tag:blogger.com,1999:blog-28530469916928946872024-03-28T00:18:23.325-07:00LIBERTY POSTWe believe in free markets and free people." We stands for free trade and sound money; against confiscatory taxation and the ukases of kings and other collectivists; and for individual autonomy against dictators, bullies and even the tempers of momentary majorities.Ricardo Valenzuelahttp://www.blogger.com/profile/06876172088323215396noreply@blogger.comBlogger1146125tag:blogger.com,1999:blog-2853046991692894687.post-38888204405548651122012-02-11T16:47:00.001-08:002012-02-11T16:47:40.415-08:00<h3 class="post-title entry-title">
<a href="http://www.intermexfreemarket.blogspot.com/2012/02/us-creative-destruction-out-of-steam.html">US ‘creative destruction’ out of steam</a>
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<span>By Ed Crooks</span></div>
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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. <br />
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In 2008, that business died too, after the market became fully
electronic. But today, the Minneapolis exchange is far from dead; this
year, its floor was taken over by CoCo, which lets out space to
freelancers and small businesses. Among the ghosts of 19th century
farmers, there are new companies catering to mobile advertising, iPad
apps, business-to-business online networking, and other niches that the
old grain traders never imagined.<br />
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<a href="http://im.media.ft.com/content/images/f894e9cc-24eb-11e1-8bf9-00144feabdc0.img?width=855&height=562&title=&desc=us-employment" target="_blank"><img alt="us-employment" src="http://im.media.ft.com/content/images/f880b3bc-24eb-11e1-8bf9-00144feabdc0.img" /><span>Click to enlarge</span></a></div>
“At
home I listen to the news about the economy, and it’s really different
from what I see at work,” says Kyle Coolbroth, a CoCo co-founder. “When
you come into this space and look at what’s happening, it doesn’t feel
like we’re in a <a href="http://www.ft.com/indepth/us-downturn" title="FT - In depth: US downturn">terrible recession</a>. A lot of people are rushing into market spaces that haven’t been defined yet.”<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/can-america-regain-most-dynamic-labour.html">Can America regain most dynamic labour market mantle?</a>
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<span>By Edward Luce</span><div class="master-row topSection">
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In Part One of the series examining the US jobs crisis, Edward Luce says that fears persist it cannot be fixed
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<span class="story-image"><img alt="Is America working" src="http://im.media.ft.com/content/images/39e0852e-2421-11e1-bbe6-00144feabdc0.img" /></span></div>
<span class="firstletter">L</span>ast week, <a href="http://www.ft.com/cms/s/0/2e03dfec-227f-11e1-923d-00144feabdc0.html" title="FT - US heads for class warfare election ">Barack Obama went to Osawatomie</a>,
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.”<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/risk-of-syrian-massacre-by-gideon.html">The risk of a Syrian massacre. by Gideon Rachman</a>
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A few weeks ago, I heard a senior person in the <a href="http://www.ft.com/indepth/obama-presidency" title="FT - latest news on the Obama presidency">Obama administration</a>
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.</div>
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I wonder whether that may be too optimistic?<span id="more-26076"></span><br />
The <a href="http://www.ft.com/cms/s/0/cc0d9b24-91d4-11e0-b4a3-00144feab49a.html">reports</a>
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.<br />
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.<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/keep-taking-testosterone.html">Keep taking the testosterone</a>
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<span>By Charles Wallace</span></div>
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<span class="story-image"><img alt="Lionel Bissoon working lives" src="http://im.media.ft.com/content/images/ab3e4bce-5311-11e1-8aa1-00144feabdc0.img" /></span><div class="caption">
High T: Lionel Bissoon (above) has seen a rise in demand for testosterone from Wall Street workers.</div>
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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 <a href="http://www.ft.com/indepth/global-financial-crisis" title="FT In depth - Global financial crisis">financial crisis</a>
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.<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/false-dawns-and-public-fury-1930s-are.html">False dawns and public fury: the 1930s are not so far away</a>
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<span>By Martin Taylor</span></div>
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<span class="story-image"><img alt="" src="http://im.media.ft.com/content/images/63658b24-5428-11e1-bacb-00144feabdc0.img" /></span></div>
Forget the icy weather: the financial markets are signalling that spring is coming. <a href="http://www.ft.com/intl/cms/s/0/bab18bf2-53cf-11e1-9eac-00144feabdc0.html#axzz1lwYy2ykh" title="FT - Pendulum swings in favour of equities">Equities are rallying</a>
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.<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/obama-budget-again-skips-making-hard.html">Obama Budget Again Skips Making Hard Choices</a>
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By <a href="http://www.investors.com/Search/SearchResults.aspx?source=filterSearch&Ntt=SEN.+JOHN+BARRASSO&Nr=OR%28Author%3aSEN.+JOHN+BARRASSO%2cAuthor%3aSen.+John+Barrasso%29">SEN. JOHN BARRASSO</a> <span> </span></div>
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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.<br />
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.<br />
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.<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/producers.html">The Producers</a>
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The decline of marriage and male wages is a problem of equality, not inequality.</h2>
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By <a href="http://online.wsj.com/search/term.html?KEYWORDS=JAMES+TARANTO&bylinesearch=true">JAMES TARANTO</a>
</h3>
<a class="" href="http://www.nytimes.com/2012/02/10/opinion/krugman-money-and-morals.html" target="_blank">Former Enron adviser</a> Paul Krugman has expanded the blog post we <a class="" href="http://bit.ly/xcKsFo" target="_blank">criticized Wednesday</a>
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:<br />
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/is-mitt-romney-electable.html">Is Mitt Romney Electable?</a>
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/washingtons-guide-to-presidency.html">Washington's Guide to the Presidency</a>
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Ricardo Valenzuela
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/santorum-new-frontrunner.html">Santorum the New Frontrunner?</a>
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/journal-columnist-jeffrey-zaslow-dies.html">Journal Columnist Jeffrey Zaslow Dies at 53</a>
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By <a href="http://online.wsj.com/search/term.html?KEYWORDS=STEPHEN+MILLER&bylinesearch=true">STEPHEN MILLER</a> and <a href="http://online.wsj.com/search/term.html?KEYWORDS=DOUGLAS+BELKIN&bylinesearch=true">DOUGLAS BELKIN</a>
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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.</div>
</div>
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<a href="http://www.intermexfreemarket.blogspot.com/" name="U603566483548MLI"></a>
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.<br />
<br />
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Ricardo Valenzuela
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at
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/low-turnout-and-big-tune-out.html">Low Turnout and the Big Tune-Out</a>
</h3>
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<h2 class="subhead">
Voters aren't bothering with the GOP, but Obama has lost their attention too.</h2>
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<h3>
By PEGGY NOONAN</h3>
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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.<br />
<br />
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Ricardo Valenzuela
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/taliban-five.html">The Taliban Five</a>
</h3>
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<h2 class="subhead">
Meet the men the U.S. might release as a goodwill gesture.</h2>
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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.<br />
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. <br />
These upstanding citizens are:<br />
• 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. <br />
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." <br />
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Guantanamo Bay, Cuba</div>
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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.<br />
<br />
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Ricardo Valenzuela
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<h3 class="post-title entry-title">
<a href="http://www.intermexfreemarket.blogspot.com/2012/02/immaculate-contraception.html">Immaculate Contraception</a>
</h3>
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<h2 class="subhead">
An 'accommodation' that makes the birth-control mandate worse.</h2>
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</div>
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.<br />
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.<br />
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</a><div class="targetCaption">
President Obama with HHS Secretary Kathleen Sebelious announce an adjustment to the health care bill on Friday.</div>
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.<br />
<br />
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Ricardo Valenzuela
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at
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<a href="http://www.intermexfreemarket.blogspot.com/2012/02/why-world-needs-america.html">Why the World Needs America</a>
</h3>
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<h2 class="subhead">
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.</h2>
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<h3 class="byline">
By <a href="http://online.wsj.com/search/term.html?KEYWORDS=ROBERT+KAGAN&bylinesearch=true">ROBERT KAGAN</a>
</h3>
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. <br />
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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.</div>
</div>
</div>
<a href="http://www.intermexfreemarket.blogspot.com/" name="U603559549978LRD"></a>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.<br />
<a href="http://www.intermexfreemarket.blogspot.com/" name="U603559549978P0E"></a>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. <br />
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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.</div>
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<h2 class="date-header">
<span>Friday, February 10, 2012</span></h2>
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<a href="http://intermexpower.blogspot.com/2012/02/10-things-that-every-american-should.html">10 Things That Every American Should Know About The Federal Reserve</a>
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<a href="http://theeconomiccollapseblog.com/archives/10-things-that-every-american-should-know-about-the-federal-reserve/10-things-that-every-american-should-know-about-the-federal-reserve" rel="attachment wp-att-3350"><img alt="" class="alignleft size-medium wp-image-3350" height="300" src="http://theeconomiccollapseblog.com/wp-content/uploads/2012/02/10-Things-That-Every-American-Should-Know-About-The-Federal-Reserve-240x300.jpg" title="10 Things That Every American Should Know About The Federal Reserve" width="240" /></a>What would happen if the Federal Reserve was shut down permanently? That is a question <a href="http://www.cnbc.com/id/46241902" target="_blank" title="that CNBC asked recently">that CNBC asked recently</a>,
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.<br />
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<a href="http://intermexpower.blogspot.com/2012/02/buying-gold-on-price-inflation.html">Buying Gold on the Price Inflation Guarantee</a>
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<span class="date"><abbr class="published" title="2011-04-15T18:00:45+0000"></abbr>Tampa, Florida – </span>At my age, I have pretty much figured out that people don’t like me because they fear me.<br />
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!<br />
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<a href="http://intermexpower.blogspot.com/2012/02/next-american-oil-boom.html">The Next American Oil Boom?</a>
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<span class="date"><abbr class="published" title="2012-02-10T17:42:29+0000">02/10/12</abbr> Baltimore, Maryland – </span>Decline rates.<br />
Seriously.<br />
There are not very many people outside the “Peak Oil” crowd who care — heck, even know — what “decline rates” are.<br />
Yet the “story that isn’t being told” is often where you find the best investment narratives.<br />
“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.<br />
“Now, after three years of testing in some areas, that window is more like five years.”<br />
After five years? Many operators will go back and refrack the wells. Those five-year wells might become 10-year wells.<br />
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<span class="date"><abbr class="published" title="2012-02-10T15:24:05+0000">02/10/12</abbr> Delray Beach, Florida – </span>We used to like traveling. Now, it’s a drag.<br />
“No, we don’t want to go through your new x-ray machine,” we told the TSA guard.<br />
“Whassa matter? It’s safe…” she replied.<br />
“How do you know that?”<br />
“The government said it was safe.”<br />
“Do you believe everything the government tells you?”<br />
“Heh…heh… Okay…” then, turning to no one in particular… “REFUSAL on 11. Male.”<br />
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.<br />
You can’t be too safe, right?<br />
<br />
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<span class="date"><abbr class="published" title="2012-02-10T18:30:20+0000">02/10/12</abbr> Buenos Aires, Argentina – </span>Wow! That was quick!<br />
“Greek Bailout at Risk as Party Pushes Back,” reports <em>Bloomberg</em>.<br />
“Greece Plunged Into Political Turmoil Over Austerity Measures,” chimes <em>The New York Times</em>.<br />
“Greek government hit by resignations,” adds the <em>FT</em>.<br />
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.<br />
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.<br />
Instead, they held tight, patiently.<br />
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<a href="http://intermexpower.blogspot.com/2012/02/us-charles-manson-energy-by-paul.html">US: Charles Manson energy – by Paul Driessen</a>
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<img alt="" class="alignleft wp-image-1430" height="367" src="http://www.hacer.org/usa/wp-content/uploads/2012/02/buitrecolisioneolica.jpg" title="Death Vulture in Navarra Photo: GURELUR" width="240" />“…
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.<br />
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<a href="http://intermexpower.blogspot.com/2012/02/us-our-constitution-is-best-model.html">US: Our Constitution Is The Best Model A Country Could Have – Investors.com</a>
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<img alt="" class="alignleft size-full wp-image-1438" height="265" src="http://www.hacer.org/usa/wp-content/uploads/2012/02/constflagfl2.jpg" title="" width="400" />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.<br />
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<a href="http://intermexpower.blogspot.com/2012/02/us-plutocrat-dems-attack-romney-as.html">US: Plutocrat Dems attack Romney as ‘Richie Rich’ – by Ann Coulter</a>
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<img alt="" class="alignleft wp-image-1418" height="310" src="http://www.hacer.org/usa/wp-content/uploads/2012/02/richierich.jpg" width="311" />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.<br />
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<a href="http://intermexpower.blogspot.com/2012/02/postwar-rent-controls-mises-daily-by.html">Postwar Rent Controls Mises Daily: by Robert L. Scheuttinger and Eamonn F. Butler</a>
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[<a href="http://mises.org/resources/3968/Forty-Centuries-of-Wage-and-Price-Controls-How-Not-to-Fight-Inflation"><i>Forty Centuries of Wage and Price Controls: How Not to Fight Inflation</i></a> (1978)]<br />
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<img alt="" border="0" src="http://images.mises.org/5871/PostwarHousingShortage1946.jpg" /></div>
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.<br />
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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.<br />
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<a href="http://intermexpower.blogspot.com/2012/02/time-is-money-capital-and-interest.html">Time Is Money: Capital and Interest Mises Daily: by Eugen-Maria Schulak and Herbert Unterköfler</a>
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<img alt="Time Is Money" border="0" src="http://images.mises.org/5872/TimeIsMoney.jpg" /></div>
The up-and-coming Austrian School received support from abroad even during the <a href="http://en.wikipedia.org/wiki/Methodenstreit"><i>Methodenstreit</i></a>.
Léon Walras mentioned already well-known supporters of the new value
theory from among the Romance countries in the preface to his <i>Théorie de la monnaie</i>
(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).<br />
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<a href="http://intermexpower.blogspot.com/2012/02/will-currency-devaluation-fix-eurozone.html">Will Currency Devaluation Fix the Eurozone? Mises Daily: by Frank Shostak</a>
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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.
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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.<br />
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</div>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com1tag:blogger.com,1999:blog-2853046991692894687.post-73347608351738155562011-08-23T16:00:00.001-07:002011-08-23T16:00:35.954-07:00<div class="post-body entry-content"> <h1>The Next Greece</h1> <p>by Daniel J. Mitchell </p> <p><em></em></p> <div class="box" style="float:right; margin:5px;"> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" style="text-decoration:none;"><img src="http://www.cato.org/images/print_page.gif" style="padding-top:1px;" border="0" /> PRINT PAGE</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a style="cursor: pointer; text-decoration: none" class="click-sticky" rel="pub_citations.php?pub_id=13513" title="Cite this article"><img src="http://www.cato.org/images/citation_page.gif" style="padding-top:1px" border="0" /> CITE THIS</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" rel="stylesheet" class="styleswitch"><img src="http://www.cato.org/images/switch_normal.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" rel="stylesheet_larger" class="styleswitch"><img src="http://www.cato.org/images/switch_larger.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" rel="stylesheet_largest" class="styleswitch"><img src="http://www.cato.org/images/switch_largest.gif" border="0" /></a> Sans Serif </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" rel="stylesheet_1_serif" class="styleswitch"><img src="http://www.cato.org/images/switch1serif.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" rel="stylesheet_2_serif" class="styleswitch"><img src="http://www.cato.org/images/switch2serif.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13513#" rel="stylesheet_3_serif" class="styleswitch"><img src="http://www.cato.org/images/switch3serif.gif" border="0" /></a> Serif </div> </div> <div class="box" style="float:right; clear: right; margin:5px; width: 130px; font-weight: bold"> <p style="font-size: 0.9em">Share with your friends:</p> <span class="st_sharethis"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets sharethis">ShareThis</span></span></span> </div> <p class="first">America is on a path to becoming a Greek-style welfare state. Thanks to the Bush-Obama spending binge, the burden of federal spending has climbed to about 25% of national economic output, up from only 18.2% of GDP when Bill Clinton left office.</p> <p>But that's just the tip of the iceberg. Because of a combination of demographic forces and poorly designed entitlement programs, federal spending could consume as much as 50% of economic output by the time the Baby Boom generation is fully retired.</p> <p>One symptom of all this excessive spending is that Washington is awash in red ink. The United States is now in its third consecutive year of trillion-dollar deficits and the politicians just had to increase the nation's US$14.3-trillion debt limit. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/daniel-mitchell">Daniel J. Mitchell</a> is a senior fellow at the Cato Institute, a think-tank based in Washington.</em></p> <a class="head" href="http://www.cato.org/people/daniel-mitchell">More by Daniel J. Mitchell</a></div></div> <p>But it wasn't easy getting there. Just as happened with the "government shutdown" debate in March, Republicans and Democrats had fierce disagreements over the right approach. They bickered until the last minute and then finally agreed to more than US$900billion of supposed spending cuts and the creation of a "super-committee" charged with proposing another US$1.5-trillion of deficit reduction.</p> <p>So which side won this fight? Republicans are bragging that they got spending cuts today, a promise of spending cuts in the future, and no tax increases. Democrats, meanwhile, are chortling that they took the debt issue off the table until after the 2012 elections, protected their favourite programs and created a super-committee that will seduce the GOP into a tax increase.</p> <p>Ignore that bragging. The easy answer is that politicians of both parties were the victors and taxpayers are the ones left in the cold.</p> <p>In other words, the budget deal was a victory for the political establishment.</p> <p>Here's why Republicans are winners. They get to tell their Tea Party activists that they forced Obama to cut spending. It doesn't matter that federal spending will actually be higher every year and that the cuts were based on Washington math (a spending increase becomes a spending cut if outlays don't climb as fast as some artificial benchmark).</p> <p>They also get to tell their anti-tax activists that they held the line. Perhaps most important, the super-committee must use the "current law" baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the super-committee therefore can't use repeal of the "Bush tax cuts for the rich" as a revenue raiser.</p> <p>This means that most Republican incumbents are well-positioned to win re-election.</p> <p>Here's why Democrats are winners. Thanks to the magic of government math, despite all the talk of budget cuts, discretionary spending will be more than US$100-billion higher in 2021 than it is this year. And since defence spending in Iraq and Afghanistan presumably is winding down, this means even more money will be available for domestic programs.</p> <p>In addition to telling the pro-spending lobbies that the gravy train is still on the tracks, they also get to tell the classwarfare crowd that there's an improved likelihood of higher taxes for corporate jet owners and other "rich" people. Notwithstanding GOP assertions, nothing in the agreement precludes the supercommittee from meeting its US$1.5-trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table.</p> <p>This means that most Democratic incumbents are well-positioned to win re-election.</p> <p>It's worth pointing out that this doesn't mean all Republicans and all Democrats are happy about the deal. The hard-core conservatives are upset that the deal is mostly smoke and mirrors on the spending side and that there may be a tax-increase trap on the revenue side.</p> <p>The hard-core liberals, by contrast, are angry that there are any spending cuts, even ones based on Washington math. Moreover, they want higher tax rates on upper-income taxpayers today, not a super-committee that may or may not follow through on soak-the-rich policies in the future.</p> <p>One group of people, however, unambiguously got the short end of the stick in this budget deal. Ordinary Americans are caught in the middle. They're not poor enough to benefit from the federal government's plethora of income-redistribution programs. But they're not rich enough to have the clever lobbyists and insider connections needed to benefit from the highdollar handouts like ethanol subsidies and bank bailouts.</p> <p>Instead, middle-class Americans play by the rules, pay ever-higher taxes, and struggle to make ends meet while the establishment of both parties engages in posturing as America slowly drifts toward a Greek-style fiscal meltdown.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/next-greece.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-23T15:54:00-07:00">3:54 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6960815108625645514">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6960815108625645514&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/The%20Next%20Greece" rel="tag">The Next Greece</a> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="9146379312226641541"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/protecting-economic-liberty.html">Protecting Economic Liberty</a> </h3> <div class="post-body entry-content"> <h1>Protecting Economic Liberty: The Essential Freedom</h1> <p>by Doug Bandow </p> <p><em></em></p> <p><em> This article appeared in </em><a href="http://www.forbes.com/" target="_blank">Forbes</a><em> on August 15, 2011. </em></p> <div class="box" style="float:right; margin:5px;"> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" style="text-decoration:none;"><img src="http://www.cato.org/images/print_page.gif" style="padding-top:1px;" border="0" /> PRINT PAGE</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a style="cursor: pointer; text-decoration: none" class="click-sticky" rel="pub_citations.php?pub_id=13576" title="Cite this article"><img src="http://www.cato.org/images/citation_page.gif" style="padding-top:1px" border="0" /> CITE THIS</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" rel="stylesheet" class="styleswitch"><img src="http://www.cato.org/images/switch_normal.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" rel="stylesheet_larger" class="styleswitch"><img src="http://www.cato.org/images/switch_larger.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" rel="stylesheet_largest" class="styleswitch"><img src="http://www.cato.org/images/switch_largest.gif" border="0" /></a> Sans Serif </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" rel="stylesheet_1_serif" class="styleswitch"><img src="http://www.cato.org/images/switch1serif.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" rel="stylesheet_2_serif" class="styleswitch"><img src="http://www.cato.org/images/switch2serif.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13576#" rel="stylesheet_3_serif" class="styleswitch"><img src="http://www.cato.org/images/switch3serif.gif" border="0" /></a> Serif </div> </div> <div class="box" style="float:right; clear: right; margin:5px; width: 130px; font-weight: bold"> <p style="font-size: 0.9em">Share with your friends:</p> <span class="st_sharethis"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets sharethis">ShareThis</span></span></span> </div> <p class="first">"I'm from the government and I'm here to help you" has become a standard punch line. There is no greater joke when public officials limit competition in the name of protecting consumers. Such as Louisiana's now-defunct casket monopoly.</p> <p>Professional licensing is routine across America. You want to be a lawyer or hairdresser? You want to be a doctor or manicurist? Get a license — from a government-backed panel dominated by your established competitors.</p> <p>No one wants to be served by an incompetent, but in most cases, health and safety are not at issue. If a hair stylist gives you a bad haircut, you'll be embarrassed, nothing more. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/doug-bandow">Doug Bandow</a> is a senior fellow at the Cato Institute. A former special assistant to Ronald Reagan, he is the author of </em><a href="http://www.amazon.com/Foreign-Follies-Americas-Global-Empire/dp/1597819883/catoinstitute-20" target="_blank">Foreign Follies: America's New Global Empire</a><em> (Xulon).</em></p> <a class="head" href="http://www.cato.org/people/doug-bandow">More by Doug Bandow</a></div></div> <p>Even for services with greater impact the licensing process is designed to protect existing practitioners rather than consumers. Plenty of non-lawyers, such as paralegals and even legal secretaries, are capable of doing work now reserved for attorneys. However, state bar associations fiercely police the "unauthorized practice of law," which is not the same as the incompetent practice of law.</p> <p>Doctors similarly create arbitrary barriers against other medical professionals caring for patients. The government should combat fraud and malpractice, not decide which provider can do which procedure.</p> <p>But casket-making is a far easier case. Obviously, making a substandard coffin isn't going to hurt the corpse, let alone kill anyone. (Indeed, the state neither sets standards for casket construction nor even requires use of one for burial.) Yet Louisiana only allows licensed funeral directors to sell "funeral merchandise," including caskets.</p> <p>It's not hard to see who benefits from this restriction. It certainly isn't the dead or the bereaved families of the dead. It's not the producers of "funeral merchandise." And it isn't the public.</p> <p>In Louisiana the casket typically accounts for nearly a third of the cost of a funeral. It is known in the trade as a "high margin" item. In fact, some people buy coffins from Wal-mart or even online in order to save money.</p> <p>The winners from the casket monopoly obviously are the funeral directors.</p> <p>Everyone paying for a funeral is a victim of Louisiana's rule. Along with the Saint Joseph Abbey of Saint Benedict, established in 1889.</p> <p>For years the Benedictine monks made simple caskets for their own members. Over the years they received numerous requests from others to buy similar coffins.</p> <p>Monks typically support themselves through common trades. Saint Joseph Abbey harvested timber for income, but Hurricane Katrina badly damaged the abbey's pine forest. Starting in 2007, Saint Joseph's 36 monks followed the example of monasteries in Illinois, Indiana, Iowa, and Minnesota and started making handcrafted caskets. The coffins are both unique and less expensive than those offered by funeral homes. Moreover, the abbey stored caskets made in advance for free.</p> <p>No customer complained. But a local competitor, the Mothe Funeral Homes, went to the Board of Embalmers and Funeral Directors. Leonard Dunn, the operator of Serenity Funeral Home, another nearby operation, explained: "They're cutting into our profit." So the state board, run by funeral directors, issued a "cease-and-desist" order even before the abbey sold its first casket. The board also employed an investigator to confirm that the monastery did, indeed, do what it claimed to do: sell caskets. The board threatened the monks with fines and imprisonment — up to six months in jail.</p> <p>The abbey urged the state legislature to change the law, but individual funeral home directors joined with industry lobbyists to defend the coffin cartel. (Not every funeral director was on board. Darin Bordelon of LaVille Funeral Home complained that Saint Joseph's opponents were "making us all look greedy.")</p> <p>The only way for the monks to avoid punishment was to abandon their religious routine, serve a year as apprentices in a licensed funeral home, and turn their monastery into a formal "funeral establishment" with embalming equipment. Just to make and sell caskets.</p> <p>So the monks went to court. Taking their case was the Institute for Justice, a public interest legal organization dedicated to defending economic liberty. IJ filed suit contending that Louisiana's casket monopoly violated the 14<sup>th</sup> Amendment.</p> <p>The monks had the facts on their side. An earlier Federal Trade Commission investigation found that state-protected monopolies do not protect consumers. The agency specifically criticized states which used licensing to restrict competition in the sale of caskets. Notably, Louisiana made no effort to prevent funeral directors from selling overpriced junk coffins. It just wanted to make sure that <em>only</em> funeral directors could sell overpriced junk coffins.</p> <p>The case also demonstrated the importance of economic liberty. Those who promote individual liberty tend to favor freedom of speech and assembly. These liberties represent freedom of conscience and promote political liberty, and are critical to the development of the human person.</p> <p>However, economic liberty is no less important. Freedom is indivisible. Freedom of expression and speech is the freedom to buy a printing press, create a website, and build a television studio. Without access to the practical economic tools of liberty it is difficult to exercise the political forms of liberty.</p> <p>More broadly, economic development helps create an environment and ethos more conducive to the development of democracy. People who no longer have to worry about feeding their families are more likely to acquire the instruments of liberty. They also are more likely to use them.</p> <p>But there is something even more basic. Economic freedom is about earning a living and supporting oneself and one's family. Few human duties are more important.</p> <p>Moreover, earning an income enables one to seek life's transcendent values. For the monks, casket-making is a means to an important end. Blocking the means interferes with the end.</p> <p>Finally, for many people work is a critical aspect of their development and happiness as human beings. Obviously, some individuals allow their job to become an idol, taking over their lives. But the opportunity to freely choose one's vocation is more than just a matter of dollars and cents.</p> <p>The law doesn't always reflect good policy. But in this case justice triumphed. U.S. District Court Judge Stanwood Duval ruled for the monks, explaining: "The Court finds no rational relationship between the Act and 'public health and safety.' No evidence was presented to demonstrate that requiring the purchase of caskets from licensed funeral directors aids the public welfare."</p> <p>No evidence was presented because none exists.</p> <p>The judge added: "Simply put, there is nothing in the licensing procedures that bestows any benefit to the public in the context of the retail sales of caskets. The license has no bearing on the manufacturing and sale of coffins. It appears that the sole reason for these laws is the economic protection of the funeral industry which reason the Court has previously found not to be a valid government interest standing alone to provide a constitutionally valid reason for these provisions."</p> <p>Unfortunately, the problem of "economic protection" is far broader than just Louisiana's protection of the funeral industry. However, Judge Duval's ruling is a good start. No government should misuse its power to sacrifice everyone's economic freedom for the enrichment of a few.</p> <p>It doesn't happen often, but in this case someone came from the government and actually did help people. Judge Duval recognized that respecting people's liberty is the best form of assistance. We can only hope that he is not the last government official to do so.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/protecting-economic-liberty.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-23T15:50:00-07:00">3:50 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9146379312226641541">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9146379312226641541&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Economic%20Liberty" rel="tag">Economic Liberty</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Protecting" rel="tag">Protecting</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1266774817926751632"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/obamas-new-new-deal-and-high.html">Obama's New New Deal and High Unemployment</a> </h3> <div class="post-body entry-content"> <h1>FDR's New Deal, Obama's New New Deal and High Unemployment</h1> <p>by Jim Powell </p> <p><em></em></p> <div class="box" style="float:right; margin:5px;"> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" style="text-decoration:none;"><img src="http://www.cato.org/images/print_page.gif" style="padding-top:1px;" border="0" /> PRINT PAGE</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a style="cursor: pointer; text-decoration: none" class="click-sticky" rel="pub_citations.php?pub_id=13591" title="Cite this article"><img src="http://www.cato.org/images/citation_page.gif" style="padding-top:1px" border="0" /> CITE THIS</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" rel="stylesheet" class="styleswitch"><img src="http://www.cato.org/images/switch_normal.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" rel="stylesheet_larger" class="styleswitch"><img src="http://www.cato.org/images/switch_larger.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" rel="stylesheet_largest" class="styleswitch"><img src="http://www.cato.org/images/switch_largest.gif" border="0" /></a> Sans Serif </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" rel="stylesheet_1_serif" class="styleswitch"><img src="http://www.cato.org/images/switch1serif.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" rel="stylesheet_2_serif" class="styleswitch"><img src="http://www.cato.org/images/switch2serif.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13591#" rel="stylesheet_3_serif" class="styleswitch"><img src="http://www.cato.org/images/switch3serif.gif" border="0" /></a> Serif </div> </div> <div class="box" style="float:right; clear: right; margin:5px; width: 130px; font-weight: bold"> <p style="font-size: 0.9em">Share with your friends:</p> <span class="st_sharethis"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets sharethis">ShareThis</span></span></span> </div> <p class="first">President Obama's New New Deal of massive government intervention was inspired by FDR's New Deal, and both have been plagued by chronic high unemployment.</p> <p>In her recent <em>New York Times</em> column, Christina Romer noted that there was some remarkable economic expansion during the New Deal period (1933-1940), but I doubt anybody disputes that. The key question is why, despite expansion, did high unemployment persist. It averaged 17 percent.</p> <p>I suggest that New Deal unemployment and related economic difficulties were unintended consequences of New Deal policies. In particular: </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/jim-powell">Jim Powell</a> is a senior fellow at the Cato Institute in Washington DC.</em></p> <a class="head" href="http://www.cato.org/people/jim-powell">More by Jim Powell</a></div></div> <p>1. Federal tax revenues more than tripled, from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and "excess profits" taxes all went up. FDR introduced an undistributed profits tax. Consumers had less money for spending, and private sector employers had less money for hiring.</p> <p>2. New Deal programs, intended to benefit the middle class and the poor, were mainly paid for by the middle class and the poor. This was because the biggest source of federal revenue during the 1930s was the excise tax on beer, cigarettes, soda, chewing gum, radios and other cheap pleasures disproportionately enjoyed by middle class and poor people. Until 1936, the federal excise tax generated more revenue than the federal personal income tax and the federal corporate income tax combined. Not until 1942, amidst World War II, did the federal personal income tax become the biggest source of federal revenue.</p> <p>3. FDR caused uncertainty that discouraged investors from taking the risks of funding growth and jobs. Frequent tax hikes (1933, 1934, 1935, 1936) made it harder for investors to estimate the net returns of possible investments. FDR added to the uncertainty by denouncing investors as "economic royalists," "economic dictators" and "privileged princes," which amounted to threatening investors. No surprise that private investment was at historically low levels during the New Deal era.</p> <p>4. The New Deal channeled government spending away from the poorest people who lived in the South. Comparatively little New Deal spending went there. Most New Deal spending went to political "swing" states in the West and East, where incomes were more than 60% higher. The decision was probably made that allocating more federal dollars to the South wouldn't yield more Democratic votes, since the South was already overwhelmingly Democratic.</p> <p>5. The New Deal made it more expensive for employers to hire people. By enforcing above-market wages (National Industrial Recovery Act, Fair Labor Standards Act), introducing excise taxes on payrolls (Social Security Act) and promoting compulsory unionism (National Labor Relations Act), the New Deal increased the costs of employing people about 25% from 1933 to 1940 — a major reason why double-digit private sector unemployment persisted throughout the New Deal era.</p> <p>6. The New Deal paid farmers to destroy food when millions were hungry. FDR promoted higher food prices by paying farmers to plow under some 10 million acres of crops and destroy some 6 million farm animals. The food destruction program mainly enriched big farmers, since benefits were paid on a per acre basis. This policy related farm programs meant the approximately 100 million American consumers had to pay more for food.</p> <p>7. The New Deal made everything more expensive during the Depression. Americans needed bargains, but FDR signed the National Industrial Recovery Act that authorized some 450 industrial cartel codes. They forced consumers to pay above-market prices for goods and services. Moreover, FDR banned discounting by signing the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937).</p> <p>8. FDR disrupted companies employing millions. In 1938, he authorized an unprecedented barrage of antitrust lawsuits against about 150 employers and industries. FDR had big employers tied up in court, distracting them from the urgent task of creating growth and jobs. In some cases, employers were attacked for pursuing policies that had been mandated by the National Industrial Recovery Act.</p> <p>"We have never made good on our promises," FDR's Treasury Secretary Henry Morgenthau despaired in May 1939, after acknowledging that the New Deal failed to banish chronic high unemployment.</p> <p>Since Obama is a great admirer of FDR's New Deal, we shouldn't be surprised that the Bureau of Labor Statistics reported fewer people are employed now and more people are unemployed now than when Obama became president in January 2009.</p> <p>We need very different policies, not more of the same.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/obamas-new-new-deal-and-high.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-23T15:46:00-07:00">3:46 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1266774817926751632">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1266774817926751632&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/High%20Unemployment" rel="tag">High Unemployment</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Obama%27s%20New%20New%20Deal" rel="tag">Obama's New New Deal</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4542883549692185693"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/empower-regulated.html">Empower the Regulated</a> </h3> <div class="post-body entry-content"> <h1>Empower the Regulated</h1> <p>by Richard W. Rahn </p> <p><em></em></p> <div class="box" style="float:right; margin:5px;"> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" style="text-decoration:none;"><img src="http://www.cato.org/images/print_page.gif" style="padding-top:1px;" border="0" /> PRINT PAGE</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a style="cursor: pointer; text-decoration: none" class="click-sticky" rel="pub_citations.php?pub_id=13602" title="Cite this article"><img src="http://www.cato.org/images/citation_page.gif" style="padding-top:1px" border="0" /> CITE THIS</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" rel="stylesheet" class="styleswitch"><img src="http://www.cato.org/images/switch_normal.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" rel="stylesheet_larger" class="styleswitch"><img src="http://www.cato.org/images/switch_larger.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" rel="stylesheet_largest" class="styleswitch"><img src="http://www.cato.org/images/switch_largest.gif" border="0" /></a> Sans Serif </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" rel="stylesheet_1_serif" class="styleswitch"><img src="http://www.cato.org/images/switch1serif.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" rel="stylesheet_2_serif" class="styleswitch"><img src="http://www.cato.org/images/switch2serif.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13602#" rel="stylesheet_3_serif" class="styleswitch"><img src="http://www.cato.org/images/switch3serif.gif" border="0" /></a> Serif </div> </div> <div class="box" style="float:right; clear: right; margin:5px; width: 130px; font-weight: bold"> <p style="font-size: 0.9em">Share with your friends:</p> <span class="st_sharethis"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets sharethis">ShareThis</span></span></span> </div> <p class="first">It is widely recognized that excessive regulation is unnecessarily killing jobs. The question has been what to do about it. President Obama may inadvertently have helped lead to a solution in his debate last week with an Iowa farmer who was complaining about excessive costly regulation. In his reply to the farmer, Mr. Obama said: "[A] lot of times we are going to be applying common sense. If someone has an idea, if we don't think it's a good idea, if we don't think there is more benefit than cost to it, we are not going to do it." Nice statement, but it is untrue in all too many cases, whether the president knows it or not.</p> <p>The president previously has endorsed the concept of cost-benefit analysis in regard to regulation and even has issued an executive order, as other presidents have done, to require executive departments to do cost-benefit analyses on regulations that would have a "major" (often defined as costing more than $100 million) impact. Officials often just ignore the requirement to do cost-benefit analyses with excuses such as that the regulation is not "major" (which they cannot know without doing the analysis) or that they don't have the time to do it, etc. etc. The president suggested to the farmer that he talk to the Department of Agriculture about his complaint, but reporters who tried to contact the department about the farmer's grievance got the same bureaucratic runaround and buck-passing that is characteristic of government — good luck, Mr. farmer.</p> <p>Now the president is telling us he is trying to do everything possible to create jobs. Members of his administration have acknowledged that regulations that do not meet a cost-benefit test cost jobs — as everyone with a basic understanding of economics realizes. We also know from decades of experience and "public choice" theory that the regulatory agencies are unlikely to clean up their acts because they have vested interests in creating more regulations to administer — the economy be damned. Many of the cost-benefit studies that are done by these regulatory agencies are little more than jokes, with grossly incomplete and incompetent analyses. Cass Sunstein, who claims to be in favor of cost-benefit analysis, is Mr. Obama's regulatory czar. But action — or inaction — speaks louder than words. Some agencies, such as the Internal Revenue Service and Treasury, often just refuse to do serious cost-benefit analysis, yet their rulings often cost hundreds of billions of dollars and hundreds of thousands of jobs.</p><div class="box2"> <div class="boxcontent"><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/richard-rahn">Richard W. Rahn</a> is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.</em></p> <a class="head" href="http://www.cato.org/people/richard-rahn">More by Richard W. Rahn</a></div></div> <p>Nancy A. Nord, a member of the U.S. Consumer Product Safety Commission (CPSC), has lists of many businesses that have been needlessly destroyed by the failure of her commission to do proper cost-benefit analysis. She has written that "these are real people who have lost real jobs and who are being forced to pay more for products with no real safety benefit."</p> <p>There is a solution. First, as a matter of law, Congress should pass a requirement that before any regulation (not just major ones) is promulgated by any government department (including the IRS) or independent agency, the department or agency must have done a competent, complete and independent cost-benefit study. In order to make the law self-enforcing so it is not just ignored, any party or collection of parties who were adversely affected by the regulation would be allowed to bring suit to have it overturned if they could show that the costs of the regulation exceed its benefit (i.e., the preponderance of evidence). If the plaintiffs win, they would be entitled to have both their legal costs and the costs of their cost-benefit study reimbursed by the agency that issued the faulty regulation. Currently, in some limited circumstances, affected parties may bring suit to overturn destructive regulations. The U.S. Court of Appeals for the D.C. Circuit just struck down the Security and Exchange Commission's "proxy access rule," with Judge Douglas H. Ginsburg's devastating critique of the incompetent cost-benefit analysis by the SEC.</p> <p>Despite these limited successes, the goal is to re-establish balance by making it much easier for those injured by regulations that do not meet a reasonable cost-benefit test to obtain redress. Frivolous suits should not be much of a problem because the plaintiffs would have to go to the considerable expense of funding a competent cost-benefit study and showing before going to court that the government's study was either nonexistent or flawed. One of the founding fathers of the field of law and economics, Henry G. Manne, dean emeritus of the George Mason University Law School, said he expects that my proposed solution would result in significantly more litigation; even so, he said he thinks it probably is well worth doing. Eventually, the regulatory agencies will realize that excessive regulation is costly to them, and thus they will become more responsible.</p> <p>Again, the president said he is for cost-benefit analyses for regulations, and he also has said we must create more jobs. Republicans in Congress are searching for their own ways to create jobs, so requiring cost-benefit analyses for regulations should have great popular appeal. If properly drafted and explained, the requirement would be difficult for the president and the Democrats in Congress to oppose. If they are smart, they even could take credit for signing it into law.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/empower-regulated.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-23T15:43:00-07:00">3:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4542883549692185693">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4542883549692185693&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Empower%20the%20Regulated" rel="tag">Empower the Regulated</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7252730167571803205"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/obamacare-heads-to-supreme-court.html">Obamacare Heads to the Supreme Court</a> </h3> <div class="post-body entry-content"> <h1>Obamacare Heads to the Supreme Court</h1> <p>by Doug Bandow </p> <p><em></em></p> <div class="box" style="float:right; margin:5px;"> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" style="text-decoration:none;"><img src="http://www.cato.org/images/print_page.gif" style="padding-top:1px;" border="0" /> PRINT PAGE</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:0;margin-bottom:3px; padding-left:5px; font-size:9px; letter-spacing:1px;"> <a style="cursor: pointer; text-decoration: none" class="click-sticky" rel="pub_citations.php?pub_id=13592" title="Cite this article"><img src="http://www.cato.org/images/citation_page.gif" style="padding-top:1px" border="0" /> CITE THIS</a> </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" rel="stylesheet" class="styleswitch"><img src="http://www.cato.org/images/switch_normal.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" rel="stylesheet_larger" class="styleswitch"><img src="http://www.cato.org/images/switch_larger.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" rel="stylesheet_largest" class="styleswitch"><img src="http://www.cato.org/images/switch_largest.gif" border="0" /></a> Sans Serif </div> <div style="background: #FFF url(/images/bubble.gif) no-repeat 0 0; height:17px; width:125px; padding-bottom:3px;padding-left:3px; font-size:9px; letter-spacing:1px;"> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" rel="stylesheet_1_serif" class="styleswitch"><img src="http://www.cato.org/images/switch1serif.gif" style="padding-top:1px;" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" rel="stylesheet_2_serif" class="styleswitch"><img src="http://www.cato.org/images/switch2serif.gif" border="0" /></a> <a href="http://www.cato.org/pub_display.php?pub_id=13592#" rel="stylesheet_3_serif" class="styleswitch"><img src="http://www.cato.org/images/switch3serif.gif" border="0" /></a> Serif </div> </div> <div class="box" style="float:right; clear: right; margin:5px; width: 130px; font-weight: bold"> <p style="font-size: 0.9em">Share with your friends:</p> <span class="st_sharethis"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets sharethis">ShareThis</span></span></span> </div> <p class="first">When Congress was pushing through President Barack Obama's plan to nationalize health care decision-making, legislators gave little thought to the Constitution. After all, the denizens of Capitol Hill had grown accustomed to passing whatever laws they desired, with the expectation that, if necessary, compliant courts would fashion another magical legal doctrine or two to justify Congress' action. Naturally, all of the president's men and their allies dismissed the legal cases filed against Obamacare after it became law.</p> <p>However, the advocates of government-controlled medicine are no longer laughing. The Eleventh Circuit Court of Appeals last week struckdown an essential part of the legislation. This evens the score, balancing an earlier decision by the Sixth Circuit to uphold the vast expansion of federal power. In the latest case, Judge Frank Hull, a Democratic appointee, voted with Chief Judge Joel Dubina to overturn the legislation.</p> <p>The substantive sections of the majority opinion in <em>State of Florida, et al., vs. U.S. Department of Health and Human Services</em> run roughly 150 pages, making it the longest and most detailed decision yet. As such, noted my Cato Institute colleague Ilya Shapiro, the "ruling shows that the constitutional issues raised by the healthcare reform — and especially the individual mandate — are complex, serious, and non-ideological." </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/doug-bandow">Doug Bandow</a> is a Senior Fellow at the Cato Institute and the Senior Fellow in International Religious Persecution at the Institute on Religion and Public Policy. A former Special Assistant to President Ronald Reagan, he is author of </em><a href="http://www.amazon.com/Beyond-Good-Intentions-Christian-Worldview/dp/0891074988/ref=sr_1_1?ie=UTF8&qid=1308322413&sr=8-1/?tag=catoinstitute-20" target="_blank">Beyond Good Intentions: A Biblical View of Politics</a><em> (Crossway).</em></p> <a class="head" href="http://www.cato.org/people/doug-bandow">More by Doug Bandow</a></div></div> <p>The decision obviously will affect Americans' health care. But the more basic issue is whether there remains any limit to the reach of the federal government. The Framers viewed the national government as having important but only limited and enumerated powers. That is, Washington was an island of government authority in an ocean of individual liberty.</p> <p>Over the years the courts have gutted constitutional doctrines intended to limit state power and justified almost any government action unless barred by the Bill of Rights. Indeed, the Commerce Clause, which authorizes federal regulation of commerce "among the several states," has been interpreted to largely swallow up Article 1, Section 8, which enumerates Congress's authority. The ocean became one of government power, with but a few islands of personal freedom.</p> <p>However, Obamacare went further than any previous federal intrusion. In the name of regulating commerce, the law ordered people who had not entered any market to purchase a private product. If upheld, the measure would establish the principle that Americans could be forced to buy American cars to bail out the auto industry, Lehman securities to save Wall Street, and homes to revive the housing market. Whether or not the insurance mandate is good policy — and there are lots of reasons to argue that it is not — it effectively dismantles any meaningful limits on the national government.</p> <p>The five federal District Court decisions so far have broken three-to-two in upholding Obamacare. Although in the majority, the former have been less than persuasive. Indeed, District Court Judge Gladys Kessler stated in her opinion that the government could regulate "mental activity" — under a constitutional provision involving "commerce."</p> <p>All of these rulings were appealed. The Sixth Circuit was first to deliver its opinion, with the judges split two-to-one in favor of the president's plan to treat passivity as if it was activity. Then last week the Eleventh Circuit said no.</p> <p>Twenty-six states sued the federal government, challenging several aspects of the misnamed Patient Protection and Affordable Care Act. (The law actually supersedes patient choice and bends the medical cost curve upward.)</p> <p>One claim was that the legislation's dramatic expansion of Medicaid, which would impose additional costs on the states, was "coercive." Explained Judges Dubina and Hull: "[T]he coercion test asks whether the federal scheme removes state choice and compels the state to act because the state, in fact, has no other option."</p> <p>Unfortunately, the states all have chosen to accept federal Medicaid dollars. With their hands greedily extended, they have been unable to convince any judge in any case that they could do nothing about the extra costs to be imposed. The Eleventh Circuit majority noted: "[S]tates have plenty of notice — nearly four years from the date the bill was signed into law — to decide whether they will continue to participate in Medicaid by adopting the expansions or not."</p> <p>States might want to stay in the program without paying more, but that is not the same as being unable to pay more. Thus, observed the judges, "Medicaid-participating states have a real choice — not just in theory but in fact — to participate in the Act's Medicaid expansion" and "Where an entity has a real choice, there can be no coercion."</p> <p>States should take this lesson to heart before again lining up for a federal handout.</p> <p>The more important challenge was to the individual mandate. Under any serious interpretation of the meaning of "commerce" carried out "among" the states, <em>not</em> buying insurance does not qualify. The activity would have to cross state boundaries and, more important, actually be a commercial activity.</p> <p>Under extraordinary political pressure the New Deal Supreme Court systematically denuded the Constitution of limits on government, substituting political preference for legal principle. In <em>Wickard v. Filburn,</em> the justices allowed the federal government to restrict a farmer from planting food for his family's personal use, ruling that intra-state non-commercial activity was the same as inter-state commerce, since the former could affect the latter.</p> <p>It was a profoundly dishonest opinion, ignoring the plain meaning of the phrase as well as clear intent of those who wrote and ratified the Constitution. Had the recently rebellious Americans understood that they would end up authorizing the federal government to regulate almost every human activity with this one phrase, they would have struck it from the text or refused to ratify the document.</p> <p>Still, <em>Wickard</em> only covered <em>almost</em> everything. Explained Judges Dubina and Hull in <em>Florida v. HHS</em>: "Nonetheless, the Supreme Court has staunchly maintained that the commerce power contains outer limits which are necessary to preserve the federal-state balance in the Constitution."</p> <p>Those limits may be hard to discern, but the high court eventually enunciated them in two cases. In 1995 the majority ruled in <em>United States v. Lopez</em> that the Commerce Clause did not allow Congress to ban possession of a gun in a school zone since there was no commerce. In <em>United States v. Morrison</em>, decided in 2000, the Court overturned a penalty against gender-related violence, since there was no "economic activity." In both cases the Supreme Court recognized that accepting the government's position yielded no obvious limit to government power. Said the majority in <em>Lopez</em>, "[W]e are hard pressed to posit any activity by an individual that Congress is without power to regulate." The justices stepped back from that jurisprudential abyss.</p> <p>After a detailed review, the Eleventh Circuit noted that Congress' latest assertion of power is unprecedented: "Even in the face of a Great Depression, a World War, a Cold War, recessions, oil shocks, inflation, and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle."</p> <p>Equally important, the power being claimed through Obamacare is extraordinary. The majority added:</p> <blockquote>In sum, the individual mandate is breathtaking in its expansive scope. It regulates those who have not entered the health care market at all. It regulates those who have entered the health care market, but have not entered the insurance market (and have no intention of doing so). It is overinclusive in <em>when</em> it regulates: it conflates those who presently consumer health care with those who will not consume health care for many years into the future. The government's position amounts to an argument that the mere fact of an individual's existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life. This theory affords no limiting principles in which to confine Congress's enumerated power.</blockquote> <p>The Administration makes much of the alleged uniqueness of the market and the problem of cost-shifting from the uninsured. However, the majority noted that the proffered distinctions have no constitutional relevance. Moreover, "the primary persons regulated by the individual mandate are not cost-shifters, but <em>healthy individuals</em> who forego purchasing insurance." This merely reaffirms the extraordinary nature of the mandate, "forcing market entry by those outside the market."</p> <p>Reinforcing the Eleventh Circuit's caution in approaching the mandate was the fact that "insurance qualifies as an area of traditional state regulation." So does health care, since "a state's role in safeguarding the health of its citizens is a quintessential component of its sovereign powers." Federalism became the clincher. Stated the majority: "When this federalism factor is added to the numerous indicia of constitutional infirmity delineated above, we must conclude that the individual mandate cannot be sustained as a valid exercise of Congress's power to regulate activities that substantially affect interstate commerce."</p> <p>The administration made two other unsuccessful claims to salvage the mandate. The first was that the requirement was "a necessary and proper exercise" of the commerce power. Nice try, but no cigar, said Judges Dubina and Hull. </p> <p>The majority concluded that the argument the mandate is "necessary" is undermined by PPACA's own terms, with "broad exemptions and exceptions to the individual mandate (and its penalty) that impair its scope and functionality." In short, "to the extent the uninsureds' ability to delay insurance purchases would leave a 'gaping hole' in Congress' efforts to reform the insurance market, Congress has seen fit to bore the hole itself.â€</p> <p>But even assuming "necessity" is not enough, the judges explained: "It would be nonsensical to suggest that, in announcing its 'larger regulatory scheme' doctrine, the Supreme Court gave Congress <em>carte blanche</em> to enact unconstitutional regulations so long as such enactments were part of a broader, comprehensive regulatory scheme." A law must be "proper" — that is, within the federal government's constitutional power — as well as "necessary."</p> <p>The government's second claim was that the mandate, backed by a tax penalty, actually is a tax. In this case the majority didn't even say nice try. Rather, noted the opinion, "all of the federal courts, which have otherwise reached sharply divergent conclusions on the constitutionality of the individual mandate, have spoken on this issue with clarion uniformity. Beginning with the district court in this case, all have found, without exception, that the individual mandate operates as a regulatory penalty, not a tax."</p> <p>It could not be otherwise. Congress declared the penalty to be a penalty, counted on no revenue from the provision, limited IRS power to enforce the penalty, and cited the Commerce Clause as the law's constitutional basis. Moreover, the fact that the Obama administration claimed the mandate was essential to its regulatory scheme demonstrated that the penalty was, in fact, a penalty enacted to back the mandate. The majority opined: "The individual mandate as written cannot be supported by the tax power."</p> <p>Although the appellate court gutted Obamacare by voiding the insurance mandate, the judges did not kill the legislation. They reversed the trial court on the issue of "severability" — that is, whether the mandate can be separated from the rest of the bill. The District Court said no, since the mandate was integral to the legislation.</p> <p>The Eleventh Circuit came out differently, however. The courts favor severability when possible, even when legislators fail, as in this case, to include a clause supporting severability. Thus, ruled the majority, the rest of the law stands since "the lion's share of the Act has nothing to do with private insurance, much less the mandate that individuals buy insurance."</p> <p>The dissent, too, is long — over 80 pages. Judge Stanley Marcus called for a "pragmatic" decision reflecting "the undeniable fact that Congress' commerce power has grown exponentially over the past two centuries." Yet even he admitted that "the individual mandate is a novel exercise of Congress' Commerce Clause power" and that "it is surely true that there is no Supreme Court decision squarely on point dictating the result that the individual mandate is within the commerce power of Congress."</p> <p>More tellingly, Judge Marcus dismissed "the parade of horribles said to follow ineluctably from upholding the individual mandate," since the supposedly "powerful limits" from <em>Lopez</em> and <em>Morrison</em> would remain. However, if these "powerful limits" do not prevent Congress from treating market inaction as market participation, they are "powerful" only in the opinion writer's mind. Affirming the individual mandate would effectively write the Article 1, Section 8 enumeration out of the Constitution.</p> <p>Judge Marcus's more basic point is that doing the latter would be no big deal since "upholding the individual mandate would be far from a cosmic expansion of the boundaries of the Commerce Clause." In short, since the federal government can do almost everything that it wants already, why not let it do everything? The idea that the Constitution was created to protect individual liberty is of no matter, since most politicians (and most judges, including this one, obviously) today are not interested in protecting individual liberty.</p> <p>The legal battle over Obamacare may look like just another esoteric court fight. However, the outcome will determine whether people retain the freedom to decide on their own medical treatment. The case also will decide whether any substantive powers remain beyond the federal government. Only if the judges affirm that the Constitution means what it says will our liberties be secure.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/obamacare-heads-to-supreme-court.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-23T15:42:00-07:00">3:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7252730167571803205">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7252730167571803205&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8955215006148930294"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/well-worth-money.html">Well Worth the Money</a> </h3> <div class="post-body entry-content"> <span style="font-weight: bold;font-size:180%;">Well Worth the Money</span>
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<br />by David Boaz
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<br />Two weeks ago the House of Representatives announced that it would end its nearly 200-year-old page program. What with new technology and all, there just isn't much need any longer to employ teenagers to take phone messages and carry documents from one member of Congress to another. The program costs $5 million a year, which isn't much in a $3.8 trillion federal budget, but taxpayers should appreciate any elimination of an unnecessary program.
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<br />The Washington Post published remembrances from former pages. One outraged response was titled "Well worth the money."
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<br />Well, it would be, wouldn't it? For those who benefited from it, it is indeed well worth the money. But, as with all government programs, the beneficiaries weren't paying for it. Did the program do the taxpayers much good? Yes, in the days when members of Congress needed a way to get documents to one another, the page program may well have been an efficient use of resources. But times change; technology has eliminated a lot of jobs in the private sector, and there's no reason to think it shouldn't have the same impact in the public sector. Cynics point out that pages were mostly the children of people with good political connections. And then they make better connections: The writer who thought the program was "well worth the money" now runs a company that boasts of having made more than 500 million political robocalls over the past 30 years. So we all owe something to the page program!
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<br />David Boaz is the executive vice president of the Cato Institute. He is the author of Libertarianism: A Primer, the editor of The Libertarian Reader and other books, and the author of the entry on libertarianism in Encyclopaedia Britannica.
<br />More by David Boaz
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<br />But this is just a tiny example of a much bigger problem: every government program is "well worth the money" to its beneficiaries. And the beneficiaries are typically the ones who lobby to create, expand, and protect it. When a program is threatened with cuts, newspapers go out and ask the people "who will be most affected" by the possible cut. They interview farmers about whether farm programs should be cut, library patrons about library cutbacks, train riders about rail subsidy cuts. And guess what: all the beneficiaries oppose cuts to the programs that benefit them. You could write those stories without going out in the August heat to do the actual interviews.
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<br />Economists call this the problem of concentrated benefits and diffuse costs. The benefits of any government program — Medicare, teachers' pensions, a new highway, a tariff — are concentrated on a relatively small number of people. But the costs are diffused over millions of consumers or taxpayers. So the beneficiaries, who stand to gain a great deal from a new program or lose a great deal from the elimination of a program, have a strong incentive to monitor the news, write their legislator, make political contributions, attend town halls, and otherwise work to protect the program. But each taxpayer, who pays little for each program, has much less incentive to get involved in the political process or even to vote.
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<br />And so we get bailouts for the Chrysler Corporation in 1979 and for Wall Street in 2008, a protective tariff for Harley-Davidson in 1982, higher-than-necessary wages for public employees, sugar and ethanol subsidies that benefit Archer-Daniels-Midland, farm subsidies, and thousands more programs with beneficiaries who know exactly who they are. When the Pentagon decided to cancel a program to build new presidential helicopters — after the price ballooned from $6.8 billion to $13 billion — an 11-year-old girl in Owego, New York, where Lockheed Martin had planned to build the helicopters, wrote a letter to President Obama that became "a voice for her shaken community":
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<br /> Lockheed is the main job source in Owego. If you shut down the program, my mom may lose her job and a lot of other people too... . Owego will be a ghost town. I've lived here my whole life and I love it here! Please really, really think it over.
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<br />This girl loves her family and her home town. And we can't expect her to understand what $13 billion means to the American taxpayers. To the girl and her mom, the new helicopter is "well worth the money." But after all the beneficiaries of all the programs lobby to keep them going, we end up with a $3.8 trillion budget and a $1.5 trillion federal deficit.
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<br />For an unusually candid view of what it means to direct federal dollars to particular areas, we might turn to an advertisement in the Durango, Colorado, Herald in 1987, which touted the Animas-La Plata dam and irrigation project and made explicit the usual hidden calculations of those trying to get their hands on federal dollars:
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<br /> Why we should support the Animas-La Plata Project: Because someone else is paying the tab! We get the water. We get the reservoir. They get the bill.
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<br />In the private sector, the voluntary sector of the economy, we know that something is "well worth the money" if people are willing to spend their own money on it. In government, politicians work to separate the payment of taxes from the receipt of specific services. We're not asked "will you pay $100 right now for farm subsidies and $4000 for Medicaid and $1600 for the wars in Iraq and Afghanistan and $130 for a new presidential helicopter and ... ?"
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<br />If we did get such a question, we might well decide that lots of government programs were not "well worth the money" to the people who would be paying the money.
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<br />And by the way, I said above that taxpayers would appreciate the elimination of even a small spending program. But House leaders said that they "will work with Members of the House to carry on the tradition of engaging young people in the work of the Congress." So chances are, taxpayers won't actually see even that $5 million savings. That's life in the taxpaying business. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/well-worth-money.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-23T15:41:00-07:00">3:41 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8955215006148930294">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8955215006148930294&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Well%20Worth%20the%20Money" rel="tag">Well Worth the Money</a> </span> </div> </div> </div> </div> <a name="1564878351978506126"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/for-global-health-china-must-liberalize.html">For Global Health, China Must Liberalize</a> </h3> <span style="font-weight: bold;font-size:180%;">For Global Health, China Must Liberalize</span>
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<br />by James A. Dorn
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<br />Chinese officials have been highly critical of the U.S. debt buildup and the political wrangling in Washington that has failed to resolve the debt crisis.
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<br />But China could well turn that leery eye inward to find policies that are preventing financial markets from functioning in a healthy manner — and which may yet spread the next serious malady to global financial markets.
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<br />One problem is that China is the largest holder of U.S. Treasury securities, with more than $1 trillion invested. Without China's large appetite for U.S. debt, Congress would have been more constrained in its deficit spending, and U.S. growth would have been more robust.
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<br /> The challenge for both China and the U.S. is to restore the balance between the state and the market — to maximize freedom and minimize coercion.
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<br />China now holds more than $3 trillion in official foreign exchange reserves, the result of large trade surpluses and inward foreign investment. However, China is a net exporter of capital via the purchase of Treasuries and other government securities. The large accumulation of dollars is the result of an exchange-rate policy designed to undervalue the yuan.
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<br />Which brings us to the second major problem: if the Chinese currency were allowed to freely float, there would be no massive buildup of official reserves. Traders, not communist party members, would determine the exchange rate. Adjustment would occur spontaneously via voluntary decisions, not via central plans.
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<br />A more flexible exchange rate and a fully convertible yuan would increase the range of choices open to people, expand the private sector, and increase popular pressure for political reform.
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<br />The legacy of central planning still haunts the banking sector. Lending, interest rates, and the major banks themselves are all controlled by the state. Even more ominous is that most of the lending is to state-owned enterprises. Investment decisions are therefore heavily politicized, and corruption is rampant.
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<br />Stimulus spending allowed China to escape the 2008-09 global financial crisis, but the rapid expansion of bank credit, as well as off-balance sheet lending, has led to excess money growth and an inflation rate of more than 6 percent. UBS data show that China's bank credit, including off-balance sheet loans, now stands at about 180 percent of GDP, up sharply from 2008.
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<br />If the economy slows, nonperforming loans could swell. The excess credit could turn into a debt crisis. That crisis could be compounded by a bursting of the Treasury bond bubble, once the Federal Reserve begins to increase interest rates, or once markets think the Fed will inflate and reduce the real debt burden.
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<br />China needs to tame domestic inflation and further liberalize its economy. Yet, there is strong political pressure to continue to peg the yuan at an artificially low rate and "sterilize" the newly minted yuan — that is, drain off excess yuan by selling central bank bills, increasing reserve requirements, and setting tighter lending quotas.
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<br />Price controls and capital controls are also being used to suppress inflation and to limit private choices. But as long as China is trapped in its export-led development model, with financial repression, the hoard of foreign exchange reserves will grow and most of those reserves will be lent to the U.S government, not to private enterprise.
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<br />The reality is that both China and the U.S. are growing the state sector at the expense of the private sector. Crony capitalism, not market liberalism, is now the norm.
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<br />James A. Dorn is vice president for academic affairs and a China analyst at the Cato Institute in Washington, D.C.
<br />More by James A. Dorn
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<br />For China to become a global financial center and achieve financial harmony, there must be privatization of the banking system, capital freedom, flexible exchange rates, market-based interest rates, and a rule of law that assigns responsibility to private individuals, not the state.
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<br />The mispricing of credit/risk and monetary manipulation plague both China and the U.S. Beijing is right to criticize U.S. policymakers for creating fiscal and monetary uncertainty. But what Beijing wants is more, not less government control, while the solution to the problem of creating economic and social harmony is less government.
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<br />With a rule of law and limited government, voluntary exchanges in private free markets would increase individual sovereignty and wealth, while promoting the general welfare. That concept of spontaneous order is now foreign to most politicians. Politics and "legal plunder" have trumped what the great French liberal Frederic Bastiat called the "law of liberty."
