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ccp
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« Reply #750 on: March 29, 2010, 11:44:25 AM »

I thought this belongs in the Progressive thread but I cannot open that thread to post this as it is locked.

Progressives see us as the enemy and our enemies as noble not the other way around:
 
****Obama Slights Our Friends, Kowtows to Our Enemies
By Michael Barone (Archive) · Monday, March 29, 2010

Barack Obama's decision to postpone his trip to Indonesia and Australia -- to a democracy with the world's largest Muslim population and to the only nation that has fought alongside us in all the wars of the last century -- is of a piece with his foreign policy generally: attack America's friends and kowtow to our enemies.

Examples run from Britain to Israel. Early in his administration, Obama returned a bust of Churchill that the British government had loaned the White House after 9/11. Then Obama gave Prime Minister Gordon Brown a set of DVDs that don't work on British machines and that Brown, who has impaired vision, would have trouble watching anyway.

More recently, Obama summoned Israel's Benjamin Netanyahu to the White House, permitted no photographs, laid down non-negotiable demands and went off to dinner.

Some may attribute these slights to biases inherited from the men who supplied the titles of Obama's two books. Perhaps like Barack Obama Sr., he regards the British as evil colonialists. Or perhaps like his preacher for 20 years, the Rev. Jeremiah Wright, he regards Israel as an evil oppressor.

But the list of American friends Obama has slighted is long. It includes Poland and the Czech Republic (anti-missile program cancelled), Honduras (backing the constitutionally ousted president), Georgia (no support against Russia), and Colombia and South Korea (no action on pending free trade agreements).

In the meantime, Obama sends yearly greetings to (as he puts it) the Islamic Republic of Iran, exchanges friendly greetings with Hugo Chavez of Venezuela, caves to Russian demands on arms control and sends a new ambassador to Syria.

What we're seeing, I think, is a president who shares a view, long held by some on the American left, that the real danger to America often comes from America's allies.

This attitude goes back to Gen. Joseph Stilwell's feud against China's Chiang Kai-shek in World War II. As Barbara Tuchman writes in her definitive biography, Stilwell thought Chiang was undercutting the U.S. by not fighting hard enough against the Japanese. He may have shared the view common among some "old China hands" -- diplomats and journalists like Edgar Snow -- that the Chinese communists were preferable.

After China fell to the communists, the old China hands got a fair share of the blame, and liberals who opposed military support of Chiang were vilified. This lesson was not forgotten.

In his first book on Vietnam, David Halberstam argued that the Diem brothers were not fighting hard enough against the communists. I remember him telling a group at the Harvard Crimson at the time how the U.S. needed to replace the Diems in order for liberals to avoid a political backlash like that against the old China hands.

The idea that allies can cause you trouble is not totally without merit. The Cold War caused us to embrace some unsavory folks. Democratic administrations supported military takeovers in Brazil in 1964 and Greece in 1967, just as a Republican administration supported one in Chile in 1973.

But liberals tend to forget the first two examples and remain fixated on the third. They see history as moving inevitably and beneficially to the left and bemoan American alliances with what they see as retrograde right-wing regimes.

They want us to look more favorably on those like Chavez and Fidel Castro, who claim they are helping the poor. Somehow it is seen as progressive to cuddle up to those who attack America and to scorn those who have shown their friendship and common values over many years.

And so Obama, the object of so much adulation in Western Europe, seems to have had only the coolest of relations with its leaders. The candidate who spoke in Berlin is now the president with no sympathy for the leaders of peoples freed when the wall fell. They are seen as impediments to his goal of propitiating Vladimir Putin's Russia, where Joseph Stalin is now an honored hero.

Obama's concessions to Russia have not prevented Russia from watering down sanctions against Iran. And Obama's display of scorning Netanyahu has not gotten the Palestinians to sit down face-to-face with the Israelis, as Netanyahu has promised to do.

Obama proclaims that through persistence he can make the leaders of Iran, North Korea, Russia, China and the Palestinians see things our way. The evidence so far is that they are making him do things their way -- and that our friends are wondering whether it pays to be on America's side.

COPYRIGHT 2010 THE WASHINGTON EXAMINER****
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Crafty_Dog
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« Reply #751 on: March 30, 2010, 08:07:19 AM »

For "Prgressivism" post here:  http://dogbrothers.com/phpBB2/index.php?topic=1518.0
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ccp
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« Reply #752 on: March 31, 2010, 04:20:36 PM »

Palin's show about overcoming adversity?  This is particularly painful to me.  I see the first guy on her list is Toby Keith. 
People who have read my music posts for ten years know that I claim this guy is a total liar and a thief.  Virtually all of every single one of his hits are composed of lyrics that were stolen from my legally blind wife.  I couldn't stop it, I couldn't prevent it.  The people doing the stealing are professionals whose craft has been honed for decades.  They will bribe anyone close to us, surveillance us, hack into any device, bribe people at Copyright, police officers, a friend of mine going back almost 40 years, my wife's uncle, her mother and everyone else who would like to make a fast buck.  There is no clear service man we can have come in more than once before he appears to have been approached and willing to screw us over.  I remember having a lock smith do some work for us.  In the kitchen he blurts out of nowhere while he was tinkering with a lock and day dreaming, "I could sure use ten thousand dollars". 

Toby Keith is the biggest farce of all.  Not only does he sing songs that were stolen, he claims he wrote all of them and then sits there and makes up these phoney stories about how he comes up with the lyrics.  And of course there is no shortage of hangers-ons whose jobs or cash payouts will keep them happy while they act as witnesses happy to back up his storey.
Rich guys have lots of friends.  I guarantee you this guy could not write a song to save his life.  Watch him *make up* stories and try to sound like just a humble all around good guy.  The truth is he is like most in the music business: total liars, selfish, bullshit artists, back stabbers and often narcissistic.  I don't think for one second any of these people give a hoot about their "fans".  It is all sales folks.  Troops included.  So his old man was in the service.  So was mine.  That doesn't mean his going to Iraq ain't about selling records.

Matt Lauer in an interview with Sheryl Crow asked her why she refused to give credit for a song (she claimed) to a guy who claimed he wrote it - even after he committed suicide.  She sat there *stoned* faced and finally when pressed by Lauer she said, "well he really didn't do that much".
Afterwards he said these people are "not nice" people in this business.  They are not the kind of people everyone thinks.

Imagine.  The guy killed himself over one song.  Can you imagine a thousand?  Most of the cowards robbing us would also have killed themselves if they went through what we have/are. 

Katherine sits in our house trying to protect what has not yet been stolen.  Our lives in shambles.  People who moved in to a number of houses to keep an eye on us.  And this God forsaken piece of f..  garbage Toby Keith is going to get up there and give some sort of story about his talents and hard work and all the rest.  I hope there is a God.  I hope there is justice.

Because there isn't any here on Earth. 

As for Sarah Palin I wish her luck with her show otherwise.  But can't she find a real hero to interview instead of this true white trash.   



****Here's a chapter in the culture wars that no one saw coming: Sarah Palin and Fox News facing off against '80s rap star and actor LL Cool J.

Palin makes her hosting debut Thursday night on Fox, as captain of an interview special in Greta Von Susteren's 10 p.m. slot. The show is called "Real American Stories," and the New York Daily News explains that it chronicles "people who have overcome adversity and more."

Among the success stories Palin plans to highlight are those of country music star Toby Keith, former GE Chairman Jack Welch, and a recipient of the Congressional Medal of Honor. LL Cool J (birth name James Todd Smith) was also included in the roster — which prompted some conservative commenters to gloat a bit.

Watch the promo for the show here:

 

Popular conservative blogger Allahpundit tweaked liberals who accuse Tea Party supporters of racist sympathies, saying they'll be "shocked to find the alleged Grand Dragon of the tea-party movement making chitchat with a hip-hop legend."

The problem is that no such chitchat was produced for the Palin show. LL Cool J, star of "NCIS: Los Angeles," tweeted Tuesday night: "Fox lifted an old interview I gave in 2008 to someone else & are misrepresenting to the public in order to promote Sarah Palins Show. WOW."

When contacted by Yahoo! News for comment, a Fox News spokesperson explained that LL Cool J had been informed in 2008 that the interview was planned as a segment for "Real American Stories"--though of course the network couldn't have known at the time that Palin would be hosting. The Fox spokesperson also provided us with a statement:

"Real American Stories features uplifting tales about overcoming adversity and we believe Mr. Smith's interview fit that criteria. However, as it appears that Mr. Smith does not want to be associated with a program that could serve as an inspiration to others, we are cutting his interview from the special and wish him the best with his fledgling acting career."

Attempts to reach LL Cool J for comment proved unsuccessful. Perhaps he intends a more recent Twitter entry to serve as his rejoinder to the Fox statement: "Nobody can bring you peace but yourself."****

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ccp
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« Reply #753 on: April 01, 2010, 10:59:53 AM »

Well now Toby Keith's pulbicist is claiming they have no idea about the Palin thing and Palin used all old clips of him.

The song "Courtesy of the Red White and Blue" was stolen right off our laptop when we lived in Florida.

Katherine had 30 songs she wanted me to type into the laptop.  I got most of them in.  I clearly remember saying the line with the image of the statue of liberty shaking her fist was a great line (this was afte 911) and we need to be careful because it would easliy be used.  After I typed most of the songs onto the laptop all of a sudden they disappeared.  Someone, probably either one of our neighbors or John Joseph Leeson networked into our laptop and took all the folders with the lyrics off the computer.  I immediately told Katherine and we made the mistake of turning off the computer as fast as possible.  I should have immediately gone somewhere else and retyped it write back in and make copies. 

They would never have done the song. Keith would have never bought it and claim he wrote it, and he would never have been where he is today.
WE didn't know at the time they will never do any songs if we have evidence.  They are very careful that way.  We wondered the opposite at the time.  Fewer copies were better because if they get one copy they will do it and use the song.  It is just the opposite.  We just didn't know how to protect ourselves.  They had some sort of networking device outside our house.  Probably some sort of relay device.  The gardner who did the lawns of 3 out of 4 of the lawns around us was seen by me going over to that side of the house multiple times for no other reason.  He had no business walking in between our house and the one neighbor who didn't use him.  Additinally that neighhbor one day had a guy and some girl doing some sort of work on their porch and fence and yard area one day. I drove home and saw this ver straight stick in the very center of my driveway pointing paralell to our property.  It was obvious it was placed there as some sorto fo marker.  I pull into the driveway and this guy is pretending to do something with the swing on my neighbors porch.  I knew right away some sort of scam was on but I didn't know what.  Nothing happened after I got into the house.  But I then went out back and up to an efficiency we had over the garage and could not see that side of the house.

I heard Katherine ringing an alarm after she heard the girl telling the guy to "get it, get it", "hurry up".  Within a minute I came out and saw them pretending to paint areas on our neighbors fence.  I believe they were getting data of some sort of networking device.  Katherine was reduced to doing computer work in our main bedroom closet because we didn't know how to stop them from knowing and thus networking into the computer.   Yes we turned off the internet and networking access.  It would always pop back on or there was always some way of hacking in with it off.  It became clear it is impossible to stop someone from hacking into a laptop and probably now any computer that has networking or wireless capacity which all of them made today have.  I can tell of probably a hundred more scams about how we keep getting ripped off.  Like we were warned by one guy who admitted, "I am the most honest guy you will ever meet in the music business" and "there are 50 ways to steal songs and if someone want them they WILL get them".

This is the power of money in the world today.  There is no doubt to this truth.

That said I am sure the hardrive has since been switched, destroyed or wiped so there would be virtually no chance we have any evidence on Keith.  The thieves who rob us know this.  That is why Keith and friends can mock us.  We yelled and screamed in our house and over the years callled him white trash and as one can imigane worse.  Of course just to mock and anger us and rub it in our faces he titles one of his albums white trash - as though he is proud of it.  This guy Keith is not doing the stealing.  His friends are.  That is why fans can laugh when someone calls these guys on it.  They say Keith is nowhere near you , doesn't need you and is rich (now) that it is the accuser not him who is making this up. It is like the mafia boss who has his goons kill off someone and then claims he was in Barbados at the time of the murder and laughs all the way to the bank.

To think Palin was going to use him as a great American story.  To think he can now get free publicity out of this fiasco.

The true American story is he is a thief, a slob, and a pig behind the facade and yet he is a star, filthy rich, connected, and loved by fans who believe in and love his music and thus couldn't care less about the real guy behind the image.

Unfortunately, this is the *real* America.

And since the media including dupes like Hannity make money off these celebrities they are all on board in a big way.
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Crafty_Dog
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« Reply #754 on: April 09, 2010, 08:46:42 AM »

Noonan has disappointed not infrequently in the last few years.  Here she begins to recapture form:

==============

By PEGGY NOOONAN
Like all Americans, I continue to seek to understand exactly what moods, facts, assumptions, dynamics, agendas and structures underlay and made possible the crash and the great recession.

We do this so that we will be able to bring our gained wisdom into the future and keep another crash from happening, should we ever have another bubble to precede it. We also do it so that we know who to hate.

That's why this week's Financial Industry Inquiry Commission hearings were so exciting, such a public service. The testimony of Charles Prince, former CEO of Citigroup, a too-big-to-fail bank that received $45 billion in bailouts and $300 billion in taxpayer guarantees, was riveting. You've seen it on the news, but if you were watching it live on C-Span, the stark power of his brutal candor was breathtaking. This, as you know, is what he said:

"Let's be real. This is what happened the past 10 years. You, for political reasons, both Republicans and Democrats, finagled the mortgage system so that people who make, like, zero dollars a year were given mortgages for $600,000 houses. You got to run around and crow about how under your watch everyone became a homeowner. You shook down the taxpayer and hoped for the best.

."Democrats did it because they thought it would make everyone Democrats: 'Look what I give you!' Republicans did it because they thought it would make everyone Republicans: 'I'm a homeowner, I've got a stake, don't raise my property taxes, get off my lawn!' And Wall Street? We went to town, baby. We bundled the mortgages and sold them to fools, or we held them, called them assets, and made believe everyone would pay their mortgage. As if we cared. We invented financial instruments so complicated no one, even the people who sold them, understood what they were.

"You're finaglers and we're finaglers. I play for dollars, you play for votes. In our own ways we're all thieves. We would be called desperadoes if we weren't so boring, so utterly banal in our soft-jawed, full-jowled selfishness. If there were any justice, we'd be forced to duel, with the peasants of America holding our cloaks. Only we'd both make sure we missed, wouldn't we?"

OK, Charles Prince didn't say that. Just wanted to get your blood going. Mr. Prince would never say something so dramatic and intemperate. I made it up. It wasn't on the news because it didn't happen.

It would be kind of a breath of fresh air though, wouldn't it?

In fact, the hearings weren't dramatic but a tepid affair, gentle and genteel. The commission members—economists, lawyers, former officeholders—actually made me miss congressmen, who can at least be relied on to emote and act out the indignation of the citizenry as they understand the citizenry. As an investigative style this isn't pretty and usually isn't even sincere, but it can jar witnesses into revealing, either deliberately or by accident, who they really are and what they really think.

At this week's hearings, the questioners often spoke the impenetrable financial language of the witnesses. The leveraged capital arbitrage of the lowest CDOs were subject to the supersenior subprime exposure, as opposed to the triple-A seniors, right? The witnesses—former Fed Chairman Alan Greenspan on Wednesday, Mr. Prince and former Treasury secretary and Citigroup chairman Robert Rubin on Thursday—were, in their testimony, obviously anxious not to be the evening's soundbite. Nobody wants to be the face of a bailout. This is where famous and important people being grilled hide now: in boringness, in an opacity of language so thick that following them is actually impossible. The testimony reminded me of an observation in Michael Lewis's "The Big Short," his study of what happened on Wall Street and why:

"Language served a different purpose inside the bond market than it did in the outside world. Bond market terminology was designed less to convey meaning than to bewilder outsiders. . . . The floors of subprime mortgage bonds were not called floors—or anything else that might lead the bond buyer to form any sort of concrete image in his mind—but tranches. The bottom tranche—the risky ground floor—was not called the ground floor but the mezzanine . . . which made it sound less like a dangerous investment and more like a highly prized seat in a domed stadium." In short, "The subprime mortgage market had a special talent for obscuring what needed to be clarified."

Which is what the hearings were like.

By Thursday afternoon I couldn't figure out why they'd been held. They couldn't have been aimed at informing the citizenry. Even the tone was strange, marked by a kind of weird delicacy, a daintiness of approach, a courtesy so elaborate I thought at some points commission members were spoofing each other. "Thank you so much for appearing," "I'm so grateful for that insight." Guys, there's a war on.

I want to pick out some memorable moments, but I can't really quote them because they resist quotation.

So I'll translate.

On Wednesday, Mr. Greenspan said it's easy to look back and see your mistakes, but what is to be gained by endless self-examination? It's tempting to be self-critical, but self-criticism can become self-indulgence. Systems are complex; human decision-making is shaped by the endless fact of human fallibility. I didn't do anything wrong, and neither did Ayn Rand by the way, but next time you might try more regulation.

On Thursday Chairman Phil Angelides to Messrs. Prince and Rubin: I like you, do you like me? But we don't like undersecuritized trilevel tranches, do we?

More Peggy Noonan
Read Peggy Noonan's previous columns

click here to order her new book, Patriotic Grace
.At one point commissioner Bill Thomas, a Republican former congressman from California, almost got an intelligent question out. It started as: How did you guys get to the top and run the show and not know what was going on below you? But Mr. Thomas got stuck in the muck of synthetic product securitized assets and then lost his thread, to the extent he had a thread. He began to ask Mr. Prince about his famous dancing quote: "As long as the music is playing, you've got to get up and dance," Mr. Prince had said in 2007. But Mr. Thomas asked his question so meekly—it was an "alleged quote" and maybe it was misunderstood by the press, which is always misunderstanding things. Then Mr. Thomas suddenly wasn't asking that, but asking if it would be nice if in the future bankers "have a structure," a stronger federal regulatory structure, though we probably shouldn't have one if we don't need it, but maybe we do, to sort of stop people like you, not that people like you should be stopped in any way.

Mr. Prince seized on this to say the dancing quote was taken out of context: He'd been talking about liquidity. Ah. Well, that takes the sting out of that one.

From a commission member: The American people have experienced a 30% fall in housing values. Do you know why?

Mr. Prince: Yes, we haven't had such a decline "since the Great Depression." The reason is before the crash there was "a bubble." There was too much "easy money." Then the bubble popped.

Thank you, Sherlock.

The takeaway, as they say, of the whole event, was more or less this:

Citigroup testifiers: We didn't do anything particularly wrong, and what happened is all so sad, isn't it? Sad, subprimed and tranched.

Commission: Yes, all so sad and tragic. Somebody's head should roll. I like your tie.

Can't we do better than this?
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ccp
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« Reply #755 on: April 17, 2010, 09:41:03 AM »

http://apnews.myway.com/article/20100416/D9F4EPUO0.html

Does anyone remember the vehement anti-government rhetoric of the "flower" children of Clinton's generation of the 60's?

How about Bama's friend Ayers who planned to bomb the Pentagon?  Why doesn't Clinton mention this in the same sentence as he mentions Tim McVey and the Tea Party.

How about the shooting of student protestors at Kent State that became the Alamo of the left back then; the same left who rionically are *in control* of government.

Now these same people who were so opposed to government back then are suddenly telling us how good government is for us.

Strange how they change their tune once they are in charge.  No?

I don't fear the right paramilitaries.  I fear another Kent state where our own leftist government starts shooting us, robbing us, threatening us, and controlling every aspect of our lives.
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Boyo
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« Reply #756 on: April 19, 2010, 01:31:03 PM »

This is a good overview of progressivism from Reason.com

Progressive History 101 (Minus All that Uncomfortable Racism, Sexism, and Support for Eugenics)
Damon W. Root | April 19, 2010

Shortly after Barack Obama was elected president, I wrote an article criticizing many of his left-leaning supporters for labeling themselves as progressives, arguing that “what the current vogue for the term progressive fails to acknowledge is that the original progressives embraced the worst abuses of state power in the late nineteenth and early twentieth centuries.”

