US ‘creative destruction’ out of steam

By Ed Crooks

If anybody wants a reason to feel optimistic about America, they might take a stroll through the magnificent trading floor of the Minneapolis Grain Exchange. A hundred years ago, farmers would come here and tip samples of their grain on to heavy wooden desks for merchants to assess. When that business moved on, the floor turned into a place for the open outcry trading of futures and options in hard red spring wheat.

Can America regain most dynamic labour market mantle?

By Edward Luce

In Part One of the series examining the US jobs crisis, Edward Luce says that fears persist it cannot be fixed

Last week, Barack Obama went to Osawatomie, Kansas, to kick off a more populist phase in his 2012 re-election bid. “This is a make-or-break moment for the middle class,” declared the US president, who chose the same venue that Teddy Roosevelt used in 1910 to call for a new progressive era. “I believe that this country succeeds when everyone gets a fair shot.”

The risk of a Syrian massacre. by Gideon Rachman

A few weeks ago, I heard a senior person in the Obama administration talk about the situation in Syria. One of the problems with Bashar al-Assad, he said, was that the Syrian leader was still surrounded by his father’s old cronies. But one positive development, he mused, was that it was no longer possible simply to kill 10,000 protesters in a single city, as Hafez al-Assad once did.

I wonder whether that may be too optimistic?
The reports from Syria are certainly alarming. Refugees flooding across the Turkish border. And the citizens of the rebellious town of Jisr al-Shugour, bracing themselves for a full-scale assault by the army.
I think the idea that the Syrian army could not simply kill thousands of their fellow citizens was based on two assumptions – or, perhaps, hopes. First, that in the internet age, it would be impossible to carry out bloody repression on this scale, without immediately provoking a paralysing international outcry. Second, that the development of the international doctrine of a “responsibility to protect” brutalised civilians – even within the boundaries of a sovereign state – would make Assad junior stay his hand.

Keep taking the testosterone

By Charles Wallace

High T: Lionel Bissoon (above) has seen a rise in demand for testosterone from Wall Street workers.

Until a few years ago, doctor Lionel Bissoon, who practises what he calls integrative medicine on Manhattan’s smart Upper West Side, mostly treated middle-aged women for what is politely known as cellulite. Then the financial crisis hit Wall Street and a strange thing happened: a stream of financial executives and traders began coming to him in the hope of being turned into alpha males.

False dawns and public fury: the 1930s are not so far away

By Martin Taylor

Forget the icy weather: the financial markets are signalling that spring is coming. Equities are rallying and credit spreads have narrowed. Yet look around, if you can bear to. Similarities with the interwar period – a time of persistent false dawns – are multiplying ominously.

Obama Budget Again Skips Making Hard Choices

By SEN. JOHN BARRASSO

On Monday, President Obama is scheduled to release his proposed budget for the coming year. If his past three budgets are any indication, it is unlikely anyone outside of the White House will take this budget seriously.
That's because past Obama budgets have been long on empty promises and short on real solutions. This president has consistently ignored Washington's crushing debt and passed the real costs on to future generations.
The administration has already signaled that this year's spending plan will offer more of the same: a budget that spends too much, borrows too much and taxes too much.

The decline of marriage and male wages is a problem of equality, not inequality.

By JAMES TARANTO

Former Enron adviser Paul Krugman has expanded the blog post we criticized Wednesday into a full-length column, and in doing so made explicit a predictable fallacy in his thinking. To review, Krugman's argument is that the sharp decline in marriage rates among less-affluent white Americans, documented by Charles Murray in his new book, "Coming Apart: The State of White America, 1960-2010," is "mainly about money" as opposed to "morals." Here's the meat of Krugman's argument:

Washington's Guide to the Presidency

Santorum the New Frontrunner?

Journal Columnist Jeffrey Zaslow Dies at 53

By STEPHEN MILLER and DOUGLAS BELKIN

Wall Street Journal reporter Jeffrey Zaslow was tragically killed in an automobile accident on Friday. Kelsey Hubbard spoke to Deputy Managing Editor Mike Miller about the beloved journalist, whose work touched and inspired millions of people around the world.