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<br />The challenge for both China and the U.S. is to restore the balance between the state and the market — to maximize freedom and minimize coercion. Rebalancing can then be market-directed, economic relations normalized, and politics put in its proper place. Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-78261659862679937722011-08-04T18:02:00.001-07:002011-08-04T18:02:17.109-07:00<div class="post-body entry-content"> <h1>Oil Heads for Biggest Weekly Decline Since May, Wiping Out Gains for Year</h1> <div id="story_meta"> <cite class="byline"> By Margot Habiby and Ben Sharples -</cite></div><br /><p>Oil fell in <a href="http://topics.bloomberg.com/new-york/">New York</a>, heading for the biggest weekly decline in three months, as investors bet that signs of a slowing economy in the U.S. indicate fuel demand will falter in the world’s biggest crude-consuming nation. </p> <p>Futures slid as much as 0.6 percent after slumping 5.8 percent yesterday. Oil erased this year’s gains as reports showed a rise in jobless claims last week and a drop in <a href="http://topics.bloomberg.com/consumer-confidence/">consumer confidence</a> to the lowest in more than two months. A Labor Department report today may show that the U.S. failed to create enough jobs in July to reduce unemployment, according to a Bloomberg News survey. </p> <p>“What you’re looking at here is concerns about what demand is going to be doing because of the economy,” said <a href="http://topics.bloomberg.com/adam-sieminski/">Adam Sieminski</a>, chief energy economist at Deutsche Bank AG in <a href="http://topics.bloomberg.com/washington/">Washington</a>. “The result of all this could be slower growth and the result of slower growth is less oil demand.” </p> <p>Crude for September delivery dropped as much as 50 cents to $86.13 a barrel in electronic trading on the <a href="http://topics.bloomberg.com/new-york-mercantile-exchange/">New York Mercantile Exchange</a> and was at $86.35 at 9:11 a.m. Sydney time. The contract yesterday tumbled $5.30 to $86.63, the lowest settlement since Feb. 18. Prices are down 9.8 percent for the week and 5.5 percent in 2011. </p> <p>Brent oil for September settlement fell $5.98, or 5.3 percent, to $107.25 on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract settled at a $20.62 premium to U.S. futures, compared with a record $22.67 close on Aug. 2. </p> <p>U.S. Economy </p> <p>U.S. stocks plunged, driving the Standard & Poor’s 500 Index to the biggest decline since February 2009. The <a href="http://topics.bloomberg.com/s%26p-500/">S&P 500</a> decreased 4.8 percent to an eight-month low of 1,200.07 at the 4 p.m. close in New York. </p> <p>Applications for jobless benefits decreased 1,000 in the week ended July 30 to 400,000, the Labor Department said yesterday in Washington. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. </p> <p>A Labor Department report today may show that U.S. payrolls rose by 85,000 workers after an 18,000 increase in June that was the smallest this year, according to the median forecast of 88 economists surveyed by Bloomberg News. The jobless rate probably held at 9.2 percent after rising in each of the previous three months. </p> <p>The Bloomberg Consumer Comfort Index was minus 47.6 in the week to July 31, the lowest since May, compared with minus 46.8 the prior period. Confidence among women fell to the lowest level since October 2009, while Americans making more than $100,000 a year were the most pessimistic since November 2009. </p> <p>U.S. crude oil stockpiles climbed for a second week in the seven days to July 29, according to an Energy Department report on Aug. 3. Inventories increased 950,000 barrels to 354.9 million, the report shows. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/oil-heads-for-biggest-weekly-decline.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:58:00-07:00">5:58 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2786091403210432495">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2786091403210432495&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7873333731841370040"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/probability-of-economic-recession-has.html">Probability of Economic Recession Has Increased</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/probability-of-economic-recession-has.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:56:00-07:00">5:56 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7873333731841370040">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7873333731841370040&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6624397498938880871"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/treasury-yields-evoke-eisenhower-era.html">Treasury Yields Evoke Eisenhower Era</a> </h3> <div class="post-body entry-content"> <h1>Treasury Yields Evoke Eisenhower Era on Concern Global Economy Is Stalling</h1> <div class="story_inline assets clearfix "> <cite class="byline"> By John Detrixhe </cite><div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container overlay_container"> <a class="enlarge_image" rel="#91375" href="http://www.bloomberg.com/photo/treasury-yields-evoke-eisenhower-era-/91375.html" target="_blank"> <span>Enlarge image</span> <img alt="Treasury Yields Evoke Eisenhower Era " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=igun2HAvDoa4" /> </a> </div> <p class="caption">The Dow Jones industrial average plunged more than 300 points and erased its gains for the year as investors grew more concerned about economic weakness in the U.S. and Europe. Photographer: Jin Lee/AP </p> </div> <div class="image thumbnail"> <div class="thumbnail_container overlay_container"> <a class="enlarge_image" rel="#91373" href="http://www.bloomberg.com/photo/treasury-yields-evoke-eisenhower-era-/91373.html" target="_blank"> <span>Enlarge image</span> <img alt="Treasury Yields Evoke Eisenhower Era " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=i4SpwAMonGRE" /> </a> </div> <p class="caption">A trader stands outside the New York Stock Exchange during afternoon trading on August 4, 201. Photographer: Mario Tama/Getty Images </p> </div> </div> </div> <p>Treasury bond yields are plunging to levels seen in the 1950s on concern the two-year recovery in the world’s largest economy is stalling. </p> <p>Yields on benchmark 10-year U.S. notes are about 4.3 percentage points below the average over the past 49 years and almost where they were when President <a href="http://topics.bloomberg.com/dwight-d.-eisenhower/">Dwight D. Eisenhower</a> began his administration in 1953. The yield, which dropped to 2.40 percent today in New York, reached a record low of 2.04 percent in December 2008 during the global financial crisis. </p> <p>Investors are piling into Treasuries after the <a href="http://topics.bloomberg.com/european-central-bank/">European Central Bank</a> resumed bond purchases and made more cash available to banks to keep the region’s debt crisis from spreading and the Japanese and Swiss central banks sought to protect their economies against declines in the dollar and euro. The Standard & Poor’s 500 Index had its biggest drop since 2009 and markets worldwide have tumbled since a July 29 report showing gross domestic product climbed less than an earlier estimate in the second quarter renewed speculation the <a href="http://topics.bloomberg.com/federal-reserve/">Federal Reserve</a> will have to resort to more stimulus measures to avert another recession. </p> <p>“It’s a clear cut panic,” said Colin Robertson, the managing director of fixed-income in <a href="http://topics.bloomberg.com/chicago/">Chicago</a> at Northern Trust Corp., which oversees $300 billion. “Along with European debt concerns, market participants are focusing on the perceived much higher likelihood of a double-dip recession in the U.S.” </p> <h2>Bill Auction </h2> <p>Yields on 10-year notes dropped 21 basis points, or 0.21 percentage point, to 2.41 percent at 4:38 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.125 percent securities maturing in May 2021 rose 1 28/32, or $18.75 per $1,000 face amount, to 106 6/32. </p> <p>Two-year note yields fell eight basis points to a record low of 0.25 percent. The yields on 10-year notes fell to within 2.16 percentage points of two-year securities, the narrowest since November. </p> <p>“There’s this fear of stall speed,” said Mohamed El- Erian, chief executive and co-chief investment officer at the world’s biggest manager of bond funds, said in an interview on Bloomberg Television yesterday. “If a plane’s not going fast enough, it ends up by coming down.” </p> <p>Rates on one-month bills traded at negative 0.005 percent and the Treasury sold $20 billion of 10-day cash management bills at zero percent as investors were willing to lend the government money for free in exchange for the promise of getting back their principal. </p> <h2>Stocks Stumble </h2> <p>“It’s signaling a flight to safety,” said <a href="http://topics.bloomberg.com/ethan-harris/">Ethan Harris</a>, head of developed-markets economic research at Bank of America Merrill Lynch in New York, on Bloomberg Television’s “Surveillance Midday” with <a href="http://topics.bloomberg.com/tom-keene/">Tom Keene</a>. “Even with the Treasury market as a weakened safe-haven market, it still gets the safe haven money.” </p> <p>The <a href="http://topics.bloomberg.com/s%26p-500/">S&P 500</a> fell 4.8 percent, dropping more than 10 percent drop from its April 29 peak. The MSCI All-Country World Index slid 4.3 percent. Oil plunged 6.2 percent to $86.27 a barrel as all 24 commodities tracked by the S&P GSCI Index declined. Gold futures retreated from a record. </p> <p>“It’s a general fear environment,” George Strickland, a managing director at <a href="http://topics.bloomberg.com/santa-fe/">Santa Fe</a>, New Mexico-based Thornburg Investment Management Inc., which oversees about $84 billion, said in a phone interview. </p> <p>The U.S. faces a 50 percent chance of a return to recession, said <a href="http://topics.bloomberg.com/martin-feldstein/">Martin Feldstein</a>, a Harvard University professor and a member of the Business Cycle Dating Committee of the National Bureau of Economic Research, said Aug. 2 on Bloomberg Television. </p> <h2>Eisenhower Era </h2> <p>The 10-year yield remained below 3 percent from the third quarter of 1953 through the second quarter of 1956, and dipped below that level again in 1958 as Eisenhower grappled with an economy that fell into a 10-month recession in 1953, an eight- month contraction in 1957 and another 10-month slowdown in 1960. </p> <p>Bond yields began a 20-year climb after the end of the last Eisenhower recession in 1961, reaching a peak at 15.8 percent in 1981 as Fed Chairman <a href="http://topics.bloomberg.com/paul-volcker/">Paul Volcker</a> raised the central bank’s target rate for overnight loans between banks to 20 percent to contain surging inflation. </p> <p>Signs of an economic slowdown have emerged as the federal government begins moving to rein in deficits. President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> signed legislation on Aug. 2 that threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years. The compromise defers decisions on the nation’s finances to a bipartisan panel of lawmakers and may reduce government deficits only modestly while slowing economic growth. </p> <h2>Payroll Report </h2> <p>“If there’s a 50-50 chance of recession risk, then you have to think there’s a 50-50 risk of deflation, then yields should be even lower than today,” said <a href="http://topics.bloomberg.com/chris-low/">Chris Low</a>, chief economist at FTN Financial in <a href="http://topics.bloomberg.com/new-york/">New York</a>. </p> <p>Payrolls climbed by 85,000 workers after an 18,000 increase in June that was the smallest this year, according to the median forecast of 86 economists surveyed by Bloomberg News before a Labor Department report Aug. 5. The jobless rate held at 9.2 percent after rising in each of the previous three months. </p> <p>The unraveling economy and unemployment higher than 9 percent may spur Fed officials to consider steps to shore up the recovery when they meet at <a href="http://topics.bloomberg.com/jackson-hole/">Jackson Hole</a>, <a href="http://topics.bloomberg.com/wyoming/">Wyoming</a> in August. Fed Chairman <a href="http://topics.bloomberg.com/ben-s.-bernanke/">Ben S. Bernanke</a> first signaled the central bank may undertake additional bond purchases, known as quantitative easing, or QE2, at the Economic Policy Symposium a year ago. </p> <h2>QE3 Speculation </h2> <p>“The Fed’s hurdle for QE3 is lower at this point than it was at the end of June at their last meeting,” Tom Higgins, global macro strategist in <a href="http://topics.bloomberg.com/boston/">Boston</a> at Standish Mellon Asset Management Co., which oversees about $85 billion in fixed-income assets, said in a telephone interview. “That we can go into a recession and come out into a recovery in normal business cycle fashion is less likely, and the reason is that the Fed has fewer tools to address the downturn and Congress is currently tightening fiscal policy.” </p> <p>Interest-rate futures signal traders are pushing back expectations for when the Fed raises its target for overnight loans between banks to 2013. The <a href="http://topics.bloomberg.com/federal-open-market-committee/">Federal Open Market Committee</a> has kept its target rate for overnight loans in a range of zero to 0.25 percent since December 2008. </p> <p>ECB purchases of Irish and Portuguese bonds haven’t stamped out investor concern on the 21-month crisis spreading to Italy and Spain, whose yields soared to euro-era highs this week. European officials are trying to put a firewall around <a href="http://topics.bloomberg.com/europe/">Europe</a>’s third and fourth-largest economies to avoid them being forced into seeking external aid. </p> <h2>‘Inkling of Growth’ </h2> <p>The yen dropped by the most since October 2008 against the dollar after <a href="http://topics.bloomberg.com/japan/">Japan</a> sold its currency to stem gains that threaten the nation’s economic recovery. The Swiss central bank unexpectedly cut interest rates yesterday and said it will increase the supply of francs to money markets to curb the “massively overvalued” currency. </p> <p>Investors have snapped up the yen and the franc as signs emerge that the global economy is slowing, said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. </p> <p>“To a great extent this is all a function of weak dollar policy and also a function of slowing U.S. fundamentals,” Schlossberg said in a telephone interview. “The market needs to perceive that the U.S. has an inkling of growth.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/treasury-yields-evoke-eisenhower-era.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:55:00-07:00">5:55 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6624397498938880871">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6624397498938880871&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4725760116066206085"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/world-market-rout-is-loud-no-confidence.html">World Market Rout Is a Loud No-Confidence Vote in Global Leadership</a> </h3> <div class="post-body entry-content"> <h1>World Market Rout Is a Loud No-Confidence Vote in Global Leadership: View</h1> <div class="story_inline assets clearfix "> <cite class="byline">By the Editors </cite><cite class="byline story_time"><span class="datestamp"></span></cite><div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container overlay_container"> <a class="enlarge_image" rel="#91419" href="http://www.bloomberg.com/photo/market-crash-/91419.html" target="_blank"> <span>Enlarge image</span> <img alt="Market Crash " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=igXPrSLqVwcg" /> </a> </div> <p class="caption">Photographs by: Scott Eells, Prashanth Vishwanathan, Tim Boyle; Illustration by Bloomberg View </p> </div> </div> </div> <p>Global markets have issued a vote of no confidence in the management of the world’s two largest economies, the U.S. and the euro area. To regain credibility, leaders on both sides of the Atlantic need to recognize the magnitude of the crisis they face. </p> <p>The outlook reflected by the market rout is not encouraging, coming as it does after European and U.S. officials thought they were doing enough to fix their similar -- and overlapping -- fiscal problems. The U.S. is growing at a rate too slow to withstand a serious shock, and that shock could easily come from <a href="http://topics.bloomberg.com/europe/">Europe</a>’s resurgent financial crisis. So far, politicians’ efforts have been far too timid to convince the world that they have the situation under control. </p> <p>This week’s deal to raise the U.S. debt ceiling is a case in point. Given the exceedingly weak recovery, the U.S. government should stand ready to provide more stimulus. To prevent larger deficits from harming its credit standing, the U.S. must also convince investors that it is capable of putting its long-term finances on a sustainable path. </p> <p>Instead, partisan brinkmanship has undermined confidence. The deal that Congress and the White House ultimately struck doesn’t come close to solving the government’s long-term problems, but threatens spending cuts that could weigh heavily on economic growth in the short term. </p> <h2>Lacking Urgency </h2> <p>Europe’s leaders have also lacked urgency. Markets need to see that German Chancellor <a href="http://topics.bloomberg.com/angela-merkel/">Angela Merkel</a>, French President <a href="http://topics.bloomberg.com/nicolas-sarkozy/">Nicolas Sarkozy</a> and other officials can rise above national politics to fix the euro area’s glaring flaws, which include the lack of a unified fiscal authority. Instead, a series of half- measures has mainly served to exacerbate the crisis, allowing its spread to the large economies of <a href="http://topics.bloomberg.com/spain/">Spain</a> and <a href="http://topics.bloomberg.com/italy/">Italy</a> and to banks that hold Europe’s sovereign debt. </p> <p>Thursday’s moves in the markets gave a taste of how costly politicians’ dithering can be. The drop in world stock markets represents hundreds of billions of dollars in lost value. Italy’s cost of borrowing, as measured by the yield on its 10- year government bond, rose to a new euro-era high of 6.18 percent. </p> <p>What needs to be done? Europe’s leaders should demonstrate that they stand together, ready to do what it takes to restore confidence. This would involve issuing jointly backed euro bonds to replace most or all of the debts of struggling governments, and simultaneously recapitalizing banks that would suffer losses from debt restructurings. It also would include setting up a <a href="http://topics.bloomberg.com/finance-ministry/">finance ministry</a> with enough taxation power to service the euro bonds and provide stimulus to weaker economies. </p> <h2>Consumer Demand </h2> <p>In the U.S., the government must be prepared to boost consumer demand, and that means putting people back to work. Ideally, a comprehensive plan to fix the country’s long-term finances could be combined with a shorter-term stimulus. President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> is already promising to pivot from debt talks to a national jobs program. But having just completed punishing negotiations over spending cuts, he has very little hope of finding new money -- and little time to waste. </p> <p>Barring a major new stimulus program, some steps can be taken. Obama could ask Congress to quickly adopt a jobs tax credit, renew clean energy tax breaks and temporarily waive federal environmental, labor and other requirements that delay public works programs, all moves that would put workers back on private payrolls. </p> <h2>Job Sharing </h2> <p>The president could ask Congress to allow states to channel some of their federal unemployment compensation into job-sharing programs, which have worked well in <a href="http://topics.bloomberg.com/germany/">Germany</a> and a few American states. He could encourage <a href="http://topics.bloomberg.com/fannie-mae/">Fannie Mae</a> and <a href="http://topics.bloomberg.com/freddie-mac/">Freddie Mac</a> to allow homeowners who are current on their mortgages, but who owe more than their houses are worth, to refinance into lower-rate loans, thus freeing up more cash to spend. </p> <p>When the <a href="http://topics.bloomberg.com/federal-reserve/">Federal Reserve</a> meets on Aug. 9, it should signal that it’s ready to do its part, too. Among the stimulative tools at its disposal: Pledging to hold onto the U.S. Treasury bonds it has accumulated in its quantitative-easing programs, and to reinvest the proceeds from any maturing securities in government debt. It could announce that it plans to keep its key <a href="http://topics.bloomberg.com/interest-rate/">interest rate</a> near zero for a longer, more defined period. It could lower the 0.25 percent interest rate it pays banks that park excess reserves at the central bank, to prompt more lending and investing. And it could replace the shorter-term securities it holds on its $2.9 trillion balance sheet with longer-term ones, to push down those rates as well. </p> <p>Ultimately, markets may force politicians and policy makers to implement all these measures and more. The world will be much better off if they find the will to get ahead of the curve. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/world-market-rout-is-loud-no-confidence.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:53:00-07:00">5:53 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4725760116066206085">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4725760116066206085&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="9165498417719319291"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/japan-stocks-plunge.html">Japan Stocks Plunge</a> </h3> <div class="post-body entry-content"> <h1>Japan Stocks Plunge Most Since March Amid Global Equities Rout</h1> <div class="story_inline assets clearfix "> <cite class="byline"> By Akiko Ikeda and Shani Raja </cite><div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container overlay_container"> <a class="enlarge_image" rel="#91413" href="http://www.bloomberg.com/photo/asian-market-/91413.html" target="_blank"> <span>Enlarge image</span> <img alt="Asian Market " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=i1W1_iSUvOAc" /> </a> </div> <p class="caption">Pedestrians walk past an electronic stock board outside a securities firm in Tokyo on Aug. 2, 2011. Photographer: Kiyoshi Ota/Bloomberg </p> </div> </div> </div> <p>Japanese stocks plunged the most in more than four months as concern the economy is faltering sparked a global equities rout that drove the Standard & Poor’s 500 Index to its worst slump since February 2009. </p> <p>Sony Corp., which makes half of its sales in the U.S. and <a href="http://topics.bloomberg.com/europe/">Europe</a>, tumbled 5.1 percent. Toyota Motor Corp., the world’s largest carmaker, retreated 4 percent. Mitsubishi Corp., <a href="http://topics.bloomberg.com/japan/">Japan</a>’s No. 1 trading company, sank 4.7 percent as commodity prices dropped. </p> <p>The Nikkei 225 Stock Average fell 4.1 percent to 9,266.50 as of 9:07 a.m. in Tokyo, dropping the most since March 15. All 225 members of the Nikkei declined. The broader Topix index plunged 3.8 percent to 794.71. </p> <p>“It’s a panic attack,” said Prasad Patkar, who helps manage the equivalent of $1.7 billion at Sydney-based Platypus Asset Management Ltd. “There was an expectation that resolution of the U.S. debt-ceiling issue would trigger a relief rally. It looks like everyone forgot about the weakness in the underlying economy.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/japan-stocks-plunge.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:52:00-07:00">5:52 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9165498417719319291">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9165498417719319291&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2713170482374550616"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/debt-crisis-white-house-wall-st-calls.html">Debt Crisis: White House-Wall St. Calls</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/debt-crisis-white-house-wall-st-calls.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:50:00-07:00">5:50 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2713170482374550616">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2713170482374550616&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Debt%20Crisis%3A%20White%20House-Wall%20St.%20Calls" rel="tag">Debt Crisis: White House-Wall St. Calls</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3273671273251504928"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/what-can-fed-do-now-to-lift-economy.html">What Can the Fed Do Now to Lift Economy?</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/what-can-fed-do-now-to-lift-economy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:49:00-07:00">5:49 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3273671273251504928">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3273671273251504928&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6387328405410017499"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/are-we-in-liquidity-trap.html">Are We in a Liquidity Trap?</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/are-we-in-liquidity-trap.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:48:00-07:00">5:48 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6387328405410017499">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6387328405410017499&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2567419699233936899"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/stocks-plummet-as-fear-grips-wall-st.html">Stocks Plummet as Fear Grips Wall St</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/stocks-plummet-as-fear-grips-wall-st.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:47:00-07:00">5:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2567419699233936899">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2567419699233936899&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1476695952961086344"></a> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/blog-post.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:47:00-07:00">5:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1476695952961086344">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1476695952961086344&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3977644970277868891"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/tax-reforms-moment.html">Tax Reform's Moment?</a> </h3> <div class="post-body entry-content"> <h1>Tax Reform's Moment? </h1><h2 class="subhead">Where else is the growth going to come from?</h2> <a href="http://online.wsj.com/search/term.html?KEYWORDS=STEPHEN+MOORE&bylinesearch=true">STEPHEN MOORE</a><h3 class="byline"> </h3><p>'Let's go with the radical approach." That's what then-Senate Finance Committee Chairman Bob Packwood exclaimed to his top tax aide during a legendary two-pitchers-of-beer lunch at Washington's Irish Times in the spring of 1986. They were trying to figure out how to save Ronald Reagan's dream of a sweeping tax overhaul that appeared dead in the Senate. That lunch changed history. </p> <a name="U502680457823O7F"></a><p>By going "radical," Mr. Packwood meant a wholesale restructuring of the tax system. His plan was to slash the 50% top tax rate to 28%—which was far lower than even the 35% rate Reagan had proposed—terminate all but the most sacred deductions, and go to war with the high-powered corporate lobbyists on K Street. And miracle of miracles, "radical" carried the day in one of the most improbable legislative victories in a generation. A majority of Republicans and Democrats in both houses voted for imposing the lowest tax rates since the 1920s. This was Congress at its very best. </p> <p>Is it time for another 1986 moment? When I asked that question to the people who could make it happen, they were hardly encouraging. "No way. It won't happen," says Wisconsin Republican and House Budget Committee Chairman Paul Ryan. "There's not enough time and the debt rules would make us raise taxes," he points out. Other naysayers complained that the war between the two parties has made the atmosphere in Washington too poisonous. </p> <p>But don't be so sure. What everyone inside and outside the Beltway wants to know, given the recent economic funk, is: Where will the growth come from? Certainly not from another round of failed Keynesian spending blowouts. The White House's lame call for an infrastructure bank this week is merely a stimulus redux, and Republicans have seen enough "shovel ready projects" to last two lifetimes. Nor will Republicans, in an era of $1.5 trillion deficits, get very far pitching pro-growth tax rate cuts, a la Reagan 1981, without major offsetting loophole closings. This omelet is going to require cracking some eggs. </p> <div class="insetContent insetCol3wide embedType-image imageFormat-DV"><div class="insetTree"> <div id="articleThumbnail_1" class="insettipUnit insetZoomTarget"><div class="insetZoomTargetBox"><div class="insettipBox"><div class="insettip"><p><a>View Full Image</a></p></div></div><a><img src="http://si.wsj.net/public/resources/images/ED-AO027_moore_DV_20110804161300.jpg" alt="moore" border="0" height="394" hspace="0" vspace="0" width="262" /></a></div> <cite>Time & Life Pictures/Getty Images</cite> <p class="targetCaption">Rep. Dan Rostenkowski (left) with Sen. Bob Packwood, June 1, 1986.</p><p>There are other reasons to think the stars might finally be aligning for another 1986 triumph. Last year the White House tax-reform commission headed by former Fed Chairman Paul Volcker denounced the corporate income tax structure and warned that the "growing gap between the U.S. corporate tax rate [39%, a combination of state average and federal rates] and the corporate tax rates of most other countries [25%] generates incentives for U.S. corporations to shift their income and operations to foreign locations." Treasury Secretary Tim Geithner was even more succinct when he said earlier this year: "Everybody who looks at the current system says we can do better than this." Amen. </p> <a name="U502680457823BOG"></a> <p>Meanwhile, everyone seemed to miss the political breakthrough by the much-maligned bipartisan Gang of Six, which proposed to end tax loopholes and lower the top income tax rate to between 23% and 29%. For the first time since 1986 we have Democrats—even liberals like Dick Durbin of Illinois—endorsing lower tax rates and finally acknowledging that soaking the rich with confiscatory taxes is an economic loser. "We understand getting these rates down is an important economic goal," says Democrat Mark Warner of Virginia, another one of the six. </p> <p>Mr. Warner is right on the economics. In the early 1990s, Dale Jorgenson, then-chair of Harvard's economics department, calculated $1 trillion of economy-wide efficiency gains from the 1986 tax reforms—and that was when a trillion was still a lot of money. </p> <a name="U502680457823LSH"></a> <p>There's an old saying that when dollar bills are lying on the sidewalk, someone picks them up. The big question is whether Barack Obama has the good sense to do that on tax reform. It may save his presidency.</p> <a name="U502680457823XSH"></a> <p>Junking the tax code is one of his last chances to pour growth hormones into a sickly economy and get jobs back before November 2012. For their part, Republicans could use a tax restructuring to tap the Laffer Curve growth effects of lower rates. There's no reason for the GOP to defend special-interest favors in the tax code doled out to the housing industry, nonprofits, the municipal bond sellers, and the green-energy lobby. The value of trading in all those undeserved favors for a 25% tax rate would be enormously positive, and by growing the economy, would lower the deficit. </p> <p>I asked Jeffrey Birnbaum, the co-author of the indispensable book on the 1986 Tax Reform Act, "Showdown at Gucci Gulch," how good policy managed to triumph over the legions of special interests. "Tax reform was like a Phoenix," he explained. "Every time it seemed dead, someone pulled it out of the ashes." Could it happen again? "Well back then," he replied, "people in both parties understood the income tax was broken and unfair." How is that different from today? </p> <p> <em>Mr. Moore is a member of the Journal's editorial board. </em> </p> </div><div style="visibility: hidden;" id="articleImage_1" class="insetFullBracket"><div class="insetFullBox"><div class="insetButton"><a class="insetClose"><img src="http://si.wsj.net/img/BTN_insetClose.gif" alt="moore" border="0" height="19" hspace="0" vspace="0" width="19" /></a></div></div></div></div></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/tax-reforms-moment.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:44:00-07:00">5:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3977644970277868891">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3977644970277868891&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3083536270788607546"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/stocks-nose-dive.html">Stocks Nose-Dive</a> </h3> <div class="post-body entry-content"> <h1>Stocks Nose-Dive Amid Global Fears </h1><h2 class="subhead">Weak Outlook, Government Debt Worries Drive Dow's Biggest Point Drop Since '08</h2><a href="http://online.wsj.com/search/term.html?KEYWORDS=TOM+LAURICELLA&bylinesearch=true">TOM LAURICELLA</a><h3 class="byline"> </h3><p>Stocks spiraled downward Thursday as investors buckled under the strain of the global economic slowdown and the failure of policy makers to stabilize financial markets. </p> <p>The selling began in Europe and continued in the U.S., where stocks plunged from the opening bell. The Dow Jones Industrial Average posted its worst point drop since the financial crisis in December 2008, falling 512.76 points, or 4.31%, to 11383.68. Oil and other commodities were also hammered. Even gold was a safe haven no more as prices fell. Tokyo's market slid on Friday morning, falling more than 4% in early trading.</p> <div class="insetContent insetCol3wide embedType-video"><div class="insetTree" id="articlevideo_1"> <div class="videoObjectBox" size="D"> <a href="http://online.wsj.com/article/SB10001424053111903454504576488581593391582.html?mod=WSJ_hp_LEFTTopStories#" class="videoClickThru"> <span class="videoHint"></span><span class="videoPlayIndicator"></span> <img src="http://m.wsj.net/video/20110804/080411hubpmmarkets5/080411hubpmmarkets5_512x288.jpg" height="153" width="272" /> </a> </div> <p class="targetCaption">Stocks plunged, driving the Dow Jones Industrial Average down more than 500 points, as investors worried about the global economy and Europe's debt crisis. Paul Vigna has details.</p> </div></div><div class="insetCol3wide"><div class="insetContent"> <h3 class="first">More Video</h3> <ul><li><span> <strong> <a class="icon video" href="http://online.wsj.com/video/news-hub-stocks-plunge---what-behind-the-drop/536DBF4D-E50A-4B1D-BDF8-FF965D019EB6.html">What's Behind the Drop?</a> </strong> </span></li><li><span> <strong> <a class="icon video" href="http://online.wsj.com/video/news-hub-are-we-in-a-liquidity-trap/C3B6839E-ABA6-4752-9ACB-73D9602026D3.html">Are We in a Liquidity Trap?</a> </strong> </span></li><li><span> <strong> <a class="icon video" href="http://online.wsj.com/video/news-hub-what-can-the-fed-do-now-to-lift-economy/CC570149-A555-484F-9D58-45FBF20273D8.html">What Can the Fed Do Now to Lift Economy?</a> </strong> </span></li></ul> </div></div><p>"It was an absolute bloodbath," said John Richards, head of strategy at RBS Global Banking & Markets.</p> <p>There was no one single catalyst for the downdraft, traders said. Rather it reflected multiple concerns that have mounted over the past month and came to a head this week. Worries about a U.S. default, settled by a last-minute fix to lift the country's debt limit on Tuesday, have given way to broader fears about the failing health of the domestic economy. That will lead to close scrutiny of Friday's jobs report.</p> <p>Investors are also questioning how much longer the recent run of strong corporate earnings can continue. Amid other troubles, corporate profits have been a rare bright spot. </p> <p>In Europe, leaders are grappling with a widening debt crisis, which started in Greece and spread to Italy and Spain. An earlier bailout of Greece now appears insufficient. There are growing concerns about European banks and their heavy investments in the debt of countries with big fiscal problems.</p> <p>The nervousness among investors is being reflected in the extraordinary rally in U.S. Treasury bonds, regarded as a safe haven for investors in times of turmoil. The yield on the 10-year Treasury note, which falls as prices rise, tumbled to just 2.46% at 3 p.m. Thursday, the lowest since October of last year.</p> <p>The carnage in stocks was the Dow's ninth down session in the past 10. With losses totaling 11.1% from its 2011 high hit in April, the index has entered official "correction" territory.</p> <p>The Dow's decline was its biggest point drop since the market was plunging amid a crisis of confidence in banks in late 2008. On Thursday, the focus has shifted to world governments, which are laboring under mountains of debt and have diminished ability to prop up the financial system.</p> <div style="width:278px" class="legacyInset"><div class="insetContent"> <h3 class="first"> <a class="" href="http://europe.wsj.com/community?mod=WSJ_formfactor">Journal Community</a> </h3> <div class="insetContent embedType-interactive insetCol3wide"> <div class="insettipUnit" id="articleinteractive_2"> </div> </div> <h3 class="first">Downward Dow</h3> <p>Track the DJIA in 5-minute intervals from Aug. 1 - 4.</p> <div class="insetContent embedType-interactive"><div class="insetTree"><div class="insettipUnit insetTarget"><div class="insetZoomTargetBox"><div class="insettipBox"><div class="insettip"><p><a href="http://online.wsj.com/article/SB10001424053111903454504576488581593391582.html?mod=WSJ_hp_LEFTTopStories#">View Interactive</a></p></div></div> <a href="http://online.wsj.com/article/SB10001424053111903454504576488581593391582.html?mod=WSJ_hp_LEFTTopStories#"><img src="http://s.wsj.net/public/resources/images/OB-PB008_dow_pr_D_20110804171159.jpg" alt="" border="0" height="174" hspace="0" vspace="0" width="262" /></a></div> </div></div></div> </div></div><p>"I'm just sorry to see my retirement going to hell," said Robert Slocomb, an 82-year old retired Kodak optical engineer in Rochester, N.Y. Mr. Slocomb blamed the government's handling of the economy for the stock market's woes. </p> <p>In the first half hour of trading Thursday the Dow lost 1.3% and by noon the widely followed benchmark was down more than 2.7%. Most of the selling appeared to be from longer-term stock investors, rather than hedge funds, which have mostly been in a defensive mode for the last several months.</p> <p>For a time during the afternoon stocks stabilized with traders wondering if bargain hunters had come on the scene. But the selloff soon resumed. </p> <p>Wall Street firms had little appetite for holding stocks and other riskier investments on their books, and their traders dumped stocks into the closing bell. The Dow lost more than 155 points in the last hour of trading.</p> <p>Some traders said the plunge put the market more in sync with the state of the U.S. economy. "The market sold off 500 points, it's not a crash, it's a small correction," said Stephen Holden, a floor trader at the new York Stock Exchange. "It's overdue…I think there's more to go."</p> <p>"In this environment, no one wants to catch a falling knife," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management. </p> <p>Volume on stock exchanges has spiked in recent days, a sign that more investors are piling into selling. For much of the year, volume had been weak as many investors stood on the sidelines. Some 7.5 billion shares changed hands in NYSE composite trading, the highest since May of last year, when investors were also fretting about European debt and the U.S. economy.</p> <p>The Chicago Board Options Exchange Volatility Index, known as the "fear gauge," broke above 30 for the first time since March 16, rising 35% to 31.66. A higher reading suggests increased volatility in markets, and nervousness among investors. Still, that's a far cry from the depths of the 2008 crisis, when the so-called VIX almost reached 100.</p> <p>Investors have grown frustrated with efforts by policy makers to deal with the challenges posed by big overhangs of corporate and consumer debt. "Their solutions are too late and no one is taking a longer-term, more-considered approach to problems," said Benjamin Segal, head of global equities at asset manager Neuberger Berman.</p> <p>In the U.S., investors fear the economy could be heading for a double-dip recession. The Federal Reserve is seen as limited in its ability to provide yet another shot in the arm. Interest rates are already essentially at zero and two rounds of quantitative easing, in which the Fed pumped $2.3 trillion into the financial markets, failed to get the U.S. economy strong enough to stand on its own. Meanwhile, given the push to trim deficits, significant economic stimulus from the U.S. government is seen as unlikely. "You look at monetary and fiscal policy and it's very hard to find a powerful lever that somebody can pull," said Mr. Richards of RBS. </p> <p>Investors have been equally underwhelmed by the official response to the European debt crisis. That was the case on Thursday when the European Central Bank outlined steps to shore up confidence in European banks in the face of deteriorating conditions in the bond market.</p> <p>The ECB also conducted purchases of bonds, traders said, but that may have backfired. Traders said the ECB bought Irish and Portuguese bonds, but didn't appear to buy bonds from Italy or Spain, countries which are seen as most at risk from the spreading crisis.</p> <p>The ECB's efforts came on the heels of the steps by the Swiss National Bank and Bank of Japan to halt the rise of the Swiss franc and Japanese yen, respectively. Investors weren't convinced that either moves will have much long-term success. "There's the idea that they are pushing against a string," says Robert Lynch, head of currency strategy for the Americas at HSBC.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/stocks-nose-dive.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T17:42:00-07:00">5:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3083536270788607546">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3083536270788607546&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Stocks%20Nose-Dive" rel="tag">Stocks Nose-Dive</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8071831909654754998"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/debt-deal-is-blank-check.html">Debt Deal is a Blank Check</a> </h3> <div class="post-body entry-content"> <h1 class="article-title">Debt Deal is a Blank Check</h1> <div class="grid_8 article-toolbox"> <div class="article-by"> By: <a href="http://www.safehaven.com/author/162/peter-schiff">Peter Schiff</a> |</div></div> <p>By supposedly compromising to raise the debt ceiling, Congress and the President have now paved the way for ever higher levels of federal spending. Although, the nation was spared the trauma of borrowing restrictions, the actual risk of default existed solely in the minds of Washington politicians. But the real crisis is not, nor has it ever been, the debt ceiling. The crisis is the debt itself. Economic Armageddon would not have resulted from failure to raise the ceiling, but it will come because we succeeded in raising it. This outcome falls along the lines that I had forecast (See my commentary, "<a href="http://www.europac.net/commentaries/don%E2%80%99t_be_fooled_political_posturing">Don't Be Fooled by Political Posturing<span class="icon external-link"></span></a>" from July 9th).</p> <p>Both parties are now pretending that the promised cuts in spending outweigh the increase in the debt limit. But the $900 billion in identified cuts are spread over a decade and are skewed toward the end of that period. There are an additional $1.4 trillion in cuts that the plan assumes will be identified by a bi-partisan budget committee. But similarly empowered panels in the past have almost never delivered on their mandates.</p> <p>More importantly, none of these "cuts" are actually binding. There is plenty of time for future Congresses to reverse what was so laboriously agreed to over the past few weeks. My guess is renewed economic weakness will be used to justify ultimate suspension of the cuts. In addition, most of the spending reductions were already scheduled to take effect before this agreement. So what did we really get?</p> <p>The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would <i>still</i> leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.</p> <p>Essentially, the structure announced today allows both political parties to talk about reform without actually changing anything. To underscore that point, the deal involves less than $25 billion in immediate cuts! This is less than a rounding error in a $3.8 trillion dollar budget. This is politics as usual.</p> <p>Even these estimates are based on rosy economic assumptions that have no chance coming to fruition. For example, for the current fiscal year, Washington estimates GDP growth at 4%. But actual growth for the first half of 2011 is below 1%! If our government is over-estimating our current year's growth by a factor of 4, how accurate could their forecasts be ten years into the future? A more honest assessment of likely economic performance would reveal future budget deficits spiraling out of control.</p> <p>Some might say that the primary goal of this deal was to avoid the dreaded credit rating downgrade. Unfortunately, the deal addresses none of the ratings agencies' stated grievances. If they fail to follow through on their downgrade warnings, the rating agencies will lose whatever credibility they have left. For political reasons, the downgrades may not come right away, but they are inevitable. But as has happened so often in the past, by the time the tardy downgrades arrive, the market will have likely already rendered its verdict.</p> <p>The debt ceiling itself merely represents a self-imposed limit on US borrowing. Since Congress can vote to raise the limit, its existence has been more of a political nuisance than an actual barrier. The operative factor is not how much we allow ourselves to borrow, but how much our creditors are willing to lend. That type of ceiling can't be raised by an Act of Congress. Once our creditors come to the conclusion that they have lent beyond our capacity to repay, they will be very reluctant to lend more. As trillions in short-term Treasuries mature, the dwindling pool of buyers will demand higher rates of return to compensate them for the risk. But our government is in no condition to afford those higher rates without gutting the rest of the budget.</p> <p>Last week, it was revealed that despite Obama's warnings that a default would immediately occur if the debt ceiling were not raised, the administration had already agreed to prioritize interest payments to avoid default. Such preferential treatment is only possible because current interest rates are so low and debt service represents only about 10% of total revenue. When the pool of willing lenders evaporates, net interest payments could quickly consume more than 50% of federal revenue. This is particularly true since rising rates will also plunge the economy into a recession that will substantially reduce revenues - even as debt payments surge.</p> <p>At that point, prioritizing interest payments would mean deep sacrifices in the rest of the federal budget - including Social Security, Medicare, and the Armed Forces. The question then becomes: will US politicians really be willing to take the political heat that would emerge from prioritizing interest payments to foreign creditors over payments to American voters?</p> <p>I expect that as soon as our creditors decide that they are no longer willing to lend to us at ultra-low rates of interest, we will refuse to repay what they have already lent.</p> <p>Besides default or major cuts to domestic spending, inflation provides the only other means for the government to deal with this intractable crisis. Because of its political palatability, inflation is, in fact, the most likely outcome. Once we go down that path, we risk high inflation turning into hyperinflation, which would decimate the remainder of our economy. So, as our leaders congratulate themselves for saving the nation, the reality is that they may have just sold it down the river.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/debt-deal-is-blank-check.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T14:33:00-07:00">2:33 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8071831909654754998">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8071831909654754998&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3271121575466741075"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/get-rich-pay-lower-taxes-boost-federal.html">Get Rich, Pay Lower Taxes, Boost Federal Revenue</a> </h3> <div class="post-body entry-content"> <h1>Get Rich, Pay Lower Taxes, Boost Federal Revenue: Amity Shlaes</h1> <div class="story_inline assets clearfix "> <cite class="byline"> By <a href="http://www.bloomberg.com/view/bios/amity-shlaes/" class="author">Amity Shlaes</a> -</cite><img alt="Shlaes" class="author_photo" src="http://cdn.gotraffic.net/v/20110802_094358/images/authors/shlaes.jpg" /> <p class="author_caption">Amity Shlaes</p> </div> <p>To clean out and start over right. </p> <p>That’s the great impulse that Americans act on each spring. We tell ourselves there’s nothing wrong with this process repeating annually. In religion, the cycle is always there: sin, repent, purge. These days the impulse gets its most vivid individual expression in the realm of personal health: “sin, repent, spinning class.” Or “sin, repent, detox drink.” The worse the year, the greater the repentance required. </p> <p>Spring also brings a collective impulse to reform. That usually gets expressed in a resolve to make the <a href="http://topics.bloomberg.com/tax-code/">tax code</a> more progressive. Some of the demand for more progressivity is revenue-related. The government needs the money, or thinks it does. </p> <p>But some of progressive reform is just the annual expression of that spring impulse to make life clean, fair and right. To “maintain or increase the progressivity of the tax code” is, for example, one of the recommendations being quoted right now from the report by President Barack Obama’s bipartisan National Commission on Fiscal Responsibility and Reform. </p> <p>Ritual isn’t always logical, however. It can be destructive, precisely because it repeats. Too much sin-and- repentance, and even we don’t believe ourselves any more. Too many detoxes, and you’re poisoning yourself. </p> <p>Nowhere is this clearer than in the case of tax progressivity. </p> <h2>Graduated Rates </h2> <p>The first modern expression of the progressive impulse came in the springs of the early part of the last century, when the Treasury Department fashioned the Form 1040. The tax formula was progressive, with a graduated rate structure going from 1 percent to 7 percent. Since only a few people paid federal income tax, that rate structure was a model of progressivity. </p> <p>But of course it wasn’t. Making the code progressive felt good to lawmakers, just the way the detox does. World War I and its costs strengthened the general mood of sacrifice. So they made the code even more progressive, taking the top rate up all the way into the 70s. </p> <p>The results taught lawmakers a quick lesson. Raise the rates too high, and you get a perverse result: less money from the rich than you expect. Lower the rates, and the rich pay a greater share of the taxes. Treasury Secretary Andrew Mellon found that when he cut rates down to 25 percent, he got the most revenue of all. </p> <p>But logic couldn’t always suppress instinct. Each year, lawmakers felt that need to demonstrate they were increasing progressivity even more than they felt the need to get an optimal result. Each year that need had to find expression. Within a generation the top rate was back in the 70s, reaching 91 percent in the 1950s. This proved inefficient. Taxpayers found ways around the statutory rates. Again, the reform didn’t work. </p> <h2>Progressive Outcomes </h2> <p>In more recent springs, both Democrats and Republicans have developed a compromise repentance to accommodate some reality. The lawmakers discovered, as Mellon had, that by talking about helping the poor, but keeping the actual top rates lower, they got an outcome that was splendidly progressive. </p> <p>In 1980, the top <a href="http://www.taxfoundation.org/files/fed_indincome_allcharts-20101005.swf" title="Open Web Site" rel="external">1 percent</a> of earners paid 19 percent of income taxes, and the bottom half of earners paid 7.1 percent. A decade later, with a lower maximum rate, the top 1 percent paid 25 percent of taxes, while the bottom earners paid just 5.8 percent. By 2008, top earners paid 38 percent of taxes, the bottom half 2.7 percent. </p> <p>What about today? It might make sense to cut taxes even more, down to, say, a top rate of 20 percent. Then the rich would pay all the taxes. And there would be more revenue, as foreigners came in. </p> <h2>Burden of Rich </h2> <p>But here tax sanctimony gets in the way of <a href="http://topics.bloomberg.com/tax-reform/">tax reform</a>. In a progressive rate structure, the rich almost always get bigger tax cuts, because their rates are higher to begin with. So their cuts sound unfair. The more progressive a tax structure, the more unfair its dismantlement appears. </p> <p>The reality is that this year in tax terms, the U.S. isn’t a sinner. The country is already clean. The very rich shoulder far more of the collective burden than their share in the population warrants. </p> <p>Yet in his recent debt speech, Obama clearly wanted to make the point that the rich don’t pay their share of the collective costs of government, whatever the data showed. So he retreated to another datum: the share of individual income that a taxpayer gives up in taxes. </p> <p>“At a time when the tax burden on the wealthy is at its lowest level in half a century,” the president said, “the most fortunate among us can afford to pay a little more.” </p> <h2>World of Problems </h2> <p>That ratio is indeed lower than at some other points. You can find a way to make America look like a sinner even if it isn’t sinning. Tax increases may be appropriate as a last, worst resort. But we are not at the last, worst moment this spring. </p> <p>Why then did Obama ignore the record of lower rates bringing more revenue? Because there’s a lot wrong in the world, starting with the federal debt, and continuing on to joblessness, war in <a href="http://topics.bloomberg.com/libya/">Libya</a>, and <a href="http://topics.bloomberg.com/japan/">Japan</a>’s nuclear crisis. So the general urge to purge is greater, and it’s being channeled into tax sanctimony. But that doesn’t mean this particular ritual is worth honoring. </p> <p>(<a href="http://topics.bloomberg.com/amity-shlaes/">Amity Shlaes</a>, a senior fellow in economic history at the <a href="http://topics.bloomberg.com/council-on-foreign-relations/">Council on Foreign Relations</a> and author of “The Forgotten Man: A New History of the Great Depression,” is a Bloomberg News columnist. The opinions expressed are her own.) </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/get-rich-pay-lower-taxes-boost-federal.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T13:36:00-07:00">1:36 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3271121575466741075">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3271121575466741075&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Boost%20Federal%20Revenue" rel="tag">Boost Federal Revenue</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Get%20Rich" rel="tag">Get Rich</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Pay%20Lower%20Taxes" rel="tag">Pay Lower Taxes</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3890618818143587945"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/balanced-budget-bill-fails-fiscal-test.html">Balanced-Budget Bill Fails Fiscal Test</a> </h3> <div class="post-body entry-content"> <h1>Balanced-Budget Bill Fails Fiscal Test: Stephen L. Carter</h1> <div class="story_inline assets clearfix "> <cite class="byline">By <a href="http://www.bloomberg.com/view/bios/stephen-carter/" class="author">Stephen L. Carter</a> </cite><cite class="byline story_time"><span class="datestamp"></span></cite><div class="module author"> <h2>About Stephen L Carter</h2> <p>Stephen L. Carter is a professor of law at Yale, where he teaches courses on contracts, professional responsibility, ethics in literature, intellectual property and the law and ethics of war.</p> <a href="http://www.bloomberg.com/view/bios/stephen-carter/" class="more_info">More about Stephen L Carter</a> </div> </div> <p>At a Washington event in the early 1990s, I happened to find myself seated beside an official fairly high in the White House of <a href="http://topics.bloomberg.com/george-h.w.-bush/">George H.W. Bush</a>. We got to chatting, and he waxed poetic about a constitutional amendment requiring the federal government to balance its annual budget. </p> <p>He even had a new draft in his pocket, words he had scribbled on a cocktail napkin. I don’t recall the precise language, but his version was short, and began something like this: “Except in time of war, the federal government shall not ..." </p> <p>A free and frank exchange of views ensued. </p> <p>Fast-forward to today: Republican lawmakers want a quick vote on a balanced-budget amendment (or BBA, as the cognoscenti, I am sad to report, are now calling it). This is an understandable demand given <a href="http://topics.bloomberg.com/congressional-budget-office/">Congressional Budget Office</a> estimates of near trillion-dollar deficits into the near future. </p> <p>Yet, while I remain skeptical of objections that the amendment would lead to fiscal disaster, I do think its opponents are right on the merits. The amendment is a poorly designed cure for a disease of complex causes. </p> <p>The American tradition of deficit spending goes back to the Revolutionary War, when the colonies financed their rebellion with borrowed money. Shortly after the constitutional system replaced the Articles of Confederation, the federal government took on the debts incurred by the states, an act that sent the new nation’s debt soaring, by most estimates, to a third or more of GDP. </p> <h2>Founding Fiscal Hawks </h2> <p>That era had its own fiscal hawks, and providing a way to pay down the debt was hotly debated at the constitutional convention. In 1798, <a href="http://topics.bloomberg.com/thomas-jefferson/">Thomas Jefferson</a> wished the Constitution had “an additional article taking from the federal government the power of borrowing.” </p> <p>The founders’ bills were paid off just in time to start the whole merry-go-round again when the Civil War broke out. Although some historians attribute the Union victory to its superior creditworthiness -- the South faced far higher borrowing costs -- the accumulated debt nearly bankrupted the winning side, and took another half century to retire. </p> <p><a href="http://topics.bloomberg.com/abraham-lincoln/">Abraham Lincoln</a> himself wondered how the U.S. would ever pay back the money borrowed to finance the Civil War, fretting that the conflict “has produced a national debt and taxation unprecedented, at least in this country.” </p> <p>And in the late years of the 19th century, a worried Congress adopted laws restricting the purposes for which the self-governing territories of the West could take on debt, limiting their borrowing to no more than 1 percent of the value of taxable property within their borders. </p> <p>It was inevitable that the worries would eventually lead to efforts to amend the Constitution. The first came in 1936, when Representative Harold Knutson, a Minnesota Republican, introduced an amendment to limit federal borrowing. It and its successors have all failed, although several proposals in the 1980s and 1990s passed in one chamber of Congress. </p> <p>Beyond political support, however, the real problem with a balanced-budget amendment is that it would fail to do what its supporters claim: Keep the nation’s fiscal house in order. </p> <p>Consider Section 1 of a current <a href="http://rules.house.gov/Media/file/XML_112_1/WD/HJRes1txt.xml" title="Open Web Site" rel="external">bill</a>: “Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless three-fifths of the whole number of each House of Congress shall provide by law for a specific excess of outlays over receipts by a rollcall vote.” </p> <p>Sounds impressive, until one parses it. We all think we know what a fiscal year is, but legislatures have redefined the term constantly for budgeting purposes. To take the most obvious example, the federal fiscal year begins on Oct. 1. But until 1976, the federal fiscal year began on July 1, and Congress has often extended the fiscal year through a continuing resolution. Businesses are allowed in some circumstances to use a 53-week fiscal year. </p> <h2>Subject to Manipulation </h2> <p>Some experts argue that the fiscal year should be 18 months to allow for smoother budgeting. In short, the amendment is built on a concept both ill-defined and subject to manipulation. </p> <p>Likewise, consider the rule that outlays must not exceed receipts. Another section defines “total receipts” as “all receipts of the United States Government except those derived from borrowing” -- in essence, taxes, tariffs and fees. “Total outlays” are “all outlays of the United States Government except for those for repayment of debt principal.” </p> <p>Here’s a quick and easy way for a future Congress to game those definitions: Set up an independent, nonprofit, nongovernmental corporation that issues bonds, for the avowed purpose not of raising revenue but of giving Americans a place to invest their money safely. We might call our new agency the Federal National Bond Association, or Fannie Bae. </p> <p>Fannie Bae’s bonds would not be quite as cheap as Treasuries, but as Treasuries would no longer exist, these would presumably be the next best thing, because of their implicit federal guarantee. Most of the money Fannie Bae raised in the market would then be turned over to the Treasury, which would place it in a <a href="http://topics.bloomberg.com/trust-fund/">trust fund</a>. (A small part would be kept to run Fannie Bae.) The funds are now just like Social Security -- a “receipt” within the meaning of the amendment -- and “outlays” may therefore rise by that amount. </p> <p>Now, you might protest that the establishment of Fannie Bae would seem to vitiate the purpose of the amendment. But the federal government gets around constitutional provisions all the time. (Remember the congressional power to declare war?) </p> <p>Maybe the courts would strike down Fannie Bae, but to imagine them doing so is to accept the likelihood that federal judges would have final say over fiscal policy. As Walter Dellinger, a solicitor general in the Bill Clinton administration, <a href="http://www.nytimes.com/2011/07/21/opinion/21dellinger.html" title="Open Web Site" rel="external">warned</a> recently in the New York Times, “the process of enforcing” such an amendment “would be uncertain and perilous.” </p> <h2>Counting the Receipts </h2> <p>Although one is tempted to respond that this quality, alas, does not differentiate the proposed amendment from any other provision of the Constitution, the more provisions we add, the greater the possibilities for, let us say, unpredictable interpretations. </p> <p>Furthermore, for the amendment to operate, someone -- presumably the <a href="http://www.cbo.gov/" title="Open Web Site" rel="external">Congressional Budget Office</a> -- would have to figure out each year what the total receipts and total outlays probably will be. Every corporation has to do the same thing, but the prospect of such review proved too much for even the fiscal watchdogs of the Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052702304521304576448091429014936.html?mod=WSJ_Opinion_LEADTop" title="Open Web Site" rel="external">editorial board</a>: “We doubt the historic 1981 Reagan tax cuts within the Kemp- Roth bill, once subjected to Congress’s revenue-neutrality accountants, could have survived the balanced budget mandate.” </p> <p>This objection hints at the biggest problem with the proposed amendment: It seeks to enshrine as fundamental law a single theory about the relation of fiscal policy to the operation of the <a href="http://topics.bloomberg.com/u.s.-economy/">U.S. economy</a>. And this would be a grave mistake. </p> <p>In microeconomics, the theory of supply and demand is rigorously worked out and often tested. Despite soft spots, it remains the heart of every introductory economics class, precisely because it is concise, understood and essentially correct. </p> <p>Macroeconomics is of a very different character. It is a field rich with theories difficult to test. One difficulty is trying to model the entire economy, and no matter how many variables are held constant, there is always something important unaccounted for. This helps to explain why economists are all over the map. Keynesians and supply-siders alike can all present data favoring their theories. That is why politicians and the economists whose work they rely on should approach the subject, as Harvard economist N. Gregory Mankiw has put it, with <a href="http://www.nationalaffairs.com/publications/detail/crisis-economics" title="Open Web Site" rel="external">humility</a>. </p> <p>So the balanced-budget amendment, whatever its political popularity, possesses the following difficulties: It is poorly written and easy to circumvent; it invites judicial control of the appropriations process; and it pretends to know more than we can confidently say we do about how the economy works. For an amendment to the Constitution, those are just too many deficits. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/balanced-budget-bill-fails-fiscal-test.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T13:32:00-07:00">1:32 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3890618818143587945">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3890618818143587945&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5204676756354028062"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/spanish-language-el-clasificado.html">Spanish-Language El Clasificado</a> </h3> <div class="post-body entry-content"> <h1>Spanish-Language El Clasificado Balances Print Growth With Online Push</h1> <div class="story_inline assets clearfix "> <cite class="byline"> By Karen E. Klein - <span class="datestamp"></span></cite><div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container overlay_container"> <a class="enlarge_image" rel="#91279" href="http://www.bloomberg.com/photo/el-clasificado-balances-print-growth-with-online-push-/91279.html" target="_blank"> <span>Enlarge image</span> <img alt="El Clasificado Balances Print Growth With Online Push " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iY0yWB9JCIec" /> </a> </div> <p class="caption">Martha de la Torre and Joe Badame run El Clasificado, the largest free, weekly Spanish- language classified print publication in the U.S., reaching more than 1.5 million people. Photographer: Pablo Scarpellini/El Classificado via Bloomberg </p> </div> </div> </div> <p>Growing up in East Los Angeles, Martha de la Torre spoke South American-influenced Spanish, which often elicited playground taunts from her classmates, mostly Mexican- Americans. Midway through elementary school, she swore she’d never speak Spanish again, except to her Ecuadorean grandmother. </p> <p>Today she runs El Clasificado, the largest free, weekly Spanish- language classified print publication in the U.S., reaching more than 1.5 million people. It’s the flagship title of the thriving 130-employee publishing company de la Torre and her husband, Joe Badame, started 23 years ago for Southern <a href="http://topics.bloomberg.com/california/">California</a>’s Latino population. </p> <p>In June, the couple rebranded, changing their company’s name from El Clasificado to <a href="http://hispanicmarketing.echispanicmedia.com/" title="Open Web Site" rel="external">EC Hispanic Media</a> to reflect the growth of their five online editions as well as their geographic expansion into the agricultural heart of Central California. With 2010 revenue of $16.3 million, the business is on track to hit $19 million this year, de la Torre says. </p> <p>“El Clasificado is a marvelous niche product,” says Peter M. Zollman, founding principal of marketing firm Advanced Interactive Group in Altamonte Springs, Fla., which publishes Classified Intelligence Report. “It takes a long time to win [the Hispanic market’s] trust and loyalty, but once you have it, you keep it.” While online sales for classifieds in the U.S. have more than doubled to about $6 billion since 2006, Zollman says, the overall industry has shrunk to about $15 billion, half its 2006 total, due to the economic downturn and the collapse in classified revenue at most daily newspapers. </p> <p>Bloomberg contributor Karen E. Klein spoke recently to de la Torre and Badame, an Italian-American who speaks even less Spanish than his wife, about their strategy for future expansion. Edited excerpts of their conversation follow. </p> <p>Karen E. Klein: So many print publications have seen their readership and distribution decline over the past decade. Is that happening to El Clasificado? </p> <p>Martha de la Torre: For years, we’ve been in fear of print disappearing just like everyone else. We ended 2010 principally a print company. Print ads account for 98 percent of our revenues. But we’ve also moved into digital, which accounted for about 1 percent of our revenue in 2010. Year-to-date, digital ads have grown to about 5 percent of our total revenue. </p> <p>Joe Badame: We’re not going away from print. Our print revenues increased close to 16 percent last year and our print circulation is up 10 percent from 2010 to 2011. The demographics are working in our favor. </p> <p>Q: The latest immigration data have shown that fewer Mexicans are emigrating due to improved opportunities in <a href="http://topics.bloomberg.com/mexico/">Mexico</a> and the economic downturn in the U.S. How will that affect your success as a Spanish-language company? </p> <p>Badame: It will have a long-term effect on us, maybe five to 10 years out. But we have such a big market of Hispanics here already; there are about 35 million in California and we’re still at 455,000 circulation so we haven’t come close to saturating the market. And the birth rates are much higher, so we don’t expect it to have a huge impact immediately. </p> <p>De la Torre: When we started out, I always thought El Clasificado would stop existing around 2005. I was wrong. </p> <p>Q: Have you found that your readers are migrating online? </p> <p>De la Torre: Digital is attractive to a lot of Latinos who have a little more education and income and are outside of densely Hispanic markets. </p> <p>Digital allows us to find additional niches, like the insurance company or lawyer who will advertise online. The problem is that our print reps are not interested in selling digital ads because they can still sell print and it’s more lucrative. An average digital sale might be $100 a week, where a print account will average $500 to $1,000 a week. Online is also harder to explain to our clients, who are very focused on print and not as advanced technologically. </p> <p>Badame: A lot of our clients don’t believe that our readers are online. But our online traffic results for El Clasificado are showing that we have 6 million page views a month, from 400,000 unique visitors, with 20 percent of them coming through mobile devices. </p> <p>De la Torre: I was at one of our biggest clients a year ago and they said, “Our customers are not online.” But I started doing keyword searches and I showed them that they are getting online now. So we gave them a free online classified so they could try it out. We’re putting all our efforts forward. We operate from fear and always look to the future, continually trying to recognize where our weaknesses could be. </p> <p>Q: Both of you have financial backgrounds. How did you become entrepreneurs? </p> <p>De la Torre: We were both CPAs, we met at Arthur Young & Co. in 1983 and started dating in 1985. I specialized in banking and the oil and gas industry and then I started getting requests to do due diligence on Hispanic media companies. I was alarmed at how much money was being spent on these companies that weren’t very impressive. </p> <p>So I started thinking about doing something like the PennySaver [a free weekly classified publication] but for Latinos. I made a business plan but I didn’t want to be an entrepreneur. I hoped someone would come along to run the thing so I could do what I do best, which was be a financial person. </p> <p>But we started the company in 1988 after Joe raised money from our friends and family. We got married in 1991. Joe kept his day job to keep us afloat for all the years we didn’t take salaries. He joined us full-time in 2000. </p> <p>Badame: We hit bottom in 1992 due to the recession, and ever since we’ve grown every year from 8 percent to 35 percent. Even during this last recession, we were growing by 16 to 17 percent. </p> <p>Q: What changes did you make? </p> <p>De la Torre: One major thing is that we changed our distribution model. My business plan was based on a bulk-mail, home-delivery model. We stuck to that for three or four years -- until we almost went bankrupt. </p> <p>Q: Why did you stay with something that wasn’t working? </p> <p>De la Torre: It took us a long time to finally get it. It was the early ‘90s, we were in recession and it seemed like nothing worked. It was hard to figure out what was going wrong. </p> <p>My mother and father were distributing our magazines in local Hispanic stores. So we tried putting distribution racks in about 150 small business locations, and we finally realized we were getting better results that way because Latino shoppers go to the market every day for fresh food. Today we have close to 22,000 locations where we drop 15 to 400 magazines each. </p> <p>Badame: We started dropping magazines at a location and then we’d sit in our car and watch what happened for a couple of hours. We realized that with home delivery, we were giving the magazine to people who might not want it. They might just throw it away. When it’s sitting in a rack, only the people who want to read it actually pick it up. </p> <p>Q: What’s next for EC Hispanic Media? </p> <p>De la Torre: For 2011, we’re going to do more geographical expansion and focus on more training and hiring. We’re also adding some new products and hope to have new online revenue to add to the 5 percent we’re currently getting from online. </p> <p>Badame: We have a short-term goal to ramp up revenues to $50 million within five years and a long-term plan to hit $100 million in the next 10 years. We can get to $50 million by 2016 if we maintain our historical [average annual] growth rate of 20.8 percent. The more experience we have, the smaller the numbers seem to look to us. Those numbers would have been huge, and unobtainable, to us years ago. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/spanish-language-el-clasificado.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T13:29:00-07:00">1:29 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5204676756354028062">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5204676756354028062&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Spanish-Language%20El%20Clasificado" rel="tag">Spanish-Language El Clasificado</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4542352582963531095"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/oil-erases-2011s-gains-on-economy.html">Oil Erases 2011’s Gains on Economy Concern</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:180%;">Oil Erases 2011’s Gains on Economy Concern</span></h1> <div class="image thumbnail"> <cite class="byline"> By Mark Shenk and Yi Tian -</cite><p class="caption">Crude oil wiped out all of its gains for 2011 and natural gas traded below $4 for the first time since April in New York as concern the global economy is weakening sent raw materials prices tumbling around the world. Photographer: Andrew Harrer/Bloomberg </p> </div><div class="story_inline assets clearfix "><div class="story_inline attachments"> </div> </div> <p>Crude oil wiped out all of its gains for 2011 and natural gas traded below $4 for the first time since April in <a href="http://topics.bloomberg.com/new-york/">New York</a> as concern the global economy is weakening sent raw materials prices tumbling around the world. </p> <p>All 24 commodities on the Standard & Poor’s GSCI Index declined slipped, as a rout in equities drove the Standard & Poor’s 500 Index to its worst nine-day slump since March 2009. Silver dropped 6 percent, gold retreated from a record and wheat slumped the most since June. </p> <p>“There’s a lot of pessimistic news on the macro-economic front and that’s hitting commodities,” said <a href="http://topics.bloomberg.com/michael-wittner/">Michael Wittner</a>, the head of oil-market research at Societe Generale SA in New York and the fourth-most-accurate forecaster for West Texas Intermediate oil among 26 analysts ranked by Bloomberg in the past eight quarters. “If the economy continues to slow, demand for oil will take a hit.” </p> <p>U.S. consumer confidence dropped last week to the lowest level in more than two months, paced by growing dissatisfaction among women and high earners, a report today showed. The Bloomberg Consumer Comfort Index was minus 47.6 in the period to July 31, the lowest level since May, compared with minus 46.8 the prior week. </p> <p><a href="http://topics.bloomberg.com/consumer-spending/">Consumer spending</a> dropped in June for the first time in almost two years as savings climbed, Commerce Department figures showed earlier this week. The <a href="http://topics.bloomberg.com/u.s.-economy/">U.S. economy</a> grew less than forecast in the second quarter after almost stalling at the start of the year, another report from the agency showed. </p> <h2>Commodity Slump </h2> <p>The S&P’s GSCI Index of 24 raw materials fell 3.7 percent to 647.1, the lowest level since June 27. The index is up 2.4 percent this year after being as much as 20 percent higher on April 11. </p> <p>Crude oil for September delivery declined $5.15, or 5.6 percent, to $86.78 a barrel at 2:24 p.m. on the <a href="http://topics.bloomberg.com/new-york-mercantile-exchange/">New York Mercantile Exchange</a>. Futures touched $86.04, the lowest level since Feb. 18 on an intraday basis. Brent for September settlement dropped $5.59, or 4.9 percent, to $107.64 a barrel on the London-based ICE Futures Europe exchange. </p> <p>“There’s a growing realization that we may be facing a double dip or at least very anemic growth,” said <a href="http://topics.bloomberg.com/chip-hodge/">Chip Hodge</a>, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in <a href="http://topics.bloomberg.com/boston/">Boston</a>. “Until the economy shows signs of life, there’s nothing to turn this around.” </p> <h2>Stocks Fall </h2> <p>The Standard & Poor’s 500 Index fell 3.7 percent to 1,213.58 and the <a href="http://topics.bloomberg.com/dow-jones-industrial-average/">Dow Jones Industrial Average</a> declined 3.4 percent to 11,490.81. </p> <p>The dollar rose 1.4 percent to $1.412 against the euro, from $1.4323 yesterday. A stronger U.S. currency reduces the appeal of dollar-denominated raw materials as an investment. </p> <p>“Fear and panic are good words to describe what we’re seeing today,” said <a href="http://topics.bloomberg.com/chris-barber/">Chris Barber</a>, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. “Anytime markets move this hard there’s been a change in sentiment.” </p> <p>Copper fell $182, or 1.9 percent, to $9,353 a metric ton on the <a href="http://topics.bloomberg.com/london/">London</a> Metal Exchange, bringing the drop this year to 2.6 percent. Aluminum fell for 1.7 percent to $2,482 a ton, the seventh consecutive decline and the longest losing streak since January 2009. </p> <p>“Sentiment has taken its turn for the worse at the moment,” said <a href="http://topics.bloomberg.com/gayle-berry/">Gayle Berry</a>, an analyst at <a href="http://topics.bloomberg.com/barclays-capital/">Barclays Capital</a> in London. “The markets are very worried about what the implications of fiscal austerity mean for the trajectory of economic growth, and therefore for metals demand.” </p> <h2>Silver Slides </h2> <p>Silver for immediate delivery dropped 5.1 percent to $39.5675 an ounce, the biggest decline since May 11. Platinum fell 3.1 percent to $1,726 an ounce and palladium dropped 5 percent to $756 an ounce, erasing gains for the year. Both metals are used in catalysts to remove exhausts in automobiles, and are more dependent on economic growth than gold. </p> <p>Gold was little changed at $1,661.43 an ounce after climbing to a record $1,681.72 an ounce earlier today. Prices are up 17 percent this year. </p> <p>Agriculture was the second-worst sector today after energy. Wheat fell 3.4 percent to $7.245 a bushel on the Chicago Board of Trade. Soybeans declined 1.8 percent to $13.4875 a bushel and corn dropped 1.9 percent to $6.9925 a bushel. </p> <p>“The world economy is struggling, and that is slowing demand,” <a href="http://topics.bloomberg.com/don-roose/">Don Roose</a>, the president of U.S. Commodities Inc. in <a href="http://topics.bloomberg.com/west-des-moines/">West Des Moines</a>, <a href="http://topics.bloomberg.com/iowa/">Iowa</a>, said in a telephone interview. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/oil-erases-2011s-gains-on-economy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T13:26:00-07:00">1:26 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4542352582963531095">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4542352582963531095&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Oil%20Erases%202011%E2%80%99s%20Gains%20on%20Economy%20Concern" rel="tag">Oil Erases 2011’s Gains on Economy Concern</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5982650783713742157"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/us-stocks-plunge-in-biggest-retreat.html">U.S. Stocks Plunge in Biggest Retreat Since 2009</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:180%;">U.S. Stocks Plunge in Biggest Retreat Since 2009</span></h1> <div class="story_inline assets clearfix "> <cite class="byline"> By Rita Nazareth - <span class="datestamp"></span></cite><div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container overlay_container"> <a class="enlarge_image" rel="#91385" href="http://www.bloomberg.com/photo/dow-drops-500-points-/91385.html" target="_blank"> <span>Enlarge image</span> <img alt="Dow Drops 500 Points " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iGO52zC30ZuU" /> </a> </div> <p class="caption">Traders work on the floor of the New York Stock Exchange on Aug. 4, 2011. Photographer: Jin Lee/AP </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Barton Biggs on U.S. Stock Market Selloff " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iGXh9u7kQ68o" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/73538884/" class="q" id="73538884" type="Video">Play Video</a></div> </div> <p class="caption"> Aug. 4 (Bloomberg) -- Barton Biggs, managing partner and co-founder of Traxis Partners LP, talks about today's decline in the U.S. stock market. He speaks with Carol Massar on Bloomberg Television's "Street Smart." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Barclays's Knapp on U.S. Stocks and Treasuries, Economy " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=i.2fsYekczhw" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/73528562/" class="q" id="73528562" type="Video">Play Video</a></div> </div> <p class="caption"> Aug. 4 (Bloomberg) -- Barry Knapp, head of U.S. equity strategy at Barclays Capital, talks about the equity and Treasury markets. Knapp, speaking on Bloomberg Television's "InBusiness With Margaret Brennan," also discusses the outlook for the U.S. economy. (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="GM CFO Dan Amman on Profit, Auto Sales, Outlook " class="small_img img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ibRVe_4WenYU" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/73513346/" class="q" id="73513346" type="Video">Play Video</a></div> </div> <p class="caption"> Aug. 4 (Bloomberg) -- Dan Ammann, chief financial officer of General Motors Co., talks about the company's second-quarter profit reported today and business strategy. The largest U.S. automaker said net income almost doubled to $2.52 billion, or $1.54 a share, on rising U.S. sales. Ammann speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg) </p> </div> </div> </div><div id="story_content" class="clearfix"> <p>U.S. stocks plunged, driving the Standard & Poor’s 500 Index to the biggest decline since February 2009, as concern the global economy is weakening prompted a global rout. </p> <p>Only three out of 500 stocks in the benchmark measure of American equities rose. Losses exceeded 10 percent for 13 of the companies including <a href="http://www.bloomberg.com/apps/quote?ticker=ANR:US" title="Get Quote" class="web_ticker">Alpha Natural Resources Inc. (ANR)</a> and <a href="http://www.bloomberg.com/apps/quote?ticker=GPS:US" title="Get Quote" class="web_ticker">Gap Inc. (GPS)</a>, which fell after the retailer’s sales missed estimates. All 10 <a href="http://topics.bloomberg.com/s%26p-500/">S&P 500</a> groups slumped, led by losses topping 5.3 percent for material, energy and industrial shares. <a href="http://www.bloomberg.com/apps/quote?ticker=CVX:US" title="Get Quote" class="web_ticker">Chevron Corp. (CVX)</a> and <a href="http://www.bloomberg.com/apps/quote?ticker=AA:US" title="Get Quote" class="web_ticker">Alcoa Inc. (AA)</a> fell more than 5.7 percent as <a href="http://topics.bloomberg.com/japan/">Japan</a> sold its currency, driving down commodities priced in the dollar. </p> <p>The S&P 500 dropped 4.8 percent to an eight-month low of 1,200.08 at 4 p.m. in <a href="http://topics.bloomberg.com/new-york/">New York</a>. It has retreated 11 percent since July 22, the biggest loss over the same amount of time since March 9, 2009, when the <a href="http://topics.bloomberg.com/bull-market/">bull market</a> began. The <a href="http://topics.bloomberg.com/dow-jones-industrial-average/">Dow Jones Industrial Average</a> retreated 512.61 points, or 4.3 percent, to 11,383.83 today, erasing its 2011 gain. </p> <p>“It’s unbelievable,” David Joy, Boston-based chief market strategist at Ameriprise Financial Inc., said in a telephone interview. His firm oversees $693 billion in assets. “The emotional aspect of this is ticking higher. It’s left everybody with this mindset that things are not good. The situation in <a href="http://topics.bloomberg.com/europe/">Europe</a> is getting everyone concerned. We had the impact of the Japan intervention in the <a href="http://topics.bloomberg.com/currency-market/">currency market</a>. The flight-to-quality trade is going to pick up.” </p> <p>To contact the reporter on this story: Rita Nazareth in New York at <a href="mailto:rnazareth@bloomberg.net" title="Send E-mail">rnazareth@bloomberg.net</a> </p> <p>To contact the editor responsible for this story: Nick Baker at <a href="mailto:nbaker7@bloomberg.net" title="Send E-mail">nbaker7@bloomberg.net</a> </p><div class="sentence_call_out">Want to save this for later? <a id="add_it_to_your_q">Add it to your Queu</a></div></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/08/us-stocks-plunge-in-biggest-retreat.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-08-04T13:23:00-07:00">1:23 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5982650783713742157">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5982650783713742157&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/U.S.%20Stocks%20Plunge%20in%20Biggest%20Retreat%20Since%202009" rel="tag">U.S. Stocks Plunge in Biggest Retreat Since 2009</a> </span> </div> </div> </div> </div> <a name="5520375272085372256"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/08/us-department-of-defense-contract.html">U.S. Department of Defense Contract Awards</a> </h3> <h1 class="singlePageTitle">U.S. Department of Defense Contract Awards for Aug 01, 2011</h1> <h1><a href="http://www.veteranstoday.com/wp-content/uploads/2011/05/DOD-CONTACTS2.jpg"><img class="alignright size-full wp-image-109841" style="border: 1px solid black; margin: 10px;" title="DOD-CONTRACTS" src="http://www.veteranstoday.com/wp-content/uploads/2011/05/DOD-CONTACTS2.jpg" alt="" height="257" width="342" /></a>Here’s Today’s Department of Defense Contract Awards</h1> <p><strong>ARMY</strong></p> <p>Oshkosh Corp., Oshkosh, Wis., was awarded a $904,184,088 firm-fixed-price contract. The award will provide for the modification of an existing contract to procure 6,963 Family of Medium Tactical Vehicles. Work will be performed in Oshkosh, Wis., with an estimated completion date of June 30, 2013. The bid was solicited through the Internet, with three bids received. The U.S. Army Contracting Command, Warren, Mich., is the contracting activity (W56HZV-09-D-0159).</p> <p>Hellfire Systems, L.L.C., Orlando, Fla., was awarded a $159,018,990 firm-fixed-price contract. The award will provide for the procurement of 3,097 Hellfire missiles in containers; 16 Hellfire II guidance test articles; and engineering, equipment, and production services. Work will be performed in Orlando, Fla., with an estimated completion date of Sept. 30, 2014. One sole-source bid was solicited, with one bid received. The U.S. Army Contracting Command, Redstone Arsenal, Ala., is the contracting activity (W31P4Q-11-C-0242).</p> <p>Wilhelm Commercial Builders, Inc., Annapolis Junction, Md., was awarded a $49,999,999 firm-fixed-price indefinite-delivery/indefinite-quantity task-order contract. The award will provide for the construction services for the Baltimore-Washington corridor with availability to be utilized throughout the continental United States. Work location will be determined with each task order, with an estimated completion date of July 29, 2016. The bid was solicited through the Internet, with nine bids received. The U.S. Army Corps of Engineers, Baltimore, Md., is the contracting activity (W912DR-11-D-0017).