In response, I received a number of angry emails stating that today’s progressives had nothing to do with the sins of the first progressives, and that to conflate the two was intellectually dishonest and just plain mean. Perhaps some of my correspondents will now direct their outrage to the left-wing Center for American Progress, which just released a new monograph entitled “The Progressive Intellectual Tradition in America.” This paper argues that today’s progressives are the direct inheritors of an unbroken progressive tradition, one that brought glorious benefits to all Americans by doing away with the evils of limited government. Here’s a sample paragraph:

Progressives sought above all to give real meaning to the promise of the Preamble of the U.S. Constitution—“We the people” working together to build a more perfect union, promote the general welfare, and expand prosperity to all citizens. Drawing on the American nationalist tradition of Alexander Hamilton and Abraham Lincoln, progressives posited that stronger government action was necessary to advance the common good, regulate business interests, promote national economic growth, protect workers and families displaced by modern capitalism, and promote true economic and social opportunity for all people.

As far as history lessons go, this is laughably biased and incomplete. For starters, the original progressives most certainly did not “promote true economic and social opportunity for all people.” In the Jim Crow South, as historian David Southern has documented, disfranchisement, segregation, race baiting, and lynching all "went hand-in-hand with the most advanced forms of southern progressivism." Economist John R. Commons, a leading progressive academic and close adviser to high-profile progressive politicians—including “Fighting” Bob Lafollette, Theodore Roosevelt, and Woodrow Wilson—authored a 1907 book entitled Races and Immigrants in America, where he called African Americans “indolent and fickle” and endorsed protectionist labor laws since "competition has no respect for the superior races."

There’s also the matter of sexism. Exhibit A is future Supreme Court Justice Louis Brandeis’ famous “Brandeis Brief,” submitted to the Supreme Court in the case of Muller v. Oregon (1908). At issue was a state law limiting the working hours of female laundry employees. In his brief, Brandeis collected a parade of statistics, arguments, and journalistic accounts, all “proving” that women required special protection from the state. In fact, Brandeis argued, since women were responsible for bearing future generations, their bodies were in some sense collective property. "The overwork of future mothers," he wrote, "directly attacks the welfare of the nation." The Supreme Court agreed, declaring that, "As healthy mothers are essential to vigorous offspring, the physical well-being of woman becomes an object of public interest and care in order to preserve the strength and vigor of the race." Feminist legal scholars have long criticized Brandeis for introducing that bit of sexist paternalism into the law, though you wouldn’t learn anything about it by reading this monograph.

Finally, “The Progressive Intellectual Tradition in America” is totally silent about the progressives’ widespread support for the theory and practice of eugenics. As Princeton University economist Tim Leonard has chronicled, "eugenic thought deeply influenced the Progressive Era transformation of the state's relationship to the American economy." Despite the fact that this monograph favorably cites progressive hero Justice Oliver Wendell Holmes for his famous dissent in the economic liberty case Lochner v. New York (1905), the authors make no mention of Holmes’ notorious majority decision in Buck v. Bell, where Holmes and his colleagues (including Louis Brandeis) upheld the forced sterilization of those who “sap the strength of the State.”

In sum, the Center for American Progress has produced a fairy tale version of history, one that highlights what the authors see as the accomplishments of progressivism while totally ignoring anything that might detract from their lopsided narrative. Anyone interested in actually learning about the origins and history of the progressive movement should look elsewhere.

Boyo
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Boyo
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« Reply #757 on: April 19, 2010, 01:42:03 PM »

Putting this here because it fits with my previous post :




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Boyo
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« Reply #758 on: April 22, 2010, 02:26:03 PM »

Here is something I found. Wasn't sure where to put it.


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« Reply #759 on: April 29, 2010, 08:33:17 PM »

Plunder or Enterprise: The World's Choice
by Thomas E. Woods, Jr.
by Thomas E. Woods, Jr.

 
Although supporters of the market economy often have good reason for pessimism, it is important, especially in this age of globalization, not to lose sight of the genuine victories that the classical liberal tradition can boast. Half a century ago, Gunnar Myrdal could declare: "The special advisers to underdeveloped countries who have taken the time and trouble to acquaint themselves with the problem, no matter who they are …all recommend central planning as the first condition of progress." At that time, development economists who dissented from this consensus could have fit inside a phone booth. Today, economists who still favor central planning for the less-developed countries may as well hold their convention in a phone booth.

Public protests against globalization – protests that occur by and large in the prosperous West – denounce free trade and the mobility of capital as instruments of exploitation and oppression. The great development economist Peter Bauer used to say that if that were the case, then we should find the greatest prosperity among those less-developed countries that have the fewest economic connections to the West, and that those places that are altogether isolated – and therefore suffer from none of this alleged exploitation at all – should be paradise on earth. Needless to say, that is not even close to what we find, and most serious observers know it.

Today practically everyone agrees that some kind of market economy is essential if the less-developed countries are to progress to developed status. There are differences of opinion, to be sure, and the so-called "new development economics" of the past decade holds far more peril than promise. But that the terms of the debate have shifted there can be little doubt.

As globalization has proceeded, the subject of the market economy has attracted more and more attention, with friend and foe alike seeking to understand the implications of the creation of a truly global marketplace. One of the market's virtues, and the reason it enables so much peaceful interaction and cooperation among such a great variety of peoples, is that it demands of its participants only that they observe a relatively few basic principles, among them honesty, the sanctity of contracts, and respect for private property.

 
This is not to say that the philosophical principles the market embodies come naturally to every cultural milieu. Peter Bauer always insisted that a people's religious, philosophical, and cultural values could have important consequences for their economic success or failure. A people who believe in fatalism or collectivism, rather than in personal responsibility, will be less likely to undertake the risks associated with capitalist entrepreneurship, for example.

Or consider the example of tenth-century China. Rodney Stark points out that a substantial iron industry was beginning to flourish there at that time, producing an estimated thirty-five thousand tons of iron per year – a figure that ultimately grew to a hundred thousand. This abundance of iron translated into better agricultural tools, which in turn meant increased food production. Great wealth was being created, and China's economic prospects seemed excellent.

 
The imperial court, on the other hand, decided that all this accumulation of wealth by mere commoners amounted to an intolerable departure from pure Confucian principle, which imagined great wealth in the hands only of society's elite, and demanded that commoners be satisfied with their lot. The government simply seized the entire industry, and this wonderful example of innovation and wealth creation was crushed. Here is an example of cultural values that were incompatible with a market economy.[1]

But I want to go even further, and suggest that morality and the market are mutually reinforcing. It isn't merely that the market requires certain moral attributes in order to function properly. The market itself encourages moral behavior.

It takes little imagination to surmise how critics of the market would respond to such a claim. Doesn't the market encourage greed, rivalry, and discord? Does it not urge people to think only of themselves, accumulating wealth with no thought to any other concern?

The Communist Counter-Example

 
That human beings seek their own well-being and that of those close to them is not an especially provocative discovery. What is important is that this universal aspect of human nature persists no matter what economic system is in place; it merely expresses itself in different forms. For all their saccharine rhetoric, for example, communist apparatchiks were not known for their disinterested commitment to the common good. They, too, sought to improve their own well-being – except they lived in a system in which all such improvements came at the expense of their fellow human beings, rather than, as in a market economy, as a reward for serving them.

Communism brought out the worst in human nature, and crippled people's ability or ambition to participate in a market economy. "Traveling around the country," wrote American reporter Hedrick Smith in 1990, "I came to see the great mass of Soviets as protagonists in what I call the culture of envy. In this culture, corrosive animosity took root under the czars in the deep-seated collectivism in Russian life and then was cultivated by Leninist ideology. Now it has turned rancid under the misery of everyday living."[2]

The Soviet ruling class, with their cushy cars, clinics, and country homes, are a natural enough target for the wrath of the little people. But what is ominous for Gorbachev's reforms is that this free-floating anger, the jealousy of the rank and file, often lights on anyone who rises above the crowd – anyone who works harder, gets ahead, and becomes better off, even if his gains are honestly earned. This hostility is a serious danger to the new entrepreneurs whom Gorbachev is trying to nurture. It is a deterrent to even modest initiative among ordinary people in factories or on farms. It freezes the vast majority into the immobility of conforming to the group.

Under the system of tyranny and deprivation that the Russian people were forced to endure for seven decades, illicit "profiteering" – "think of the worker stealing wheelbarrows and multiply him by a million," one writer says – made it possible for countless Russians to acquire the goods they needed. We might therefore expect the profiteer to emerge as at least vaguely heroic, but the actual effect seems to have been to poison the idea of profit in the minds of many Russians, since they came to assume that anyone making a profit must be engaged in behavior that was somehow illicit or underhanded.

 
The countless stories in the Soviet press, as late in the socialist experiment as the 1980s, about vandalism and attacks on small shops by those who resented the success of their fellow man "bear witness to the powerful influence of decades of Leninist indoctrination," Hedrick Smith explained. "For great masses of Soviet people, capitalism is still a dirty word, and the fact that someone earns more, gets more, is a violation of the egalitarian ideal of socialism. Tens of millions of Soviets deeply mistrust the market, fearing they will be cheated and outsmarted. They see the profit motive as immoral."

The Supreme Soviet's Anatoly Sobchak once remarked, "Our people cannot endure seeing someone else earn more than they do…. They are so jealous of other people that they want others to be worse off, if need be, to keep things equal." Sobchak described this attitude as one of the chief obstacles to economic reform. Television personality Dmitri Zakharov put it this way: "In the West, if an American sees someone on TV with a shiny new car, he will think, 'Oh, maybe I can get that someday for myself.' But if a Russian sees that, he will think, 'This bastard with his car. I would like to kill him for living better than I do.'" That is what Marxism-Leninism did to these people.

Overlooked Perils of Interventionism

 
That system, the polar opposite of the free market, encouraged greed in the ruling class and apathy, envy, and alienation among everyone else. Scarcely anyone defends it any longer. At the same time, we are urged not to let the socialist debacle sour us on the state itself, which we are told is an indispensable instrument in the pursuit of "social justice." But the less predatory state that such critics have in mind carries its own moral and cultural perils, only a few of which we can consider here.

Economists speak of the disutility of labor. Albert Jay Nock referred to the human inclination to seek after wealth with the least possible exertion. In a formulation familiar to libertarians, Franz Oppenheimer described two ways of acquiring wealth: the economic means and the political means. The economic means involves the production of a good or service that is then sold to willing buyers seeking to improve their own well-being. Both parties benefit. The political means, on the other hand, involves the use of force to enrich one party or group at the expense of another – either to acquire someone else's wealth directly or to give oneself an unfair advantage over his competitors through the use or threat of coercion. That is a much easier way of enriching oneself; and since people tend to prefer an easier over a more difficult path to wealth, a society that hopes to foster both justice and prosperity needs to discourage wealth acquisition via the political means and encourage it through the economic means.

But the state, wrote Oppenheimer, was the organization of the political means of wealth acquisition. It was through this channel that people could find paths to their own economic well-being that involved the use of force – carried out on their behalf by the state – rather than their own honest work. For that reason, the baser aspects of human nature can find in the state an irresistible attraction. It is easier to become dependent on welfare than to work; it is easier to accept farm subsidies and thereby to increase food prices than it is to compete honorably and freely; and it is easier to file an antitrust complaint against a competitor than to outcompete him honestly in the marketplace. By making these and countless other predatory options possible, the state fosters unattractive moral attributes and appeals to the worst features of human nature.

 
In short order, society degenerates into a condition of low-intensity civil war, with each pressure group anxious to secure legislation aimed at enriching itself at the expense of the rest of society. The Hobbesian war of all against all that allegedly characterizes life under the pre-political state of nature creeps into political life itself, as even those who were initially reluctant to seek political favors pursue them with vigor, if only to break even (that is, vis-à-vis groups who are less scrupulous about using the state to secure their ends). All of this looting under cover of law is what Frédéric Bastiat memorably called "legal plunder."

The same phenomena are observable around the world, when misguided development aid programs have strengthened the interventionist state in less-developed nations. Ben Powell makes the important point, echoing Peter Bauer, that the fashionable proposals we hear about nowadays that seek to direct foreign aid to responsible, relatively non-predatory regimes miss the point: these aid programs are inherently bad, no matter how selectively the funds are allocated. Not only do they tend to enlarge the public sector of the recipient country, but competition for a share of the grant money also diverts private resources away from the satisfaction of genuine wants and into the wasteful, anti-social expenditure of time and resources for the purpose of winning government favors.

Some Virtues of the Market

If the state is the organization of the political means of wealth acquisition, then the market is the embodiment of the economic means. The market all but compels people to be other-regarding, but not by means of intimidation, threats, and propaganda, as in socialist and statist systems. It employs the perfectly normal, morally acceptable desire to improve one's material conditions and station in life, both of which can grow under capitalism only by directing one's efforts to the production of a good or service that improves the well-being of his fellow man. This is why the title of Frédéric Bastiat's book Economic Harmonies is such a beautiful encapsulation of the classical liberal message. (The American Anti-Imperialist League's George McNeill made essentially the same observation, if perhaps more vividly, in the late 1890s: "Wealth is not so rapidly gained by killing Filipinos as by making shoes.")

John Rawls famously argued in A Theory of Justice that we could judge a society on the basis of the material condition of the least well-off. The market wins according to that moral criterion as well. Capital University's Robert Lawson has shown that all around the world, the poor are consistently better off in the least interventionist, most market-oriented societies. America's poor are better off than much of the European middle class today, and better off than the American middle class of the 1950s.

This happy outcome follows from the very nature of capitalism. When businesses invest in capital equipment to render the production process more efficient, they make it possible to produce more goods at a lower unit cost. Competition then passes these cost cuts on to the consumer in the form of lower prices (a phenomenon not always so visible in an inflationary economy, but at work all the same). This greater abundance increases the purchasing power of all real incomes, and thereby redounds to the benefit of everyone.
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Crafty_Dog
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« Reply #760 on: April 29, 2010, 08:34:09 PM »

The Enron Objection

 
Needless to say, the market possesses a great many virtues in addition to these. But what we might call the Enron objection will at this point be raised: doesn't that fiasco reflect a serious moral problem at the heart of capitalism? Enron, it is said, was the free market in action, and Ken Lay an apostle of laissez faire. In fact, neither claim is true. Time constraints limit me to recommending the Enron chapter in Tim Carney's important book The Big Ripoff: How Big Business and Big Government Steal Your Money (2006). To make a long story short, Enron was on the receiving end of countless waves of government subsidies. It also manipulated the bizarre regulatory thicket that was the California energy market in grotesquely anti-social ways that enriched Enron at the expense, quite literally, of everyone else. The Cato Institute's Jerry Taylor correctly described Enron on balance as "an enemy, not an ally of free markets. Enron was more interested in rigging the marketplace with rules and regulations to advantage itself at the expense of competitors and consumers than in making money the old-fashioned way – by earning it honestly from their customers through voluntary trade."

Enron was in fact punished by the market for its behavior, while the American government, awash in Ponzi schemes, accounting irregularities, and unfunded liabilities it can't possibly cover, goes about its business in peace. "Far from an example of a market failure," argues Jacksonville State University's Christopher Westley, "Enron's saga shows that firms which invest too much in politics can easily become complacent in the face of changing market conditions…. If there's a scandal to be found in the Enron debacle, it is this: Enron's faith that its political investments would eventually solve its problems caused it to avoid making necessary changes in its organization until it was too late. Anyone who checks Enron's stock price, now listed on one of the penny stock exchanges, knows that the market has penalized this strategy." Amazon.com and Kmart, on the other hand, were up front with their investors about their financial difficulties, and ended up doing much better – by and large, their investors, no doubt impressed by these firms' honesty and transparency, stuck by them.

The nature of the attacks on capitalism frequently changes: one day it's the corruption of businessmen, as with Enron, the next it's environmental degradation (which is typically the fault of poorly developed property rights and arbitrary regulatory regimes rather than of capitalism itself). Sometimes capitalism will be criticized for one alleged failing one day and exactly the opposite failing the next. Thus socialists once claimed that capitalism was less efficient than socialism, and could not produce in nearly the same abundance. Now that that argument has been silenced, we have begun to hear exactly the opposite claim: capitalism brings about too much wealth, and makes people materialistic and fat. As Joseph Schumpeter put it, "Capitalism stands its trial before judges who have the sentence of death in their pockets. They are going to pass it, whatever the defense they may hear; the only success a victorious defense can possibly produce is a change in the indictment." For a system that has brought about such astonishing and unprecedented advances in the well-being of the great mass of mankind, it is surprisingly vulnerable to attack.

 
Capitalism and Public Opinion

Murray Rothbard was fond of citing the arguments of Étienne de La Boétie (as well as those of such later figures as David Hume and Ludwig von Mises) to the effect that governments survive or perish on the basis of public opinion. Since those who rule are of necessity vastly outnumbered by those who are ruled, it is curious that any regime – much less the truly oppressive – should get away with it for so long. The only way they can do so, according to these men, is through the voluntary consent of the public. That consent need not take the form of wild enthusiasm, which is rarely forthcoming for any regime; passive resignation is quite enough.

If a critical mass of the population withdraws that consent, on the other hand, regimes collapse. The fall of the communist regimes in Eastern Europe was a textbook example of exactly what La Boétie meant: when next to no one obeys commands any longer, how can the ruling elite hold on to power?

 
It is not only political regimes but also economic systems that must pass a public opinion test if they are to endure. And here we encounter an essential cultural attribute for the maintenance of a free economy: a critical mass of the population must consider market exchange, and the institutional supports that make it possible, to be fundamentally just.

And yet from our major institutions here in the United States we hear something like the opposite. Schoolchildren are given the impression that the private sector is the source of all wickedness and oppression, from which public-spirited government officials, in their selfless commitment to justice, must rescue and protect us. The selection of subject matter itself exhibits a pro-state bias: students leave school knowing all about how a bill becomes a law, for example, but with no idea of how markets work.

All of this applies just as strongly to popular culture and the media, with of course a few noble exceptions like John Stossel. That is why I am surprised not by how much of the market economy has been suppressed in the United States, but by how much has managed to survive in the face of a hostile educational and cultural establishment. Europe's opinion molders, as Olaf Gersemann observes in his book Cowboy Capitalism, are utterly contemptuous of American capitalism, a phenomenon they do not understand, and it is not surprising that in such an intellectual milieu those countries find themselves burdened with even more statism than we do.

The Culture of Enterprise: Concluding Thoughts

We are being much too ambitious if we think even the best economic institutions can transform human beings from flawed creatures into saints. The correction of human failings is the business of families, churches, and voluntary organizations of all kinds. The twentieth century served, among other things, as an extended lesson in both the danger and the folly of state-led efforts to transform human nature. We can be more than satisfied if our economic system is content to take human beings as they are, direct their energies into productive rather than anti-social outlets, and reward them for satisfying the needs of their fellow men.

 
Thomas Jefferson once observed that the mass of mankind was not "born with saddles on their backs, nor a favored few booted and spurred, ready to ride them." That is what the free economy is all about: anyone is free to serve the public in the manner he thinks best, and no one, not even those who have been most successful in the past, can claim exemption from the daily referenda that take place whenever the public decides to buy or to abstain from buying what he has to sell.

To my ear, the term "culture of enterprise" suggests a society that possesses a conscious appreciation of the distinct virtues of the market economy, some of which I have described here, and why it is morally and materially superior to statist alternatives, as I have also described here. In other words, the points I have made in my remarks today are the kind of arguments that should resonate with and constitute important pillars for a culture of enterprise. Instead of being held up for condemnation and abuse, entrepreneurs in such a society would be respected and honored for the risks they assume with their own property in order to bring improvement to people's lives, from the latest technological innovation to the most mundane of necessities. For a true culture of enterprise to last, people must see in the unhampered market economy not merely the least intolerable system but a positive good, in which living standards consistently rise, human creativity is given free rein, and human interaction proceeds on the civilized basis of respect for others' person and property.

The decades following World War II taught anyone who was paying attention how not to encourage prosperity or escape from less-developed status: demonize producers and the successful, nationalize industry, harass foreign investors, make property insecure, institute "import substitution" policies, and suffocate entrepreneurship through regulation. Development aid programs, meanwhile, either expressly endorsed these policies (as in the case of import substitution) or enabled them to continue by masking the true effects of such disastrous measures or propping up the regimes that implemented them. If the less-developed countries are to enjoy the prosperity of such success stories as Hong Kong and South Korea, or enjoy the growth rates being observed today in Ireland and even China, they must abandon the destructive and wicked policies of the past, discard the culture of envy their leaders have fostered, and embrace the principles of freedom that have allowed more people than ever before in history to enjoy the material conditions of civilized life.

