is happening? Mauricio Rojas, a well-known analyst, thinks this is “the best and least loved government in our history.” He points to “the malaise of success”, a material progress that multiplies expectations a lot faster than the ability to meet them. I agree. I watched a similar process in Spain, where a large middle class that was the child of the booming post-Franco economy eventually became complacent and placed on the system redistributive and egalitarian demands that were incompatible with a prosperous society. The result was, in part, Spain’s recent crisis.

Could the same happen in Chile, whose progress has made it an emblem of the emerging world? Much will depend on Bachelet, who as a candidate has given in to several demands from the radical left, including proposing major changes to the Constitution, universal free education, a tax raise and the creation of a public pension system, among others. Whether she will go ahead with this is uncertain since her majority in Congress falls short of what is required for a constitutional change. But one thing is clear: Her government will be under more pressure than any other since the return of democracy in 1990 to reverse course on many of the institutional factors that have made Chile a envied liberal democracy. A significant segment of the middle class seems to have fallen for the siren song of old-fashioned socialism.

......

Read more at:

http://www.independent.org/newsroom/article.asp?id=4838

Machiavelli for Moms

The people desire neither to be commanded nor oppressed by the great, and the great desire to command and oppress the people

By RITA KOGANZON

Niccolò Machiavelli, the 16th-century Florentine political advisor and philosopher, has been credited with founding the modern "realist" school of international relations, the modern conception of the state, and even modernity itself. What he is most famous for, however, is founding a new approach to politics that emphasizes deception and effectiveness over virtue and morality. In his best-known work, The Prince, he advises the politically ambitious to eschew genuine virtue for the mere appearance of it and to accept that the aims of a true leader justify his means, whatever they may be. "For a man who wants to make a profession of good in all regards must come to ruin among so many who are not good," he writes. "Hence it is necessary to a prince, if he wants to maintain himself, to learn to be able not to be good."

This Machiavellian willingness to be "altogether wicked" is difficult to square with some of what we in the modern world he helped create have made of Machiavelli. Perhaps most peculiar, and most telling, of all is the steady stream of self-help and advice manuals for everyday living that claim to have been inspired by him. There is What Would Machiavelli Do? The Ends Justify the Meanness, one of a number of Machiavellian guides for business success. There is also The Suit: A Machiavellian Approach to Men's Style; The Princessa: Machiavelli for Women; A Child's Machiavelli; a slew of (largely self-published) Machiavellian tracts on picking up women; and, most recently, Machiavelli for Moms.

These books find their model primarily in The Prince, a work claiming to dispense advice for princes — not office pushovers, frumpy dressers, playground wimps, and dateless sad sacks. Machiavelli does venture some advice for mothers in the Discourses on Livy, in which he applauds Caterina Sforza's parenting, though it is hard to imagine that today's self-help gurus would share his admiration for her. After conspirators trying to take the city of Forlì kill Sforza's husband and capture her and her young children, she promises to betray the fortress to the conspirators if they release her, and she leaves her children with them as collateral. Machiavelli writes, "As soon as she was inside, she reproved them from the walls for the death of her husband....And to show that she did not care for her children, she showed them her genital parts, saying that she still had the mode for making more of them." That is Machiavelli for moms, though this story is not mentioned in the recent parenting guide. How then has Machiavelli, proponent of every kind of deceit, been domesticated, becoming a modern American sartorial consultant, business guru, and family therapist?

The process has been gradual, spanning several centuries — it began, in fact, with the first great American Machiavellian, Benjamin Franklin. Machiavelli's value for European geopolitical strategy was recognized almost immediately, but it was Franklin who realized that, although Machiavelli had largely been understood as an advisor to the rulers of great states, he was in fact a philosopher for losers. He wrote books about power and the men who had succeeded or failed to seize it, but men who are busy seizing and holding power rarely have time to read books. We are most receptive to Machiavelli when we are young and lowly, or when we have been brought low by some setback, and, in both cases, Machiavelli instructs the weak. But Franklin recognized, too, that Machiavelli speaks to the ambitious among the weak, those who are not satisfied to remain low, and this made him useful to Franklin in particular and to Americans in general.

Machiavelli still has much to teach the lowly and ambitious, but some of the more recent attempts to apply his insights to American life today have missed the point. In order to benefit from the useful lessons Machiavelli can teach us about succeeding in America, we need to identify exactly what those lessons really are. To do so, we would do well to re-examine Benjamin Franklin's approach to employing Machiavellian methods to get ahead in America.

FRANKLIN'S CIVIC MACHIAVELLIANISM

The American situation as Benjamin Franklin saw it in the 18th century was particularly ripe for Machiavellian losers. The period was marked by relative social equality, an observation Tocqueville would echo a half-century later. As Franklin wrote in an advertisement to potential immigrants in 1782, "The Truth is, that though there are in that Country few People so miserable as the Poor of Europe, there are also very few that in Europe would be called rich: it is rather a general happy Mediocrity that prevails." This happy mediocrity prevailed in part because of the availability of land, but also because members of the English aristocracy were disinclined to leave their estates and move to the American colonies, leaving the new world to be populated by lower gentry, small farmers, and tradesmen. The relative absence of aristocratic hierarchy in turn meant that ambitious but poor men like Franklin might rise by their own wits. Here, however, another central feature of the American situation stood in their way: Colonial Protestants looked down on worldly ambition, deeming it sinful to grasp after wealth and position, though to actually possess either or both was a mark of God's grace.

Read more at:

http://www.nationalaffairs.com/publications/detail/machiavellian-self-help