</p> <p>Olin Corp., East Alton, Ill., was awarded a $29,372,473 firm-fixed-price with economic price adjustment contract. The award will provide for the procurement of 5.56mm, 7.62mm, and .50 small caliber ammunition. Work will be performed in East Alton, Ill., with an estimated completion date of March 31, 2017. The bid was solicited through the Internet, with two bids received. The U.S. Army Contracting Command, Rock Island, Ill., is the contracting activity (W52P1J-11-C-0038).</p> <p>Okland Construction, Inc., Salt Lake City, Utah, was awarded a $22,282,136 firm-fixed-price contract. The award will provide for the design and construction of the Aerospace Maintenance and Regeneration Group hangar at Davis-Monthan Air Force Base, Tucson, Ariz. Work will be performed in Davis-Monthan Air Force Base, with an estimated completion date of July 18, 2013. The bid was solicited through the Internet, with 15 bids received. The U.S. Army Corps of Engineers, Los Angeles, Calif., is the contracting activity (W912PL-11-C-0007).</p> <p>Delfasco, L.L.C., Afton, Tenn. (W15QKN-11-D-0198), and Conco, Inc., Louisville, Ky. (W15QKN-11-C-0192), were awarded a $19,859,690 firm-fixed-price indefinite-delivery/indefinite-quantity multiple-award-task-order contract between two contractors. The award will provide for the facilities, personnel and equipment for the manufacture of the PA 117 container. Work location will be determined with each task order, with an estimated completion date of July 11, 2020. Four bids were solicited, with four bids received. The U.S. Army Contracting Command, Picatinny Arsenal, N.J., is the contracting activity.</p> <p>AAI Corp., Hunt Valley, Md., was awarded an $18,682,819 cost-plus-fixed-fee contract. The award will provide for the engineering services in support of the Shadow 200 unmanned aircraft system. Work will be performed in Hunt Valley, Md., with an estimated completion date of May 31, 2013. One bid was solicited, with one bid received. The U.S. Army Contracting Command, Redstone Arsenal, Ala., is the contracting activity (W58RGZ-11-C-0103).</p> <p>Alliant Lake City Small Caliber Ammunition Co., L.L.C., Independence, Mo., was awarded a $7,968,389 firm-fixed-price contract. The award will provide for the production base support projects at Lake City Army Ammunition Plant. Work will be performed in Independence, Mo., with an estimated completion date of Sept. 30, 2012. One bid was solicited, with one bid received. The U.S. Army Contracting Command, Rock Island, Ill., is the contracting activity (DAAA09-99-E-0002).</p> <p>BWAY Corp., Atlanta, Ga., was awarded a $7,366,564 firm-fixed-price with economic price adjustment contract. The award will provide for the procurement of 797,986 M2A1 ammunition containers in support of various contracts for small caliber ammunition production. Work will be performed in Atlanta, Ga., with an estimated completion date of April 26, 2013. The bid was solicited through the Internet, with two bids received. The U.S. Army Contracting Command, Rock Island, Ill., is the contracting activity (W52P1J-09-C-0030).</p> <p><strong>AIR FORCE</strong></p> <p>Lockheed Martin Corp., Archbold, Pa. (FA8213-11-D-0008), and Raytheon Missile Systems of Tucson, Ariz. (FA8213-11-D-0007), are being awarded a $475,000,000 firm-fixed-price contract for Paveway II laser-guided bomb computer control groups (seekers) and GBU-12 air foil groups (tail kits). The Ogden Air Logistics Center/GHGKA, Hill Air Force Base, Utah, is the contracting activity.</p> <p>The University of Dayton Research Institution, Dayton, Ohio, is being awarded a $24,510,000 cost-plus-fixed-fee, firm-fixed-price, cost reimbursement contract to provide testing, evaluation, and the incidental research and development of advanced polymer materials, equipment and processes, and to provide for the operation and maintenance of the Coatings Technology Integration Office, Special Test and Research facilities, and Erosion facilities at Wright-Patterson Air Force Base, Ohio, where work will be performed. The Air Force Research Laboratories/PK, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8650-11-D-5602).</p> <p>ITT Industries, Inc., Systems Division, Cape Canaveral, Fla., is being awarded a $13,465,960 cost-plus-award-fee contract modification for Spacelift Range System contract support for increased depot level software maintenance for the operationally accepted Range Standard Architecture System, to include the transition and ongoing sustainment of range standard architecture for both the Eastern and Western ranges. Work will be performed at Patrick Air Force Base, Fla., and Vandenberg Air Force Base, Calif. The Space and Missile Systems Center Space Logistics Group/PK, Peterson Air Force Base, Colo., is the contracting activity (F04701-01-C-0001, P00693).</p> <p>Planning Professional, Ltd., Allen, Texas, is being awarded a $12,418,640 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for event planning services in support of the Air Force Reserve Command Yellow Ribbon Program. Work will be performed at Allen, Texas; Summerfield, N.C.; and Twinsburg, Ohio. The Headquarters Air Force Reserve Command/A7KA, Robins Air Force Base, Ga., is the contracting activity (FA6643-11-D-0004).</p> <p>BAE Systems, Nashua, N.H., is being awarded a $9,000,000 firm-fixed-price contract for one Autonomous Real-Time Ground Ubiquitous Surveillance-Imaging System with options for two additional systems. The Air Force Materiel Command, Aeronautical Systems Center, 645th Aeronautical Systems Group/WIJK, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8620-11-G-4029 0008).</p> <p>Chugach Management Services, J.V., Anchorage, Alaska, is being awarded an $8,811,927 firm-fixed-price contract for civil engineering management services. Work will be performed at Kirtland Air Force Base, N.M. The Air Force Nuclear Weapons Center/PKOC, Kirtland Air Force Base, N.M., is the contracting activity (FA9401-11-C-0010).</p> <p><strong>NAVY</strong></p> <p>General Electric Aircraft Engines, Lynn, Mass., is being awarded a $71,484,930 modification to a previously awarded firm-fixed-price contract (N00019-06-C-0088) to exercise an option for the supplemental engine requirement to procure (18) F414-GE-400 engines and (18) F414-GE-400 engine device kits. The F414-GE-400 engine powers the F/A-18E/F Super Hornet aircraft. Work will be performed in Lynn, Mass. (44.8 percent); Madisonville, Ky. (18.1 percent); Evandale, Ohio (14.1 percent); Hooksett, N.H. (10.4 percent); Rutland, Vt. (3.9 percent); Dayton, Ohio (2.2 percent); Jacksonville, Fla. (1.5 percent); Muskegon, Mich. (1.4 percent); Terre Haute, Ind. (1.4 percent); Bromont, Canada (1.2 percent); and Asheville, N.C. (1 percent). Work is expected to be completed in July 2013. Contract funds will not expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.</p> <p>Raytheon Co., Network Centric Solutions, Marlborough, Mass., is being awarded a $67,030,102 indefinite-delivery/indefinite-quantity, cost-plus fixed-fee/cost-plus incentive-fee/firm-fixed-price hybridcontract for the procurement of highly specialized engineering services to meet the Navy’s Satellite Communications Program requirements to include, but not limited to, the following systems produced by Raytheon: Extremely High Frequency (EHF); Super High Frequency (SHF) WSC-6 (v)5/7; Global Broadcast Service (GBS); Submarine High Date Rate (SUB HDR); and Navy Multiband Terminal (NMT). Work will be performed in Marlborough, Mass. (84.49 percent), Chula Vista, Calif. (13.51 percent), and Sterling, Va. (2 percent). Work is expected to be completed by August 2016<em>.</em> Contract funds will not expire at the end of the current fiscal year. This contract was not competitively procured because Raytheon Co., Network Centric Solutions, is the sole manufacturer and current maintainer of the EHF, SHF (AN/WSC-6 (v)5/7), GBS, SUB HDR, and NMT systems and is the only source that possesses the detailed knowledge and unique expertise necessary to provide the required engineering services without substantial duplication of cost to the government that is not expected to be recovered through competition. The Space and Naval Warfare Systems Command, San Diego, Calif., is the contracting activity (N00039-11-D-0045).</p> <p>Oceaneering International, Inc., Chesapeake, Va., is being awarded a $47,429,395 modification to previously awarded contract (N65540-05-D-0012) to provide continuing Subsafe engineering and technical services to support submarine, Subsafe, and Level I material work onboard Seawolf (SSN 21) class, Los Angeles (SSN 688) class, Ohio class (SSBN), and Virginia class submarines. Work will be performed in Puget Sound, Wash. (60 percent), Norfolk, Va. (30 percent), and Pearl Harbor, Hawaii (10 percent), and is expected to be completed by May 2014. Contract funds in the amount of $15,000,000 dollars will expire at the end of the current fiscal year. The Naval Surface Warfare Center, Carderock Division, Ship Systems Engineering Station, Philadelphia, Pa., is the contracting activity.</p> <p>Toyon Research Corp.*, Goleta, Calif., is being awarded a $12,109,000 indefinite- quantity/indefinite-delivery contract for the procurement of various antennas and ancillary parts, which are integrated into communication jamming pods and electronic warfare laboratories, spares, and the incidental engineering required to fabricate, modify and/or maintain the antenna and feed assemblies. Work will be performed in Goleta, Calif., and is expected to be completed in August 2014. Contract funds will not expire at the end of the current fiscal year. This contract was not competitively procured pursuant to FAR 6.302-1. The Naval Air Warfare Center Weapons Center, China Lake, Calif., is the contracting activity (N68936-11-D-0027).</p> <p>Lockheed Martin Maritime Systems and Sensors, Moorestown, N.J., is being awarded a $8,657,273 cost-plus-fixed-fee modification to previously awarded contract (N00024-10-C-5124) to exercise options for fiscal 2011 technical and engineering support and related operation and maintenance of the Navy’s Combat Systems Engineering Development Site and technical engineering support of the SPY-1A test lab and Naval Systems Computing Center. Work will be performed in Moorestown, N.J., and is expected to be completed by October 2011. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington Navy Yard, D.C., is the contracting activity.</p> <p>SoBran, Inc.*, Dayton, Ohio, is being awarded an $8,453,652 modification to a previously awarded time-and-material, indefinite-delivery/indefinite-quantity contract (N68936-05-D-0042) to provide 308,072 hours of logistics production support for the Fleet Readiness Center Southeast, Jacksonville. Work will be performed in Jacksonville, Fla. (95 percent), Oceana, Va. (3 percent), and Beaufort, S.C. (2 percent). Work is expected to be completed in May 2012. Contract funds will not expire at the end of the current fiscal year. The Naval Air Warfare Center Training Systems Division, Orlando, Fla., is the contracting activity.</p> <p>Raytheon Co., Tucson, Ariz., is being awarded a $7,351,328 modification to previously awarded contract (N00024-11-C-5448) for three refurbished and upgraded rolling airframe missile MK 49 Mod 3 Guided Missile Launch Systems with associated hardware for LHA 7 and LCS 5. Work will be performed in Tucson, Ariz., and is expected to be completed by March 2013. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.</p> <p>Pathfinder Systems, Inc.*, Arvada, Colo., is being awarded a $6,717,214 cost-plus-fixed-fee contract for a Phase III Small Business Innovation Research (SBIR) project under Topic N03-190 forthe Phase III operational prototype Marine Common Aircrew Trainer (MCAT) prototype two. This SBIR Phase III project will implement a baseline configuration upgrade based on the previously delivered MCAT prototype one and will build upon previously demonstrated and delivered Phase II simulation technologies. Work will be performed in Arvada, Colo. (95 percent), and the Naval Air Station Miramar, Miramar, Calif. (5 percent), and is expected to be completed in August 2013. Contract funds will not expire at the end of the current fiscal year. This Phase III contract was not competitively procured pursuant to FAR 6.302-5. The Naval Air Warfare Center Training Systems Division, Orlando, Fla., is the contracting activity (N61340-11-C-0021).</p> <p>Raytheon Co., Tucson, Ariz., is being awarded a $6,693,470 modification to previously awarded contract (N00024-07-C-5437) for engineering and technical services in support of the MK15 Phalanx Close-In-Weapon System. The Phalanx Close-In Weapon System is a fast reaction terminal defense against low- and high-flying, high-speed maneuvering anti-ship missile threats that have penetrated all other ships’ defenses. The Phalanx Close-In Weapon System is an integral element of the fleet defense in-depth concept and the Ship Self-Defense Program. Operating either autonomously or integrated with a combat system, it is an automatic terminal defense weapon system designed to detect, track, engage, and destroy anti-ship missile threats penetrating other defense envelopes. Phalanx Close-In Weapon System is currently installed on approximately 187 Navy ships and is in use in more than 20 foreign militaries. This effort includes the governments of Japan and Saudi Arabia (1 percent) under the Foreign Military Sales Program. Work will be performed in Tucson, Ariz., and is expected to be completed by April 2012. Contract funds in the amount of $200,000 will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.</p> <p><strong>DEFENSE LOGISTICS AGENCY</strong></p> <p>Meggitt Polymers, Rockmart, Ga., was awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity, requirements type contract with a maximum $9,500,706 for aircraft fuel tanks. There are no other locations of performance. Using service is Air Force. The date of performance completion is July 2017. The Defense Logistics Agency Procurement Operations, Warner Robins, Robins Air Force Base, Ga., is the contracting activity (SPRWA1-11-D-0016).</p> <p>General Petroleum*, Rancho Dominquez, Calif., was issued a line item modification on the current contract SP0600-11-D-0360/P00002. Award is a fixed-price with economic price adjustment contract with a maximum $6,920,760 for marine gas oil. Other location of performance is San Francisco, Calif. Using services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. The date of performance completion is April 30, 2015. The Defense Logistics Agency Energy, Fort Belvoir, Va., is the contracting activity.</p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-50445603319005033572011-07-15T16:33:00.001-07:002011-07-15T16:33:16.977-07:00<div class="post-body entry-content"> <div class="guia">EN RIESGO DE SUSPENSIÓN DE PAGOS</div> <h1><span style="font-size:130%;">Standard&Poor's cierra el cerco sobre la deuda de EEUU</span></h1> <h2 class="lead">La agencia afirma que hay bastantes posibilidades de que degrade la deuda del país en los próximos meses.<br /></h2><div class="texto-noticia"><p> Standard & Poor's situó hoy la deuda estadounidense "bajo vigilancia con perspectiva negativa", e indicó que <strong>hay un 50 por ciento de posibilidades de que la degrade en los próximos tres meses</strong>.</p> <p> El anuncio de Standard & Poor's se suma al emitido el miércoles por otra de las grandes agencias mundiales de calificación, Moody's, que colocó bajo revisión la calificación "Aaa" de la deuda de Estados Unidos, ante la <strong>posibilidad de que no se logre un acuerdo que eleve el límite de endeudamiento</strong> del país antes del 2 de agosto. "El debate político sobre la posición fiscal de Estados Unidos y el asunto relacionado del techo de la deuda del Gobierno estadounidense, en nuestra opinión, no ha hecho más que complicarse", indicó Standard & Poor's en un comunicado.</p> <p> De no lograr un acuerdo bipartidista en los próximos días, la <strong>agencia considera que el país no podría alcanzarlo "en varios años"</strong>, lo que resulta "inconsistente con una calificación 'Aaa', dada la trayectoria esperada de la deuda en los próximos años.</p> <p> John Chambers, director gerente de Standard & Poor's, <strong>comunicó la decisión de la agencia en una reunión privada</strong> con el líder de la mayoría demócrata en el Senado, Harry Reid, y a funcionarios de la Cámara de Comercio de EEUU y del Foro de Servicios Financieros.</p> <p> <strong>Toque de atención</strong></p> <p> El subsecretario del Tesoro para finanzas domésticas, <strong>Jeffrey Goldstein, consideró la medida un nuevo toque de atención </strong>sobre la urgencia de que republicanos y demócratas encuentren cuanto antes un acuerdo que evite que el país entre en suspensión de pagos por primera vez en su historia. "La acción de hoy de S&P demuestra lo que el Gobierno de (Barack) Obama lleva diciendo un tiempo: que el Congreso debe actuar expeditamente para evitar un incumplimiento de las obligaciones nacionales, y para trazar un plan de reducción del déficit creíble y que tenga un apoyo bipartidista", dijo Goldstein en un comunicado.</p> <p> Si el Congreso y el Gobierno finalmente llegan a un acuerdo antes del 2 de agosto, <strong>S&P "revisará los detalles" de ese plan en los 90 días siguientes </strong>para determinar si, en su opinión, "es suficiente para estabilizar la dinámica de la deuda de Estados Unidos a medio plazo", según el comunicado de la agencia.</p> <p> Obama alentó a los líderes republicanos y demócratas del Congreso a <strong>esforzarse para llegar a un acuerdo en las próximas 24 a 36 horas</strong>, para evitar exponerse a la fecha límite en la que caduca el anterior tope de la deuda, de 14,29 billones de dólares.</p> <p> El presidente, cuya propuesta inicial estaba ligada a una ambiciosa reducción del déficit valorada en unos 4 billones de dólares en los próximos diez años, <strong>sigue abogando por el "acuerdo más amplio posible"</strong>, pero está ahora más dispuesto a aceptar un plan más modesto, con un recorte de unos 2 billones de dólares.</p> <p> Sin embargo, la propuesta de Obama, que incluye concesiones demócratas como los recortes a la Seguridad Social, <strong>sigue contemplando subidas de impuestos</strong>, algo que los republicanos aseguran que no aceptarán.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/standard-cierra-el-cerco-sobre-la-deuda.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T16:27:00-07:00">4:27 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1509671816706876095">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1509671816706876095&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5321718236752513658"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/david-ogilvys-lesson-for-libertarians.html">David Ogilvy's Lesson for Libertarians</a> </h3> <div class="post-body entry-content"> <div class="colPost"> <h2><span style="font-size:180%;">David Ogilvy's Lesson for Libertarians</span></h2> <p class="datetime">by <b>Michael Cloud</b> <span id="sharethis_0"><a title="ShareThis via email, AIM, social bookmarking and networking sites, etc." class="stbutton stico_default"><span class="stbuttontext"></span></a></span> </p> <p> <img alt="" src="http://theadvocates.org/admin/system/images/2011-06/speaker-ppp.jpg" style="width: 600px; height: 225px;" /></p> <p> "A good advertisement is one which sells the product without drawing attention to itself," wrote advertising legend David Ogilvy.<br /><br /> Good advertisements persuade people to buy and use the product. Bad advertisements convince people that the ad was clever or funny or interesting.<br /><br />Good advertisements create an ever-growing number of customers. Bad advertisements leave sales stagnant, but they win advertising industry awards.<br /><br />David Ogilvy's insight is equally true of libertarian speakers and talk show guests.<br /><br /> Good libertarian speakers win people to liberty. Slick libertarian speakers convince the audience that they are clever or interesting.<br /><br /> Good libertarian TV and radio talk show guests sell the audience on libertarianism. Slick libertarian guests sell the audience on them.<br /><br /> Good libertarian spokespeople leave the audience excited about liberty. Slick libertarian spokespeople leave the audience excited about them.<br /><br />Do you want the audience jazzed about the product: liberty? Or the advertisement: the speaker?<br /><br />Do you want new supporters of freedom? Or fans of the speaker?<br /><br />Do you want the audience embracing and advancing liberty? Or embracing and promoting the speaker?<br /><br />Why is this important to you? Why is this important to libertarianism?<br /><br /> Because your choice will determine whether we grow the libertarian movement, whether we advance the libertarian cause -- or whether we promote the careers of slick libertarian personalities who do NOT increase our numbers or advance our cause.<br /><br />Because your choice will determine whether we make America more free -- or an ambitious libertarian personality more famous.<br /><br />Because your choice will either push liberty forward or hold it back in America.<br /><br />When you support and promote spokespeople who put liberty first, we will get more libertarians and more liberty.</p> <hr /> <p> <em>Michael Cloud is author of the acclaimed book <a href="http://store.theadvocates.org/products/secrets-of-libertarian-persuasion">Secrets of Libertarian Persuasion</a>, available exclusively from the Advocates.</em></p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/david-ogilvys-lesson-for-libertarians.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T16:20:00-07:00">4:20 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5321718236752513658">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5321718236752513658&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/David%20Ogilvy%27s" rel="tag">David Ogilvy's</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Lesson%20for%20Libertarians" rel="tag">Lesson for Libertarians</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5415807241212879822"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/should-you-oppose-redistribution-of.html">Should You Oppose the "Redistribution of Wealth?"</a> </h3> <div class="post-body entry-content"> <div class="colPost"> <h2><span style="font-size:180%;">Should You Oppose the "Redistribution of Wealth?"</span></h2> <p class="datetime"> by <b>Michael Cloud</b> <span id="sharethis_0"><a title="ShareThis via email, AIM, social bookmarking and networking sites, etc." class="stbutton stico_default"><span class="stbuttontext">ShareThis</span></a></span> </p> <p> <img alt="" src="http://theadvocates.org/admin/system/images/2011-07/money-ppp.jpg" style="width: 600px; height: 225px;" /></p> <p> "These government programs and policies take us closer to -- or are -- the redistribution of wealth," say pundits, bloggers, and talk radio hosts. Then they expose and explain and attack the "redistribution of wealth."<br /><br />Some bring light to the subject. Others just heat.<br /><br /> Will you empty your mind of all you know and believe about "the redistribution of wealth?" Will you look at the matter with fresh eyes and an open mind?<br /><br />Will you "examine your premises," as Ayn Rand wisely counseled?<br /><br />Ask: What is the redistribution of wealth?<br /><br />First, the meaning of the key words: "wealth" and "redistribution."<br /><br />"Wealth" means all goods, services, or information that have economic value. Usually money or goods.<br /><br />To understand "redistribution," we need to first grasp the meaning of "distribution."<br /><br /> "Distribute" means to deliver, disperse, spread, give out, or hand out. "Distribution" means the act of distributing or condition of being distributed.<br /><br />"Redistribute" means to distribute again. "Redistribution" is the act of distributing again or the condition of being distributing again.<br /><br />Wealth is first distributed when each of us earns or produces it.<br /><br />Every transfer afterwards is redistribution.<br /><br />When you barter, you redistribute wealth.<br /><br />When you buy or sell, you redistribute wealth.<br /><br />When you give or receive gifts or charity, you redistribute wealth.<br /><br />When you borrow or loan money, you redistribute wealth.<br /><br />Every voluntary transfer of wealth is redistribution. A free market is a mechanism for voluntary redistribution of wealth.<br /><br />But there is also the involuntary, coerced, forced redistribution of wealth.<br /><br />Armed robbery is a coerced transfer of wealth.<br /><br />Burglary is, too.<br /><br />Embezzlement and fraud are coerced transfers of wealth.<br /><br />So is extortion.<br /><br />I support each person's right to freely choose, to voluntarily redistribute his own wealth.<br /><br />I oppose the criminal, coercive, involuntary redistribution of a person's wealth.<br /><br />Don't you? Isn't this the litmus test for being a libertarian?<br /><br />I'd wager that most of the critics of the redistribution of wealth would agree with you and me -- up to this point.<br /><br />But then they'd add, "I'm talking about the GOVERNMENT'S redistribution of wealth."<br /><br />Okay.<br /><br />Every tax transfers money from the man or women who earned it to the government.<br /><br /> Every tax redistributes wealth. Then the government again redistributes the wealth to government contractors, government employees, politically-privileged special interests, and other beneficiaries.<br /><br />Every government mandate on private citizens and private businesses redistributes wealth.<br /><br />Many government laws and regulations redistribute wealth.<br /><br />So, do these critics oppose ALL "government redistribution of wealth?" All taxes? All government spending?<br /><br /> Or, are they just against certain KINDS of "government redistribution of wealth?" Or for certain purposes? Or for certain individuals or groups?<br /><br />Or, are they only against these KINDS or these PURPOSES when "the other political party" controls the White House, Senate, or House of Representatives?<br /><br />Some critics are engaging in self-serving, misleading propaganda.<br /><br />But many largely agree with the libertarian principle. Not totally. But mostly.<br /><br /> If they examine their premises, many will reject the phrasing and framing of the two-edged slogan. They will find better concepts and language to oppose Big Government -- to endorse and advocate individual liberty, personal responsibility, and small government.</p> <hr /> <p> <em>Michael Cloud is author of the acclaimed book <a href="http://store.theadvocates.org/products/secrets-of-libertarian-persuasion">Secrets of Libertarian Persuasion</a>, available exclusively from the Advocates.</em></p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/should-you-oppose-redistribution-of.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T16:19:00-07:00">4:19 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5415807241212879822">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5415807241212879822&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/%22Redistribution%20of%20Wealth" rel="tag">"Redistribution of Wealth</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Should%20You%20Oppose" rel="tag">Should You Oppose</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2380399621562453916"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/put-ceiling-on-overregulation.html">Put a Ceiling on Overregulation</a> </h3> <div class="post-body entry-content"> <div class="node-header"> <h2><span style="font-size:180%;">Put a Ceiling on Overregulation</span></h2> <div class="cei-subtitle">Make regulatory reform part of the big deal.</div> <div class="cei-authors"> By <a href="http://cei.org/expert/john-berlau">John Berlau</a>, <a href="http://cei.org/expert/clyde-wayne-crews">Clyde Wayne Crews</a> </div></div> <p>After months of saying it wanted a “clean” hike in borrowing authority, the Obama administration now proclaims it wants to do something “big” in a debt-ceiling package just as its self-imposed deadline is approaching. On NBC’s <em>Meet the Press</em> this Sunday, Treasury Secretary Tim Geithner <a href="http://www.businessinsider.com/obama-still-looking-for-biggest-debt-ceiling-deal-possible-2011-7#ixzz1RlJkfqPV">said</a> the president wanted to do the “biggest, most substantial deal possible, the deal that’s going to be best for the economy.”</p> <p>GOP leaders should take up this challenge and put on the bargaining table something big that would also be a boost the economy: curbing overregulation that’s crushing economic growth.</p> <p>With the economy teetering, leaders of both parties realize that long-term issues must be addressed in a debt-ceiling package. The American people agree and so, seemingly, do the markets. While the bond market has registered barely a hiccup to news about the debt-ceiling talks, stocks and other financial instruments continue to drop after the release of dismal growth and employment statistics.</p> <p>Yet when it comes to the foundations of the U.S. economy, neither party is using the debt-ceiling talks to address the proverbial elephant in the room. In this case, it’s a trillion-dollar elephant that is stomping all over new business formation and job growth.</p> <p>Taxes and spending are of course very important. House Speaker John Boehner is right to insist that debt reduction come from spending cuts rather than net tax hikes. It is more than reasonable for congressional leaders to shape most of the package to their liking, because the <a href="http://www.nationalreview.com/articles/271329/constitutional-nonsense-debt-john-berlau">Constitution explicitly makes approval of new borrowing a prerogative of Congress</a>, not the presidency.</p> <p>But the problem here is that GOP leaders aren’t exercising this prerogative to deal with the vital issue of overregulation. Even if the GOP got all the spending cuts it is asking for, with no increase in taxes, Americans would still face the hidden tax of overregulation.</p> <p>Even the Obama administration itself has pledged — in its rhetoric — to rein in regulation. “If they are not providing the kind of benefits in terms of the public health, and clean air and clean water, and worker safety that have been promised, then we should get rid of some of those regulations,” Obama <a href="http://www.whitehouse.gov/the-press-office/2011/06/29/press-conference-president">said</a> in his press conference on Monday following up on his calls earlier this year for repealing “outdated regulations that stifle job creation.”</p> <p>This language sounds strikingly similar to language in the House GOP’s “Plan for America’s Job Creators” unveiled in May, which <a href="http://www.gop.gov/indepth/jobs">states</a>: “We must remove onerous federal regulations that are redundant, harmful to small businesses, and impede private sector investment and job creation.”</p> <p>Yet, amazingly, even though both parties now want the debt-ceiling package to address issues of economic growth — all the more so, in the wake of Friday’s dismal employment numbers — no one has put measures to rein in regulation on the table. Since both Obama and GOP leaders are saying that overregulation is a barrier to job creation, it’s time to make regulatory curbs part of the debt-ceiling negotiations. As Sen. Olympia Snowe (R., Maine), not generally known as an anti-government Tea Party stalwart, <a href="http://www.politico.com/news/stories/0611/57543.html">wrote</a> recently in <em>Politico</em>, “One of the most effective ways government can spur job creation is to pass substantial regulatory reforms — immediately.”</p> <p>A debt-ceiling deal to spur growth without adding to our fiscal woes must contain measures to halt and reverse the mounting regulatory burden. The Competitive Enterprise Institute’s annual study “<a href="http://cei.org/10kc">Ten Thousand Commandments</a>” found that the <em>Federal Register</em>, which spells out all the new regulation the government has issued, stands — as of the end of 2010 — at an all-time-record high of 81,405 pages. Meanwhile, the sheer number of regulations in the pipeline at the end of 2010 stood at 2,439, a 19 percent increase from 2009.</p> <p>In 2010, the Obama administration issued more than 90 rules that regulatory agencies figure will cost the economy at least $100 million apiece. A single provision of the 2010 Dodd-Frank financial overhaul — the pending rule on new collateral requirements for derivatives — <a href="http://www.reuters.com/article/2010/06/29/us-derivatives-isda-idUSTRE65S6NF20100629?type=politicsNews&feedType=RSS&sp=true">could cost</a> U.S. manufacturers and other firms as much as $1 trillion in lost capital and liquidity, according to an estimate by the International Swaps and Derivatives Association. <em>The Atlantic</em> magazine finance columnist Daniel Indiviglio largely agrees with ISDA’s calculation, <a href="http://www.theatlantic.com/business/archive/2010/06/dodd-franks-derivatives-rules-could-cost-main-street-1-trillion/58989/">arguing</a> that the cost “would certainly be in the hundreds of billions.”</p> <p>This and other pending regulations have attracted bipartisan criticism. Democrats have joined Republicans in expressing objections to the Federal Communications Commission’s “net neutrality” mandates on Internet providers, the Department of Education’s “<a href="http://cei.org/news-releases/new-cei-study-challenges-department-educations-gainful-employment-rule">gainful employment</a>” regulations on for-profit colleges, and the Environmental Protection Agency’s plans to regulate carbon dioxide as a pollutant under the Clean Air Act — a backdoor cap-and-trade scheme that <em>Time</em> <a href="http://www.time.com/time/health/article/0,8599,2040485,00.html">has called</a> “the most far-reaching environmental regulatory scheme in American history.”</p> <p>The ideological gulf between Obama and the GOP on many of these regulations is indeed wide, and it may be unrealistic to address all these edicts in a debt-ceiling deal. Still, since both Obama and the GOP recognize that regulation can be a barrier to growth, the debt-ceiling package can set a framework to put constraints on regulatory agencies and hold them more accountable to Congress and the courts. At the very least, any hike in borrowing authority should be conditioned on passage of major elements of bills pending in Congress to reform the regulatory process. The GOP should give the Obama administration the chance to back up at least some of its rhetoric on overregulation.</p> <p>First, a debt-ceiling deal should include passage of the <a href="http://snowe.senate.gov/public/index.cfm/pressreleases?ContentRecord_id=e7cdf2af-193c-4d3a-b467-d01cf854227c&ContentType_id=ae7a6475-a01f-4da5-aa94-0a98973de620&Group_id=2643ccf9-0d03-4d09-9082-3807031cb84a">Freedom Act</a> sponsored by Senator Snowe. This bill received the support of 53 senators — including six Democrats — when voted on in June. The act would, among other things, give small business more access to the courts to challenge rules.</p> <p>Current rules requiring agencies to minimize costs for smaller firms lack teeth, because firms are required to “exhaust” time- and money-consuming challenges before agencies before they can get judicial review. This can be next to impossible for firms that have trouble securing money for day-to-day operations, let alone a costly lawsuit. The Freedom Act would make this process easier for smaller entrepreneurs by allowing suits to be filed as soon as a rule is proposed.</p> <p>And where Snowe’s bill would give the courts more oversight over regulations, the <a href="http://geoffdavis.house.gov/REINS/">REINS Act</a> would do the same for Congress. It would require that major rules scored as costing the economy $100 million or more be affirmatively approved by both houses of Congress.</p> <p>The bill, a part of the House GOP’s job-creation plan, has been praised by such respected scholars as New York Law School professor <a href="http://www.aei.org/docLib/SchoenbrodHouseWritten.pdf">David Schoenbrod</a> and Case Western Reserve University professor Jonathan Adler. Adler <a href="http://www.cato.org/pubs/regulation/regv34n2/regv34n2-2.pdf">writes</a> in the current issue of the policy journal <em>Regulation</em> that “requiring congressional approval before economically significant rules may take effect ensures that Congress takes responsibility for major regulatory policy decisions.” Noting that the REINS Act designs a streamlined procedure for approval of regulations that is not subject to filibuster, Adler compares the bill to legislation creating “fast-track trade authority or base closing” procedures and argues that it will likely not delay “needed regulatory initiatives.”</p> <p>Meanwhile, Sen. Mark Warner’s (D., Va.) “one-in, one-out” <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/12/12/AR2010121202639.html">proposal</a> for balancing new regulations by getting rid of old ones at least helps put a “ceiling” on today’s regulatory enterprise. It belongs on the table too.</p> <p>Sober reflection indicates that ours is an age in which we need, not politicians who come to Washington merely to “get things done,” but leaders who recognize when it’s time to get things “undone.” Balancing the budget may address our fiscal woes. But to resolve the current “ceiling” we suffer on job creation, we must reduce the “regulatory budget” of costly mandates faced by entrepreneurs.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/put-ceiling-on-overregulation.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T16:15:00-07:00">4:15 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2380399621562453916">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2380399621562453916&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Overregulation" rel="tag">Overregulation</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Put%20a%20Ceiling" rel="tag">Put a Ceiling</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="584037255977301690"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/shadow-science-of-economics.html">The Shadow Science of Economics</a> </h3> <div class="post-body entry-content"> <h2 class="title"><span style="font-size:180%;"><a href="http://takimag.com/article/the_shadow_science_of_economics">The Shadow Science of Economics</a></span></h2> <p class="byline large"><a href="http://takimag.com/contributors/JohnDerbyshire/76">by John Derbyshire</a> <a href="http://takimag.com/contributors/contributor_feed/JohnDerbyshire/"><img src="http://takimag.com/images/global/feed-32x32.png" class="leftX" height="12" width="12" /></a></p> <span class="addthis_separator"></span><a href="http://takimag.com/article/the_shadow_science_of_economics/print#" title="Send to Facebook_like" target="_blank" class="addthis_button_facebook_like at300b"><span></span></a><div class="addthis_toolbox addthis_default_style no_print" style="text-decoration:none;"> </div> <div class="img_article" style="width:270px;background-color:#f9f9f9;"> <img src="http://takimag.com/images/uploads/Bodrum_Peninsula_6582.jpg" alt="The Shadow Science of Economics" width="270" /> <br /> <p class="byline large" style="padding:8px;">Bodrum, Turkey</p> </div> <p>I spent the Memorial Day weekend as a guest of Professor Hans-Hermann Hoppe’s <a href="http://propertyandfreedom.org/" target="blank">Property and Freedom Society</a> at their annual conference in Bodrum, Turkey. It was a wonderfully relaxing break, for which I am very much obliged to the good professor, his charming wife, and their co-organizers. I gave <a href="http://www.johnderbyshire.com/Opinions/China/understanding.html" target="blank">a talk about China</a> and got to see some of Turkey (a country that was new to me), and I listened to some interesting and instructive lectures.</p> <p>The PFS exists to help promote the economic and political libertarianism of <a href="http://mises.org/about/3248" target="blank">Ludwig von Mises</a> and <a href="http://murrayrothbard.com/" target="blank">Murray Rothbard</a>. I was in Bodrum because Prof. Hoppe was kind enough to invite me, not because I am a particularly dogmatic disciple of those gents. I approve of them and their doctrines in a vague, general sort of way, as I approve of anything much to the right of the statist elephantiasis dominant in the modern West and which looks to be sailing into some great crisis in the near future. </p> <p>On the other hand I have issues with libertarianism—with <a href="http://www.amazon.com/Free-Trade-Doesnt-Work-Replace/dp/0578082616/ref=sr_1_1?s=books&ie=UTF8&qid=1306952809&sr=1-1" target="blank">free trade</a>, for instance, and with the open-borders dogma that too many libertarians (though not all the ones at Bodrum, perhaps not even a majority) cling to with religious zeal. </p> <p>If I had to be marooned on a desert island with an economist, I’d much prefer it to be someone from the Austrian School, merely for their devotion to liberty; but like other economists, the Austrians seem to be uninterested in the <a href="http://answers.yahoo.com/question/index?qid=20080726210904AAwu6Ag" target="blank">crooked-timber</a> aspect of human nature. (I might exempt some <a href="http://www.amazon.com/Advances-Behavioral-Economics-Roundtable/dp/0691116822/ref=pd_sim_b_4" target="blank">behavioral economists</a> from that observation, but as <a href="http://mises.org/media/author/304/Nikolay-Gertchev" target="blank">Nikolay Gertchev</a> demonstrated in his talk at Bodrum, the Austrians look askance at behavioral economics. The title of Nikolay’s forceful address was “Psychology Ain’t Economics.”)</p><div class="pullquote">“Human nature, and a true understanding thereof, precedes everything in the human world.”</div> <p>I have never read anything by an economist—though I confess I have read far too little in the field—or heard any lecture by an economist that did not leave me thinking, “If this guy’s fundamental assumptions about human nature were true, human history would have been utterly different.” </p> <p>Still, I suppose <i>someone</i> has to do economics, and the Austrians do it closer to my own political tastes than any others. There was even something calming about listening to their airy abstractions there at Bodrum. I came away feeling about the Austrian school somewhat the same way I feel about <a href="http://takimag.com/article/loyalty_to_the_tribe" target="blank">the Anglican Church</a>: unable to assent wholeheartedly to the doctrines, but sympathetic at some deep level and wishing them well. </p> <p>Back home in New York, I checked through the mail that had arrived in my absence. It included my subscription copy of <i>The Economist</i>. Page 87, “<a href="http://www.economist.com/node/18741382" target="blank">The Future of Mobility</a>”:</p> <blockquote><p>Immigration is unpopular in rich countries because people overestimate its costs and underestimate its benefits. An influx of unskilled migrants may drag down the wages of unskilled natives, but this effect is “very small at most, and may be irrelevant”, according to a number of different studies.</p> </blockquote> <p>Really? According <a href="http://www.cis.org/Wages" target="blank">to a number of <i>different</i> different studies</a>, that is not true. So what is the non-economist to think? Perhaps the same thing he finds himself thinking when surveying <a href="http://nobelprize.org/nobel_prizes/economics/laureates/" target="blank">the list of recent Nobel Prize winners in economics</a> and noticing that for every large opinion that has won a Nobel, the contrary opinion has also won one. Real sciences don’t work like that. </p> <p>And then (going back to <i>The Economist</i>):</p> <blockquote><p>The next big wave of migration will come from Africa.</p> </blockquote> <p>Oh. The <i>Economist</i> article (it is actually a <a href="http://www.amazon.com/Exceptional-People-Migration-Shaped-Define/dp/0691145725/ref=sr_1_1?ie=UTF8&s=books&qid=1306955107&sr=1-1" target="blank">book</a> review) is illustrated with a photograph of some young black African men, presumably the leading edge of that “next big wave.” </p> <p>I suppose the <i>Economist</i> reviewer would be shocked speechless to know that some large majority of Europeans and Americans, presented with that picture, imagine not fresh, keen young workers coming to help ease their labor shortage. Instead, in their wicked human hearts, they see <a href="http://www.insidehighered.com/news/2011/05/09/false_claim_of_police_harassment_is_debated_at_university_of_virginia" target="blank">sowers of discord</a>, <a href="http://stuffblackpeopledontlike.blogspot.com/2011/05/drudge-report-exposes-bra.html" target="blank">destroyers of civil peace</a>, <a href="http://ronmull.tripod.com/racism.html" target="blank">inmates of penitentiaries</a>, <a href="http://www.theglobeandmail.com/news/national/ontario/jury-was-racist-convicted-hiv-killer-says/article2037333/" target="blank">carriers of disease</a>, agents of <a href="http://www.haitian-culture.com/images/map-of-haiti.jpg" target="blank">social and economic entropy</a>, and <a href="http://www.acf.hhs.gov/programs/ofa/character/FY2008/tab08.htm" target="blank">consumers of welfare</a>.</p> <p>That’s economics for you—and economists, and <i>The Economist</i>. The world of their imagination is a cool, well-lit world in which thoughtful human beings, responding to rational incentives, move along paths defined by elegant mathematical formulas. It is a shadow world, a dream of perfection. It resembles, but only as shadows resemble objects, the grimy, gamy, half-mad world of actual humanity—the substance of human affairs. </p> <p>The human beings who populate the economist’s—certainly <i>The Economist</i>’s—imagination are mere tokens. They have no allegiance to nation, faith, family, or the huge old inbred extended families we call <a href="http://www.politico.com/blogs/joshgerstein/0311/Eric_Holder_Black_Panther_case_focus_demeans_my_people.html" target="blank">races</a>. Still less do they exhibit features so evident to those of us who live outside great universities: pride, stubbornness, folly, misplaced loyalty, and the occasional irresistible urge to cut off one’s nose to spite one’s face. They are not biological entities at all.</p> <p>Economics can have a future, if the human race does. It will not be a container of large truths, though, unless it somehow incorporates facts about human nature that the earthier human sciences—genetics, paleoanthropology, evolutionary biology, neurophysiology, and psychometrics—are only beginning to wrestle into submission. </p> <p>Until it is willing to do this, and actually <i>can</i> do it, economics will be a discipline of shadows, not substances. Worse yet, it will continue to be a plaything of <a href="http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html" target="blank">ideologues</a>, as it has so disastrously been <a href="http://freemencapitalist.com/wp-content/uploads/2010/11/Karl-Marx1.jpg" target="blank">in the past</a>. Human nature, and a true understanding thereof, precedes everything in the human world.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/shadow-science-of-economics.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T15:49:00-07:00">3:49 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=584037255977301690">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=584037255977301690&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/economics" rel="tag">economics</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/The%20Shadow%20Science" rel="tag">The Shadow Science</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7151827020312937120"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/what-is-anarcho-capitalism.html">What is anarcho-capitalism?</a> </h3> <div class="post-body entry-content"> <span><h2><a name="part1">1. <span style="font-size:130%;">What is anarcho-capitalism?</span></a></h2> <b>Anarcho-capitalism</b> is the political philosophy and theory that <ol><li>the State is an unnecessary evil and should be abolished, and</li><li>a free-market private property economic system is morally permissible.</li></ol> Part one is simply the definition of "anarchism," and part two is soft propertarianism, known more generally as "a free market" or "laissez-faire." Let's look more closely at each of the two parts of our definition. Moral permissibility is a "minimum" position. Almost all anarcho-capitalists believe also that a laissez-faire economic system is generally better than alternatives. Some strong propertarians, such as <a href="http://www.aynrand.org/site/PageServer?pagename=objectivism_intro">objectivists</a>, go further and claim that laissez-faire is the <i>only</i> moral economic system.<p> A typical dictionary definition<a href="http://www.onelook.com/?w=anarchism&ls=a"><sup>Pf</sup></a> of anarchism is: <i>"The theory or doctrine that all forms of government are oppressive and undesirable and should be abolished."</i><a href="http://www.bartleby.com/61/17/A0281700.html"><sup>Pf</sup></a> This definition follows the etymology of the word: "Anarchism" is derived from the Greek αναρχία meaning "without archon" (ruler, chief, or king.) This is the core meaning of the term - <b>against the State</b>. This means against it <i>in principle</i>, as an institution, not merely against certain policies or personnel.</p><p> Murray Rothbard coined the term "anarcho-capitalist" in the winter of 1949 or 1950. "My whole position was inconsistent [...], there were only two logical possibilities: socialism, or anarchism. Since it was out of the question for me to become a socialist, I found myself pushed by the irresistible logic of the case, a private property anarchist, or, as I would later dub it, an anarcho-capitalist."<a href="http://www.mises.org/journals/scholar/Modugno.PDF"><sup>Pf</sup></a></p><p> Some prefer the term "market anarchism" to avoid the negative connotations some people have with "capitalism." </p><h2><a name="part2">2. Why should one consider anarcho-capitalism?</a></h2> <img src="http://www.ozarkia.net/picts/AnarchoDollar.gif" align="right" border="0" height="116" hspace="18" vspace="0" width="145" /> First, there is the issue of <i>self-ownership</i>, as the abolitionists called it, or <i>moral autonomy</i> as the philosophers call it. Is <i>your life</i> your own moral purpose? Do you owe anyone obedience regardless of consent? In natural rights language: Do you have rights - moral claims to freedom of action? If you answer yes to any of these questions, then logic leads you to the position of philosophical anarchism. <blockquote> The defining mark of the state is authority, the right to rule. The primary obligation of man is autonomy, the refusal to be ruled. It would seem, then, that there can be no resolution of the conflict between the autonomy of the individual and the putative authority of the state. Insofar as a man fulfills his obligation to make himself the author of his decisions, he will resist the state's claim to have authority over him. That is to say, he will deny that he has a duty to obey the laws of this state <i>simply because they are the laws</i>. In that sense, it would seem that anarchism is the only political doctrine consistent with the virtue of autonomy." - Robert Paul Wolff, <a href="http://www.ucpress.edu/books/sale/pages/8269.html">In Defense of Anarchism</a>. </blockquote> A second more utilitarian reason is the dismal record of States. Considering all the war, genocide, slavery, and repression perpetrated by States through history, might humanity do better without this barbaric institution? As the young Edmund Burke wrote in the world's first anarchist essay (before he went conservative): <blockquote> These Evils are not accidental. Whoever will take the pains to consider the Nature of Society, will find they result directly from its Constitution. For as Subordination, or in other Words, the Reciprocation of Tyranny, and Slavery, is requisite to support these Societies, the Interest, the Ambition, the Malice, or the Revenge, nay even the Whim and Caprice of one ruling Man among them, is enough to arm all the rest, without any private Views of their own, to the worst and blackest Purposes; and what is at once lamentable and ridiculous, these Wretches engage under those Banners with a Fury greater than if they were animated by Revenge for their own proper Wrongs - Edmund Burke, <a href="http://www.ozarkia.net/bill/anarchism/library/VindicationBurke/index.html">A Vindication of Natural Society</a>. </blockquote> That was written in 1756, long before modern weapons of mass destruction and long before 170 million civilian people were murdered by their own governments in the 20th century. That's just civilian deaths perpetrated by their own governments; it doesn't count the deaths due to enemy States, deaths of soldiers, dislocated refugees, and so on. To quote Rothbard, "If we look at the black record of mass murder, exploitation, and tyranny levied on society by governments over the ages, we need not be loath to abandon the Leviathan State and ... try freedom." <h2><a name="part3">3. Do anarcho-capitalists favor chaos?</a></h2> No. Anarcho-capitalists believe that a stateless society would be much more peaceful, harmonious, and prosperous than society under statism. We see life under <i>States</i> as chaotic - the insanity of war and the arbitrariness of government regulation and plunder. Anarcho-capitalists agree with the "father of anarchism" Pierre Proudhon: "Liberty is not the daughter but the mother of order," and his contemporary Frederic Bastiat, who wrote of the "natural harmony" of the market, that "natural and wise order that operates without our knowledge." (<a href="http://www.econlib.org/library/Bastiat/basHar.html">"Economic Harmonies"</a>) <h2><a name="part4">4. Isn't anarcho-capitalism utopian?</a></h2> No. Anarcho-capitalists tend to be pragmatic, and argue that, no matter how good or bad man is, he is better off in liberty. If men are good, then they need no rulers. If men are bad, then governments of men, composed of men, will also be bad - and probably worse, due to the State's amplification of coercive power. Most anarcho-capitalists think that some men are okay and some aren't; and there will always be some crime. We are not expecting any major change in human nature in that regard. Since utopianism by definition requires a change in human nature, anarcho-capitalism is not utopian.</span> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/what-is-anarcho-capitalism.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T15:46:00-07:00">3:46 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7151827020312937120">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7151827020312937120&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Anarcho-Capitalism" rel="tag">Anarcho-Capitalism</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/What%20is" rel="tag">What is</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3024067708622710798"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/tea-party-confusion.html">Tea Party Confusion</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:180%;"><a href="http://blog.independent.org/2011/07/15/tea-party-confusion/" rel="bookmark" title="Permanent Link to Tea Party Confusion">Tea Party Confusion</a></span></h1> <p>By <b><a href="http://blog.independent.org/author/tibor-machan/" title="Posts by Tibor Machan">Tibor Machan</a></b><span style="position:relative;top:3px;"><span></span></span></p><div class="entry"><p><a href="http://blog.independent.org/wp-content/uploads/2011/07/teapartyscene1.jpg"><img class="alignright size-medium wp-image-11568" title="teapartyscene" src="http://blog.independent.org/wp-content/uploads/2011/07/teapartyscene1-300x225.jpg" alt="" height="225" width="300" /></a>The idea that politicians should sign a pledge to promote personal morality is contrary to the avowed Tea Party commitment to small government. If you want the government to have a restricted scope, you should stick to the US Declaration as your guide: Government is instituted so as to secure our rights! It is not instituted, at least in the American political tradition, so as to be our moral police!</p> <p>This is the kind of inconsistency that will bode very ill for the Tea Party and the Republicans. It is just like the liberals’ inconsistency of preaching choice in the abortion debate but loving to take it from us in nearly everything else. Obama care comes to mind which commands people to buy health insurance and is, thus, anything but pro choice. And what about coercing us all to buy green light bulbs?</p> <p>Who are these people, imposing their standards of right conduct on the rest? Both sides of the political spectrum are still wedded to their tyrannical ways. No wonder so few people vote.</p> <p>Here is the pledge Tea Party Republican Rep. Michell Bockmann wants candidates to sign:<br /><em> “Therefore, in any elected or appointed capacity by which I may have the honor of serving our fellow citizens in these United States, I the undersigned do hereby solemnly vow* to honor and to cherish, to defend and to uphold, the Institution of Marriage as only between one man and one woman. I vow* to do so through my:<br />Personal fidelity to my spouse.<br />Respect for the marital bonds of others.<br />Official fidelity to the U.S. Constitution, supporting the elevation of none but faithful constitutionalists as judges or justices.<br />Vigorous opposition to any redefinition of the Institution of Marriage – faithful monogamy between one man and one woman – through statutory-, bureaucratic-, or court-imposed recognition of intimate unions which are bigamous, polygamous, polyandrous, same-sex, etc.<br />Recognition of the overwhelming statistical evidence that married people enjoy better health, better sex, longer lives, greater financial stability, and that children raised by a mother and a father together experience better learning, less addiction, less legal trouble, and less extramarital pregnancy.<br />Support for prompt reform of uneconomic, anti-marriage aspects of welfare policy, tax policy, and marital/divorce law, and extended “second chance” or “cooling-off” periods for those seeking a “quickie divorce.”<br />Earnest, bona fide legal advocacy for the Defense of Marriage Act (DOMA) at the federal and state levels.<br />Steadfast embrace of a federal Marriage Amendment to the U.S. Constitution which protects the definition of marriage as between one man and one woman in all of the United States.<br />Humane protection of women and the innocent fruit of conjugal intimacy – our next generation of American children – from human trafficking, sexual slavery, seduction into promiscuity, and all forms of pornography and prostitution, infanticide, abortion and other types of coercion or stolen innocence.<br />Support for the enactment of safeguards for all married and unmarried U.S. Military and National Guard personnel, especially our combat troops, from inappropriate same-gender or opposite-gender sexual harassment, adultery or intrusively intimate commingling among attracteds (restrooms, showers, barracks, tents, etc.); plus prompt termination of military policymakers who would expose American wives and daughters to rape or sexual harassment, torture, enslavement or sexual leveraging by the enemy in forward combat roles.<br />Rejection of Sharia Islam and all other anti-woman, anti-human rights forms of totalitarian control.<br />Recognition that robust childbearing and reproduction is beneficial to U.S. demographic, economic, strategic and actuarial health and security.<br />Commitment to downsizing government and the enormous burden upon American families of the USA?s $14.3 trillion public debt, its $77 trillion in unfunded liabilities, its $1.5 trillion federal deficit, and its $3.5 trillion federal budget.<br />Fierce defense of the First Amendment?s rights of Religious Liberty and Freedom of Speech, especially against the intolerance of any who would undermine law-abiding American citizens and institutions of faith and conscience for their adherence to, and defense of, faithful heterosexual monogamy.”</em></p> <p>Some of this is of course redundant–anyone who takes the oath to defend the US Constitution has made many of these pledges, namely, those that involve protection of individual rights. But many of them are meddling pieces of political posturing as the citizenry’s moral guide, as our nannies, just as Al Gore wants to be our moral guide vis-a-vis global warming or other environmental issues.</p> <p>One thing is for sure: anyone who signs this would not be a supporter of limited government, the sort Tea Party folks are proud to claim to be.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/tea-party-confusion.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T15:12:00-07:00">3:12 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3024067708622710798">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3024067708622710798&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Confusion" rel="tag">Confusion</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Tea%20Party" rel="tag">Tea Party</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4731487312493062141"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/why-us-leaders-deceive-their-own-people_15.html">Why U.S. Leaders Deceive Their Own People</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Why U.S. Leaders Deceive Their Own People</span></h1> <p>by Ted Galen Carpenter </p><p class="first">Professor John Mearsheimer's latest book, <em>Why Leaders Lie</em>, provides a number of intriguing insights and surprising conclusions. Perhaps his most unexpected conclusion is that leaders lie to foreign leaders far less frequently than is generally assumed. Indeed, he contends that leaders lie to their own people more than they do to foreign counterparts. He does, however, concede that less blatant forms of deception, such as "spinning" and "concealment" are pervasive in international politics.</p> <p>Two other conclusions ought to be deeply troubling to populations in democratic countries, and especially so to Americans. One is that officials in democratic political systems are more likely to deceive their own people — even engaging in outright lies — than officials in autocratic systems. His reasoning on that point is solid, and he provides compelling evidence to support his case. Mearsheimer's thesis is that democratic leaders are much more dependent than autocrats on public support for foreign policy initiatives, especially when an initiative includes going to war. If the available evidence is weak that a major security threat exists, but political leaders believe that taking military action is in the national interest, a powerful incentive exists to inflate the threat to gain badly needed public support.</p> <p>A second, related part of his thesis is that political leaders are much more inclined to lie involving wars of choice rather than wars of necessity. Again, there are ample historical examples supporting his argument. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/ted-galen-carpenter">Ted Galen Carpenter</a>, senior fellow of foreign policy studies at The Cato Institute, is the author of </em><a href="http://www.cato.org/store/books/smart-power-toward-prudent-foreign-policy-america-hardback">Smart Power: Toward a Prudent Foreign Policy for America</a><em>, as well as other books on international affairs.</em></p> <a class="head" href="http://www.cato.org/people/ted-galen-carpenter">More by Ted Galen Carpenter</a></div></div> <p>If Mearsheimer is correct, Americans must face the troubling realization that U.S. leaders will be unusually prone to engage in lying as well as milder forms of deception to gull their own populations. Not only is the United States a long-standing democracy, but it is the nation since World War II that is most inclined to embark on wars of choice — often involving issues that have little or no connection to genuine American security interests. The list of U.S. military interventions just in the post-Cold War era — Panama, Somalia, Haiti, Bosnia, Kosovo, Iraq (twice), and the extended mission in Afghanistan — is definitive testimony to that tendency.</p> <p>America's status as a democracy and a country inclined to wage wars of choice is a deadly combination that creates an overwhelming incentive for political leaders to use whatever techniques of threat inflation are necessary to stampede an otherwise skeptical public into supporting the latest dubious military crusade. The potential corrosive effect on America's political institutions and values are all too apparent. At a minimum, Americans ought to be on guard and doubly skeptical when an administration's spin machine goes into action making the case that Lower Slobovia's mistreatment of Upper Slobovians really, truly poses a dire security threat that only U.S. military action can prevent. The American people have heard such a refrain — and believed it — far too often for the health of the Republic.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/why-us-leaders-deceive-their-own-people_15.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T15:00:00-07:00">3:00 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4731487312493062141">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4731487312493062141&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Deceive" rel="tag">Deceive</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Their%20Own%20People" rel="tag">Their Own People</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Why%20U.S.%20Leaders" rel="tag">Why U.S. Leaders</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="268431768943957216"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/federal-spending-doesnt-work.html">Federal Spending Doesn't Work</a> </h3> <div class="post-body entry-content"> <h1>Federal Spending Doesn't Work</h1> <p>by Chris Edwards </p><p class="first">Despite ongoing federal deficits of more than $1 trillion a year, many liberals are calling for more government spending to "create jobs." At the same time, liberals are opposing budget cuts because that would supposedly hurt the economic recovery. And then there is the perennial problem of Democrats and Republicans defending spending on their particular favored programs.</p> <p>With all these forces arrayed against budget sanity, it's time to take a back-to-basics look at the role of government spending in the economy.</p> <p>Federal spending has soared over the past decade. As a share of gross domestic product, spending grew from 18 percent in 2001 to 24 percent in 2011. The causes of this expansion include the costs of wars, growing entitlement programs, the 2009 stimulus bill and rising spending on discretionary programs such as education.</p> <blockquote class="pullquote"><p>The reality is that Washington is very bad at trying to micromanage short-term economic performance.</p></blockquote> <p>New projections from the Congressional Budget Office show that without reforms spending will keep rising for decades to come. The CBO's "alternative fiscal scenario" shows spending growing to 34 percent of GDP by 2035. Thus, the federal government is on course to gobble up almost twice as much of the U.S. economy 24 years from now as it did just a decade ago.</p> <p><strong>America is becoming a big-government nation</strong></p> <p>Sadly, America is rapidly becoming a big-government nation. Data from the Organization for Economic Cooperation and Development compares spending by all levels of government among its 31 high-income member countries. This year, government spending in the United States hit 41 percent of GDP, meaning that more than 4 out of every 10 dollars that we produce is consumed by our federal, state and local governments.</p> <p>We used to have a substantial government size advantage compared to other countries. But Figure 1 shows that while government spending in the United States was about 10 percentage points of GDP smaller than the average OECD country in the past, that gap has now shrunk to just 4 points. A number of high-income nations — such as Australia — now have smaller governments than does the United States.</p> <p>This is very troubling because America's strong growth and high living standards were historically built on our relatively small government. The ongoing surge in federal spending is undoing this competitive advantage that we have enjoyed in the world economy.</p> <p>CBO projections show that federal spending will rise by about 10 percentage points of GDP between now and 2035. If that happens, governments in the United States will be grabbing more than half of everything produced in the nation by that year. That would doom future generations of Americans to unbearable levels of taxation and a stagnant economy with fewer opportunities.</p> <center><img src="http://www.cato.org/images/pubs/testimony/ct-edwards-62911-2.jpg" /></center> <p><strong>Government spending doesn't stimulate</strong></p> <p>There is renewed talk in Washington about further spending measures to try and stimulate the weak economy. That idea is remarkably naïve and misguided. It is now more than two years after passage of the $821 billion stimulus package in 2009, and it is obvious that that effort was a hugely expensive Keynesian policy failure.</p> <p>The Obama administration's attempt to pump up "aggregate demand" in the economy simply hasn't worked. In Keynesian theory, the total amount of deficit spending is the amount of "stimulus" delivered to the economy. Well, we've had deficit spending of $459 billion in 2008, $1.4 trillion in 2009, $1.3 trillion in 2010 and $1.4 trillion in 2011.</p> <p>Yet despite that enormous deficit-spending stimulus, U.S. unemployment remains stuck at more than 9 percent and the recovery is very sluggish compared to prior recoveries. Indeed, the current recovery appears to be slower than any since World War II, according to a recent Joint Economic Committee study.</p> <p>Obama administration economists had claimed that the Keynesian "multipliers" from government spending are large, meaning that spending would give a big boost to GDP. But other economists have found that Keynesian multipliers are actually quite small, meaning that added government spending mainly just displaces private-sector activities. Stanford University economist John Taylor took a detailed look at GDP data over recent years, and he found little evidence of any benefits from the 2009 stimulus bill. Any "sugar high" to the economy from recent increases in government spending was at best very small and short-lived.</p> <p>The reality is that Washington is very bad at trying to micromanage short-term economic performance. Its failed stimulus actions have just put the nation further into debt, which will harm our long-term prosperity. Harvard University's Robert Barro calculated that any short-term benefit that the 2009 stimulus bill may have provided is greatly outweighed by the future damage caused by higher taxes and debt.</p> <p><strong>The government's leaky bucket</strong></p> <p>Let's take a look at how government spending damages the economy over the long run. Spending is financed by the extraction of resources from current and future taxpayers. The resources consumed by the government cannot be used to produce goods in the private marketplace. For example, the engineers needed to build a $10 billion government high-speed rail line are taken away from building other products in the economy. The $10 billion rail line creates government-connected jobs, but it also kills at least $10 billion worth of private jobs.</p> <p>Indeed, the private sector would actually lose more than $10 billion in this example. That is because government spending and taxing creates "deadweight losses," which result from distortions to working, investment and other activities. The CBO says that deadweight loss estimates "range from 20 cents to 60 cents over and above the revenue raised." Harvard University's Martin Feldstein thinks that deadweight losses "may exceed one dollar per dollar of revenue raised, making the cost of incremental governmental spending more than two dollars for each dollar of government spending." Thus, a $10 billion high-speed rail line would cost the private economy $20 billion or more.</p> <p>The government uses a "leaky bucket" when it tries to help the economy. Former chairman of the Council of Economics Advisors, Michael Boskin, explains: "The cost to the economy of each additional tax dollar is about $1.40 to $1.50. Now that tax dollar … is put into a bucket. Some of it leaks out in overhead, waste and so on. In a well-managed program, the government may spend 80 or 90 cents of that dollar on achieving its goals. Inefficient programs would be much lower, $0.30 or $0.40 on the dollar." Texas A&M economist Edgar Browning comes to similar conclusions about the magnitude of the government's leaky bucket: "It costs taxpayers $3 to provide a benefit worth $1 to recipients."</p> <p>The larger the government grows, the leakier the bucket becomes. On the revenue side, tax distortions rise rapidly as tax rates rise. On the spending side, funding is allocated to activities with ever lower returns as the government expands. Figure 2 illustrates the consequences of the leaky bucket. On the left-hand side, tax rates are low and the government initially delivers useful public goods such as crime reduction. Those activities create high returns, so per-capita incomes initially rise as the government grows.</p> <p>As the government expands further, it engages in less productive activities. The marginal return from government spending falls and then turns negative. On the right-hand side of the figure, average incomes fall as the government expands. Government in the United States — at more than 40 percent of GDP — is almost certainly on the right-hand side of this figure.</p> <p>In his 2008 book, <em>Stealing from Ourselves</em>, Professor Browning concludes that today's welfare state reduces GDP — or average U.S. incomes — by about 25 percent. That would place us quite far to the right in Figure 2, and it suggests that federal spending cuts would substantially increase U.S. incomes over time.</p> <center><img src="http://www.cato.org/images/pubs/testimony/ct-edwards-62911-3.jpg" /></center> <p>All the official projections show rivers of red ink for years to come unless federal policymakers enact major budget reforms. Unless spending is cut, the United States is headed for economic ruin. We need to cut entitlements, domestic discretionary programs and defense spending, as Cato has detailed at www.DownsizingGovernment.org.</p> <div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/chris-edwards">Chris Edwards</a> is editor of Cato Institute's <a href="http://www.downsizinggovernment.org/">Downsizing Government.org</a>.</em></p> <a class="head" href="http://www.cato.org/people/chris-edwards">More by Chris Edwards</a></div></div> <p>Cutting spending would boost the economy because many federal programs have very low or negative returns. Many programs cause severe economic distortions. Other programs damage the environment and restrict individual freedom. And the federal government has expanded into hundreds of areas that would be better left to state and local governments, businesses, charities and individuals.</p> <p>With the upcoming debt-limit vote, fiscal conservatives in Congress have a real chance to start turning the tide. If they don't stick to their guns, the "life, liberty and pursuit of happiness" we celebrate this July 4 will become meaningless as Washington usurps an ever larger share of our incomes and our economy.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/federal-spending-doesnt-work.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T14:56:00-07:00">2:56 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=268431768943957216">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=268431768943957216&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="58389167791831775"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/tim-pawlenty-latest-dangerous.html">Tim Pawlenty: The Latest Dangerous Neoconservative</a> </h3> <div class="post-body entry-content"> <h1>Tim Pawlenty: The Latest Dangerous Neoconservative</h1> <p>by Doug Bandow </p><p class="first">Republicans have spent a decade as the party of war. In fact, since President George W. Bush abandoned his call for a "humble foreign policy" the country has not been at peace. Now former Minnesota Gov. Tim Pawlenty has unabashedly raised the neoconservative banner.</p> <p>President Bill Clinton famously wished to be a wartime leader, but ordering 78 days of high-altitude bombing of Serbia doesn't count. When he left office Americans were not in combat, other than undertaking episodic air and missile strikes to enforce the "no fly" zone over Iraq. Looking back, those were the good ole days.</p> <p>Unfortunately, this relative peace ended with 9/11. Rather than limit his response to targeting al-Qaeda, President Bush launched two nation-building crusades. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/doug-bandow">Doug Bandow</a> is a senior fellow at the Cato Institute. A former special assistant to Ronald Reagan, he is the author of </em><a href="http://www.amazon.com/Foreign-Follies-Americas-Global-Empire/dp/1597819883/catoinstitute-20" target="_blank">Foreign Follies: America's New Global Empire</a><em> (Xulon)</em></p> <a class="head" href="http://www.cato.org/people/doug-bandow">More by Doug Bandow</a></div></div> <p>The first, in Afghanistan, is nearing its tenth year with little success to show. As the attack on the Intercontinental Hotel demonstrates, even the capital of Kabul is not safe.</p> <p>The second, in Iraq, generated a new terrorist franchise and turned an entire nation into a charnel house. Over time, U.S. military operations spread into Pakistan and Yemen, and today qualify as "hostilities" by any definition except that used by the Obama administration.</p> <p>President Barack Obama has initiated his own war, in Libya, for largely discredited humanitarian claims. Nevertheless, the GOP's most avid cheerleaders for war, Senators John McCain and Lindsey Graham, have pressed for escalation in North Africa. Sen. Graham also has proposed military action against Syria.</p> <p>Four years ago advocates of permanent war dominated the Republican presidential race. Rudy Giuliani was perhaps the most hawkish but least informed candidate. The other GOP presidential candidates, other than Rep. Ron Paul, also advocated pursuing the American imperium, irrespective of cost. Even Mitt Romney, who presented himself as a responsible businessman, sounded like a neocon bot.</p> <p>Sen. McCain ended up as the Republican presidential nominee and his hawkish mien defined the GOP fall campaign. He even urged confrontation with nuclear-armed Russia in its conflict with the country of Georgia — which started the conflict. Had McCain won the election, no one knows how many additional wars Washington now would be fighting.</p> <p>But reality has made a reemergence in Republican ranks. Rep. Paul has been joined by another ideological libertarian, former New Mexico Gov. Gary Johnson. Former Utah Gov. Jon Huntsman has expressed skepticism of the Afghan war. And the newly refurbished Mitt Romney has taken several carefully choreographed steps away from the neocon cry of "Afghanistan forever."</p> <p>The result has been much wailing and gnashing of teeth in the neoconservative camp, and especially by Senators McCain and Graham. In their view, anyone who fails to endorse killing foreigners in at least five different countries or believes that Americans cannot afford to forever police the globe is an "isolationist."</p> <p>Now candidate Pawlenty has taken up the cry of "war now, war forever" with his speech to the Council on Foreign Relations. Naturally, it took him little time to toss the "I" word at his primary opponents: "parts of the Republican Party now seem to be trying to out-bid the Democrats in appealing to isolationist sentiments."</p> <p>The talk was long on rhetoric but short on reality. Candidate Pawlenty obviously is a true believer in Washington's ability to run the world. The U.S. president need only speak with sufficient firmness — unlike Barack Obama, naturally — and the world will come to heel.</p> <p>Pawlenty focused on the struggle of Arab peoples against authoritarian governments, many long supported by the United States: "We can help steer events in the right direction." He complained that the Obama administration stood by as an election was stolen in Iran only "to see the Green Movement crushed." He decried the reduction in foreign aid as "a lack of support" for democracy in Egypt. Declared Pawlenty: "I called for Assad's departure on March 29; I call for it again today."</p> <p>As for policy, Pawlenty called for more American micro-management in more countries:</p> <ul><li>"We must do more than monitor polling places."</li><li>We must use foreign aid "to build good allies."</li><li>"We must insist that our international partners get off the sidelines and do the same."</li><li>We must tell new government "the truth," that "economic growth and prosperity are the result of free markets and free trade."</li><li>We must "commit America's strength to removing Qaddafi."</li><li>"We should press new friends to end discrimination against women, to establish independent courts, and freedom of speech and the press."</li><li>"We must insist on religious freedoms for all."</li><li>"We need to tell the Saudis what we think."</li><li>"We need to be frank about what the Saudis must do to insure stability in their own country. Above all, they need to reform and open their own society."</li><li>"We need to encourage opponents of the [Syrian] regime by making our own position very clear, right now. Bashar al-Assad must go."</li><li>We must "hasten the fall of the mullahs" in Iran.</li><li>We should keep the military option against Tehran on the table.</li><li>"Peace will only come if everyone in the region perceives clearly that America stands strongly with Israel."</li><li>"I would ensure our assistance to the Palestinians immediately ends if the teaching of hatred in Palestinian classrooms and airwaves continues."</li><li>"I would recommend cultivating and empowering moderate forces in Palestinian society."</li><li>We must seek "victory" like "in the 1980s."</li></ul> <p>It's an impressive litany, and most of the sentiments are reasonable or at least defensible. But most are sentiments, not policies. And certainly not realistic policies. Nor are any of the points new. Unfortunately, none so far has worked. Because most people, irrespective of how friendly, will not allow Washington to run their lives. They want to govern themselves.</p> <p>Of course, foreign aid should be used to build "good allies." Like giving billions of dollars to Hosni Mubarak year in and year out. He was a "good ally." Moreover, with his overthrow has come rising hostility to Israel and religious minorities. Does Pawlenty believe that all we have to do is "insist" that the newly democratic Egyptians adopt our liberal values and all will be well?</p> <p>Of course, the Saudi ruling family should be encouraged to reform. Does Pawlenty believe that the Saudi royals run a quasi-totalitarian state because they have never considered the benefits of reform? That all we have to do is tell the Riyadh autocrats that empowering women and freeing religious minorities would be good for the country, and the regime will act?</p> <p>Why didn't Presidents Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Carter, Reagan, Bush, Clinton, Bush, and Obama realize how easy it was?</p> <p>Naturally, Pawlenty closed with the usual rhetorical boilerplate used to justify an American imperium. It is wrong "for the Republican Party to shrink from the challenges of American leadership." "Weakness in foreign policy costs us and our children much more than we'll save in a budget line item." "America already has one political party devoted to decline, retrenchment, and withdrawal." "Our enemies in the War on Terror, just like our opponents in the Cold War, respect and respond to strength." Of course. All the U.S. government has to do is stand strong for "the ideals of economic and political freedom of equality and opportunity for all citizens" and all will be well.</p> <p>Patriotism is the last refuge of the scoundrel said Samuel Johnson, and so it is today. What current politician does not believe in the traditional values which have animated the American republic? What presidential candidate does not want to ensure U.S. security in a dangerous world? What national leader wants America and Americans to be isolated from and uninvolved in the world?</p> <p>The challenge is how to best promote those values and best ensure that security. America as empire — constantly bombing, hectoring, invading, lecturing, occupying, and instructing other states — is not.</p> <p>Today the U.S. is involved in the equivalent of five wars: Iraq, Afghanistan, Yemen, Pakistan, and Libya. Americans have not enjoyed peace for more than a decade, and if Tim Pawlenty has his way, would not enjoy peace for years if not decades to come.</p> <p>The costs are high. Some 6000 Americans have died and tens of thousands of Americans have been wounded in Afghanistan and Iraq alone, and the human toll continues to climb. In Iraq perhaps 200,000 civilians died in the violent aftermath to the U.S. invasion; millions of people were pushed into internal or external exile; the historic Christian community was ravaged. The financial cost continues to rise. Washington is effectively bankrupt, with a $14 trillion national debt, trillions more in unfunded federal retirement liabilities, and more than $100 trillion in unfunded Social Security and Medicate obligations. Yet America has doubled military spending, adjusted for inflation, over the last decade. The U.S. now spends more, in real terms, than at any point in the Cold, Korean, and Vietnam wars, and accounts for roughly half of the globe's military outlays.</p> <p>Finally, every new bombing run, invasion, and occupation creates more enemies, and thus encourages more terrorism. Better calibrated responses relying on Special Forces, drones, intelligence, and international cooperation are less costly, more effective, and less likely to trigger blowback.</p> <p>Far from being an early neocon, Ronald Reagan was a master of restraint. He used force only three times — in Grenada, Libya, and Lebanon. All were limited actions, and in the latter case Reagan responded to the bombing of the Marine Corps barracks by pulling out U.S. forces rather than launching a nation-building campaign. He recognized that the stakes in Lebanon were no where near the cost of expanding the conflict.</p> <p>Ultimately, advocates of limited government and individual liberty must choose between empire and freedom. Perpetual intervention and conflict have been among the most important political fertilizers for the growth of the Leviathan state.</p> <p>Tim Pawlenty has endorsed war and Big Government. Let us hope his competitors decide differently.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/tim-pawlenty-latest-dangerous.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T14:54:00-07:00">2:54 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=58389167791831775">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=58389167791831775&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5884270659643022007"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/why-us-leaders-deceive-their-own-people.html">Why U.S. Leaders Deceive Their Own People</a> </h3> <div class="post-body entry-content"> <span style="font-weight: bold;font-size:180%;">Why U.S. Leaders Deceive Their Own People</span><br /><br />by Ted Galen Carpenter<br /><br />Professor John Mearsheimer's latest book, Why Leaders Lie, provides a number of intriguing insights and surprising conclusions. Perhaps his most unexpected conclusion is that leaders lie to foreign leaders far less frequently than is generally assumed. Indeed, he contends that leaders lie to their own people more than they do to foreign counterparts. He does, however, concede that less blatant forms of deception, such as "spinning" and "concealment" are pervasive in international politics.<br /><br />Two other conclusions ought to be deeply troubling to populations in democratic countries, and especially so to Americans. One is that officials in democratic political systems are more likely to deceive their own people — even engaging in outright lies — than officials in autocratic systems. His reasoning on that point is solid, and he provides compelling evidence to support his case. Mearsheimer's thesis is that democratic leaders are much more dependent than autocrats on public support for foreign policy initiatives, especially when an initiative includes going to war. If the available evidence is weak that a major security threat exists, but political leaders believe that taking military action is in the national interest, a powerful incentive exists to inflate the threat to gain badly needed public support.<br /><br />A second, related part of his thesis is that political leaders are much more inclined to lie involving wars of choice rather than wars of necessity. Again, there are ample historical examples supporting his argument.<br /><br />Ted Galen Carpenter, senior fellow of foreign policy studies at The Cato Institute, is the author of Smart Power: Toward a Prudent Foreign Policy for America, as well as other books on international affairs.<br />More by Ted Galen Carpenter<br /><br />If Mearsheimer is correct, Americans must face the troubling realization that U.S. leaders will be unusually prone to engage in lying as well as milder forms of deception to gull their own populations. Not only is the United States a long-standing democracy, but it is the nation since World War II that is most inclined to embark on wars of choice — often involving issues that have little or no connection to genuine American security interests. The list of U.S. military interventions just in the post-Cold War era — Panama, Somalia, Haiti, Bosnia, Kosovo, Iraq (twice), and the extended mission in Afghanistan — is definitive testimony to that tendency.<br /><br />America's status as a democracy and a country inclined to wage wars of choice is a deadly combination that creates an overwhelming incentive for political leaders to use whatever techniques of threat inflation are necessary to stampede an otherwise skeptical public into supporting the latest dubious military crusade. The potential corrosive effect on America's political institutions and values are all too apparent. At a minimum, Americans ought to be on guard and doubly skeptical when an administration's spin machine goes into action making the case that Lower Slobovia's mistreatment of Upper Slobovians really, truly poses a dire security threat that only U.S. military action can prevent. The American people have heard such a refrain — and believed it — far too often for the health of the Republic. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/why-us-leaders-deceive-their-own-people.