 
And at a time when our countrymen are being courted by all manner of interventionist politicians – with one noble exception, I hasten to add – peddling all kinds of grandiose schemes for human betterment, Americans themselves could stand to be reminded of the values that inform a culture of enterprise. There was something disturbing, and yet revealing, in the title of MSNBC's election coverage segment last year – Battleground: America. Every two years, but especially every four, the country becomes in effect a battleground between opposing forces, in which the winner acquires the power to take the country to war unilaterally, to impose a uniform social policy on 280 million Americans, and to implement all manner of policies on his own authority, by means of executive orders and signing statements. Americans typically take for granted that this is normal, and indeed how life must be.

But in fact we don't need Hillary Clinton or John Edwards, Rudy Giuliani or John McCain, to "run the country" (to use an infelicitous if unfortunately common phrase) or to make us prosperous. A free and responsible people can manage its affairs without the platitudes and paternal custodianship of a Great Leader, and exhibits no superstitious reverence toward the occupants of political office. Once a society begins to absorb this revolutionary discovery, it has already embraced the culture of enterprise.

Notes

[1] Rodney Stark, The Victory of Reason (New York: Random House, 2005), 71–72.

[2] This discussion of envy in Russia relies on Hedrick Smith, The New Russians (New York: Random House, 1990), 199–205.

Reprinted from Mises.org.

April 28, 2010

Thomas E. Woods, Jr. (visit his website; follow him on Facebook; send him mail), holds a bachelor’s degree in history from Harvard and his master’s, M.Phil., and Ph.D. from Columbia University. His nine books include the critically acclaimed study The Church Confronts Modernity (Columbia University Press, 2004) and two New York Times bestsellers: Meltdown and The Politically Incorrect Guide to American History. His new book, Nullification, will be released on June 29.
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Freki
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« Reply #761 on: April 30, 2010, 07:51:39 AM »

Crafty that was a home run!  Thanks for posting it!
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Crafty_Dog
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« Reply #762 on: May 05, 2010, 06:41:07 AM »

The Power to Tax ... and Revolt
"An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation." --John Marshall
On December 16th, 1773, "radicals" from Boston, members of a secret organization of American Patriots called the Sons of Liberty, boarded three East India Company ships and threw into Boston Harbor 342 chests of tea.

This iconic event, in protest of oppressive British taxation and tyrannical rule, became known as the Boston Tea Party.

Resistance to the Crown had been mounting over enforcement of the 1764 Sugar Act, 1765 Stamp Act and 1767 Townshend Act, which led to the Boston Massacre and gave rise to the slogan, "No taxation without representation."

The 1773 Tea Act and resulting Tea Party protest galvanized the Colonial movement opposing British parliamentary acts, which violated the natural, charter and constitutional rights of the colonists.

In response to the rebellion, the British enacted additional punitive measures, labeled the "Intolerable Acts," in hopes of suppressing the burgeoning insurrection. Far from accomplishing their desired outcome, however, the Crown's countermeasures led colonists to convene the First Continental Congress on September 5th, 1774, in Philadelphia.

Near midnight on April 18th, 1775, Paul Revere departed Charlestown (near Boston) for Lexington and Concord in order to warn John Hancock, Samuel Adams and other Sons of Liberty that the British army was marching to arrest them and seize their weapons caches. While Revere was captured after reaching Lexington, his friend, Samuel Prescott, was able to evade the Red Coats and took word to the militiamen at Concord.

In the early dawn of that first Patriots' Day, April 19th, Captain John Parker, commander of the Lexington militia, ordered, "Don't fire unless fired upon, but if they want a war let it begin here." That it did -- American Minutemen fired the "shot heard round the world," as immortalized by poet Ralph Waldo Emerson, confronting British Regulars on Lexington Green and at Concord's Old North Bridge.

Thus, by the time the Second Continental Congress convened on May 10th, 1775, the young nation was in open war for liberty and independence, which would not be won until a full decade later. (Read more here.)

Today, the tax burden borne by most Americans, even those who pay no direct federal taxes but at the least pay a great hidden cost in federal regulation, is far greater than that which incited our Founders to revolution.

Thus, some 221 years after the ratification of our Constitution, Americans are once again at a crossroads with oppressive centralized government -- a point at which we must choose to turn up toward liberty or down toward tyranny and anarchy.

Those at the helm of the federal government, by way of generations of overreaching executive orders, legislative malfeasance and judicial diktat, have abandoned their sacred oaths to "support and defend the Constitution of the United States against all enemies, foreign and domestic," and to "bear true faith and allegiance to the same."

Although our Constitution provides the People with an authentic means for amendment as prescribed in Article V, successive generations of leftists have, by way of legislation, regulation and activist courts, altered that august founding convention well beyond any semblance of its original intent.

Consequently, they have undermined constitutional Rule of Law, supplanting it with the rule of men.

They have done so in order to win the allegiance of special interest constituencies, which then ensure perpetual re-election of their sponsors in return for political and economic agendas structured on Marxist-Leninist-Maoist collectivism.

How have leftist politicians succeeded in this assault?

They accomplished this through direct taxation on an ever-smaller number of Americans for the benefit of an ever-larger number of Americans -- "progressive taxation" and "social justice" as the Left so self-righteously calls it.

So, shouldn't those who have more give to those who have less?

Well, yes, in my humble opinion, but individuals should rightly be left to decide how best to use their resources for the benefit of others. And in this respect, Americans are the most generous people on earth and from any time of human history.

However, Barack Hussein Obama, an ideological Marxist, believes that government should be the ultimate arbiter for the redistribution of wealth. Indeed, he said as much on the campaign trail in 2008.

Obama claims our economy is "out of balance," and our tax policies "badly skewed."

To resolve this, he says we need a "tax policy making sure that everybody benefits, fair distribution, a restoration of balance in our tax code, money allocated fairly..."

"Fair distribution"?

By this, of course, he means "redistribution."

It's not enough that 20 percent of Americans are already forced to fund 80 percent of the cost of bloated government largess; if Obama can saddle them with 100 percent of this cost, then he could anoint himself king.

Never mind that progressive taxation constitutes, in effect, a "Bill of Attainder" as outlawed by Article I, Section 9, of our Constitution. Who in Washington these days pays that venerable old parchment any mind?

As devoted socialist George Bernard Shaw acknowledged, "A government which robs Peter to pay Paul can always depend on the support of Paul," which is the template for a bloodless socialist revolution.

Further, Obama asserts that free enterprise is nothing more than "Social Darwinism, every man or woman for him or herself ... [a] tempting idea, because it doesn't require much thought or ingenuity."

Free enterprise "doesn't require much thought or ingenuity"?

Only in the distorted worldview of a "community organizer" and lifelong adherent of Marxist doctrine could such an absurd assertion originate.

The current debacle of progressive taxation is the result of Franklin Delano Roosevelt's class-warfare decree: "Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle."

We beg to differ. Roosevelt's "principle" was no more American than Obama's. Roosevelt was merely paraphrasing Karl Marx, whose maxim declared, "From each according to his abilities, to each according to his needs."

At the time Marx was formulating his collectivist manifesto, classical liberal Claude Frederic Bastiat, a prominent 19th-century political economist, wrote, "Government is the great fiction through which everybody endeavors to live at the expense of everybody else. ... Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve. But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn't belong. See if the law benefits one citizen at the expense of another... Then abolish that law without delay; No legal plunder; this is the principle of justice, peace, order, stability, harmony and logic."

Now, according to Heritage Foundation's Index of Dependence on Government, "Despite the famed 1996 Welfare Reform Act and the more recent welfare adjustments in 2006, 60.8 million Americans remain dependent on the government for their daily housing, food, and health care. Starting in 2016, Social Security will not collect enough in taxes to pay all of the promised benefits -- which is a problem for all workers, but especially for the roughly half of the American workforce that has no other retirement program. Add in spiraling academic grants, flat-out farm socialism, and the swelling ranks of Americans who believe themselves entitled to public-sector benefits for which they pay few or no taxes -- and Americans must ask themselves whether they are near a tipping point in the nature of their government." (Also see How the Tax Code is Expanding Government.)

Perversely, almost half of all American workers pay no income tax per the current tax code scheme, though under the Obama plot many now qualify for a tax refund.

Once a majority of Americans can be "protected" from a tax burden, they will ignore the constitutional, moral and civic implications of "progressive taxation."

The fact is that the only way to ensure fiscal accountability at the federal level is to directly spread the cost of government to a much broader number of taxpayers so all Americans "feel the pain." Of course, the Left understands that in order to escape any fiscal accountability, they need only ensure that the cost of government is borne by a targeted minority of income earners.

Obama is now poised to propose the implementation of a supplemental value-added tax, a national sales tax. Though this would seemingly spread the cost of government to all Americans (precisely what liberals want to avoid), Obama's VAT coupled with the myriad proposed exempt products and "rebates" to the "poor," would most assuredly be yet another avenue for the central government to use the tax code to bludgeon a minority of consumers in order to expand its authority and constituencies.

Vladimir Lenin asserted, "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."

And that is precisely Obama's political model.

But the problem with the socialist model is, as former British Prime Minister Margaret Thatcher aptly noted, "they always run out of other people's money."

If I could emphasize but one point, it would be this: The Left has bankrupted the nation and the bill for freeloading on others is coming due. It will most certainly be paid back in the currency of liberty.

The time is at hand when we must inquire with a unified voice: "If there is no constitutional authority for most laws and regulations enacted by Congress and enforced by the central government, then by what authority do those entities lay and collect taxes to fund such laws and regulations?" (See the Patriot Declaration.)
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DougMacG
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« Reply #763 on: May 05, 2010, 12:35:14 PM »

Pres. Bush paid a political price over Katrina because big government is lousy at delivering goods and services.  Obama may or may not pay a political price over the abysmal federal response in the gulf - failure to even execute its own emergency response plan.  In the mortgage crisis, the oversight committee actually made things worse instead of preventing or alleviating the crisis.  The SEC administrators it turns out were addicted to porn and happy to have free internet at work.  Most of what is wrong with healthcare originates from government's already heavy involvement in it.  Every government subsidy to make higher education affordable drives up the cost of higher education.  Government measures poverty by not counting any of the subsidies we already pay to alleviate poverty and measure homelessness by not counting the money we spend to house the homeless.

This week in the housing business I dug out a green area to replace it with pavement to comply with City of Minneapolis inspection orders that have the power to fine, assess and take my property if I don't comply while other departments of the City Government meet with their highly paid staffs in their prime real estate downtown offices to figure out where we can put in more green area in place of pavement.

Beware when politicians of any and all stripes tell you that we need to 'do something' or that 'we can do more'.  Maybe we should consider doing less.
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Crafty_Dog
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« Reply #764 on: May 09, 2010, 05:16:13 PM »



http://www.youtube.com/watch?v=okHGCz6xxiw&feature=related
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Crafty_Dog
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« Reply #765 on: May 18, 2010, 08:06:55 AM »

Doomsayers Beware, a Bright Future Beckons
By JOHN TIERNEY
Published: May 17, 2010
 
Long before “sustainable” became a buzzword, intellectuals wondered how long industrial society could survive. In “The Idea of Decline in Western History,” after surveying predictions from the mid-19th century until today, the historian Arthur Herman identifies two consistently dominant schools of thought.


The first school despairs because it foresees inevitable ruin. The second school is hopeful — but only because these intellectuals foresee ruin, too, and can hardly wait for the decadent modern world to be replaced by one more to their liking. Every now and then, someone comes along to note that society has failed to collapse and might go on prospering, but the notion is promptly dismissed in academia as happy talk from a simpleton. Predicting that the world will not end is also pretty good insurance against a prolonged stay on the best-seller list. Have you read Julian Simon’s “The State of Humanity”? Indur Goklany’s “The Improving State of the World”? Gregg Easterbrook’s “Sonic Boom”?

Good books all, and so is the newest addition to this slender canon, “The Rational Optimist,” by Matt Ridley. It does much more than debunk the doomsaying. Dr. Ridley provides a grand unified theory of history from the Stone Age to the better age awaiting us in 2100.

It’s an audacious task, but he has the intellectual breadth for it. A trained zoologist and former editor at The Economist, Dr. Ridley has established himself in previous books, like “The Origins of Virtue” and “Genome,” as the supreme synthesist of lessons from anthropology, psychology, molecular genetics, economics and game theory. This time he takes on all of human history, starting with our mysteriously successful debut. What made Homo sapiens so special? Dr. Ridley argues that it wasn’t our big brain, because Neanderthals had a big brain, too. Nor was it our willingness to help one another, because apes and other social animals also had an instinct for reciprocity.

“At some point,” Dr. Ridley writes, “after millions of years of indulging in reciprocal back-scratching of gradually increasing intensity, one species, and one alone, stumbled upon an entirely different trick. Adam gave Oz an object in exchange for a different object.”

The evidence for this trick is in perforated seashells from more than 80,000 years ago that ended up far from the nearest coast, an indication that inlanders were bartering to get ornamental seashells from coastal dwellers. Unlike the contemporary Neanderthals, who apparently relied just on local resources, those modern humans could shop for imports.

“The extraordinary promise of this event was that Adam potentially now had access to objects he did not know how to make or find; and so did Oz,” Dr. Ridley writes. People traded goods, services and, most important, knowledge, creating a collective intelligence: “Ten individuals could know between them ten things, while each understanding one.”

As they specialized and exchanged, humans learned how to domesticate crops and animals and sell food to passing merchants. Traders congregated in the first cities and built ships that spread goods and ideas around the world.

The Phoenician merchants who sailed the Mediterranean were denounced by Hebrew prophets like Isaiah and Greek intellectuals like Homer. But trading networks enabled the ancient Greeks to develop their alphabet, mathematics and science, and later fostered innovation in the trading hubs of the Roman Empire, India, China, Arabia, Renaissance Italy and other European capitals.

Rulers like to take credit for the advances during their reigns, and scientists like to see their theories as the source of technological progress. But Dr. Ridley argues that they’ve both got it backward: traders’ wealth builds empires, and entrepreneurial tinkerers are more likely to inspire scientists than vice versa. From Stone Age seashells to the steam engine to the personal computer, innovation has mostly been a bottom-up process.

“Forget wars, religions, famines and poems for the moment,” Dr. Ridley writes. “This is history’s greatest theme: the metastasis of exchange, specialization and the invention it has called forth, the ‘creation’ of time.”

You can appreciate the timesaving benefits through a measure devised by the economist William D. Nordhaus: how long it takes the average worker to pay for an hour of reading light. In ancient Babylon, it took more than 50 hours to pay for that light from a sesame-oil lamp. In 1800, it took more than six hours of work to pay for it from a tallow candle. Today, thanks to the countless specialists producing electricity and compact fluorescent bulbs, it takes less than a second. That technological progress, though, was sporadic. Innovation would flourish in one trading hub for a while but then stagnate, sometimes because of external predators — roving pirates, invading barbarians — but more often because of internal parasites, as Dr. Ridley writes:

“Empires bought stability at the price of creating a parasitic court; monotheistic religions bought social cohesion at the expense of a parasitic priestly class; nationalism bought power at the expense of a parasitic military; socialism bought equality at the price of a parasitic bureaucracy; capitalism bought efficiency at the price of parasitic financiers.”

Progress this century could be impeded by politics, wars, plagues or climate change, but Dr. Ridley argues that, as usual, the “apocaholics” are overstating the risks and underestimating innovative responses.

“The modern world is a history of ideas meeting, mixing, mating and mutating,” Dr. Ridley writes. “And the reason that economic growth has accelerated so in the past two centuries is down to the fact that ideas have been mixing more than ever before.”

Our progress is unsustainable, he argues, only if we stifle innovation and trade, the way China and other empires did in the past. Is that possible? Well, European countries are already banning technologies based on the precautionary principle requiring advance proof that they’re risk-free. Americans are turning more protectionist and advocating byzantine restrictions like carbon tariffs. Globalization is denounced by affluent Westerners preaching a return to self-sufficiency.

But with new hubs of innovation emerging elsewhere, and with ideas spreading faster than ever on the Internet, Dr. Ridley expects bottom-up innovators to prevail. His prediction for the rest of the century: “Prosperity spreads, technology progresses, poverty declines, disease retreats, fecundity falls, happiness increases, violence atrophies, freedom grows, knowledge flourishes, the environment improves and wilderness expands.”

If you’re not ready to trust an optimist, if you still fear a reckoning is at hand, you might consider the words of Thomas B. Macaulay, a British poet, historian and politician who criticized doomsayers of the mid-1800s.

“We cannot absolutely prove,” he wrote, “that those are in error who tell us that society has reached a turning point, that we have seen our best days. But so said all who came before us, and with just as much apparent reason.”
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DougMacG
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« Reply #766 on: May 18, 2010, 12:03:06 PM »

Short rant regarding gays in the military, higher education, Kagan and the Supreme Court, the Solomon amendment, free speech, the autonomy of a private institution in this country and the ridiculous imbalance of makers vs. takers in this country:

Kagan was prevented from standing on her principles and opposing the way the American military discriminates because of the addiction of Harvard University to federal money.  Excuse me, but why in the hell is one of the world's richest, most expensive, elitist institutions receiving federal subsidy?  With a billion in the bank are they unable or unwilling to perform research for the public good at their own expense and give something back to society?  The result is that a plumber in flyover country who works all day with no college degree, who makes a good wage, gets 2 weeks a year off and supports a family of four must pay taxes that subsidize Harvard University, its elitist professors with all their tenure, time off, idealism and excesses.  Unbelievable.
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G M
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« Reply #767 on: May 28, 2010, 04:46:02 PM »

http://townhall.com/blog/g/cb91fd92-7c8b-4ad7-8dd5-f5869a653f74

I know quite a bit about Columbine and the killers there. Christianity was most certainly not their motive.
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Body-by-Guinness
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« Reply #768 on: May 28, 2010, 06:21:17 PM »

Goose stepping Baptist alert!!!!!!
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Crafty_Dog
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« Reply #769 on: June 03, 2010, 10:15:49 AM »

History Returns to Europe
 
http://www.freerepublic.com/focus/f-news/2526744/posts

VIENNA -- Walk the beautiful streets in Munich, Strasbourg and Vienna, and you can see why Europeans thought in the last decades that they had reached the end of history. There is not a soldier to be seen. Sidewalk cafes are jammed midweek with two-hour lunch-goers. Fashion, vacations and sex dominate the ads and billboards.

Bikers, electric commuter trains and tiny fuel-efficient cars zoom by in a green contrast to our gas-guzzling Tahoes and Yukons.

So naturally, there is a general sense of satisfied accomplishment among European social democrats. They believe that finally a quiet sameness across their continent has replaced two millennia of constant European warring and revolution. Now, everybody seems to get an apartment, small car, state job, good pension and peace -- and in exchange, all voice comfortable center-left consensus politics.

But beneath the genteel European Union veneer, few remembered that human nature remains constant and gives not even nice Europeans a pass from its harsh laws.

So suddenly the Greek financial meltdown, and the staggering debts that must be repaid, have alternately enraged and terrified northern European creditors. Even the most vocal Europhiles are quietly rethinking the entire premise of a European Union that offers lavish benefits but no sound method of paying for them.

After all, it is one thing to redistribute income by taking from richer Germans and Austrians to give to poorer Germans and Austrians. But it is something else for all Germans and Austrians to extend their socialist charity to siesta-taking Greeks, Italians and Spaniards. For all the lofty rhetoric of the collective European Union, age-old culture, language and nationalism still trump the ideal of continental unity.

But bickering over a trillion dollars in bad southern European debt is not the EU's only problem. Why, for example, do Europe's cradle-to-grave entitlements so often end up encouraging declining populations, atheism and lower worker productivity that is readily apparent to the casual visitor?

Perhaps if everybody ends up about the same, regardless of effort or achievement, then life must be enjoyed mostly in the here and now. Why sacrifice for children, or put something aside for heirs, or worry over a judgment in the afterlife? The more the European Union talks about its global caring, the less likely its own citizens are to have children.