Jeffrey Zaslow, a longtime Wall Street Journal writer and best-selling author with a rare gift for writing about love, loss, and other life passages with humor and empathy, died at age 53 on Friday of injuries suffered in a car crash in northern Michigan.

Voters aren't bothering with the GOP, but Obama has lost their attention too.

By PEGGY NOONAN

The Romney campaign is better at dismantling than mantling. They're better at taking opponents apart than building a compelling candidate of their own. They do not seem capable of deepening his meaning, making his stands and statements more textured and interesting. He comes across like a businessman who studied the data and came up with the formula that will make the deal.

Meet the men the U.S. might release as a goodwill gesture.

The Obama Administration is pursuing peace talks with the Taliban, and as a goodwill gesture it has been leaking the news that it may pre-emptively release five of their leaders held at Guantanamo. We thought you might like to meet them.
Their identities are an open secret, and last week the White House gave a restricted briefing to a few Members of Congress to win their support. The men are among the 46 out of 171 detainees left at Gitmo that an Administration review in 2010 deemed "too dangerous to transfer but not feasible for prosecution." Two years later, these detainees are evidently no longer too dangerous.
These upstanding citizens are:
• Mohammad Fazl, around age 45, was the senior-most Taliban commander in northern Afghanistan and their deputy defense minister when captured in November 2001. He was at the Qala-i-Jangi fortress, outside the city of Mazar-i-Sharif, when hundreds of Taliban prisoners revolted against their captors in the Northern Alliance. CIA operative Johnny Michael Spann died in the melee, becoming the first American casualty of the Afghan war. A confidential annex of the Administration's 2010 review suggests that Fazl may be responsible for Spann's death.
According to his secret 2008 Gitmo file, which was published by WikiLeaks, Fazl also commanded foreign fighters in Afghanistan and "possessed vast power and financial resources."

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AFP/Getty Images

Guantanamo Bay, Cuba

He was close to Mullah Omar, the Taliban leader. Before 9/11, Fazl commanded troops in central Afghanistan who massacred hundreds of Hazaras, a Shiite Muslim ethnic minority. His Gitmo file also says the Iranian government suspects him of "being connected" to the killing of its diplomats in Mazar-i-Sharif in 1998.

An 'accommodation' that makes the birth-control mandate worse.

Here's a conundrum: The White House wants to impose its birth-control ideology on all Americans, including those for whom sponsoring or subsidizing such services violates their moral conscience. The White House also wants to avoid a political backlash from this blow to religious freedom. These goals are irreconcilable.
So you almost have to admire the absurdity of the new plan President Obama floated yesterday: The government will now write a rule that says the best things in life are "free," including contraception. Thus a political mandate will be compounded by an uneconomic one—in other words, behold the soul of ObamaCare.

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AFP/Getty Images

President Obama with HHS Secretary Kathleen Sebelious announce an adjustment to the health care bill on Friday.

Under the original Health and Human Services regulation, all religious institutions except for houses of worship would be required to cover birth control, including hospitals, schools and charities. Under the new rule, which the White House stresses is "an accommodation" and not a compromise, nonprofit religious organizations won't have to directly cover birth control and can opt out. But the insurers they hire to cover their employees can't opt out. If that sounds like a distinction without a difference, odds are you're a rational person.

Foreign-policy pundits increasingly argue that democracy and free markets could thrive without U.S. predominance. If this sounds too good to be true, writes Robert Kagan, that's because it is.

By ROBERT KAGAN

History shows that world orders, including our own, are transient. They rise and fall, and the institutions they erect, the beliefs and "norms" that guide them, the economic systems they support—they rise and fall, too. The downfall of the Roman Empire brought an end not just to Roman rule but to Roman government and law and to an entire economic system stretching from Northern Europe to North Africa. Culture, the arts, even progress in science and technology, were set back for centuries.

Many of us take for granted how the world looks today. But it might look a lot different without America at the top. The Brookings Institution's Robert Kagan talks with Washington bureau chief Jerry Seib about his new book, "The World America Made," and whether a U.S. decline is inevitable.