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T14:47:00-07:00">2:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5884270659643022007">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5884270659643022007&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Deceive" rel="tag">Deceive</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Their%20Own%20People" rel="tag">Their Own People</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Why%20U.S.%20Leaders" rel="tag">Why U.S. Leaders</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5058895309605956742"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/how-to-get-real-spending-cuts_15.html">How to Get Real Spending Cuts</a> </h3> <div class="post-body entry-content"> <span style="font-weight: bold;font-size:180%;">How to Get Real Spending Cuts</span><br /><br />by Michael D. Tanner<br /><br />It is getting close to "crunch time" in the debate over raising the debt ceiling. Much of the debate continues to focus on whether Republicans will accept tax hikes as part of the package, and how big the debt-reduction package will be. All sorts of numbers are being tossed out: $4 trillion over twelve years? $6 trillion over ten years? $3 trillion over two years?<br /><br />But focusing on dollars — even trillions of dollars — may be setting Republicans up for a fall.<br /><br />After all, we've heard promises of spending cuts before. Remember the deal over the continuing resolution that kept the government open back in April? That deal was supposed to include $61 billion in spending cuts, but, in reality, it was crammed full of gimmicks such as counting savings from spending that hadn't occurred in the previous year or not funding programs that actually didn't exist. In the end, the actual reduction in spending was less than $8 billion.<br /><br /> Budget history is flush with promises of cuts some day in the future — but some day never actually comes.<br /><br />And President Obama, in his most recent budget proposal, counted interest savings and the elimination of tax breaks ("spending in the tax code") as reductions in spending. They might show up that way on a balance sheet, but that sort of budget cutting does very little to reduce the size and burden of government — which is what this debate should really be about.<br /><br />Republicans must also ask when those spending cuts will occur and how will they be enforced. Budget history is flush with promises of cuts some day in the future — but some day never actually comes. This is especially true when budget savings are anticipated not from actually eliminating programs, but from making government "more efficient." For example, the Obama administration claims that the health-care-reform law will ultimately save some $500 billion in Medicare spending. But even Medicare's own actuaries don't believe those savings will ever occur.<br /><br />Now, the administration is reportedly offering another $340 billion in Medicare and Medicaid cuts as part of a budget deal. But because the administration continues to resist any changes in the structure of the program, those savings are likely to be as ephemeral as the Obamacare cuts.<br /><br />And speaking of those Obamacare cuts, the health-care law "double counted" those Medicare savings by routing them through the so-called Medicare Trust Fund. This type of "trust-fund accounting" allowed the administration to "extend the life of Medicare" and reduce the program's unfunded liabilities, even as the savings were actually spent elsewhere. Will the debt-ceiling deal include similar smoke and mirrors?<br /><br />Michael Tanner is a senior fellow at the Cato Institute and coauthor of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.<br />More by Michael D. Tanner<br /><br />That is why Republicans should not get hung up on seeking any particular amount of spending cuts. The dollar amount matters far less than getting the structural and institutional changes that will actually bring down the size, cost, and intrusiveness of government in the future.<br /><br />Republicans should push hard for a balanced-budget amendment to the Constitution — and not one that simply requires a balanced budget, but one that includes meaningful spending limitations. If they can't get the two-thirds vote that such an amendment would require, they should at least insist on a statutory spending cap. Republicans should also insist on fundamental structural changes to Medicare, Medicaid, and Social Security.<br /><br />In the end, this is not really a debate about budgeting or the size of the national debt. It is a debate about whether we will have a limited constitutional government or a European-style social democracy. Winning that debate will not be a question of whether there is an agreement to cut $2 trillion over ten years rather than $1.5 trillion. If Republicans get an extra $500 billion in cuts on paper, but leave the structures of big government in place, they will find out down the road that nothing has really changed. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/how-to-get-real-spending-cuts_15.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T14:46:00-07:00">2:46 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5058895309605956742">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5058895309605956742&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7934569172257807763"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/stocks-advance-behind-energy-tech.html">Stocks Advance Behind Energy, Tech Shares</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Stocks Advance Behind Energy, Tech Shares</span></h1> <div class="story_inline assets clearfix "> <cite class="byline"> By Nikolaj Gammeltoft -</cite><div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="House to Vote " class="img_keep_size" src="http://www.bloomberg.com/apps/data?pid=avimage&iid=inSQGqI.QdcQ" /> </div> <p class="caption">U.S. House Speaker John Boehner (R-OH), right, listens as U.S. House Majority Leader Eric Cantor (R-VA), center, answers questions during a press conference on a balanced budget amendment at the U.S. Capitol July 14, 2011 in Washington, DC. Photographer: Win McNamee/Getty Images </p> </div> </div> </div> <p>U.S. stocks rose, trimming the Standard & Poor’s 500 Index’s weekly loss, as gains in energy and technology shares were enough to overcome concern that an impasse over raising the federal debt limit is putting the nation’s top credit rating in jeopardy. </p> <p><a href="http://www.bloomberg.com/apps/quote?ticker=GOOG:US" title="Get Quote" class="web_ticker">Google Inc. (GOOG)</a> jumped 13 percent after reporting sales that beat predictions, a sign that it’s making progress expanding beyond search advertising. <a href="http://www.bloomberg.com/apps/quote?ticker=HK:US" title="Get Quote" class="web_ticker">Petrohawk Energy Corp. (HK)</a> rallied 62 percent as BHP Billiton Ltd. agreed to buy the oil and gas company for $12.1 billion in cash. Gauges of energy stocks and technology companies advanced at least 1.5 percent. <a href="http://www.bloomberg.com/apps/quote?ticker=CLX:US" title="Get Quote" class="web_ticker">Clorox Co. (CLX)</a> rose 8.9 percent after <a href="http://topics.bloomberg.com/carl-icahn/">Carl Icahn</a> offered to buy the company. </p> <p>The S&P 500 rose 0.6 percent to 1,316.14 at 4 p.m. in New York. The gauge fell 2.1 percent this week. The <a href="http://topics.bloomberg.com/dow-jones-industrial-average/">Dow Jones Industrial Average</a> added 42.61 points, or 0.3 percent, to 12,479.73 today. </p> <p>“There’s a lot more company-specific issues driving stocks now, even though there’s still macro uncertainty about the debt negotiations in <a href="http://topics.bloomberg.com/washington/">Washington</a> and the European crisis,” Jeffrey Coons, president of Manning & Napier Advisors Inc. in Fairport, <a href="http://topics.bloomberg.com/new-york/">New York</a>, said in a telephone interview. His firm manages $44 billion. </p> <p>Stocks lost their gains this morning amid concern negotiations toward raising the U.S. debt ceiling are failing to progress. House Speaker <a href="http://topics.bloomberg.com/john-boehner/">John Boehner</a>, a Republican from <a href="http://topics.bloomberg.com/ohio/">Ohio</a>, told reporters that his party wouldn’t accept any tax increases as they work with President Barack Obama on a deal to lower deficits and possibly raise the U.S. debt limit. Moody’s Investors Service and S&P said this week that they may cut the federal government’s credit rating if the issue isn’t resolved. </p> <h2>Higher Rates </h2> <p>Obama said a failure to raise the U.S. debt limit would trigger a default on the nation’s obligations that could drive up <a href="http://topics.bloomberg.com/interest-rates/">interest rates</a> for everyone in the country. </p> <p>“We could end up with a situation where interest rates rise for everyone,” he told a Washington press conference. In effect, it would be “a tax increase for everybody.” </p> <p>The <a href="http://topics.bloomberg.com/s%26p-500/">S&P 500</a> rallied 93 percent from its low in March 2009 through yesterday as the <a href="http://topics.bloomberg.com/federal-reserve/">Federal Reserve</a> used large-scale asset purchases to buoy the economy and companies posted earnings that beat analysts’ estimates. Of the 13 S&P 500 companies that have posted results so far this earnings season, 11 have beaten forecasts for per-share profit. </p> <p>Stocks fell from their highs of the day after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 63.8 in July from 71.5 the prior month. The gauge was projected to rise to 72.2, according to the median forecast of 62 economists surveyed by Bloomberg News. Estimates for the confidence measure ranged from 75 to 68. The index averaged 89 in the five years leading up to the recession that began in December 2007. </p> <h2>Stress Tests </h2> <p>Stocks briefly extended their advance after the European Banking Authority said eight banks failed the European Union stress tests with a combined capital shortfall of 2.5 billion euros ($3.5 billion). </p> <p>Agricultural Bank of Greece SA, <a href="http://topics.bloomberg.com/austria/">Austria</a>’s Oesterreichische Volksbanken AG and Spain’s Banco Pastor SA were among the failures. The companies were found to have insufficient reserves to maintain a core tier 1 capital ratio of 5 percent in the event of an economic slowdown, the European Banking Authority said. All banks tested in Italy, <a href="http://topics.bloomberg.com/germany/">Germany</a> and the U.K. passed. </p> <p>“The stress test results are coming in pretty much as expected, at least at the headline level,” E. William Stone, who helps oversee about $110 billion as chief investment strategist at PNC Wealth Management in Philadelphia, said in a telephone interview. “Everybody is waiting for more news on the U.S. debt ceiling and more about the EU sovereign debt situation, and nobody wants to get too far on one side or the other ahead of the weekend.” </p> <h2>Google, Clorox </h2> <p>Google soared 13 percent to $597.62, its biggest gain since October 2008. Sales, excluding revenue passed on to partner sites, rose to $6.92 billion. That topped the $6.57 billion average estimate of analysts surveyed by Bloomberg. </p> <p>Clorox advanced 8.9 percent to $74.55, its highest price since at least 1980. Icahn, a billionaire, offered to buy the maker of the namesake bleach for about $10.2 billion in a move designed to draw out other potential bidders. </p> <p>Petrohawk Energy rallied 62 percent to $38.17. <a href="http://topics.bloomberg.com/bhp-billiton/">BHP Billiton</a>, the world’s largest mining company, agreed to buy the company for about $12.1 billion in cash in its biggest acquisition, betting natural gas demand will gain in the U.S. </p> <p><a href="http://www.bloomberg.com/apps/quote?ticker=CHK:US" title="Get Quote" class="web_ticker">Chesapeake Energy Corp. (CHK)</a> climbed 9.1 percent to $32.96. The natural-gas driller would be worth $58 a share should it be taken over based on the valuation of the Petrohawk acquisition, Ticonderoga Securities LLC said in a note. </p> <h2>Energy Stocks </h2> <p>Energy companies rose 2.3 percent, the most among 10 industries in the S&P 500. Technology stocks added 1.6 percent as a group. </p> <p><a href="http://www.bloomberg.com/apps/quote?ticker=RAH:US" title="Get Quote" class="web_ticker">Ralcorp Holdings Inc. (RAH)</a> fell 0.7 percent to $86, dropping for a sixth straight day. The maker of Raisin Bran cereals and private-label food brands plans to spin off Post Foods after failing to sell the unit to rival foodmakers or private-equity firms. </p> <p><a href="http://www.bloomberg.com/apps/quote?ticker=FLIR:US" title="Get Quote" class="web_ticker">Flir Systems Inc. (FLIR)</a> fell the most in the S&P 500, slumping 9.9 percent to $28.92. The maker of night-vision cameras used by U.S. combat forces reported second-quarter profit excluding some items of 35 cents a share, trailing the average analyst estimate by 4 cents, according to Bloomberg data. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/stocks-advance-behind-energy-tech.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-15T14:43:00-07:00">2:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7934569172257807763">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7934569172257807763&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Behind%20Energy" rel="tag">Behind Energy</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Stocks%20Advance" rel="tag">Stocks Advance</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Tech%20Shares" rel="tag">Tech Shares</a> </span> </div> </div> </div> </div> <a name="2407237047207778909"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/is-obama-one-termer.html">Is Obama a One-Termer?</a> </h3> <p><img src="http://takeaction.wta007.com/images/142/napoleon.jpg" title="" align="left" height="279" hspace="8" vspace="4" width="226" />Republicans have a golden opportunity to break Barack Obama's presidency, ensuring he will be a one-termer. Mr. Obama has backed himself into a corner on the debt-limit talks; the GOP can smash his re-election prospects if they have the will—and intelligence—to do it.<br /><br />Mr. Obama has asked that the nation's $14.3 trillion debt-ceiling be raised, and he knows that cannot be done without support from House Republicans. Moreover, along with Treasury Secretary Timothy F. Geithner, Mr. Obama warns that fiscal Armageddon is coming unless the ceiling is lifted before Aug. 2—the date Mr. Geithner claims the United States begins defaulting to its debtors.<br /><br />Mr. Obama seeks a "grand bargain": a debt reduction package that includes $1 trillion in tax increases to accompany entitlement spending cuts, including Social Security and Medicare. He wants to go big. His target is to slash $4 trillion over 10 years. He has repeatedly vowed to veto any "small" debt-limit increase—one that keeps America paying its bills until a more comprehensive agreement is ratified. In other words, Mr. Obama has issued an ultimatum to congressional Republicans: either break your 2010 campaign pledge not to raise taxes or else be blamed for the debt-limit debacle. As he put it, it's time to "eat our peas." The president is playing Russian roulette with the economy and our nation's future.<br /><br />Yet, he has badly played his weak hand. Mr. Obama has committed a fatal mistake: overreach. The president has issued a public ultimatum that either must be upheld or he must back down from. Either way, it is Mr. Obama's political credibility that threatens to be shattered.<br /><br />House Speaker John Boehner is holding all the cards. Mr. Boehner should insist on a small deal—lifting the debt ceiling accompanied with corresponding spending reductions. Every debt dollar raised should be coupled with a dollar cut. Hence, the package pays for itself. More importantly, it places Mr. Obama in a no-win situation. House Republicans will pass legislation that raises the debt-limit. Therefore, they cannot be blamed for any economic fallout should America default. Mr. Obama can veto it, which means he will be solely responsible for the fiscal calamity. Or he can sign it—publicly standing down from his earlier threats. Thus, he will be denuded among his liberal supporters and the larger electorate, and shown to be a weak leader whose words mean nothing.<br /><br />Either way, it will be his Waterloo: the effective end of his presidency.</p> <div class="MsoNormal" style="text-align:center" align="center"><span style="mso-fareast-font-family:"Times New Roman""> <hr align="center" size="2" width="100%"> </span></div> <p><strong><span style="color:#003366">AOL Touts Masturbation Huffington-Style</span></strong></p> <p><img src="http://takeaction.wta007.com/images/142/xxx.jpg" title="" align="left" height="118" hspace="8" vspace="4" width="255" />America Online is now endorsing masturbation. Recently, AOL posted an item on its general page discussing how men often fake orgasms, and that they should engage in masturbation to help "discover what stimulates you." Apparently, women aren't the only ones faking it in the bedroom.</p> <p>The fact that AOL would even run a lewd story like this—never mind give it top billing—reveals the change in editorial content since its merger with the far left Huffington Post. The liberal website, founded by Arianna Huffington, was acquired by AOL in February for a stunning $315 million. Moreover, the deal made Ms. Huffington the editor-in-chief of AOL's 1,200-member newsroom. AOL's stories are starting to reflect her radical views—undermining its credibility as a respectable Internet news source.</p> <p>This is what now passes for informative news at AOL? Under Ms. Huffington's leadership, the popular website has become a pimp for the sexual revolution. It is peddling the Playboy philosophy, hoping to make it mainstream. Perversion and moral indecency are packaged as part of a "healthy lifestyle." What's next: the benefits of bestiality, polygamy or oral sex?<br /><br />Ms. Huffington is frittering away the hard-won reputation of AOL and dragging it into the journalistic gutter.</p> <div class="MsoNormal" style="text-align:center" align="center"><span style="mso-fareast-font-family:"Times New Roman";color:#990000"> <hr align="center" size="2" width="100%"> </span></div> <p style="color:rgb(0, 51, 102)"><strong>Beck's Swan Song</strong></p> <p><img src="http://takeaction.wta007.com/images/142/quill.jpg" title="" align="left" height="154" hspace="8" vspace="4" width="250" />Glenn Beck, the radio host and former FOX News talking head, apparently needs to capitalize one last time on his dwindling fame. His solution: publish a redundant book on the Federalist Papers. </p> <p>In "The Original Argument" (Threshold Editions, 430 pages), Mr. Beck seeks to translate and adapt the Federalist Papers for contemporary readers. Therefore, many of its passages—written in 18th-century English prose—are updated to be more understandable and, hopefully, relevant. The book contains footnotes explaining the historical events or references of the time. There are short summaries of key arguments, as well as one-paragraph nuggets on the essays seeking to apply their wisdom to today's problems. "The Original Argument" is really a version of the "Federalist Papers for Dummies." </p> <p>But do we really need another work on the Constitution, or the Federalist Papers for that matter? The subject has become a cottage industry. There have been countless volumes written on the topic. Mr. Beck argues that the Federalist Papers are "boring" to read and arcane, thereby there is a need for his book. This is false—and puerile. I (along with millions of students) had no trouble reading the essays in college years ago. The same held true for the Bible, Shakespeare, Plato and all the other canons of Western civilization. Hence, will Mr. Beck be coming out with his adaptation of the Bible anytime soon—maybe one for those of his Mormon faith. </p> <p>Mr. Beck has cynically positioned himself as a so-called leader of the Tea Party. His rise to fame and fortune has been based on one giant gimmick: the wannabe constitutionalist professor, eye glasses and chalk-board in hand, preaching about the evils of progressivism. Yet, Mr. Beck is really a phony: He has placed Vaseline near his eyes so he could cry on cue about the suffering caused by President Obama's socialist policies. Mr. Beck is the court jester of the conservative movement. </p> <p>He is a modern-day P.T. Barnum, whose act has finally worn thin. His ratings at FOX dropped dramatically. He had become overexposed—the speaking tours, the countless books and novels, the metamorphosis into a self-help guru preaching personal empowerment and bogus uplift. He is now leaving the stage, launching his own Internet-based television network (GBTV). My prediction: it will flop. Just like "The Original Argument," Mr. Beck has nothing new or meaningful to say. This is a non-book by a non-author. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-18221726857943157532011-07-14T10:34:00.001-07:002011-07-14T10:34:48.259-07:00<div class="post-body entry-content"> <h1><span style="font-size:130%;">The New Commanding Heights</span></h1> <p>by Arnold Kling </p><p><span class="tallcap">I</span>n the early 1920s, the Russian economy was flagging, having been ravaged by years of war and political turmoil. In an attempt at revival, Vladimir Lenin initiated a series of controversial reforms, including permitting a bit of profit-making enterprise in some areas of the economy. This move naturally shocked many Bolsheviks, who had risked their lives in the Russian Revolution in order to advance communist principles. Eager to alleviate their concerns, Lenin addressed the communist-party faithful at a convention in 1922. He told them not to worry: The reforms were relatively modest, and the new Soviet state would always retain its control over what he called the "commanding heights" of the economy.</p> <p class="first">By "commanding heights," Lenin meant the critical sectors that dominated economic activity — primarily electricity generation, heavy manufacturing, mining, and transportation. Because these industries were the foremost drivers of employment, production, and consumption in Russia — and because they were the essential growth sectors in any economy of that era that sought to be called "modern" — government control of these particular sectors meant government dominance over the economic life of the nation. A communist government could afford to permit relatively free markets in less significant sectors, Lenin thought, because as long as it controlled those industries that formed the heart of the economy, it effectively controlled the whole.</p> <p>Throughout much of the 20<sup>th</sup> century, communist and socialist parties around the world continued to see government dominance of these industries as a key goal. The commanding heights of the economy became crucial battlegrounds in the struggle between advocates of central planning and defenders of market economics. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/arnold-kling">Arnold Kling</a> is an adjunct scholar with the Cato Institute and a member of the Financial Markets Working Group at the Mercatus Center at George Mason University. Nick Schulz is the DeWitt Wallace Fellow at the American Enterprise Institute and the editor of American.com.</em></p> <a class="head" href="http://www.cato.org/people/arnold-kling">More by Arnold Kling</a></div></div> <p>In America today, few people champion government control of the industries Lenin saw as the commanding heights. On the contrary, these sectors have been largely deregulated, and market forces have, for the most part, been permitted to govern their development for decades. Defenders of the market might therefore imagine that they have won, and that the struggles that remain are peripheral debates.</p> <p>But such a declaration of victory would be dangerously premature. Over the past few decades, our economy has undergone some fundamental changes — with the result that the fight for control over the commanding heights of American economic life is still very much with us. And it is a fight that, at least for now, the free-market camp appears to be losing.</p> <p>The commanding heights of our economy today are not heavy manufacturing, energy, and transportation. They are, rather, education and health care. These are our foremost growth sectors — the ones most central to employment and consumption; the ones that, increasingly, drive our economy. And it is in precisely these two sectors that the case for extensive government intervention and planning, if not outright control, is dominant — and becoming ever more so.</p> <p>If there is to be any hope of reversing this trend, champions of market economics must come to see these two sectors as the front lines in the battle for capitalism. At stake is not only an ideological or theoretical point, but also American prosperity. The historical record makes this clear: In the nations where it was practiced, government control of the old commanding heights of the economy made those industries less efficient and less innovative — bringing overall economic performance down with them.</p> <p>Today, America risks following the same course. Looking to the coming decades, it will simply not be possible to maintain a genuine free market — or a thriving, innovative, growing economy — if our education and health sectors are controlled by the government. Champions of the market thus have their work cut out for them. First and foremost, however, they must come to understand the central place that education and health care occupy in America's economic life.</p> <p><b>AN ECONOMY TRANSFORMED</b></p> <p>To discern where the heart of an economy lies, one must identify the sectors in which employment and consumption are focused, and in which growth is swiftest. In the case of our own economy, the data over recent decades clearly show the decline of the old commanding heights — manufacturing and heavy industry — and their replacement by "softer" sectors, especially health care, education, and government work.</p> <p>Economists Michael Spence and Sandile Hlatshwayo recently devised a way of breaking the American economy into industries that produce tradable goods and services and industries that produce non-tradable ones. They calculated that, from 1990 to 2008, employment in the tradable sector edged up from 33.7 million to 34.3 million. Meanwhile, in the non-tradable sector — which covers most service-based businesses — employment rose from 88.3 million to 114.9 million. Thus the non-tradable sector accounted for nearly <em>all</em> of the job growth during this period.</p> <p>We are accustomed to thinking that our country is in the midst of a long transition from an industrial economy to a "service" economy, and these figures would seem to confirm that perception. But the service economy is not what we often think it is. The images that most readily come to mind when we think of these sectors might involve retail sales, information-technology consulting, and financial services. But Spence and Hlatshwayo's work shows that, within the non-tradable sector, health care was easily the growth leader — increasing from 10 million to 16.3 million jobs, and accounting for almost 25% of total job growth in the past two decades. Government was second, growing from 18.4 million to 22.5 million jobs, and accounting for about 15% of total job growth. Of this expansion in government employment, nearly 70% was attributable to jobs in education. Today, the drivers of the American labor market are therefore clearly health, education, and government work; these sectors form the backbone of our post-industrial economy.</p> <p>Over the past decade, this trend has only accelerated. Economist Michael Mandel has shown that, between February 2001 and February 2011, employment in the U.S. economy in health care, education, and government increased by 16%. This was not simply a function of a growing population and economy: During the same period, employment outside of those sectors <em>decreased</em> by 8%. Wage gains were similarly tilted toward health and education. "What we see," Mandel explains, "is that health and education (public and private) accounted for an amazing 75% of real wage and salary gains."</p> <p>A similar picture emerges when one looks at changes in American spending and consumption patterns. Our examination of the most recent data from the Bureau of Economic Analysis concludes that spending on health care and education (public and private combined) accounted for 21% of gross domestic product in 2000 and roughly 26% in 2010. Education and health-care spending thus accounted for an astonishing 37% of the overall growth of the economy over the past ten years.</p> <p>The recession of the past few years presents an especially clear picture of consumption patterns and priorities — for it is during such downturns that people must prioritize their spending, thus offering economists a sense of the relative degree to which Americans value certain goods and services over others. In the period between January 2008 and January 2009, for instance, Americans significantly reduced spending related to cars, as well their spending on clothing and food. At the same time, they increased spending on education, recreation, and, most of all, health care.</p> <center><img src="http://www.nationalaffairs.com/imgLib/20110623_KlingSchulz_webchartVERYSMALL.jpg" /></center> <p>Several related factors have combined to produce this trend. When economists compare different sectors — particularly in terms of employment — they consider the relationship between demand for the goods those sectors provide and the productivity of those sectors in meeting that demand. If demand for a sector's product grows more rapidly than that sector's productivity can increase in order to keep up, employers in that sector will need to hire more workers to bridge the gap. Similarly, when demand grows less rapidly than productivity, that sector will experience relative shrinkage.</p> <p>Changes in both demand and productivity across the economy have brought about the growing dominance of the health and education sectors. Relative changes in demand have chiefly been a function of rising incomes over many decades — a shift that has put many basic necessities (such as food, clothing, and shelter) more easily within the reach of more Americans. At the same time, this shift has provided Americans with more disposable income, which many people have chosen to spend on health care and education. This does not mean that people are spending less money in nominal terms than they once did on food, clothing, or manufactured items. What it means is that people spend a smaller <em>proportion</em> of their incomes on these commodities, since Americans now have significantly more money to spend than they used to.</p> <p>This change is easiest to see when examining spending patterns over the very long term. Economic historian Robert Fogel compared how potential income was divided among broad categories of goods and services in 1875 with its distribution among the same categories 120 years later. He found the following:</p> <center><img src="http://www.nationalaffairs.com/imgLib/20110625_KlingSchulz_table_small.jpg" /></center> <p>The period Fogel examined is, obviously, an extremely long stretch over which to trace economic trends — spanning from roughly the beginning of the industrial era in America to nearly its end. But what Fogel confirmed in his research was that, across this wide window of time, the proportion of people's incomes spent on bare necessities diminished as their incomes rose. Meanwhile, more of Americans' wealth came to be devoted to health, education, and leisure.</p> <p>It should be noted that Fogel's findings are expressed in terms of <em>potential</em> income — in other words, the income that someone <em>could</em> earn from working full time as an adult, including income that is implicitly taken as leisure. Thus, when Americans devote greater portions of time to leisure (as they now do, thanks to developments like a shorter work week and longer lives in retirement), this is expressed as a proportion of income — which tends to inflate the numbers for leisure in Fogel's calculations. Putting leisure aside, however, his consideration of how real income has been used by Americans over the past 12 decades provides more evidence in support of a crucial point: As our society has grown more wealthy, there has been a significant increase in the proportion of income that people choose to devote to education and health care; a significantly smaller share, meanwhile, has come to be devoted to basic necessities and durable goods.</p> <p>Economists describe such trends in terms of "income elasticity of demand." This phrase refers to how the demand for a particular good responds to changes in the incomes of the people demanding that good. Some goods, like public transportation, show a negative income elasticity of demand — meaning that people consume less of them as they get wealthier. Others, like bread and butter, show an elasticity near zero — meaning people buy them at roughly constant levels regardless of whether they are rich or poor.</p> <p>Fogel has shown that education and health care have particularly high income elasticities of demand. By his calculations, the long-term income elasticity of demand for each is roughly 1.6 — meaning that, if a person's potential income goes up by 1%, his spending on those services will rise by 1.6%. As people get wealthier, therefore, the relative portion of their incomes going to health and education will increase.</p> <p>To illustrate the point, suppose, for example, that in 2030 potential income has increased over its 1995 level by 100%. If in 1995 we had $100 in potential income and spent $9 on health care (as Fogel's figures show), then in 2030 we will have $200 in potential income and spend $23 on health care. In other words, while potential income will have doubled, spending on health care will have increased by a factor of more than 2.5. Generally speaking, this is the trend that has emerged in education and health-care spending in recent decades — and all signs suggest that it will continue.</p> <p>But the growing centrality of education and health care is not only a function of public preferences and demand. Another important factor, especially to the two sectors' growth within the labor market, is the fact that it is more difficult to squeeze labor costs out of those industries than it is in, say, manufacturing or agriculture. After all, most factory work does not require deep knowledge or complex judgment. As a result, engineers are constantly developing machines that can substitute for humans in manufacturing. Furthermore, as countries like China and India become more integrated into the global economy, an ever-larger pool of low-skill labor becomes available. The need for manufacturing labor in the United States is therefore reduced; the relative cost of manufacturing output is thus held down.</p> <p>Compared to manufacturing, the delivery of services in education and health care today is relatively labor intensive. Teachers and doctors require much more training than do manufacturing workers. Everyday work in education and health care generally involves more judgment and complex decision-making than are required on a production line. These higher-level tasks are not as easily handed over to machines or outsourced to low-skilled workers abroad.</p> <p>Education and health care are also more resistant to the productivity increases that have dramatically altered the manufacturing sector. Factory automation, for instance, can swiftly raise the number of widgets produced per worker; office automation has vastly streamlined supply-chain management, inventory control, and accounting. But increasing the number of operations per surgeon, or the number of essays graded per teacher, is much more difficult. Hence, productivity growth in health care and education lags behind that in other industries.</p> <p>As a rule, this means that health care and education tend to be less efficient. As increased productivity has led to wage growth in other, more efficient industries, the inefficient sectors must maintain competitive wages. But without the commensurate productivity gains, they experience cost growth, an effect named "Baumol's Cost Disease" (after the economist William Baumol, who identified it in the 1960s).</p> <p>Baumol's famous illustration of this phenomenon compared classical musicians with auto workers. It takes just as many musicians to play one of Mozart's symphonies today as it did a half-century ago, but it takes far fewer auto workers to produce a car now than it did then. As a result, manufacturing has become much more efficient — employing fewer people, but paying each of them somewhat more. Orchestras can't employ fewer people, but they do have to pay each of their employees more than they used to — if only to keep up with the rest of the economy, lest their musicians run off to become auto workers.</p> <p>The result is that, over time, costs in less efficient industries — like the fine arts, but also health care and education — will increase in relation to costs in more efficient industries. And these increasing costs, as well as rising demand for the services these sectors offer, have combined to place both education and health care at the commanding heights of today's economy.</p> <p><b>PUBLIC SECTORS</b></p> <p>If it were true only that health care and education are increasingly important sectors of our economy, there would be little cause for concern. Indeed, societies ought to desire economies that are strong and flexible enough to hum along as new technologies and other developments cause industries within them to rise and fall. The problem, rather, is that both health care and education are increasingly government-dominated industries. And this domination produces two ill effects that exacerbate the changes these sectors are already undergoing: Government's influence artificially increases the demand for health care and education (by significantly subsidizing both), and it makes both sectors even less efficient than they would be otherwise (by heavily regulating them and shielding them from market forces).</p> <p>In most industrialized countries, more than 80% of health-care spending is now paid for by third parties, primarily government, leaving about 20% to be paid directly by consumers. In the United States, however, only about 10% of health-care spending is paid for by households out of pocket. About 50% is directly paid for by government, mainly through Medicare and Medicaid. And about 35% comes from private health insurance, which is heavily subsidized by the government through the income-tax exemption for employer-provided coverage. The result is that patients rarely need to factor in cost when making choices about medical treatment, since someone else is footing almost all of the bill.</p> <p>Removing cost as a consideration certainly increases the demand for medical services, although it is difficult to calculate precisely how much. In 1971, RAND began a 15-year study to examine the effects of free medical care on both health-care consumption and participants' actual health quality. To date, the experiment is the only major controlled study of health-care spending behavior in America. And its findings clearly demonstrated that households tend to reduce consumption of medical services when they shoulder a greater share of the cost. Families whose coverage included cost-sharing components (like co-insurance) used between 20% and 30% less medical care (depending on the extent of their co-insurance). Moreover, as the RAND study put it, "In general, the reduction in services induced by cost sharing had no adverse effect on participants' health."</p> <p>As for education in the United States, government directly provides most schooling from kindergarten through 12<sup>th</sup> grade through the public-school system that now educates about 90% of American children. Through various tax benefits, it also subsidizes some educational expenses for parents who choose to have their children educated outside of that system. In addition, there are large public universities where many students pay less in tuition than the cost of their education, pushing enormous expenses onto the taxpayer. Finally, the federal government subsidizes college education to a massive degree even in private colleges and universities, with generous student-loan guarantees and other financial-support programs.</p> <p>Government also has enormous influence over the supply side of health care and education. For instance, in primary education — again, because most children attend public schools — states and localities employ the great majority of educators. Government schools face little market pressure to improve productivity, and it is difficult to change outmoded practices and fire incompetent teachers.</p> <p>Another way government shapes work-force supply (and, for that matter, demand) is through its support for credential requirements. The salary scales for government employment often automatically reward people for obtaining additional educational credentials; given the massive number of jobs in the government sector, as well as the high demand for them, this helps to stimulate the demand for post-graduate education. Requirements for credentials also restrict the supply of teachers in public schools: Even though there is reason to doubt the practical classroom value of teacher education provided at the college level, a degree in education is required for employment by most public-school systems.</p> <p>The entry of new providers into the health-care sector is similarly regulated, primarily through government-mandated licensing requirements. Not surprisingly, these requirements are often manipulated by incumbent practitioners in order to restrict supply. They can make it impossible for health-care providers to improve efficiency by substituting on-the-job training for formal educational credentials. Such restrictions might make sense in the case of many physicians and nurses, but they extend to every variety of service provider in health care in ways that often undermine cost effectiveness and efficiency. For example, several years ago, the state of Maryland increased the education requirements for licensed physical therapists, insisting that anyone entering the profession hold a doctorate. This sort of requirement benefits degree-granting institutions and works to the advantage of the incumbent physical therapists, but comes at the expense of consumers.</p> <p>We are left to wonder how much of the salary gap between workers with college degrees and those without is artificial. We cannot tell how salaries <em>would</em> be determined if government did not set its own pay scales based on educational attainment (thereby setting a standard that private employers must compete with); we cannot calculate precisely where pay levels would be if government did not enforce licensing restrictions in health care, education, and other industries. Still, it is not difficult to imagine that, if a dynamic and free market were allowed to flourish in education and health services, there might be more apprenticeships and fewer degree factories; one can easily see how salaries might be determined more on the basis of performance than of educational attainment. But because there is no true free market in these industries, the usual methods we have for evaluating such patterns simply do not suffice.</p> <p>The inability to apply the usual standards and measures of our market economy to health care and education points to a broader problem with government's domination of our new commanding heights. The unique characteristics of these sectors — and especially the fact that they are subject to so much government influence and control — make it very difficult to assess them using the terms in which we usually describe our economy. It is therefore nearly impossible to compare them to other sectors, to distinguish success from failure, and to make informed consumer choices.</p> <p>In health care, education, and government work, concepts like economic value, efficiency, productivity, and consumer preferences are obscured. And as these sectors continue to grow more central to our economy in the years ahead, our broader economy will therefore become more difficult to analyze and understand in traditional market terms.</p> <p><b>THE NON-MARKET ECONOMY</b></p> <p>To be sure, part of this shift is inherent to the nature of the "softer" sectors that now make up the commanding heights of American economic life. The "products" of education and health care are less tangible than those of heavy industry or agriculture, making them more difficult to measure and quantify. We can quantify the inputs — the workers and equipment used in medical procedures or in teaching — but their effects on outcomes are notoriously difficult to judge.</p> <p>Nobel Prize-winning economist Kenneth Arrow is usually credited with first noting the information asymmetries that characterize health care — for instance, the basic fact that it is often difficult for a consumer to know whether the treatment provided by his physician is correct. Doctors, after all, have expertise that patients lack. Similarly, in education, consumers typically have to trust that the educators involved in selecting a curriculum, and the teachers who are delivering it, know what they are doing. But it is not simply that consumers may lack knowledge about the value of educational or medical services: The providers themselves suffer from biases and large gaps in their knowledge. Thus, economic decisions and the allocation of both private and public resources in these sectors are often poorly informed.</p> <p>Many careful studies show little or no value added from increased health-care expenditures or additional resources devoted to education. It is true, of course, that people in the United States, and indeed all over the world, are healthier today than they were one or two generations ago; the average lifespan appears to be increasing at a rate of about three months per year, or about 2.5 years per decade in this country. And it's not just longevity: Overall health quality throughout one's life has improved as well. Robert Fogel has shown that the quality of life of people in their sixties is much improved in recent decades. The average number of chronic illnesses for those over age 65 has fallen dramatically. And these improvements in longevity and general health have had an enormous impact on well-being. Economists Kevin Murphy and Robert Topel estimated the economic value of the measurable improvements in health in the United States from 1970 to 2000 at about half of the value of the increase in GDP over that same time period.</p> <p>Nonetheless, although there is no doubt that health has improved considerably over time, it is not clear how much of this gain can be attributed to health <em>care</em>. Indeed, much of the improvement comes from better nutrition, less dangerous work environments, better sanitation, and other public-health measures, as well as more informed and health-conscious citizens. The marginal impact on health outcomes of increased spending on medical procedures appears to be low. Numerous studies, including the RAND health-care experiment, find <em>no</em> significant effect on outcomes for more intensive medical treatment in similar groups of patients. The Dartmouth Atlas project has documented large differences in health-care spending through Medicare across different regions of the country, with no apparent effect on outcomes.</p> <p>A similar pattern prevails in education. Looking at population averages, the correlation between schooling and earnings is unmistakable. Regions and countries with higher average levels of schooling have higher per capita incomes. Work by Claudia Goldin and Lawrence Katz has recently shown that, within the United States, the gap in average earnings between workers with college education and those without is large and apparently growing.</p> <p>But this correlation does not demonstrate causation, and the true impact of spending on outcomes in education is as elusive as it is in health care. In 2006, the United States spent close to 40% more per student on K-12 education than the average of the 34 developed nations of the Organization for Economic Cooperation and Development. Yet according to student-performance rankings in science, reading, and math, the U.S. ranks far below the OECD average. And in higher education, Stacy Dale and Alan Krueger have found that, controlling for factors that could be observed prior to college attendance, the actual choice of college (i.e., the choice between a very expensive and a far less expensive school) makes little or no difference in subsequent earnings.</p> <p>This is true even of education programs specifically meant to compensate for the many obstacles — poor home or community environment, low income, neglect, a lack of early-childhood schooling, and so forth — that are often blamed for gaps in later income attainment. Summarizing a large body of research, James Heckman wrote in 2005,</p> <blockquote>[C]lassroom remediation programs designed to combat early cognitive deficits have a poor track record. Public job training programs and adult literacy and educational programs, like the GED, that attempt to remediate years of educational and emotional neglect among disadvantaged individuals have a low economic return, and for young males, the return is negative.</blockquote> <p>In both education and health care, then, our faith in the value of expensive interventions is not reliably supported by the evidence. And as these sectors absorb larger shares of employment and spending, and become increasingly central to our economy, aggregate productivity measures will become more problematic — making our understanding of the economy at large ever more hazy.</p> <p>Naturally, there are also difficulties in measuring the value of complex durable goods in other sectors of the economy. It can be hard to compare, for instance, the value of this year's cell phone that includes a five-megapixel digital camera with last year's model that included only a three-megapixel camera. For these goods, however, consumer preferences offer vital guidance concerning value. The willingness of consumers to pay more for goods with certain features provides a clue as to the true value of those features.</p> <p>But in the cases of health care and education — in large part because of the dominance of government in these sectors — the prices of various "features" are often barely related to consumer preferences. With much of health-care and education spending paid for by third parties (and ultimately subsidized by government), consumers generally do not make decisions based on perceived relative value. The medical patient, instead of asking which medical procedure offers the greatest value, asks only whether the recommended procedure will be covered by insurance — a decision made by insurance-company or government bureaucrats, who have little sense of what is most important to the patient. The parents of a student in an elementary school are not responsible for choosing the school's teaching methods; as "consumers," they have no say in — and indeed, no way of knowing — whether the costly programs they pay for with their tax dollars are in fact producing good "value" in the form of their child's education.</p> <p>The result is that, in the sectors of education and health care, the preferences of policymakers — not of consumers — become the driving economic forces. And as these sectors become the new commanding heights, policymakers — rather than consumers and producers — will come to dominate more and more of our nation's economic life.</p> <p>Under these circumstances, the supposed inadequacy of market economics will become a self-fulfilling prophecy. Markets can work in education and health care, but only if governments allow them to. This means that, for the champions of free enterprise, introducing market principles and mechanisms into health care and education must become a top priority in the years ahead.</p> <p><b>NEW PRIORITIES</b></p> <p>Unfortunately, these would-be champions have a lot of work to do. As the advocates of state control over education and health care have steadily ascended the new commanding heights, advocates of markets have been flat-footed. Why?</p> <p>In August 2008, Philip Klein wrote a perceptive article in the conservative <em>American Spectator</em> magazine. Addressing his compatriots on the right, and astutely anticipating the coming political dramas, Klein argued that his fellow conservatives needed to start "learning to care about health care." "While the right has been effective at mobilizing support among its activist base on issues such as guns, taxes, and judges," Klein wrote, "when it comes to health care, conservatives who aren't involved in public policy for a living tend to tune out."</p> <p>As a generalization, it's difficult to deny Klein's point. The academic and professional public-policy communities have long contained conservative and libertarian scholars doing serious and thoughtful work on health care. But, broadly speaking, the most politically active advocates of free enterprise have usually been uninterested in the details of health-care policy.</p> <p>Klein was concerned that apathy would ultimately translate into political defeat and greater state involvement in the nation's health-care system. The passage of Obamacare seemed to validate his concern (although the drawn-out fight over the law helped galvanize conservative activists and the Tea Party movement). That struggle has certainly made conservatives a little more interested in health care, but they have a lot of catching up to do. Most conservative politicians and activists still know little about the details of health policy, and still struggle with profound apathy. As one right-leaning policy wonk quoted by Klein put it, most of his fellow libertarians and conservatives "find health care a sort of squishy, bleeding-heart kind of issue that doesn't interest them very much."</p> <p>What has been true of health care has also often been true of education — an issue most conservative politicians have struggled to speak about. Market-minded conservatives have tended to dismiss both as "soft" issues with little relevance to the kind of "hard" economics that moves them most.</p> <p>As with all generalizations, there are exceptions. But it is telling that, when George W. Bush sought to distinguish himself from traditional conservatives — going so far as to brand himself a "compassionate conservative" — his campaign focused on his interest in education policy. And when prominent conservative politicians (including Bush) have shown a serious interest in health care and education, they have usually advanced policies that ceded control of the new commanding heights to critics of the market. Rather than looking for ways to bring market principles to these arenas, they have accepted the premise that "reform" of these sectors must require exceptions to their usual belief in the benefits of markets.</p> <p>Bush, for instance, pushed through a major expansion of the health-care entitlement system with his Medicare prescription-drug plan. And his signature domestic-policy achievement, the No Child Left Behind Act, marked a significant expansion of the federal government's role in K-12 education. Mitt Romney took a similar approach to health-care reform as governor of Massachusetts. He opted for greater government involvement in the state's health-care sector through an ill-considered system of mandates, price controls, and subsidies. The result has been, as the <em>Wall Street Journal</em> reports, that the state's total health-care spending as a share of its budget has gone from 30% in 2006 (when the law was enacted) to 40% today.</p> <p>Thinkers on the left have long seen these subjects more clearly. Consider the insights of the great social scientist Daniel Bell — who, while difficult to categorize politically, once famously described himself as "a socialist in economics." In his prophetic book <em><a href="http://www.amazon.com/Coming-Post-Industrial-Society-Venture-Forecasting/dp/0465097138/ref=sr_1_1?s=books&ie=UTF8&qid=1308861259&sr=1-1">The Coming of Post-Industrial Society</a></em>, Bell predicted that, over time, "there will be an enormous growth in the 'third sector': the non-profit area outside of business and government which includes <em>schools</em>, <em>hospitals</em>, <em>research</em> <em>institutes</em>, voluntary and civic associations, and the like" (emphasis added). Bell published this forecast in 1976, when the Cold War fight over the political control of the old commanding heights was still raging. It is safe to say that Bell and other economic progressives had a better understanding of how the new commanding heights of the economy would emerge over time than have their more conservative counterparts.</p> <p>But while advocates of market control (as opposed to political control) of the economy's commanding heights may have been slow to recognize the importance of education and health care, they may now finally be starting to catch up. The events of the past few years seem to have made the public increasingly wary of America's looming fiscal challenges. This is prompting renewed scrutiny of the nation's health-care entitlement programs, especially Medicare and Medicaid. It is also emboldening a number of reform-minded legislators and executives to propose changes to programs that were once thought politically untouchable. For its part, the passage of Obamacare has caused more conservatives to think seriously about the structure of our entire system of health insurance and medical care.</p> <p>Meanwhile, as concerns over federal finances have mounted, there has been an increasing awareness of the budget crises facing states and municipalities. The states' problems include underfunded public-employee pensions, particularly for teachers, as well as the ever-increasing costs of Medicaid.</p> <p>It is worth examining the recent contretemps in Wisconsin — the fight over Governor Scott Walker's efforts to eliminate some collective-bargaining privileges for public employees — through the lens of the broader battle over the new commanding heights. On one level, the Wisconsin situation was a squabble about mundane questions of salaries and benefits. On another level, however, it was a more fundamental struggle over political control, with the state's teachers' unions struggling to maintain their power over the commanding heights of education. Walker, for his part, was trying to restore that power to citizens and free markets.</p> <p>It is clear that such struggles will continue in the coming years, so that health care and education will increasingly be front and center in our economic debates. This is as it should be. But defenders of the market can waste no time in preparing themselves accordingly.</p> <p><b>THE NEXT FRONT</b></p> <p>The growing economic significance of health care and education makes the question of their ultimate control — whether by government or the market — one of deep national importance. It is no exaggeration to say that the struggle for power over these sectors will be the focal point of American domestic politics in the 21<sup>st</sup> century.</p> <p>The fight over the relative merits and demerits of Obamacare leading up to its passage last year highlighted the inadequacy of our current political debates about the new commanding heights. Champions of the law pointed to its distributional effects — broadening access to health coverage for those without employer-provided insurance, for example. Critics focused mostly on excessive costs or fears of rationing — worthy concerns, to be sure. But there was very little attention paid to what greater government control of the health sector would mean for the adaptive efficiency of the health-care system — the ability of providers to generate and use new techniques, business models, services, and technologies to keep quality high and costs low.</p> <p>It is not surprising that the debate among the political class focused on questions of allocation. Much of politics is a scramble for existing resources, and so political fights often boil down to questions of control over a fixed set of goods and services. But the long-run success of a health-care system — or any economic sector, or an entire economy — has much more to do with questions of adaptation, new technology, and innovation than with the allocation of fixed resources. The more that we allow our economy to be governed by politics rather than market forces, the more inclined we will be to forget that fact, and so to see our dynamism and prosperity diminish.</p> <p>If the century-long battle over Lenin's old commanding heights should teach us anything, it is that the extent of government control over the key sectors of a nation's economy matters tremendously to that nation's eventual success. That lesson should be foremost in our minds as we commence a long and arduous struggle over the American economy's new commanding heights.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/new-commanding-heights.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T10:31:00-07:00">10:31 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4357501587420644886">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4357501587420644886&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Commanding%20Heights" rel="tag">Commanding Heights</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/The%20New" rel="tag">The New</a> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5093171906035569469"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/patriotic-taxation-or-unpatriotic.html">Patriotic Taxation or Unpatriotic Redistribution?</a> </h3> <div class="post-body entry-content"> <h1>Patriotic Taxation or Unpatriotic Redistribution?</h1> <p>by Doug Bandow </p><p class="first">The unruly Democratic coalition can unite around little other than raising taxes. Only with higher revenues can the various interest groups carrying the Democratic banner enrich themselves at public expense.</p> <p>Not surprisingly, few people who actually work and pay taxes are enthused about turning more of their money over to Washington. So big-spending pols have to resort to increasingly creative arguments for pushing up the government's take.</p> <p>The campaign to fill government coffers naturally has focused on the "rich." (Luckily, I guess, I don't qualify under anyone's definition!) Senate Majority Leader Harry Reid is pushing a resolution declaring that "it is the sense of the Senate that any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort." </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/doug-bandow">Doug Bandow</a> is a senior fellow at the Cato Institute. A former special assistant to Ronald Reagan, he is the author of </em><a href="http://www.amazon.com/Foreign-Follies-Americas-Global-Empire/dp/1597819883/catoinstitute-20" target="_blank">Foreign Follies: America's New Global Empire</a><em> (Xulon).</em></p> <a class="head" href="http://www.cato.org/people/doug-bandow">More by Doug Bandow</a></div></div> <p>Offering more than boilerplate rhetoric is former Labor Secretary Robert Reich, who proposed returning to a top income tax rate of 70%. Still, he could have gone higher: the top rate once ran 91%, before President Jack Kennedy's across-the-board rate cuts.</p> <p>A more peculiar advocate for higher taxes is "Patriotic Millionaires for Fiscal Strength." The group has a website and its members wrote an open leader urging the president and congressional leaders "to put our country ahead of politics." How? By increasing taxes on incomes greater than a million dollars.</p> <p>Argued PMFS, "Our country faces a choice — we can pay our debts and build for the future, or we can shirk our financial responsibilities and cripple our nation's potential." There's no discussion of cutting spending, which has exploded in recent years. Rather, argue these "patriotic millionaires," a decade ago Congress "made a mistake. You decided our country needed less money, and millionaires like me needed more." The obvious answer: "Please do the right thing for our country. Raise our taxes."</p> <p>Actually, tax cuts don't reduce money for "our country." Tax cuts reduce money for the government. The two are not the same.</p> <p>If there is one truth in life, it is that Washington spends far more money than it should. Indeed, Uncle Sam squanders money on a grand scale. There is the usual waste, fraud, and abuse. The redundant and ineffective programs. The pork used to reelect legislators. The consistent refusal of the governing establishment to treat the taxpayers' money as anything other than a great common pool to use for political advantage.</p> <p>The greatest waste of money is not inadvertent inefficiency, but intentional redistribution from the economically productive to the politically influential. Why billions in pork? Why tens of billions in corporate welfare? Why hundreds of billions in subsidies for rich foreign allies? Why more than a trillion in middle class welfare?</p> <p>The deficit is too high because the government spends too much, not because Washington collects too little. In the decade following the Bush tax cuts federal revenue actually rose, just not as much as it would have otherwise. As a percentage of GDP federal tax revenues, despite the Bush tax cuts, continue to run around the historical average of 18%.</p> <p>From 2001 to 2011 a projected surplus of $5.6 trillion turned into a real deficit of $6.1 trillion. Noted the Heritage Foundation's Brian Riedl, the "tax cuts were responsible for just 14% of the swing." A similar analysis by the Tax Foundation's Scott Hodge figured that number at 16%.</p> <p>The biggest factors by far were increased spending and lower economic growth. Today's huge deficit is almost entirely due to them, as the impact of the Bush tax cuts continues to diminish. There are many people to blame for exploding deficits, but not because they reduced income tax rates.</p> <p>The future is even clearer. Over the last 40 years revenues have averaged about 18% of GDP. The Congressional Budget Office projects that tax collections will run about 18.2% of GDP in 2020, even if the Bush tax cuts are preserved. In the past, outlays averaged 20.3% of GDP. The CBO expects that to go to 26.5% without action. Spending is the problem.</p> <p>But the issue is not partisan. Republicans bear equal responsibility with Democrats — the Medicare drug benefit was a budget-buster just like health care "reform," and the misguided Bush administration wars have turned into unfunded liabilities. However, the answer is not handing more of people's earnings over to the same legislators who have so prodigiously wasted past monies.</p> <p>The "patriotic millionaires" would do more good if they campaigned to stop legislators from gaily wasting taxpayers' dollars day in and day out. Only politicians would benefit from a tax hike like that suggested by PMFS.</p> <p>Still, if the "patriotic millionaires" really believe the government collects too little money, they should personally contribute more. The organization argues increasing taxes "is both an ethical and patriotic decision," but there is nothing ethical or patriotic about taking other people's money. Real fiscal patriots would give more of their own cash.</p> <p>Earlier this year Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee, wrote the PMFS coordinator to helpfully point out that "For those that are interested in making voluntary contributions to pay down the national debt, the process is both easy and advantageous." Voluntary payments to reduce the debt came to only $3.1 million in 2010, leaving much room for the "patriotic millionaires" to help out.</p> <p>The PMFS responded rather churlishly, denouncing the idea of allowing people to "opt out" and noting that the government even used rationing during World War II. But the biggest problem, argued PMFS, is that "we are a very small group. If there were even the remotest chance of making a noticeable dent in the problem by acting alone we would have done it already." So it appears that there are virtually no "patriotic millionaires" ready to give politicians more money to waste. Rather, the PMFS apparently represents a few "unpatriotic redistributionists" who mostly want to take more of <em>other people's money</em>.</p> <p>In support of raising taxes the PMFS members contend that "We have been more fortunate than most people." But they also likely pay more taxes than most people. In 2008, the last year for which the figures are available, the top 1% of earners paid 38% of total income tax levies; the top 5% paid 59%. The top quarter paid 86%.</p> <p>These numbers generally have been increasing over time. They rose after the 1986 Reagan tax reform, which kicked many poorer people off the income tax rolls entirely. The shares of taxes paid by wealthier Americans also rose after the Bush tax cuts.</p> <p>In contrast, the share of income taxes paid by the bottom 50% started out below 10% and fell steadily over time, to less than 3% in 2008. In fact, federal policy, particularly the earned income tax credit and child credit now mean that almost half of filers pay no income tax. Virtually no one in the bottom income quintile and only a minority in the next quintile owe anything.</p> <p>Never mind, says PMFS. Member Paul Egerman argued that "If our country is really broke, then we can't afford to give tax cuts to people like me." However, tax cuts give nothing. Rather, they allow people of all income levels to keep more of their own money, money usually earned through hard work, risk-taking, investment acumen, and/or entrepreneurial insight.</p> <p>Yet the worst blindness is the failure to address what additional revenues would be used to finance. To Sen. Hatch's argument that the deficit reflects overspending, replied PMFS: "This is quibbling over semantics. Deficits result when spending exceeds receipts. Whether that happens because spending is too high or receipts are too low is a matter of perspective and priorities."</p> <p>It is a matter of perspective and priorities, which must be addressed. If the U.S. was locked in a struggle for national survival, then one might call on the American people for a maximum sacrifice. But the exploding deficit reflects old-fashioned tax-and-spend politics. Hiking taxes would reward those responsible for America's current financial travails.</p> <p>So the "patriotic millionaires" shouldn't wait on others to join them. If they believe there is an "ethical and patriotic" obligation to pay more, they have a duty to act. Right now.</p> <p>The easiest step, as suggested by Sen. Hatch, would simply be to give money to reduce the national debt. But that should be just a start.</p> <p>So-called economic patriots should routinely inflate their income tax liabilities. Whether they are patriotic billionaires, millionaires, or even thousandaires, they should engage in a little creative accounting. One of the virtues of America's outrageously complicated tax system is the fact that it offers many opportunities for paying more to the government.</p> <p>Pick up the 1040. Don't claim dependents, irrespective of how many children one has. Take the standard deduction instead of itemizing.</p> <p>Claim extra interest, dividends, and miscellaneous income. Maybe even toss in some nonexistent alimony.</p> <p>On the Schedule C make up income and don't claim expenses. Do the same with capital gains. What self-respecting "patriotic millionaire" would take advantage of unfair loopholes in order to deny Uncle Sam needed revenue?</p> <p>Finally, inflate taxes owed. Don't take any credits and toss in some "additional taxes" at the end. The IRS might be a bit perplexed about how the numbers were derived, but the agency isn't likely to turn down extra cash.</p> <p>This strategy can be repeated year in and year out. "Patriotic millionaires" should do the same for their state and city taxes. Those governments also need money, lots of it!</p> <p>There is much wrong with America's tax system. The personal income tax is complex and intrusive. High corporate tax rates place the U.S. at an international disadvantage. Excessive capital gains taxes discourage investment.</p> <p>But one thing is not a problem: paying the government too little.</p> <p>It would be nice if all millionaires were patriotic. But love of country does not mean campaigning for increased taxes that would spark even more greedy raids on taxpayers. The best way for everyone to demonstrate their commitment to America would be to battle against the non-stop special interest looting that occurs in Washington.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/patriotic-taxation-or-unpatriotic.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T10:29:00-07:00">10:29 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5093171906035569469">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5093171906035569469&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="285881305625113660"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/07/intransigent-meet-unserious.html">The Intransigent Meet the Unserious</a> </h3> <div class="post-body entry-content"> <h1>The Intransigent Meet the Unserious</h1> <p>by Michael D. Tanner </p><p class="first">Last Friday, House minority leader Nancy Pelosi held a press conference to announce that House Democrats should oppose a debt-ceiling agreement that included any cuts in Medicare or Social Security. Meanwhile, over in the Senate, Sherrod Brown (D., Ohio) and Bernie Sanders (I., Vt.) announced that they would filibuster any deal that included changes to those programs, and possibly Medicaid as well.</p> <p>So, of course, you saw the deluge of media stories blaming Democratic intransigence for threatening to throw the country into default. Neither did I. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/michael-tanner">Michael D. Tanner</a> is a senior fellow at the Cato Institute and author of </em><a href="http://www.cato.org/store/books/leviathan-right-how-big-government-conservatism-brought-down-republican-revolution-hardback">Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution</a><em>.</em></p> <a class="head" href="http://www.cato.org/people/michael-tanner">More by Michael D. Tanner</a></div></div> <p>Republicans have clearly drawn a line in the sand, opposing any tax increase. But Democrats have been even more unbending, resisting any serious structural reform of entitlements or deep spending cuts, while insisting on huge tax hikes as part of any deal.</p> <p>Why the insistence on tax hikes? Democrats know that, according to the Congressional Budget Office, tax revenues will return to their historic average of 18 to 19 percent of GDP by the end of the decade. They know this will happen even if the Bush tax cuts are extended and the alternative minimum tax is fixed. The only reason, therefore, for tax increases would be to enable more government spending.</p> <p>The president is now calling for a "big" deal that would reduce the debt by $4 tillion over ten years, while we'll borrow more than a third of that this year.  In fact, over those ten years, we are expected to run up more than $13 trillion in new debt.</p> <p>It's also important to remember that the president is not offering $4 trillion in spending cuts. The deal he has proposed includes more than $1 trillion in tax hikes. Another $1 trillion is assumed savings on interest payments. Thus, what is really on the table is barely $2 trillion in actual spending reductions. What the president is really offering is closer to $2 in spending reductions for every $1 in tax hikes, not the 4:1 ratio reported by the media. Moreover, that is over ten years, meaning the cuts would actually be just $200 billion per year. We will pay more than that this year in interest on what we have already borrowed.</p> <p>As minimal as these cuts are, they are actually even less than they appear. Most people assume that a spending cut means spending less next year than we spend this year. Then again, most people don't understand Washington. Washington operates under "baseline budgeting," meaning that if Congress plans to spend $2 billion more on a program than it spent this year, but only spends $1 billion more, that is a $1 billion "cut." Thus, the $2 trillion in spending "cuts" currently being discussed would actually allow government spending to increase by $1.8 trillion.</p> <p>Of course, the president also has expressed a willingness to put Medicare and Social Security on the table, despite opposition from the Democrats in Congress. But here too the proposals are far less than they appear. They would do nothing to change the structure of these programs, instead offering a grab bag of future benefit trims that may or may not ever occur, such as further squeezing reimbursements to hospitals and physicians.</p> <p>So the deal that the Republicans are currently offering would actually allow federal revenue, federal spending, and the national debt all to increase over the next decade. They have abandoned structural changes to entitlement programs — anything like Paul Ryan's Medicare reform is off the table — and appear to have dropped calls for a balanced-budget amendment or a spending cap.</p> <p>This is radical? This is intransigence? If only.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/07/intransigent-meet-unserious.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T10:27:00-07:00">10:27 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=285881305625113660">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=285881305625113660&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Meet%20the%20Unserious" rel="tag">Meet the Unserious</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/The%20Intransigent" rel="tag">The Intransigent</a> </span> </div> </div> </div> </div> <a name="5572457343071282387"></a> <b><span style="font-size: x-large;"><span style="font-family: Georgia,"Times New Roman",serif;">Cuba: Enriquecimiento de Fidel basado en desinformación de los cubanos</span></span></b> <a href="http://www.asuntoscapitales.com/articulo.asp?ida=5826" title="Ir al artículo siguiente"><img src="http://www.asuntoscapitales.com/images/n_siguiente.png" border="none" /></a> <br /><div class="sintesis">“Desde que Fidel tomó el poder, el país quedo paralizado en el tiempo. Y como sabemos, lo que no mejora, empeora. Esa es la triste realidad de una Cuba que camina sobre la base de la desinformación.”</div><br /><div class="autor">Samuel Angel</div><span class="fecha_articulo"></span><br /><div class="submenu"> <table style="margin-top: -3px;" align="right"><tbody> <tr> <td align="right"> <br /></td></tr> <tr> <td> <div class="relacionados"> <div class="head"> </div></div><br /></td></tr> </tbody></table></div><div class="texto">La Cuba que visite en días pasados no refleja la información de la Revista financiera Forbes que en el año 2006, mostraba la <a href="http://www.elmundo.es/mundodinero/2006/05/05/portada/1146791748.html">fortuna del dictador Cubano Fidel Castro en 900 millones de dólares</a>, ubicándolo en el séptimo puesto entre los mandatarios más ricos del mundo.<br />Por supuesto que los cubanos no saben esto y toda información que pueda tocar sus puertas que no convenga, será mostrada como producto del “imperio yanqui”. Sin embargo la miseria que inunda la isla por doquier haría que cualquier información real conocida por el pueblo que sufre, se convierta en una bomba de tiempo para los intereses de los Castro.<br />En el país de la desinformación, gracias a Fidel, los cubanos viven con pavor de lo que el régimen haga. Claro, si se dieran cuenta que no tienen por qué aguantarse la miseria que les brinda Fidel y su régimen, podrían cambiar de vida así como lo están haciendo en medio oriente varios países.<br />Fidel no permite que la gente tenga celulares, tener un celular cuesta el equivalente al salario mensual para un cubano raso. Que entre otras cosas es de 10 dólares mensuales, como todos comprenderán, nadie vive de eso, pero todo sea por la revolución, la revolución económica personal de Fidel. O come o habla por celular, ¿qué escogería usted?<br />Por supuesto, los que tienen celular no tienen plan de datos, los cubanos no saben bien qué es eso. Es decir, no tienen la posibilidad de educarse, realizar transacciones, aumentar su productividad y tantas otras cosas que para el mundo en la actualidad son parte de la vida cotidiana a través de la tecnología. Claro, los que tienen celular no pueden llamar porque también les cuesta un ojo de la cara.<br />Como me decía un taxista cubano: “en sus países conocen a las personas que están en la miseria, porque viven en la calle pidiendo dinero, en Cuba, los indigentes están dentro de las casas, y son todos”.<br />Es increíble el nivel de obras inconclusas o con andamios llenos ya de vegetación, producto de la parálisis económica de ese país, sumergido en el socialismo, improductivo, esclavizante y adormecedor.<br />Las librerías de la Habana contienen únicamente literatura guerrillera, resulta fácil encontrar el bestseller “la Guerra de Guerrillas”, escrito por el Che. Literatura que se llevan los incautos jóvenes turistas europeos, que confunden al Che con Tarzan y a Fidel con una especie de Moisés en decadencia.<br />La pobreza en Cuba está por doquier y el principal afectado es el pueblo cubano, a quienes se les ha infundido por parte de Fidel una especie de creencia en que son mártires del socialismo, santos de la guerrilla. A costa de cuyo sufrimiento en medio de la desolación del país, deben aguantar las migajas que el régimen les tira al piso.<br />Los vendedores del órgano informativo del régimen, el Granma, son personas de la tercera edad, que entregan el periódico a cambio de cualquier moneda, caminan por las calles de la ciudad descompuestos, hambrientos y solitarios. Sacados de un cuento de terror, esos ancianitos sufren física hambre mientras son usados por el régimen para entregar a los turistas el periódico que alaba las maravillas del régimen de miseria en el que viven.<br />Como nadie vive de 10 dólares al mes, se ha generado toda una economía informal, basada en el contrabando de puros, prostitución y abuso de cobros al incauto turista. Claro, todas las anteriores son prohibidas por el régimen, pero, ante el conocimiento de su ineptitud y buscando no gobernar sobre cadáveres, todo lo permite de manera solapada.<br />Si alguien se expresa de manera contraria a Fidel y su régimen comunista, es llevado a las mazmorras al estilo de los antiguos esclavistas. La policía traída de oriente a la ciudad de la Habana es más obediente ya que, al provenir de la provincia, su ingenuidad de sentirse traído a la ciudad, los hace ser presas fáciles, obedientes ciegos a Fidel.<br />Los músicos que pululan en la Habana tocan de manera maravillosa repertorios de los cincuentas, paralizados en la historia, estos artistas deben supeditar su arte a las ideas del régimen. No salirse del Guantamera de Martí es una regla y bailar al ritmo del son cubano como si fueran libres debe ser su mayor puesta en escena.<br />Los automóviles de los años 40s y 50s que transitan por las calles Cubanas y que se han vuelto un icono del país, en realidad están allí, ante la imposibilidad del régimen de permitirle al pueblo escoger lo que más quiera, cambiar de auto o mejorar año tras año, eso, gracias a Fidel, no existe en Cuba.<br />Desde que Fidel tomó el poder, el país quedo paralizado en el tiempo. Y como sabemos, lo que no mejora, empeora. Esa es la triste realidad de una Cuba que camina sobre la base de la desinformación.<br /></div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Publicadas por <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> a la/s <a class="timestamp-link" href="http://alianzaliberal.blogspot.com/2011/07/enriquecimiento-de-fidel.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T10:20:00-07:00">10:20 AM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=3679109554603372635&postID=2955235618392992924">0 comentarios</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="http://intermexfreemarket.blogspot.com/email-post.g?blogID=3679109554603372635&postID=2955235618392992924" title="Enviar la entrada por correo electrónico"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Etiquetas: <a href="http://alianzaliberal.blogspot.com/search/label/de%20Fidel" rel="tag">de Fidel</a>, <a href="http://alianzaliberal.blogspot.com/search/label/Enriquecimiento" rel="tag">Enriquecimiento</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="2336017175401209156"></a> <h3 class="post-title entry-title"> <a href="http://alianzaliberal.blogspot.com/2011/07/como-obtuvo-calderon-la-presidencia.html">Cómo obtuvo Calderón la Presidencia</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-2336017175401209156"> <div style="font-family: Georgia,"Times New Roman",serif;"><b><span style="font-size: x-large;">Cómo obtuvo Calderón la Presidencia (o cuando los priistas no eran un peligro para México)</span></b></div><br /><br /><div class="sintesis">“La izquierda era un peligro para México en 2006 y lo será en 2012 si llega al poder, aunque lo haga de la mano del PAN. La suma de un mal mayor y un mal menor no hacen un mal menor y menos un bien ¡Obvio!”</div><br /><div class="autor">Leopoldo Escobar</div><br /><div class="submenu"> <table style="margin-top: -3px;" align="right"><tbody> <tr> <td align="right"> <br /></td></tr> <tr> <td> <div class="relacionados"> <div class="head"> </div></div><br /></td></tr> </tbody></table></div><div class="texto"> El periodista Ciro Gómez Leyva le preguntó a Felipe Calderón si Enrique Peña Nieto le parecía un peligro para México. Con ello el periodista aludió al señalamiento de ser un peligro para México que Calderón lanzó contra su rival Andrés Manuel López, durante la contienda electoral de 2006.<br />Al responder, esta vez Calderón no fue claridoso como hace 5 años, sino ambiguo. Pero eso es en público, pues en corto Calderón sigue insistiendo en que lo peor que le podría pasar al país en 2012 es el triunfo electoral del PRI y en que, por tanto, lo único que podría impedir tal escenario es una alianza electoral entre su partido (el PAN) y la izquierda. Y con los malos resultados para PAN y PRD en los comicios locales del Estado de México, que esta vez marcharon separados, Calderón y los partidarios de la alianza la suponen ahora más necesaria y más viable.<br />Pero hubo un tiempo en el cual a Calderón los priistas no le parecían un peligro para México. La historia que hoy los calderonistas quieren sepultar bajo una montaña de olvido es que Calderón no sólo pudo tomar posesión de su cargo como Presidente de la República gracias a los priistas, sino que además gracias a ellos (o una parte de ellos) pudo ganar la elección.<br />Y esos votos decisivos provinieron de los muy priistas seguidores de Elba Esther Gordillo, Enrique Peña y Eugenio Hernández, entre otros prominentes personajes del PRI, quienes en forma soterrada pero efectiva promovieron el voto útil a favor de Calderón, para impedir que la izquierda se hiciera del poder.<br /><div align="center"><strong>Cuando El Peje parecía una calamidad inexorable</strong></div>Un par de semanas antes de la elección presidencial de 2006, parecía muy difícil que Calderón pudiera derrotar a López, si bien la distancia de las preferencias electorales se habían venido acortando y había un “empate técnico” o…casi.<br />La última encuesta mensual (correspondiente a junio de 2006) de Mitofsky daba 35% de los votos para López, 32% para Calderón y 28% para Roberto Madrazo.<br />La encuesta de Reforma publicada el 23 de junio de 2006, 9 días antes de la elección, concedía 36% a López y 34% a Calderón.<br />Pero el 2 de julio Calderón se impuso por una diferencia de apenas 0.52% de los votos (235,329 en cifras absolutas). De “panzazo”, pero ganó. Mas ¿cómo lo hizo?<br /><div align="center">Encuestas de Mitofsky</div><div align="center"> <table border="1" cellpadding="0" cellspacing="0"><tbody> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="center"><a href="http://alianzaliberal.blogspot.com/" name="_Hlk298351132"><strong>CANDIDATO</strong></a></div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="center"><strong>Enero</strong></div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="center"><strong>Febrero</strong></div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="center"><strong>Marzo</strong></div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="center"><strong>Abril</strong></div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="center"><strong>Mayo</strong></div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="center"><strong>Junio</strong></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="left">Andrés Manuel López </div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">39%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">39%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">38%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">34%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">34%</div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="right">35%</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="left">Felipe Calderón </div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">31%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">30%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">31%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">35%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">34%</div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="right">32%</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="left">Roberto Madrazo </div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">29%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">28%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">29%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">27%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">28%</div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="right">28%</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="left">Patricia Mercado </div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">1%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">1%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">1%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">3%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">3%</div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="right">4%</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="left">Roberto Campa </div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">0%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">2%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">1%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">1%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">1%</div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="right">1%</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="19%"><div align="left">TOTAL </div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">100%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">100%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">100%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">100%</div></td> <td nowrap="nowrap" valign="bottom" width="14%"><div align="right">100%</div></td> <td nowrap="nowrap" valign="bottom" width="10%"><div align="right">100%</div></td> </tr> </tbody></table></div>López y sus secuaces gritaron que la no correspondencia entre resultados y encuestas era “prueba” del “fraude”. Pero si las encuestas previeran exactamente los resultados, entonces nos ahorraríamos las elecciones. Calderón ganó legal, limpiamente. No hubo fraude alguno y es el momento que seguimos esperando las evidencias de la supuesta defraudación de 2006, ese otro mito izquierdista.