It is also strange that the more Europeans flock to their ancient majestic cathedrals, splendid museums and grandiose villas and castles to satisfy an innate human desire to enjoy artistic, architectural and religious achievement, the more it is likely that they would never again build a now politically incorrect cathedral at Rouen, a Schönbrunn Palace or a castle on the Rhine.

Much is made of European multiculturalism, a willingness to allow Muslims from the Middle East, Pakistan and Turkey to live separate lives without assimilating fully into European society.

But such "tolerance" reflects in part a fear of radical Islam and terrorism. For all the European talk of progressive attitudes about free speech, feminism and gay rights, such principles fade quickly when radical Muslims demand Sharia law, demonize homosexuals or threaten European cartoonists and novelists. It is almost as if the more Europe takes pride in its own multiculturalism, the larger its ethnic ghettoes expand -- and the more its native populations grow bitter against the foreign-born.

Europe is a vocal member of the United Nations and other transnational organizations. But this utopian internationalism depends on the protection guaranteed by the United States and its huge military. Otherwise, there would either be costly European militaries -- or the occasional threat of attack. Europeans forgot that just because they are not looking for war, it doesn't mean that war might not look for them.

In short, as a reaction to the self-destruction of Europe in World War II and the twin monsters of fascism and communism, Europeans thought they could change human nature itself through the creation of an all-caring, all-wise European Union uber-citizen. Instead of dealing with human sins, European wise men of the last half-century would simply declare them passé.

But human-driven history is now roaring back with a fury in Europe -- from Mediterranean insolvency, to the threat of radical Islam, to demographic decline, to new international dangers on the horizon.

Only one question remains: At a time when Europe is discovering that its democratic socialism does not work, why in the world is the United States doing its best to copy it?
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Crafty_Dog
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« Reply #770 on: June 05, 2010, 09:41:33 AM »



http://www.youtube.com/watch?v=LyePCRkq620&feature=player_embedded
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Crafty_Dog
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« Reply #771 on: June 06, 2010, 02:09:58 PM »

For those of you too young to remember Paul Volcker was appointed Chairman of the Fed in 1978.  It was he that brought the Nixon-Ford-Carter inflation under control (econ growth due to supply side tax rate cuts by Reagan was the other half of the equation).  More recently he was brought on board by the Obama team during the presidential campaign to bolster the impression that Obama was a responsible man.  Once in power, PV has complained that he has felt ignored.  Now that the excrement's approach to the fan is more imminent, BO re-courts PV. 

Here are PV's most recent thoughts:
=======================================

The New York Review of Books
 
The Time We Have Is Growing Short
by Paul Volcker
Some five years ago, at a conference of the Stanford Institute for Economic Policy Research, I lamented that “the growing imbalances, disequilibria, risks” were giving rise to “circumstances as dangerous and intractable” as any I could recall—intractable not just because of the combination of complicated issues, but because there seemed to be “so little willingness or capacity to do much about it.”

Part of the story is familiar. In the United States, savings practically disappeared as consumption rose far above past relationships to national production. That consumption was satisfied by rapidly growing imports from China and elsewhere in Asia at remarkably cheap prices, helping to keep inflation well subdued. The resulting seemingly inexorable increase in our current account deficit was easily financed by an equally large flow of short-term funds from abroad at exceptionally low interest rates. In fact, money was so easily available that it supported what became a bubble in housing, with rising home prices reinforcing a sense of prosperity and high consumption.

It was not so much that the imbalances were hidden or unknown. In particular, the Chinese surpluses and American deficits were widely thought to be unsustainable. But for the time being, the world economy was growing strongly. China in particular was mainly interested in developing its industry by encouraging exports, and the United States was not prepared to balance its national budget or to restrain the consumption and housing boom.

At the time, I suggested that the most likely result would not be well- thought-out and complementary policy actions. Rather, sooner or later, the necessary changes would be forced by a financial crisis.

I certainly did not anticipate the nature of the crisis that eventually ensued, its complexity, its force, or its impact right across the industrialized world. Subprime mortgages, credit default swaps, CDOs—squared, tranched, or otherwise—were not part of my world. Nor, I can add, had I ever imagined that the financial markets over those frightening weeks in the fall of 2008 would virtually freeze up. The sense of mutual trust upon which operating financial markets depend was lost.

Now we know that trillions of dollars of official funds came to the rescue of the broken system in the form of loans, capital, and guarantees. Flows of finance have been restored, albeit with large areas of continuing public support. The residential mortgage market in the United States—by far the largest sector of our capital market for the time being—remains almost wholly a ward of the government. Now, another range of uncertainty has arisen. Sovereign credits have come into question, most pointedly in the Eurozone but potentially of concern among some of our own states.

Any thoughts—any longings—that participants in the financial community might have had that conditions were returning to normal (implicitly promising the return of high compensation) should by now be shattered. We are left with some very large questions: questions of understanding what happened, questions of what to do about it, and ultimately, questions of political possibilities. The way those questions are answered will determine whether, in the end, the financial crisis has, in fact, forced the changes in thinking and in policies needed to restore a well-functioning financial system and better-balanced growing economies.

The Stanford Institute prize announcement sets out a simple proposition I suspect we all would support: “Economics is fundamentally about efficiently allocating resources so as to maximize the welfare of individuals.” I think it is fair to say that for some time the dominant approach of economic theorizing, increasingly reflected in public policy, has been that free and open financial markets, supported by advances in electronic technology and by sophisticated financial engineering, would most effectively support both market efficiency and stability. Without heavily intrusive regulation, investable funds would flow to the most profitable and productive uses. The inherent risks of making loans and extending credits would be diffused and reallocated among those best able and willing to bear them.

It is an attractive thesis, attractive not only in concept but for those participating in its seeming ability to generate enormous financial rewards. Our best business schools developed and taught ever more complicated models. A large share of the nation’s best young talent was attracted to finance. However, even when developments seemed most benign, there were warning signs.

Has the contribution of the modern world of finance to economic growth become so critical as to support remuneration to its participants beyond any earlier experience and expectations? Does the past profitability of and the value added by the financial industry really now justify profits amounting to as much as 35 to 40 percent of all profits by all US corporations? Can the truly enormous rise in the use of derivatives, complicated options, and highly structured financial instruments really have made a parallel contribution to economic efficiency? If so, does analysis of economic growth and productivity over the past decade or so indicate visible acceleration of growth or benefits flowing down to the average American worker who even before the crisis had enjoyed no increase in real income?

There was one great growth industry. Private debt relative to GDP nearly tripled in thirty years. Credit default swaps, invented little more than a decade ago, soared at their peak to a $60 trillion market, exceeding by a large multiple the amount of the underlying credits potentially hedged against default. Add to those specifics the opacity that accompanied the enormous complexity of such transactions.

The nature and depth of the financial crisis is forcing us to reconsider some of the basic tenets of financial theory. To my way of thinking, that is both necessary and promising in pointing toward useful reform.

One basic flaw running through much of the recent financial innovation is that thinking embedded in mathematics and physics could be directly adapted to markets. A search for repetitive patterns of behavior and computations of normal distribution curves are a big part of the physical sciences. However, financial markets are not driven by changes in natural forces but by human phenomena, with all their implications for herd behavior, for wide swings in emotion, and for political intervention and uncertainties.

Important questions about the governance of businesses and the relationships between principals and their agents are being reexamined. Most obviously and appropriately, the role of regulation and supervision, their necessity, their methods, and their difficulties are being reconsidered.

Virtually all developed economies have long had official institutions responsible for regulating their banking systems. To a lesser extent, there has been oversight of financial markets and nonbank financial institutions. In the United States, there has been a particularly complicated and intrusive institutional structure. But as a broad generalization, these existing structures, in all their variety, largely failed to prevent cascading financial failures, with severe economic damage.

One response has been a broad international effort to review capital requirements, leverage restraints, and liquidity practices, extending even beyond the traditional area of commercial banking. These are matters that by and large are within the existing competences of national regulatory authorities. Over the past two years, there has been much useful analysis and large areas of conceptual agreement. But even with that concentrated effort, it has been difficult to reach operational consensus.

The fact is that the exercise of effective regulatory and supervisory authority is always difficult on a national level, and those difficulties are multiplied when dozens of countries are involved. There are large political constraints and industry pressure. Consider the ten-year effort by the G10’s Basel Committee on Banking Supervision to coordinate capital requirements—completed just in time to be largely rendered moot by the financial crisis.

To me, the lesson is clear. There are deep-seated structural issues that must be dealt with by legislation. Moreover, there should be common elements among nations hosting significant international financial markets and institutions. As this is written, the US Senate has passed one fairly comprehensive legislative approach. There are some parts of that bill that I would prefer to see changed, redrafted, or eliminated in the negotiations to reconcile it with the House bill during the coming weeks. This is particularly true in clarifying the limits on proprietary activity of commercial banks, including trading in derivatives. However, I do think that taken as a whole the bill does incorporate basic approaches that can and should be part of our international consensus.

 

The central issue with which we have been grappling is the doctrine of “too big to fail.” Its corollary is so-called moral hazard: the sense that an institution—its creditors, its management, even its stockholders—will be inclined to tolerate highly aggressive risk in the expectation that it will be rescued from possible failure by official financial support.

That is not a new concern. Commercial banks in the ordinary course of their business have deposit insurance and access to Federal Reserve credit in times of stress. In practice, creditors of the largest banking institutions have been protected. The quid pro quo has been extensive regulation to limit risk. The underlying assumption has been, quite correctly in my view, that these banking institutions perform absolutely critical functions in our economy. They manage the payment systems, nationally and internationally. They provide safe and liquid facilities for depositing money. They are an indispensable source of credit to most businesses.

Now, the situation has been changed. A vast “shadow banking system” has emerged alongside, and is importantly dependent upon, traditional commercial banks. Investment banks have become financial trading machines. Hedge and private equity funds are active, operating in large part on borrowed funds. Financial affiliates of some industrial firms have expanded into the capital markets to the extent, in a few cases, that the risks have jeopardized the entire company. Derivatives, including credit default swaps hardly known a decade ago, have become speculative vehicles, exceeding their use as hedging instruments. Fragmented regulation and supervision, if present at all, have been weak.

To a substantial extent, it was those “nonbanks” that were at the epicenter of the crisis. Contrary to well-established central bank practices and with active government support, many of those same institutions received extensive assistance to remain viable.

Dealing with this great extension of moral hazard has become the largest challenge for financial reform. Central to that effort in thinking both in the United States and in Europe has been the creation of a new “resolution authority” that could supersede conventional bankruptcy procedures when the potential failure of a “systemically important” financial institution threatens to undermine the stability of the financial system.

Essentially, an official agency following established procedural safeguards (in theUS presumably the FDIC) could seize control of the failing institution, deal with its immediate obligations to maintain continuity in the market, but then promptly arrange for an orderly liquidation: stockholders and management would be gone, and creditors placed at risk, as in a normal bankruptcy. Ideally the path toward liquidation (including the sale of parts of the company) would be eased by setting out a “living will”—dissolution priorities prepared by large nonbank institutions and reviewed by their supervisors. Put simply, the concept is to prepare for a dignified burial—not intensive care with hopes for recovery.


The largest nonbank institutions would also be subject to supervision with respect to their capital, leverage, and liquidity—matters that, according to the Senate bill, would be overseen by the Federal Reserve. The intent is to permit the nonbanks to compete, to innovate, to actively trade, and to make profits free of highly detailed intrusive regulation. They should also be free to fail.

Put simply, there would continue to be a federal safety net implicitly subsidizing strongly regulated commercial banks, as has been the practice for decades, even for centuries—here and abroad. Other institutions, and their creditors, should not expect official protection. The clear possibility of failure without a “bailout” will be reflected in lower credit ratings, in higher financing costs, and in market-imposed restraints.

The logic of that approach is embedded in the Senate bill. Commercial banking would implicitly be supported in its wide range of relations with businesses and other customers. Proprietary trading, hedge funds, and other potentially profitable but risky activities not related to their essential responsibilities should clearly be prohibited for banks. The essential logic is that the taxpayers need not, and should not, be called upon to support essentially speculative activities within the protected, implicitly subsidized financial sector.

There are other key elements in the Senate bill. Importantly, there is a strong effort to force trading, clearance, and settlement of derivatives into organized exchanges and clearinghouses. New responsibilities for coherent oversight of the entire financial system are set out. Regulatory authorities are clarified. In all these areas, a high degree of international cooperation is necessary. My hope is that the legislative initiative underway will provide a solid foundation for strong American leadership in that effort.

None of these reforms will assure crisis-free financial markets in the years ahead. The point is to keep the inevitable excesses and points of strain manageable, to reduce their scale and frequency, and in the process more effectively contribute to the efficient allocation of our financial resources.

As we well know, the critical policy issues we face go way beyond the technicalities of law and regulation of financial markets. There is growing awareness of historically large and persistent fiscal deficits in a number of well-developed economies. The risks associated with the virtually unprecedented levels of public debts as we emerge from recessions are evident. In California, as in my own state of New York, it’s not a matter of intellectual awareness but of practical confrontation.

If we need any further illustration of the potential threats to our own economy from uncontrolled borrowing, we have only to look to the struggle to maintain the common European currency, to rebalance the European economy, and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshaled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary.

As we look to that European experience, let’s consider our own situation. We are not a small country highly vulnerable to speculative attack. In an uncertain world, our currency and credit are well established. But there are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs. Looking only a little further ahead, there are even larger questions of critical importance for those of less advanced age than I. The need to achieve a consensus for effective action against global warming, for energy independence, and for protecting the environment is not going to go away. Are we really prepared to meet those problems, and the related fiscal implications? If not, today’s concerns may soon become tomorrow’s existential crises.

I referred at the start of these remarks to my sense five years ago of intractable problems, resisting solutions. Little has happened to allay my concerns. But, of course, it is not true that our economic problems are intractable beyond our ability to react, to make the necessary adjustments to more fully realize the enormous potential for improving our well-being. Permit me a note of optimism.

A few days ago, I spent a little time in Ireland. It’s a small country, with few resources and, to put it mildly, a troubled history. In the last twenty years, it took a great leap forward, escaping from its economic lethargy and its internal conflicts. Responding to the potential of free and open markets and the stable European currency, standards of living have bounded higher, close to the general European level. Instead of emigration, there has been an influx of workers from abroad.

But now Ireland has been caught up in its own speculative excesses and financial deficits, culminating in a sharp economic decline. There is a lot of grumbling, about banks in particular. But I came away with another impression. The people I spoke to had an understanding that the boom had gotten out of hand. There seems to me a determination to do something about the situation, reflected not just in the words of the political leaders but in support for action among the public. And there is a sense of what is at stake, that the gains they made in recent years have been placed in jeopardy. The urgent need to get back on a sustainable budgetary and economic track is well understood.

I hope my quick impressions of Irish attitudes and policies will be borne out and that that small country will not be caught up by a European crisis beyond its control. In the United States, we don’t seem to me to share the same sense of urgency. We view ourselves as a huge and relatively self-sufficient country, in control of our own destiny. We have time to sort out our priorities, to decide what to do, and to do it. There are elements of truth in those propositions, but the time we have is growing short.

Restoring our fiscal position, dealing with Social Security and health care obligations in a responsible way, sorting out a reasonable approach toward limiting carbon omissions, and producing domestic energy without unacceptable environmental risks all take time. We’d better get started. That will require a greater sense of common purpose and political consensus than has been evident in Washington or the country at large.
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ccp
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« Reply #772 on: June 07, 2010, 09:45:45 AM »

This morning while watching him give a lecture on the greatness of gigantic government made me realize who the next in line Democratic Presidential candidate will be (probably as Crafty thinks - not 2012 but 2016).
Another NE liberal lawyer.  Chuck Schumer.  This is the guy the Republicans better start studying and getting their answers to.
He is IMHO FAR more formidable than Bamster who doesn't have a clue.

He is the guy who is going to bring the fight right back at us.  He is in line to be the Senate Dem leader after Reid falls this fall.
Next will be the Presidential bid.  I don't think he will want to be Bamster's second fiddle for 2012 though it is possible.
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DougMacG
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« Reply #773 on: June 07, 2010, 12:49:02 PM »

CCP,  You are correct about Schumer.  There are others but he is the most senior and trusted among his peers for liberal strategy.  His skills and view of the constitution will be on display soon as the Senate Judiciary Committee ushers through uber-liberal Elena Kagan.
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Crafty_Dog
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« Reply #774 on: June 07, 2010, 08:16:04 PM »

These thoughts probably fit better on the Politics thread , , ,
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Crafty_Dog
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« Reply #775 on: June 09, 2010, 12:39:11 AM »



http://www.youtube.com/watch?v=XNUc8nuo7HI
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Crafty_Dog
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« Reply #776 on: June 23, 2010, 10:14:09 AM »

The collapse of the West, with Islam at the gate

--------------------------------------------------------------------------------

Internecine civil wars are underway almost everywhere within the West, and most
virulently in the United States of America. They are not yet kinetic wars, but wars
of grinding prepositioning, the kind which lead to foregone conclusions without a
shot being fired. They are wars of survival, nonetheless, because the basic
architecture for national strength is being altered incrementally or dramatically.
And in many cases consciously.

Almost all of the strategic restructuring of states is occurring in large part as a
result of an accumulation of wealth; an accumulation and value of which is seen as
permanent. This has resulted in the hubris — expressed by those who did not earn it
— of triumph in the Cold War. This is a Western phenomenon because the widespread
growth of wealth, the creation of freedoms classically associated with democracy,
resulted — as it must inevitably result — in complacencies which in turn led to a
"vote too far": the extension of the democratic franchise to those who do not help
in the creation of wealth.

Once the voting franchise of the West reached the point where those who sought
benefits outweighed those who created benefits, the tipping point was reached. The
situation of de facto "class warfare" thus emerges automatically under such
circumstances, and the envy of those who take against those who provide erupts into
"rights" and "entitlement". By deifying "democracy" above justice, the enfranchised
non-producers could always outvote the producers. We are at this point. The result
can only be collapse, or restructuring around a Cæsar or a Bonaparte until,
eventually, a productive hierarchy reappears, usually after considerable pain.

Virtually every conscious step of the Administration of President Barack Obama and
the overwhelming Democratic Party majority in Congress has been to increase the size
and role of government in the economy and society, and to decrease, limit, and
control the position of private enterprise and capital formation. Given that this
progressively contracts and ultimately eliminates production, and reduces the
inherent asset base of the country — its raw materials and productive intellect — to
a null value, the tradable value of the U.S. currency will inevitably decline. We
cannot be swayed by the enormous wealth of the North American continent. Almost all
areas have an inherent wealth of some kind, but assets left idle in the ground or
infertile in the brain define countries which fail, or are not victorious in their
quest for unbridled sovereignty.

Thus, a decline in currency value is exacerbated, or accelerated, by the increasing
supply of money, inextricably depreciating its value, particularly at a time of
decreasing productivity in vital perishable and nonperishable output.

The U.S. Obama Administration has focused entirely on an agenda of expanding
government — the seizure of the envied (and often ephemeral) "wealth" of the
producers — without addressing the process of facilitating the production of
essential commodities
and goods. Even the USSR and the People's Republic of China, during their communist
periods, focused — albeit badly — on the production of goods and services, when they
realized that the "wealth" to be "redistributed" existed only as the result of
production and innovation. The U.S., meanwhile, heavily as a result of policies of
the former Clinton Administration, has "outsourced" production, and the State — that
is, the Government — cannot easily, in the U.S., become the producer.

President Obama has addressed the U.S.' economic crisis by expanding government, and
government-related, employment in nonproductive sectors, while at the same time
blaming and punishing the private sector for all of the U.S. ills. Empowered by the
extended franchise, this was the politics of envy now becoming enabled. Moreover,
the populist, short-term response to the major oil-spill in the Gulf of Mexico was
clearly geared toward (a) transforming a crisis into an opportunity to pursue a
green energy agenda by highlighting the evils of the fossil fuels on which the U.S.
remains dependent; (b) ensuring that the President was not blamed for the poor
crisis response; and (c) ensuring that the Democratic Party did not suffer from the
crisis in the November 2010 mid-term Congressional elections.