Modern history has followed a similar pattern. After the Napoleonic Wars of the early 19th century, British control of the seas and the balance of great powers on the European continent provided relative security and stability. Prosperity grew, personal freedoms expanded, and the world was knit more closely together by revolutions in commerce and communication.
With the outbreak of World War I, the age of settled peace and advancing liberalism—of European civilization approaching its pinnacle—collapsed into an age of hyper-nationalism, despotism and economic calamity. The once-promising spread of democracy and liberalism halted and then reversed course, leaving a handful of outnumbered and besieged democracies living nervously in the shadow of fascist and totalitarian neighbors. The collapse of the British and European orders in the 20th century did not produce a new dark age—though if Nazi Germany and imperial Japan had prevailed, it might have—but the horrific conflict that it produced was, in its own way, just as devastating.

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U.S. Navy

If the U.S. is unable to maintain its hegemony on the high seas, would other nations fill in the gaps? On board the USS Germantown in the South China Sea, Tuesday.

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10 Things That Every American Should Know About The Federal Reserve

What would happen if the Federal Reserve was shut down permanently? That is a question that CNBC asked recently, but unfortunately most Americans don't really think about the Fed much. Most Americans are content with believing that the Federal Reserve is just another stuffy government agency that sets our interest rates and that is watching out for the best interests of the American people. But that is not the case at all. The truth is that the Federal Reserve is a private banking cartel that has been designed to systematically destroy the value of our currency, drain the wealth of the American public and enslave the federal government to perpetually expanding debt. During this election year, the economy is the number one issue that voters are concerned about. But instead of endlessly blaming both political parties, the truth is that most of the blame should be placed at the feet of the Federal Reserve. The Federal Reserve has more power over the performance of the U.S. economy than anyone else does. The Federal Reserve controls the money supply, the Federal Reserve sets the interest rates and the Federal Reserve hands out bailouts to the big banks that absolutely dwarf anything that Congress ever did. If the American people are ever going to learn what is really going on with our economy, then it is absolutely imperative that they get educated about the Federal Reserve.

By The Mogambo Guru

Tampa, Florida – At my age, I have pretty much figured out that people don’t like me because they fear me.
I don’t know why, exactly, but perhaps they fear me because I am a cynical, paranoid, gold-bug old man who thinks that the Federal Reserve has turned into an evil institution by creating So Freaking Much Money (SFMM), now so that it can commit the sin of monetizing new government debt by the truckload, increasing the money supply and guaranteeing a roaring inflation that hurts the poor, and hurts the almost-poor, and hurts the not-quite-poor, and (now that I think about it) it hurts everybody, which hurts me personally because they come whining to me to give them some of MY money!

By Addison Wiggin

02/10/12 Baltimore, Maryland – Decline rates.
Seriously.
There are not very many people outside the “Peak Oil” crowd who care — heck, even know — what “decline rates” are.
Yet the “story that isn’t being told” is often where you find the best investment narratives.
“At first,” our resident energy enthusiast kicks us off with just such a tale, “the conservative approach was to estimate that the Marcellus wells would be productive for about two-three years and then the decline curve would kick in.
“Now, after three years of testing in some areas, that window is more like five years.”
After five years? Many operators will go back and refrack the wells. Those five-year wells might become 10-year wells.

By Bill Bonner

02/10/12 Delray Beach, Florida – We used to like traveling. Now, it’s a drag.
“No, we don’t want to go through your new x-ray machine,” we told the TSA guard.
“Whassa matter? It’s safe…” she replied.
“How do you know that?”
“The government said it was safe.”
“Do you believe everything the government tells you?”
“Heh…heh… Okay…” then, turning to no one in particular… “REFUSAL on 11. Male.”
We were out quickly…but the poor old woman behind us had to get up out of her wheelchair…hobble through the x-ray machine…and then they still wanted to feel her up on the other side.
You can’t be too safe, right?