<br />Lo que sí es cierto es que con los puros votos de los simpatizantes del PAN Calderón no ganaba y López hubiera arrasado. Calderón necesitó casi 5 puntos porcentuales más de lo que podrían aportar los simpatizantes panistas. La prueba es que mientras Calderón obtuvo 14,921,749 votos, los disputados panistas obtuvieron apenas poco más de 13 millones de votos. Casi 2 millones de ciudadanos dividieron sus votos entre diferentes partidos. Pero esta operación no fue del todo espontánea, aunque su inducción tampoco fue ilegal o ilegítima.<br /><div align="center"><strong>Entra Elba al quite…pero no basta</strong></div>Si la elección presidencial hubiera sido en enero, febrero o marzo de 2006, Calderón habría perdido. Estaba estancado en un máximo de 31% de las preferencias. A finales de febrero situación era desesperada y entonces Calderón pactó alianzas terminó de amarrar la alianza con Elba Esther Gordillo.<br />Toda la estructura del Partido Nueva Alianza -que respondía a Gordillo (mientras ella formalmente seguía en el PRI)- aprendió la consigna: votar por Calderón para presidente (y no por el candidato de la PANAL que era Roberto Campa) y votar por los candidatos del partido para los demás cargos. Por eso en la elección mientras que los diputados del PANAL obtuvieron 1.8 millones de votos, su candidato presidencial apenas consiguió 400 mil. Gordillo y su partidarios aportaron 1.4 millones de votos a Calderón.<br />En las encuestas de abril se empiezan a sentir los efectos benéficos de estas maniobras. Pero los votos del PANAL no bastaban para derrotar a López y para que triunfara Calderón. Por eso en abril diferentes operadores políticos experimentados, que no pertenecían ni al PAN y al PRI, pero que tenían buenas relaciones con políticos de ambos partidos, emprendieron una labor para convencer a ciertos gobernadores priistas a promover el voto útil en favor de Calderón en virtud de que ni Roberto Madrazo tenía real probabilidad de ganar y de que López efectivamente era una formidable amenaza para México. Gordillo por su parte también cabildeó con gobernadores priistas.<br />La labor se centró especialmente en los gobernadores de Campeche, Durango, Hidalgo, México, Nuevo León, Sonora y Tamaulipas. Estos mandatarios accedieron, pero advirtieron que no serían muchos los votos que podrían lograr para el candidato panista, pues la promoción no podía ser abierta, so riesgo de provocar un cisma en el PRI.<br /><div align="center">Resultados de votaciones para Presidente de la República (2000 y 2006) y diputados federales (2009)</div><table style="width: 595px;" align="center" border="1" cellpadding="0" cellspacing="0"><tbody> <tr> <td rowspan="10" nowrap="nowrap" valign="middle" width="48"><div align="left">2000</div><div align="left"><br /></div><div align="left"><br /></div><div align="left"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="96"><div align="center"><br /></div></td> <td valign="bottom" width="84"><div align="center"><strong>V. Fox</strong></div></td> <td valign="bottom" width="84"><div align="center"><strong>F. Labastida</strong></div></td> <td valign="bottom" width="72"><div align="center"><strong>C. Cárdenas</strong></div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="center"><strong>Diferencia</strong><br /><strong>2000-2006 (PRI)</strong></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="center"><strong>Diferencia</strong><br /><strong>2003-2006 (PRI)</strong></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">NACIONAL</div></td> <td valign="bottom" width="84"><div align="right">15,104,164</div></td> <td valign="bottom" width="84"><div align="right">12,654,930</div></td> <td valign="bottom" width="72"><div align="right">5,842,589</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Campeche</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">97,712</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">96,730</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">31,968</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">9,318</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Durango</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">186,989</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">188,262</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">44,626</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">34,272</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Hidalgo</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">270,992</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">335,446</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">129,134</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">99,520</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">México</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">2,094,449</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">1,520,711</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">896,409</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">487,601</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Nuevo León</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">730,290</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">588,217</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">92,427</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">99,815</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Sonora</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">423,420</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">277,377</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">107,665</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">102,012</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Tamaulipas</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">486,262</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">413,861</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">85,425</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">96,012</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td colspan="4" nowrap="nowrap" valign="bottom" width="336"><div align="left">Suma</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right">928,550</div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td rowspan="10" nowrap="nowrap" valign="middle" width="48"><div align="left">2003</div><div align="left"><br /></div><div align="left"><br /></div><div align="left"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="96"><div align="left"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">PAN</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">PRI</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">PRD</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">NACIONAL</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">8,273,012</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">9,878,787</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">4,734,612</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Campeche</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">100,808</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">106,570</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">6,351</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">19,158</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Durango</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">100,653</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">193,845</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">14,538</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">39,855</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Hidalgo</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">126,756</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">259,716</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">93,043</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">23,790</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">México</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">886,940</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">1,059,755</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">705,108</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">26,645</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Nuevo León</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">508,860</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">718,831</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">30,190</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">230,429</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Sonora</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">310,680</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">313,937</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">87,955</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">138,572</div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Tamaulipas</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">244,950</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">386,914</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">60,694</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right">69,065</div></td> </tr> <tr> <td colspan="6" nowrap="nowrap" valign="bottom" width="547"><div align="left">Suma<br />547,514</div></td> </tr> <tr> <td rowspan="9" nowrap="nowrap" valign="middle" width="48"><div align="left">2006</div><div align="left"><br /></div><div align="left"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="96"><div align="left"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">F. Calderón</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">R. Madrazo</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">A. López</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">NACIONAL</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">14,921,284</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">9,301,441</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">14,686,420</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Campeche</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">99,526</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">87,412</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">101,192</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Durango</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">255,229</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">153,990</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">128,881</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Hidalgo</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">251,772</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">235,926</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">385,750</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">México</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">1,771,515</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">1,033,110</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">2,469,093</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Nuevo León</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">865,006</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">488,402</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">282,384</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Sonora</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">468,288</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">175,365</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">240,114</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> <tr> <td nowrap="nowrap" valign="bottom" width="96"><div align="left">Tamaulipas</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">506,177</div></td> <td nowrap="nowrap" valign="bottom" width="84"><div align="right">317,849</div></td> <td nowrap="nowrap" valign="bottom" width="72"><div align="right">324,491</div></td> <td nowrap="nowrap" valign="bottom" width="107"><div align="right"><br /></div></td> <td nowrap="nowrap" valign="bottom" width="104"><div align="right"><br /></div></td> </tr> </tbody></table>Los candidatos del PRI a diputados federales obtuvieron 1.4 millones más de votos que los que obtuvo su candidato presidencial. No todos esos votos fueron para Calderón, pero sí la mayoría y gracias a las promociones soterradas de los gobernadores priistas ganados a la causa del voto útil.<br />Como se aprecia en la tabla, esos gobernadores no pudieron mantener para el candidato presidencial priista ni siquiera los votos obtenidos en 2003 (a pesar de que las elecciones intermedias son de menor participación electoral que las presidenciales), para no hablar de los votos de 2000. La transferencia de votos priistas al candidato panista Calderón fue del orden de entre 600 mil y 900 mil. Y por cierto, nadie obligó a esas personas a votar así, porque en la soledad de las urnas podrían haber votado de otro modo si esa hubiera sido su convicción. Simplemente parte del liderazgo político consiste en tener autoridad moral y capacidad de persuasión sobre los seguidores.<br />Sea por las motivaciones que sea, muchos priistas actuaron responsablemente en 2006 y ayudaron a impedir la catástrofe que habría significado que la izquierda llegara al poder. Por eso ahora resulta tan hipócrita que se tome a los mismos que ayudaron a Calderón a llegar al poder como “un peligro para México” ¿No es acaso absurdo hasta el ridículo que el “peligro para México” haya sido vencido con el apoyo de otro “peligro para México”? En realidad lo que dicen los que antes veían en la izquierda un peligro para México y hoy lo ven en los priistas es: la única manera en que no haya peligro para México es que nosotros estemos en el poder…por siempre…<br />El único “peligro para México” es la izquierda. Las demás opciones políticas simplemente son no deseables por cuanto están infectadas por el intervencionismo estatal, el programa de la “justicia” redistributiva y el colectivismo edulcorado y difícilmente lograran que nuestra nación supere la pobreza y el subdesarrollo. Esas opciones debemos considerarlas males menores en diferente grado, las cuales son preferibles frente al mal mayor que es la izquierda, claro, en tanto no surja la opción de poder deseable, que no es otra que la liberal.<br />La izquierda era un peligro para México en 2006 y lo será en 2012 si llega al poder, aunque lo haga de la mano del PAN. La suma de un mal mayor y un mal menor no hacen un mal menor y menos un bien ¡Obvio!<br /></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Publicadas por <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> a la/s <a class="timestamp-link" href="http://alianzaliberal.blogspot.com/2011/07/como-obtuvo-calderon-la-presidencia.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T10:03:00-07:00">10:03 AM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=3679109554603372635&postID=2336017175401209156">0 comentarios</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="http://intermexfreemarket.blogspot.com/email-post.g?blogID=3679109554603372635&postID=2336017175401209156" title="Enviar la entrada por correo electrónico"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Etiquetas: <a href="http://alianzaliberal.blogspot.com/search/label/cuando%20los%20priistas%20no%20eran" rel="tag">cuando los priistas no eran</a>, <a href="http://alianzaliberal.blogspot.com/search/label/para%20M%C3%A9xico" rel="tag">para México</a>, <a href="http://alianzaliberal.blogspot.com/search/label/un%20peligro" rel="tag">un peligro</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="372474097973514233"></a> <h3 class="post-title entry-title"> <a href="http://alianzaliberal.blogspot.com/2011/07/desafios-del-liberalismo-clasico-en-una.html">Desafíos del liberalismo clásico en una era de información</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-372474097973514233"> <div style="font-family: Georgia,"Times New Roman",serif;"><b><span style="font-size: x-large;">Crítica, conversación y creatividad: Desafíos del liberalismo clásico en una era de información </span></b> </div><br /><br /><div class="sintesis">“La evolución de las tecnologías de comunicación tenderá a revolucionar nuestros métodos de generación de contenidos. Quizás deberemos emprender la formulación general de un liberalismo con aceptabilidad pública. Por ahora, dados los riesgos que impone la atracción pública hacia la vanidad de redención absoluta, en la defensa de la crítica y la conversación debemos contemplar todo aquello que permita avanzar los fines de la libertad.”</div><br /><br /><div class="autor">Roberto Salinas León</div><span class="fecha_articulo"></span><br /><div class="submenu"> <table style="margin-top: -3px;" align="right"><tbody> <tr> <td align="right"> <br /></td></tr> </tbody></table></div><div class="style1" align="center">El presente texto forma parte de la colección "Facetas Liberales: Ensayos en honor de Manuel F. Ayau", editado en 2011 por la Universidad Francisco Marroquín y coordinado por Alberto Benegas Lynch (h) y Giancarlo Ibargüen. Asuntos Capitales reproduce este ensayo con autorización tanto del autor como de los coordinadores de la obra.</div><a href="http://www.asuntoscapitales.com/mini.asp?idm=253#_ftn1" name="_ftnref1" title="">[Nota sobre el autor]</a><br /><em>“Modern civilization will not perish unless it does so by its own act of self-destruction. Only inner enemies can threaten it. It can come to an end only if the ideas of liberalism are supplanted by an anti-liberal ideology hostile to social cooperation.”</em> Ludwig von Mises<br /><strong>Introducción</strong><br />Los grandes avances tecnológicos en el mundo de las comunicaciones han generado una explosión de nuevos contenidos y medios más sofisticados para transmitir ideas. En este sentido, el futuro de la información conlleva una gama de nuevas tecnologías que facilitarán enormemente la producción y, sobre todo, la difusión de contenidos y conocimientos. Ciertamente, la causa de consolidar una sociedad abierta, junto con la de articular una defensa efectiva de la libertad y de los principios del liberalismo clásico, también disfrutará de una mayor disponibilidad de tecnologías de comunicación, sin los costos de transacción -como la distancia, el tiempo o las fronteras nacionales, por ejemplo- que tradicionalmente han estado asociados a esta labor. Sin embargo, aún no existe un mecanismo ideal, una “camisa de fuerza dorada”, que limite la naturaleza de contenidos potencialmente transmisibles.<a href="http://www.asuntoscapitales.com/mini.asp?idm=253#_ftn2" name="_ftnref2" title="">[1]</a> Las ideas tienen consecuencias; buenas o malas, liberales o anti-liberales, radicales o en el centro. El reto permanente de defender una sociedad abierta, de exponer de manera convincente los argumentos del liberalismo clásico, sigue siendo una tarea de máxima relevancia para el futuro de la libertad y la conversación civilizada.<br /><br /></div> <div class="jump-link"> <a href="http://alianzaliberal.blogspot.com/2011/07/desafios-del-liberalismo-clasico-en-una.html#more" title="Desafíos del liberalismo clásico en una era de información">Más información »</a> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Publicadas por <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> a la/s <a class="timestamp-link" href="http://alianzaliberal.blogspot.com/2011/07/desafios-del-liberalismo-clasico-en-una.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T10:00:00-07:00">10:00 AM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=3679109554603372635&postID=372474097973514233">0 comentarios</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="http://intermexfreemarket.blogspot.com/email-post.g?blogID=3679109554603372635&postID=372474097973514233" title="Enviar la entrada por correo electrónico"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Etiquetas: <a href="http://alianzaliberal.blogspot.com/search/label/Desaf%C3%ADos%20del%20liberalismo%20cl%C3%A1sico%20en" rel="tag">Desafíos del liberalismo clásico en</a>, <a href="http://alianzaliberal.blogspot.com/search/label/informaci%C3%B3n" rel="tag">información</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="7127852348143644614"></a> <h3 class="post-title entry-title"> <a href="http://alianzaliberal.blogspot.com/2011/07/colombia-las-cifras-verdaderas-sobre-la.html">Colombia: Las cifras verdaderas sobre la violencia en el país</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-7127852348143644614"> <h2 class="post_name" id="post-9100"><span style="font-size:180%;">Colombia: Las cifras verdaderas sobre la violencia en el país </span>– por William Calderón</h2> <div class="post_meta"> </div> <p style="text-align: left;" dir="ltr"><a href="http://www.hacer.org/latam/wp-content/uploads/2011/07/ELNisback.jpg"><img class="alignleft size-full wp-image-9102" title="ELNisback" src="http://www.hacer.org/latam/wp-content/uploads/2011/07/ELNisback.jpg" alt="" height="252" width="336" /></a>Mientras los consultados en las más recientes encuestas se muestran pesimistas en temas tan sensibles como la seguridad, la salud y el empleo, nadie se explica cómo el presidente Santos mantiene tan alta su favorabilidad en las mediciones de opinión. La pregunta se la trasladamos, en La Hora de la Verdad, de Súper, al encuestador Jorge Londoño, de Gallup, quien se salió por la tangente y se despidió sin darnos una respuesta satisfactoria.</p><div style="text-align: left;"> </div><p style="text-align: left;" dir="ltr">En la prensa costeña no se apagan todavía los ecos del rifirrafe que mantuvieron, en Montería, el Presidente de la República y la gobernadora de Córdoba alrededor de las cifras sobre los muertos y heridos que deja la violencia en esa región del litoral atlántico. La mandataria salió airosa al demostrar con datos institucionales que su información no era producto de la imaginación, como lo sugirió el doctor Santos. Tras la visita presidencial, El Meridiano de Córdoba abundó en información gráfica y escrita sobre las víctimas de la ola criminal y en un editorial exigió al gobierno central resultados para frenar la violencia.</p><div style="text-align: left;"> </div><p style="text-align: left;" dir="ltr"> </p><p style="text-align: left;" dir="ltr"><strong>La ofensiva de los terroristas en el sur</strong></p><div style="text-align: left;"> </div><p style="text-align: left;" dir="ltr">El pasado fin de semana, en el sur del país, los insurrectos activaron cargas explosivas en Cali y Buenaventura. Hubo asaltos en Argelia y Jambaló, Cauca, con saldo de muertos y heridos, a pesar de las advertencias que había recibido el gobierno por parte del senador payanés Aurelio Iragorri, a quien también tildó de mentiroso el presidente Santos, en otro desafortunado consejo de seguridad. En San Vicente del Caguán hubo masacre durante el fin de semana. En el departamento del Magdalena –como lo registró el diario que lleva su nombre—se registraron en junio último 56 asesinatos, 30 de ellos ocasionados con armas de fuego. La violencia también hizo presencia en Arboletes, Antioquia; entre las víctimas figura un periodista. Cabe recordar que la guerrilla regresó al Chocó, de acuerdo con una denuncia del gobernador Malcom Ali Córdoba.</p><div style="text-align: left;"> </div><p style="text-align: left;" dir="ltr"> </p><p style="text-align: left;" dir="ltr"><strong>Alarmante ola de inseguridad imperante en Colombia</strong></p><div style="text-align: left;"> </div><p style="text-align: left;" dir="ltr">El Diario del Otún, de Pereira, la tierra natal del ministro de Defensa, Rodrigo Rivera, publicó durante el “puente” festivo un inflamado editorial dando cuenta de la alarmante ola de inseguridad imperante en Colombia. Entre los hechos perturbadores enumerados dejábamos por fuera el regreso del boleteo, la extorsión y el secuestro en Arauca (según Salud Hernández) y los Llanos orientales (de acuerdo con María Isabel Rueda). Y al departamento de Nariño regresó el ELN. Sin embargo, después de este inventario el almirante Cely dice otra cosa muy distinta en El Tiempo. Como que estamos en el gobierno del “tapen, tapen”. El ministro Rivera sostiene que quienes están perpetrando los asaltos y asesinatos de oficiales y suboficiales de la fuerza pública son unos chichipatos. Lo que preocupa es que “esos pobres chichipatos” tengan al país perplejo con la inseguridad que se vive en la nación, ola que se trató de disimular con la innecesaria rueda de prensa ofrecida por el Presidente, en la base militar de Catam.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Publicadas por <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> a la/s <a class="timestamp-link" href="http://alianzaliberal.blogspot.com/2011/07/colombia-las-cifras-verdaderas-sobre-la.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T09:37:00-07:00">9:37 AM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=3679109554603372635&postID=7127852348143644614">0 comentarios</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="http://intermexfreemarket.blogspot.com/email-post.g?blogID=3679109554603372635&postID=7127852348143644614" title="Enviar la entrada por correo electrónico"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Etiquetas: <a href="http://alianzaliberal.blogspot.com/search/label/Colombia%3A%20Las%20cifras%20verdaderas" rel="tag">Colombia: Las cifras verdaderas</a>, <a href="http://alianzaliberal.blogspot.com/search/label/violencia%20en%20el%20pa%C3%ADs" rel="tag">violencia en el país</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="9162047336002728006"></a> <h3 class="post-title entry-title"> <a href="http://alianzaliberal.blogspot.com/2011/07/venezuela-la-hora-final.html">Venezuela: La hora final –</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-9162047336002728006"> <h2 class="post_name" id="post-9223"><span style="font-size:180%;">Venezuela: La hora final –</span> por Pompeyo Márquez</h2> <div class="post_meta"> </div> <p><a href="http://www.hacer.org/latam/wp-content/uploads/2011/07/chavez-enfermo-111.jpg"><img class="alignleft size-full wp-image-9230" title="chavez enfermo 11" src="http://www.hacer.org/latam/wp-content/uploads/2011/07/chavez-enfermo-111.jpg" alt="" height="240" width="360" /></a>Marx encontró una bella metáfora para referirse a ese proceso sociopolítico, cultural y económico que va tejiendo nuevos escenarios históricos casi siempre a redropelo de la voluntad de los hombres y a veces, incluso, contra su expresa voluntad. Engañando a tirios y troyanos y usando los más equívocos, falsos y trastornados mensajeros. Lo llamó “el viejo topo”. Y al trabajo que realiza en el subsuelo de la conciencia colectiva hasta derrumbar todas las falsas certidumbres para permitir el nacimiento de una nueva sociedad lo llamó “su trabajo de zapa”.</p> <p>Súbitamente y de la manera más insólita, pues nadie se lo había siquiera imaginado, el viejo topo hace su trabajo de zapa bajo el resquebrajado cuero seco de esta Venezuela petrolera.</p> <p>Y para terminar de derrumbar el tinglado fantasmagórico de esta sedicente revolución bolivariana y permitir que emerja del trajinado subsuelo de nuestra sociedad la nueva sociedad moderna y globalizada que exigen las circunstancias, se sirve del falso mensajero: un teniente coronel con aspiraciones de eternidad al que el destino, en una siniestra jugarreta, le desemboza de un solo tajo la dolorosa fragilidad de su existencia. La historia lo pilla en offside: fuera de juego. Con su revolución en el cartapacio.</p> <p>Pertenezco a aquellos que creyeron que Hugo Chávez, en esta particular circunstancia, se desempeñaba en el rol de lo que Molière llamara “le malade imaginaire”, el enfermo imaginario. Bajo la mise en scène de Fidel Castro y la producción estelar del G2 cubano.</p> <p>En un operativo que llamé “misión resurrección”. Consistente, tal como lo ha hecho el mayor de los Castro, en desaparecer de la faz del planeta, provocar conmoción pública y reaparecer al filo de la desesperación colectiva para ser recibido en gloria y majestad como el hijo pródigo, ya al borde de la histeria. Tiempo suficiente, además, para volver a empaquetar la mercadería: un lifting, una cirugía estética, un new look para ver si engañaba a Cronos, el Dios del tiempo, el implacable. Ha sido el recurso con el que su íntimo amigo y compañero de aventuras Muammar Gadaffi ha refrescado su imagen, hasta ahora, cuando los dioses del desierto le vuelven la espalda.</p> <p>La realidad parece desmentirme. La realización de la asamblea cumbre de la organización con que el segundo de Fidel Castro imagina el futuro sin la OEA, el CELAC, pautada para el 4 y 5 de julio en la isla de Margarita, jugada maestra de los bolivarianos y del lulista Foro de Sao Paulo con la que pretenden desbancar a los Estados Unidos y al Canadá del tablero político latinoamericano, ha sido cancelada el pasado miércoles 29 de junio. La razón clama a los cielos: Chávez está enfermo. Y no de cualquier minucia propia de personajes estresados – empresarios, artistas, periodistas, productores de televisión, políticos derrotados y jugadores de bolsa – tales como una gastritis, colon irritable, mareos súbitos, torsiones musculares, obesidad y desmayos causados por la acumulación de acosos existenciales. De ninguna manera. Chávez padece de cáncer. Por ahora, según se deduce de las informaciones que traspasando el espeso muro del secretismo propio de regímenes totalitarios han llegado a los medios nacionales e internacionales, no padece de un cáncer terminal y devastador, como los que suelen llevarse a los simples mortales en pocos días con la silbante ráfaga de un guadañazo. Pero no nos llamemos a engaño: un cáncer es un cáncer. No existe un cáncer benigno – ejemplar oxímoron -, como esos malestares que se guardan en el portafolios y nos sorprenden el día de mañana llegando a la oficina. Una acidez pertinaz e insoportable después de días de alcohol, sexo y fatiga.</p> <p>Nadie ha dicho que el cáncer de Chávez, supuestamente de próstata con algún nivel de metástasis en otros órganos vecinos – se habla del hígado y del páncreas, incluso de sus huesos -, se lo llevará al otro mundo de un día al otro. Conozco a muchos que han sobrevivido años y años con un cáncer, de los aviesos y traidores.</p> <p>Pero al día de hoy y a pesar de esa certidumbre debemos reconocer que casi todos quienes sufren de cáncer se invalidan para las grandes aventuras psíquicas, físicas y corporales a las que se sentían llamados. En la inefable pantalla espiritual de sus vidas se asoma la persistente, la tenaz, la aviesa sombra de la más antigua, más amarga y más extenuante de las certidumbres: la de la inmediatez inevitable de la muerte. En esos casos, ese tenue velo de la eternidad con el que convivimos en la sana inconsciencia cotidiana, se rasga como con un relámpago. Murieron las ilusiones.</p> <p>Esto le, nos sucede, además, en el peor y más angustioso de los momentos del proyecto vital que ha convertido en esencia de su vida desde sus tempranos días en la Academia Militar. Le sucede cuando la llamada revolución bolivariana se derrumba en pedazos sin haber dejado a su paso una sola institución, una sola obra, una sola realidad imperecedera.</p> <p>Como suele suceder con regímenes autocráticos sustentado en atributos absolutamente personales y azarosos del autócrata. La única que pudo sobrevivirle, la Constitución, ha sido envilecida, atropellada y ultrajada por sus mismos creadores.</p> <p>En un país que siente animadversión congénita por el orden constitucional y se lo ha pasado pergeñando constituciones – ya van 27, mientras Estados Unidos tiene una con enmiendas e Inglaterra simplemente carece de ella – difícilmente le sobrevivirá más de algunos meses.La asamblea nacional – sea escrito en minúsculas dada su bajeza – es infinitamente más venal, corrupta y despreciable que todas las que la precedieran en estos doscientos años de vida legislativa. Incluso la de Cipriano Castro, sobre la que Rómulo Gallegos escupiera su juvenil y corajudo desprecio hace más de un siglo. Y el partido que se sacó de la manga en medio del aluvión social que lo arrastrara al Poder, el PSUV, se volverá escenario de una guerra a dentelladas por la herencia de los despojos. En suma: estos trece años de despilfarro, desorden, odios, enfrentamientos y esperanzas yacen por los suelos. Tanto, que uno de sus más importantes artífices, el teniente Diosdado Cabello, se ve en la obligación de señalar que sin Chávez, no queda, no quedaría, no quedará absolutamente nada. Como exclama el croupier cuando detiene las apuestas: fin de partie. Para comprender la magnitud de la confesión me imagino un solo escenario: ¿Stalin exclamando que sin Lenin se acabó la revolución bolchevique? Imposible.</p> <p>Aún así, haberse mantenido firmemente montado sobre el alebrestado cimarrón que lo respalda no es poco para un ágrafo teniente coronel al que en la academia militar menospreciaban sin miramientos apodándolo “el loco Chávez”. Haber enfebrecido a un pueblo rebajado a pasto de sus ambiciones ha sido una proeza que pasará a la historia. Como tambiél pasará el hecho insólito y condenable de no dejarle un techo, un pan, un abrigo a pesar de haber contado en una década con la mayor fortuna jamás conocida en la historia de Venezuela desde su descubrimiento. Ni siquiera le entrega una auténtica Nación en la que cobijarse. Sólo un recuerdo vaporoso y difuso que el viento irá esparciendo en el olvido como el sueño de una larga, interminable, pesadillesca noche de verano. Pues todo lo que sobrevive en instituciones, en infraestructura, en desarrollo económico, cultural y social ha sido obra de los cuarenta años que lo precedieran. Y que el más feroz de los embates no ha podido terminar por destruir.</p> <p>Es esencial que las élites lo comprendan y se preparen a actuar en concordancia: Venezuela, desde el 10 de junio de 2011, día en que se le operara en La Habana de un absceso pélvico producto de una prostatectomía, ya es otro país. Chávez no está muerto ni posiblemente lo estará en años. Le ha sucedido algo peor, porque es menos glorioso: se nos ha vuelto súbitamente inútil, obsoleto. Temeroso, frágil y quebradizo. Ya es tarde para parapetar de urgencia una nueva realidad pariendo de la noche a la mañana una revolución armada, socialista, bolchevique, heroica e impoluta como la que naciera en la Sierra Maestra y muriese a poco andar de un brutal totalitarismo caudillesco y autocrático. Tal como lo pretende Adán Chávez, patética y lamentable parodia de Raúl Castro, el comunista de la familia. Nunca segundas partes fueron buenas.</p> <p>La oposición debe descifrar las claves de este nuevo país.</p> <p>Y observar con atención al estado de excepción que se agudiza tras este providencial suceso. Un atentado del destino ha fracturado las bases del Poder caudillesco que sostenía la farsa revolucionaria. Desde luego, y visto en la gran perspectiva del Poder y la Historia, no se trata de mantener la ficción electoral sometiéndola al estrés del apuro y la precipitación. Se trata del aprehender y comprender en toda su magnitud el momento crucial que vivimos, el Kairós (καιρός) que llamaban los griegos: ese instante único e irrepetible por el que se nos cuela lo nuevo, lo inédito en la historia. El problema, así como el desafío, son trascendentales. Se trata de asumir la responsabilidad del Poder y asegurarle a la Nación el futuro cuyas portones acaban de ser abiertos por el viejo topo. Lenin exigió en sus tesis de abril de 1917, cuando la parodia democrático burguesa intentaba gatear, “todo el poder a los soviets”.</p> <p>Llegó la hora de exigir “todo el Poder a la Democracia” y proceder de inmediato al delicado montaje de la transición a la nueva Venezuela.</p> <p>Dios quiera que sea por medios electorales. Y que el fantasma del golpe de Estado que estará rondando las cabezas de los más afiebrados de entre los huérfanos de Chávez, ultima ratio de una revolución que se desbarranca, sea impedido por la sensatez de nuestras élites civiles y uniformadas. La Patria lo demanda. La decisión está en nuestras manos.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Publicadas por <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> a la/s <a class="timestamp-link" href="http://alianzaliberal.blogspot.com/2011/07/venezuela-la-hora-final.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-07-14T09:35:00-07:00">9:35 AM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=3679109554603372635&postID=9162047336002728006">0 comentarios</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="http://intermexfreemarket.blogspot.com/email-post.g?blogID=3679109554603372635&postID=9162047336002728006" title="Enviar la entrada por correo electrónico"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Etiquetas: <a href="http://alianzaliberal.blogspot.com/search/label/Venezuela%3A%20La%20hora%20final%20%E2%80%93" rel="tag">Venezuela: La hora final –</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="9189205852920795667"></a> <h3 class="post-title entry-title"> <a href="http://alianzaliberal.blogspot.com/2011/07/venezuela-centro-operativo-de.html">Venezuela: Centro operativo de terrorismo</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-9189205852920795667"> <h2 class="post_name" id="post-9208"><span style="font-size:180%;">Venezuela: Centro operativo de terrorismo</span> – por Adolfo R. Taylhardat</h2> <div class="post_meta"> </div> <p><a href="http://www.hacer.org/latam/wp-content/uploads/2011/07/IranChavezBrotherhood.jpg"><img class="alignleft size-full wp-image-9211" title="IranChavezBrotherhood" src="http://www.hacer.org/latam/wp-content/uploads/2011/07/IranChavezBrotherhood.jpg" alt="" height="265" width="375" /></a>La semana pasada el Comité de Seguridad Nacional de la Cámara de Representantes del Congreso de los Estados Unidos inició una investigación acerca de las actividades de apoyo al terrorismo que tienen lugar en América Latina. En una audiencia de ese Comité, en la cual participaron congresistas y expertos en cuestiones de terrorismo, trascendió que elementos vinculados al Hezbollah y ciudadanos venezolanos de origen árabe participan en labores de reclutamiento y entrenamiento para la realización de ataques terroristas y que una base central operativa para esa actividad se encuentra en la Isla de Margarita.</p> <p>La investigación en el Congreso de los Estados imprime al tema un carácter sumamente delicado y coloca a nuestro país en una posición comprometedora porque el asunto está siendo considerado como una situación que podría constituir “una seria amenaza para la seguridad de los Estados Unidos”.</p> <p>Según los expertos que participan en esa investigación, en América Latina se encuentran activos alrededor de 80 operativos de Hezbollah, principalmente en Venezuela y Brasil.</p> <p>Roger Noriega, quien hasta hace poco desempeñó el cargo de Secretario para Asuntos Latinoamericanos en el Departamento de Estado y participa en la investigación como uno de los expertos en el tema, señaló que régimen venezolano “tiene un récord de apoyar a narcoterroristas colombianos, ha cooperado con Irán para proveer apoyo político, financiamiento o armas a Hezbollah, Hamas o la palestina Jihad Islámica en este hemisferio y otras partes” Afirma además que la isla de Margarita “ha eclipsado a la infame área de la Trifrontera – la región donde Brasil, Argentina y Paraguay coinciden en Sur América- como el principal refugio y centro de las operaciones de Hezbollah en las Américas”.</p> <p>Según informaciones proporcionadas durante la audiencia “Uno de los líderes claves de Hezbollah, es el segundo funcionario en importancia en la embajada de Venezuela en Siria”, el venezolano originario de Líbano, Ghazi Atef Salameh Nassereddine Abu Ali, quien supuestamente dirige, “junto a dos de sus hermanos, una red de lavado de dinero y reclutamiento, que entrena operativos para expandir la influencia de Hezbollah en Venezuela y en toda América Latina”. Nassereddine figura, desde el año 2008 en la lista de personas que apoyan el terrorismo internacional elaborada por el Departamento del Tesoro de los Estados Unidos. También se afirmó en la audiencia que Oday, el hermano menor de Nassereddine, “ha establecido en Venezuela “una base en la cual se organizan operaciones de entrenamiento en la Isla de Margarita, y actualmente está reclutando seguidores a través de los Círculos Bolivarianos en Barquisimeto”.</p> <p>Ya el periodista español Antonio Salas, en su libro “El Palestino”, publicado recientemente, había ofrecido testimonios acerca de la existencia en Venezuela de campos de entrenamiento en los cuales las FARC, ETA, Hezbollah y otros grupos terroristas realizan actividades de entrenamiento de sus efectivos. Según Salas, quien se hizo pasar como un palestino-venezolano partidario de la jihad y logró penetrar esos grupos, solamente en los alrededores de Caracas existen seis campamentos de entrenamiento de terrorismo. Los testimonios de Salas están respaldados con una serie de fotografías y videos, que están disponibles en Internet.</p> <p>El libro de Salas habría sido <em>notitia criminis</em> más que suficiente como para que la fiscalía emprendiera una investigación sobre esas graves y comprometedoras revelaciones. Sin embargo, como ocurre siempre con situaciones que involucran al régimen, el tema ha sido olímpicamente ignorado por las autoridades que deberían tomar cartas en el asunto.</p> <p>Seguramente la investigación del parlamento norteamericano recibirá el mismo tratamiento, sazonado con calificativos peyorativos y hasta soeces, como es la conducta habitual del régimen.</p> <p>Sin embargo, no está lejos el momento en que la actual administración tendrá que rendir cuenta a los venezolanos y a la comunidad internacional por esta conducta que constituye una grave falta a los compromisos internacionales del país. Además infringe decisiones expresas del Consejo de Seguridad de las Naciones Unidas e involucran a Venezuela como país y a personeros del gobierno en actividades contrarias a la esencia fundamental de nuestra nación, implicándola en situaciones que por su propia naturaleza generan riesgos claros e inminentes para la soberanía nacional.</p></div></div></div>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-56519744372309019552011-06-30T16:57:00.001-07:002011-06-30T16:57:32.949-07:00<h2 class="date-header"><span>Thursday, June 30, 2011</span></h2> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="4100691512939170288"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/collars-for-dollars.html">Collars for Dollars</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-4100691512939170288"> <div class="post-options"> <a href="http://reason.com/archives/2011/06/29/collars-for-dollars/print" class="printer" rel="alternate">Print</a><span class="pipe">|</span><a href="http://reason.com/archives/2011/06/29/collars-for-dollars/email" class="emailer">Email</a> </div> <h2><span style="font-size:180%;"><a href="http://reason.com/archives/2011/06/29/collars-for-dollars">Collars for Dollars</a></span></h2> <h3>How the drug war sacrifices real policing for easy arrests.</h3> <p class="byline"><span><a href="http://reason.com/people/peter-moskos" rel="author">Peter Moskos</a> </span></p> <div class="google-ad"> <div id="google_ads_div_inner1_ad_container"> When I was a police officer in Baltimore, one sergeant would sometimes motivate his troops in the middle of a shift change by joyfully shouting, “All right, you maggots! Let’s lock people up! They don’t pay you to stand around. I want production! I want lockups!” He said this while standing in front of a small sign he most likely authored: “Unlike the citizens of the Eastern District, you are required to work for your government check.”</div> </div> <p>In the police world, there are good arrests and better arrests, but there is no such thing as a bad arrest. In recent years, measures of “productivity” have achieved an almost totemic significance. And because they are so easy to count, arrests have come to outweigh more important but harder-to-quantify variables such as crimes prevented, fights mitigated, or public fears assuaged.</p> <p>There’s an argument that putting pressure on rank-and-file officers to make lots of arrests is a good thing. After all, we pay police to arrest criminals. But there’s a difference between quantity and quality. Quantity is easy to influence, and the rank and file can easily increase their output of discretionary arrests for minor offenses like loitering, disorderly conduct, and possession of marijuana. They are also influenced by what is known in New York as “collars for dollars”: Arrest numbers are influenced by the incentive of overtime pay for finishing up paperwork and appearing in court.</p> <p>Police would love to arrest only “real” criminals, but that isn’t easy. It’s difficult to find a good criminal. There’s never a felon around when you need one. Fishing for low-level drug arrests is a far easier way to generate overtime.</p> <p>When I worked in Baltimore, officers would pull up on a drug corner and stop the slowest addict walking away. While conducting a perfectly legal “Terry Frisk”—a cursory search nominally conducted for officer safety—cops would feel some drugs in a pocket. That easy arrest and lockup likely meant two hours of overtime pay.</p> <p>In some cities, like New York, it’s trickier. Overtime for court testimony is harder to get, and the state’s highest court has ruled—precisely to prevent the Baltimore-style approach—that feeling drugs during a Terry Frisk does not allow an officer to search that pocket and remove those drugs. The court reasoned that the drugs are not a threat to the officer’s safety, and safety is the only justification for these sorts of frisks.</p> <p>In New York state, small-scale possession of marijuana is virtually decriminalized. It’s not even an arrestable offense. But police in need of overtime are nothing if not wily. So a group of officers might approach a man in a high-crime neighborhood and, in no uncertain terms, “ask” him to empty his pockets. Fearful, resigned, or simply taking the path of least resistance, the suspect might do so, and in the process he might reveal a small “dime bag” of weed. While <em>possessing</em> that amount of marijuana is not an arrestable offense, it becomes one as soon as the drug is placed in “public view.”</p> <p>Supporters sometimes say these small-scale drug arrests are part of a “broken windows” approach to preventing crime. This tactic comes from an influential 1982 <em>Atlantic</em> magazine article by George Kelling and James Q. Wilson that combined the 19th century police theories of Robert Peel with the 20th century urban philosophy of Jane Jacobs. The idea is that if you take care of the little things—disorder, quality-of-life issues, and public fear—then the big things like robbery and murder will take care of themselves.</p> <p>Since Police Commissioner William Bratton implemented a broken windows policing strategy in the early 1990s, homicides in New York dropped more than 80 percent. But the crime didn’t drop because police were cracking down on drug users; overall, illegal drug use is as high as ever. When the murder rate was falling fastest in the 1990s, police never arrested more than a few thousand people per year for public-view marijuana. Only after the crime drop <em>slowed</em> did police turn to small-scale drug arrests to meet their “productivity goals.” It’s as if real criminals became too difficult to find, and the addiction to overtime pay remained strong as ever.</p> <p>Last year in New York City, 50,300 people—mostly young black and Hispanic men—were arrested solely for misdemeanor “public-view” possession of marijuana. It’s true that some may have been up to no good. And some might have been walking down the street proudly smoking a spliff in front of the police. But nobody really believes this accounts for most of those 50,300 lockups. Many were people just going about their business, intending to smoke later, in private, in the very manner the law was intended to decriminalize.</p> <p>“What is it with the drugs?” a man once asked me while I was policing a 7-11 for coffee, “When there’s shootin’ or fightin’, you don’t seem to care! But when there’s drugs, you come right away.” It’s a fair question to ask. Why do we do it? What do we gain? Especially when we know drug arrests are expensive and turn a lot of otherwise law-abiding citizens into cop-hating criminals?</p> <p>The drug war, because it can’t be won, encourages outward signs of police effectiveness at the expense of good old-fashioned policing. Hard-working cops, especially those who ask for little more than a middle-class income in return for the dangerous work they do, turn to drug arrests to make ends meet. The Baltimore sergeant was right: Police officers do need to work for their government check. It’s a shame “collars for dollars” has become the easiest way to do it. </p> <em><a href="mailto:moskos@gmail.com">Peter Moskos</a> (moskos@gmail.com), a former Baltimore police officer, is an assistant professor of law and political science at John Jay College of Criminal Justice, The City University of New York's Doctoral Program in Sociology, and LaGuardia Community College's Department of Social Science. He is the author of In Defense of Flogging (2011) and Cop in the Hood: My Year Policing Baltimore's Eastern District (2008)</em> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/collars-for-dollars.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T16:07:00-07:00">4:07 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=4100691512939170288">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=4100691512939170288" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=4100691512939170288&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Labels: <a href="http://mexicanfreezone.blogspot.com/search/label/Collars" rel="tag">Collars</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/for%20Dollars" rel="tag">for Dollars</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="301910057600035633"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/big-daddy.html">Big Daddy</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-301910057600035633"> <h2><span style="font-size:180%;"><a href="http://reason.com/archives/2011/06/29/big-daddy">Big Daddy</a></span></h2> <h3>The government should let parents regulate their children's entertainment.</h3> <p class="byline"><span><a href="http://reason.com/people/jacob-sullum" rel="author">Jacob Sullum</a> |</span></p> <div class="google-ad"> <div id="google_ads_div_inner1_ad_container"> When it comes to monitoring their children's media diets, some parents worry about sex, while others worry about violence. I worry more about inane sitcoms featuring smart-alecky kids and dumb adults, which is why I have blocked the Disney channel.</div> </div> <p>Different parents have different standards, and the same parents are likely to have different standards for different children, depending on their age, maturity, and personality. Because of this diversity, policies that aim to bolster parental authority by restricting minors' access to material the government deems inappropriate, such as the California video game law that the Supreme Court <a href="http://www.nytimes.com/2011/06/28/us/28scotus.html">overturned</a> this week, would be doomed to fail even if they did not violate the First Amendment.</p> <p>California's law made selling or renting a "violent video game" to a minor a civil offense punishable by a $1,000 fine. It covered games "in which the range of options available to a player includes killing, maiming, dismembering, or sexually assaulting an image of a human being," depicted in a way that "a reasonable person, considering the game as a whole, would find appeals to a deviant or morbid interest of minors," that is "patently offensive to prevailing standards in the community as to what is suitable for minors," and that "causes the game, as a whole, to lack serious literary, artistic, political, or scientific value for minors."</p> <p>The thing about reasonable people, of course, is that they may disagree, especially on such abstruse issues as whether a video game appeals to a minor's "deviant or morbid interest," whatever that might be. "Prevailing standards in the community," which determine what is "patently offensive," are likewise a matter of dispute. Pretending that everyone in California agrees about "what is suitable for minors," or sees eye to eye on the redeeming value of violent entertainment, does not make it so.</p> <p>The one thing all parents probably do agree on is that teenagers should not be treated like toddlers. Yet that is what California's legislators decided to do, decreeing one (indeterminate) standard for everyone under 18. The industry's <a href="http://www.esrb.org/index-js.jsp">game ratings</a>, by contrast, draw six distinctions based on age and use 30 "content descriptors" to indicate the nature of potentially objectionable material.</p> <p>Since parents can use these ratings to regulate what their children play (and can even use system settings to block games with certain ratings), what was the motivation for California's law? "California cannot show that the Act's restrictions meet a substantial need of parents who wish to restrict their children’s access to violent video games but cannot do so," the Supreme Court <a href="http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&navby=case&vol=000&invol=08-1448"> concluded</a>.</p> <p>"Not all of the children who are forbidden to purchase violent video games on their own have parents who <em>care</em> whether they purchase violent video games," Justice Antonin Scalia noted in the majority opinion, questioning the premise that "punishing third parties for conveying protected speech to children <em>just in case</em> their parents disapprove of that speech is a proper governmental means of aiding parental authority." He suggested that the main effect of the law was to enforce "what the State thinks parents <em>ought</em> to want"—the opposite of respecting parental authority.</p> <p>On the same day the Court overturned California's video game law, it <a href="http://www.nytimes.com/2011/06/28/business/media/28fcc.html">agreed</a> to consider a First Amendment challenge to the federal ban on broadcast indecency, another policy that imposes government-determined standards of propriety in the name of helping parents protect their children. It features the same sort of constitutionally problematic vagueness and subjectivity yet applies to adults as well as minors, banning "patently offensive" material related to sex or excretion between 6 a.m. and 10 p.m.</p> <p>Like California's law, which arbitrarily distinguished between video games and other forms of violent entertainment, the indecency ban is "wildly underinclusive," applying to broadcast TV and radio but not to programming carried by cable, satellite, or the Internet. In both cases the solution is not to expand the government's cultural regulations but to privatize them by letting people raise their own children.</p> <em><em><a href="mailto:jsullum@reason.com">Jacob Sullum</a> is a senior editor at</em></em> Reason <em><em>and a nationally syndicated columnist</em></em> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/big-daddy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T16:01:00-07:00">4:01 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=301910057600035633">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=301910057600035633" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=301910057600035633&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Labels: <a href="http://mexicanfreezone.blogspot.com/search/label/Big%20Daddy" rel="tag">Big Daddy</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="4193634426968799207"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/unseen-war-on-american-farms.html">The Unseen War on American Farms</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-4193634426968799207"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/unseen-war-on-american-farms.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T16:00:00-07:00">4:00 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=4193634426968799207">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=4193634426968799207" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=4193634426968799207&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="2726038831959007925"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/stephen-colbert-lampoons-first.html">Stephen Colbert Lampoons the First Amendment</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-2726038831959007925"> <h2><span style="font-size:180%;"><a href="http://reason.com/archives/2011/06/30/stephen-colbert-lampoons-the-f">Stephen Colbert Lampoons the First Amendment</a></span></h2> <h3>The Comedy Central host receives government approval to form a political action committee.</h3> <p class="byline"><span><a href="http://reason.com/people/jeff-patch" rel="author">Jeff Patch</a> |<br /></span></p> <div class="google-ad"> <div id="google_ads_div_inner1_ad_container"> Comedy Central host Stephen Colbert took his vaudeville routine to the Federal Election Commission (FEC) Thursday morning. He emerged from the choreographed hearing with approval from the agency to form what’s called a super PAC, an entity that may raise and spend unlimited funds to blast or boost federal candidates.</div> </div> <p>Steve Dingledine, a 43-year-old Washington resident, arrived at 5:45 a.m. to catch a glimpse of the faux-newsman. Colbert is a “court jester par excellence,” Dingledine declared, but he said he also hopes that the comedian's shtick will shift public opinion. “The awareness is going to be raised to a point where the loophole cannot be exploited by media companies,” the Colbert groupie said.</p> <p>What advocates of strict campaign finance regulation call a “loophole,” others call protected political speech under the First Amendment. In May, Colbert submitted an advisory opinion request through an attorney asking the FEC to sanction his political action committee.</p> <p>The central question was whether Comedy Central’s corporate parent company, Viacom, had to report administrative assistance to the PAC and potential payments to air political ads on other television stations. FEC lawyers submitted three different drafts responding to Colbert, and the agency ultimately approved a compromise version allowing Colbert to claim the “press exemption” to campaign finance law. Viacom must therefore report PAC involvement not relating to the late-night program, including logistical support for the PAC and advertising placement on other networks.</p> <p>Inside the packed hearing room, Colbert’s request didn’t sound like an effort to open a loophole for laughs. A subdued Colbert was nearly mute as his lawyer, Trevor Potter, blandly answered commissioners’ questions with only brief interjections from his client. After all the hype, Colbert’s appearance seemed anti-climatic, in contrast to his cheering fans waiting outside.</p> <p>By 9:30 a.m., more than 30 of those fans were standing in line, along with a few campaign finance lawyers and Capitol Hill staffers. Six “coordinators” clad in red t-shirts reading “COLBERT SUPER PAC” arrived with signs to energize the crowd. Four Department of Homeland Security officers, who were there to provide security, told the redshirts that no “signs or protests were allowed” in the FEC hearing room. The redshirts assured the police that they planned to remain on the sidewalk’s de facto free speech zone.</p> <p>Back inside, only one of the six commissioners broke with his colleagues to question the wisdom of the two-tiered set of rules for media corporations and other companies. Don McGahn, an iconoclastic Republican, challenged the authority of the commission to decide who gets a government-approved press license in an age of creative destruction in the media industry.</p> <p>The FEC has grappled with the definition of <em>the press</em> for decades. In 1980, the FEC investigated <em>Reader’s Digest</em> for making an “illegal corporate expenditure to negatively influence” the 1980 presidential election after the magazine distributed a video reenactment of the Chappaquiddick car wreck involving then-candidate Sen. Edward Kennedy (D-Mass.). After a long investigation, the case was dismissed in 1981.</p> <p>Almost 20 years later, the FEC granted a media exemption to the conservative advocacy group Citizens United, which meant the Republican-leaning group no longer had to disclose its spending on certain production expenses. Citizens United was the plaintiff in the blockbuster 2010 Supreme Court case holding that the government may not restrict the independent speech of companies and advocacy groups. If Citizens United need not disclose its spending on documentaries and certain ads as a press entity, why should Viacom and Colbert have to?</p> <p>“Commentary is a slippery concept, and I’m having trouble being the one who decides what is commentary and what is not commentary. We’re in an interesting era now, post-<em>Citizens United</em>,” McGahn said, citing bloggers and other non-traditional journalists. McGahn also rejected the notion that corporations gained First Amendment rights in <em>Citizens United</em>, arguing that media corporations have long enjoyed the unfettered ability to engage in political advocacy through editorial boards and TV talking heads.</p> <p>Campaign finance lawyers have speculated that the FEC’s advisory opinion may spur FOX News or Current TV, an Al Gore-owned network featuring former MSNBC host Keith Olbermann, to engage in politics through the super PAC model. McGahn registered his objections by voting unanimously with his colleagues to approve one version of the advisory opinion but withholding his vote from the final version that the FEC officially approved.</p> <p>Colbert mingled with FEC commissioners and staff in a conference room during a brief recess after the vote. An agency lawyer, who chatted with Colbert in the men’s restroom, asked the comedian about the mass of people waiting for him outside the building. “There are a lot of crazy people out there,” he replied. Colbert emerged from the building just before 11 a.m. to address a throng of 150 or so of those crazies, plus gawking journalists and “federal employees with extremely generous lunch break policies,” as he put it.</p> <p>“Hello freedom lovers! I am here to represent your voice, so please quiet down so we can all hear what you have to say with my mouth,” he said during the three-minute press conference. “There will be [those] that say, ‘Stephen Colbert, what will you do with that unrestricted Super PAC money?’ To which I say, ‘I don’t know. Give it to me and let’s find out.’”</p> <p>Colbert finished with a fundraising pitch to prime the pump of his super PAC.</p> <p>“I don’t know about you, but I do not accept limits on my free speech!” said Colbert, who was chauffeured by an ethanol-guzzling Cadillac. “I do not accept the status quo! I do accept Visa, MasterCard, and American Express—$50 or less please, because then I don’t have to keep a record of who gave it to me.”</p> <em>Jeff Patch is a writer and political consultant based in Alexandria, Virginia</em> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/stephen-colbert-lampoons-first.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T15:56:00-07:00">3:56 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=2726038831959007925">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=2726038831959007925" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=2726038831959007925&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Labels: <a href="http://mexicanfreezone.blogspot.com/search/label/First%20Amendment" rel="tag">First Amendment</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/Lampoons" rel="tag">Lampoons</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/Stephen%20Colbert" rel="tag">Stephen Colbert</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="7591303905244362294"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/nick-gillespie-and-matt-welch-discuss.html">Nick Gillespie and Matt Welch Discuss the End of the Two-Party System wi...</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-7591303905244362294"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/nick-gillespie-and-matt-welch-discuss.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T15:54:00-07:00">3:54 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=7591303905244362294">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=7591303905244362294" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=7591303905244362294&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="1936013106703964090"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/nick-gillespie-discusses-declaration-of.html">Nick Gillespie Discusses The Declaration of Independents on Fox News' Re...</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-1936013106703964090"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/nick-gillespie-discusses-declaration-of.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T15:53:00-07:00">3:53 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=1936013106703964090">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=1936013106703964090" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=1936013106703964090&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="8275186558239221969"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/mayor-ed-koch-on-rent-control.html">Mayor Ed Koch on rent control</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-8275186558239221969"> <h2><a href="http://reason.com/blog/2011/06/29/reasontv-mayor-ed-koch-on-rent">Reason.tv: Mayor Ed Koch on rent control, his sexuality, Andrew Cuomo, and how he helped save New York</a></h2> <p class="byline"><span><a href="http://reason.com/people/jim-epstein" rel="author">Jim Epstein</a> & <a href="http://reason.com/people/nick-gillespie" rel="author">Nick Gillespie</a> | June 29, 2011</span></p><p class="byline"><span><br /></span></p> <div class="entry"><p> </p> <p>In 1978, New York City was crumbling and the leading indicator of America's seemingly irreversible decline. The South Bronx, once a thriving middle-class neighborhood, had became a national symbol of urban horror. From 1960 to 1980, New York's murder rate tripled. Out-of-control spending had brought the city to the brink of bankruptcy, leading to a state takeover of its finances. The city's subway was plauged by crime, graffiti, and equipment breakdowns.</p> <p>On July 13th, 1977, the city reached its nadir when a 24-hour blackout gave way to mass looting. Bushwick, a working-class neighborhood in Brooklyn, was practically burned to the ground.</p> <p>Then in 1978, Edward Irving Koch became New York's 105th Mayor.</p> <p>A veteran congressman from Manhattan, Koch’s chutzpah was exactly what the city needed. A self-proclaimed "liberal with sanity," Koch took on special interests, he put the city’s finances back in order, and showed that it was not only possible to govern but to have fun doing it.</p> <p>Koch gained a national reputation by being the quintessential New Yorker: A Bronx-born ethnic whose disparaging remarks about life outside the city may well have sunk his 1981 bid for the governor’s mansion in Albany. Long presumed to be gay, Koch kept mum about his personal life while pushing for social tolerance. His symbolic and practical role in the Big Apple's multi-decade renaissance is as huge as his appetite for publicity.</p> <p>Since losing his bid for a fourth term in 1989, Koch has been a tireless dilettante. He’s written books and hosted his own radio show. He was Judge Wapner’s first replacement on the People’s Court. He started a <a href="http://www.nyuprising.org/">nonprofit</a> to clean up corruption in the state capital. He turned his passion for film into an avocation as a movie reviewer, first for a community paper called the <a href="http://westsidespirit.com/">West Side Spirit</a>, and now on the YouTube Channel, <a href="http://www.youtube.com/user/mayoredkoch">The Mayor at the Movies</a>.</p> <p>Reason.tv's Nick Gillespie sat down with Mayor Koch at his office in Midtown in April 2011 for a wide ranging discussion about rent control, the Tea Party, Donald Trump, his sexuality, whether Gov. Andrew Cuomo coined the phrase "Vote for Cuomo not the Homo," his memories of World War II, and how he "gave New York City back its morale" (as the late Sen. Daniel Moynihan put it).</p> <p>Approximately 18 minutes.</p> <p>Produced, shot, and edited by Jim Epstein, with help from Lucas Newman. Additional camera by Anthony Fisher.</p> <p>Go to <a href="http://reason.com/admin/pages/Reason.tv">Reason.tv</a> for downloadable versions, and subscribe to <a href="http://www.youtube.com/user/ReasonTV">Reason.tv's YouTubeChannel</a> to receive notifications when new content goes live.</p></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/mayor-ed-koch-on-rent-control.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T15:42:00-07:00">3:42 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=8275186558239221969">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=8275186558239221969" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=8275186558239221969&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Labels: <a href="http://mexicanfreezone.blogspot.com/search/label/Mayor%20Ed%20Koch" rel="tag">Mayor Ed Koch</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/rent%20control" rel="tag">rent control</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="4303355204440446363"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/nanny-state-propaganda.html">Nanny State Propaganda</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-4303355204440446363"> <div class="entry"><h2><span style="font-size:180%;"><a href="http://reason.com/archives/2011/06/29/nanny-state-propaganda">Nanny State Propaganda</a></span></h2> <h3>How long before the government places graphic warning labels on junk food?</h3> <span><a href="http://reason.com/people/a-barton-hinkle" rel="author">A. Barton Hinkle</a> </span><p>Don’t get too used to those graphic new cigarette warnings Washington regulators unveiled last week. They’re going to disappear one way or the other.</p> <p>The courts might throw them out on First Amendment grounds. That seems unlikely. But if the judicial branch doesn’t get rid of them, the executive branch will. Not because it decided they were too repulsive. No, federal authorities plan to update the warning labels to keep the shock value fresh.</p> <p>"We’ll begin . . . studies to make sure that we are keeping people sensitized," says Health and Human Services Secretary Kathleen Sibelius. "What may seem quite shocking at the beginning, people get used to quite quickly." So if people build up a tolerance for the repulsive, the FDA will amp the dial up to grotesque.</p> <p>Although the placement of graphic warning labels on commercial products is novel in the U.S., government’s use of the gross-out is nothing new. Wartime propaganda posters of an earlier age routinely depicted the enemy as monstrous beasts to be slain or subhuman bugs to be exterminated.</p> <p>Of course, no one backing the new warning labels would call them propaganda. Rather, the FDA’s Lawrence Deyton says, "We are trying to communicate accurate, truthful information about the health impact of smoking, to allow consumers to be informed."</p> <p>That is a lie. The old warnings—informing buyers that cigarettes cause cancer, and so forth—conveyed information. The new labels are designed to provoke a reaction in that lizard part of your brain thoughts never reach. A warning on a ladder that reads, "Caution: Improper use could lead to serious injury from falling" conveys information. A graphic photo of a compound tibia fracture conveys only sentiment.</p> <p>It’s the kind of cheap trick you could play with just about anything. Take exercise. Sporting-equipment companies glamorize it just as cigarette companies glamorize smoking, with beautiful idols looking too cool for school as they engage in the activity. But you could de-glamorize exercise in a hurry by forcing people to view pictures of dislocated shoulders, torn ligaments, and genitals covered in raging cases of jock itch.</p> <p>Since the gross-out is cross-functional, it’s reasonable to ask when the federal government will start showing us disgusting pictures on packages of food, in which Washington also takes a keen interest. Indeed, someone asked Sibelius that very question during a press conference about the cigarette labels. Her response was evasive. Food labels are voluntary, she said. And tobacco is unique because smoking is "the No. 1 cause of preventable death."</p> <p>It won’t be No. 1 forever. Obesity is gaining ground fast. Sibelius says smoking imposes "$200 billion a year in health costs." According to the Centers for Disease Control, obesity costs the U.S. about $150 billion. Ergo, Sibelius says the government has an interest in food because "it has a lot to do with underlying health costs and [the] overall health of our nation. . . . The work around obesity and healthier, more nutritious eating" will be "an ongoing focus."</p> <p>Do tell. Already the federal government has organized an Interagency Working Group on Food Marketed to Children in "an effort to combat childhood obesity – the most serious health crisis facing today’s youth."</p> <p>The working group—comprising the FTC, the CDC, the FDA, and the Agriculture Department—already has proposed that food companies either (a) change their child-centered products to make them healthier or (b) lose the right to advertise them. The proposal is ostensibly voluntary. But then so is paying the Mafia protection money not to burn down your store.</p> <p>In brief, the arc of food regulation seems to be following the arc of tobacco regulation: "voluntary" measures imposed "for the sake of the children" at first—followed by less voluntary, more comprehensive regulation undertaken for the sake of the common good, defined in both public-health terms and public-finance terms. What’s more, the same assumption holds in both cases: The government should direct personal behavior that has any effect on other people. Since any behavior can be said to affect somebody else in some way, this is a recipe for a government of infinite scope.</p> <p>Two days after Washington unveiled its new warning labels for cigarette packages, the <em>New England Journal of Medicine</em> published a study reporting that our food choices influence our weight more than exercise does. And potato chips pack on the pounds faster than any other food, including candy and desserts.</p> <p>The logic of Washington’s new cigarette warning labels holds that government should frighten people away from consumer goods that impose social costs. If we apply that consistently, then there is no reason federal regulators should not adorn bags of potato chips with garish photos of morbidly obese corpses, cutaways of clogged ateries, or glistening mounds of fatty tissue hacked out of cadavers.</p> <p>If that doesn’t slim America down enough, then perhaps Washington also will make everybody exercise for an hour a day. The idea sounds laughably implausible now. So what? As Secretary Sibelius says: "What may seem quite shocking at the beginning, people get used to quite quickly."</p> <p> <em>A. Barton Hinkle is a columnist at the Richmond Times-Dispatch. This article <a href="http://www2.timesdispatch.com/news/rtd-opinion/2011/jun/28/tdopin02-hinkle-want-to-see-a-corpse-on-a-can-of-p-ar-1136851/"> originally appeared</a> at the Richmond Times-Dispatch.</em> </p></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/nanny-state-propaganda.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T15:40:00-07:00">3:40 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=4303355204440446363">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=4303355204440446363" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=4303355204440446363&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Labels: <a href="http://mexicanfreezone.blogspot.com/search/label/Nanny%20State" rel="tag">Nanny State</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/Propaganda" rel="tag">Propaganda</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry uncustomized-post-template"> <a name="7053894932649716848"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/stimulus-to-nowhere.html">Stimulus to Nowhere</a> </h3> <div class="post-header"> </div> <div class="post-body entry-content" id="post-body-7053894932649716848"> <div class="entry"><h2><span style="font-size:180%;"><a href="http://reason.com/archives/2011/06/30/stimulus-to-nowhere">Stimulus to Nowhere</a></span></h2> <h3>The failure of Obama's economic agenda</h3> <span><a href="http://reason.com/people/steve-chapman" rel="author">Steve Chapman</a> |</span><p>Mired in excruciating negotiations over the budget and the debt ceiling, President Barack Obama might reflect that things didn't have to turn out this way. The impasse grows mainly out of one major decision he made early on: pushing through a giant stimulus.</p> <p>When he took office in January 2009, this was his first priority. The following month, Obama signed the American Recovery and Reinvestment Act, with a price tag eventually put at $862 billion.</p> <p>It was, he said at the time, the most sweeping economic recovery package in our history," and would "create or save three and a half million jobs over the next two years."</p> <p>The president was right about the first claim. As a share of gross domestic output, it was the largest fiscal stimulus program ever tried in this country. But the second claim doesn't stand up so well. Today, total nonfarm employment is down by more than a million jobs.</p> <p>What Obama didn't foresee is that his program would spark a populist backlash and give rise to the tea party. Where would Michele Bachmann be if the stimulus had never been enacted—or if it had been a brilliant success?</p> <p>To say it has not been is to understate the obvious. The administration says the results look meager because the economy was weaker than anyone realized. Maybe so, but fiscal policy is a clumsy and uncertain tool for stimulating growth, which the past two years have not vindicated.</p> <p>The package had three main components: tax cuts, aid to state governments, and spending on infrastructure projects. Tax cuts would induce consumers to buy stuff. State aid would prop up spending by keeping government workers employed. Infrastructure outlay would generate hiring to build roads, bridges, and other public works.</p> <p>That was the alluring theory, which vaporized on contact with reality. The evidence amassed so far by economists indicates that the stimulus has come up empty in every possible way.</p> <p>Consider the tax cuts. Wage-earners saw their take-home pay rise as the IRS reduced withholding. But as with past rebates and one-time tax cuts, consumers proved reluctant to perform their assigned role.</p> <p>Claudia Sahm of the Federal Reserve Board and Joel Slemrod and Matthew Shapiro of the University of Michigan found that only 13 percent of households indicated they would spend most of the windfall. The rest said they preferred to put it in the bank or pay off debts—neither of which boosts the sale of goods and services.</p> <p>This puny yield was even worse than that of the 2008 tax rebate devised by President George W. Bush. Neither attempt, the study reported, "was very effective in stimulating spending in the near term."</p> <p>The idea behind channeling money to state governments is that it would reduce the paring of government payrolls, thus preserving the spending power of public employees. But the plan went awry, according to a paper by Dartmouth College economists James Feyrer and Bruce Sacerdote published by the National Bureau of Economic Research.</p> <p>"Transfers to the states to support education and law enforcement appear to have little effect," they concluded. Most likely, they said, states used the money to avoid raising taxes or borrowing money.</p> <p>That's right: The federal government took out loans that it will have to cover with future tax increases ... so states don't have to. It's like paying your Visa bill with your MasterCard.</p> <p>The public works component could have been called public non-works. It sounds easy for Washington to pay contractors to embark on "shovel-ready projects" that needed only money to get started. The administration somehow forgot that even when the need is urgent, the government moves at the speed of a glacier.</p></div> <strong>Page:</strong> <b>1</b> <a href="http://reason.com/archives/2011/06/30/stimulus-to-nowhere/1">2</a> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"> <span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://mexicanfreezone.blogspot.com/2011/06/stimulus-to-nowhere.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T15:38:00-07:00">3:38 PM</abbr></a> </span> <span class="reaction-buttons"> </span> <span class="star-ratings"> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4917525600192633972&postID=7053894932649716848">0 comments</a> </span> <span class="post-backlinks post-comment-link"> </span> <span class="post-icons"> <span class="item-action"> <a href="email-post.g?blogID=4917525600192633972&postID=7053894932649716848" title="Email Post"> <img alt="" class="icon-action" src="http://img1.blogblog.com/img/icon18_email.gif" height="13" width="18" /> </a> </span> <span class="item-control blog-admin pid-1376315960"> <a href="post-edit.g?blogID=4917525600192633972&postID=7053894932649716848&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <div class="post-share-buttons goog-inline-block"> </div> </div> <div class="post-footer-line post-footer-line-2"> <span class="post-labels"> Labels: <a href="http://mexicanfreezone.blogspot.com/search/label/economic%20agenda" rel="tag">economic agenda</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/failure" rel="tag">failure</a>, <a href="http://mexicanfreezone.blogspot.com/search/label/Obama%27s" rel="tag">Obama's</a> </span> </div> <div class="post-footer-line post-footer-line-3"> <span class="post-location"> </span> </div> </div> </div> </div> <a name="4765174613783203143"></a> <h3 class="post-title entry-title"> <a href="http://mexicanfreezone.blogspot.com/2011/06/new-day-in-politics.html">A New Day in Politics</a> </h3> <div class="post-header"> </div> <h2><span style="font-size:180%;"><a href="http://reason.com/archives/2011/06/30/a-new-day-in-politics">A New Day in Politics</a></span></h2> <h3>How libertarianism can fix what's wrong with America</h3> <span><a href="http://reason.com/people/john-stossel" rel="author">John Stossel</a> </span><p>Most Americans used to call themselves Republican or Democrat. These days, more call themselves independent. What does that mean for American politics? A lot.</p> <p>"Independents are everywhere, and they're becoming the largest single voting bloc in the country," <em>Reason</em> magazine Editor Matt Welch says. " (T)hey can determine every national election and every ... election for state office. So independent voters—people who refuse to say, 'I'm a Republican or I'm a Democrat'—that's where all the action is."</p> <p>Welch and Reason.tv Editor in Chief Nick Gillespie just published a book on what to expect from this change: <a href="http://www.amazon.com/exec/obidos/ASIN/1586489380/reasonmagazineA/"> <em>The Declaration of Independents: How Libertarian Politics Can Fix What's Wrong With America</em></a>.</p> <p>The big change they see stems from independents' refusal to be absorbed by any party. "Compare the tea party to the ... Howard Dean antiwar movement," Welch said. "Howard Dean became the chairman (of the) Democratic National Committee. But the tea party has kept an arm's length and said, 'No, we're not going to be Republicans. ... (W)e're going to focus on ... government spending, deficit, and debt, and that's it.' ... And by maintaining that independence they have retained power."</p> <p>"Independence in politics means that you can actually dictate some of the terms to our overlords," Welch and Gillespie write, adding that we need independence not just in politics but from politics. Welch said, "When we look at the places where government either directly controls or heavily regulates things, like K-12 education, health care, retirement, things are going poorly."</p> <p>It's very different outside of government where—from culture to retail stores to the Internet—there's been an explosion of choice. "(Y)ou were lucky ... 20 years ago (if) you would see one eggplant in an exotic store," Welch continued. "Now in the crappiest supermarket in America you'll see four or five or six varieties of eggplant, plus all types of different things. ... (W)hen you get independent from politics, things are going great because people can experiment, they can innovate. ... We should squeeze down the (number of) places where we need a consensus to the smallest area possible, because all the interesting stuff happens outside of that."</p> <p>Government is a zero-sum game: Someone wins, and someone loses, unlike in the market, where it's win-win, where merchant and customer thank each other. "Anytime that you have the government expressing anything," Welch continued, "it's a battle of values. If a government is supporting an art show, people who find that art offensive have a legitimate claim. If a government buys ... a new baseball stadium, well, my wife hates baseball, so how is that fair to her?"</p> <p>"Fifty-one percent of the people get to tell the other 49 percent what to do, how much to pay, where you have to show up," Gillespie added. In the private sector, everybody gets to pick what he or she wants.</p> <p>"There are troubles and tradeoffs," Gillespie said. "But ... if somebody starts selling stuff you don't like, you don't hold a rally and you don't try and get a bunch of people to vote to change it. You go to the next grocery store ... or you build your own grocery store. It's hard to do that with schools ... with health care and ... retirement." Of course, as government makes more decisions for people and limits competition, it reduces our choices. It's also given us horrible, unsustainable debt.</p> <p>But, surprisingly, the <em>Reason</em> folks are optimistic.</p> <p>"There are cases (of big government rollbacks)," Gillespie said. "New Zealand did this. Canada did this. The U.S. did this after World War II—dramatically ramped down the amount of spending, both in absolute terms and in relative terms as a percentage of economic activity. Political change happens."</p> <p>But for now, the politicians continue to move us in the wrong direction. Last year, the feds alone added another 80,000 pages of rules. Despite talk of cuts, spending keeps growing. So does the debt.</p> <p>And yet maybe the optimists are right. Maybe the human spirit is so powerful it will overcome the stupidity of politics.</p> <p>I sure hope so.</p> <p> <em>John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at <a href="http://www.johnstossel.com/">johnstossel.com</a>.</em> </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-64784050778767667902011-06-30T15:34:00.001-07:002011-06-30T15:34:40.204-07:00<div class="post-body entry-content"> <h1 class="title">Islamist Militancy in a Pre- and Post-Saleh Yemen</h1><p><strong>By Reva Bhalla</strong></p> <p>Nearly three months have passed since the Yemeni capital, Sanaa, first saw mass demonstrations against Yemeni President Ali Abdullah Saleh, but an exit from the current stalemate is still nowhere in sight. Saleh retains enough support to continue dictating the terms of his eventual political departure to an emboldened yet frustrated opposition. At the same time, the <a href="http://www.stratfor.com/analysis/20110318-yemen-crisis-special-report">writ of his authority beyond the capital is dwindling</a>, which is increasing the level of chaos and allowing various rebel groups to collect arms, recruit fighters and operate under dangerously few constraints.</p> <p>The prospect of Saleh’s political struggle providing a boon to <a href="http://www.stratfor.com/analysis/20100823_yemen_military_faces_aqap_south">al Qaeda in the Arabian Peninsula (AQAP)</a> is understandably producing anxiety in Washington, where U.S. officials have spent the past few months trying to envision what a post-Saleh Yemen would mean for U.S. counterterrorism efforts in the Arabian Peninsula.</p> <p>While fending off opponents at home, Saleh and his followers have been relying on the “me or chaos” tactic abroad to hang onto power. Loyalists argue that the dismantling of the Saleh regime would fundamentally derail years of U.S. investment designed to elicit meaningful Yemeni cooperation against AQAP or, worse, result in a civil war that will provide AQAP with freedom to hone its skills. Emboldened by the recent unrest, a jihadist group called the Abyan-Aden Islamic Army launched a major raid on a weapons depot in Jaar in late March, leading a number of media outlets to speculate that the toppling of the Saleh regime would play directly into the hands of Yemen’s jihadists.</p> <p>Meanwhile, the opposition has countered that the <a href="http://www.stratfor.com/geopolitical_diary/20100105_yemens_complex_jihadist_problem">Yemeni jihadist threat</a> is a perception engineered by Saleh to convince the West of the dangers of abandoning support for his regime. Opposition figures argue that Saleh’s policies are what led to the rise of AQAP in the first place and that the fall of his regime would provide the United States with a clean slate to address its counterterrorism concerns with new, non-Saleh-affiliated political allies. The reality is likely somewhere in between.</p> <h3>The Birth of Yemen’s Modern Jihadist Movement</h3> <p>The pervasiveness of radical Islamists in Yemen’s military and security apparatus is no secret, and it contributes to the staying power of al Qaeda and its offspring in the Arabian Peninsula. The root of the issue dates back to the Soviet-Afghan war, when Osama bin Laden, whose family hails from the Hadramawt region of the eastern Yemeni hinterland, commanded a small group of Arab volunteers under the leadership of Abdullah Azzam in the Islamist insurgency against the Soviets through the 1980s. Yemenis formed one of the largest contingents within bin Laden’s Arab volunteer force in Afghanistan, which meant that by 1989, a sizable number of battle-hardened Yemenis returned home looking for a new purpose.