The result of all the Obama initiatives has been to expand government and reduce or
absolutely control and tax the private sector, even though, without the private
sector, the U.S. has no viable export or self-sustaining capability. The net effect
has been to mirror — and overtake — the situation in which, for example, Germany
found itself a decade ago: without the ability to retain capital investment or
attract new capital investment. And in order to restrain capital flight from the
U.S., the Obama Administration seeks to further control worldwide earnings of U.S.
corporations and citizens. For other reasons, the U.S., believing that it still
dominates the technology arena, has imposed greater and greater restrictions on
international exports of technology through its ITAR (International Traffic in Arms
Regulations) and the Foreign Corrupt Practices Act.

All of this conspires to limit investment in U.S. manufacturing and restrict foreign
interest in U.S. exports because the regulations are being enforced merely for
political punitive reasons. The U.S. is making itself increasingly unappealing to
foreign investors and has, as this writer has noted, made the appeal of the U.S.
dollar as the global reserve currency evaporate, saved, for the moment, only by the
lack of a ready alternative. That situation will change within a very few years.

Thus, the U.S. has, in the space of a couple of years: (i) so dramatically inflated
money supply that the value of the dollar
is only shored up by the lack of international alternative currencies to act as
reserve trading currencies; (ii) so dramatically inflated public debt, without
stimulating economic growth, that U.S. economic performance will continue to decline
on a national and a per capita basis while competitive economies, such as the PRC
and Russia, will grow, reducing strategic differentials; (iii) severely punished the
private sector, thereby reducing the opportunities and incentives for strategic
capital formation, and in particular punishing the industrial production and energy
sectors, almost ensuring major dislocation to the delivery of U.S. basic needs in
the near-term; and (iv) so blatantly reduced its strategic capabilities through all
of these actions and in its diplomatic and military posture as to guarantee a
reduction in U.S. strategic credibility. Concurrent with all of this is an
increasingly punitive taxation framework.

The near-term impact will include rising domestic energy prices, possibly even
before the November 2010 mid-term Congressional elections, which could result in the
Democratic Party losing its substantial majority in both Houses. Even on this
matter, Democratic Party ideologues have attempted to suggest that this is exactly
what the country needs: expensive energy in order to facilitate change to "green"
solutions. This defies the historical reality that preeminent powers must always
have vast energy surpluses and use.

So much damage has been done to the U.S. strategic posture in just two years
(although building on a base of inefficiencies which have been growing since the end
of the Cold War), in many respects equal to the 1917 Russian Revolution (but without
the bloodshed), that it is difficult to forecast whether — because of a changing
global environment — the U.S. can, within a decade or two, recover its strategic
authority and leadership. Domestically, the massively statist and interventionist
approaches of the Obama Administration have polarized the country, and the response
will be reactive rather than innovative, inducing a period of isolation and
nationalism, but with grave difficulty in rebuilding confidence from the
international investment
community.

Europe

Artificial, wealth-induced complacency following the end of the Cold War led to fury
when economic collapse inevitably occurred in 2010, leading to draconian restraint
in public spending in many societies, but particularly Greece and Spain. It is said
that tourists are warned not to feed bears in Yellowstone National Park, in the
U.S., because the bears do not understand when the tourists have run out of food.
State-fed populations in Europe, the U.S., and Australia (see below) equally do not
understand when the free ride is over, and work must recommence.

Germany, France, and the United Kingdom have begun the arduous path back to
recovery, but the euro may, as a currency, have been irrevocably damaged, and the
European Union itself may have spent the term of its virility. Clearly, the
wealth-induced complacency, which had the compounding effect of allowing a decline
in a sense of national survival and national identity among the European Union (EU)
component states, has led now to a revived — but as yet unrealized — sense of
nationalism. This is beginning to lead to the recognition of the cohesive national
efficiency required for survival and competitiveness. It can be said that the EU
destroyed nationalism, without replacing it with any mechanism to create a new sense
of social cohesion, thus removing Europe's capability for economic competitiveness,
self defense, or ability to define a new culture (and identity) to replace the
national identities. Had the British Labour Party Government of outgoing Prime
Minister Gordon Brown persisted in office with his slavishly doctrinaire governance
— and demonstrably unworkable socialism, led by a privileged élite of Labour
mandarins wallowing at the trough — it is possible that an economic recovery
in the UK would have been problematic. It may still be problematic. And in this,
Brown was a prototype Obama, with his rank sense of entitlement. Even now, the
British political psyche is fractured along geographic lines, and, wealth-induced,
considers itself effectively "post-industrial", and therefore beyond the need for a
manufacturing (or even agricultural base). Thus, even though the UK is now far more
dependent on a maritime trade base than at any time in its history, it is incapable
of defending or projecting that maritime base; neither does it have the wherewithal
to trade.

Australia

The Australian Government of Prime Minister Kevin Rudd has — like the Obama
Administration in the U.S. and the Brown Administration in the UK — demonstrated its
absolute lack of experience in management, economics, or real-life work skills. A
decision by Prime Minister Rudd to impose a new "super tax" of some 40 percent on
resource companies — miners, who produce most of Australia's export wealth —
suddenly highlighted the reality that the mining companies did not need to put their
investment into Australian projects.

It also highlighted the fact that foreign investors did not need to invest in
Australia, and that capital could move — as it always does — away from draconian tax
regimes. As Chilean Mines Minister Laurence Goldborne said in June 2010: "Just
because you have resources doesn't guarantee investment." This is something which
the governments of most African states know.

In Australia, the realization of the over-reaching greed — and envy-inspired
approach of of the proposed new tax laws — in turn led much of the ruling Australian
Labor Party (ALP) and the profoundly leftist Australian media to begin their drift
away from Rudd, leaving him with the prospect that he could either be abandoned as
party leader before the late-2010 general elections, or be faced with the prospect
of becoming Australia's first one-term Prime Minister. The question remains,
however, as to whether the markets will still be there when the ruin of trust in
Australian export and investment reliability is addressed by a future government.
The People's Republic of China (PRC), Australia's major export client state, and
Russia are now developing vast iron ore reserves on their mutual border, possibly —
in the near future — obviating the need for much of what Australia exports.

In the meantime, both Kevin Rudd and the opposition Liberal Party have essentially
embraced the move by Australia to see itself as a pseudo-post-industrial society,
gradually eroding the independent and innovative manufacturing sector which had been
a hallmark of Australian economic growth. A pseudo-post-industrial society is one
which believes that it can live solely on the intrinsic value of its currency,
without the necessity to sustain a balanced agricultural and industrial base to
preserve sovereign independence. A true post-industrial society — something thus far
a utopian dream — can produce all of its food and goods with a minute fraction of
its population, which would largely be left to address intellectual pursuits.

Australia, thus, faces a major challenge to its comfort, wealth, and security when
value perceptions, investment, and clients evaporate. We see, then, in the very
deliberate acts of envy and entitlement politics, the seeds of national collapse in
Australia, the U.S., and Western Europe.

Conclusions

Some of the Western powers have slumped before, and recovered. The United States has
yet to demonstrate this resilience. Other Western societies have slumped, and have
yet been protected by a strong regional system so that their societies could prosper
under foreign protection. The Netherlands, Spain, and Portugal, for example,
retained stable and individual prosperous societies and yet never recovered their
strategic leadership, relying, instead, on the power of their region for economic
and security protection. States which remain dependent on others for their
protection never fully regain their wealth and freedom.

States such as New Zealand depend on their greater neighbors for protection. But
wither New Zealand if Australia fails? Wither the Netherlands today if the European
Union fails? And wither the United States if its fortunes erode? Re-birth is, as
Britain has found through history, as did Rome, more arduous than that first, pure
flush of strategic victory.

The West is at its watershed, not because of a threat from a less-productive
society. The collapse of the West is not because Islam is at the gates. Islam is at
the gates because of the collapse of the West.

http://www.worldtribune.com/worldtri...0560_06_22.asp
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« Reply #777 on: June 23, 2010, 11:08:45 AM »

Mort is clearly not thrilled with Joe-Bama's (my nick name) approach to Israel.  I would guess that has some cause for this piece from an otherwise liberal/Democrat Jewish writer

Part one:

 Mort Zuckerman: World Sees Obama as Incompetent and Amateur
The president is well-intentioned but can't walk the walk on the world stage
By Mortimer B. Zuckerman
Posted June 18, 2010
President Obama came into office as the heir to a great foreign policy legacy enjoyed by every recent U.S. president. Why? Because the United States stands on top of the power ladder, not necessarily as the dominant power, but certainly as the leading one. As such we are the sole nation capable of exercising global leadership on a whole range of international issues from security, trade, and climate to counterterrorism. We also benefit from the fact that most countries distrust the United States far less than they distrust one another, so we uniquely have the power to build coalitions. As a result, most of the world still looks to Washington for help in their region and protection against potential regional threats.

 
Yet, the Iraq war lingers; Afghanistan continues to be immersed in an endless cycle of tribalism, corruption, and Islamist resurgence; Guantánamo remains open; Iran sees how North Korea toys with Obama and continues its programs to develop nuclear weapons and missiles; Cuba spurns America's offers of a greater opening; and the Palestinians and Israelis find that it is U.S. policy positions that defer serious negotiations, the direct opposite of what the Obama administration hoped for.

The reviews of Obama's performance have been disappointing. He has seemed uncomfortable in the role of leading other nations, and often seems to suggest there is nothing special about America's role in the world. The global community was puzzled over the pictures of Obama bowing to some of the world's leaders and surprised by his gratuitous criticisms of and apologies for America's foreign policy under the previous administration of George W. Bush. One Middle East authority, Fouad Ajami, pointed out that Obama seems unaware that it is bad form and even a great moral lapse to speak ill of one's own tribe while in the lands of others.

Even in Britain, for decades our closest ally, the talk in the press—supported by polls—is about the end of the "special relationship" with America. French President Nicolas Sarkozy openly criticized Obama for months, including a direct attack on his policies at the United Nations. Sarkozy cited the need to recognize the real world, not the virtual world, a clear reference to Obama's speech on nuclear weapons. When the French president is seen as tougher than the American president, you have to know that something is awry. Vladimir Putin of Russia has publicly scorned a number of Obama's visions. Relations with the Chinese leadership got off to a bad start with the president's poorly-organized visit to China, where his hosts treated him disdainfully and prevented him from speaking to a national television audience of the Chinese people. The Chinese behavior was unprecedented when compared to visits by other U.S. presidents.

Obama's policy on Afghanistan—supporting a surge in troops, but setting a date next year when they will begin to withdraw—not only gave a mixed signal, but provided an incentive for the Taliban just to wait us out. The withdrawal part of the policy was meant to satisfy a domestic constituency, but succeeded in upsetting all of our allies in the region. Further anxiety was provoked by Obama's severe public criticism of Afghan President Hamid Karzai and his coterie of family and friends for their lackluster leadership, followed by a reversal of sorts regarding the same leaders.

Obama clearly wishes to do good and means well. But he is one of those people who believe that the world was born with the word and exists by means of persuasion, such that there is no person or country that you cannot, by means of logical and moral argument, bring around to your side. He speaks as a teacher, as someone imparting values and generalities appropriate for a Sunday morning sermon, not as a tough-minded leader. He urges that things "must be done" and "should be done" and that "it is time" to do them. As the former president of the Council on Foreign Relations, Les Gelb, put it, there is "the impression that Obama might confuse speeches with policy." Another journalist put it differently when he described Obama as an "NPR [National Public Radio] president who gives wonderful speeches." In other words, he talks the talk but doesn't know how to walk the walk. The Obama presidency has so far been characterized by a well-intentioned but excessive belief in the power of rhetoric with too little appreciation of reality and loyalty.

In his Cairo speech about America and the Muslim world, Obama managed to sway Arab public opinion but was unable to budge any Arab leader. Even the king of Saudi Arabia, a country that depends on America for its survival, reacted with disappointment and dismay. Obama's meeting with the king was widely described as a disaster. This is but one example of an absence of the personal chemistry that characterized the relationships that Presidents Clinton and Bush had with world leaders. This is a serious matter because foreign policy entails an understanding of the personal and political circumstances of the leaders as well as the cultural and historical factors of the countries we deal with.

1 2 3 Next Page >
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« Reply #778 on: June 23, 2010, 11:14:29 AM »

 Mort Zuckerman: World Sees Obama as Incompetent and Amateur
The president is well-intentioned but can't walk the walk on the world stage
By Mortimer B. Zuckerman
Posted June 18, 2010
President Obama came into office as the heir to a great foreign policy legacy enjoyed by every recent U.S. president. Why? Because the United States stands on top of the power ladder, not necessarily as the dominant power, but certainly as the leading one. As such we are the sole nation capable of exercising global leadership on a whole range of international issues from security, trade, and climate to counterterrorism. We also benefit from the fact that most countries distrust the United States far less than they distrust one another, so we uniquely have the power to build coalitions. As a result, most of the world still looks to Washington for help in their region and protection against potential regional threats.

 
Yet, the Iraq war lingers; Afghanistan continues to be immersed in an endless cycle of tribalism, corruption, and Islamist resurgence; Guantánamo remains open; Iran sees how North Korea toys with Obama and continues its programs to develop nuclear weapons and missiles; Cuba spurns America's offers of a greater opening; and the Palestinians and Israelis find that it is U.S. policy positions that defer serious negotiations, the direct opposite of what the Obama administration hoped for.

The reviews of Obama's performance have been disappointing. He has seemed uncomfortable in the role of leading other nations, and often seems to suggest there is nothing special about America's role in the world. The global community was puzzled over the pictures of Obama bowing to some of the world's leaders and surprised by his gratuitous criticisms of and apologies for America's foreign policy under the previous administration of George W. Bush. One Middle East authority, Fouad Ajami, pointed out that Obama seems unaware that it is bad form and even a great moral lapse to speak ill of one's own tribe while in the lands of others.

Even in Britain, for decades our closest ally, the talk in the press—supported by polls—is about the end of the "special relationship" with America. French President Nicolas Sarkozy openly criticized Obama for months, including a direct attack on his policies at the United Nations. Sarkozy cited the need to recognize the real world, not the virtual world, a clear reference to Obama's speech on nuclear weapons. When the French president is seen as tougher than the American president, you have to know that something is awry. Vladimir Putin of Russia has publicly scorned a number of Obama's visions. Relations with the Chinese leadership got off to a bad start with the president's poorly-organized visit to China, where his hosts treated him disdainfully and prevented him from speaking to a national television audience of the Chinese people. The Chinese behavior was unprecedented when compared to visits by other U.S. presidents.

Obama's policy on Afghanistan—supporting a surge in troops, but setting a date next year when they will begin to withdraw—not only gave a mixed signal, but provided an incentive for the Taliban just to wait us out. The withdrawal part of the policy was meant to satisfy a domestic constituency, but succeeded in upsetting all of our allies in the region. Further anxiety was provoked by Obama's severe public criticism of Afghan President Hamid Karzai and his coterie of family and friends for their lackluster leadership, followed by a reversal of sorts regarding the same leaders.

Obama clearly wishes to do good and means well. But he is one of those people who believe that the world was born with the word and exists by means of persuasion, such that there is no person or country that you cannot, by means of logical and moral argument, bring around to your side. He speaks as a teacher, as someone imparting values and generalities appropriate for a Sunday morning sermon, not as a tough-minded leader. He urges that things "must be done" and "should be done" and that "it is time" to do them. As the former president of the Council on Foreign Relations, Les Gelb, put it, there is "the impression that Obama might confuse speeches with policy." Another journalist put it differently when he described Obama as an "NPR [National Public Radio] president who gives wonderful speeches." In other words, he talks the talk but doesn't know how to walk the walk. The Obama presidency has so far been characterized by a well-intentioned but excessive belief in the power of rhetoric with too little appreciation of reality and loyalty.

In his Cairo speech about America and the Muslim world, Obama managed to sway Arab public opinion but was unable to budge any Arab leader. Even the king of Saudi Arabia, a country that depends on America for its survival, reacted with disappointment and dismay. Obama's meeting with the king was widely described as a disaster. This is but one example of an absence of the personal chemistry that characterized the relationships that Presidents Clinton and Bush had with world leaders. This is a serious matter because foreign policy entails an understanding of the personal and political circumstances of the leaders as well as the cultural and historical factors of the countries we deal with.

1 2 3 Next Page >
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« Reply #779 on: June 23, 2010, 11:19:06 AM »


part 3:
Mort Zuckerman: World Sees Obama as Incompetent and Amateur
The president is well-intentioned but can't walk the walk on the world stage
By Mortimer B. Zuckerman
Posted June 18, 2010
 
The United States for 60 years has met its responsibilities as the leader and the defender of the democracies of the free world. We have policed the sea lanes, protected the air and space domains, countered terrorism, responded to genocide, and been the bulwark against rogue states engaging in aggression. The world now senses, in the context of the erosion of America's economic power and the pressures of our budget deficits, that we will compress our commitments. But the world needs the vision, idealism, and strong leadership that America brings to international affairs. This can be done and must be done. But we are the only ones who can do it.

< Previous Page 1 2 3
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Crafty_Dog
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« Reply #780 on: June 24, 2010, 01:03:26 PM »

American Psychosis
What happens to a society that cannot distinguish between reality and illusion?

https://www.adbusters.org/magazine/90/hedges-american-psychosis.html

The United States, locked in the kind of twilight disconnect that grips dying empires, is a country entranced by illusions. It spends its emotional and intellectual energy on the trivial and the absurd. It is captivated by the hollow stagecraft of celebrity culture as the walls crumble. This celebrity culture giddily licenses a dark voyeurism into other people’s humiliation, pain, weakness and betrayal. Day after day, one lurid saga after another, whether it is Michael Jackson, Britney Spears or John Edwards, enthralls the country … despite bank collapses, wars, mounting poverty or the criminality of its financial class.

The virtues that sustain a nation-state and build community, from honesty to self-sacrifice to transparency to sharing, are ridiculed each night on television as rubes stupid enough to cling to this antiquated behavior are voted off reality shows. Fellow competitors for prize money and a chance for fleeting fame, cheered on by millions of viewers, elect to “disappear” the unwanted. In the final credits of the reality show America’s Next Top Model, a picture of the woman expelled during the episode vanishes from the group portrait on the screen. Those cast aside become, at least to the television audience, nonpersons. Celebrities that can no longer generate publicity, good or bad, vanish. Life, these shows persistently teach, is a brutal world of unadulterated competition and a constant quest for notoriety and attention.

Our culture of flagrant self-exaltation, hardwired in the American character, permits the humiliation of all those who oppose us. We believe, after all, that because we have the capacity to wage war we have a right to wage war. Those who lose deserve to be erased. Those who fail, those who are deemed ugly, ignorant or poor, should be belittled and mocked. Human beings are used and discarded like Styrofoam boxes that held junk food. And the numbers of superfluous human beings are swelling the unemployment offices, the prisons and the soup kitchens.

It is the cult of self that is killing the United States. This cult has within it the classic traits of psychopaths: superficial charm, grandiosity and self-importance; a need for constant stimulation; a penchant for lying, deception and manipulation; and the incapacity for remorse or guilt. Michael Jackson, from his phony marriages to the portraits of himself dressed as royalty to his insatiable hunger for new toys to his questionable relationships with young boys, had all these qualities. And this is also the ethic promoted by corporations. It is the ethic of unfettered capitalism. It is the misguided belief that personal style and personal advancement, mistaken for individualism, are the same as democratic equality. It is the nationwide celebration of image over substance, of illusion over truth. And it is why investment bankers blink in confusion when questioned about the morality of the billions in profits they made by selling worthless toxic assets to investors.

We have a right, in the cult of the self, to get whatever we desire. We can do anything, even belittle and destroy those around us, including our friends, to make money, to be happy and to become famous. Once fame and wealth are achieved, they become their own justification, their own morality. How one gets there is irrelevant. It is this perverted ethic that gave us investment houses like Goldman Sachs … that willfully trashed the global economy and stole money from tens of millions of small shareholders who had bought stock in these corporations for retirement or college. The heads of these corporations, like the winners on a reality television program who lied and manipulated others to succeed, walked away with hundreds of millions of dollars in bonuses and compensation. The ethic of Wall Street is the ethic of celebrity. It is fused into one bizarre, perverted belief system and it has banished the possibility of the country returning to a reality-based world or avoiding internal collapse. A society that cannot distinguish reality from illusion dies.