By Joel Bowman

02/10/12 Buenos Aires, Argentina – Wow! That was quick!
“Greek Bailout at Risk as Party Pushes Back,” reports Bloomberg.
“Greece Plunged Into Political Turmoil Over Austerity Measures,” chimes The New York Times.
“Greek government hit by resignations,” adds the FT.
We spilled a good deal of virtual ink in yesterday’s issue casting doubt and aspersions over the validity of the Greek bailout plan. The story, we reckoned, was at best an old one…at worst an irrelevant one. Bailout or no bailout, the Greeks are broke. The rest is merely noise.
Curiously (and to their credit), markets yesterday would not be roused to action, neither by rumour, hearsay or scuttlebutt regarding the imminent, 11th hour deals “struck” between Greek Prime Minister Lucas Papademos and European Central Bank President Mario Draghi.
Instead, they held tight, patiently.

“… gleaming white wind turbines generating carbon-free electricity carpet chaparral-covered ridges and march down into valleys of Joshua trees.” This is “the future” of American energy – not “the oil rigs planted helter-skelter in [nearby] citrus groves,” nor the “smoggy San Joaquin Valley” a few miles away.

Our Constitution is no longer respected as it once was. Nations writing new constitutions don’t see it as the prototype to be followed. All have something in common with our president.

Having given up on pillorying Mitt Romney for plundering his way to vast wealth — because, unfortunately, it isn’t true — the NFM (Non-Fox Media) seem to have settled on denouncing him as a rich jerk.

Postwar Rent Controls Mises Daily: by Robert L. Scheuttinger and Eamonn F. Butler

[Forty Centuries of Wage and Price Controls: How Not to Fight Inflation (1978)]

The rent that a landlord charges for his accommodation is merely an instance of a price for a commodity, like all other prices for all other commodities. And like all other prices and all other commodities, rents have been a prime target for government restrictions. The postwar experience with rent control has been particularly revealing in regard to the adequacy of controls in general.

2007 are a sharp departure from the old way of performing monetary policy. In fact, it is difficult to state that the Fed is any longer in the business of traditional monetary policy — understood in the United States as aiming for low inflation and smoothed output volatility. A new breed of monetary policies better referred to as "quasi-fiscal" policies has become the norm.

The up-and-coming Austrian School received support from abroad even during the Methodenstreit. Léon Walras mentioned already well-known supporters of the new value theory from among the Romance countries in the preface to his Théorie de la monnaie (1886). In English publications, the subjectivist theory of value was gaining increased acceptance as well (cf. Böhm-Bawerk 1889b). The fact alone that it had been discovered at almost the same time by three authors (Walras, Menger, and Jevons) was considered by Böhm-Bawerk to be substantive evidence of its veracity (Böhm-Bawerk 1891/1930, p. 132 n. 1). In contrast, Gustav Cohn (1840–1919), an advocate of the Historical School, interpreted this brisk publishing activity to mean that the discovery of the marginal utility constituted a "meager morsel" that would have to be shared by "a number of like-minded discoverers" (Cohn 1889, p. 23).

Will Currency Devaluation Fix the Eurozone? Mises Daily: by Frank Shostak

Roubini said in Davos, Switzerland, on January 25, 2012, that tight policies are making the recession in the eurozone worse. According to Roubini what Europe needs is less austerity and more growth. In particular, the NYU professor is concerned about the deep recession in the eurozone's peripheral countries: Spain, Portugal, Greece — all are on a strict regime of austerity. For instance, in Spain the yearly rate of growth of government outlays stood at minus 12.4 percent in November against minus 15.7 percent in the month before. In Portugal the yearly rate of growth stood at minus 3.6 percent in December against minus 2.5 percent in November. In Greece the yearly rate of growth fell to 2.9 percent in December from 6.2 percent in the prior month.

A visible tightening is also observed in the two major European economies of Germany and France. Year-on-year government outlays in Germany stood at minus 1.6 percent in November versus minus 1.7 percent in October. In France the yearly rate of growth stood at minus 12.4 percent in November against minus 12.3 percent in the prior month.