</p> <p>They did not have to wait long. Leading the jihadist pack returning from Afghanistan was Tariq al Fadhli of the once-powerful al Fadhli tribe based in the southern Yemeni province of Abyan. Joining al Fadhli was Sheikh Abdul Majid al Zindani, the spiritual father of Yemen’s Salafi movement and one of the leaders of the conservative Islah party (now leading the political opposition against Saleh). The al Fadhli tribe had lost its lands to the Marxists of the Yemeni Socialist Party (YSP), which had ruled South Yemen with Soviet backing throughout the 1980s while North Yemen was ruled with Saudi backing. Al Fadhli, an opportunist who tends to downplay his previous interactions with bin Laden, returned to his homeland in 1989 (supposedly with funding from bin Laden) with a mission backed by North Yemen and Saudi Arabia to rid the south of Marxists. He and his group set up camp in the mountains of Saada province on the Saudi border and also established a training facility in Abyan province in South Yemen. Joining al Fadhli’s group were a few thousand Arabs from Syria, Egypt, Saudi Arabia and Jordan who had fought in Afghanistan and faced arrest or worse if they tried to return home.</p> <p>When North and South Yemen unified in 1990 following the collapse of the Soviet Union, Yemen’s tribal Salafists, still trying to find their footing, were largely pushed aside as the southern Marxists became part of the new Republic of Yemen, albeit as subjugated partners to the north. Many within the Islamist militant movement shifted their focus to foreign targets — with an eye on the United States — and rapidly made their mark in December 1992, when two hotels were bombed in the southern city of Aden, where U.S. soldiers taking part in Operation Restore Hope in Somalia were lodged (though no Americans were killed in the attack). A rocket attack against the U.S. Embassy in January 1993 was also attempted and failed. Though he denied involvement in the hotel attacks, al Fadhli and many of his jihadist compatriots were thrown in jail on charges of orchestrating the hotel bombings as well as the assassination of one of the YSP’s political leaders.</p> <p>But as tensions intensified between the north and the south in the early 1990s, so did the utility of Yemen’s Islamist militants. Yemeni President Ali Abdullah Saleh brokered a deal in 1993 with al Fadhli in which the militant leader was released from jail and freed of all charges in exchange for his assistance in defeating the southern socialists, who were now waging a civil war against the north. Saleh’s plan worked. The southern socialists were defeated and stripped of much of their land and fortunes, while the jihadists who made Saleh’s victory possible enjoyed the spoils of war. Al Fadhli, in particular, ended up becoming a member of Saleh’s political inner circle. In tribal custom, he also had his sister marry Brig. Gen. Ali Mohsen al-Ahmar, a member of the president’s Sanhan tribe in the influential Hashid confederation and now commander of Yemen’s northwestern military division and 1st Armored Brigade. (Mohsen, known for his heavily Islamist leanings, has been leading the political standoff against Saleh ever since his high-profile defection from the regime March 24.)</p> <h3>The Old Guard Rises and Falls</h3> <p>Saleh’s co-opting of Yemen’s Islamist militants had profound implications for the country’s terrorism profile. Islamists of varying ideological intensities were rewarded with positions throughout the Yemeni security and intelligence apparatus, with a heavy concentration in the Political Security Organization (PSO), a state security and intelligence agency. The PSO exists separately from the Ministry of Interior and is supposed to answer directly to the president, but it has long operated autonomously and is believed to have been behind a number of large-scale jailbreaks, political assassinations and militant operations in the country. While the leadership of the PSO under Ghaleb al Ghamesh has maintained its loyalty to Saleh, the loyalty of the organization as a whole to the president is highly questionable.</p> <p>Many within the military-intelligence-security apparatus who fought in the 1994 civil war to defeat South Yemen and formed a base of support around Saleh’s presidency made up what is now considered the “old guard” in Yemen. Interspersed within the old guard were the mujahideen fighters returning from Afghanistan. Leading the old guard within the military has been none other than Mohsen, who, after years of standing by Saleh’s side, has emerged in the past month as the president’s most formidable challenger. Mohsen, whose uncle was married to Saleh’s mother in her second marriage, was a stalwart ally of Saleh throughout the 1990s. He played an instrumental role in protecting Saleh from coup attempts early on in his political reign and led the North Yemen army to victory against the south in the 1994 civil war. Mohsen was duly rewarded with ample military funding and control over Saada, al-Hudaydah, Hajja, Amran and Mahwit, surpassing the influence of the governors in these provinces.</p> <p>While the 1990s were the golden years for Mohsen, the 21st century brought with it an array of challenges for the Islamist sympathizers in the old guard. Following the 2000 bombing of the USS Cole, Saleh came under enormous pressure from the United States to crack down on al Qaeda operatives and their protectors in Yemen, both within and beyond the bounds of the state. Fearful of the political backlash that would result from U.S. unilateral military action in Yemen and tempted by large amounts of counterterrorism aid being channeled from Washington, Saleh began devising a strategy to gradually marginalize the increasingly problematic old guard.</p> <p>These were not the only factors driving Saleh’s decision, however. Saleh knew he had to prepare a succession plan, and he preferred to see the next generation of Saleh men at the helm. Anticipating the challenge he would face from powerful figures like Mohsen and his allies, Saleh shrewdly created new and distinct security agencies for selected family members to run under the tutelage of the United States with the those agencies run by formidable members of the old guard. Thus the “new guard” was born.</p> <h3>The Rise of Saleh’s Second-Generation New Guard</h3> <p>Over the course of the past decade, Saleh has made a series of appointments to mark the ascendancy of the new guard. Most important, his son and preferred successor, Ahmed Ali Saleh, became head of the elite Republican Guard (roughly 30,000-plus men) and Special Operations Forces. Ahmad replaced Saleh’s half-brother, Ali Saleh al-Ahmar, as chief of the Republican Guard, but Saleh made sure to appease Ali by making him Yemen’s defense attache in Washington, followed by appointing him to the highly influential post of chief of staff of the supreme commander of the Armed Forces and supervisor to the Republican Guard.</p> <p>The president also appointed his nephews — the sons of his brother Muhammad Abdullah Saleh (now deceased) — to key positions. Yahya became chief of staff of the Central Security Forces and Counter-Terrorism Unit (roughly 50,000 plus); Tariq was made commander of the Special Guard, which effectively falls under the authority of Ahmed’s Republican Guard; and Ammar became principal duty director of the National Security Bureau (NSB). Moreover, nearly all of Saleh’s sons, cousins and nephews are evenly distributed throughout the Republican Guard.</p> <p>Each of these agencies received a substantial amount of money as U.S. financial aid to Yemen increased from $5 million in 2006 to $155 million in 2010. This was expected to rise to $1 billion or more over the next several years, but Washington froze the first installment in February when the protests broke out. Ahmed’s Republican Guard and Special Operations Forces worked closely with U.S. military trainers in trying to develop an elite fighting force along the lines of Jordan’s U.S.-trained Fursan al Haq (Knights of Justice). The creation of the mostly U.S.-financed NSB in 2002 to collect domestic intelligence was also part of a broader attempt by Saleh to reform all security agencies to counter the heavy jihadist penetration of the PSO.</p> <p>Meanwhile, Mohsen watched nervously as his power base flattened under the weight of the second-generation Saleh men. One by one, Mohsen’s close old-guard allies were replaced: In 2007, Saleh sacked Gen. Al Thaneen, commander of the Republican Guard in Taiz. In 2008, Brig. Gen. Mujahid Gushaim replaced Ali Sayani, the head of military intelligence (Ali Sayani’s brother, Abdulmalik, Yemen’s former defense minister, was one of the first generals to declare support for the revolt against Saleh). The same year, Gen. Al Thahiri al Shadadi was replaced by Brig Gen. Mohammed al Magdashi as commander of the Central Division; Saleh then appointed his personal bodyguard, Brig. Gen. Aziz Mulfi, as chief of staff of the 27th mechanized brigade in Hadramawt. Finally, in early 2011, Saleh sacked Brig. Gen. Abdullah Al Gadhi, commander of Al Anad Base that lies on the axis of Aden in the south and commander of the 201st mechanized brigade. As commander of the northwestern division, Mohsen had been kept busy by an al-Houthi rebellion that ignited in 2004, and he became a convenient scapegoat for Saleh when the al-Houthis rose up again in 2009 and began seizing territory, leading to a rare Saudi military intervention in Yemen’s northern Saada province.</p> <p>Using the distraction and intensity of the al-Houthi rebellion to weaken Mohsen and his forces, Saleh attempted to move the headquarters of Mohsen’s 1st Armored Brigade from Sanaa to Amran just north of the capital and ordered the transfer of heavy equipment from Mohsen’s forces to the Republican Guard. While Saleh’s son and nephews were on the receiving end of millions of dollars of U.S. financial aid to fight AQAP, Mohsen and his allies were left on the sidelines as the old-guard institutions were branded as untrustworthy and thus unworthy of U.S. financing. Mohsen also claims Saleh tried to have him killed at least six times. One such episode, revealed in a WikiLeaks cable dated February 2010, describes how the Saleh government allegedly provided Saudi military commanders with the coordinates of Mohsen’s headquarters when Saudi forces were launching airstrikes on the al-Houthis. The Saudis aborted the strike when they sensed something was wrong with the information they were receiving from the Yemeni government.</p> <p>Toward the end of 2010, with the old guard sufficiently weakened, Saleh was feeling relatively confident that he would be able to see through his plans to abolish presidential term limits and pave the way for his son to take power. What Saleh didn’t anticipate was the viral effect of the North African uprisings and the opportunity they would present to Mohsen and his allies to take revenge and, more important, make a comeback.</p> <p><a href="http://web.stratfor.com/images/middleeast/map/Yemen_conflict_zones_800.jpg"> </a></p><div class="media media-image floatleft" style="width:400px"><a href="http://web.stratfor.com/images/middleeast/map/Yemen_conflict_zones_800.jpg"> <div class="inner"> <div class="media-item"><img src="http://media.stratfor.com/files/mmf/c/2/c2eaf9226ba809df28020899b95b1cfdf026771f.jpg" alt="Islamist Militancy in a Pre- and Post-Saleh Yemen" title="" /></div> <div class="media-caption">(click here to enlarge image)</div> </div> </a></div><a href="http://web.stratfor.com/images/middleeast/map/Yemen_conflict_zones_800.jpg"> </a> <h3>An Old Guard Revival?</h3> <p>Mohsen, 66 years old, is a patient and calculating man. When thousands of Yemenis took to the streets of Sanaa in late March to protest against the regime, his 1st Armored Brigade, based just a short distance from the University of Sanaa entrance where the protesters were concentrated, deliberately stood back while the CSF and Republican Guard took the heat for increasingly violent crackdowns. In many ways, Mohsen attempted to emulate Egyptian Field Marshal Mohamed Hussein Tantawi in having his forces stand between the CSF and the protesters, acting as a protector of the pro-democracy demonstrators in hopes of making his way to the presidential palace with the people’s backing. Mohsen continues to carry a high level of respect among the Islamist-leaning old guard and, just as critically, maintains a strong relationship with the Saudi royals.</p> <p>Following his March 24 defection, a number of high-profile military, political and tribal defections followed. Standing in league with Mohsen is the politically ambitious Sheikh Hamid al-Ahmar, one of the 10 sons of the late Abdullah bin Hussein al-Ahmar, who ruled the Hashid confederation as the most powerful tribal chieftain in the country and was also a prominent leader of the Islah political party. (Saleh’s Sanhaan tribe is part of the Hashid confederation as well.) Hamid is a wealthy businessman and vocal leader of the Islah party, which dominates the Joint Meeting Parties (JMP), an opposition coalition. The sheikh who, like Mohsen, has a close relationship with the Saudi royals, has ambitions to replace Saleh and has been responsible for a wave of defections from within the ruling General People’s Congress, nearly all of which can be traced back to his family tree. In an illustration of Hamid’s strategic alliance with Mohsen, Hamid holds the position of lieutenant colonel in the 1st Armored Brigade. This is a purely honorary position but provides Hamid with a military permit to expand his contingent of body guards, the numbers of which of recently swelled to at least 100.</p> <p>Together, Mohsen and Sheikh Hamid have a great deal of influence in Yemen to challenge Saleh, but still not enough to drive him out of office by force. Mohsen’s forces have been gradually trying to encroach on Sanaa from their base in the northern outskirts of the capital, but forces loyal to Saleh in Sanaa continue to outman and outgun the rebel forces.</p> <p>Hence the <a href="http://www.stratfor.com/analysis/20110413-yemens-rebel-general-raises-stakes">current stalemate</a>. Yemen does not have the luxury of a clean, geographic split between pro-regime and anti-regime forces, as is the case in Libya. In its infinite complexity, the country is divided along tribal, family, military and business lines, so its political future is difficult to chart. A single family, army unit, village or tribe will have members pledging loyalty to either Saleh or the revolution, providing the president with just enough staying power to deflect opposition demands and drag out the political crisis.</p> <h3>Washington’s Yemen Problem</h3> <p>The question of whether Saleh stays or goes is not the main topic of current debate. Nearly every party to the conflict, including the various opposition groups, Saudi Arabia, the United States and even Saleh himself, understand that the Yemeni president’s 33-year political reign will end soon. The real sticking point has to do with those family members surrounding Saleh and whether they, too, will be brought down with the president in a true regime change.</p> <p>This is where the United States finds itself in a particularly uncomfortable spot. Yemen’s opposition, a hodgepodge movement including everything from northern Islamists to southern socialists, are mostly only united by a collective aim to dismantle the Saleh regime, including the second-generation Saleh new guard that has come to dominate the country’s security-military-intelligence apparatus with heavy U.S.-backing.</p> <p>The system is far from perfect, and counterterrorism efforts in Yemen continue to frustrate U.S. authorities. However, Saleh’s security reforms over the past several years and the tutelage the U.S. military has been able to provide to these select agencies have been viewed as a significant sign of progress by the United States, and that progress could now be coming under threat.</p> <p>Mohsen and his allies are looking to reclaim their lost influence and absorb the new-guard entities in an entirely new security set-up. For example, the opposition is demanding that the Republican Guard and Special Forces be absorbed into the army, which would operate under a general loyal to Mohsen (Mohsen himself claims he would step down as part of a deal in which Saleh also resigns, but he would be expected to assume a kingmaker status), that the CSF and CTU paramilitary agencies be stripped of their autonomy and operationally come under the Ministry of Interior and that the newly created NSB come under the PSO. Such changes would be tantamount to unraveling the past decade of U.S. counterterrorism investment in Yemen that was designed explicitly to raise a new generation of security officials who could hold their own against the Islamist-leaning old guard. This is not to say that Mohsen and his allies would completely obstruct U.S. counterterrorism efforts. Many within the old guard, eager for U.S. financial aid and opposed to U.S. unilateral military action in Yemen, are likely to veer toward pragmatism in dealing with Washington. That said, Mohsen’s reputation for protecting jihadists operating in Yemen and his poor standing with Washington would add much distrust to an already complicated U.S.-Yemeni relationship.</p> <p>Given its counterterrorism concerns and the large amount of U.S. financial aid flowing into Yemen in recent years, Washington undoubtedly has a stake in Yemen’s political transition, but it is unclear how much influence it will be able to exert in trying to shape a post-Saleh government. The United States lacks the tribal relationships, historical presence and trust to deal effectively with a resurgent old guard seeking vengeance amid growing chaos.</p> <p>The real heavyweight in Yemen is Saudi Arabia. The Saudi royals have long viewed their southern neighbor as a constant source of instability in the kingdom. Whether the threat to the monarchy emanating from Yemen drew its roots from Nasserism, Marxism or radical Islamism, Riyadh deliberated worked to keep the Yemeni state weak while buying loyalties across the Yemeni tribal landscape. Saudi Arabia shares the U.S. concern over Yemeni instability providing a boon to AQAP. The Saudi royals, who are reviled by a large segment of <a href="http://www.stratfor.com/weekly/20090128_al_qaeda_arabian_peninsula_desperation_or_new_life">Saudi-born jihadists in AQAP operating from Yemen</a>, are a logical target for AQAP attacks that carry sufficient strategic weight to shake the oil markets and the royal regime, especially given the current climate of unrest in the region. Moreover, Saudi Arabia does not want to deal with a dramatic increase in the already regular spillover of refugees, smugglers and illegal workers from Yemen should civil war ensue.</p> <p>At the same time, Saudi Arabia and the United States may not entirely see eye to eye in how to manage the jihadist threat in Yemen. The Saudis have maintained close linkages with a number of influential Islamist members within the old guard, including Mohsen and jihadists like al Fadhli, who broke off his alliance with Saleh in 2009 to lead the Southern Movement against the regime. The Saudis are also more prone to rely on their jihadist allies from time to time in trying to snuff out more immediate threats to Saudi interests.</p> <p>For example, Saudi Arabia’s current concern regarding Yemen centers not on the future of Yemen’s counterterrorism capabilities but on the al-Houthi rebels in the north, who have wasted little time in exploiting Sanaa’s distractions to expand their territorial claims in Saada province. The al-Houthis belong to the Zaydi sect, considered an offshoot of Shiite Islam and heretical by Wahhabi standards. Riyadh fears Houthi unrest in Yemen’s north could stir unrest in Saudi Arabia’s southern provinces of Najran and Jizan, which are home to the Ismailis, also an offshoot of Shiite Islam. Ismaili unrest in the south could then embolden Shia in Saudi Arabia’s oil-rich Eastern Province, who have already been engaged in demonstrations, albeit small ones, against the Saudi monarchy with heavy Iranian encouragement. Deputy AQAP leader Saad Ali al Shihri’s declaration of war against the al-Houthi rebels on Jan. 28 may have surprised many, but it also seemed to play to the Saudi agenda in channeling jihadist efforts toward the al-Houthi threat.</p> <p>The United States has a Yemen problem that it cannot avoid, but it also has very few tools with which to manage or solve it. For now, the stalemate provides Washington with the time to sort out alternatives to the second-generation Saleh relatives, but that time also comes at a cost. The longer this political crisis drags on, the more Saleh will narrow his focus to holding onto Sanaa, while leaving the rest of the country for the al-Houthis, the southern socialists and the jihadists to fight over. The United States can take some comfort in the fact that AQAP’s poor track record of <a href="http://www.stratfor.com/analysis/20110120-jihadism-2011-persistent-grassroots-threat">innovative yet failed attacks</a> has kept the group in the <a href="http://www.stratfor.com/weekly/20110330-aqap-and-vacuum-authority-yemen">terrorist minor leagues</a>. With enough time, resources and sympathizers in the government and security apparatus, however, AQAP could find itself in a more comfortable spot in a post-Saleh scenario, likely to the detriment of U.S. counterterrorism efforts in the Arabian Peninsula.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/islamist-militancy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T11:47:00-07:00">11:47 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8222536337860717133">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8222536337860717133&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Islamist%20Militancy" rel="tag">Islamist Militancy</a> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1587634939954262651"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/divided-states.html">The Divided States</a> </h3> <div class="post-body entry-content"> <h1 class="title">The Divided States of Europe</h1><p><strong>By Marko Papic</strong></p> <p>Europe continues to be engulfed by economic crisis. <a class="strat_tip_off" title="Watch Video: Dispatch: Greek Austerity Measures and the Wider Eurozone Threat"><img src="http://media.stratfor.com/stratfor_images/playbuttonsmall.gif" /> The global focus returns to Athens</a> on June 28 as Greek parliamentarians debate austerity measures imposed on them by eurozone partners. If the Greeks vote down these measures, Athens will not receive its second bailout, which could create an even worse crisis in Europe and the world.</p> <p>It is important to understand that <a href="http://www.stratfor.com/geopolitical_diary/20110622-eurozone-crisis-not-greek-drama">the crisis is not fundamentally about Greece</a> or even about the indebtedness of the entire currency bloc. After all, Greece represents only 2.5 percent of the eurozone’s gross domestic product (GDP), and the bloc’s fiscal numbers are not that bad when looked at in the aggregate. Its overall deficit and debt figures are in a better shape than those of the United States — the U.S. budget deficit stood at 10.6 percent of GDP in 2010, compared to 6.4 percent for the European Union — yet the focus continues to be on Europe.</p> <p>That is because the real crisis is the more fundamental question of how the European continent is to be ruled in the 21st century. Europe has emerged from its subservience during the Cold War, when it was the geopolitical chessboard for the Soviet Union and the United States. It won its independence by default as the superpowers retreated: Russia withdrawing to its Soviet sphere of influence and the United States switching its focus to the Middle East after 9/11. Since the 1990s, Europe has dabbled with institutional reform but has left the fundamental question of political integration off the table, even as it integrated economically. This is ultimately the source of the current sovereign debt crisis, the lack of political oversight over economic integration gone wrong.</p> <p>The eurozone’s economic crisis brought this question of Europe’s political fate into focus, but it is a recurring issue. Roughly every 100 years, Europe confronts this dilemma. The Continent suffers from overpopulation — of nations, not people. Europe has the largest concentration of independent nation-states per square foot than any other continent. While Africa is larger and has more countries, no continent has as many rich and relatively powerful countries as Europe does. This is because, geographically, the Continent is riddled with features that prevent the formation of a single political entity. Mountain ranges, peninsulas and islands limit the ability of large powers to dominate or conquer the smaller ones. No single river forms a unifying river valley that can dominate the rest of the Continent. The Danube comes close, but it drains into the practically landlocked Black Sea, the only exit from which is another practically landlocked sea, the Mediterranean. This limits Europe’s ability to produce an independent entity capable of global power projection.</p> <p>However, Europe does have plenty of rivers, convenient transportation routes and well-sheltered harbors. This allows for <a href="http://www.stratfor.com/analysis/20100602_eu_us_european_credit_rating_agency_challenge">capital generation at a number of points on the Continent</a>, such as Vienna, Paris, London, Frankfurt, Rotterdam, Milan, Turin and Hamburg. Thus, while large armies have trouble physically pushing through the Continent and subverting various nations under one rule, ideas, capital, goods and services do not. This makes Europe rich (the Continent has at least the equivalent GDP of the United States, and it could be larger depending how one calculates it).</p> <p>What makes Europe rich, however, also makes it fragmented. The current political and security architectures of Europe — <a href="http://www.stratfor.com/analysis/20091014_eu_and_lisbon_treaty_part_1_history_behind_bloc">the European Union</a> and <a href="http://www.stratfor.com/analysis/20101121_nato_inadequate_strategic_concept">NATO</a> — were encouraged by the United States in order to unify the Continent so that it could present a somewhat united front against the Soviet Union. They did not grow organically out of the Continent. This is a problem because <a href="http://www.stratfor.com/analysis/20110606-europe-shifting-battleground-part-2">Moscow is no longer a threat for all European countries</a>, Germany and France see Russia as a business partner and European states are facing their first true challenge to Continental governance, with fragmentation and suspicion returning in full force. Closer unification and the creation of some sort of United States of Europe seems like the obvious solution to the problems posed by the eurozone sovereign debt crisis — although <a href="http://www.stratfor.com/analysis/20110217-europes-next-crisis">the eurozone’s problems are many</a> and not easily solved just by integration, and Europe’s geography and history favor fragmentation.</p> <h3>Confederation of Europe</h3> <p>The European Union is a confederation of states that outsources day-to-day management of many policy spheres to a bureaucratic arm (the European Commission) and monetary policy to <a href="http://www.stratfor.com/analysis/20100325_greece_lifesupport_extension_ecb">the European Central Bank</a>. The important policy issues, such as defense, foreign policy and taxation, remain the sole prerogatives of the states. The states still meet in various formats to deal with these problems. Solutions to the Greek, Irish and Portuguese fiscal problems are agreed upon by all eurozone states on an ad hoc basis, as is participation in the Libyan military campaign within the context of the European Union. Every important decision requires that the states meet and reach a mutually acceptable solution, often producing non-optimal outcomes that are products of compromise.</p> <p>The best analogy for the contemporary European Union is found not in European history but in American history. This is the period between the successful Revolutionary War in 1783 and the ratification of the U.S. Constitution in 1788. Within that five-year period, the United States was governed by a set of laws drawn up in the Articles of the Confederation. The country had no executive, no government, no real army and no foreign policy. States retained their own armies and many had minor coastal navies. They conducted foreign and trade policy independent of the wishes of the Continental Congress, a supranational body that had less power than even <a href="http://www.stratfor.com/analysis/20090608_eu_european_parliament_elections">the European Parliament</a> of today (this despite Article VI of the Articles of Confederation, which stipulated that states would not be able to conduct independent foreign policy without the consent of Congress). Congress was supposed to raise funds from the states to fund such things as a Continental Army, pay benefits to the veterans of the Revolutionary War and pay back loans that European powers gave Americans during the war against the British. States, however, refused to give Congress money, and there was nothing anybody could do about it. Congress was forced to print money, causing the Confederation’s currency to become worthless.</p> <p>With such a loose confederation set-up, the costs of the Revolutionary War were ultimately unbearable for the fledgling nation. The reality of the international system, which pitted the new nation against aggressive European powers looking to subvert America’s independence, soon engulfed the ideals of states’ independence and limited government. Social, economic and security burdens proved too great for individual states to contain and a powerless Congress to address.</p> <p>Nothing brought this reality home more than a rebellion in Western Massachusetts led by Daniel Shays in 1787. Shays’ Rebellion was, at its heart, an economic crisis. Burdened by European lenders calling for repayment of America’s war debt, the states’ economies collapsed and with them the livelihoods of many rural farmers, many of whom were veterans of the Revolutionary War who had been promised benefits. Austerity measures — often in the form of land confiscation — were imposed on the rural poor to pay off the European creditors. Shays’ Rebellion was put down without the help of the Continental Congress essentially by a local Massachusetts militia acting without any real federal oversight. The rebellion was defeated, but America’s impotence was apparent for all to see, both foreign and domestic.</p> <p>An economic crisis, domestic insecurity and constant fear of a British counterattack — Britain had not demobilized forts it held on the U.S. side of the Great Lakes — impressed upon the independent-minded states that a “more perfect union” was necessary. Thus the United States of America, as we know it today, was formed. States gave up their rights to conduct foreign policy, to set trade policies independent of each other and to withhold funds from the federal government. The United States set up an executive branch with powers to wage war and conduct foreign policy, as well as a legislature that could no longer be ignored. In 1794, the government’s response to the so-called Whiskey Rebellion in western Pennsylvania showed the strength of the federal arrangement, in stark contrast to the Continental Congress’ handling of Shays’ Rebellion. Washington dispatched an army of more than 10,000 men to suppress a few hundred distillers refusing to pay a new whiskey tax to fund the national debt, thereby sending a clear message of the new government’s overwhelming fiscal, political and military power.</p> <p>When examining the evolution of the American Confederation into the United States of America, one can find many parallels with the European Union, among others a weak center, independent states, economic crisis and over-indebtedness. The most substantial difference between the United States in the late 18th century and Europe in the 21st century is the level of external threat. In 1787, Shays’ Rebellion impressed upon many Americans — particularly George Washington, who was irked by the crisis — just how weak the country was. If a band of farmers could threaten one of the strongest states in the union, what would the British forces still garrisoned on American soil and in Quebec to the north be able to do? States could independently muddle through the economic crisis, but they could not prevent a British counterattack or protect their merchant fleet against Barbary pirates. America could not survive another such mishap and such a wanton display of military and political impotence.</p> <p>To America’s advantage, the states all shared similar geography as well as similar culture and language. Although they had different economic policies and interests, all of them ultimately depended upon seaborne Atlantic trade. The threat that such trade would be choked off by a superior naval force — or even by North African pirates — was a clear and present danger. The threat of British counterattack from the north may not have been an existential threat to the southern states, but they realized that if New York, Massachusetts and Pennsylvania were lost, the South might preserve some nominal independence but would quickly revert to de facto colonial status.</p> <p>In Europe, there is no such clarity of what constitutes a threat. Even though there is a general sense — at least among the governing elites — that Europeans share economic interests, it is very clear that their security interests are not complementary. There is <a href="http://www.stratfor.com/weekly/20101011_natos_lack_strategic_concept">no agreed-upon perception of an external threat</a>. For Central European states that only recently became European Union and NATO members, <a href="http://www.stratfor.com/geopolitical_diary/20101207_who_fears_russian_bear">Russia still poses a threat</a>. They have asked NATO (and even the European Union) to refocus on the European continent and for the alliance to reassure them of its commitment to their security. In return, they have seen <a href="http://www.stratfor.com/analysis/20110620-russia-and-france-new-levels-cooperation">France selling advanced helicopter carriers to Russia</a> and <a href="http://www.stratfor.com/analysis/20110215-significance-russias-deal-germanys-rheinmetall">Germany building an advanced military training center in Russia</a>.</p> <h3>The Regionalization of Europe</h3> <p>The eurozone crisis — which is engulfing EU member states using the euro but is symbolically important for the entire European Union — is therefore a crisis of trust. Do the current political and security arrangements in Europe — the European Union and NATO — capture the right mix of nation-state interests? Do the member states of those organizations truly feel that they share the same fundamental fate? Are they willing, as the American colonies were at the end of the 18th century, to give up their independence in order to create a common front against political, economic and security concerns? And if the answer to these questions is no, then what are the alternative arrangements that do capture complementary nation-state interests?</p> <p>On the security front, we already have our answer: the regionalization of European security organizations. NATO has ceased to effectively respond to the national security interests of European states. Germany and France have pursued an accommodationist attitude toward Russia, to the chagrin of the Baltic states and Central Europe. As a response, these Central European states have begun to arrange alternatives. The four Central European states that make up the regional <a href="http://www.stratfor.com/analysis/20110204-visegrad-group-central-europes-bloc">Visegrad Group</a> — Poland, the Czech Republic, Slovakia and Hungary — have used the forum as the mold in which to create <a href="http://www.stratfor.com/weekly/20110516-visegrad-new-european-military-force">a Central European battle group</a>. Baltic states, threatened by Russia’s general resurgence, have looked to expand <a href="http://www.stratfor.com/geopolitical_diary/20110208-nordic-baltic-alliance-and-natos-arctic-thaw">military and security cooperation with the Nordic countries</a>, with Lithuania set to join the Nordic Battlegroup, of which Estonia is already a member. France and the United Kingdom have decided to enhance cooperation with <a class="strat_tip_off" title="Watch Video: Dispatch: France Balances Germany With a British Military Deal"><img src="http://media.stratfor.com/stratfor_images/playbuttonsmall.gif" /> an expansive military agreement</a> at the end of 2010, and London has also expressed an interest in becoming close to the developing Baltic-Nordic cooperative military ventures.</p> <p>Regionalization is currently most evident in security matters, but it is only a matter of time before it begins to manifest itself in political and economic matters as well. For example, German Chancellor Angela Merkel has been forthcoming about wanting Poland and the Czech Republic to speed up their efforts to enter the eurozone. Recently, both indicated that they had <a href="http://www.stratfor.com/analysis/20110518-polands-continued-hesitation-over-eurozone-entry">cooled on the idea of eurozone entry</a>. The decision, of course, has a lot to do with the euro being in a state of crisis, but we cannot underestimate the underlying sense in Warsaw that Berlin is not committed to Poland’s security. Central Europeans may not currently be in the eurozone (save for Estonia, Slovenia and Slovakia), but the future of the eurozone is intertwined in its appeal to the rest of Europe as both an economic and political bloc. All EU member states are contractually obligated to enter the eurozone (save for Denmark and the United Kingdom, which negotiated opt-outs). From Germany’s perspective, membership of the Czech Republic and Poland is more important than that of peripheral Europe. Germany’s trade with Poland and the Czech Republic alone is greater than its trade with Spain, Greece, Ireland and Portugal combined.</p> <p><a href="http://web.stratfor.com/images/europe/map/5-18-11-European_Monetary_Union_800.jpg"> </a></p><div class="media media-image floatright" style="width:400px"><a href="http://web.stratfor.com/images/europe/map/5-18-11-European_Monetary_Union_800.jpg"> <div class="inner"> <div class="media-item"><img src="http://media.stratfor.com/files/mmf/b/0/b02b122cbe3fa29fc28b575b2dd07f9b1944b919.jpg" alt="The Divided States of Europe" title="" /></div> <div class="media-caption">(click here to enlarge image)</div> </div> </a></div><a href="http://web.stratfor.com/images/europe/map/5-18-11-European_Monetary_Union_800.jpg"> </a> <p>The security regionalization of Europe is not a good sign for the future of the eurozone. A monetary union cannot be grafted onto security disunion, especially if the solution to the eurozone crisis becomes more integration. Warsaw is not going to give Berlin veto power over its budget spending if the two are not in agreement over what constitutes a security threat. This argument may seem simple, and it is cogent precisely because it is. Taxation is one of the most basic forms of state sovereignty, and one does not share it with countries that do not share one’s political, economic and security fate.</p> <p>This goes for any country, not just Poland. If the solution to the eurozone crisis is greater integration, then the interests of the integrating states have to be closely aligned on more than just economic matters. The U.S. example from the late 18th century is particularly instructive, as one could make a cogent argument that American states had more divergent economic interests than European states do today, and yet their security concerns brought them together. In fact, the moment the external threat diminished in the mid-19th century due to Europe’s exhaustion from the Napoleonic Wars, American unity was shaken by the Civil War. America’s economic and cultural bifurcation, which existed even during the Revolutionary War, erupted in conflagration the moment the external threat was removed.</p> <p>The bottom line is that Europeans have to agree on more than just a 3 percent budget-deficit threshold as the foundation for closer integration. Control over budgets goes to the very heart of sovereignty, and European nations will not give up that control unless they know their security and political interests will be taken seriously by their neighbors.</p> <h3>Europe’s Spheres of Influence</h3> <p>We therefore see Europe evolving into a set of regionalized groupings. These organizations may have different ideas about security and economic matters, one country may even belong to more than one grouping, but for the most part membership will largely be based on location on the Continent. This will not happen overnight. Germany, France and other core economies have <a href="http://www.stratfor.com/weekly/20100208_germanys_choice">a vested interest in preserving the eurozone</a> in its current form for the short term — perhaps as long as another decade — since the economic contagion from Greece is an existential concern for the moment. In the long term, however, regional organizations of like-minded blocs is the path that seems to be evolving in Europe, especially if Germany decides that its relationship with core eurozone countries and Central Europe is more important than its relationship with the periphery.</p> <p><a href="http://web.stratfor.com/images/europe/map/Europe_Spheres_influence_800.jpg"> </a></p><div class="media media-image floatright" style="width:400px"><a href="http://web.stratfor.com/images/europe/map/Europe_Spheres_influence_800.jpg"> <div class="inner"> <div class="media-item"><img src="http://media.stratfor.com/files/mmf/a/d/ad826b4788bf938c33c9415dabff0613fcda9f93.jpg" alt="The Divided States of Europe" title="" /></div> <div class="media-caption">(click here to enlarge image)</div> </div> </a></div><a href="http://web.stratfor.com/images/europe/map/Europe_Spheres_influence_800.jpg"> </a> <p>We can separate the blocs into four main fledgling groupings, which are not mutually exclusive, as a sort of model to depict the evolving relationships among countries in Europe:</p> <ol><li><strong>The German sphere of influence</strong> (Germany, Austria, the Netherlands, Belgium, Luxembourg, Czech Republic, Hungary, Croatia, Switzerland, Slovenia, Slovakia and Finland): These core eurozone economies are not disadvantaged by Germany’s competitiveness, or they depend on German trade for economic benefit, and they are not inherently threatened by Germany’s evolving relationship with Russia. Due to its isolation from the rest of Europe and proximity to Russia, Finland is not thrilled about Russia’s resurgence, but occasionally it prefers Germany’s careful accommodative approach to the aggressive approach of neighboring Sweden or Poland. Hungary, the Czech Republic and Slovakia are the most concerned about the Russia-Germany relationship, but not to the extent that Poland and the Baltic states are, and they may decide to remain in the German sphere of influence for economic reasons.<br /><br /></li><li><strong>The Nordic regional bloc</strong> (Sweden, Norway, Finland, Denmark, Iceland, Estonia, Lithuania and Latvia): These mostly non-eurozone states generally see Russia’s resurgence in a negative light. The Baltic states are seen as part of the <a href="http://www.stratfor.com/analysis/20090629_geopolitics_sweden_baltic_power_reborn">Nordic sphere of influence (especially Sweden’s)</a>, which leads to problems with Russia. Germany is an important trade partner, but it is also seen as overbearing and as a competitor. Finland straddles this group and the German sphere of influence, depending on the issue.<br /><br /></li><li><strong>Visegrad-plus</strong> (Poland, Czech Republic, Slovakia, Hungary, Romania and Bulgaria): At the moment, the Visegrad Group members belong to different spheres of influence. The Czech Republic, Slovakia and Hungary do not feel as exposed to Russia’s resurgence as Poland or Romania do. But they also are not completely satisfied with Germany’s attitude toward Russia. Poland is not strong enough to lead this group economically the way Sweden dominates the Nordic bloc. Other than security cooperation, the Visegrad countries have little to offer each other at the moment. Poland intends to change that by lobbying for more funding for new EU member states in the next six months of its EU presidency. That still does not constitute economic leadership.<br /><br /></li><li><strong>Mediterranean Europe</strong> (Italy, Spain, Portugal, Greece, Cyprus and Malta): These are Europe’s peripheral states. Their security concerns are unique due to their exposure to illegal immigration via routes through Turkey and North Africa. Geographically, these countries are isolated from the main trade routes and lack the capital-generating centers of northern Europe, save for Italy’s Po River Valley (which in many ways does not belong to this group but could be thought of as a separate entity that could be seen as part of the German sphere of influence). These economies therefore face similar problems of over-indebtedness and lack of competitiveness. The question is, who would lead?</li></ol> <p>And then there are France and the United Kingdom. These countries do not really belong to any bloc. This is <a href="http://www.stratfor.com/geopolitical_diary/20091008_geopolitical_implications_conservative_britain">London’s traditional posture with regard to continental Europe</a>, although it has recently begun <a href="http://www.stratfor.com/analysis/20110118-baltic-nordic-british-relationship-summit">to establish a relationship with the Nordic-Baltic group</a>. France, meanwhile, could be considered part of the German sphere of influence. Paris is attempting to hold onto its leadership role in the eurozone and is revamping its labor-market rules and social benefits to sustain its connection to the German-dominated currency bloc, <a href="http://www.stratfor.com/analysis/20101021_france_turmoil">a painful process</a>. However, France traditionally is also a Mediterranean country and has considered Central European alliances in order to surround Germany. It also recently entered into a new bilateral military relationship with the United Kingdom, in part as a hedge against its close relationship with Germany. If France decides to exit its partnership with Germany, it could quickly gain control of its normal sphere of influence in the Mediterranean, probably with enthusiastic backing from a host of other powers such as the United States and the United Kingdom. In fact, its <a href="http://www.stratfor.com/analysis/france_germany_mediterranean_union_and_tectonic_shift">discussion of a Mediterranean Union</a> was a political hedge, an insurance policy, for exactly such a future.</p> <h3>The Price of Regional Hegemony</h3> <p>The alternative to the regionalization of Europe is clear German leadership that underwrites — economically and politically — greater European integration. If Berlin can overcome the anti-euro populism that is feeding on bailout fatigue in the eurozone core, it could continue to support the periphery and prove its commitment to the eurozone and the European Union. Germany is also trying to show Central Europe that its relationship with Russia is a net positive by using its negotiations with Moscow over Moldova as <a href="http://www.stratfor.com/analysis/20110616-start-new-german-russian-cooperation">an example of German political clout</a>.</p> <p>Central Europeans, however, are already putting Germany’s leadership and commitment to the test. Poland assumes the EU presidency July 1 and has made the union’s commitment to increase funding for new EU member states, as well as EU defense cooperation, its main initiatives. Both policies are a test for Germany and an offer for it to reverse the ongoing security regionalization. If Berlin says no to new money for the newer EU member states — at stake is the union’s cohesion-policy funding, which in the 2007-2013 budget period totaled 177 billion euros — and no to EU-wide security/defense arrangements, then Warsaw, Prague and other Central European capitals have their answer. The question is whether Germany is serious about being a leader of Europe and paying the price to be the hegemon of a united Europe, which would not only mean funding bailouts but also standing up to Russia. If it places its relationship with Russia over its alliance with Central Europe, then it will be difficult for Central Europeans to follow Berlin. This will mean that the regionalization of Europe’s security architecture — via the Visegrad Group and Nordic-Baltic battle groups — makes sense. It will also mean that Central Europeans will have to find new ways to draw the United States into the region for security.</p> <p>Common security perception is about states understanding that they share the same fate. American states understood this at the end of the 18th century, which is why they gave up their independence, setting the United States on the path toward superpower status. Europeans — at least at present — do not see their situation (or the world) in the same light. Bailouts are enacted not because Greeks share the same fate as Germans but because German bankers share the same fate as German taxpayers. This is a sign that integration has progressed to a point where economic fate is shared, but this is an inadequate baseline on which to build a common political union.</p> <p>Bailing out Greece is seen as an affront to the German taxpayer, even though that same German taxpayer has benefited disproportionally from the eurozone’s creation. The German government understands <a href="http://www.stratfor.com/weekly/20100315_germany_mitteleuropa_redux">the benefits of preserving the eurozone</a> — which is why it continues bailing out the peripheral countries — but there has been no national debate in Germany to explain this logic to the populace. Germany is still waiting to have an open conversation with itself about its role and its future, and especially what price it is willing to pay for regional hegemony and remaining relevant in a world fast becoming dominated by powers capable of harnessing the resources of entire continents.</p> <p>Without a coherent understanding in Europe that its states all share the same fate, the Greek crisis has little chance of being Europe’s Shays’ Rebellion, triggering deeper unification. Instead of a United States of Europe, its fate will be ongoing regionalization.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/divided-states.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T11:45:00-07:00">11:45 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1587634939954262651">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1587634939954262651&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Europe" rel="tag">Europe</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/The%20Divided%20States" rel="tag">The Divided States</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8606179176139736646"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/seattle-plot.html">The Seattle Plot</a> </h3> <div class="post-body entry-content"> <h1 class="title">The Seattle Plot: Jihadists Shifting Away From Civilian Targets?</h1><p><strong>By Scott Stewart</strong></p> <p>On June 22 in a Seattle warehouse, Abu Khalid Abdul-Latif pulled an unloaded M16 rifle to his shoulder, aimed it, and pulled the trigger repeatedly as he imagined himself gunning down young U.S. military recruits. His longtime friend Walli Mujahidh did likewise with an identical rifle, assuming a kneeling position as he engaged his notional targets. The two men had come to the warehouse with another man to inspect the firearms the latter had purchased with money Abdul-Latif had provided him. The rifles and a small number of hand grenades were to be used in an upcoming mission: an attack on a U.S. Military Entrance Processing Station (MEPS) in an industrial area south of downtown Seattle. </p> <p>After confirming that the rifles were capable of automatic fire and discussing the capacity of the magazines they had purchased, the men placed the rifles back into a storage bag intending to transport them to a temporary cache location. As they prepared to leave the warehouse, they were suddenly swarmed by a large number of FBI agents and other law enforcement officers and quickly arrested. Their plan to conduct a terrorist attack inside the United States had been discovered when the man they had invited to join their plot (the man who had allegedly purchased the weapons for them) reported the plot to the Seattle Police Department, which in turn reported it to the FBI. According to the federal criminal complaint filed in the case, the third unidentified man had an extensive criminal record and had known Abdul-Latif for several years, but he had not been willing to undertake such a terrorist attack. </p> <p>While the behavior of Abdul-Latif and Mujahidh in this plot demonstrates that they were amateur “wannabe” jihadists rather than seasoned terrorist operatives, their plot could have ended very differently if they had found a kindred spirit in the man they approached for help instead of someone who turned them into the authorities. This case also illustrates some important trends in jihadist terrorism that we have been watching for the past few years as well as a possible shift in mindset within the jihadist movement. </p> <h3>Trends</h3> <p>First, Abu-Khalid Abdul-Latif and Walli Mujahidh, both American converts to Islam, are prime examples of what we refer to as <a href="http://www.stratfor.com/weekly/20100512_setting_record_grassroots_jihadism">grassroots jihadists</a>. They are individuals who were inspired by the al Qaeda movement but who had no known connection to the al Qaeda core or one of its franchise groups. In late 2009, in response to the success of the U.S. government and its allies in preventing jihadist attacks in the West, al Qaeda in the Arabian Peninsula (AQAP) began a <a href="http://www.stratfor.com/weekly/20091104_counterterrorism_shifting_who_how">campaign to encourage jihadists living in the West to conduct simple attacks</a> using readily available items, rather than travel abroad for military and terrorism training with jihadist groups. After successes such as the <a href="http://www.stratfor.com/weekly/20091111_hasan_case_overt_clues_and_tactical_challenges">November 2009 Fort Hood shooting</a>, this theme of encouraging grassroots attacks was <a href="http://www.stratfor.com/weekly/20110608-al-qaedas-new-video-message-defeat">adopted by the core al Qaeda group</a>. </p> <p>While the grassroots approach does present a challenge to law enforcement and intelligence agencies in that attackers can seemingly appear out of nowhere with no prior warning, the <a href="http://www.stratfor.com/weekly/20100317_jihadism_grassroots_paradox">paradox presented by grassroots operatives</a> is that they are also far less skilled than trained terrorist operatives. In other words, while they are hard to detect, they frequently lack the skill to conduct large, complex attacks and frequently make mistakes that expose them to detection in smaller plots. </p> <p>And that is what we saw in the Seattle plot. Abdul-Latif had originally wanted to hit U.S. Joint Base Lewis-McChord (formerly known as Fort Lewis and McChord Air Force Base), which is located some 70 kilometers (44 miles) south of Seattle, but later decided against that plan since he considered the military base to be too hardened a target. While Abdul-Latif and Mujahidh were amateurs, they seem to have reached a reasonable assessment of their own abilities and which targets were beyond their abilities to strike.</p> <p>Another trend we noted in this case was that the attack plan called for the use of firearms and hand grenades in an armed assault, rather than the use of an improvised explosive device (IED). There have been a number of botched IED attacks, such as the <a href="http://www.stratfor.com/weekly/20100505_uncomfortable_truths_times_square_attack">May 2010 Times Square attack</a> and <a href="http://www.stratfor.com/analysis/20090922_u_s_thwarting_potential_attack">Najibullah Zazi’s plot to attack the New York subway system</a>. </p> <p>These were some of the failures that caused jihadist leaders such as AQAP’s Nasir al-Wahayshi to encourage grassroots jihadists to undertake simple attacks. Indeed, the most successful jihadist attacks in the West in recent years, such as the Fort Hood shooting, the June 2009 attack on a <a href="http://www.stratfor.com/weekly/20090603_lone_wolf_lessons">military recruitment center in Little Rock, Ark.,</a> and the March 2011 attack on <a class="strat_tip_off" title="Watch Video: Dispatch: U.S. Airmen Shot in Germany"><img src="http://media.stratfor.com/stratfor_images/playbuttonsmall.gif" /> U.S. troops at a civilian airport in Frankfurt, Germany</a>, involved the use of firearms rather than IEDs. When combined with the thwarted <a href="http://www.stratfor.com/analysis/20110512-new-york-police-disrupt-alleged-jihadist-plot">plot in New York in May 2011</a>, these incidents support the trend we identified in May 2010 of grassroots jihadist conducting <a href="http://www.stratfor.com/weekly/20100526_failed_bombings_armed_jihadist_assaults">more armed assaults and fewer attacks involving IEDs</a>. </p> <p>Another interesting aspect of the Seattle case was that Abdul-Latif was an admirer of AQAP ideologue Anwar al-Awlaki. Unlike the Fort Hood case, where U.S. Army Maj. Nidal Malik Hasan had been in email contact with al-Awlaki, it does not appear that Abdul-Latif had been in contact with the AQAP preacher. However, from video statements and comments Abdul-Latif himself posted on the Internet, he appears to have had a high opinion of al-Awlaki and to have been influenced by his preaching. It does not appear that Abdul-Latif, who was known as Joseph Anthony Davis before his conversion to Islam, or Mujahidh, whose pre-conversion name was Frederick Domingue Jr., spoke Arabic. This underscores the importance of <a href="http://www.stratfor.com/weekly/20110511-al-qaeda-leadership-yemen">al-Awlaki’s role within AQAP as its primary spokesman to the English-speaking world</a> and his mission of radicalizing English-speaking Muslims and encouraging them to conduct terrorist attacks in the West. </p> <h3>Vulnerabilities </h3> <p>Once again, in the Seattle case, the attack on the MEPS was not thwarted by some CIA source in Yemen, an intercept by the National Security Agency or an intentional FBI undercover operation. Rather, the attack was thwarted by a Muslim who was approached by Abdul-Latif and asked to participate in the attack. The man then went to the Seattle Police Department, which brought the man to the attention of the FBI. This is what we refer to as <a href="http://www.stratfor.com/weekly/jihadist_threat_and_grassroots_defense">grassroots counterterrorism</a>, that is, local cops and citizens bringing things to the attention of federal authorities. As the jihadist threat has become more diffuse and harder to detect, grassroots defenders have become an <a href="http://www.stratfor.com/weekly/20110406-how-tell-if-your-neighbor-bombmaker">even more critical component</a> of international counterterrorism efforts. This is especially true for Muslims, many of whom consider themselves engaged in a struggle to defend their faith (and their sons) from the threat of jihadism. </p> <p>But, even if the third man had chosen to participate in the attack rather than report it to the authorities, the group would have been vulnerable to detection. First, there were the various statements Abdul-Latif made on the Internet in support of attacks against the United States. Second, any Muslim convert who chooses a name such as Mujahidh (holy warrior) for himself must certainly anticipate the possibility that it will bring him to the attention of the authorities. Abdul-Latif and Mujahidh were also somewhat cavalier in their telephone conversations, although those conversations do not appear to have brought them to the attention of the authorities. </p> <p>Perhaps their most significant vulnerability to detection, aside from their desire to obtain automatic weapons and hand grenades, would have been <a href="http://www.stratfor.com/vulnerabilities_terrorist_attack_cycle">their need to conduct preoperational surveillance of their intended target</a>. After conducting some preliminary research using the Internet, Abdul-Latif quickly realized that they needed more detailed intelligence. He then briefly conducted physical surveillance of the exterior of the MEPS to see what it looked like in person. Despite the technological advances it represents, the Internet cannot replace the physical surveillance process, which is a critical requirement for terrorist planners. Indeed, after the external surveillance of the building, Abdul-Latif asked the informant to return to the building under a ruse in order to enter it and obtain a detailed floor plan of the facility for use in planning the attack. </p> <p>In this case, the informant was able to obtain the information he needed from his FBI handlers, but had he been a genuine participant in the plot, he would have had to have exposed himself to detection by entering the MEPS facility after conducting surveillance of the building’s exterior. If some sort of <a href="http://www.stratfor.com/secrets_countersurveillance">surveillance detection program</a> was in place, it likely would have flagged him as a person of interest for follow-up investigation, which could have led authorities back to the other conspirators in the attack.</p> <h3>A New Twist</h3> <p>One aspect of this plot that was different from many other recent plots was that Abdul-Latif insisted that he wanted to target the U.S. military and did not want to kill people he considered innocents. Certainly he had no problem with the idea of killing the armed civilian security guards at the MEPS — the plan called for the attackers to kill them first, or the unarmed still-civilian recruits being screened at the facility, then to kill as many other military personnel as possible before being neutralized by the responding authorities. However, even in the limited conversations documented in the federal criminal complaint, Abdul-Latif repeated several times that he did not want to kill innocents. This stands in stark contrast to the actions of previous attackers and plotters such as John Allen Mohammed, the so-called D.C. sniper, or Faisal Shahzad, who planned the failed Times Square attack. </p> <p>Abdul-Latif’s reluctance to attack civilians may be a reflection of the debate we are seeing among jihadists in places like Afghanistan, Pakistan and even Algeria over the killing of those they consider innocents. This debate is also raging on many of the English-language jihadist message boards Abdul-Latif frequented. Most recently, this tension was seen in the <a href="http://www.stratfor.com/analysis/20110628-afghanistan-weekly-war-update-border-tensions-pakistan">defection of a Tehrik-i-Taliban Pakistan faction in Pakistan’s Kurram agency</a>. </p> <p>If this sentiment begins to take wider hold in the jihadist movement, and especially the English-speaking jihadist community in the West, it could have an impact on the target-selection process for future attacks by grassroots operatives in the West. It could also mean that commonly attacked targets such as subway systems, civilian aircraft, hotels and public spaces will be seen as less desirable than comparably soft military targets. Given the limitations of grassroots jihadists, and their tendency to focus on soft targets, such a shift would result in a much smaller universe of potential targets for such attacks — the softer military targets such as recruit-processing stations and troops in transit that have been targeted in recent months. </p> <p>Removing some of the most vulnerable targets from the potential-target list is not something that militants do lightly. If this is indeed happening, it could be an indication that some important shifts are under way on the <a href="http://www.stratfor.com/weekly/20081001_al_qaeda_and_tale_two_battlespaces">ideological battlefield</a> and that jihadists may be concerned about losing their popular support. It is still too early to know if this is a trend and not merely the idiosyncrasy of one attack planner — and it is contrary to the target sets laid out in recent messages from AQAP and the al Qaeda core — but when viewed in light of the Little Rock, Fort Hood and Frankfurt shootings, it is definitely a concept worth further examination.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/seattle-plot.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T11:43:00-07:00">11:43 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8606179176139736646">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8606179176139736646&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/The%20Seattle%20Plot" rel="tag">The Seattle Plot</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2625833620777225231"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/rise-of-transfer-state.html">Rise of the Transfer State</a> </h3> <div class="post-body entry-content"> <div id="header"> <div id="blackband_top_left"> </div></div><span style="font-weight: bold;font-size:180%;"><a href="http://www.cato-at-liberty.org/rise-of-the-transfer-state/" rel="bookmark" title="Permanent link to this post">Rise of the Transfer State</a></span> <p class="post-author"> Posted by <span class="author vcard"><a target="_blank" class="url fn n" href="http://www.cato.org/people/mark-calabria" title="View all posts by Mark A. Calabria">Mark A. Calabria</a></span> </p> <p>Perhaps this is best thought of as the<em><strong> chart of the day</strong></em>, as I will not attempt to discuss its many implications or drivers. The following chart tracks the percentage of federal spending that is simply a direct transfer of income. Now we could debate whether all government spending is little more than a transfer of wealth, but let’s save that for another day. The chart shows a dramatic increase in the share of government that does not go to buying or producing anything, but simply takes the form of a check, increasing from around a third of federal spending to about two-thirds today.</p> <div><a target="_blank" href="http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/govt-transfers.png"><img class="alignleft size-full wp-image-34141" title="govt transfers" src="http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/govt-transfers.png" alt="" height="378" width="630" /></a>There is one aspect of this trend which merits study in our current economic environment. While there is a wide range of estimates* for how much government spending adds (or subtracts from) overall economic activity – the so called “<a target="_blank" href="http://en.wikipedia.org/wiki/Fiscal_multiplier">fiscal multiplier</a>” - that multiplier is likely to differ for transfer payments versus the government purchase of goods and services. If government simply takes from A and gives to B, then the magnitude and sign (- or +) will depend on A’s marginal propensity to consume relatives to B’s, minus any resources A spends to avoid said transfer. This suggests to me that the multiplier for transfers is likely to be about zero, if not negative. Some of that transfer will be saved by the receiving party, while consumption will likely decline by the losing party.</div> <p>With direct government purchases of good and services, little, if any, of the initial spending will be saved. Hence it seems reasonable to believe that the multilpier for direct spending is higher than than for transfer payments, although it still may be less than one.</p> <p>The point of all this is that the shift of federal spending towards transfer spending has likely reduced the fiscal multiplier, all else equal. As this is an empirical question, I would certainly be interested in knowing if anyone has tried to measure it.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/rise-of-transfer-state.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T10:07:00-07:00">10:07 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2625833620777225231">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2625833620777225231&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Rise" rel="tag">Rise</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Transfer%20State" rel="tag">Transfer State</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1073816285898635814"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/economics-of-sustainability.html">The Economics of Sustainability</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/economics-of-sustainability.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T10:04:00-07:00">10:04 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1073816285898635814">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1073816285898635814&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5108134368992836806"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/economic-freedom-quality-of-life.html">Economic Freedom & Quality of Life</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/economic-freedom-quality-of-life.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-30T10:04:00-07:00">10:04 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5108134368992836806">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5108134368992836806&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <h2 class="date-header"><span>Wednesday, June 29, 2011</span></h2> <div class="post-outer"> <div class="post hentry"> <a name="5141581296857961538"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/revisiting-fdr-and-unimagined-power.html">Revisiting FDR and 'Unimagined Power': Echoes</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size: x-large;">Revisiting FDR and 'Unimagined Power': Echoes</span></h1><div id="article_image_container"> <img alt="First Draft " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iYYbHEjOdwEg" /> <div id="article_credit">Courtesy of the Franklin D. Roosevelt Presidential Library and Museum </div></div><div class="bview_story_meta"> <cite class="byline">By Amity Shlaes </cite><cite class="byline story_time"><span class="datestamp"></span></cite></div>Last week, reader Chris Ryan wrote to say that in analyzing President <a href="http://topics.bloomberg.com/franklin-d.-roosevelt/">Franklin D. Roosevelt</a>'s second inaugural address of 1937 <a href="http://www.bloomberg.com/news/2011-06-06/what-paul-krugman-misses-about-1937-redux-echoes.html">my last column</a> contained a "serious factual error." I noted that when Roosevelt said the U.S. sought "an instrument of unimagined power for the establishment of a morally better world," the instrument the president was referring to was the government. Mr. Ryan disagrees.<br />He argues that FDR wasn't referring to government in this section -- that the president had moved on to matters of the spirit. The suggestion here is that my column made Roosevelt look more aggressive than he was. Mr. Ryan says "such distortions of people’s words are dishonest."<br />Here's my take. Roosevelt relished ambiguity, precisely because it allowed him to have it both ways. Indeed, you can hear FDR chuckling in the background when modern history buffs squabble over what he meant. That's what he wanted us to do. As my Bloomberg View colleague <a href="http://topics.bloomberg.com/jonathan-alter/">Jonathan Alter</a> has noted in his book "<a href="http://www.amazon.com/Defining-Moment-FDRs-Hundred-Triumph/dp/0743246004">The Defining Moment</a>," Roosevelt once backed free trade and protectionism in the same speech. A distraught speechwriter, Ray Moley, pointed out that the principles were mutually exclusive. FDR blithely told the speechwriter to "weave them together."<br />But to the 1937 inaugural. Speechwriter Sam Rosenman notes in his memoir, "Working With Roosevelt," that this speech involved multiple drafts and contained more "work, corrections, inserts, substitutions and deletions by the President than any of the other speeches." Exactly what was intended by these changes, readers may judge for themselves: A copy of the relevant pages from two of those earlier drafts are posted here, courtesy of the <a href="http://www.fdrlibrary.marist.edu/">Franklin D. Roosevelt Presidential Library and Museum</a> in Hyde Park, <a href="http://topics.bloomberg.com/new-york/">New York</a>.<br />But since Mr. Ryan's charges are so strong, it seems worthwhile to supply some more facts. Roosevelt had campaigned the prior fall vowing that he would escalate the fight against business if he won, promising that in him businessmen would find they had met "their master." Whoa.<br />Then he did win, in a landslide so historic it seemed Democrats would rule always and forever. Everyone, including those in his administration, therefore expected that laws even more radical than those of FDR's first term would be passed and signed. And those of the first term had already been disastrous for business: The National Recovery Act and the Public Utilities Holding Company Act, which strangled promising utilities, were just two examples. When you review the second inaugural speech, it helps to recall that context.<br />In the speech, FDR reminds the country that from the beginning the settlers in the New World realized that they must strengthen government. And he placed his own first term in that tradition: "Instinctively we recognized a deeper need -- the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization." Note the use of the word "instrument."<br />Then Roosevelt moves on to other topics, winding his way toward both the spiritual and political change the nation had already begun. He says that "using the new materials of social justice we have undertaken to erect on the old foundations a more enduring structure for the better use of future generations."<br />Then the president suggests that Americans have learned to think differently about economics. "In that purpose we have been helped by achievements of mind and spirit. Old truths have been relearned; untruths have been unlearned. We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays."<br />Roosevelt ends the paragraph by taking up the instrument image again. "We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world."<br />Mr. Ryan thinks Roosevelt is referring this time to an event purely spiritual in nature. But the case that Roosevelt has moved back to government -- that he means it is government that will have unimagined power -- is also strong. That’s because the word "instrument" has already been established in this speech as a governmental instrument. The lines that follow also suggest FDR’s instrument here is for action, not philosophizing.<br />"This new understanding undermines the old admiration of worldly success as such. We are beginning to abandon our tolerance of the abuse of power by those who betray for profit the elementary decencies of life. In this process evil things formerly accepted will not be so easily condoned."<br />Here FDR sounds like he's giving marching orders to his antitrust lawyers, not laying out the Sunday school curriculum.<br />A few moments later, Roosevelt utters the famous lines about "one third of a nation" being "ill clad, ill housed, ill nourished." (The FDR Library reports that Roosevelt seems to have made those ratios up, but never mind.) Roosevelt also talks about using America's "rediscovered ability to improve our economic order." Rediscovered ability means time for action.<br />Most importantly, what this speech is remembered for is that it did, in fact, foreshadow aggressive presidential action. Roosevelt soon launched his plan to pack the <a href="http://topics.bloomberg.com/supreme-court/">Supreme Court</a> with justices friendly to his view, a level of executive intervention into the judiciary branch so egregious that his own party blocked it.<br />In short, Mr. Ryan's interpretation is possible. My interpretation -- that Roosevelt was talking about government -- is also possible. This is not a factual dispute. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/revisiting-fdr-and-unimagined-power.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T21:26:00-07:00">9:26 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5141581296857961538">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5141581296857961538&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="9201662170914592102"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/rule-of-lawlessness.html">Rule of Lawlessness</a> </h3> <div class="post-body entry-content"> <h2><span style="font-size: x-large;"><a href="http://spectator.org/archives/2011/06/29/rule-of-lawlessness">Rule of Lawlessness</a></span></h2><div class="byline"><span>By <a href="http://spectator.org/people/john-h-fund" rel="author">John H. Fund</a> </span></div><div class="byline"><br /></div>Is the Age of Obama ushering in an Era of Thuggery by his left-wing supporters?<br />Barack Obama has made clear his admiration of Saul Alinsky, the radical "father" of community organizing. Peter Slevin of the <em>Washington Post</em> wrote in 2007 that "Obama embraced many of Alinsky's tactics and recently said his years as an organizer gave him the best education of his life."<br />Alinsky, who died in 1971, was known for his belief that revolutionaries must stir up the downtrodden to become angry enough at their condition to demand its betterment. In his famous book <em>Rules for Radicals</em>, Alinsky acknowledged his debt to Lucifer, "the very first radical," who "rebelled against the establishment and did it so effectively that he at least won his own kingdom."<br />When it came to the best way to achieve revolution, Alinsky explictly argued for moral relativism in fighting the establishment: "In war the end justifies almost any means." Specifically, "the practical revolutionary will understand… [that] in action, one does not always enjoy the luxury of a decision that is consistent both with one's individual conscience and the good of mankind."<br />It appears that the left has decided to throw conscience aside and put the raw exercise of political power first. Consider three separate news stories that developed within the same week in late April:<br />• When Attorney General Eric Holder decided to no longer uphold the constitutionality of the 1996 Defense of Marriage Act, or DOMA, the U.S. House hired the Atlanta-based law firm of King and Spalding to defend it in court. The law defines marriage as between a man and a woman and says states aren't obliged to honor gay marriages recognized in other states.<br />But within days of being hired the firm dropped the House as a client, claiming the firm had failed in properly "vetting" the issue. Former Bush solicitor general Paul Clement, who had brought the case to King and Spalding, resigned from the firm in protest.<br />The real reason the case was dropped was the campaign launched by the Human Rights Campaign to "educate" (read: intimidate) the firm's clients about "King and Spalding's decision to promote discrimination." Never mind that like 84 other senators Vice President Joe Biden had voted for the bill. Or that Holder's old boss Bill Clinton signed it. Anyone who now touched the issue was to be branded a bigot. "Gay rights activists argue that DOMA is unconstitutional," notes <em>San Francisco Chronicle</em> columnist Debra Saunders. "If they're so sure, why are they trying to prevent good lawyers from defending it?"<br />• California Democratic leaders, frustrated by the refusal of Republican state legislators to go along with tax increases to close the state's $15.4 billion deficit, are threatening to focus budget cuts on the districts those Republicans represent.<br />"You don't want to pay for government, well then, you get less of it," Senate president pro tem Darrell Steinberg told reporters in late April. Steinberg echoed comments made by Treasurer Bill Lockyer, who told reporters that budget cuts should be targeted at the districts of lawmakers who oppose putting $11 billion in tax increases before the state's voters in a referendum.<br />"When it comes to kids or the vulnerable, I wouldn't want to make distinctions between who lives in a Democratic district and who lives in a Republican district, but when it comes to sort of basic services, convenience services that affect adults...I have an open mind," Steinberg told reporters.<br />A spokeswoman for Bob Dutton, the Senate's Republican leader, reacted quickly to the bully-boy tactics. "It only means Democrats are unwilling to stand up to public employee unions," said Jann Taber. "They'd rather cut services to Californians than fix bloated public employee pension systems. Clearly this isn't an attempt to craft a true bipartisan budget solution."<br />Local officials in districts represented by Republicans called the tactic completely counterproductive.<br />"That is shameless extortion," Butte County supervisor Larry Wahl told the <em>Sacramento Bee</em>.<br />"He's trying to get me to call [Assemblyman Dan] Logue and [state Sen.] Doug LaMalfa and say 'Raise our taxes.' I'm not going to do that."<br /><div class="paginator"><span style="font-size: x-large;"><strong>Page:</strong> <b>1</b> <a href="http://spectator.org/archives/2011/06/29/rule-of-lawlessness/1">2</a> <a href="http://spectator.org/archives/2011/06/29/rule-of-lawlessness/1" rel="next">></a> </span></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/rule-of-lawlessness.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T18:01:00-07:00">6:01 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9201662170914592102">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9201662170914592102&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Rule%20of%20Lawlessness" rel="tag">Rule of Lawlessness</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7799618978717616115"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/that-90s-show.html">That '90s Show</a> </h3> <div class="post-body entry-content"> <h3 class="department"> <a href="http://spectator.org/departments/features">Feature</a> </h3><h2><span style="font-size: x-large;"><a href="http://spectator.org/archives/2011/06/29/that-90s-show">That '90s Show</a></span></h2><div class="byline">By <a href="http://spectator.org/people/james-antle" rel="author">W. James Antle, III</a> </div><div class="byline"><br /></div>Since the Republican victory in last year's elections was frequently compared to 1994, it was not terribly surprising that many observers expected the next two years to be a repeat of 1995-96. The conventional wisdom held that the resurgent Republicans would overreach, allowing an unpopular Democratic president a new lease on life and an improbable second term. The new Republican-controlled House would reprise the role of Newt Gingrich's revolutionaries, while Barack Obama replayed Bill Clinton.<br />Six months into this new era of divided government, a rerun of the Seinfeld decade remains a plausible scenario. Conservative commentator and Republican campaign veteran Jim Pinkerton has gone so far as to argue that the "Tea Party-ized House" will make such an inviting target that Obama will emulate not Clinton but Harry Truman, running entirely against a "Do Nothing" Congress in 2012. But it is important to note that there are key differences between the 1990s and now.<br />First, no current Republican leader has emerged as a PR villain of Gingrich-like proportions. Polls show House Speaker John Boehner is becoming better known and less popular, but not to the point where his photo in a campaign commercial is a silver bullet for Democratic candidates. He isn't as given to bombastic pronouncements as Gingrich. Voters who pay only a modest amount of attention to politics are more likely to be familiar with his tears than his views or public remarks on controversial issues.<br />Senate Minority Leader Mitch McConnell has penetrated the public consciousness even less than Boehner, causing Democrats to look around for other congressional Republicans to demonize. Congresswoman Michele Bachmann of Minnesota is one target for liberals eager to relive their two-minute hate against Sarah Palin, but she has yet to acquire Palin's name identification. House Budget Committee chairman Paul Ryan has become another potential Gingrich figure, though his calm and cerebral manner might persuade Democrats to stick to demagoguery about his proposed spending cuts instead. No matter how it treats his 2012 budget proposal, <i>Time</i> will probably not run a holiday cover story comparing Ryan to the Grinch who stole Christmas.<br />While the Democrats' retention of the Senate has frustrated many conservative ambitions, it has also complicated any media narrative about right-wing control of Washington. Where Clinton seemed besieged by Republicans on all sides of Capitol Hill, nothing can reach Obama's desk without at least token bipartisan support. Tea Party senators like Rand Paul are as likely to be in opposition to legislation that emerges from the Senate as they are to be ramming conservative policy proposals down the president's throat. In their imagined sequel to the 1996 election, Democrats may need Newt Gingrich to play himself by running for president.<br />BUT THERE ARE a lot of similarities between then and now as well, and these commonalities have guided the major players in the 2011-12 political drama. When they entered into their initial budget confrontation with Obama, it was clear that whatever the Tea Party activists may have wanted, the Republican leadership was determined to avoid a government shutdown. Despite major changes in the media over the past 16 years, such as the rise of conservative-leaning Fox News, GOP leaders seemed convinced that a shutdown would play as badly for Republicans this year as it did in 1995. <i>New York Times</i> columnist Ross Douthat opined that Boehner "made it abundantly clear -- in word, deed, and especially body language -- that he wanted the government shut down about as much as Indiana Jones wants to be locked in a room full of cobras."<br />Meanwhile, President Obama has forced himself to copy Clinton's triangulation strategy even though it manifestly runs counter to his ideological and temperamental inclinations. He signed a temporary extension of the Bush tax cuts for upper-income earners, although he clearly wasn't very happy about it. He reached a budget agreement with the House Republicans that cut at least some spending. (That time, Obama did pretend to be happy.) He fine-tuned his fiscal 2012 budget to appear more serious about deficit reduction in response to the Ryan plan. And Obama has quietly adopted most of George W. Bush's national security policies, down to launching another preventive war against a Muslim country and enlisting General David Petraeus -- the man who oversaw the surge in Iraq -- to run the country's intelligence apparatus.<br />Virtually all of these moves were bitterly unpopular with Obama's liberal base, and the current president is much less comfortable distancing himself from progressives than was Clinton. Obama was nominated in large part as a reaction against the Clintons' triangulating ways, a successful version of Howard Dean's 2004 presidential campaign. But changing political circumstances have led the president to embrace the Clintons' Democratic Leadership Council logic: he believes independents will reward at least the appearance of responsible behavior on fiscal policy and national defense while angry liberals will have nowhere else to go. Daily Kos visitors aren't going to vote for Mitt Romney.<br />Yet Clinton-era triangulation never made partisan attacks on Republicans less potent. In fact, because he was ceding substantive policy ground to the GOP on issues ranging from welfare reform to the capital gains tax, Clinton needed to sharpen the rhetorical distinctions between the parties, not dull them. So even as he ended up working with Republicans to balance the budget, he also promised to protect the country from their cuts -- real and imagined -- to Social Security, Medicare, Medicaid, education, and the environment. He challenged the Republicans to be fiscally responsible, and then punished them for it at the polls when they complied.<br />That's exactly what the Democrats hope to repeat this time around. House Republicans dodged a government shutdown by agreeing to a continuing resolution that to some extent fudged its $38.5 billion in spending reductions, but they have passed a budget that is breathtakingly honest about the scope of entitlement cuts that will be necessary to keep the federal tax burden from soaring past its postwar average of 18 to 20 percent of GDP. Where the Gingrich Republicans promised to grow Medicare more slowly, the Ryan Republicans want to partially privatize Medicare. While the Gingrich Republicans favored a smaller increase in Medicare recipients' benefits, the Ryan Republicans are actually cutting benefits (albeit on the theory that they can also cut costs).<br />WHAT HASN'T CHANGED at all is the standard Democratic talking point. In 1995, Republicans estimated that their Medicare reforms would save $270 billion while most estimates pegged their proposed tax cut at $245 billion. Naturally, Democrats argued that these figures proved Republicans were cutting Medicare benefits-even abolishing Medicare-in order to pay for tax cuts for the rich. "Finally we learn the truth about how the Republicans want to eliminate Medicare," warned one 1996 Clinton campaign ad. Dozens of other Democratic commercials in down-ballot races used similar scare tactics.<br />Ever strong believers in recycling, Democrats have dusted off their 1990s rhetoric and reused it in attacks on the Ryan plan. "Newt Gingrich has said Medicare should wither on the vine," intoned Rep. Jan Schakowsky (D-IL) "Well, this Republican budget would chop it down." Rep. Henry Waxman (D-CA) also took aim at Ryan's proposed block granting of Medicaid: "They use Medicaid as a piggy bank in order to avoid asking the people at the very top of our economic ladder, the very richest in our society, the highest income earners of millions of dollars or more, to avoid paying their fair share of taxes."<br />Higher-brow liberals have chimed in with similar talking points. Jonathan Chait writes in the <i>New Republic</i> that Ryan has consciously decided to "cut Medicare in order to cut taxes for the rich." Paul Krugman, writing in the <i>New York Times</i>, agrees "a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts." John Cassidy blogged for the <i>New Yorker</i> that the Republican budget "featured slashing reductions in domestic spending, more big tax cuts for the rich, and the conversion of Medicare to a voucher program." Cassidy concluded, "By spelling out what the Republicans would do to Medicare and Medicaid, [Ryan] may well have deprived his party of the White House for the foreseeable future."