The tantalizing illusions offered by our consumer culture, however, are vanishing for most citizens as we head toward collapse. The ability of the corporate state to pacify the country by extending credit and providing cheap manufactured goods to the masses is gone. The jobs we are shedding are not coming back, as the White House economist Lawrence Summers tacitly acknowledges when he talks of a “jobless recovery.” The belief that democracy lies in the choice between competing brands and the accumulation of vast sums of personal wealth at the expense of others is exposed as a fraud. Freedom can no longer be conflated with the free market. The travails of the poor are rapidly becoming the travails of the middle class, especially as unemployment insurance runs out. And class warfare, once buried under the happy illusion that we were all going to enter an age of prosperity with unfettered capitalism, is returning with a vengeance.

America is sinking under trillions in debt it can never repay and stays afloat by frantically selling about $2 billion in Treasury bonds a day to the Chinese. It saw 2.8 million people lose their homes in 2009 to foreclosure or bank repossessions – nearly 8,000 people a day – and stands idle as they are joined by another 2.4 million people this year. It refuses to prosecute the Bush administration for obvious war crimes, including the use of torture, and sees no reason to dismantle Bush’s secrecy laws or restore habeas corpus. Its infrastructure is crumbling. Deficits are pushing individual states to bankruptcy and forcing the closure of everything from schools to parks. The wars in Iraq and Afghanistan, which have squandered trillions of dollars, appear endless. There are 50 million Americans in real poverty and tens of millions of Americans in a category called “near poverty.” One in eight Americans – and one in four children – depend on food stamps to eat. And yet, in the midst of it all, we continue to be a country consumed by happy talk and happy thoughts. We continue to embrace the illusion of inevitable progress, personal success and rising prosperity. Reality is not considered an impediment to desire.

When a culture lives within an illusion it perpetuates a state of permanent infantilism or childishness. As the gap widens between the illusion and reality, as we suddenly grasp that it is our home being foreclosed or our job that is not coming back, we react like children. We scream and yell for a savior, someone who promises us revenge, moral renewal and new glory. It is not a new story. A furious and sustained backlash by a betrayed and angry populace, one unprepared intellectually, emotionally and psychologically for collapse, will sweep aside the Democrats and most of the Republicans and will usher America into a new dark age. It was the economic collapse in Yugoslavia that gave us Slobodan Milosevic. It was the Weimar Republic that vomited up Adolf Hitler. And it was the breakdown in Tsarist Russia that opened the door for Lenin and the Bolsheviks. A cabal of proto-fascist misfits, from Christian demagogues to loudmouth talk show hosts, whom we naïvely dismiss as buffoons, will find a following with promises of revenge and moral renewal. And as in all totalitarian societies, those who do not pay fealty to the illusions imposed by the state become the outcasts, the persecuted.

The decline of American empire began long before the current economic meltdown or the wars in Afghanistan and Iraq. It began before the first Gulf War or Ronald Reagan. It began when we shifted, in the words of Harvard historian Charles Maier, from an “empire of production” to an “empire of consumption.” By the end of the Vietnam War, when the costs of the war ate away at Lyndon Johnson’s Great Society and domestic oil production began its steady, inexorable decline, we saw our country transformed from one that primarily produced to one that primarily consumed. We started borrowing to maintain a level of consumption as well as an empire we could no longer afford. We began to use force, especially in the Middle East, to feed our insatiable thirst for cheap oil. We substituted the illusion of growth and prosperity for real growth and prosperity. The bill is now due. America’s most dangerous enemies are not Islamic radicals but those who sold us the perverted ideology of free-market capitalism and globalization. They have dynamited the very foundations of our society. In the 17th century these speculators would have been hung. Today they run the government and consume billions in taxpayer subsidies.

As the pressure mounts, as the despair and desperation reach into larger and larger segments of the populace, the mechanisms of corporate and government control are being bolstered to prevent civil unrest and instability. The emergence of the corporate state always means the emergence of the security state. This is why the Bush White House pushed through the Patriot Act (and its renewal), the suspension of habeas corpus, the practice of “extraordinary rendition,” warrantless wiretapping on American citizens and the refusal to ensure free and fair elections with verifiable ballot-counting. The motive behind these measures is not to fight terrorism or to bolster national security. It is to seize and maintain internal control. It is about controlling us.

And yet, even in the face of catastrophe, mass culture continues to assure us that if we close our eyes, if we visualize what we want, if we have faith in ourselves, if we tell God that we believe in miracles, if we tap into our inner strength, if we grasp that we are truly exceptional, if we focus on happiness, our lives will be harmonious and complete. This cultural retreat into illusion, whether peddled by positive psychologists, by Hollywood or by Christian preachers, is magical thinking. It turns worthless mortgages and debt into wealth. It turns the destruction of our manufacturing base into an opportunity for growth. It turns alienation and anxiety into a cheerful conformity. It turns a nation that wages illegal wars and administers offshore penal colonies where it openly practices torture into the greatest democracy on earth. And it keeps us from fighting back.

Resistance movements will have to look now at the long night of slavery, the decades of oppression in the Soviet Union and the curse of fascism for models. The goal will no longer be the possibility of reforming the system but of protecting truth, civility and culture from mass contamination. It will require the kind of schizophrenic lifestyle that characterizes all totalitarian societies. Our private and public demeanors will often have to stand in stark contrast. Acts of defiance will often be subtle and nuanced. They will be carried out not for short term gain but the assertion of our integrity. Rebellion will have an ultimate if not easily definable purpose. The more we retreat from the culture at large the more room we will have to carve out lives of meaning, the more we will be able to wall off the flood of illusions disseminated by mass culture and the more we will retain sanity in an insane world. The goal will become the ability to endure.

Chris Hedges, a Pulitzer Prize-winning reporter for the New York Times, is the author of several books including the best sellers War Is a Force That Gives Us Meaning and Empire of Illusion: The End of Literacy and the Triumph of Spectacle.
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« Reply #781 on: June 25, 2010, 03:52:15 PM »

Please post it on the Pathological Science thread on SCH forum, or on Legal Issues.  Thank you.
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« Reply #782 on: June 25, 2010, 08:41:41 PM »

I was torn between path. science or rants, I chose rants for the nanny state aspect.  It is now in path. science.
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« Reply #783 on: June 26, 2010, 01:58:56 AM »

No worries; thank you.
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« Reply #784 on: June 29, 2010, 01:18:33 PM »



http://www.daybydaycartoon.com/2010/06/27/
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« Reply #785 on: June 30, 2010, 05:10:14 AM »

oooohhh! evil  That is a stinging rejoinder if I ever heard one.
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« Reply #786 on: July 04, 2010, 09:53:53 AM »

A Perfect Storm of Ignorance

by Jeffrey Friedman

Jeffrey Friedman is the editor of Critical Review and of Causes of the
Financial Crisis, forthcoming from the University of Pennsylvania Press.

You are familiar by now with the role of the Federal Reserve in stimulating
the housing boom; the role of Fannie Mae and Freddie Mac in encouraging
low-equity mortgages; and the role of the Community Reinvestment Act in
mandating loans to "subprime" borrowers, meaning those who were poor credit
risks. So you may think that the government caused the financial crisis. But
you don't know the half of it. And neither does the government.

A full understanding of the crisis has to explain not just the housing and
subprime bubbles, but why, when they popped, it should have had such
disastrous worldwide effects on the financial system. The problem was that
commercial banks had made a huge overinvestment in mortgage-backed bonds
sold by investment banks such as Lehman Brothers.

Commercial banks are familiar to everyone with a checking or savings
account. They accept our deposits, against which they issue commercial loans
and mortgages. In 1933, the United States created the FDIC to insure
commercial banks' depositors. The aim was to discourage bank runs by
depositors who worried that if their bank had made too many risky loans,
their accounts, too, might be at risk.

The question of whether deposit insurance was necessary is worth asking, and
I will ask it later on. But for now, the key fact is that once deposit
insurance took effect, the FDIC feared that it had created what economists
call a "moral hazard": bankers, now insulated from bank runs, might be
encouraged to make riskier loans than before. The moral-hazard theory took
hold not only in the United States but in all of the countries in which
deposit insurance was instituted. And both here and abroad, the regulators'
solution to this (real or imagined) problem was to institute bank-capital
regulations. According to an array of scholars from around the world — Viral
Acharya, Juliusz Jablecki, Wladimir Kraus, Mateusz Machaj, and Matthew
Richardson — these regulations helped turn an American housing crisis into
the world's worst recession in 70 years.

WHAT REALLY WENT WRONG

The moral-hazard theory held that since the FDIC would now pick up the
pieces if anything went wrong, bankers left to their own devices would make
clearly risky loans and investments. The regulators' solution, across the
entire developed world, was to require banks to hold a minimum capital
cushion against a commercial bank's assets (loans and investments), but the
precise level of the capital reserve, and other details, varied from country
to country.

In 1988, financial regulators from the G-10 agreed on the Basel (I) Accords.
Basel I was an attempt to standardize the world's bank-capital regulations,
and it succeeded, spreading far beyond the G-10 countries. It differentiated
among the risks presented by different types of assets. For instance, a
commercial bank did not have to devote any capital to its holdings of
government bonds, cash, or gold — the safest assets, in the regulators'
judgment. But it had to allot 4 percent capital to each mortgage that it
issued, and 8 percent to commercial loans and corporate bonds.

Each country implemented Basel I on its own schedule and with its own
quirks. The United States implemented it in 1991, with several different
capital cushions; a 10 percent cushion was required for "well-capitalized"
commercial banks, a designation that carries privileges that most banks
want. Ten years later, however, came what proved in retrospect to be the
pivotal event. The FDIC, the Fed, the Comptroller of the Currency, and the
Office of Thrift Supervision issued an amendment to Basel I, the Recourse
Rule, that extended the accord's risk differentiations to asset-backed
securities (ABS): bonds backed by credit card debt, or car loans — or
mortgages — required a mere 2 percent capital cushion, as long as these
bonds were rated AA or AAA or were issued by a government-sponsored
enterprise (GSE), such as Fannie or Freddie. Thus, where a well-capitalized
commercial bank needed to devote $10 of capital to $100 worth of commercial
loans or corporate bonds, or $5 to $100 worth of mortgages, it needed to
spend only $2 of capital on a mortgage-backed security (MBS) worth $100. A
bank interested in reducing its capital cushion — also known as "leveraging
up" — would gain a 60 percent benefit from trading its mortgages for MBSs
and an 80 percent benefit for trading its commercial loans and corporate
securities for MBSs.

Astute readers will smell a connection between the Recourse Rule and the
financial crisis. By 2008 approximately 81 percent of all the rated MBSs
held by American commercial banks were rated AAA, and 93 percent of all the
MBSs that the banks held were either triple-A rated or were issued by a GSE,
thus complying with the Recourse Rule. (Figures for the proportion of
double-A bonds are not yet available.) According to the scholars I mentioned
earlier, the lesson is clear: the commercial banks loaded up on MBSs because
of the extremely favorable treatment that they received under the Recourse
Rule, as long as they were issued by a GSE or were rated AA or AAA.

When subprime mortgages began to default in the summer of 2007, however,
those high ratings were cast into doubt. A year later, the doubts turned
into a panic. Federally mandated mark-to-market accounting — the requirement
that assets be valued at the price for which they could be sold right now —
translated temporary market sentiment into actual numbers on a bank's
balance sheet, so when the market for MBSs dried up, Lehman Brothers went
bankrupt — on paper. Mark-to-market accounting applied to commercial banks
too. And it was the commercial banks' worry about their own and their
counterparties' solvency, due to their MBS holdings, that caused the lending
freeze and, thus, the Great Recession.

What about the rest of the world? The Recourse Rule did not apply to
countries other than the United States, but Basel I included provisions for
even more profitable forms of "capital arbitrage" through off-balance-sheet
entities such as structured investment vehicles, which were heavily used in
Europe. Then, in 2006, Basel II began to be implemented outside the United
States. It took the Recourse Rule's approach, encouraging foreign banks to
stock up on GSE-issued or highly rated MBSs.

THE PERFECT STORM?

Given the large number of contributory factors — the Fed's low interest
rates, the Community Reinvestment Act, Fannie and Freddie's actions, Basel
I, the Recourse Rule, and Basel II — it has been said that the financial
crisis was a perfect storm of regulatory error. But the factors I have just
named do not even begin to complete the list. First, Peter Wallison has
noted the prevalence of "no-recourse" laws in many states, which relieved
mortgagors of financial liability if they simply walked away from a house on
which they defaulted. This reassured people in financial straits that they
could take on a possibly unaffordable mortgage with virtually no risk.
Second, Richard Rahn has pointed out that the tax code discourages
partnerships in banking (and other industries). Partnerships encourage
prudence because each partner has a lot at stake if the firm goes under.
Rahn's point has wider implications, for scholars such as Amar Bhidé and
Jonathan Macey have underscored aspects of tax and securities law that
encourage publicly held corporations such as commercial banks — as opposed
to partnerships or other privately held companies — to encourage their
employees to generate the short-term profits adored by equities investors.
One way to generate short-term profits is to buy into an asset bubble.
Third, the Basel Accords treat monies set aside against unexpected loan
losses as part of banks' "Tier 2" capital, which is capped in relation to
"Tier 1" capital — equity capital raised by selling shares of stock. But
Bert Ely has shown in the Cato Journal that the tax code makes equity
capital unnecessarily expensive. Thus banks are doubly discouraged from
maintaining the capital cushion that the Basel Accords are trying to make
them maintain. This litany is not exhaustive. It is meant

only to convey the welter of regulations that have grown up across different
parts of the economy in such immense profusion that nobody can possibly
predict how they will interact with each other. We are, all of us, ignorant
of the vast bulk of what the government is doing for us, and what those
actions might be doing to us. That is the best explanation for how this
perfect regulatory storm happened, and for why it might well happen again.

By steering banks' leverage into mortgage-backed securities, Basel I, the
Recourse Rule, and Basel II encouraged banks to overinvest in housing at a
time when an unprecedented nationwide housing bubble was getting underway,
due in part to the Recourse Rule itself — which took effect on January 1,
2002: not coincidentally, just at the start of the housing boom. The Rule
created a huge artificial demand for mortgage-backed bonds, each of which
required thousands of mortgages as collateral. Commercial banks duly met
this demand by lowering their lending standards. When many of the same banks
traded their mortgages for mortgage-backed bonds to gain "capital relief,"
they thought they were offloading the riskiest mortgages by buying only
triple-A-rated slices of the resulting mortgage pools. The bankers appear to
have been ignorant of yet another obscure regulation: a 1975 amendment to
the SEC's Net Capital Rule, which turned the three existing rating
companies — S&P, Moody's, and Fitch — into a legally protected oligopoly.
The bankers' ignorance is suggested by e-mails unearthed during the recent
trial of Ralph Cioffi and Matthew Tannin, who ran the two Bear Stearns hedge
funds that invested heavily in highly rated subprime mortgage-backed bonds.
The e-mails show that Tannin was a true believer in the soundness of those
ratings; he and his partner were exonerated by the jury on the grounds that
the two men were as surprised by the catastrophe as everyone else was. Like
everyone else, they trusted S&P, Moody's, and Fitch. But as we would expect
of corporations shielded from market competition, these three "rating
agencies" had gotten sloppy. Moody's did not update its model of the
residential mortgage market after 2002, when the boom was barely underway.
And Moody's model, like those of its "competitors," determined how large
they could make the AA and AAA slices of mortgage-backed securities.

THE REGULATORS' IGNORANCE OF THE REGULATIONS

The regulators seem to have been as ignorant of the implications of the
relevant regulations as the bankers were. The SEC trusted the three rating
agencies to continue their reliable performance even after its own 1975
ruling protected them from the market competition that had made their
ratings reliable. Nearly everyone, from Alan Greenspan and Ben Bernanke on
down, seemed to be ignorant of the various regulations that were pumping up
house prices and pushing down lending standards. And the FDIC, the Fed, the
Comptroller of the Currency, and the Office of Thrift Supervision, in
promulgating one of those regulations, trusted the three rating companies
when they decided that these companies' AA and AAA ratings would be the
basis of the immense capital relief that the Recourse Rule conferred on
investment-bank-issued mortgage-backed securities. Did the four regulatory
bodies that issued the Recourse Rule know that the rating agencies on which
they were placing such heavy reliance were an SEC-created oligopoly, with
all that this implies? If you read the Recourse Rule, you will find that the
answer is no. Like the Bank for International Settlements (BIS), which later
studied whether to extend this American innovation to the rest of the world
in the form of Basel II (which it did, in 2006), the Recourse Rule wrongly
says that the rating agencies are subject to "market discipline."

Those who play the blame game can find plenty of targets here: the bankers
and the regulators were equally clueless. But should anyone be blamed for
not recognizing the implications of regulations that they don't even know
exist?

Omniscience cannot be expected of human beings. One really would have had to
be a god to master the millions of pages in the Federal Register — not to
mention the pages of the Register's state, local, and now international
counterparts — so one could pick out the specific group of regulations,
issued in different fields over the course of decades, that would end up
conspiring to create the greatest banking crisis since the Great Depression.
This storm may have been perfect, therefore, but it may not prove to be
rare. New regulations are bound to interact unexpectedly with old ones if
the regulators, being human, are ignorant of the old ones and of their
effects.

This is already happening. The SEC's response to the crisis has not been to
repeal its 1975 regulation, but to promise closer regulation of the rating
agencies. And instead of repealing Basel I or Basel II, the BIS is busily
working on Basel III, which will even more finely tune capital requirements
and, of course, increase capital cushions. Yet despite the barriers to
equity capital and loan-loss reserves created by the conjunction of the IRS
and the Basel Accords, the aggregate capital cushion of all American banks
at the start of 2008 stood at 13 percent — one-third higher than the
American minimum, which in turn was one-fifth higher than the Basel minimum.
Contrary to the regulators' assumption that bankers need regulators to
protect them from their own recklessness, the financial crisis was not
caused by too much bank leverage but by the form it took: mortgage-backed
securities. And that was the direct result of the fine tuning done by the
Recourse Rule and Basel II.

HOW DID WE GET INTO THIS MESS?

The financial crisis was a convulsion in the corpulent body of social
democracy. "Social democracy" is the modern mandate that government solve
social problems as they arise. Its body is the mass of laws that grow up
over time — seemingly in inverse proportion to the ability of its brain to
comprehend the causes of the underlying problems.

When voters demand "action," and when legislators and regulators provide it,
they are all naturally proceeding according to some theory of the cause of
the problem they are trying to solve. If their theories are mistaken, the
regulations may produce unintended consequences that, later on, in
principle, could be recognized as mistakes and rectified. In practice,
however, regulations are rarely repealed. Whatever made a mistaken
regulation seem sensible to begin with will probably blind people to its
unintended effects later on. Thus future regulators will tend to assume that
the problem with which they are grappling is a new "excess of capitalism,"
not an unintended consequence of an old mistake in the regulation of
capitalism.

Take bank-capital regulations. The theory was (and remains) that without
them, bankers protected by deposit insurance would make wild, speculative
investments. So deposit insurance begat bank-capital regulations. Initially
these were blunderbuss rules that required banks to spend the same levels of
capital on all their investments and loans, regardless of risk. In 1988 the
Basel Accords took a more discriminating approach, distinguishing among
different categories of asset according to their riskiness — riskiness as
perceived by the regulators. The American regulators decided in 2001 that
mortgage-backed bonds were among the least risky assets, so they required
much lower levels of capital for these securities than for every alternative
investment but Treasury's. And in 2006, Basel II applied that erroneous
judgment to the capital regulations governing most of the rest of the
world's banks. The whole sequence leading to the financial crisis began, in
1933, with deposit insurance. But was deposit insurance really necessary?

The theory behind deposit insurance was (and remains) that banking is
inherently prone to bank runs, which had been common in 19th-century America
and had swept the country at the start of the Depression.

But that theory is wrong, according to such economic historians as Kevin
Dowd, George Selgin, and Kurt Schuler, who argue that bank panics were
almost uniquely American events (there were none in Canada during the
Depression — and Canada didn't have deposit insurance until 1967). According
to these scholars, bank runs were caused by 19th-century regulations that
impeded branch banking and bank "clearinghouses." Thus, deposit insurance,
hence capital minima, hence the Basel rules, might all have been a mistake
founded on the New Deal legislators' and regulators' ignorance of the fact
that panics like the ones that had just gripped America were the unintended
effects of previous regulations.

What I am calling social democracy is, in its form, very different from
socialism. Under social democracy, laws and regulations are issued
piecemeal, as flexible responses to the side effects of progress — social
and economic problems — as they arise, one by one. (Thus the official name:
progressivism.) The case-by-case approach is supposed to be the height of
pragmatism. But in substance, there is a striking similarity between social
democracy and the most utopian socialism. Whether through piecemeal
regulation or central planning, both systems share the conceit that modern
societies are so legible that the causes of their problems yield easily to
inspection. Social democracy rests on the premise that when something goes
wrong, somebody — whether the voter, the legislator, or the specialist
regulator — will know what to do about it. This is less ambitious than the
premise that central planners will know what to do about everything all at
once, but it is no different in principle.

This premise would be questionable enough even if we started with a blank
legal slate. But we don't. And there is no conceivable way that we, the
people — or our agents in government — can know how to solve the problems of
modern societies when our efforts have, in fact, been preceded by
generations of previous efforts that have littered the ground with a tangle
of rules so thick that we can't possibly know what they all say, let alone
how they might interact to create another perfect storm.

This article originally appeared in the January/February 2010 edition of
Cato Policy Report.

http://www.cato.org/pubs/policy_report/v32n1/cpr32n1-1.html
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Rarick
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« Reply #787 on: July 04, 2010, 10:14:24 AM »

Ohhh, wow.  This would be a wonderful something to put in editorials for why the "small government is better" crowd are not a bunch of kooks.  A bunch of agencies working to do their job created a nice mess. and congress guided by lobbiest "experts" also created inintended consequences?  Heck, this would make the bailout an even more heinous action in many eyes, rewarding banks for their short term greed in light of the regulatory environment, while still not helping out people that might otherwise of managed to "do the right thing" and stay in their house and pay of the mortgage.  I am sure there are a lot of people out there who might have needed a small amount of engouragement that way, but given the refusal of the banks to help figure things out due to the bail out terms.........

I suspect that the repeal of the old Savings and Loan regulations back in the late 80's contributed to this, at least in severity, too. 
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Body-by-Guinness
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« Reply #788 on: July 05, 2010, 04:18:02 PM »

A dour piece. . . .

The New Civil Wars Within the West
      
Written by Gregory R. Copley     
Sunday, 04 July 2010 17:41

Internecine civil wars are underway almost everywhere within the West, and most virulently in the United States of America. They are not yet kinetic wars, but wars of grinding prepositioning, the kind which lead to foregone conclusions without a shot being fired. They are wars of survival, nonetheless, because the basic architecture for national strength is being altered incrementally or dramatically. And, in many cases, consciously.

Almost all of the strategic restructuring of states is occurring in large part as a result of an accumulation of wealth; an accumulation and value of which is seen as permanent. This has resulted in the hubris — expressed by those who did not earn it — of triumph in the Cold War. This is a Western phenomenon because the widespread growth of wealth, the creation of freedoms classically associated with democracy, resulted — as it must inevitably result — in complacencies which in turn led to a “vote too far”: the extension of the democratic franchise to those who do not help in the creation of wealth.

Once the voting franchise of the West reached the point where those who sought benefits outweighed those who created benefits, the tipping point was reached. The situation of de facto “class warfare” thus emerges automatically under such circumstances, and the envy of those who take against those who provide erupts into “rights” and “entitlement”.  By deifying “democracy” above justice, the enfranchised non-producers could always outvote the producers.  We are at this point.  The result can only be collapse, or restructuring around a Cæsar or a Bonaparte until, eventually, a productive hierarchy reappears, usually after considerable pain.

The United States of America

Virtually every conscious step of the Administration of Pres. Barack Obama and the overwhelming Democratic Party majority in Congress has been to increase the size and role of government in the economy and society, and to decrease, limit, and control the position of private enterprise and capital formation.  Given that this progressively contracts and ultimately eliminates production, and reduces the inherent asset base of the country — its raw materials and productive intellect — to a null value, the tradable value of the US currency will inevitably decline. We cannot be swayed by the enormous wealth of the North American continent.  Almost all areas have an inherent wealth of some kind, but assets left idle in the ground or infertile in the brain define countries which fail, or are not victorious in their quest for unbridled sovereignty.

Thus, a decline in currency value is exacerbated, or accelerated, by the increasing supply of money, inextricably depreciating its value, particularly at a time of decreasing productivity in vital perishable and non-perishable output.

The US Obama Administration has focused entirely on an agenda of expanding government — the seizure of the envied (and often ephemeral) “wealth” of the producers — without addressing the process of facilitating the production of essential commodities and goods.  Even the USSR and the People’s Republic of China, during their communist periods, focused — albeit badly — on the production of goods and services, when they realized that the “wealth” to be “redistributed” existed only as the result of production and innovation.  The US, meanwhile, heavily as a result of policies of the former Clinton Administration, has “outsourced” production, and the State — that is, the Government — cannot easily, in the US, become the producer.

Pres. Obama has addressed the US’ economic crisis by expanding government, and government-related, employment in non-productive sectors, while at the same time blaming and punishing the private sector for all of the US’ ills.  Empowered by the extended franchise, this was the politics of envy now becoming enabled.

Moreover, the populist, short-term response to the major oil-spill in the Gulf of Mexico was clearly geared toward (a) transforming a crisis into an opportunity to pursue a green energy agenda by highlighting the evils of the fossil fuels on which the US remains dependent; (b) ensuring that the President was not blamed for the poor crisis response; and (c) ensuring that the Democratic Party did not suffer from the crisis in the November 2010 mid-term Congressional elections.

The result of all the Obama initiatives has been to expand government and reduce or absolutely control and tax the private sector, even though, without the private sector, the US has no viable export or self-sustaining capability. The net effect has been to mirror — and overtake — the situation in which, for example, Germany found itself a decade ago: without the ability to retain capital investment or attract new capital investment.

And in order to restrain capital flight from the US, the Obama Administration seeks to further control worldwide earnings of US corporations and citizens. For other reasons, the US, believing that it still dominates the technology arena, has imposed greater and greater restrictions on international exports of technology through its ITAR (International Traffic in Arms Regulations) and the Foreign Corrupt Practices Act.

All of this conspires to limit investment in US manufacturing and restrict foreign interest in US exports because the regulations are being enforced merely for political punitive reasons. The US is making itself increasingly unappealing to foreign investors and has, as this writer has noted, made the appeal of the US dollar as the global reserve currency evaporate, saved, for the moment, only by the lack of a ready alternative. That situation will change within a very few years.

Thus, the US has, in the space of a couple of years: (i) so dramatically inflated money supply that the value of the dollar is only shored up by the lack of international alternative currencies to act as reserve trading currencies; (ii) so dramatically inflated public debt, without stimulating economic growth, that US economic performance will continue to decline on a national and a per capita basis while competitive economies, such as the PRC and Russia, will grow, reducing strategic differentials; (iii) severely punished the private sector, thereby reducing the opportunities and incentives for strategic capital formation, and in particular punishing the industrial production and energy sectors, almost ensuring major dislocation to the delivery of US basic needs in the near-term; and (iv) so blatantly reduced its strategic capabilities through all of these actions and in its diplomatic and military posture as to guarantee a reduction in US strategic credibility. Concurrent with all of this is an increasingly punitive taxation framework.

The near-term impact will include rising domestic energy prices, possibly even before the November 2010 mid-term Congressional elections, which could result in the Democratic Party losing its substantial majority in both Houses.  Even on this matter, Democratic Party ideologues have attempted to suggest that this is exactly what the country needs: expensive energy in order to facilitate change to “green” solutions. This defies the historical reality that pre-eminent powers must always have vast energy surpluses and use.

So much damage has been done to the US strategic posture in just two years (although building on a base of inefficiencies which have been growing since the end of the Cold War), in many respects equal to the 1917 Russian Revolution (but without the bloodshed), that it is difficult to forecast whether — because of a changing global environment — the US can, within a decade or two, recover its strategic authority and leadership.

Domestically, the massively statist and interventionist approaches of the Obama Administration have polarized the country, and the response will be reactive rather than innovative, inducing a period of isolation and nationalism, but with grave difficulty in rebuilding confidence from the international investment community.

Europe

Artificial, wealth-induced complacency following the end of the Cold War led to fury when economic collapse inevitably occurred in 2010, leading to draconian restraint in public spending in many societies, but particularly Greece and Spain. It is said that tourists are warned not to feed bears in Yellowstone National Park (in the US) because the bears do not understand when the tourists have run out of food. State-fed populations in Europe, the US, and Australia (see below) equally do not understand when the free ride is over, and work must recommence.

Germany, France, and the United Kingdom have begun the arduous path back to recovery, but the euro may, as a currency, have been irrevocably damaged, and the European Union itself may have spent the term of its virility. Clearly, the wealth-induced complacency, which had the compounding effect of allowing a decline in a sense of national survival and national identity among the European Union (EU) component states, has led now to a revived — but as yet unrealized — sense of nationalism.

This is beginning to lead to the recognition of the cohesive national efficiency required for survival and competitiveness. It can be said that the EU destroyed nationalism, without replacing it with any mechanism to create a new sense of social cohesion, thus removing Europe’s capability for economic competitiveness, self-defense, or ability to define a new culture (and identity) to replace the national identities.

Had the British Labour Party Government of outgoing Prime Minister Gordon Brown persisted in office with his slavishly doctrinaire governance — and demonstrably unworkable socialism, led by a privileged élite of Labour mandarins wallowing at the trough — it is possible that an economic recovery in the UK would have been problematic. It may still be problematic. And in this, Brown was a prototype Obama, with his rank sense of entitlement.

Even now, the British political psyche is fractured along geographic lines, and, wealth-induced, considers itself effectively “post-industrial”, and therefore beyond the need for a manufacturing (or even agricultural base). Thus, even though the UK is now far more dependent on a maritime trade base than at any time in its history, it is incapable of defending or projecting that maritime base; neither does it have the wherewithal to trade.

Australia

The Australian Government has — like the Obama Administration in the US and the Brown Administration in the UK — demonstrated its absolute lack of experience in management, economics, or real-life work skills. A decision by Prime Minister Kevin Rudd to impose a new “super tax” of some 40 percent on resource companies — miners, who produce most of Australia’s export wealth — suddenly highlighted the reality that the mining companies did not need to put their investment into Australian projects.

This “tax and spend” approach so damaged Prime Minister Rudd’s popularity in the run-up to a November 2010 election, that his deputy Prime Minister, Julia Gillard, an extreme left-wing feminist, mounted a rapid campaign within the ruling Labor Party to overthrow him.  But apart from some temporary back-peddling on the Resources Super Profits Tax until the next election is out of the way, don’t expect incoming Prime Minister Gillard — the first Australian female head-of-government and the most left-wing ever — to back off her punitive stance against the private sector.

The Australian Government’s punitive tax approach, initiated by Rudd but likely to continue for as long as Labor governs, also highlighted the fact that foreign investors did not need to invest in Australia, and that capital could move — as it always does — away from draconian tax regimes.  As Chilean Mines Minister Laurence Goldborne said in June 2010, “Just because you have resources doesn’t guarantee investment.” This is something which the governments of most African states know.

In Australia, the realization of the over-reaching greed — and envy-inspired approach of the proposed new tax laws — in turn led much of the ruling Australian Labor Party (ALP) and the profoundly leftist Australian media to begin their drift away from Rudd, leaving him with the prospect that he could either be abandoned as party leader before the late-2010 general elections, or be faced with the prospect of becoming Australia’s first one-term Prime Minister.

Gillard’s unbridled ambition also saw to that. The question remains as to whether she will be able to win the November 2010 general election. A more important question remains, however, as to whether the markets will still be there when the ruin of trust in Australian export and investment reliability is addressed by a future government. The People’s Republic of China (PRC), Australia’s major export client state, and Russia are now developing vast iron ore reserves on their mutual border, possibly — in the near future — obviating the need for much of what Australia exports.

In the meantime, both Kevin Rudd and the opposition Liberal Party have essentially embraced the move by Australia to see itself as a pseudo-post-industrial society, gradually eroding the independent and innovative manufacturing sector which had been a hallmark of Australian economic growth.  A pseudo-post-industrial society is one which believes that it can live solely on the intrinsic value of its currency, without the necessity to sustain a balanced agricultural and industrial base to preserve sovereign independence. A true post-industrial society — something thus far a utopian dream — can produce all of its food and goods with a minute fraction of its population, which would largely be left to address intellectual pursuits.

Australia, thus, faces a major challenge to its comfort, wealth, and security when value perceptions, investment, and clients evaporate. We see, then, in the very deliberate acts of envy and entitlement politics, the seeds of national collapse in Australia, the US, and Western Europe.

Conclusions

Some of the Western powers have slumped before, and recovered. The United States has yet to demonstrate this resilience.  Other Western societies have slumped, and have yet been protected by a strong regional system so that their societies could prosper under foreign protection.  The Netherlands, Spain, and Portugal, for example, retained stable and individual prosperous societies and yet never recovered their strategic leadership, relying, instead, on the power of their region for economic and security protection.  States which remain dependent on others for their protection never fully regain their wealth and freedom.

States such as New Zealand depend on their greater neighbors for protection.  But wither New Zealand if Australia fails?  Wither the Netherlands today if the European Union fails?  And wither the United States if its fortunes erode? Re-birth is, as Britain has found through history, as did Rome, more arduous than that first, pure flush of strategic victory.

The West is at its watershed, not because of a threat from a less-productive society. The collapse of the West is not because Islam is at the gates. Islam is at the gates because of the collapse of the West.

Analysis. By Gregory R. Copley, Editor, GIS/Defense & Foreign Affairs.

http://oilprice.com/Geo-Politics/International/The-New-Civil-Wars-Within-the-West.html
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G M
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« Reply #789 on: July 05, 2010, 04:25:18 PM »

Very well said.
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ccp
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« Reply #790 on: July 09, 2010, 10:22:05 AM »

1)  big vs little government
2)  class warfare (distribute wealth)
3)  race/cultural warfare (get even white Europeans)

But not only in the domestic context but Bamster has elevated it to a global context.

It is astonishing to see a DOJ so obviously reverse-racist and the MSM literally supporting them.

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Crafty_Dog
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« Reply #791 on: July 13, 2010, 10:33:30 PM »

http://www.newstatesman.com/ideas/2010/07/debt-system-mother-black

 

Beware those Black Swans
Nassim Nicholas Taleb

Published 05 July 2010

The bestselling economist Nassim Nicholas Taleb argues that we can’t make the world financial system immune to shocks –– but we can make sure it’s much more robust by building randomness into our planning.



After completing my book The Black Swan, I spent some time meditating on the fragility of systems with the illusion of stability. This convinced me that the banking system was the mother of all accidents waiting to happen. I explained in the book that the best teachers of wisdom are the eldest, because they may have picked up invisible tricks that are absent from our epistemic routines and which help them survive in a world more complex than the one we think we understand. So being old implies a higher degree of resistance to "Black Swans" (events with the following three attributes: they lie outside the realm of regular expectations; they carry an extreme impact; and human nature makes us concoct explanations for their occurrence after the fact).

Take Mother Nature, which is clearly a complex system, with webs of interdependence, non-linearities and a robust ecology (otherwise it would have blown up a long time ago). It is a very old person with an impeccable memory. Mother Nature does not develop Alz­heimer's - and there is evidence that even humans would not easily lose brain functions with age if they took long walks, avoided sugar, bread, white rice and stock-market investments, and refrained from taking economics classes or reading the New York Times.

Let me summarise my ideas of how Mother Nature deals with the Black Swan. First, she likes redundancies. Look at the human body. We have two eyes, two lungs, two kidneys, even two brains (with the possible exception of company executives) - and each has more capacity than is needed ordinarily. So redundan­cy equals insurance, and the apparent inefficiencies are associated with the costs of maintain­ing these spare parts and the energy needed to keep them around in spite of their idleness.

The exact opposite of redundancy is naive optimisation. The reason I tell people to avoid attending an (orthodox) economics class and argue that economics will fail us is the following: economics is largely based on notions of naive optimisation, mathematised (poorly) by Paul Samuelson - and these mathematics have contributed massively to the construction of an error-prone society. An economist would find it inefficient to carry two lungs and two kidneys - consider the costs involved in transporting these heavy items across the savannah. Such optimisation would, eventually, kill you, after the first accident, the first "outlier". Also, consider that if we gave Mother Nature to economists, it would dispense with individual kidneys - since we do not need them all the time, it would be more "efficient" if we sold ours and used a central kidney on a time-share basis. You could also lend your eyes at night, since you do not need them to dream.

Almost every major idea in conventional economics fails under the modification of some assumption, or what is called "perturbation", where you change one parameter or take a parameter henceforth assumed to be fixed and stable by the theory, and make it random. Take the notion of comparative advantage, supposedly discovered by David Ricardo, and which has oiled the wheels of globalisation. The idea is that countries should focus on "what they do best". So one country should specialise in wine, another in clothes, even though one of them might be better at both. But consider what would happen to the country if the price of wine fluctuated. A simple perturbation around this assumption leads one to reach the opposite conclusion to Ricardo. Mother Nature does not like overspecialisation, as it limits evolution and weakens the animals.

This explains why I found the current ideas on globalisation (such as those promoted by the journalist Thomas Friedman) too naive, and too dangerous for society - unless one takes into account the side effects. Globalisation might give the appearance of efficiency, but the operating leverage and the degrees of interaction between parts will cause small cracks in one spot to percolate through the entire system.

The debt taboo
The same idea applies to debt: it makes you very fragile under perturbations. We currently learn in business schools to engage in borrowing, against all historical traditions (all Mediterranean cultures developed over time a dogma against debt). "Felix qui nihil debet", goes the Roman proverb: "Happy is he who owes nothing." Grandmothers who survived the Great Depression would have advised doing the exact opposite of getting into debt: have several years of income in cash before any personal risk-taking. Had the banks done the same, and kept high cash reserves while taking more aggressive risks with a smaller portion of their port­folios, there would have been no crisis.

Documents dating back to the Babylonians show the ills of debt, and Near Eastern religions banned it. This tells me that one of the purposes of religious traditions has been to enforce prohibitions to protect people against their own epistemic arrogance. Why? Debt implies a strong statement about the future, and a high degree of reliance on forecasts. If you borrow $100 and invest in a project, you still owe $100 even if you fail in the project (but you do a lot better in case you succeed). So debt is dangerous if you are overconfident about the future and are Black Swan-blind - which we all tend to be. And forecasting is harmful since people (especially governments) borrow in response to a forecast (or use the forecast as a cognitive excuse to borrow). My "Scandal of Prediction" (bogus predictions that seem to be there to satisfy psychological needs) is compounded by the "Scandal of Debt": borrowing makes you more vulnerable to forecast error.

Just as Mother Nature likes redundancies, so she abhors anything that is too big. The largest land animal is the elephant, and there is a reason for that. If I went on a rampage and shot an elephant, I might be put in jail and get yelled at by my mother, but I would hardly disturb the ecology of Mother Nature. On the other hand, my point about banks in my book - that if you shot a large bank, I would "shiver at the consequences" and that "if one falls, they all fall" - was subsequently illustrated by events: one bank failure, Lehman Brothers, in September 2008, brought down the entire edifice.

The crisis of 2008 provides an illustration of the need for robustness. Over the past 2,500 years of recorded ideas, only fools and Platonists have believed in engineered utopias. We shouldn't think that we can correct mistakes and eliminate randomness from social and economic life. The challenge, rather, is to ensure that human mistakes and miscalculations remain confined, and to avoid them spreading through the system - just the way Mother Nature does it. Reducing randomness increases exposure to Black Swans.

My dream is to have a true "epistemocracy"; that is, a society robust against expert errors, forecasting errors and hubris, one that can be resistant to the incompetence of politicians, regulators, economists, central bankers, bank­ers, policy wonks and epidemiologists.Here are ten principles for a Black Swan-robust society.

What is fragile should break early while it's still small: Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks become the biggest.