<br />That's exactly what the Democrats are betting. Concerns Republicans would cut Medicare certainly helped deprive them of the White House in 1996. Bob Dole ineffectually decried the Democrats' "Mediscare" tactics, but the then 73-year-old lost the 65 and over vote by 50 percent to 43 percent. Dole also failed to carry senior-heavy Florida, which had been the second-largest remaining weapon in the GOP's electoral vote arsenal just four years before.<br />Then as now, Republicans argued that they were not just cutting Medicare but "saving" the program by preventing its insolvency. And they had some advantages in the '90s that don't obtain now. The baby boomers were then in their peak earning years, not entering retirement. The economy was on the cusp of a high-tech boom, not coming off the Great Recession. The GOP's $500 per child tax credit was harder to characterize as a tax cut for the wealthy than lowering the top marginal tax rate to 25 percent.<br /><div class="paginator"><b><span style="font-size: x-large;"><b>Page:</b> 1 <a href="http://spectator.org/archives/2011/06/29/that-90s-show/1">2</a> <a href="http://spectator.org/archives/2011/06/29/that-90s-show/2">3</a> <a href="http://spectator.org/archives/2011/06/29/that-90s-show/1" rel="next">></a> </span></b></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/that-90s-show.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T18:00:00-07:00">6:00 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7799618978717616115">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7799618978717616115&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/That%20%2790s%20Show" rel="tag">That '90s Show</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4814239134427883867"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/friedrich-hayek-for-president-in-2012.html">Friedrich Hayek For President in 2012</a> </h3> <div class="post-body entry-content"> <h2 class="date-header"><span></span><span style="font-size: x-large;">Friedrich Hayek For President in 2012</span></h2><div class="date-posts"><div class="post-outer"><div class="post hentry"><h3 class="post-title entry-title"> </h3><div class="post-body entry-content"> <div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5HNNo2_icqm2aGYdWsCuNOT9-0znSmUV9qFZyZbdV0aT89UvusRKQQQfiO6ks__XImXkR3CFw9LUROfol_6VEikvh0YouXag4P9ZCCELWH6Ub_-0_KOMHWqedROCJNmm1Ln7UuvUxTg/s1600/keynes_hayek.jpg" style="margin-left: 1em; margin-right: 1em;"><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5HNNo2_icqm2aGYdWsCuNOT9-0znSmUV9qFZyZbdV0aT89UvusRKQQQfiO6ks__XImXkR3CFw9LUROfol_6VEikvh0YouXag4P9ZCCELWH6Ub_-0_KOMHWqedROCJNmm1Ln7UuvUxTg/s400/keynes_hayek.jpg" border="0" height="301" width="400" /></a></div>The ever-shifting American populace is temporarily sick of deficit spending and bailouts. Not necessarily because they disagree with the fundamental principles behind them, but rather, they simply don't like what the current economy looks like. So, more and more are jumping on the Paul Ryan bandwagon that says shallow spending cuts will solve everything.<br /><br />But did anyone else catch this video of John Stossel on Bill O'Reilly, translating Ron Paul's views on Keynesian economic policy for him?<br /><br />Perhaps it shouldn't have, but this clip completely shocked me.<br /><br /><b>Bill O'Reilly, a leading political commentator and conservative voice, is wholly unfamiliar with the man the United States bases its entire macroeconomic model off of! </b>How much more so the average American voter!?!?<br /><br />It's as if we've conceded Keynesian theory as <i>de facto</i> best practice and inarguable economics. Because of that, the current economic debate in this country is overly-simplified and, from a macro standpoint, entirely one-sided.<br /><br />The 2008 Presidential campaign made Ron Paul a household name. The 2012 campaign needs to do the same for a man who's not running. His name is Friedrich Hayek.</div><div class="post-body entry-content"> </div></div></div></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/friedrich-hayek-for-president-in-2012.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T16:48:00-07:00">4:48 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4814239134427883867">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4814239134427883867&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="317033435174291376"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/sen-rand-paul-on-situation-room-062911.html">Sen. Rand Paul on The Situation Room - 06/29/11</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/sen-rand-paul-on-situation-room-062911.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T16:45:00-07:00">4:45 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=317033435174291376">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=317033435174291376&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="787858283484883145"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/tom-woods-say-no-to-fopo-nullify-now.html">Tom Woods: Say No to FoPo - Nullify Now! Los Angeles</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/tom-woods-say-no-to-fopo-nullify-now.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T16:42:00-07:00">4:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=787858283484883145">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=787858283484883145&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6171849782350764705"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/monetary-policy-subcommittee-imf-gold.html">Monetary Policy Subcommittee: IMF & Gold Pt. 2 - 06/23/11</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/monetary-policy-subcommittee-imf-gold.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T16:41:00-07:00">4:41 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6171849782350764705">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6171849782350764705&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="9113914702880160484"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/first-step-to-sound-money.html">A First Step To Sound Money</a> </h3> <h1 style="margin-bottom: 10px;"><span style="font-size: x-large;">A First Step To Sound Money</span></h1><table class="no_print" id="links" style="border-bottom: 1px solid gray; margin: 5px 0 5px 0;" border="0" cellpadding="0" cellspacing="0"><tbody> <tr><td style="font-family: arial; font-size: 12px; padding: 3px 5px 3px 5px; vertical-align: bottom;"><br /></td><td style="border-left: 1px solid gray; font-family: arial; font-size: 12px; padding: 3px 5px 3px 5px; vertical-align: bottom;"><br /></td><td style="border-left: 1px solid gray; font-family: arial; font-size: 12px; padding: 3px 5px 3px 5px; vertical-align: bottom;"><br /></td><td style="border-left: 1px solid gray; color: #525252; font-family: arial; font-size: 12px; padding: 3px 5px 3px 5px; text-decoration: none; vertical-align: bottom; white-space: nowrap;"><br /></td> </tr> </tbody></table><div id="print_content_3"><div class="content-copy"><div class="introduction">Here’s a hypothetical situation. Suppose you had $1.5 million. At today’s gold price that would buy approximately 1,000 ounces of gold. Suppose now that President Obama, the Congress, and the Federal Reserve began managing the American economy in such a way that by the end of President Obama’s second term, the dollar was back to where it was when President George W. Bush began his first term. Were that to happen, your $1.5 million could purchase 5,660 ounces of gold.</div>So, do you think you should have to pay taxes on the increase in the value of your money?<br />If the idea strikes you as crazy, let us refer you to the legislation introduced today at the Senate by James DeMint, Rand Paul, and Michael Lee. It’s called the Sound Money Promotion Act, and The New York Sun is happy to lay claim to being the first newspaper to endorse it. The measure, as it is characterized in a press release posted by Senator DeMint, would remove the tax burden on gold and silver coins that have been declared legal tender by either the federal government or state governments.<br />On its face it might seem an odd bill. But looks at the hypothetical situation above from the opposite end of the telescope, so to speak. It seeks to block tax authorities from treating gold and silver coins as though they were mere commodities and start treating them, at least in tax law, as though they were what the Founders of America thought they were, which is money. Gold and silver coins are already treated this way, as legal tender, inside the state of Utah, whence Senator Lee was elected.<br />This is because Utah was the first state in our modern time to exercise its constitutional power to make gold and silver coins legal tender. It did so earlier this year, ahead of as many as a dozen states that are at various stages of looking in to the question of how to protect themselves against the collapse of the United States dollars that are being issued by the Federal Reserve. They are all being energized by the fact that the value of the dollar has collapsed to barely a fifth of what it was, if that, at the start of the 21<sup>st</sup> century.<br />One of the states considering making gold and silver coins legal tender is South Carolina. That was remarked on by Mr. DeMint, one of its senators at Washington, in introducing the bill. He attributed the dollar’s collapse in recent years to “the government’s reckless over-spending, continued bailouts, and the Federal Reserve’s easy money policy” and said that in addition to fiscal discipline the country would need “monetary discipline to restrain further destructive monetizing of our debt.” The legislation, he said, “would encourage wider adoption of sound money measures.”<br />The press release introduced by Senators DeMint, Lee, and Paul noted that Standard & Poor’s has recently downgraded America’s outlook to “negative” from “stable,” meaning, the senators asserted, “there is a one in three chance of an actual credit downgrade in the next two years.” They asserted that the Federal Reserve is now buying 70% of U.S. Treasuries, set to surpass the holdings of both Communist China and Japan combined.<br />How far the three senators will get with the Sound Money Protection Act is hard to say. Its implication — a recognition of gold and silver as the true constitutional money — is, in the current context, radical. But it's no more radical than the Founders, who, when they twice used the word “dollars” in the Constitution, were referring to a coin containing 371 ¼ grains of silver. They codified that as the definition of the dollar in the Coinage Act of 1792. They also referenced gold in the 1792 Act, with a value of 15 times that of silver. We are in a time when understanding the concept of constitutional money will point the way to the policies needed to steer our country out of its current difficulties.</div></div>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-89256321459918793212011-06-29T15:16:00.001-07:002011-06-29T15:16:17.463-07:00<div class="post-body entry-content"> <h1 class="documentFirstHeading">Are Productivity Gains in Higher Education Possible?</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Andrew%20Kelly">By Andrew Kelly</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">Yes, but not until institutions are provided with incentive to pursue them. </div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/june/are-productivity-gains-in-higher-education-possible/FeaturedImage" class="image-left" /> <p>Here’s a puzzle: leaders are calling on colleges and universities to produce more degrees, but cash-strapped states are cutting higher education spending. What’s the solution? Be careful how you answer—this question has become the most prominent fissure in contemporary debates about higher education reform.</p> <p>On the one hand, many observers within higher education argue that colleges and universities are fundamentally handicapped when it comes to increasing productivity because of the nature of their core business. The argument (explored in the recent book <span class="link-external"><a style="font-style: italic;" target="_blank" href="http://www.oup.com/us/catalog/general/subject/Economics/Policy/?view=usa&ci=9780199744503">Why Does College Cost So Much</a></span><span style="font-style: italic;">?</span>) is that higher education is a service industry, where the “product” is heavy on human interaction, requires a fixed amount of time with the consumer, and is run by highly educated individuals with high reservation wages. These forces translate to increases in wages and costs without any increase in outputs, leading to declines in overall productivity. This dynamic is what economists call the “cost disease.”</p> <blockquote class="pullquote">Increasing wages leads to rising costs with no increase in outputs, and together this translates to declines in productivity. </blockquote> <p>Reform-minded analysts within and outside of higher education have argued that institutions <span style="font-style: italic;">can </span>conceivably become more productive by leveraging technology, reallocating resources, and searching for cost-effective policies that promote student success. Advances in technology and in our understanding of how students learn have opened new avenues for online and hybrid courses that can build capacity and reduce cost. Decisions about how to structure programs—like requiring students to register full-time and creating a set sequence of courses—can promote retention and degree completion over a shorter time frame, leading some colleges to be far more productive than others. And some institutions have shown a willingness to think strategically about how to cut costs so that funding is preserved for elements that are both effective and efficient in promoting student success.</p> <p>This divide—between those who see no way out the “cost disease” and those who believe colleges and universities can change to become more productive—has risen to the fore of current higher education policy debates. While age-old arguments about whether everyone should go to “college” and who should pay for it still rage, the productivity question is the most prominent dividing line between reformers and the status quo.</p> <p style="font-weight: bold;">Objections to the Productivity Agenda: The ‘Cost Disease’</p> <p>The standard response to calls for more higher education productivity is to invoke Baumol and William Bowen’s “cost disease.” The “cost disease” posits that service sector firms whose “products” involve interactions with customers (i.e., a nurse treating a patient, a barber giving a haircut) will have difficulty increasing their productivity because those interactions typically entail a fixed amount of time with the customer. Meanwhile, because industries outside of service sector routinely enhance their productivity by utilizing new technology and re-allocating labor, the wages for workers in those industries will increase as productivity increases. As wages increase in other sectors, service sector firms must pay their own employees more in order to prevent them from defecting to industries where the pay is higher, even though they are not producing more of their product. Increasing the wages of these service sector workers leads to rising costs with no increase in outputs, and together this translates to declines in productivity.</p> <blockquote class="pullquote">The authors argue that new technologies actually increase higher education costs. </blockquote> <p>Applying this argument to higher education leads many to conclude that productivity gains will prove elusive—students are required to spend about as much time listening to lectures as they were 50 years ago, and grading essays takes about as long as it did when typewriters ruled the day, yet a university must pay faculty and staff more in order to retain them. Moreover, if compelled to increase productivity, institutions will likely respond by decreasing the quality of the education they provide. As Robert Archibald and David Feldman <span class="link-external"><a target="_blank" href="http://www.oup.com/us/catalog/general/subject/Economics/Policy/?view=usa&ci=9780199744503">write </a></span>in their recent study of college costs and productivity:</p> <p style="margin-left: 40px;">An institution can increase class size to raise measured output (students taught per faculty per year) or it can use an increasing number of less expensive adjunct teachers to deliver the service, but these examples of productivity gain are likely to be perceived as decreases in quality, both in the quality rankings and in the minds of the students.</p> <p>What about the promise of technology, which has so markedly increased the productivity of firms in many different industries? A blind alley, say Archibald and Feldman:</p> <p style="margin-left: 40px;">For the higher education industry, new technologies are not transforming the industry in ways that allow significant reductions in input use, especially of highly educated labor, and the shift toward an ever-more-highly-skilled workforce has not led to any measured productivity gain for the sector as a whole. Costs must go up as a consequence.</p> <p>In fact, the authors argue that new technologies actually <span style="font-style: italic;">increase </span>higher education costs as colleges seek to maintain a “standard of care” that keeps up with technological change and what employers need.</p> <p>In light of this apparent iron law of higher education, it is not surprising that higher education advocates bristle at the suggestion that their institutions could improve without an influx of new dollars. In a recent <span class="link-external"><a target="_blank" href="http://www.insidehighered.com/layout/set/popup/views/2011/04/11/walters_more_degrees_at_same_cost_will_hurt_quality">editorial </a></span>in Inside Higher Education, the director of South Carolina’s commission on higher education pilloried the idea that prodding colleges and universities to become more productive is a sensible approach to reform:</p> <p style="margin-left: 40px;">The thinking goes like this: 1) Higher education is getting more expensive; 2) Higher education is more necessary than ever; so 3) we should be able to get our colleges and universities to produce the same product at half the cost.</p> <p style="margin-left: 40px;">That shrieking sound in the background is the logic alarm going off. Unfortunately, many can’t hear it over the loud, unceasing babble about reform ...</p> <p style="margin-left: 40px;">We need to escape from the “creating more degrees through better management” box. If we don’t, my fear is that the ersatz reform movement will win and higher education will come to resemble K-12: a vast machine run by bureaucrats and focused on outputs that are truly quantitative but only pretend qualitative.</p> <p>If focusing on outputs and better management are dead ends, how should we go about making <span style="font-style: italic;">real </span>gains? By providing more money to higher education’s “experts” and improving inputs, naturally. A favorite recommendation: pour grant money “into projects designed to create more of a pervasive education culture in the U.S.” Walters’ belief “is that much of the inefficiency in our education system ... occurs because students don’t think learning is important or don’t believe they can learn, or both.” Translation: It’s those darn lackadaisical students who need to be reformed, not the institutions they attend. With remediation rates at community colleges hovering around 40 percent, we clearly have a lot of work to do on the preparation front. But this does not take colleges off the hook. If students must be prepared for college, colleges must be prepared for students.</p> <p>The main target of Walters’ ire was a report released by McKinsey and Company last year (“<span style="font-style: italic;">Winning by Degrees</span>”) which highlighted how improved management and use of technology could increase the productivity of postsecondary institutions.</p> <blockquote class="pullquote">Researchers and institutions themselves have rarely paid much attention to whether their policies and practices are cost-effective. </blockquote> <p>I’m as skeptical of management consultants in public policy as the next guy. The solutions always seem a little too simple and self-evident (“better management”) and the numbers are provocative but largely un-replicable (e.g., “the achievement gap costs the U.S. $3 to $5 billion a day”). More to the point, Walters is right that small-bore tinkering with management is only likely to produce incremental benefits. And experimentation with new ideas often requires some start-up investment to get them up and running.</p> <p>But these caveats don’t add up to a rejection of the McKinsey report’s basic premise: institutions of higher education can learn to become more productive and can do so without a big infusion of new dollars or a decline in quality. At the very least, providing incentives for colleges to rethink the way they organize and do business seems like a more tractable approach than pie-in-the-sky proposals to increase students’ appreciation for learning <span style="font-style: italic;">before </span>they enroll in college.</p> <p style="font-weight: bold;">Getting Past the ‘Known Unknowns’ Is a First Step to Enhancing Productivity</p> <p>In some sense, it is not surprising that colleges and universities would argue that they cannot possibly become more productive. As an influential paper by Doug Harris and Sara Goldrick-Rab <span class="link-external"><a target="_blank" href="http://www.lafollette.wisc.edu/publications/workingpapers/harris2010-023.pdf">argues</a></span>, researchers and institutions themselves have rarely paid much attention to whether policies and practices are cost-effective. How would you know whether you’re spending money effectively if you’ve never even asked the question?</p> <blockquote class="pullquote">A redesigned course features computer-based interactive tutorials that periodically quiz students to gauge their mastery of concepts. </blockquote> <p>Harris and Goldrick-Rab argue that higher education research has largely ignored questions about the cost-effectiveness of important institutional policies—everything from student-faculty ratios, to the use of adjunct faculty, to call centers for student support. Without concrete information about cost-effectiveness, it is difficult, if not impossible, to figure out which changes might enhance productivity. The authors suggest that “the absence of [this] type of information ... is perhaps the strongest evidence that we are falling short of our productivity potential.”</p> <p>On the basis of their analysis, Harris and Goldrick-Rab conclude that colleges are far from “helpless” when it comes to confronting productivity, and that their results “suggest a need to break out of this mindset, to actively search for new and better ways to serve students.” Shedding light on what policies and programs are cost-effective—the “known unknowns”—is a critical first step in enhancing productivity.</p> <p style="font-weight: bold;">Are Productivity Improvements Possible?</p> <p>In spite of the “cost disease,” some institutions and providers are experimenting with productivity-enhancing reforms, providing scattered proof points to the reform-minded.</p> <p>The National Center for Academic Transformation (<span class="link-external"><a target="_blank" href="http://www.thencat.org/whatwedo.html">NCAT</a></span>) is probably the most oft-cited example of how to reform instructional delivery in a way that maintains quality and reduces costs. NCAT partners with existing institutions to redesign large enrollment introductory courses using information technology. Instead of the standard model, where students sit in a professor’s lecture for 3-4 hours per week and attend an hour-long discussion section, a redesigned course features computer-based interactive tutorials that periodically quiz students to gauge their mastery of concepts. The redesigned courses also feature “on-demand” assistance from peer tutors or course assistants. Because these lower-cost assistants and tutors handle organizational and technical issues, faculty can spend less time fussing with these elements and more time on instructional matters. And because students can rely on these intermediaries for assistance, student-faculty ratios can increase in redesigned courses.</p> <p>The proof is in the pudding: NCAT’s various redesign efforts, hosted at a variety of institutions and in a variety of courses, boast student outcomes that are as good if not better than the analogous traditional courses. Most importantly, they do so at a lower cost. NCAT’s rigorous <span class="link-external"><a target="_blank" href="http://www.thencat.org/R2R/R2R_Outcomes_Analysis.htm">evaluations </a></span>have estimated cost savings of between 15 and 75 percent when compared with the traditional model. No loss of quality there, and a whole lot less expensive.</p> <blockquote class="pullquote">Reallocating resources away from costly policies and practices with dubious track records toward those that show promise is another route to enhanced productivity. </blockquote> <p>Leveraging technology is not the only route to enhanced productivity. Reallocating resources away from costly policies and practices with dubious track records toward those that show promise is another. For example, a high percentage of community college students are placed in remedial courses on the basis of an exam taken just before the semester begins. These remedial courses rarely count toward a certificate or a degree but must be taken before the student can advance to credit-bearing coursework. The costs of providing these remedial courses are enormous and research suggests that remediation may be negatively related to retention and completion rates. The good news is that some institutions are thinking of low-cost ways to help their students avoid remedial classes The key insight is simple: people are likely to do better on a test if they are prepared for it—if they know the stakes, are familiar with the format, and know which concepts will be tested. Some colleges have realized that a dose of such test preparation can go a long way toward reducing remediation rates.</p> <p>Some institutions have invested a fraction of the money that they spend on remedial courses in a summer “bridge” program, where students are pre-tested and then brush up on their basic math and English skills before taking the real exam. Others, like <span class="link-external"><a target="_blank" href="http://www.epcc.edu/AboutEPCC/Documents/Pathways_To_Success.pdf">El Paso Community College</a></span>, have reached down into local high schools to let students know what they can expect on the Accuplacer exam. EPCC has found that simply explaining what a placement test is, pre-testing high school juniors, and providing targeted instruction on the basis of the pretest can help a nontrivial proportion of incoming students avoid remedial classes. Avoiding these “false positives” saves the student money and lowers the college’s cost per degree.</p> <p style="font-weight: bold;">Getting Around the ‘Cost Disease’ Argument</p> <p>The cost disease is clearly not a figment of college administrators’ imaginations. Indeed, Archibald and Feldman do an excellent job illustrating that the cost and productivity curves of other service industries (i.e., legal services, healthcare) look similar to those in higher education. Given the pathologies that plague these two industries, higher education should take little solace in the fact that it has company. But the costs of hiring highly educated workers are what they are, and policy makers must acknowledge that.</p> <p>But they must also acknowledge that we are unlikely to see increases in productivity, or even experimentation with innovations that might cut costs, until institutions are provided with incentive to pursue them. Funding colleges and universities based on bodies in seats rather than successful outcomes is a fundamental handicap in advancing a productivity agenda. Competitive grant-making that rewards successful programs without attention to whether those programs are cost-effective leaves us without the information that would make productivity gains possible. Policies that provide incentives to focus on productivity not only test the limits of the cost disease, but can provide further proof that it is not an iron law.</p> <p>At this stage, though, this debate is still as rhetorical as it is empirical. So long as entrenched higher education interests skirt responsibility for stagnant productivity by citing the cost disease or the academic preparation of their students, reformers who believe institutions can improve will cede any rhetorical momentum.</p> <p>Inputs like state funding and the types of students that schools enroll are obvious determinants of institutional success, but they are not the only ones. In an era of budget cuts and mass enrollment, the path to raising attainment rates must start with colleges and universities themselves.</p> <p><span style="font-weight: bold;">Andrew Kelly is a research fellow in education policy at the <span class="link-external"><a target="_blank" href="http://www.aei.org/">American Enterprise Institute</a></span>.</span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/productivity-gains-in-higher-education.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T15:11:00-07:00">3:11 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1098392951818324690">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1098392951818324690&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Higher%20Education" rel="tag">Higher Education</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Productivity%20Gains" rel="tag">Productivity Gains</a> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3478361605470042531"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/how-not-to-balance-budget.html">How Not to Balance the Budget</a> </h3> <div class="post-body entry-content"> <h1 class="documentFirstHeading">Means and Extremes: How Not to Balance the Budget</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Andrew%20G.%20Biggs">By Andrew G. Biggs</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">Should we impose a means test on Social Security and Medicare benefits? No.</div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/june/means-and-extremes-how-not-to-balance-the-budget/FeaturedImage" class="image-left" /> <p>Last month, the Peter G. Peterson Foundation <span class="link-external"><a href="http://pgpf.org/Issues/Fiscal-Outlook/2011/01/20/PGPF-Announces-Grants-to-Six-Institutions-to-Develop-Solutions-to-Americas-Fiscal-Challenges.aspx" target="_blank">released </a></span>budget plans authored by analysts at six think tanks from across the ideological spectrum: the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, the Economic Policy Institute, The Heritage Foundation, and the Roosevelt Institute Campus Network. Along with Joe Antos, Alan Viard, and Alex Brill, I was one of the authors of the <span class="link-external"><a href="http://pgpf.org/Issues/Fiscal-Outlook/2011/01/20/%7E/media/6A83826740A94DBE91CCA557ECA1D36F" target="_blank">proposal </a></span>from AEI (and I’d note that it represents the authors’ opinions and not those of AEI or other AEI scholars).</p> <p>All of the plans managed to put the budget on a more-or-less sustainable track through tax increases, spending reductions, or a combination of the two. One plan, from Heritage, stood out in that it went further in cutting spending and it stabilized the debt sooner than the others. The principle difference between Heritage’s plan and AEI’s (which are similar in many other respects) is that Heritage imposed a means test on Social Security and Medicare benefits.</p> <blockquote class="pullquote">The reason means tests have been unpopular in the past remains true today: they penalize people who work and save. </blockquote> <p>I’m working on a general article for National Affairs on means testing that will come out in the fall, but since we’ve gotten some questions about how the plans differ and why we didn’t go for a means test in our approach, I thought I’d quickly run through the issues. I’ve talked to the folks at Heritage and welcome a back-and-forth discussion. I’ve worked with Heritage and even written papers published by them, so this should be taken as a disagreement among friends.</p> <p>A means test makes the payment of a government benefit contingent upon the income or assets—that is, the “means”—of the recipient. Many programs for low earners are means tested, but means tests for Social Security and Medicare are more limited. Retirees may pay income taxes on part of their Social Security benefits and high-income retirees pay higher Medicare premiums, but the effects of these de facto means tests are usually pretty small.</p> <blockquote class="pullquote">Older individuals are particularly sensitive to marginal rates, because unlike others they have the option of retiring. </blockquote> <p>Heritage imposed a means test more aggressively, which may reflect a new willingness among conservatives to use means tests to limit spending. Columnist Charles Krauthammer has called for a means test for Social Security “so that Warren Buffett’s check gets redirected to a senior in need.” Likewise, former Minnesota Governor Tim Pawlenty favors means-tested Cost of Living Adjustments (COLAs).</p> <p>But the reason means tests have been unpopular in the past remains true today: they penalize people who work and save. Some may perceive this as unfair; fair or unfair, means tests have negative effects on incentives to work and save.</p> <p>Heritage’s means test would reduce Social Security and Medicare benefits for retirees with non-Social Security income over $55,000 and eliminate them for those with incomes over $110,000. The means test is limited: around 9 percent of individuals would have some benefit reduction and around 3.5 percent would lose their benefits completely. (It’s not clear if these percentages would remain stable over time.)</p> <p>Since a typical person at that income level has Social Security benefits of around $14,000 and Medicare benefits, under Heritage’s plan of around $11,000, Heritage’s means test implies a loss of around 45 cents in benefits for each dollar of income over $55,000. In effect, it’s an implicit marginal tax of 45 percent on top of the 25 percent flat tax rate under Heritage’s proposal, for a total of around 70 percent.</p> <blockquote class="pullquote">We don’t want to set a precedent that 70 percent marginal rates for anyone are a good policy prescription for addressing the U.S. deficit. </blockquote> <p>One of the lessons of tax policy is that most people aren’t going to pay that kind of tax rate. My National Affairs article will point to some interesting research finding that older individuals are particularly sensitive to marginal rates, because unlike others they have the option of retiring. If people stop working then they won’t get the income and the government won’t get the spending reductions.</p> <p>In practice (or using dynamic scoring), I doubt Heritage’s means test would produce nearly the savings that a static projection implies. Some people would limit their earnings to avoid it, as individuals already do with Social Security’s Retirement Earnings Test, which reduces social benefits for early retirees who earn more than around $14,000. If individuals work less to avoid the Heritage means test, that’s bad for them, but it also means lower budget savings. Other retirees might avoid the means test by delaying claiming Social Security benefits until after they stop working completely. The main savings would come from individuals with incomes far above $110,000, for whom the negative marginal incentives wouldn’t apply. But there are only a tiny number of people in this category.</p> <p>Heritage’s plan projects a reduction in Social Security and Medicare outlays of 1.4 percent of GDP from 2011 to 2015, much of which presumably comes from the means test (although savings may also come from abandoning ObamaCare and other areas). Personally, I do not think this reduction would really happen. Moreover, I don’t think it should happen, in the sense that we don’t want to set a precedent that 70 percent marginal rates for anyone are a good policy prescription for addressing the U.S. deficit.</p> <blockquote class="pullquote">Heritage imposed a means test more aggressively, which may reflect a new willingness among conservatives to use means tests to limit spending. </blockquote> <p>To be fair, Heritage’s plan would exempt the first $10,000 in retirees’ incomes from taxes, which would encourage low-income retirees to work. However, for individuals in the means test’s income range of $55,000-110,000, this exemption would actually exacerbate disincentives to work (in econo-speak, they’d have a positive income effect on top of the means test’s negative substitution effect, both of which discourage work). I believe Heritage’s plan would do away with some of the smaller entitlement means tests under current law, although the implicit taxes from these current policies aren’t huge. So, on net, this is a pretty big change.</p> <p>Because Heritage’s plan (like AEI’s) would shift the general tax code to a consumption base, it might seem that the true marginal rate would not be the sum of the implicit tax through the means test and the 25 percent consumption tax rate. But that’s not right. Consumption taxes alter the incentives whether income, once earned, would be spent or saved, but they don’t change work incentives overall.</p> <p>If you needed to reduce Social Security and Medicare outlays in a hurry, there is a way around this: cut benefits based on individuals’ <span style="font-style: italic;">lifetime </span>earnings rather than their current incomes. Social Security benefits are based on lifetime earnings, so we already know what people earned. If you cut benefits for retirees with high lifetime earnings, you would give them the incentive to earn more to make up the difference, not the incentive to earn less to avoid the penalty. I’m not saying it would be popular and it wouldn’t be as closely targeted as a means test based on current income, but it would be more effective in generating budget savings and more conducive to encouraging individual work and saving.</p> <p>Clearly we need to get on top of the budget deficit, and to their credit, Heritage’s folks were willing to make tougher choices than most of the rest of us. But, at least when it comes to the means test, I think the benefits aren’t worth the cost.</p> <p style="font-weight: bold;">Andrew G. Biggs is a resident scholar at the <span class="link-external"><a href="http://www.aei.org/" target="_blank">American Enterprise Institute</a></span>.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/how-not-to-balance-budget.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T15:10:00-07:00">3:10 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3478361605470042531">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3478361605470042531&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Balance%20the%20Budget" rel="tag">Balance the Budget</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/How%20Not" rel="tag">How Not</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5585067643107517386"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/to-help-us-economy-raise-rates.html">To Help U.S. Economy, Raise Rates</a> </h3> <div class="post-body entry-content"> <h1>To Help U.S. Economy, Raise Rates</h1> <p>by Steve H. Hanke </p><p class="first">The rate of broad money growth (M3) in the United States is weak. The ultra-low federal funds rate (0.25%) has acted to keep a lid on broad money growth and, in turn, economic activity. Yes, "low" interest rates imposed by the Fed are contributing to a credit crunch and anaemic money growth. But, wait. This is counterintuitive. And if that's not enough, it's not what the textbooks tell us, either.</p> <p>While the Fed has pumped huge quantities of so-called high-powered money into the economy, the United States is paradoxically facing a credit crunch. Banks have utilized their liquidity to pile up cash and accumulate government bonds and securities. In contrast, bank loans have actually decreased since May 2008. And since credit is a source of working capital for businesses, a credit crunch acts like a supply constraint on the economy. Even though it appears as though the economy has loads of excess capacity, the supply side of the economy is, in fact, constrained by the credit crunch. It is not surprising, therefore, that the economy is not firing on all cylinders.</p> <p>To understand why, in the Fed's sea of liquidity, the economy is being held back by a credit crunch, we have to focus on the workings of the loan markets. Retail bank lending involves making risky forward commitments. A line of credit to a corporate client, for example, represents such a commitment. The willingness of a bank to make such forward commitments depends, to a large extent, on a well-functioning interbank market — a market operating without counterparty risks and with positive interest rates. With the availability of such a market, even illiquid (but solvent) banks can make forward commitments (loans) to their clients because they can cover their commitments by bidding for funds in the wholesale interbank market. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/steve-hanke">Steve H. Hanke</a> is a professor of applied economics at The Johns Hopkins University in Baltimore and a senior fellow at the Cato Institute in Washington, D.C.</em></p> <a class="head" href="http://www.cato.org/people/steve-hanke">More by Steve H. Hanke</a></div></div> <p>At present, the major problem facing the interbank market is what can be termed a zero-interest rate trap. In a world in which the fed funds rate is close to zero, banks with excess reserves are reluctant to part with them for virtually no yield in the interbank market. Accordingly, the interbank market has dried up — thanks to the Fed's "zero" interest-rate policy. And, with that, banks have been unwilling to scale up their forward loan commitments.</p> <p>But, how can banks make money without making wholesale and/or retail loans? Well, it's easy and "risk free" to boot. By holding the federal funds rate near zero, the Fed creates an opportunity for banks to borrow funds at virtually no cost and use them to purchase two-year U.S. treasury notes, which yield about 40 basis points. That doesn't sound like much. But, considering that banks don't have to hold capital against U.S. treasuries, their positions in U.S. government securities can be leveraged to the moon. Well, not really. But, at a leverage ratio of 20, a bank can do quite well by playing the treasury yield curve.</p> <p>It's time for the Fed to recognize market realities and raise the federal funds rate. A higher fed funds rate would release the credit squeeze created by the Fed's misguided "low" interest-rate policy. If the Fed boosted the funds rate to 2%, the all-important broad money measure — M3 — would get a boost, and so would the slumping economy.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/to-help-us-economy-raise-rates.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T14:29:00-07:00">2:29 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5585067643107517386">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5585067643107517386&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Help" rel="tag">Help</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Raise%20Rates" rel="tag">Raise Rates</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/U.S.%20Economy" rel="tag">U.S. Economy</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4408872277751519022"></a> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/blog-post_29.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T14:28:00-07:00">2:28 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4408872277751519022">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4408872277751519022&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4822731060430720904"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/time-to-ax-federal-jobs-programs.html">Time to Ax Federal Jobs Programs</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Time to Ax Federal Jobs Programs</span></h1> <p>by Chris Edwards and Daniel Murphy </p><p class="first">With the nation's unemployment rate still above 9 percent and a steady stream of worrisome labor news (the latest statistic: 429,000 new unemployment claims last week), federal policymakers are facing pressure to do something about joblessness. The giant 2009 stimulus bill was supposed to cut unemployment to less than 7 percent by now — but that clearly hasn't worked as planned.</p> <p>Some policymakers are now looking at expanding job training and other federal employment programs. Even conservative House Budget Committee ChairmanPaul Ryan (R-Wis.) proposed to "strengthen" these programs in his recent fiscal plan. Alas, the history of waste and failure in these programs argues for termination, not expansion.</p> <p>Federal programs for unemployed and disadvantaged workers now cost $18 billion a year, yet the Government Accountability Office recently concluded that "little is known about the effectiveness of employment and training programs we identified." Indeed, many studies over the decades have found that these programs — though well intentioned — don't help the economy much, if at all.</p> <blockquote class="pullquote"><p>As Congress scours the budget looking for spending cuts, employment and training programs would be good targets.</p></blockquote> <p>Worse, federal jobs programs have long been notorious for wastefulness. The word "boondoggle" was coined in the 1930s, to describe the inefficiencies of New Deal jobs programs. Laborers on Works Progress Administration projects were generally viewed as slackers, and a popular song of the era went, "WPA, WPA, lean on your shovel to pass the time away."</p> <p>The modern era of jobs programs began in the 1960s, under Presidents John F. Kennedy and Lyndon B. Johnson, who created an array of employment services. Indeed, so many overlapping programs were created that, in 1969, Labor Secretary George Shultz called the organization chart for jobs programs a "wiring diagram for a perpetual motion machine."</p> <p>In the 1970s, President Richard Nixon created — and President Jimmy Carter then expanded — the Public Service Employment Program, which used federal dollars to create hundreds of thousands of jobs in local governments and community groups. The program was "scandal-ridden," according to Congressional Quarterly, and led to many "newspaper exposés of local instances of nepotism, favoritism and other kinds of fraud."</p> <p>Luckily, President Ronald Reagan killed the entire program. Unfortunately, he then backed a wasteful "conservative" solution to high unemployment — expanded job training. Reagan said the Job Training Partnership Act of 1982 would not be "another make-work, dead-end bureaucratic boondoggle."</p> <p>But in his book, <="" em="">, University of Oregon labor professor Gordon Lafer found that "from its start, JTPA was plagued by widespread abuse and mismanagement." A 1994 official study on JTPA found that job-training programs created no significant benefits for most participants.</p> <p>Subsequent legislation has allegedly improved these programs. But, Lafer notes, "as successive generations of job-training programs fail to produce the hoped-for results, policymakers have cycled through a stock repertoire of procedural fixes that promise to solve the problem."</p> <p>They don't, but politicians keep trying.</p> <p>Ryan now argues that the budget "is dotted with failed, unaccountable and duplicative job-training programs." But rather than repealing them, his recent budget plan wants to make them more "targeted."</p> <p>Ryan's budget-reform efforts are laudatory, but he should follow his own plan's advice to "limit government to its core constitutional roles" — and terminate federal jobs programs.</p> <p>The good news is that federal job-training and employment programs don't fill any critical need that private markets can't fill in the modern economy. The vast majority of U.S. job training, for example, is done by individuals and businesses without government help in the normal pursuit of higher wages and profits. U.S. organizations spent more than $120 billion a year on employee learning and development, according to the American Society for Training and Development.</p> <div class="box2"> <div class="boxcontent"><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/chris-edwards">Chris Edwards</a> is editor of the Cato Institute's <a href="http://www.downsizinggovernment.org/">Downsizing Government.org</a>. Daniel Murphy is a former special assistant in the Labor Department.</em></p> <a class="head" href="http://www.cato.org/people/chris-edwards">More by Chris Edwards</a></div></div> <p>Other Labor Department activities are also redundant. The department helps fund 3,000 offices nationwide that provide unemployed workers with job-searching and job-matching services. In turns out that remarkably few people use these services, even with today's high unemployment.</p> <p>Instead, job seekers mainly rely on the Internet, personal networking, temp agencies and other market institutions. Essentially, Monster.com has made federal employment offices obsolete.</p> <p>To solve the federal budget mess, policymakers need to restrain their impulses to "help" the economy with spending programs. Federal help usually doesn't work — it just consumes resources that would have created jobs and growth if left in the private sector.</p> <p>As Congress scours the budget looking for spending cuts, employment and training programs would be good targets.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/time-to-ax-federal-jobs-programs.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T14:26:00-07:00">2:26 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4822731060430720904">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4822731060430720904&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Federal%20Jobs%20Programs" rel="tag">Federal Jobs Programs</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Time%20to%20Ax" rel="tag">Time to Ax</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8295365779883817780"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/tax-increase-con-men.html">Tax Increase Con Men</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Tax Increase Con Men</span></h1> <p>by Richard W. Rahn </p><p class="first">Would you prefer to have 25 percent of $200 that you can see or 20 percent of $300 that you cannot see immediately? Many battles, including the current ones in Washington, are fought between those who can see the consequences of actions several steps in the future, like good chess players, and those who cannot.</p> <p>Former Vice Chairman of the Federal Reserve Alan Blinder wrote an article in the <em>Wall Street Journal</em> this past week attacking Republicans who have said that more government spending will kill jobs. In the same vein, my old friend Bruce Bartlett, a Treasury official in the George H.W. Bush administration, wrote an article attacking former Minnesota Gov. Tim Pawlenty and other Republicans for claiming the Reagan tax cuts paid for themselves. (Note: Mr. Bartlett used to be a supply-side advocate, but in the past few years, he has become an almost full-time Republican basher and, not surprisingly, now writes for the <em>New York Times</em>.) Mr. Blinder, Mr. Bartlett and others of their stripe no longer seem to be able to see beyond the first-order effects of an economic policy.</p> <p>The reason these old questions are still causing arguments is because the answers give a guide to which future economic policies are likely to be effective and which are not. Did President Reagan's tax cuts pay for themselves? Mr. Bartlett states: "The fact is that the only metric that really matters is revenues as a share of the gross domestic product. By this measure, total federal revenues fell from 19.6 percent of GDP in 1981 to 18.4 percent of GDP in 1989."</p><div class="box2"> <div class="boxcontent"><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/richard-rahn">Richard W. Rahn</a> is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.</em></p> <a class="head" href="http://www.cato.org/people/richard-rahn">More by Richard W. Rahn</a></div></div> <p>The real fact is that Mr. Bartlett has it dead wrong.</p> <p>It is not only the size of the revenue share of GDP that matters, but, more important, the size of the pie (GDP in this case). Real GDP grew by more than 34 percent from 1982, when Reagan's tax-cut policies started to take effect, through 1989. (A mixture of both tax increases and tax-rate cuts over the Reagan years resulted in a massive drop of the top marginal rate from 70 to 28 percent.) This was an average annual real growth rate of approximately 4.5 percent, much higher than either opponents or proponents of the Reagan policies had forecast. When Mr. Bartlett and others argue that the Reagan-era tax cuts did not pay for themselves, even though real inflation-adjusted revenues rose, they are, in effect, saying that some other, unspecified policies would have brought in more revenue. From the beginning of 1979, there was no real economic growth under President Carter's tax-rate regime. The economy did not start steady growth again until the fourth quarter of 1982, when the Reagan tax cuts were being phased in.</p> <p>Why should one believe the economy would have grown as fast under the Carter tax regime with a 70 percent top rate? If you assume, as I and many others do, that a continuation of the Carter policies would have produced an economic growth rate of no more than 2.8 percent and probably lower (which is the 30-year average economic growth rate and also is almost identical to the growth rate of the two years of the so-called Obama "recovery") then the Reagan tax cuts did pay for themselves in seven years. Again, the size of the pie counts, and a much larger pie results when it compounds at 4.5 percent rather than 2.8 percent.</p> <p>Higher economic growth also results in a bigger permanent stock of capital, which can have wealth-enhancing effects many years into the future. Some Roman aqueducts built 2,000 years ago are still being used. Lower tax rates, particularly on capital, make it easier for entrepreneurs to raise capital for new ventures, some of which can have enormous productivity and other beneficial effects on society. Those beneficial innovations that were squashed by high taxes or destructive regulation are never seen. Without specifying the alternative policy regime and knowing the precise effects of it, as contrasted with the Reagan policies, Mr. Bartlett and the others cannot "prove" that the Reagan tax cuts did not pay for themselves in seven years.</p> <p>Likewise, Mr. Blinder can only see the jobs that are created by direct government spending but not the jobs that are destroyed by it. When funds are spent on a less productive government job, there is diversion of productive resources along with the dead-weight loss of the taxes or borrowing needed to pay for it. Many studies show that most governments are larger than optimal and thus more government jobs lead to fewer total jobs. A study published in the <em>British Economic Policy Journal</em> concluded: "Empirical evidence from a sample of [Organization for Economic Co-operation and Development, OECD] countries in the 1960-2000 period suggests that, on average, creation of 100 public jobs may have eliminated 150 private sector jobs."</p> <p>Finally, Mr. Blinder ignores the important fact that as government spending increases as a share of GDP, the percentage of adults employed in the civilian labor force decreases and vice versa.</p> <p>There is little doubt that if much of the counterproductive government spending, regulation and taxation were removed, the U.S. economy could grow for many years at a 5 percent or higher rate. If higher taxes and more government spending were the keys to prosperity, it would be easy to see. The question is: What is unseen?</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/tax-increase-con-men.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T14:24:00-07:00">2:24 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8295365779883817780">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8295365779883817780&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Con%20Men" rel="tag">Con Men</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Tax%20Increase" rel="tag">Tax Increase</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7880960189645867321"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/public-versus-private-risk.html">Public Versus Private Risk</a> </h3> <div class="post-body entry-content"> <h1>Public Versus Private Risk: Heed the Lesson from Greece</h1> <p>by Jagadeesh Gokhale </p><p class="first">Greece's current debt problems were created by government officials who used underhanded financial mechanisms to hide the size of the nation's debt and exposure to risky assets from their foreign creditors. Once these problems were revealed, the Greek economy began an endless downward spiral.</p> <p>In order to protect its own banks from exposure to debts in Greece and other fiscally struggling nations, the European Central Bank created the European Stability Fund to provide bailouts. But these payments are conditional on recipient nations adopting very stiff austerity policies.</p> <p>The latest round of Greek austerity measures is meeting with violent resistance on the nation's streets. The next vote could support or sink the entire bailout enterprise, with potentially huge consequences for the ECB's financial sectors and the survival of the euro. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/jagadeesh-gokhale">Jagadeesh Gokhale</a> is a senior fellow at the Cato Institute, a member of the Social Security Advisory Board, and author of </em><a href="http://www.cato.org/store/books/social-security-fresh-look-policy-alternatives-hardback">Social Security: A Fresh Look at Policy Options</a><em>.</em></p> <a class="head" href="http://www.cato.org/people/jagadeesh-gokhale">More by Jagadeesh Gokhale</a></div></div> <p>With the twin spiral of imploding private and public sectors, it's difficult not to sympathize with Greek demonstrators. This is a problem created not by them, but by their elected officials. Yet in its outcome, it is very similar to the situation that proponents of government service and insurance provision fear and wish to protect against: a steep and economywide recession from distant and uncontrollable economic shocks and market failures. We need to acknowledge the significant possibility of government failure and understand how Greece got there.</p> <p>Greece owed $587 billion to foreign creditors as of December 2010. Of that, $280 billion was owed to foreign governments and $290 billion to foreign banks.</p> <p>The country's debt problem has two features: insolvency of the government and insolvency of its banks. Bailouts from other Euro-zone countries and the International Monetary Fund can temporarily stave off government insolvency. Bank insolvency is a more difficult problem: As foreigners continually withdraw their investments from Greece, the nation's private banks are being forced to liquidate their assets, starving businesses of the credit they need to continue operating.</p> <p>In a vicious cycle, worsening business prospects in an already uncompetitive economy are inducing additional capital flight from Greece. By the end of 2012, analysts expect Greek bank deposits to shrink by 40 percent compared with their amount in mid-June 2010. And ECB members are demanding additional austerity policies to bail out the state: cutting payrolls, laying off government workers, reducing public services and scaling back the overly generous (even by EU standards) retirement and health benefits of public workers and retirees.</p> <p>The weight of expert opinion now is that unless it is rescued, Greece's economy will implode. But the provision of periodic bailouts may prove to be yet another government failure because they work only when the recipient institution is economically viable but short on liquidity, not when it is insolvent as the Greek state and its financial sector are.</p> <p>Moreover, defaults on foreign private sector loans will adversely affect other ECB nations, chiefly Germany, where banks are exposed to Greek, Irish, Portuguese and Spanish debt; all those nations are also facing sovereign debt problems.</p> <p>With a shrinking economy, it's difficult to predict when the Greek economy will stabilize, but that's key because the capacity of ECB nations to provide bailout funds is limited. That's when the ECB's financial system and the Euro will face their true test of survival.</p> <p>Many proponents of broad government intervention and management of the economy, including comprehensive social insurance programs, insist those solutions to be the only way to provide needed public services and to protect workers and other vulnerable segments of the population from brutish market forces. But the recent events in Greece suggest the government's ability to operate, manage, self-insure and protect the population can be just as tenuous as that attributed by liberal-leaning analysts to the market.</p> <p>Although the government can provide a qualitatively different source of risk management, it is not a fail-safe mechanism, and certainly not an unambiguous improvement over private sector mechanisms. The safer option would be to diversify between public and private sector mechanisms to protect the economically vulnerable.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/public-versus-private-risk.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T14:23:00-07:00">2:23 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7880960189645867321">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7880960189645867321&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Public%20Versus%20Private%20Risk" rel="tag">Public Versus Private Risk</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="9138850799701907708"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/good-bye-recession-hello-slump.html">Good-Bye Recession, Hello Slump</a> </h3> <div class="post-body entry-content"> <h1>Good-Bye Recession, Hello Slump</h1> <p>by Steve H. Hanke </p><p class="first">The U.S. recession officially ended in June 2009. With that, a normal post-recession boom failed to materialize. Instead, an unwelcomed slump ensued. Since the recession bowed out, the average annual GDP growth rate has been a paltry 1.6% — well below the long-run trend growth rate of 3.1%.</p> <p>The economic policy prescriptions of the Obama administration — contrary to the President's oft-repeated assertions — have failed to mitigate the damage from the Panic of 2008-09. Rather, they have kept the patient in sick bay.</p> <p>The first misguided advice was peddled by the fiscalists (Keynesians) who dominate the Washington, D.C. stage. According to them, increased government spending, accompanied by fiscal deficits, stimulates the economy. That dogma doesn't withstand factual verification. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/steve-hanke">Steve H. Hanke</a> is a Professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, D.C.</em></p> <a class="head" href="http://www.cato.org/people/steve-hanke">More by Steve H. Hanke</a></div></div> <p>Nothing contradicts the fiscalists' dogma more conclusively than former President Clinton's massive fiscal squeeze. When President Clinton took office in 1993, government expenditures were 22.1% of GDP, and when he departed in 2000, the federal government's share of the economy had been squeezed to a low of 18.2% (see the accompanying chart and table). And that's not all. During the final three years of the former President's second term, the federal government was generating fiscal surpluses. President Clinton was even confident enough to boldly claim in his January 1996 State of the Union address that "the era of big government is over."</p> <p>President Clinton's squeeze didn't throw the economy into a slump, as Keynesianism would imply. No. President Clinton's Victorian fiscal virtues generated a significant confidence shock, and the economy boomed.</p> <p>As for President Clinton's proclamation about the era of big government being over, he obviously hadn't anticipated the uncontrolled government spending that would accompany former President George W. Bush's eight years in office and the truly shocking two-year's worth of government spending on President Obama's watch. All told, the George W. Bush and Obama Good-Bye Recession, Hello Slump administrations have added a whopping 5.6 percentage points to government spending as a proportion of GDP. The current federal government outlays are at 23.8% (see the accompanying chart and table). This is significantly above the average of 20.1%.</p> <p>The surge in government spending — coupled with President Obama's anti-market, anti-business and anti-bank rhetoric — does not inspire confidence. In consequence, the current U.S. fiscal stance has fueled a slump.</p> <center><img src="http://www.cato.org/images/pubs/commentary/hanke-globeasia-july2011-1.jpg" /></center> <p>That said, it is important to stress what the fiscalists refuse to acknowledge: money dominates. When fiscal and monetary policies move in opposite directions, the direction taken by monetary policy will dictate the economy's course. During the Clinton era, fiscal policy was tight (confidence was "high") and monetary policy was accommodative. The economy boomed.</p> <p>Since the Panic of 2008-09, fiscal policy has been ultra expansionary, while the growth in the money supply has fallen from a peak annual growth rate of over 15% to an annual rate of contraction of over 5% (see the accompanying chart). No surprise that the economy suffered a serious recession and then became mired in a slump. With the current anemic money supply growth rate, it looks like the slumping economy — something I first warned about in my August 2010 column "Money Dominates" — will, unfortunately, be with us for the foreseeable future.</p> <p>What makes that gloomy prognosis more likely is the prospect for continued muted growth in the broad measure of the money supply, M3. To understand this, we must understand the implications of the so-called Basel III capital-asset standards for banks, which are set by the Bank for International Settlements in Basel, Switzerland — a bank that counts the U.S. and twenty-six other countries as members.</p> <p>Basel III, among other things, will require banks in member countries to hold more capital against their assets than under the prevailing Basel II regime. While the higher capital-asset ratios that are required by Basel III are intended to strengthen banks (and economies), these higher ratios destroy money. In consequence, higher bank capital-asset ratios contain an impulse — one of weakness, not strength.</p> <p>To demonstrate this, we only have to rely on a tried and true accounting identity: assets must equal liabilities. For a bank, its assets (cash, loans and securities) must equal its liabilities (capital, bonds and liabilities which the bank owes to its shareholders and customers). In most countries, the bulk of a bank's liabilities (roughly 90%) are deposits. Since deposits can be used to make payments, they are "money."</p> <center><img src="http://www.cato.org/images/pubs/commentary/hanke-globeasia-july2011-2.jpg" /></center> <p>Accordingly, most bank liabilities are money.</p> <p>Under the Basel III regime, banks will have to increase their capitalasset ratios. They can do this by either boosting capital or shrinking assets. If banks shrink their assets, their deposit liabilities will decline. In consequence, money balances will be destroyed. So, paradoxically, the drive to deleverage banks and to shrink their balance sheets, in the name of making banks safer, destroys money balances. This, in turn, dents company liquidity and asset prices. It also reduces spending relative to where it would have been without higher capital-asset ratios.</p> <p>The other way to increase a bank's capital-asset ratio is by raising new capital. This, too, destroys money. When an investor purchases newly-issued bank equity, the investor exchanges funds from a bank deposit for new shares. This reduces deposit liabilities in the banking system and wipes out money.</p> <center><img src="http://www.cato.org/images/pubs/commentary/hanke-globeasia-july2011-3.jpg" /></center> <p>As banks ramp up in the anticipation of the introduction of Basel III in January 2013, we observe stagnation in the growth of broad money measures. And if that isn't bad enough, Federal Reserve Governor Daniel Tarullo has suggested that capital-asset ratios for some larger U.S. banks should be mandated to be set at higher levels than those imposed by Basel III. Governor Tarullo's views appear to be widely shared by his colleagues at the Federal Reserve and most who inhabit the environs of Washington, D.C.</p> <p>The suggestion of ultra-high capital-asset ratios for some banks will not go down without a fight, however. Indeed, Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. recently confronted the Chairman of the Federal Reserve Ben S. Bernanke. Dimon argued that excessive bank regulation, including ultra-high capitalasset ratios would put a damper on money supply growth and the U.S. economy. While Dimon might have been arguing JPMorgan's book, he was on the right side of economic principles and Chairman Bernanke was on the wrong side.</p> <p>Banks in the eurozone come under the purview of Basel III. Like banks in the U.S., eurozone banks are shrinking their risk assets relative to their equity capital, so that they can meet Basel III. Broad money growth for the euro area is barely growing and moving sideways (see the accompanying chart). And Greece, which is at the epicenter of Europe's current crisis, is facing a rapidly shrinking money supply. These money supply numbers will ultimately be the spike that is driven into the heart of the Greek economy and the false hopes of a peaceful resolution of Greece's fiscal woes. Greece will be yet another case in which money dominates.</p> <center><img src="http://www.cato.org/images/pubs/commentary/hanke-globeasia-july2011-4.jpg" /></center> <center><img src="http://www.cato.org/images/pubs/commentary/hanke-globeasia-july2011-5.jpg" /></center> <p>In China, money matters, too. During the 1995-2005 period, when China fixed the yuan- U.S. dollar exchange rate at 8.28, China's overall inflation rate mirrored that of the U.S. and was relatively "low." Once China caved in to misguided pressure — notably from the U.S., France and international institutions, like the International Monetary Fund — and allowed the yuan- U.S. dollar exchange rate to wobble around, problems arose. The money supply growth rate surged in the wake of the Panic of 2008-09. And as night follows day, inflation has raised its ugly head in China. The monetary authorities are scrambling to cool down the inflationary pressures by slowing monetary growth — from almost 30% per annum to 15%.</p> <p>The combination of Basel III (or Basel III, plus) and China's attempt to squeeze inflation out of the economy via tighter money leads to a less than encouraging money supply picture. Good-bye recession, hello slump.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/good-bye-recession-hello-slump.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T14:21:00-07:00">2:21 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9138850799701907708">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9138850799701907708&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Good-Bye" rel="tag">Good-Bye</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Hello" rel="tag">Hello</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/recession" rel="tag">recession</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Slump" rel="tag">Slump</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5807039836255117943"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/triumphalism-hides-many-important.html">Triumphalism Hides Many Important Foreign-Policy Failures</a> </h3> <div class="post-body entry-content"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">Triumphalism Hides Many Important Foreign-Policy Failures</span></p> <div class="details3"> by <a href="http://original.antiwar.com/author/eland/" title="Posts by Ivan Eland">Ivan Eland</a></div><p> Nationalism in many countries prompts their governments to trumpet foreign-policy successes while sweeping disappointments under the rug. The inclination toward such biases may only be human nature, but democracies should also take the difficult step of heeding and analyzing the failures—that is, if they want to embrace truth and avoid the path to authoritarianism. </p> <p> Because American nationalism is especially strong, the U.S. government regularly attempts to take maximum credit for events such as the fall of the communist bloc and the killing of terrorist Osama bin Laden—while forgetting about profligate blunders that have made America and its citizens less secure, a failure in the most importance function of government. </p> <p> Although communism did fall, in most such societal revolutions, domestic factors usually overwhelm external influences. Although Reaganophiles give that president almost sole credit for toppling the communist bloc, an unviable economic system is what ultimately brought down the Soviet Union and its communist allies. </p> <p> As for killing Osama bin Laden, it took the gold-plated U.S. intelligence community, which probably spends as much on intelligence as the rest of the world combined, a decade and a half to neutralize him. Moreover, the CIA’s greatest triumph has been its greatest failure; its encouragement and funding of radical Islam, including the Afghan “freedom fighters,” as a counterweight to Soviet communism helped create al-Qaeda in the first place. Moreover, the U.S. government’s unneeded meddling and military presence in the Islamic world motivated bin Laden to attack the United States and continue to fuel Islamists’ anti-American attacks—for example, the nation-building occupations in Afghanistan and Iraq inflame Islamic jihadists worldwide. Because many anti-American jihadists in Iraq came from eastern Libya, American provision of the air force for the Libyan rebels may replicate the unintended threat-creation experience of U.S. aid to Islamists in Afghanistan. And getting rid of Moammar Gadhafi—whom Ronald Reagan originally demonized and attacked but who had more recently given up his nuclear-weapons program and made nice with the West—won’t enhance U.S. security very much. </p> <p> But such reckless behavior should not be surprising. The U.S. government has made or strengthened enemies before. Recent examples are in Somalia, Lebanon, Pakistan, Yemen, Iraq, and Iran. In Somalia, the U.S. government recently trumpeted the killing of Fazul Abdullah Mohammed, a leader in both the Somali Islamist Shabaab movement and al-Qaeda. Yet the Islamists had little support in the moderate Islamic country of Somalia until the U.S. government began supporting corrupt, violent warlords there. And Somali support for Shabaab against foreign influence really spiked during the catastrophic U.S.-backed Ethiopian invasion of Somalia in 2006. The Bush administration’s encouragement—with weapons and advisers—of a Christian-led Ethiopian government’s invasion of a Muslim country further stoked the fires of radical Islam, coming in the wake of the post-9/11 U.S. invasions of Muslim Afghanistan and Iraq. </p> <p> In Lebanon, the Shi’ite Islamist group Hezbollah—which formed during the 1982 invasion of Lebanon by U.S.-backed Israel and which enhanced its reputation by throwing Reagan’s forces out of Lebanon soon thereafter—now dominates the Lebanese government. This result was made possible by Israel’s second invasion of Lebanon in 2006, which again enhanced Hezbollah’s reputation by demonstrating its ability to withstand an attack by a stronger power. </p> <p> In Pakistan, the Pakistani Taliban did not try to attack targets in the United States—the attempted Times Square bombing—until the United States began to kill Pakistani Taliban fighters with drone attacks in Pakistan. Similarly, Islamist militants in Yemen did not try to attack targets in the United States until our government escalated military involvement in Yemen. </p> <p> In Iraq, the United States helped bring Saddam Hussein to power, made him the dominant power in the Persian Gulf by supporting him in his successful war with Iran, and then demonized him and fought two wars against him. </p> <p> Finally, creating an enemy in Iran goes way back to 1953, when the CIA helped overthrow the elected anti-communist government of Mohammed Mossadegh because he had nationalized British oil interests. The United States restored the autocratic shah, who allowed U.S. companies to have some of Iran’s oil, oppressed his people with the secret police, and spent too many of the country’s resources on U.S.-made weapons and not enough on economic development. He was overthrown by a Shi’ite Islamist regime, which has always been predictably hostile to the United States. </p> <p> Throw in the expensive and pointless Korean and Vietnam Wars, the reckless and failed invasion of Cuba at the Bay of Pigs, and the resulting near incineration of the world during the Cuban Missile Crisis for no American strategic gain, and post-World War II U.S. foreign policy doesn’t look so successful after all. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/triumphalism-hides-many-important.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T11:39:00-07:00">11:39 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5807039836255117943">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5807039836255117943&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7545148143619625328"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/like-nixon-obama-will-waste-lives-to.html">Like Nixon, Obama Will Waste Lives to Get Reelected</a> </h3> <div class="post-body entry-content"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">Like Nixon, Obama Will Waste Lives to Get Reelected</span></p> <div class="details3"> by <a href="http://original.antiwar.com/author/eland/" title="Posts by Ivan Eland">Ivan Eland</a></div><p> No one needs to tell the public that politicians are slick — and the ones who get elected are the oiliest. President Obama, in a recent speech announcing the phased withdraw of 33,000 U.S. surge forces from Afghanistan by September 2012, told the country that the United States had largely achieved its goals in Afghanistan and that “we are starting this drawdown from a position of strength.” The public could be forgiven for missing the real message: “We’ve lost the war, but we are declaring victory anyway and getting out.” </p> <p> The reality of withdrawing 33,000 of about 100,000 troops in that country is that the president’s “counterinsurgency” strategy — the U.S. clearing areas of Taliban forces until “good government” can take hold and the Afghan forces are competent enough to take over — has failed. The strategy was designed to achieve battlefield gains that would not eradicate the Taliban but cause the group to come to the negotiating table. Although the Taliban is negotiating, it is not doing so seriously because it knows it is winning the war. If it were losing, more Taliban would be defecting to the Afghan government; so far, only 1,700 out of between 25,000 and 40,000 insurgents have done so. </p> <p> Superior U.S. forces have cleared some areas of the southern provinces of Helmand and Kandahar, traditionally Taliban strongholds, but they only have an illegitimate, corrupt Afghan government and incompetent Afghan security forces to hand them over to. Yet it is still nearly impossible to drive safely from the capital of Kabul to Kandahar. Furthermore, the Taliban merely lies low in those two provinces until the U.S. leaves, or they move to other parts of the country where American forces are much more sparse. The Taliban in eastern Afghanistan — which have more links to al-Qaeda than those in the south but who have enjoyed less U.S. attention — can withdraw to sanctuaries in Pakistan. The U.S. and NATO have never had enough forces in Afghanistan to run an effective counterinsurgency strategy. And if the insurgents are not losing, they are winning. Time is on their side, because it’s their country and they can simply outwait the United States, which the insurgents know will eventually withdraw.</p> <p> Since according to counterinsurgency expert William R. Polk, guerrilla warfare is 80 percent political, 15 percent administrative, and only 5 percent military, the U.S.-sponsored corrupt and illegitimate Afghan government is a major albatross around America’s neck. Also, even after Afghan security forces have been trained for almost a decade, they are incapable of securing Afghanistan on their own. </p> <p> Yet if there hasn’t been a terrorist threat from Afghanistan for seven to eight years, as the Obama administration maintains, then why did we need the surge and 18-month counterinsurgency strategy in the first place, and why can’t troops come home faster? The answer is that the withdrawal timetable is not based on military considerations but on electoral politics.</p> <p> Instead of going against the Taliban during the next fighting season, those 33,000 troops already will have been withdrawn or will be packing to leave Afghanistan by September 2012. Thus, with an eye toward the November 2012 presidential election, Obama can say that the surge is over, that it was a success, and that all surge forces have been withdrawn. But if the withdrawal table is political, why not claim the same victory and remove all 100,000 U.S. troops to satisfy a war-weary public?</p> <p> Richard Nixon faced the same dilemma presiding over the lost Vietnam War. In 1971, he wanted to withdraw U.S. forces from South Vietnam until Henry Kissinger reminded him that the place would likely fall apart in 1972, the year Nixon was up for reelection. To avoid this scenario, Nixon unconscionably delayed a peace settlement until 1973, thus trading more wasted American lives for his reelection.</p> <p> Obama appears to be up to the same thing. A phased withdrawal of 33,000 U.S. troops before the election will push back at Republican candidates’ demands for more rapid withdrawal and signal to the conflict-fatigued American public that he is solving the problem, while leaving 70,000 forces to make sure the country doesn’t collapse before that election. Again, American lives will be needlessly lost so that a slick politician can look his best at election time. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/like-nixon-obama-will-waste-lives-to.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T11:37:00-07:00">11:37 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7545148143619625328">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7545148143619625328&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Like%20Nixon" rel="tag">Like Nixon</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Obama" rel="tag">Obama</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Reelected" rel="tag">Reelected</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Will%20Waste%20Lives" rel="tag">Will Waste Lives</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3880970565327715381"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/its-kinetic-so-dont-get-frenetic.html">It’s ‘Kinetic,’ So Don’t Get Frenetic</a> </h3> <div class="post-body entry-content"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">It’s ‘Kinetic,’ So Don’t Get Frenetic</span></p> <p class="pagesub">Throw away your dictionary – we’re not at war in Libya</p> <div class="details3"> by <a href="http://original.antiwar.com/author/justin/" title="Posts by Justin Raimondo">Justin Raimondo</a></div><p>Explaining the Obama administration’s rationale for violating the War Powers Act by not asking Congress for authorization to attack Libya, the White House claims that what’s going on in Libya isn’t war, it’s a “<a href="http://washingtonexaminer.com/blogs/beltway-confidential/2011/03/white-house-libya-fight-not-war-its-kinetic-military-action">kinetic military action</a>.” This set off such a round of guffaws – even from Libya war supporters in the Democratic congressional caucus – that the administration felt compelled to send a government lawyer to Congress to elaborate on this exercise in Doublespeak. <a href="http://www.lawfareblog.com/2011/06/an-overview-of-harold-kohs-testimony-on-the-wpr-at-todays-sfrc-hearing/">Harold Koh</a>, the State Department’s lawyer-in-chief, explained to the Senate Foreign Relations Committee that since there was no back-and-forth firing between American and Libyan forces, the Libyan intervention isn’t a real war – and therefore the President is not in violation of <a href="http://avalon.law.yale.edu/20th_century/warpower.asp">the War Powers Act</a>. (No word yet on whether he’s in violation of <a href="http://press-pubs.uchicago.edu/founders/tocs/a1_8_11.html">the Constitution</a>, which gives Congress, and not the President, the power to make war.)</p> <p>This, by the way, is the same <a href="http://washingtonexaminer.com/opinion/columnists/2011/06/harold-koh-gollum-foggy-bottom">Harold Hongju Koh</a> who <a href="http://www.lawfareblog.com/2011/03/presidential-war-unilateralism-and-the-role-of-a-government-lawyer-the-case-of-harold-koh/">once authored</a> a <a href="http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1748&context=facpubs&sei-redir=1#search=%22law+professords+memorandum+dellums%22">legal brief</a> [.pdf] challenging George Herbert Walker Bush’s authority to fight <a href="http://www.lewrockwell.com/rothbard/ir/Ch22.html">the first Iraq war</a>, on the grounds that “the Constitution requires the president to consult with Congress and receive its affirmative authorization – not merely present it with faits accomplis – before engaging in war.” </p> <p>Oh, but this <i>isn’t</i> a war – didn’t you hear me the first time? As Koh explained to the befuddled solons in his <a href="http://www.youtube.com/watch?v=gM-54TM93-Q">opening statement</a>: the word “hostilities,” which “triggers” the 60-day time line imposed by the War Powers Act, is “an ambiguous term of art.” Translation: it can mean anything anyone wants it to mean – especially if that anyone is a sitting Democratic president. After all, Koh argued, the word wasn’t defined in the legislation, and there is no legislative precedent that would define it for us. Oh, and <i>put down</i> that <a href="http://www.google.com/webhp?hl=en#sclient=psy&hl=en&site=webhp&source=hp&q=hostilities+dictionary&aq=&aqi=&aql=&oq=&pbx=1&bav=on.2,or.r_gc.r_pw.&fp=f0db36aa1c9349b9&biw=746&bih=615">dictionary</a> – we don’t use them in ObamaWorld, which is in the same galaxy as <a href="http://www.antiwar.com/justin/j021302.html">Bizarro World</a>. Instead, we must stick to “historical practice.” </p> <p>It is precisely “historical practice” that argues against Koh’s Orwellian linguistics, because never in the history of the world has anyone ever argued that bombing and killing citizens of a foreign country isn’t war plain and simple – not even <a href="http://www.hawaii.edu/powerkills/NOTE4.HTM">the Soviets</a>, who were masters of Doublespeak. That didn’t deter our State Department’s legal eagle from defending the indefensible: after all, this administration is all about “change” – and yet they didn’t tell us they were changing the language and the clear meaning of words. </p> <p>According to Koh, there are four factors that qualify the Libyan adventure as a “kinetic action” rather than a war, the first being that the action has “international support,” and – due to its multilateral character – transcends the need for congressional approval. That is the view taken by his boss, Hillary Clinton, who <a href="http://www.commondreams.org/headline/2011/03/30-3">stated</a> that the only authorization needed came from the United Nations. Koh echoed Hillary again when he said that even if the Senators disagreed with the administration’s position on the issue of authorization, they should support the Libyan <s><strike> war</strike></s> “kinetic action,” because congressional opposition only “serves Gadhafi’s’s interests.” A less dramatic way of saying, as Hillary did, “<a href="http://nation.foxnews.com/hillary-clinton/2011/06/24/hillary-clinton-libya-war-critics-whose-side-are-you">Whose side are you on?</a>”, but just as <a href="http://www.salon.com/news/opinion/glenn_greenwald/2011/06/24/clinton/index.html">offensive</a>. </p> <p>Furthermore, argued Koh, this “kinetic action” was launched in pursuit of “limited goals,” i.e. protecting Libyan civilians by preventing an <a href="http://articles.boston.com/2011-04-14/bostonglobe/29418371_1_rebel-stronghold-civilians-rebel-positions">alleged impending</a> “massacre” (as administration spokesmen put it). Yet this is another brazen falsehood, because the goals of the NATO alliance <i>have</i> changed – and with record rapidity.</p> <p>You’ll recall it was only a few months ago that the pro-war pundits and their friends in the White House were <a href="http://thehill.com/homenews/campaign/151191-white-house-suggests-regime-change-is-goal-of-libya-mission">telling us</a> that “regime change” was not on the agenda, that it would be “<a href="http://blogs.abcnews.com/politicalpunch/2011/03/obama-to-members-of-congress-action-versus-libya-in-days-not-weeks.html">a matter of days, not weeks</a>,” and that the <a href="http://www.youtube.com/watch?v=Mw4ETZhgEbw">whole idea</a> was to prevent the Mad Dog Dictator from slaughtering as many as 100,000 of his political enemies. In a matter of weeks, all three of the NATO principals – Obama, British Prime Minister David Cameron, and French President Nicolas Sarkozy – published a <a href="http://www.nytimes.com/2011/04/15/opinion/15iht-edlibya15.html?