No socialisation of losses and privatisation of gains: Whatever may need to be bailed out should be nationalised; whatever does not need a bailout should be free, small and risk-bearing. We got ourselves into the worst of capitalism and socialism. In France, in the 1980s, the Socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

People who drove a school bus blindfolded (and crashed it) should never be given a new bus: The economics establishment lost its legitimacy with the failure of the system in 2008. Find the smart people whose hands are clean to get us out of this mess.

Don't let someone making an "incentive" bonus manage a nuclear plant - or your financial risks: Odds are he would cut every corner on safety to show "profits" from these savings while claiming to be "conservative". Bonuses don't accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives.

Time to definancialise
Compensate complexity with simplicity: Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. Complex systems survive thanks to slack and redundancy, not debt and optimisation.

Do not give children sticks of dynamite, even if they come with a warning label: Complex financial products need to be banned because nobody understands them, and few are rational enough to know it. We need to protect citizens from themselves, from bankers selling them "hedging" products, and from gullible regulators who listen to economic theorists.

Only Ponzi schemes should depend on confidence: Governments should never need to "restore confidence". Cascading rumours are a product of complex systems. Governments cannot stop the rumours. We just need to be able to shrug off rumours, to be robust to them. Do not give an addict more drugs if he has withdrawal pains: Using leverage to cure the problems of too much leverage is not homoeopathy, it's denial. The debt crisis is not a temporary problem, it's a structural one. We need rehab.

Citizens should not depend on financial assets as a repository of value and rely on fallible "expert" advice for their retirement: Economic life should be definancialised. We should learn not to use markets as warehouses of value.

Make an omelette with the broken eggs: The crisis of 2008 was not a problem to fix with makeshift repairs. We will have to remake the system before it does so itself. Let us move voluntarily into a robust economy by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here and teaching people to navigate a world with fewer certainties. Then we will see an economic life closer to our biological environment: smaller firms and no leverage - a world in which entrepreneurs, not bankers, take the risks, and in which companies are born and die every day without making the news.
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DougMacG
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« Reply #792 on: July 14, 2010, 10:50:04 AM »

I agree strongly (in part) with the creative thought process in this piece.  Ever since studying human physiology in medical school (as an undergrad elective; NOT a med student) I have long believed that business and economic designers should study the intelligent design within human subsystems and found in nature's ecosystems for ideas inspiration to improve business and public services systems performance.  This author makes that point extremely well.

OTOH it seems he carries it too far with his presumption that we can design our economy out further with even greater central control (if I read him correctly) rather than erring on the side of economic freedoms allowing us to make personal choices and errors as individuals, businesses and nations.

For example he criticizes the concept of comparative advantage in globalization.  I agree with his point only to the point that public policies certain should not be made to exaggerate that phenomenon, but would warn that the loss of economic freedom required to prevent over-specialization would be worse than the problem or risk IMHO.
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Crafty_Dog
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« Reply #793 on: July 14, 2010, 10:56:26 AM »

I too find that there are several passages with which I disagree.  I posted it because of the influence his Black Swan book has had.

I don't even understand what he means with this one:

"Citizens should not depend on financial assets as a repository of value and rely on fallible "expert" advice for their retirement: Economic life should be definancialised. We should learn not to use markets as warehouses of value."

I'm confused, what form does he think savings should take?
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DougMacG
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« Reply #794 on: July 14, 2010, 11:44:38 AM »

Quoting: "Citizens should not depend on financial assets as a repository of value and rely on fallible "expert" advice for their retirement: Economic life should be definancialised. We should learn not to use markets as warehouses of value." -  Crafty: "I'm confused, what form does he think savings should take?"

In my case, and after the tech debacle, my retirement is entirely in real estate(hard assets/non-financial).  What could possibly go wrong with that?  sad   shocked  angry  Besides the crash of values, I will need increasing amounts of financial assets just to pay the property taxes or lose (again) all I have saved and invested.

Still his piece is enlightening and I was not previously familiar with his work.  I would like to see someone take and run with the best aspects of it.
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Freki
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« Reply #795 on: July 14, 2010, 12:04:24 PM »

When you have to pay rent to the government (property taxes) to keep your property, Liberty is at stake!!!!

Freki
« Last Edit: July 14, 2010, 12:31:19 PM by Freki » Logged
Rarick
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« Reply #796 on: July 15, 2010, 05:26:13 AM »

To get definancialized, I think you need to find some sort of "self- sustaining property", something like what used to be called the family farm.  There is a whole structure around owning enough land/ resources on that land that has been built up, and I think it favors corporate/lobbyist issues more than "the people".  Freki's one liner has a pretty sharp point, and a blunt weight to it when you think about it.  How many families have to give up their "solid base of resource" because taxes become too onerous, and they end up selling out to a larger business farm to pay the tax debt off and move to the city "to make a living".  A couple of generations later, you have what we have now.  5% of the population is still "out in the green" raising food for everyone else. 95% is suffering a certain "wage slavery" codependancy in the city with no real means of coping with a crisis without some sort of ready cash reserve.  That generally seems to be really hard to create too without some serious hard work (quality of life killing hard), and a lot of luck.

Huh??
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Crafty_Dog
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« Reply #797 on: July 15, 2010, 09:37:52 AM »

Freki is dead on. 
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DougMacG
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« Reply #798 on: July 15, 2010, 02:55:19 PM »

Freki: "When you have to pay rent to the government (property taxes) to keep your property, Liberty is at stake!!!!"

Crafty: "Freki is dead on."
-----

Agree! If I don't pay the property taxes which are slightly more than 100% of my take home income, I lose the properties.  If I sell the properties I have to pay tax on a 20-30 year gain in one year boosting all other income into soak-the-rich rates.  There is no income averaging anymore.  I would have to pay federal tax on the inflation component of the gain - that might be all of it in some cases.  I would have to pay state tax at the highest rate because states tax capital gains including the inflation component gain (which is no gain at all) as ordinary income.  I can't sell this year because of depressed markets flooded with foreclosures.  Next year the tax rates go up.  Not exactly efficient or low impact taxation.

If your nest egg were all put in gold bullion all of your life, you would be in the similar situation of being taxed heavily on an inflationary gain.  And it's all inflationary gain because it is the exact same gold that you bought in the first place.

So much for hard, non-financial assets for prosperity, to remove risk and to simplify your life.
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Body-by-Guinness
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« Reply #799 on: July 16, 2010, 05:24:13 PM »

Not a big fan of the American Spectator as it often struck me as the right's version of the Daily Kos or Democratic Underground, and indeed this piece taken from it has its shrill moments, starts slowly, and is really freaking long. With that said, the thesis of this piece has a resonance that grew the more I read it:

The American Spectator

home

FEATURE

America's Ruling Class -- And the Perils of Revolution

By Angelo M. Codevilla from the July 2010 - August 2010 issue

As over-leveraged investment houses began to fail in September 2008, the leaders of the Republican and Democratic parties, of major corporations, and opinion leaders stretching from the National Review magazine (and the Wall Street Journal) on the right to the Nation magazine on the left, agreed that spending some $700 billion to buy the investors' "toxic assets" was the only alternative to the U.S. economy's "systemic collapse." In this, President George W. Bush and his would-be Republican successor John McCain agreed with the Democratic candidate, Barack Obama. Many, if not most, people around them also agreed upon the eventual commitment of some 10 trillion nonexistent dollars in ways unprecedented in America. They explained neither the difference between the assets' nominal and real values, nor precisely why letting the market find the latter would collapse America. The public objected immediately, by margins of three or four to one.

When this majority discovered that virtually no one in a position of power in either party or with a national voice would take their objections seriously, that decisions about their money were being made in bipartisan backroom deals with interested parties, and that the laws on these matters were being voted by people who had not read them, the term "political class" came into use. Then, after those in power changed their plans from buying toxic assets to buying up equity in banks and major industries but refused to explain why, when they reasserted their right to decide ad hoc on these and so many other matters, supposing them to be beyond the general public's understanding, the American people started referring to those in and around government as the "ruling class." And in fact Republican and Democratic office holders and their retinues show a similar presumption to dominate and fewer differences in tastes, habits, opinions, and sources of income among one another than between both and the rest of the country. They think, look, and act as a class.

Although after the election of 2008 most Republican office holders argued against the Troubled Asset Relief Program, against the subsequent bailouts of the auto industry, against the several "stimulus" bills and further summary expansions of government power to benefit clients of government at the expense of ordinary citizens, the American people had every reason to believe that many Republican politicians were doing so simply by the logic of partisan opposition. After all, Republicans had been happy enough to approve of similar things under Republican administrations. Differences between Bushes, Clintons, and Obamas are of degree, not kind. Moreover, 2009-10 establishment Republicans sought only to modify the government's agenda while showing eagerness to join the Democrats in new grand schemes, if only they were allowed to. Sen. Orrin Hatch continued dreaming of being Ted Kennedy, while Lindsey Graham set aside what is true or false about "global warming" for the sake of getting on the right side of history. No prominent Republican challenged the ruling class's continued claim of superior insight, nor its denigration of the American people as irritable children who must learn their place. The Republican Party did not disparage the ruling class, because most of its officials are or would like to be part of it.

Never has there been so little diversity within America's upper crust. Always, in America as elsewhere, some people have been wealthier and more powerful than others. But until our own time America's upper crust was a mixture of people who had gained prominence in a variety of ways, who drew their money and status from different sources and were not predictably of one mind on any given matter. The Boston Brahmins, the New York financiers, the land barons of California, Texas, and Florida, the industrialists of Pittsburgh, the Southern aristocracy, and the hardscrabble politicians who made it big in Chicago or Memphis had little contact with one another. Few had much contact with government, and "bureaucrat" was a dirty word for all. So was "social engineering." Nor had the schools and universities that formed yesterday's upper crust imposed a single orthodoxy about the origins of man, about American history, and about how America should be governed. All that has changed.

Today's ruling class, from Boston to San Diego, was formed by an educational system that exposed them to the same ideas and gave them remarkably uniform guidance, as well as tastes and habits. These amount to a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints. Using the right words and avoiding the wrong ones when referring to such matters -- speaking the "in" language -- serves as a badge of identity. Regardless of what business or profession they are in, their road up included government channels and government money because, as government has grown, its boundary with the rest of American life has become indistinct. Many began their careers in government and leveraged their way into the private sector. Some, e.g., Secretary of the Treasury Timothy Geithner, never held a non-government job. Hence whether formally in government, out of it, or halfway, America's ruling class speaks the language and has the tastes, habits, and tools of bureaucrats. It rules uneasily over the majority of Americans not oriented to government.

The two classes have less in common culturally, dislike each other more, and embody ways of life more different from one another than did the 19th century's Northerners and Southerners -- nearly all of whom, as Lincoln reminded them, "prayed to the same God." By contrast, while most Americans pray to the God "who created and doth sustain us," our ruling class prays to itself as "saviors of the planet" and improvers of humanity. Our classes' clash is over "whose country" America is, over what way of life will prevail, over who is to defer to whom about what. The gravity of such divisions points us, as it did Lincoln, to Mark's Gospel: "if a house be divided against itself, that house cannot stand."

The Political Divide

Important as they are, our political divisions are the iceberg's tip. When pollsters ask the American people whether they are likely to vote Republican or Democrat in the next presidential election, Republicans win growing pluralities. But whenever pollsters add the preferences "undecided," "none of the above," or "tea party," these win handily, the Democrats come in second, and the Republicans trail far behind. That is because while most of the voters who call themselves Democrats say that Democratic officials represent them well, only a fourth of the voters who identify themselves as Republicans tell pollsters that Republican officeholders represent them well. Hence officeholders, Democrats and Republicans, gladden the hearts of some one-third of the electorate -- most Democratic voters, plus a few Republicans. This means that Democratic politicians are the ruling class's prime legitimate representatives and that because Republican politicians are supported by only a fourth of their voters while the rest vote for them reluctantly, most are aspirants for a junior role in the ruling class. In short, the ruling class has a party, the Democrats. But some two-thirds of Americans -- a few Democratic voters, most Republican voters, and all independents -- lack a vehicle in electoral politics.

Sooner or later, well or badly, that majority's demand for representation will be filled. Whereas in 1968 Governor George Wallace's taunt "there ain't a dime's worth of difference" between the Republican and Democratic parties resonated with only 13.5 percent of the American people, in 1992 Ross Perot became a serious contender for the presidency (at one point he was favored by 39 percent of Americans vs. 31 percent for G.H.W. Bush and 25 percent for Clinton) simply by speaking ill of the ruling class. Today, few speak well of the ruling class. Not only has it burgeoned in size and pretense, but it also has undertaken wars it has not won, presided over a declining economy and mushrooming debt, made life more expensive, raised taxes, and talked down to the American people. Americans' conviction that the ruling class is as hostile as it is incompetent has solidified. The polls tell us that only about a fifth of Americans trust the government to do the right thing. The rest expect that it will do more harm than good and are no longer afraid to say so.

While Europeans are accustomed to being ruled by presumed betters whom they distrust, the American people's realization of being ruled like Europeans shocked this country into well nigh revolutionary attitudes. But only the realization was new. The ruling class had sunk deep roots in America over decades before 2008. Machiavelli compares serious political diseases to the Aetolian fevers -- easy to treat early on while they are difficult to discern, but virtually untreatable by the time they become obvious.

Far from speculating how the political confrontation might develop between America's regime class -- relatively few people supported by no more than one-third of Americans -- and a country class comprising two-thirds of the country, our task here is to understand the divisions that underlie that confrontation's unpredictable future. More on politics below.

The Ruling Class

Who are these rulers, and by what right do they rule? How did America change from a place where people could expect to live without bowing to privileged classes to one in which, at best, they might have the chance to climb into them? What sets our ruling class apart from the rest of us?

The most widespread answers -- by such as the Times's Thomas Friedman and David Brooks -- are schlock sociology. Supposedly, modern society became so complex and productive, the technical skills to run it so rare, that it called forth a new class of highly educated officials and cooperators in an ever less private sector. Similarly fanciful is Edward Goldberg's notion that America is now ruled by a "newocracy": a "new aristocracy who are the true beneficiaries of globalization -- including the multinational manager, the technologist and the aspirational members of the meritocracy." In fact, our ruling class grew and set itself apart from the rest of us by its connection with ever bigger government, and above all by a certain attitude.

Other explanations are counterintuitive. Wealth? The heads of the class do live in our big cities' priciest enclaves and suburbs, from Montgomery County, Maryland, to Palo Alto, California, to Boston's Beacon Hill as well as in opulent university towns from Princeton to Boulder. But they are no wealthier than many Texas oilmen or California farmers, or than neighbors with whom they do not associate -- just as the social science and humanities class that rules universities seldom associates with physicians and physicists. Rather, regardless of where they live, their social-intellectual circle includes people in the lucrative "nonprofit" and "philanthropic" sectors and public policy. What really distinguishes these privileged people demographically is that, whether in government power directly or as officers in companies, their careers and fortunes depend on government. They vote Democrat more consistently than those who live on any of America's Dr. Martin Luther King Jr. Streets. These socioeconomic opposites draw their money and orientation from the same sources as the millions of teachers, consultants, and government employees in the middle ranks who aspire to be the former and identify morally with what they suppose to be the latter's grievances.

Professional prominence or position will not secure a place in the class any more than mere money. In fact, it is possible to be an official of a major corporation or a member of the U.S. Supreme Court (just ask Justice Clarence Thomas), or even president (Ronald Reagan), and not be taken seriously by the ruling class. Like a fraternity, this class requires above all comity -- being in with the right people, giving the required signs that one is on the right side, and joining in despising the Outs. Once an official or professional shows that he shares the manners, the tastes, the interests of the class, gives lip service to its ideals and shibboleths, and is willing to accommodate the interests of its senior members, he can move profitably among our establishment's parts.

If, for example, you are Laurence Tribe in 1984, Harvard professor of law, leftist pillar of the establishment, you can "write" your magnum opus by using the products of your student assistant, Ron Klain. A decade later, after Klain admits to having written some parts of the book, and the other parts are found to be verbatim or paraphrases of a book published in 1974, you can claim (perhaps correctly) that your plagiarism was "inadvertent," and you can count on the Law School's dean, Elena Kagan, to appoint a committee including former and future Harvard president Derek Bok that issues a secret report that "closes" the incident. Incidentally, Kagan ends up a justice of the Supreme Court. Not one of these people did their jobs: the professor did not write the book himself, the assistant plagiarized instead of researching, the dean and the committee did not hold the professor accountable, and all ended up rewarded. By contrast, for example, learned papers and distinguished careers in climatology at MIT (Richard Lindzen) or UVA (S. Fred Singer) are not enough for their questions about "global warming" to be taken seriously. For our ruling class, identity always trumps.

Much less does membership in the ruling class depend on high academic achievement. To see something closer to an academic meritocracy consider France, where elected officials have little power, a vast bureaucracy explicitly controls details from how babies are raised to how to make cheese, and people get into and advance in that bureaucracy strictly by competitive exams. Hence for good or ill, France's ruling class are bright people -- certifiably. Not ours. But didn't ours go to Harvard and Princeton and Stanford? Didn't most of them get good grades? Yes. But while getting into the Ecole Nationale d'Administration or the Ecole Polytechnique or the dozens of other entry points to France's ruling class requires outperforming others in blindly graded exams, and graduating from such places requires passing exams that many fail, getting into America's "top schools" is less a matter of passing exams than of showing up with acceptable grades and an attractive social profile. American secondary schools are generous with their As. Since the 1970s, it has been virtually impossible to flunk out of American colleges. And it is an open secret that "the best" colleges require the least work and give out the highest grade point averages. No, our ruling class recruits and renews itself not through meritocracy but rather by taking into itself people whose most prominent feature is their commitment to fit in. The most successful neither write books and papers that stand up to criticism nor release their academic records. Thus does our ruling class stunt itself through negative selection. But the more it has dumbed itself down, the more it has defined itself by the presumption of intellectual superiority.

The Faith

Its attitude is key to understanding our bipartisan ruling class. Its first tenet is that "we" are the best and brightest while the rest of Americans are retrograde, racist, and dysfunctional unless properly constrained. How did this replace the Founding generation's paradigm that "all men are created equal"?

The notion of human equality was always a hard sell, because experience teaches us that we are so unequal in so many ways, and because making one's self superior is so tempting that Lincoln called it "the old serpent, you work I'll eat." But human equality made sense to our Founding generation because they believed that all men are made in the image and likeness of God, because they were yearning for equal treatment under British law, or because they had read John Locke.

It did not take long for their paradigm to be challenged by interest and by "science." By the 1820s, as J. C. Calhoun was reading in the best London journals that different breeds of animals and plants produce inferior or superior results, slave owners were citing the Negroes' deficiencies to argue that they should remain slaves indefinitely. Lots of others were reading Ludwig Feuerbach's rendition of Hegelian philosophy, according to which biblical injunctions reflect the fantasies of alienated human beings or, in the young Karl Marx's formulation, that ethical thought is "superstructural" to material reality. By 1853, when Sen. John Pettit of Ohio called "all men are created equal" "a self-evident lie," much of America's educated class had already absorbed the "scientific" notion (which Darwin only popularized) that man is the product of chance mutation and natural selection of the fittest. Accordingly, by nature, superior men subdue inferior ones as they subdue lower beings or try to improve them as they please. Hence while it pleased the abolitionists to believe in freeing Negroes and improving them, it also pleased them to believe that Southerners had to be punished and reconstructed by force. As the 19th century ended, the educated class's religious fervor turned to social reform: they were sure that because man is a mere part of evolutionary nature, man could be improved, and that they, the most highly evolved of all, were the improvers.

Thus began the Progressive Era. When Woodrow Wilson in 1914 was asked "can't you let anything alone?" he answered with, "I let everything alone that you can show me is not itself moving in the wrong direction, but I am not going to let those things alone that I see are going down-hill." Wilson spoke for the thousands of well-off Americans who patronized the spas at places like Chautauqua and Lake Mohonk. By such upper-middle-class waters, progressives who imagined themselves the world's examples and the world's reformers dreamt big dreams of establishing order, justice, and peace at home and abroad. Neither were they shy about their desire for power. Wilson was the first American statesman to argue that the Founders had done badly by depriving the U.S. government of the power to reshape American society. Nor was Wilson the last to invade a foreign country (Mexico) to "teach [them] to elect good men."
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