_r=1">jointly-authored op ed piece</a> openly acknowledging that the goal had changed, and the allies were now going for regime change. </p> <p>There is nothing limited about America’s war on Libya: Washington’s war aims are as unlimited as <a href="http://www.africom.mil/">their ambition</a>. Libya is just the beginning. Wait until they go into <a href="http://www.ibtimes.com/articles/170620/20110628/sudan-abyei-peacekeepers-un-security-council-obama.htm">Sudan</a>, again on “humanitarian” grounds. </p> <p>In any case, whatever “limited” objectives this administration is currently pursuing in North Africa – or anywhere else, for that matter – you can be sure it’s in the service of a much larger objective: ensuring <a href="http://docs.google.com/viewer?a=v&q=cache:ruMnHnl98cAJ:www.newamericancentury.org/RebuildingAmericasDefenses.pdf+rebuilding+america%27s+defenses&hl=en&gl=us&pid=bl&srcid=ADGEESj4bAm84ZY-wSHiV4YDs97cgz0dSV0v85ZlpKgYvrnwC1RXrRrCmouidLePaRILxVsz7AgCq4zMmn59xYjMDUfcn9hWbhO9Qz-Sh1b41g8wNkHQBu7zCHPkbQCWyAFvTLSAafoo&sig=AHIEtbQLHMPAOmA5rD_XhiHfftZsx9Xj9g">US domination</a> of the region. Given the current circumstances, in which American-supported dictators in the Middle East and North Africa are being <a href="http://english.aljazeera.net/news/middleeast/2011/06/20116583530542599.html">kicked out</a> of power <a href="http://www.nytimes.com/2011/06/29/world/middleeast/29egypt.html">left</a> and <a href="http://english.ahram.org.eg/NewsContent/2/8/15150/World/Region/Ben-Ali-supporters-to-be-banned-from-Tunisia-vote-.aspx">right</a>, the only way Washington can accomplish this is through <a href="http://www.khaleejtimes.com/DisplayArticle09.asp?xfile=data/international/2011/June/international_June1085.xml&section=international">war</a>. But <i>please</i> – don’t call it that. </p> <p>Another argument made by Koh is that, since there is little or even no danger of incurring casualties – US planes are bombing from heights unreachable by the ramshackle Libyan air defenses – this action doesn’t meet the definition of a war. There have been no deaths on the US side, nor are any likely to occur, said Koh – but what about the Libyans? In particular, what about those civilians we keep “<a href="http://news.antiwar.com/2011/06/19/nato-admits-killing-civilians-in-tripoli-attack/">mistakenly</a>” killing? Apparently, only the number of American deaths enters into Koh’s calculations. </p> <p>Oh, and did I tell you Senor Koh is noted as a great defender of “human rights”? <a href="http://www.bahaindex.com/en/news/human-rights/902-harold-hongju-koh-assistant-secretary-of-state-for-democracy-human-rights-and-labor-robert-a-sei">Indeed</a>, he served as U.S. Assistant Secretary of State for Democracy, Human Rights and Labor in the Clinton administration.</p> <p>In today’s world, it is entirely possible – indeed, probable – that a “human rights” champion of renown would argue in favor of a military action on the grounds that the enemy is completely at our mercy, and unable to mount an effective defense. That’s what we mean by “human rights” in ObamaWorld. </p> <p>Koh’s third point was that US military action in Libya is unlikely to escalate, because a ground presence has been ruled out in advance. Yet that is not what <a href="http://www.wsws.org/articles/2011/apr2011/liby-a19.shtml">we’ve heard</a> from our European allies, particularly the French, who have consistently pushed for an all-out invasion. Furthermore, how do we know there are no US troops are the ground – because the US government says so? </p> <p>Well, I guess it all depends on how one defines “troops” – we’re back to playing word games, you’ll note – because the CIA is almost certainly “on the ground” in Libya, along with their <a href="http://gawker.com/5806794/armed-western-troops-filmed-in-libya-as-generals-defect">British</a> and French equivalents. What if one or more of these spooks are captured, and subjected to torture and/or public display? What if one of those US pilots crashes, and is captured? This is almost certain to result in an attempted rescue operation, and that will in itself represent a significant escalation of the conflict. Such a scenario would fatally undermine Koh’s fourth point, made in testimony to the Senate committee, that the US is utilizing limited means to achieve its limited objectives. </p> <p>Koh, an advocate of “<a href="http://www.uctv.tv/search-details.aspx?showID=8382">transnational</a>” law, is not only an enemy of Libyan sovereignty, he’s also an enemy of US sovereignty: we don’t need congressional authorization to commence “kinetic” actions, according to Koh and his fellow transnationalists, because “international law” precedes – and overrides – the US Constitution.</p> <p>To Obama and his minions, the Constitution is an obstacle to be ignored, where possible, and “reinterpreted” when necessary. During his presidency, the US military is the instrument of a militant internationalism, one that murders civilians in the cause of “human rights” and seeks to spread “democracy” abroad even while ignoring basic democratic precepts on the home front. </p> <p>This administration, armed with an ideology so far removed from American traditions and sheer common sense, is far more dangerous than its <a href="http://webcache.googleusercontent.com/search?q=cache:rRjgrKoMXqoJ:antiwar.com/engelhardt/%3Farticleid%3D12928+antiwar+bush+kick+ass&cd=1&hl=en&ct=clnk&gl=us&source=www.google.com">war-maddened</a> predecessor. At least Bush spared us the verbal gymnastics and never denied he intended to take us to war. The current occupant of the Oval Office wants us to consider him a modern Gandhi while besting Bush at his own game. The pretentious doubletalk engaged in by this White House is an insult to the American people, and yet another measure of Obama’s monumental arrogance. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/its-kinetic-so-dont-get-frenetic.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T11:35:00-07:00">11:35 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3880970565327715381">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3880970565327715381&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7950938415255200770"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/idolizing-absolute-power.html">Idolizing Absolute Power</a> </h3> <div class="post-body entry-content"> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">Idolizing Absolute Power</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By JAMES BOVARD</span></p> <p class="style2"><span class="style50">T</span>he <em>Christian Science Monitor </em>published a piece I wrote last month wrote opposing allowing the U.S. government to kill Americans without a warrant, trial, or any judicial niceties. The article, “<a href="http://www.csmonitor.com/Commentary/Opinion/2011/0517/Assassination-nation-Are-there-any-limits-on-President-Obama-s-license-to-kill">Assassination Nation: Are there any limits on President Obama's license to kill?</a>,” spurred a torrent of feedback on Yahoo.com that vividly illustrates how some Americans now view absolute power.</p> <p class="style2">Some folks believed that opposing “extrajudicial killings” should be a capital offense. My article mentioned an American Civil Liberties Union lawsuit pressuring the Obama administration “to disclose the legal standard it uses to place U.S. citizens on government kill lists.” “Will R.” was indignant: “We need to send Bovard and the ACLU to Iran. You shoot traders and the ACLU are a bunch of traders.” (I’m not aware that the ACLU is engaged in either interstate or international commerce). “Jeff” took the high ground: "Hopefully there will soon be enough to add James Bovard to the [targeted killing] list." Another commenter - self-labeled as “Idiot Savant” - saw a grand opportunity: "Now if we can only convince [Obama] to use this [assassination] authority on the media, who have done more harm than any single terror target could ever dream of..." </p> <p class="style2">Many folks feared that any restrictions on U.S. government killing could be fatal. As “Rogmac” groused: “You guys who are against killing these guys are going to be the death of all of us.” Other commenters started from the self-evident truth that, as “Bert” declared, “In the best interest of the United Sates and it's citizen's, someone has to be the judge, jury and executioner.” This theory of government differs significantly from that proffered in the<em> Federalist Papers</em>. “Rich” was sure everything had been done properly: “The warrants have already been signed, the execution orders have all been approved now we just need to find them and eradicate them.” Having a president approve his own execution orders is more efficient than the procedures used by the U.S. government in earlier times. “Coder Cable” joined the pro-power parade: “In a time of war, the military (ie: President) is allowed to execute anyone for the crime of treason, assuming there is strong evidence to backup the claim.”</p> <p class="style2">This was practically the only pro-assassination comment that referred to a standard of evidence. The question of whether government officials can be trusted to arbitrarily label Americans as enemies did not arise. Instead, most commenters favored “faith-based killings,” blindly accepting the assertions of any political appointee as the ultimate evidence. “Dark Ruby Moon” wrote: “I won't loose a minutes sleep over these people being eliminated.... One of the reasons presidential elections are so important is we are picking someone who must make such difficult decisions and who is in the end accountable for those decisions.” Perhaps future presidential races will feature campaign promises such as “Vote for Smith - he won’t have you killed unless all his top advisers agree you deserve to die”? </p> <p class="style2">Commenter “FU” played the race card: “James bovard, I don't think the killing started with Obama but I wonder if you would write the same article if the cowboy from Texas was pulling the trigger? Or is it that you are angry because the existence of plantations run with blacks are done in this country and Obama managed to become president? We would all be better off if bigots like you stopped writing crap.” Bigotry is the only reason to oppose permitting a black president to kill Americans of all races and ethnicities. </p> <p class="style2">For “Rocketman1945,” the fact that I opposed unlimited presidential power proved I was a foreigner: “WOW! You can sure tell what side of the political spectrum this article came from. Not one word of support for the currant American President. Who are these people that write this drivel? Not Americans that's for sure.” </p> <p class="style2">The newspaper won few fans on Yahoo for publishing that piece. “Zaria” said it was no surprise that an article that was “all nonesense” came from the <em>Monitor</em>. “Nomadd” denounced the <em>Monitor</em> as a “socialist rag” that should be “put in supermarket checkout lines.” Perhaps “Nomadd” assumed that only left-wingers had anything to fear from this new power. (I never saw socialist rags in grocery checkout lines, except maybe at the Boston Food Co-op). </p> <p class="style2">Unfortunately, the primary difference between some assassination advocates and Washington apologists for targeted killing is that the latter use spellcheckers. For both groups, “due process” is an anachronism - if not a terrorist ploy. And for both groups, boundless groveling to the Commander-in-Chief is the new trademark of a good American. Anything less is national suicide. </p> <p class="style2"><strong>James Bovard</strong> is a policy advisor for <a href="http://www.fff.org/">The Future of Freedom Foundation</a> and is the author of <a href="http://www.amazon.com/exec/obidos/ASIN/140397666X/counterpunchmaga">Attention Deficit Democracy</a>, <a href="http://www.amazon.com/exec/obidos/ASIN/1403968519/counterpunchmaga">The Bush Betrayal</a>, <a href="http://www.amazon.com/exec/obidos/ASIN/1403963681/counterpunchmaga">Terrorism and Tyranny</a>, and other books. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/idolizing-absolute-power.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-29T11:33:00-07:00">11:33 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7950938415255200770">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7950938415255200770&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="251148737135811922"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/world-overwhelmed-by-western-hypocrisy.html">A World Overwhelmed by Western Hypocrisy</a> </h3> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">In America, Lawlessness is Now Complete</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">A World Overwhelmed by Western Hypocrisy</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By PAUL CRAIG ROBERTS</span></p> <p class="style2"><span class="style50">W</span>estern institutions have become caricatures of hypocrisy. </p> <p class="style2">The International Monetary Fund and the European Central Bank are violating their charters in order to bail out French, German, and Dutch private banks. The IMF is only empowered to make balance of payments loans, but is lending to the Greek government for prohibited budgetary reasons in order that the Greek government can pay the banks. The ECB is prohibited from bailing out member country governments, but is doing so anyway in order that the banks can be paid. The German parliament approved the bailout, which violates provisions of the European Treaty and Germany’s own Basic Law. The case is in the German Constitutional Court, a fact unreported in the US media. </p> <p class="style2">US president George W. Bush’s designated lawyer ruled that the president has “unitary powers” that elevate him above statutory US law, treaties, and international law. According to this lawyer’s legal decisions, the “unitary executive” can violate with impunity the Foreign Intelligence Surveillance Act, which prevents spying on Americans without warrants obtained from the FISA Court. Bush’s man also ruled that Bush could violate with impunity the statutory US laws against torture as well as the Geneva Conventions. In other words, the fictional “unitary powers” make the president into a Caesar. </p> <p class="style2">Constitutional protections, such as habeas corpus, which prohibit government from holding people indefinitely without presenting charges and evidence to a court, and which prohibit government from denying detained people due process of law and access to an attorney, were thrown out the window by the US Department of Justice, and the federal courts went along with most of it. </p> <p class="style2">As did Congress, “the people’s representatives”. Congress even enacted the Military Tribunals Commissions Act of 2006, signed by the White House Brownshirt on October 17. </p> <p class="style2">This act allows anyone alleged to be an “unlawful enemy combatant” to be sentenced to death on the basis of secret and hearsay evidence not presented in the kangaroo military court placed out of reach of US federal courts. The crazed nazis in Congress who supported this total destruction of Anglo-American law masqueraded as “patriots in the war against terrorism.” </p> <p class="style2">The act designates anyone accused by the US, without evidence being presented, as being part of the Taliban, al-Qaeda, or “associated forces” to be an “unlawful enemy combatant,” which strips the person of the protection of law. </p> <p class="style2">The Taliban consists of indigenous Afghan peoples, who, prior to the US military intervention, were fighting to unify the country. The Taliban are Islamist, and the US government fears another Islamist government, like the one in Iran that was blowback from US intervention in Iran’s internal affairs. The “freedom and democracy” Americans overthrew an elected Iranian leader and imposed a tyrant. American-Iranian relations have never recovered from the tyranny that Washington imposed on Iranians. </p> <p class="style2">Washington is opposed to any government whose leaders cannot be purchased to perform as Washington’s puppets. This is why George W. Bush’s regime invaded Afghanistan, why Washington overthrew Saddam Hussein, and why Washington wants to overthrow Libya, Syria, and Iran. </p> <p class="style2">Barack Obama inherited the Afghan war, which has lasted longer than World War II with no victory in sight. Instead of keeping with his election promises and ending the fruitless war, Obama intensified it with a “surge,” </p> <p class="style2">The war is now ten years old, and the Taliban control more of the country than does the US and its NATO puppets. Frustrated by their failure, the Americans and their NATO puppets increasingly murder women, children, village elders, Afghan police, and aid workers. </p> <p class="style2">A video taken by a US helicopter gunship, leaked to Wikileaks and released, shows American forces, as if they were playing video games, slaughtering civilians, including camera men for a prominent news service, as they are walking down a peaceful street. A father with small children, who stopped to help the dying victims of American soldiers’ fun and games, was also blown away, as were his children. The American voices on the video blame the children’s demise on the father for bringing kids into a “war zone.” It was no war zone, just a quiet city street with civilians walking along. </p> <p class="style2">The video documents American crimes against humanity as powerfully as any evidence used against the Nazis in the aftermath of World War II at the Nuremberg Trials. </p> <p class="style2">Perhaps the height of lawlessness was attained when the Obama regime announced that it had a list of American citizens who would be assassinated without due process of law. </p> <p class="style2">One would think that if law any longer had any meaning in Western civilization, George W. Bush, Dick Cheney, indeed, the entire Bush/Cheney regime, as well as Tony Blair and Bush’s other co-conspirators, would be standing before the International Criminal Court. </p> <p class="style2">Yet it is Gadaffi for whom the International Criminal Court has issued arrest warrants. Western powers are using the International Criminal Court, which is supposed to serve justice, for self-interested reasons that are unjust. </p> <p class="style2">What is Gadaffi’s crime? His crime is that he is attempting to prevent Libya from being overthrown by a US-supported, and perhaps organized, armed uprising in Eastern Libya that is being used to evict China from its oil investments in Eastern Libya. </p> <p class="style2">Libya is the first <em>armed </em>revolt in the so-called “Arab Spring.” Reports have made it clear that there is nothing “democratic” about the revolt. </p> <p class="style2">The West managed to push a “no-fly” resolution through its puppet organization, the United Nations. The resolution was limited to neutralizing Gadaffi’s air force. However, Washington, and its French puppet, Sarkozy, quickly made an “expansive interpretation” of the UN resolution and turned it into authorization to become directly involved in the war. </p> <p class="style2">Gadaffi has resisted the armed rebellion against the state of Libya, which is the normal response of a government to rebellion. The US would respond the same as would the UK and France. But by trying to prevent the overthrow of his country and his country from becoming another American puppet state, Gadaffi has been indicted. The International Criminal Court knows that it cannot indict the real perpetrators of crimes against humanity--Bush, Blair, Obama, and Sarkozy--but the court needs cases and accepts the victims that the West succeeds in demonizing. </p> <p class="style2">In our times, everyone who resists or even criticizes the US is a criminal. For example, Washington considers Julian Assange and Bradley Manning to be criminals, because they made information available that exposed crimes committed by the US government. Anyone who even disagrees with Washington, is considered to be a “threat,” and Obama can have such “threats” assassinated or arrested as a “terrorist suspect” or as someone “providing aid and comfort to terrorists.” American conservatives and liberals, who once supported the US Constitution, are all in favor of shredding the Constitution in the interest of being “safe from terrorists.” They even accept such intrusions as porno-scans and sexual groping in order to be “safe” on air flights. </p> <p class="style2">The collapse of law is across the board. The Supreme Court decided that it is “free speech” for America to be ruled by corporations, not by law and certainly not by the people. On June 27, the US Supreme Court advanced the fascist state that the “conservative” court is creating with the ruling that Arizona cannot publicly fund election candidates in order to level the playing field currently unbalanced by corporate money. The “conservative” US Supreme Court considers public funding of candidates to be unconstitutional, but not the “free speech” funding by business interests who purchase the government in order to rule the country. The US Supreme Court has become a corporate functionary and legitimizes rule by corporations. Mussolini called this rule, imposed on Americans by the US Supreme Court, fascism. </p> <p class="style2">The Supreme Court also ruled on June 27 that California violated the US Constitution by banning the sale of violent video games to kids, despite evidence that the violent games trained the young to violent behavior. It is fine with the Supreme Court for soldiers, whose lives are on the line, to be prohibited under penalty of law from drinking beer before they are 21, but the idiot Court supports inculcating kids to be murderers, as long as it is in the interest of corporate profits, in the name of “free speech.” </p> <p class="style2">Amazing, isn’t it, that a court so concerned with ‘free speech” has not protected American war protesters from unconstitutional searches and arrests, or protected protesters from being attacked by police or herded into fenced-in areas distant from the object of protest. </p> <p class="style2">As the second decade of the 21st century opens, those who oppose US hegemony and the evil that emanates from Washington risk being declared to be “terrorists.” If they are American citizens, they can be assassinated. If they are foreign leaders, their country can be invaded. When captured, they can be executed, like Saddam Hussein, or sent off to the ICC, like the hapless Serbs, who tried to defend their country from being dismantled by the Americans. </p> <p class="style2">And the American sheeple think that they have “freedom and democracy.” </p> <p class="style2">Washington relies on fear to cover up its crimes. A majority of Americans now fear and hate Muslims, peoples about whom Americans know nothing but the racist propaganda which encourages Americans to believe that Muslims are hiding under their beds in order to murder them in their sleep. </p> <p class="style2">The neoconservatives, of course, are the purveyors of fear. The more fearful the sheeple, the more they seek safety in the neocon police state and the more they overlook Washington’s crimes of aggression against Muslims. </p> <p class="style2">Safety uber alles. That has become the motto of a once free and independent American people, who once were admired but today are despised. </p> <p class="style2">In America lawlessness is now complete. Women can have abortions, but if they have stillbirths, they are arrested for murder. </p> <p class="style2">Americans are such a terrified and abused people that a 95-year old woman dying from leukemia traveling to a last reunion with family members was forced to remove her adult diaper in order to clear airport security. Only a population totally cowed would permit such abuses of human dignity. </p> <p class="style2">In a June 27 interview on National Public Radio, Ban Ki-moon, Washington’s South Korean puppet installed as the Secretary General of the United Nations, was unable to answer why the UN and the US tolerate the slaughter of unarmed civilians in Bahrain, but support the International Criminal Court’s indictment of Gadaffi for defending Libya against armed rebellion. Gadaffi has killed far fewer people than the US, UK, or the Saudis in Bahrain. Indeed, NATO and the Americans have killed more Libyans than has Gadaffi. The difference is that the US has a naval base in Bahrain, but not in Libya. </p> <p class="style2">There is nothing left of the American character. Only a people who have lost their soul could tolerate the evil that emanates from Washington.</p> <p class="style2"><strong>Paul Craig Roberts</strong> was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. His latest book, <a href="http://www.easycartsecure.com/CounterPunch/CounterPunch_Books.html">HOW THE ECONOMY WAS LOST</a>, has just been published by CounterPunch/AK Press. He can be reached at: <a href="mailto:PaulCraigRoberts@yahoo.com">PaulCraigRoberts@yahoo.com</a></p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-35113463589308947402011-06-27T21:17:00.001-07:002011-06-27T21:17:16.863-07:00<div class="post-body entry-content"> <div class="post-headline"> <h1>Rich Dad, Poor Dad, Prepper Dad? Even Robert Kiyosaki Is Warning That An Economic Collapse Is Coming</h1> </div> <p><a rel="attachment wp-att-2354" href="http://theeconomiccollapseblog.com/archives/rich-dad-poor-dad-prepper-dad-even-rober-kiyosaki-is-warning-that-an-economic-collapse-is-coming/robert-kiyosaki"><img class="alignleft size-thumbnail wp-image-2354" title="Robert Kiyosaki" src="http://theeconomiccollapseblog.com/wp-content/uploads/2011/06/Robert-Kiyosaki-237x250.jpg" alt="" height="250" width="237" /></a>Are you familiar with Robert Kiyosaki? He is best known for the "Rich Dad, Poor Dad" series of books. Over 26 million books authored by Kiyosaki have been sold and he is recognized as a financial expert by millions of people across the globe. Well, guess what? Even Robert Kiyosaki is warning that an economic collapse is coming. In fact, Kiyosaki and his team of financial experts are encouraging Americans to stock up on food, guns and precious metals. This is yet another sign of just how close we are to the total collapse of the U.S. Economy. Kiyosaki, who once co-authored a book with Donald Trump entitled "Why We Want You To Be Rich" is now a full-fledged prepper. As even more prominent Americans start warning that an "economic collapse" is coming do you think that the American people will finally wake up and start paying attention?</p> <p>The statements that Robert Kiyosaki makes in the video posted below are absolutely jaw-dropping. Once upon a time he was all about teaching people how they could get rich, but now he is talking about storing food, buying guns, investing in precious metals and preparing for the coming crash.</p> <p>The following are 11 of the best Kiyosaki "sound bites" from the video below....</p> <p><strong>#1</strong> "when the economy crashes as we predict"</p> <p><strong>#2</strong> "the crowds come rushing in to buy gold and silver"</p> <p><strong>#3</strong> "we could either go into a depression or we go to hyperinflation"</p> <p><strong>#4</strong> "or we could also go to war"</p> <p><strong>#5</strong> "buy a gun"</p> <p><strong>#6</strong> "I'm preparing"</p> <p><strong>#7</strong> "I'm prepared for the worst"</p> <p><strong>#8</strong> "so come to my house and I'm armed and dangerous and I'll welcome you"</p> <p><strong>#9</strong> "we have food, we have water, we have guns, gold and silver, and cash"</p> <p><strong>#10</strong> "the credit card system shuts down, the world shuts down"</p> <p><strong>#11</strong> "the supermarkets have less than 3 days supply"</p> <p>If you have not seen this video yet, it is definitely worth the 8 minutes that it takes to watch it. Robert Kiyosaki seems to be extremely alarmed about the future of the U.S. economy....</p> <p>It certainly seems as though the entire financial culture in America is changing.</p> <p>Once upon a time everyone wanted to know how to get rich.</p> <p>Now everyone wants to know how to survive the collapse that is coming.</p> <p>As I have written about previously, even people like <a href="http://theeconomiccollapseblog.com/archives/even-tony-robbins-is-warning-that-an-economic-collapse-is-coming">Tony Robbins</a> and <a href="http://theeconomiccollapseblog.com/archives/even-donald-trump-is-warning-that-an-economic-collapse-is-coming">Donald Trump</a> are warning that an economic collapse is coming.</p> <p>Economic pessimism is seemingly everywhere and almost every recent survey indicates that the American people are <a href="http://theeconomiccollapseblog.com/archives/losing-faith-in-the-u-s-economy">losing faith</a> in the U.S. economy.</p> <p>For example, in a recent article I noted that 48 percent of Americans believe that it is likely that <a href="http://theeconomiccollapseblog.com/archives/48-percent-of-americans-believe-another-great-depression-is-likely-in-the-next-12-months-19-reasons-why-they-are-not-completely-crazy">another great Depression</a> will begin within the next 12 months.</p> <p>According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high <a href="http://www.gallup.com/poll/148244/Record-High-Americans-Lack-Confidence-Banks.aspx?utm_source=tagrss&utm_medium=rss&utm_campaign=syndication&utm_term=All%20Gallup%20Headlines">of 36%</a>. Back in 2007, just 14% of Americans lacked confidence in U.S. banks.</p> <p>In order for society to function correctly, people need to be able to trust each other and they need to be able to trust the major institutions that hold society together.</p> <p>Once confidence in our major societal institutions is gone, it is going to be incredibly difficult to get it back.</p> <p>Sadly, the reality is that many of our major financial institutions have been untrustworthy for a very long time. It is just that the American people are only just now starting to wake up to that fact.</p> <p>For example, <a href="http://theeconomiccollapseblog.com/archives/19-reasons-why-the-federal-reserve-is-at-the-heart-of-our-economic-problems">the Federal Reserve</a> has been at the heart of our economic problems for decades but most Americans have not realized it.</p> <p>But now that is starting to change. According to one recent poll, <a href="http://www.nypost.com/p/news/business/his_two_left_feet_feat_myx77BB64tdNaLXTpqpoKN">only 30%</a> of Americans currently view Federal Reserve Chairman Ben Bernanke favorably.</p> <p>The American people are becoming increasingly dissatisfied with an economic system where the vast majority of the rewards flow to Wall Street, the big banks, the biggest corporations and the ultra-wealthy.</p> <p><a href="http://www.washingtonpost.com/wp-srv/special/business/income-inequality/">According to the Washington Post</a>, the top 0.1% of all income earners in the United States took home 2.6% of the nation's earnings in 1975. By 2008, the top 0.1% were taking home 10.4% of the nation's earnings.</p> <p>The Washington Post <a href="http://www.washingtonpost.com/wp-srv/special/business/income-inequality/">also says</a> that after adjusting for inflation, the average income of the top 0.1% of all Americans jumped by 385 percent between 1970 and 2008 while the average income for the bottom 90 percent of all Americans actually fell by one percent.</p> <p>The sad truth is that <a href="http://theeconomiccollapseblog.com/archives/will-the-banksters-and-the-corpocracy-eventually-own-it-all-29-statistics-about-extreme-income-inequality-in-america-that-will-blow-your-mind">income inequality</a> in the United States has become a major problem. A very small sliver of the population is reaping almost all of the rewards and the middle class is being ripped to shreds. Conservatives, liberals, Democrats, Republicans and libertarians should all be alarmed by this.</p> <p>Meanwhile, the <a href="http://theeconomiccollapseblog.com/archives/national-debt">national debt</a> continues to explode. Right now, U.S. government debt is expanding at a rate of <a href="http://www.telegraph.co.uk/news/worldnews/us-politics/8598451/Dont-be-distracted-by-Greece-Americans-must-also-face-financial-facts.html">$40,000 per second</a>.</p> <p>Every single minute we steal another 2 million dollars away from our children and our grandchildren.</p> <p>But if we stop this theft it would throw the U.S. economy into a horrible economic crisis that would be far worse than what we are experiencing right now.</p> <p>That is why the vast majority of our politicians do not have the guts to do it.</p> <p>We truly are caught between a rock and a hard place.</p> <p>But people like Robert Kiyosaki can see what is coming, and they are getting prepared.</p> <p>Are you prepared?</p> <p>Many of our young people have come up with their own versions of an "economic stimulus plan". In past articles I have documented many of the signs that <a href="http://theeconomiccollapseblog.com/archives/12-more-signs-that-society-is-collapsing">society is collapsing</a>, including the disturbing rise of the "mob robbery" phenomenon.</p> <p>Well, just the other day there was another very shocking mob robbery in the city of Philadelphia.</p> <p>On Thursday, a mob of 40 teens and young adults <a href="http://www.delcotimes.com/articles/2011/06/26/news/doc4e0696aaf127f552097776.txt?nstrack=sid:3501255%7Cmet:300%7Ccat:0%7Corder:1">invaded a Sears department store on 69th Street</a>, grabbed all of the merchandise that they could carry, and stormed right back out again.</p> <p>We are starting to see these kinds of large scale crimes happen from coast to coast.</p> <p>So what is going to happen to America if the economy experiences the kind of full out collapse that Robert Kiyosaki is talking about?</p> <p>We live in very interesting times.</p> <p>I hope that you are getting prepared.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/even-robert-kiyosaki-is-warning-that.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T21:13:00-07:00">9:13 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1913984853018616822">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1913984853018616822&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Coming" rel="tag">Coming</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Economic%20Collapse" rel="tag">Economic Collapse</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Even%20Robert%20Kiyosaki" rel="tag">Even Robert Kiyosaki</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Is%20Warning" rel="tag">Is Warning</a> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="294874993735000044"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/why-are-food-prices-rising-so-fast.html">Why Are Food Prices Rising So Fast?</a> </h3> <div class="post-body entry-content"> <div class="post-headline"> <h1><span style="font-size:130%;">Why Are Food Prices Rising So Fast?</span></h1> </div> <p><a rel="attachment wp-att-2343" href="http://theeconomiccollapseblog.com/archives/why-are-food-prices-rising-so-fast/why-are-food-prices-rising-so-fast"><img class="alignleft size-thumbnail wp-image-2343" title="Why Are Food Prices Rising So Fast" src="http://theeconomiccollapseblog.com/wp-content/uploads/2011/06/Why-Are-Food-Prices-Rising-So-Fast-250x164.jpg" alt="" height="164" width="250" /></a>If you do much grocery shopping, you have probably noticed that the cost of food has been rising at a very brisk pace over the past year. So why are food prices rising so fast? According to Federal Reserve Chairman Ben Bernanke, inflation is still very low and the <a href="http://theeconomiccollapseblog.com/archives/is-the-economy-improving">economy is improving</a>. So what is going on here? When I go to the grocery store these days, there are very few things that I will buy unless they are on sale. In fact, I have noticed that many of the new "sale prices" are the old regular prices. Other items have had their packages reduced in size in order to hide the price increases. But with millions of American families just barely scraping by as it is, what is going to happen if food prices keep rising this rapidly?</p> <p>The food prices are especially painful if you are trying to eat healthy. Most of the low price stuff in the grocery stores is garbage. Eating the "typical American diet" is a highway to cancer, heart disease and diabetes.</p> <p>But if you try to stick to food that is "healthy" or "organic" you can blow through hundreds of dollars in a heartbeat. In fact, the reality is that tens of millions of American families have now essentially been priced out of a healthy diet.</p> <p>Soon there will be millions more American families that will not even be able to afford an unhealthy diet.</p> <p>Some recent statistics compiled by the Bureau of Labor Statistics are absolutely staggering. According to <a href="http://www.cnbc.com/id/43498072">a recent CNBC article</a>, over the past year many of the most popular foods in America have absolutely soared in price....</p> <blockquote><p><em>Coffee, for instance, is up 40 percent. Celery is 28 percent higher while butter prices rose 26.4 percent. Rounding out the top five are bacon, at 23.5 percent, and cabbage, at 23.3 percent.</em></p></blockquote> <p>Unfortunately, it looks like the trend of rising food prices is accelerating. Just look at what <a href="http://www.cnbc.com/id/43498072">the CNBC article</a> says happened in the month of April alone....</p> <blockquote><p><em>Just in April—the most recent month for which data is available—grapes went up nearly 30 percent, cabbage jumped about 17 percent and orange juice surged more than 5 percent.</em></p></blockquote> <p>Meat is becoming more expensive as well. Since March 2009, livestock prices have risen <a href="http://www.economicpolicyjournal.com/2011/06/livestock-prices-soar.html">by 138%</a>.</p> <p>So when Ben Bernanke tells us that inflation is very low, that really is a lie. On the stuff that people spend money on every day (like food and gas), prices have gone up dramatically.</p> <p>Sadly, this is not just a phenomenon that is happening in the United States. The truth is that the entire planet is rapidly approaching a horrific <a href="http://theeconomiccollapseblog.com/archives/20-signs-that-a-horrific-global-food-crisis-is-coming">global food crisis</a>.</p> <p>Over the past year, the global price of food has risen <a href="http://www.bloomberg.com/news/2011-06-22/sarkozy-tells-g-20-ministers-food-price-surge-is-plague-needing-action.html">by 37 percent</a> and this has pushed approximately 44 million more people around the world into poverty.</p> <p>When food prices rise in the U.S. it may be painful for millions of American families, but around the world a rise in food prices can mean the difference between surviving and not surviving.</p> <p>That is why it has been so alarming that the global price of wheat has approximately doubled over the past year.</p> <p>But it is not just wheat that has been soaring. Check out what <a href="http://www.bloomberg.com/news/2011-06-22/sarkozy-tells-g-20-ministers-food-price-surge-is-plague-needing-action.html">a recent Bloomberg article</a> had to say about what has been happening to many key agricultural commodities over the past year....</p> <blockquote><p><em>Corn futures advanced 77 percent in the past 12 months in Chicago trading, a global benchmark, rice gained 39 percent and sugar jumped 64 percent. There will be shortages in corn, wheat, soybeans, coffee and cocoa this year or next, according to Utrecht, Netherlands-based Rabobank Groep. Prices also rose after droughts and floods from Australia to Canada ruined crops last year. European farmers are now contending with their driest growing season in more than three decades.</em></p></blockquote> <p>Even before this recent spike in food prices the world was struggling to get enough food to everybody. It has been estimated that somewhere in the world someone starves to death <a title="every 3.6 seconds" href="http://endoftheamericandream.com/archives/just-one-really-bad-year-away-from-a-horrific-world-famine">every 3.6 seconds</a>, and 75 percent of those are children under the age of five.</p> <p>So what is going to happen if food prices keep on rising at the current pace?</p> <p>That is a very good question.</p> <p>We really are starting to move into unprecedented territory. Nobody is quite sure what is going to happen next.</p> <p>So why is all of this happening?</p> <p>Well, a lot of people are blaming <a href="http://theeconomiccollapseblog.com/archives/19-reasons-why-the-federal-reserve-is-at-the-heart-of-our-economic-problems">the Federal Reserve</a>. All of the "quantitative easing" that the Fed has done has flooded the financial markets with money. All of that money had to go somewhere. Much of it has pumped up the prices of hard assets such as oil, gold and agricultural commodities.</p> <p>But it is not just the Fed that is to blame. The truth is that central banks all over the world have been <a href="http://theeconomiccollapseblog.com/archives/6-charts-which-prove-that-central-banks-all-over-the-globe-are-recklessly-printing-money">recklessly printing money</a>.</p> <p>When the amount of money in an economy goes up, the purchasing value of all existing money goes down. In the United States, that means that your dollars will not go as far as they did before.</p> <p>But it is not just monetary policy that is affecting food prices. In 2010 and 2011 we have seen an unprecedented wave of natural disasters and crazy weather. This has caused problems with crops all over the globe.</p> <p>In addition, U.S. economic policies are also playing a role. At this point, <a href="http://yaleglobal.yale.edu/content/looming-food-crisis">almost a third</a> of all corn grown in the United States is used for fuel. This is putting a lot of stress on the price of corn.</p> <p>Also, there are some long-term trends that are not in our favor. For example, <a href="http://www.telegraph.co.uk/earth/8359076/US-farmers-fear-the-return-of-the-Dust-Bowl.html">the systematic depletion of the Ogallala Aquifer</a> could eventually turn "America's Breadbasket" back into the "Dust Bowl". If you have not heard of this problem I would encourage you to do some research on it.</p> <p>Things are going to get a lot worse, but already America is having a really hard time feeding itself. According to Feeding America's 2010 hunger study, <a href="http://www.usatoday.com/money/economy/2011-05-10-new-face-of-hunger-food-assistance_n.htm">more than 37 million Americans</a> are now being served by food pantries and soup kitchens.</p> <p>So is that number unusual?</p> <p>Yes, it sure is.</p> <p>The number of Americans that are going to food pantries and soup kitchens has increased <a href="http://www.usatoday.com/money/economy/2011-05-10-new-face-of-hunger-food-assistance_n.htm">by 46%</a> since 2006.</p> <p>That is not a good trend.</p> <p>Another stat that I talk a lot about in this column is the number of Americans on food stamps.</p> <p>Right now, there are 44 million Americans on food stamps. Nearly half of them <a href="http://theeconomiccollapseblog.com/archives/20-facts-about-child-hunger-and-child-poverty-that-will-break-your-heart">are children</a>.</p> <p>How did we ever get to the point as a nation where more than 20 million children end up on food stamps?</p> <p>It is estimated that <a href="http://www.nytimes.com/2009/11/29/us/29foodstamps.html">one out of every four</a> American children is currently on food stamps, and it is being projected that <a href="http://theeconomiccollapseblog.com/archives/more-than-1-in-5-american-children-are-now-living-below-the-poverty-line">approximately 50 percent</a> of all U.S. children will be on food stamps at some point in their lives before they reach the age of 18.</p> <p>So what is going to happen if the economy gets even worse?</p> <p>What is going to happen if there really is a major food crisis in this country someday?</p> <p>Food prices have been going up for decades and they are going to continue to go up. But the frightening thing is how fast they are increasing now.</p> <p>As the U.S. middle class <a href="http://theeconomiccollapseblog.com/archives/the-coming-economic-hell-for-american-families">continues to be destroyed</a>, the number of Americans that can't afford to buy enough food is going to continue to rise. Food prices are rising much faster than wages are, and that is not likely to change any time soon.</p> <p>Food is rapidly becoming one of the most important global economic issues of this decade. The farther one looks down the road, the bleaker things look for the global food situation.</p> <p>I hope you are prepared for that.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/why-are-food-prices-rising-so-fast.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T21:11:00-07:00">9:11 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=294874993735000044">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=294874993735000044&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Food%20Prices" rel="tag">Food Prices</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/rising" rel="tag">rising</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/So%20Fast" rel="tag">So Fast</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5043085876493931893"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/is-economy-improving.html">Is The Economy Improving?</a> </h3> <div class="post-body entry-content"> <div class="post-headline"> <h1><span style="font-size:130%;">Is The Economy Improving?</span></h1> </div> <p><a rel="attachment wp-att-2338" href="http://theeconomiccollapseblog.com/archives/is-the-economy-improving/is-the-economy-improving"><img class="alignleft size-thumbnail wp-image-2338" title="Is The Economy Improving" src="http://theeconomiccollapseblog.com/wp-content/uploads/2011/06/Is-The-Economy-Improving-250x166.jpg" alt="" height="166" width="250" /></a>Is the U.S. economy improving? That is what Federal Reserve Chairman Ben Bernanke would have us believe. Bernanke declared today that the "recovery appears to be proceeding at a moderate pace" and that everything is going pretty much as planned. Sadly, the mainstream media and most of the American people still seem to have faith in the economic pronouncements of Helicopter Ben. They seem to have forgotten all of the <a href="http://theeconomiccollapseblog.com/archives/say-what-30-ben-bernanke-quotes-that-are-so-stupid-that-you-wont-know-whether-to-laugh-or-cry">Bernanke quotes</a> from before the financial crisis. Bernanke pledged that there would not be a housing crash and that there would not be a recession. It is amazing that anyone still believes that Bernanke has any credibility left.</p> <p>Of course "economic recovery" is one of Barack Obama's favorite new terms. He loves to talk about all of the signs that the economy is improving. To Obama, all of the recent bad economic news is no big deal. He says that what we are experiencing right now are simply "<a title="bumps on the road to recovery" href="http://www.cnbc.com/id/43279028" target="_blank">bumps on the road to recovery</a>".</p> <p>Well, whether you want to call them "bumps" or "potholes" or "massive gaping wounds that are gushing blood all over the place", the truth is that the U.S. economy is not improving at all. In fact, it is rapidly getting worse.</p> <p>Let's take a look at just a few areas of the economy....</p> <p><strong>Federal Government Finances</strong></p> <p>As I wrote about yesterday, the <a href="http://theeconomiccollapseblog.com/archives/national-debt">national debt</a> is completely and totally out of control. Since Barack Obama took office, the U.S. national debt has increased <a href="http://www.treasurydirect.gov/NP/NPGateway">by nearly 4 trillion dollars</a>.</p> <p>Keep in mind that from George Washington to Ronald Reagan, the U.S. government accumulated only 1 trillion dollars in debt.</p> <p>Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared <a href="http://www.thestreet.com/story/11142443/10-myths-that-politicians-want-you-to-believe.html">by 61%</a> during that same time period.</p> <p>Now the Democrats and the Republicans are busy negotiating over some modest reductions in spending.</p> <p>But unprecedented federal spending is one of the only things propping the economy up right now.</p> <p>If the U.S. economy is performing so poorly after being flooded with "stimulus money" from the federal government, what is going to happen once the federal government cuts back?</p> <p><strong>State And Local Government Finances</strong></p> <p>All over the United States, there are large numbers of state and local governments <a href="http://theeconomiccollapseblog.com/archives/municipal-bond-market-crash-2011-are-dozens-of-state-and-local-governments-about-to-default-on-their-debts">that are on the verge of bankruptcy</a>.</p> <p>For the moment, let's just focus on the state of Illinois.</p> <p>Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is letting bills go unpaid for long periods of time on a regular basis?</p> <p>It's true.</p> <p>Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almost indescribable.</p> <p>In <a href="http://www.counterpunch.org/lendman01132011.html">one recent article</a>, author Stephen Lendman described the horrific financial crisis that Illinois is facing right now....</p> <blockquote><p><em>With spending exceeding revenues, and obligations not postponed, unpaid bills are growing "at a frightening rate. For instance, IGPA's Fiscal Futures Model indicates (they) could reach $40 billion by July 1, 2013, with an associated delay in paying those bills of more than five years."</em></p> <p><em> Besides its $13 billion deficit and $6 billion in unpaid bills, its pension fund is about $130 billion in the red - a red flag that state workers may lose out altogether, wiping out their promised retirement savings.</em></p></blockquote> <p>But it isn't just the state government that is having problems. According to Cook County Treasurer Maria Pappas, the average household in Chicago would owe <a href="http://www.chicagobusiness.com/section/blogs?blogID=greg-hinz&plckController=Blog&plckBlogPage=BlogViewPost&uid=1daca073-2eab-468e-9f19-ec177090a35c&plckPostId=Blog:1daca073-2eab-468e-9f19-ec177090a35cPost:73061b12-c71d-45b0-aad9-130e57727e64&plckScript=blogScript&plckElementId=blogDest">a whopping $63,525</a> if all local government debt was divided up equally among all of the households.</p> <p>The truth is that even if the finances of the federal government could somehow be fixed, there would still be dozens and dozens of very significant "government debt problems" all across America.</p> <p>With so many state and local governments drowning in debt, jobs are being slashed at an alarming rate. UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash <a href="http://www.businessinsider.com/ten-signs-the-double-dip-recession-has-begun-2011-6#5-the-federal-budget-5">a whopping 450,000 jobs</a> by the end of next year.</p> <p>So would the U.S. government step in and start bailing out state and local governments?</p> <p>Not likely.</p> <p>U.S. Representative Paul Ryan <a href="http://www.counterpunch.org/lendman01132011.html">has said the following</a> about the prospect of bailing out the states....</p> <blockquote><p><em>"If we bail out one state, then all of the debt of all of the states are almost explicitly on the books of the federal government."</em></p></blockquote> <p>So for now, state and local governments are on their own.</p> <p><strong>Commercial Real Estate</strong></p> <p>Commercial real estate continues to decline all across America.</p> <p>Moody’s/REAL All Property Type Aggregate Index <a href="http://www.bloomberg.com/news/2011-06-22/u-s-commercial-property-index-falls-to-record-on-distressed-properties.html">fell 3.7%</a> in April and is now the lowest it has been in over 10 years.</p> <p>Overall, commercial real estate is down by over 40 percent since the peak back in 2007.</p> <p><strong>Residential Real Estate</strong></p> <p>The United States is dealing with a <a href="http://theeconomiccollapseblog.com/archives/category/housing-crash">housing crash</a> that never seems to end.</p> <p>According to the National Association of Realtors, existing home sales in the United States <a href="http://www.bizjournals.com/phoenix/news/2011/06/21/national-association-of-realtors.html?ana=RSS&s=article_search&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+industry_20+%28Industry+Commercial+Real+Estate%29&utm_content=Google+Reader">fell another 3.8%</a> in May.</p> <p>During this housing crash home values have declined more than they did during the Great Depression and there does not appear to be any hope in sight.</p> <p>New home sales are in even worse shape. During the first three months of this year, less new homes were sold in the U.S. than in any three month period <a title="ever recorded" href="http://www.goldshark.com/kaspars-comments/item/123-sociapitalism-how-the-government-became-the-next-bubble.html" target="_blank">ever recorded</a>.</p> <p><strong>Unemployment</strong></p> <p>As 2009 began, the official U.S. unemployment rate <a title="was 7.6 percent" href="http://www.bls.gov/opub/ted/2009/feb/wk2/art02.htm" target="_blank">was 7.6 percent</a>. Today it is 9.1 percent.</p> <p>The American people keep waiting for a "jobs recovery", but it has not shown up.</p> <p>Sadly, all of this is part of a long-term trend.</p> <p>Over the past decade, U.S. multinational corporations have been laying off <a href="http://motherjones.com/politics/2011/06/speedup-americans-working-harder-charts">millions of workers</a> in the U.S. and hiring millions of workers overseas to take their place.</p> <p>The labor of American workers is rapidly losing value in a globalized economy. Big corporations have a tough time justifying paying ten times more to a worker in the United States when they are allowed to hire people for slave labor wages overseas.</p> <p>The share of the national income taken in by U.S. workers continues to decline. Just consider what Mortimer Zuckerman had to say in a recent article <a href="http://www.usnews.com/opinion/mzuckerman/articles/2011/06/20/why-the-jobs-situation-is-worse-than-it-looks?PageNr=1">for usnews.com</a>....</p> <blockquote><p><em>Labor's share of national income has fallen to the lowest level in modern history, down to 57.5 percent in the first quarter as compared to 59.8 percent when the so-called recovery began. This reflects not only the 7 million fewer workers but the fact that wages for part-time workers now average $19,000—less than half the median income.</em></p></blockquote> <p>In the United States today, there are not nearly enough jobs for everyone. The number of "middle class jobs" has fallen by about 10 percent over the last decade.</p> <p>Only <a title="66.8%" href="http://www.usatoday.com/money/economy/employment/2011-04-13-more-americans-leave-labor-force.htm" target="_blank">66.8%</a> of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.</p> <p>We are seeing the rise of a whole class of people that are chronically unemployed. At the beginning of 2009, the number of "long-term unemployed" in the United States was approximately 2.6 million. Today, that number <a title="is up to 6.2 million" href="http://www.bls.gov/news.release/pdf/empsit.pdf" target="_blank">is up to 6.2 million</a>.</p> <p>So in light of these employment statistics, can anyone really say that the economy is improving?</p> <p><strong>Economic Anxiety</strong></p> <p>The economy is the number one issue on the minds of the American people. There is an extraordinary about of economic pain out there today, and Americans are becoming impatient.</p> <p><a href="http://www.cnbc.com/id/43482688">According to CNBC</a>, the Money Anxiety Index is at its highest level in 30 years....</p> <blockquote><p><em>The latest indicator to ring up trouble is the Money Anxiety Index, which uses traditional economic metrics as well as other factors to gauge the level of consumers' worry regarding their personal financial conditions. </em></p> <p><em>According to the May figures, the MAI is not only at its highest level in 30 years at 91.9 but also two months away from indicating another dip into recession. In the past, five straight months of increases in the index often signaled recession.</em></p></blockquote> <p>Most recent polls show that the American people are rapidly becoming more pessimistic about the direction the U.S. economy is headed.</p> <p><a href="http://hotair.com/archives/2011/06/08/cnn-48-believe-a-great-depression-is-coming-within-a-year/">According to a recent CNN poll</a>, 48 percent of Americans believe that "<a href="http://theeconomiccollapseblog.com/archives/48-percent-of-americans-believe-another-great-depression-is-likely-in-the-next-12-months-19-reasons-why-they-are-not-completely-crazy">another Great Depression</a>" is likely within the next 12 months.</p> <p>When you really stop and think about that number, it is really frightening.</p> <p><strong>Inflation</strong></p> <p>Ben Bernanke may not admit it, but the truth is that the price of just about everything is soaring.</p> <p>For example, when Barack Obama took office, the average price of a gallon of gasoline in the United States was $1.83. Today <a href="http://travel.usatoday.com/destinations/dispatches/post/2011/06/fourth-of-july-travel-gas-prices-/175269/1">it is about $3.74</a>.</p> <p>So what are our politicians doing about it?</p> <p>Not much.</p> <p>They just want to pretend that it isn't happening.</p> <p>In fact, members of Congress are actually tinkering with the idea <a href="http://www.zerohedge.com/article/americas-latest-proposal-deal-its-insolvency-and-pursue-stealth-dollar-devaluation-change-cp">of changing the way that inflation is calculated</a> once again.</p> <p>By making inflation appear lower, it would be easier for Congress to deny cost of living increases to those on Social Security and other social programs.</p> <p>How sad is that?</p> <p><strong>Economic Suffering</strong></p> <p>As American families find it increasingly difficult to pay the mortgage and put food on the table, many of them find themselves forced to put off other expenses. According to one recent survey, <a href="http://money.cnn.com/2011/06/07/pf/financial_stress_health/index.htm?iid=HP_LN&iid=EL">26 percent of Americans</a> have put off doctor visits because of the economy.</p> <p>Other Americans can't make it at all without government assistance. As 2007 began, there were only 26 million Americans on food stamps. Today, there are more than <a title="44 million on food stamps" href="http://theeconomiccollapseblog.com/archives/you-call-this-an-economic-recovery-44-million-americans-on-food-stamps-and-10-other-reasons-why-the-economy-is-simply-not-getting-better" target="_blank">44 million Americans on food stamps</a>, which is an all-time record.</p> <p>It is not good to have so many Americans on food stamps, but it is probably better than the alternative.</p> <p>If there were tens of millions of Americans that could not feed themselves we would probably already have economic riots in the streets.</p> <p><strong>Solutions?</strong></p> <p>So do our politicians have any solutions?</p> <p>Of course not. Everything that they have tried has failed.</p> <p>Several top Democrats in Washington D.C. are now calling for <a href="http://www.cnbc.com/id/43499845">a new economic stimulus package</a>. When in doubt, our politicians usually revert to spending more money.</p> <p>Sadly, this is about the best that our economy is going to get.</p> <p>What we are experiencing right now is "the recovery". As we move forward things are going to get progressively worse.</p> <p>A lot of people don't like to hear that we are in the middle of a long-term economic decline, but that is the truth.</p> <p>The era of tremendous economic prosperity for America is coming to an end.</p> <p>An economic nightmare is coming.</p> <p>You better get ready.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/is-economy-improving.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T21:10:00-07:00">9:10 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5043085876493931893">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5043085876493931893&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Improving%3F" rel="tag">Improving?</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Is%20The%20Economy" rel="tag">Is The Economy</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8867142670073507894"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/us-stocks-gain-as-banks-get-new-capital.html">U.S. Stocks Gain as Banks Get New Capital Rules</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/us-stocks-gain-as-banks-get-new-capital.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:58:00-07:00">7:58 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8867142670073507894">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8867142670073507894&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="42427244788485601"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/pjtv-mainstream-media-takes-aim-at.html">PJTV: The Mainstream Media Takes Aim at Michele Bachmann</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/pjtv-mainstream-media-takes-aim-at.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:56:00-07:00">7:56 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=42427244788485601">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=42427244788485601&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7687715852767389256"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/rupkey-says-gdp-growth-will-help-shrink.html">Rupkey Says GDP Growth Will Help Shrink U.S. Deficit</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/rupkey-says-gdp-growth-will-help-shrink.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:55:00-07:00">7:55 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7687715852767389256">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7687715852767389256&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6810361500334356518"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/why-old-jobs-arent-coming-back.html">Why the Old Jobs Aren't Coming Back</a> </h3> <div class="post-body entry-content"> <h2 class="title "> <span style="font-size:180%;"><a href="http://www.hoover.org/news/daily-report/83506" title="Why the Old Jobs Aren't Coming Back">Why the Old Jobs Aren't Coming Back</a></span> </h2> <div class="byline small-font">by <span class="bold"><a href="http://www.hoover.org/fellows/9827">Michael Spence</a></span><br /></div> <div class="content"> <p>Many have expressed shock at the recent U.S. employment data. But 9.1% unemployment shouldn't be a surprise. To address the jobs challenge, we must stop pretending that this is only a difficult cyclical recovery. The root of the problem is structural.</p> <p>During the two decades before the crisis of 2008-09, the U.S. economy added 27 million jobs, primarily in government, health care, construction, retail and hospitality. This employment growth was almost all in the "nontradable" side of the economy—sectors generating goods and services that must be consumed where they are produced. But several factors will depress these sectors. Government budget woes, a likely leveling-out of the dramatic growth in health-care consumption, and a permanent reduction in domestic consumption as asset prices reset downward and debt-financed purchases are reduced, will all have effects in the short-to-medium term.</p> <p>The "tradable" side of the economy (which includes exportable goods and services) has its own set of issues. While finance, consulting, computer design and managing complex international businesses all fueled job growth for 20 years, these gains were matched by declines in the manufacturing jobs held by the middle class. The very things that propped up our tradable sectors through the export market—high growth rates in emerging economies and a more educated consumer class in those countries—have challenged middle-class U.S. employees on the job front. Emerging markets are now increasingly moving up the value chain with improved skills, and it's likely that higher-paying jobs—including design and even product development—will move abroad in ever greater numbers.</p> <p>Multinational companies have benefited from these global supply-chain opportunities and from growing emerging-economy markets, but the effects for the U.S. have been mixed. Growth may be coming back slowly, but it is not bringing jobs with it.</p> <p>A stimulus package that temporarily restores elements of precrisis demand is unlikely to generate the escape velocity needed to get out of the jobs hole. Nontradable job growth can't mask the declines in the tradable sector any more. The structural problem demands a structural answer.</p> <p>Rebuilding the employment engine requires shifts in policy and process. On the policy side, we must expand the scope of the tradable sector. A short list of steps would include investments in infrastructure and education reform that emphasizes teaching productive skills, for example in advanced manufacturing sectors. Tax reform should aim for simplification and the elimination of biases against domestic investment for our multinational firms. It should also aim to help raise savings rates so we can finance our own investment. A value-added tax with an exemption for exports would enhance competitiveness. An energy policy focused on efficiency and security would create opportunities for investment and growth.</p> <p>In terms of process, business, government and labor must identify what each has to offer and needs to help expand the tradable sector. What will it take to keep more jobs in the U.S.? We might have to accept a period of lower income growth in order to restore competitiveness.</p> <p>A useful model is Germany, which limited wage and salary growth as part of a restructuring in the period 2000-05, allowing it to compete more effectively in exports and the tradable sector than other advanced countries.</p> <p>In addition, a broad public-private investment in advanced manufacturing and in energy- efficiency technologies can advance relatively high-income, capital-intensive job creation. Government co-investment can lower the private sector's cost and expand the employability of domestic citizens in the tradable sector.</p> <p>These structural solutions won't work, of course, without a plan to restore fiscal balance. A sovereign-debt crisis will abort any recovery. Right now, however, the policy discussion oscillates between balancing the budget and supporting a fragile economic recovery—mixed with puzzlement that employment figures are disobeying the rules of a normal cyclical recovery. Having a credible five-year fiscal plan would help avoid an excessively rapid withdrawal of government expenditure and investment from the demand side of the economy.</p> <p>Can business, government, educators and labor come together to tackle the structural employment challenge head-on? Some will say that in the present political and fiscal climate, this is highly unlikely. They may be right. But it is a choice, a collective choice. We can invest in future growth and employment of an inclusive kind, or not. If we do, it will take significant shared sacrifice.</p> <p><i>Mr. Spence, a 2001 Nobel laureate in economics, is the author of "The Next Convergence: The Future of Economic Growth in a Multispeed World," out last month from Farrar, Straus and Giroux.</i></p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/why-old-jobs-arent-coming-back.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:52:00-07:00">7:52 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6810361500334356518">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6810361500334356518&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Aren%27t%20Coming%20Back" rel="tag">Aren't Coming Back</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Old%20Jobs" rel="tag">Old Jobs</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5511372492513998845"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/us-and-eu.html">The U.S. and E.U.</a> </h3> <div class="post-body entry-content"> <div class="entry_header clearfix"> <h1><span style="font-size:130%;">The U.S. and E.U.: Have They Ever Been in Such Terrible Shape?</span></h1> <ul class="detail_top_links"><li><div class="author"><a href="http://www.tnr.com/article/economy/90539/european-union-greece-bankruptcy-us-unemployment#" class="author-info-link" rel="/authorinfo/view/Josef Joffe"><h3>Josef Joffe</h3></a></div></li></ul></div><div class="img-left"><img src="http://www.tnr.com/sites/default/files/imagecache/detail_page/EU1.jpg" alt="" title="" class="imagecache imagecache-detail_page" height="250" width="250" /></div><p>This is no time for gloating, neither for Americans nor for Europeans. For both sides are in deep economic trouble, only in different ways. The U.S. runs the worst deficit (as share of GDP) since World War II, and yet Keynesianism to the max won’t budge the unemployment rate—pace Professors Krugman and Stiglitz. What does fall is the dollar and the price of real estate, a double-whammy if ever there was one.</p> <p>The euro, meanwhile, may be rising, at least against the greenback, but the common currency, now ten years old, is about as stable as was Confederate script back in the Civil War. “Civil war,” actually, is not a bad way to describe the state of Euroland. On one side, there are the “PIIGS”—Portugal, Ireland, Italy, Greece, and Spain—looking at bankruptcy. In fact, Greece <i>is </i>bankrupt. Its foreign debt exceeds its GDP by about one-half, and, as slices of it come due, it cannot possibly redeem the bonds without yet another infusion of cash from Europe and the International Monetary Fund (IMF). Government outlays keep rising, while tax receipts are falling (year-on-year). So austerity does not work—except in the streets of Athens, where the angry masses revolt against a tottering government.</p> <p>On the other side are France and Germany, the two heavies of the E.U. economy (Britain is in as much trouble as the U.S., but outside the euro). Their banks groan under a hefty exposure to Greek debt, French banks more than their German counterparts. So neither Berlin nor Paris wants the Greeks to default. But the two of them have their own little civil war. Nicholas Sarkozy wants to put Greece on welfare as long as it takes, counting on Germany—the biggest and richest country in Euroland—to foot the largest part of the bill. Angela Merkel, well aware of this unending drain, wants to impose fiscal discipline and market reforms on Athens. In the latest spat, Merkel, who is not as enamored of state action as her French counterpart, wanted to drag in banks, pension funds, and insurance companies by making them roll over Greek debt by seven years. This would be a default in everything but name, and so the French balked. Merkel, always tougher at the outset than at the end, finally relented. Participation by the private sector now is to be “voluntary.” So far, though, there haven’t been too many volunteers.</p> <p>This mano-a-mano is typical for Germany and France, who are always vying for the leadership of Europe. But it is patty-cakes compared to the other horrors the monetary union has wrought, and not for lack of warning. As many economists cried out in the run-up to the euro 15 years ago, in monetary policy, one size won’t fit all—certainly not a bunch of diverging economies untrammeled by common governance. And, indeed, the euro, instead of forcing member states into fiscal convergence, has only accentuated the bad habits of the PIIGS. These countries had always lived beyond their means. With the euro, however, they could suddenly spend like Italians, but borrow like Germans, at low rates. Bond spreads converged between the spendthrifts and the tightwads, but not basic policies. Indeed, cheap money encouraged even more profligacy—worst of all in Greece (which also managed to cheat on its financial statistics before and after entering the euro).</p> <p>This is where we are now: With Greek two-year bonds fetching almost 30 percent, the markets are growling that Hellas is doomed. Both Merkel and Sarkozy dread the looming default as “Lehman squared“—and so, by the way, does Washington. So, too, does the IMF, which wants to withhold a critical $12 billion pay-out to the Greeks unless the E.U. swears a holy oath on bailing out Athens, come what may.</p> <p>Europe will inevitably buy time by handing over a few more slices of bail-out money to Greece, even though, one day, the country <i>will </i>default. With 50 cents of the euro, it will halve its debt as well as its repayments and thus buy more time. The E.U., meanwhile, still won’t have any idea where it’s going or how to handle the crisis long-term. But what else is new? Twenty-seven governments do not a “more perfect union” make. Certainly not when the natural leader, which is Germany by dint of wealth and weight, sounds such an uncertain trumpet as it has under Chancellor Merkel. Yet what, exactly, is she supposed to do when the chickens of an ill-designed monetary union have finally come home to roost? Neither she nor Sarkozy can undo the mismanagement of the PIIGS in one fell swoop.</p> <p>Meanwhile, back to the United States—to its still-sinking dollar and rising unemployment. It is hard to think of a time when both the U.S. and the E.U., the two biggest players in the international economy, were in such miserable shape. We are talking about two giants with a total of 50 percent of global GDP. Who will save them?</p> <p><i>Josef Joffe is the editor of </i>Die Zeit<i> in Hamburg Germany. He is also a senior fellow at the Freeman-Spogli Institute for International Studies and Abramowitz Fellow at the Hoover Institution, both at Stanford.</i><br /></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/us-and-eu.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:50:00-07:00">7:50 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5511372492513998845">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5511372492513998845&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/and%20E.U." rel="tag">and E.U.</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/The%20U.S." rel="tag">The U.S.</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3414827123485802815"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/us-and-pakistan-afghan-strategies_27.html">U.S. and Pakistan: Afghan Strategies</a> </h3> <div class="post-body entry-content"> <h1 class="title">U.S. and Pakistan: Afghan Strategies</h1><p><strong>By George Friedman</strong></p> <p>U.S. President Barack Obama will give a speech on Afghanistan on June 22. Whatever he says, it is becoming apparent that the United States is exploring ways to accelerate the drawdown of its forces in the country. It is also clear that <a href="http://www.stratfor.com/geopolitical_diary/20110602-us-pakistan-unending-love-hate-relationship">U.S. relations with Pakistan are deteriorating</a> to a point where cooperation — whatever level there was — is breaking down. These are two intimately related issues. Any withdrawal from Afghanistan, particularly an accelerated one, will leave a <a href="http://www.stratfor.com/analysis/20100418_afghanistan_campaign_view_kabul">power vacuum in Afghanistan that the Kabul government will not be able to fill</a>. Afghanistan is Pakistan’s back door, and its evolution is a matter of fundamental interest to Pakistan. A U.S. withdrawal means an Afghanistan intertwined with and influenced by Pakistan. Therefore, the current dynamic with Pakistan challenges any withdrawal plan.</p> <p>There may be some in the U.S. military who believe that the United States might prevail in Afghanistan, but they are few in number. The champion of this view, Gen. David Petraeus, has been relieved of his command of forces in Afghanistan and promoted (or kicked upstairs) to become director of the CIA. The conventional definition of victory has been the creation of a strong government in Kabul controlling an army and police force able to protect the regime and ultimately impose its will throughout Afghanistan. With <a href="http://www.stratfor.com/geopolitical_diary/20100405_karzai_political_reality">President Hamid Karzai increasingly uncooperative with the United States</a>, the likelihood of this outcome is evaporating. Karzai realizes his American protection will be withdrawn and understands that the Americans will blame him for any negative outcomes of the withdrawal because of his <a href="http://www.stratfor.com/geopolitical_diary/20100510_conflicting_objectives_afghanistan_and_pakistan">inability or unwillingness to control corruption</a>.</p> <h3>Defining Success in Afghanistan</h3> <p>There is a prior definition of success that shaped the Bush administration’s approach to Afghanistan in its early phases. The goal here was the disruption of al Qaeda’s operations in Afghanistan and the prevention of further attacks on the United States from Afghanistan. This definition did not envisage the emergence of a stable and democratic Afghanistan free of corruption and able to control its territory. It was more modest and, in many ways, it was achieved in 2001-2002. Its defect, of course, was that the disruption of al Qaeda in Afghanistan, while useful, did not address the evolution of al Qaeda in other countries. In particular, it did not deal with the movement of al Qaeda operatives to Pakistan, nor did it address the Taliban, who were not defeated in 2001-2002 but simply <a href="http://www.stratfor.com/analysis/taliban_withdrawal_was_strategy_not_rout_0">declined combat on American terms</a>, re-emerging as a viable insurgency when the United States became bogged down in Iraq.</p> <p>The mission creep from denying Afghan bases to al Qaeda to the transformation of Afghan society had many roots and was well under way during the Bush administration, but the immediate origin of the current strategy was the attempt to transfer the lessons of Iraq to Afghanistan. <a href="http://www.stratfor.com/iraq_u_s_iranian_negotiations_surge_and_future_war">The surge in Iraq</a>, and the important political settlement with Sunni insurgents that brought them into the American fold, reduced the insurgency. It remains to be seen whether it will produce a stable Iraq not hostile to American interests. The ultimate Iraq strategy was a political settlement framed by an increase in forces, and its long-term success was never clear. The Obama administration was prepared to repeat the attempt in Afghanistan, at least by using Iraq as a template if not applying exactly the same tactics.</p> <p>However, the United States found that the Taliban were less inclined to negotiate with the United States, and certainly not on the favorable terms of the Iraqi insurgents, simply because <a href="http://www.stratfor.com/analysis/20100830_afghanistan_why_taliban_are_winning">they believed they would win in the long run</a> and did not face the dangers that the Sunni insurgents did. The military operations that framed the search for a political solution turned out to be a frame without a painting. In Iraq, it is not clear that the Petraeus strategy actually achieved a satisfactory political outcome, and its application to Afghanistan does not seem, as yet, to have drawn the Taliban into the political process in the way that incorporating the Sunnis made Iraq appear at least minimally successful.</p> <p>As we pointed out after the <a href="http://www.stratfor.com/weekly/20110502-bin-ladens-death-and-implications-jihadism">death of Osama bin Laden</a>, his demise, coupled with the <a href="http://www.stratfor.com/geopolitical_diary/20110502-death-bin-laden-and-strategic-shift-washington">transfer of Petraeus out of Afghanistan</a>, offered two opportunities. The first was a return to the prior definition of success in Afghanistan, in which the goal was the disruption of al Qaeda. Second, the departure of Petraeus and his staff also removed the ideology of counterinsurgency, in which social transformation was seen as the means toward a practical and radical transformation of Afghanistan. These two events opened the door to the redefinition of the U.S. goal and the ability to claim mission accomplished for the earlier, more modest end, thereby building the basis for terminating the war.</p> <p>The central battle was in the United States military, divided between conventional warfighters and counter-insurgents. Counterinsurgency draws its roots from theories of social development in emerging countries going back to the 1950s. It argues that victory in these sorts of wars depends on social and political mobilization and that the purpose of the military battle is to create a space to build a state and nation capable of defending itself.</p> <p>The conventional understanding of war is that its purpose is to defeat the enemy military. It presents a more limited and focused view of military power. This faction, bitterly opposed to Petraeus’ view of what was happening in Afghanistan, saw the war in terms of defeating the Taliban as a military force. In the view of this faction, defeating the Taliban was impossible with the force available and unlikely even with a more substantial force. There were two reasons for this. First, <a href="http://www.stratfor.com/analysis/20100830_afghanistan_why_taliban_are_winning">the Taliban comprised a light infantry force with a superior intelligence capability</a> and the ability to withdraw from untenable operations (such as the battle for Helmand province) and re-engage on more favorable terms elsewhere. Second, sanctuaries in Pakistan allowed the Taliban to withdraw to safety and reconstitute themselves, thereby making their defeat in detail impossible. The option of invading Pakistan remained, but the idea of invading a country of 180 million people with some fraction of the nearly 150,000 U.S. and allied troops in Afghanistan was militarily unsupportable. Indeed, no force the United States could field would be in a position to compel Pakistan to conform to American wishes.</p> <p>The alternative on the American side is a more conventional definition of war in which the primary purpose of the U.S. military in Afghanistan is to create a framework for special operations forces to disrupt al Qaeda in Afghanistan and potentially Pakistan, not to attempt to either defeat the Taliban strategically or transform Afghanistan politically and culturally. With the death of bin Laden, an argument can be made — at least for political purposes — that <a href="http://www.stratfor.com/themes/al_qaeda">al Qaeda has been disrupted</a> enough that the conventional military framework in Afghanistan is no longer needed. If al Qaeda revives in Afghanistan, then covert operations can be considered. The problem with al Qaeda is that it does not require any single country to regenerate. It is a global guerrilla force.</p> <h3>Asymmetry in U.S. and Pakistani Interests</h3> <p>The United States can choose to leave Afghanistan without suffering strategic disaster. Pakistan cannot leave Pakistan. It therefore cannot leave its border with Afghanistan nor can it evade the reality that Pakistani ethnic groups — particularly the Pashtun, who straddle the border and form the heart of the Taliban phenomenon — live on the Afghan side of the border as well. Therefore, while Afghanistan is a piece of American global strategy and not its whole, Afghanistan is central to Pakistan’s national strategy. This asymmetry in U.S. and Pakistani interests is now the central issue.</p> <p>When the Soviets invaded Afghanistan, Pakistan joined with the United States to defeat the Soviets. Saudi Arabia provided money and recruits, the Pakistanis provided training facilities and intelligence and the United States provided trainers and other support. For Pakistan, the Soviet invasion was a matter of fundamental national interest. Facing a hostile India supported by the Soviets and a Soviet presence in Afghanistan, Pakistan was threatened on two fronts. Therefore, deep involvement with the jihadists in Afghanistan was essential to Pakistan because the jihadists tied down the Soviets. This was also beneficial to the United States.</p> <p>After the Soviet withdrawal from Afghanistan, the United States became indifferent to Afghanistan’s future. Pakistan could not be indifferent. It remained deeply involved with the Islamist forces that had defeated the Soviets and would govern Afghanistan, and it helped facilitate the emergence of the Taliban as the dominant force in the country. The United States was quite content with this in the 1990s and accepted the fact that Pakistani intelligence had become intertwined not only with the forces that fought the Soviets but also with the Taliban, who, with Pakistani support, won the civil war that followed the Soviet defeat.</p> <p>Intelligence organizations are as influenced by their clients as their clients are controlled by them. Consider anti-Castro Cubans in the 1960s and 1970s and their beginning as CIA assets and their end as major influencers of U.S. policy toward Cuba. <a href="http://www.stratfor.com/analysis/pakistan_anatomy_isi">The Pakistani Inter-Services Intelligence directorate (ISI) became entwined with its clients</a>. As the influence of the Taliban and Islamist elements increased in Afghanistan, the sentiment spread to Pakistan, where a massive Islamist movement developed with influence in the government and intelligence services.</p> <p>Sept. 11, 2001, posed a profound threat to Pakistan. On one side, Pakistan faced a United States in a state of crisis, demanding Pakistani support against both al Qaeda and the Taliban. On the other side Pakistan had a massive Islamist movement hostile to the United States and intelligence services that had, for a generation, been intimately linked to Afghan Islamists, first with whole-hearted U.S. support, then with its benign indifference. The American demands involved shredding close relationships in Afghanistan, supporting an American occupation in Afghanistan and therefore facing internal resistance and threats in both Afghanistan and Pakistan.</p> <p>The Pakistani solution was the only one it could come up with to placate both the United States and the forces in Pakistan that did not want to cooperate with the United States. The Pakistanis lied. To be more precise and fair, they did as much as they could for the United States without completely destabilizing Pakistan while making it appear that they were being far more cooperative with the Americans and far less cooperative with their public. As in any such strategy, the ISI and Islamabad found themselves engaged in a massive balancing act.</p> <p>U.S. and Pakistani national interests widely diverged. The United States wanted to disrupt al Qaeda regardless of the cost. The Pakistanis wanted to avoid the collapse of their regime at any cost. These were not compatible goals. At the same time, the United States and Pakistan needed each other. The United States could not possibly operate in Afghanistan without some Pakistani support, ranging from the <a href="http://www.stratfor.com/analysis/20090424_pakistan_facing_reality_risk_pakistan">use of Karachi and the Karachi-Khyber and Karachi-Chaman lines of supply</a> to at least some collaboration on intelligence sharing, at least on al Qaeda. The Pakistanis badly needed American support against India. If the United States simply became pro-Indian, the Pakistani position would be in severe jeopardy.</p> <p>The United States was always aware of the limits of Pakistani assistance. The United States accepted this publicly because it made Pakistan appear to be an ally at a time when the United States was under attack for unilateralism. It accepted it privately as well because it did not want to see Pakistan destabilize. The Pakistanis were aware of the limits of American tolerance, so a game was played out.</p> <h3>The Endgame in Afghanistan</h3> <p>That game is now breaking down, not because the United States raided Pakistan and killed bin Laden but because it is becoming apparent to Pakistan that the United States will, sooner or later, be dramatically drawing down its forces in Afghanistan. This drawdown creates three facts. First, Pakistan will be facing the future on its western border with Afghanistan without an American force to support it. Pakistan does not want to alienate the Taliban, and not just for ideological reasons. It also expects the Taliban to govern Afghanistan in due course. India aside, Pakistan needs to maintain its ties to the Taliban in order to maintain its influence in Afghanistan and guard its western flank. Being cooperative with the United States is less important. Second, Pakistan is aware that as the United States draws down, it will need Pakistan to cover its withdrawal strategically. Afghanistan is not Iraq, and as the U.S. force draws down, it will be in greater danger. The U.S. needs Pakistani influence. Finally, there will be a negotiation with the Taliban, and elements of Pakistan, particularly the ISI, will be the intermediary.</p> <p>The Pakistanis are preparing for the American drawdown. Publicly, it is important for them to <a href="http://www.stratfor.com/geopolitical_diary/20110518-us-unilateral-operations-pakistan-upsetting-domestic-balance-power">appear as independent and even hostile to the Americans as possible</a> in order to maintain their domestic credibility. Up to now, they have appeared to various factions in Pakistan as American lackeys. If the United States is leaving, the Pakistanis can’t afford to appear that way anymore. There are genuine issues separating the two countries, but in the end, the show is as important as the issues. U.S. accusations that the government has not cooperated with the United States in fighting Islamists are exactly what the Pakistani establishment needs in order to move to the next phase. Publicly arresting CIA sources who aided the United States in capturing bin Laden also enhances this new image.</p> <p>From the American point of view, the war in Afghanistan — and elsewhere — has not been a failure. There have been no more attacks on the United States on the order of 9/11, and that has not been for al Qaeda’s lack of trying. U.S. intelligence and security services, fumbling in the early days, achieved a remarkable success, and that was aided by the massive disruption of al Qaeda by U.S. military operations. The measure of military success is simple. If the enemy was unable to strike, the military effort was a success. Obviously, there is no guarantee that al Qaeda will not regenerate or that another group will not emerge, but a continued presence in Afghanistan at this point doesn’t affect that. This is particularly true as franchise operations like the Yemen-based al Qaeda in the Arabian Peninsula begin to overtake the old apex leadership in terms of both operational innovation in transnational efforts and the ideological underpinnings of those attacks.</p> <p>In the end, <a class="strat_tip_off" title="Watch Video: Dispatch: Re-examining the U.S. Withdrawal from Afghanistan"><img src="http://media.stratfor.com/stratfor_images/playbuttonsmall.gif" /> the United States will leave Afghanistan</a> (with the possible exception of some residual special operations forces). Pakistan will draw Afghanistan back into its sphere of influence. Pakistan will need American support against India (since <a href="http://www.stratfor.com/analysis/20110523-chinas-interest-pakistans-gwadar-port">China does not have the force needed to support Pakistan</a> over the Himalayas nor the navy to protect Pakistan’s coast). The United States will need Pakistan to do the basic work of preventing an intercontinental al Qaeda from forming again. Reflecting on the past 10 years, Pakistan will see that as being in its national interest. The United States will use Pakistan to balance India while retaining close ties to India.</p> <p>A play will be acted out like the New Zealand Haka, with both sides making terrible sounds and frightening gestures at each other. But now that the counterinsurgency concept is being discarded, from all indications, and a fresh military analysis is under way, the script is being rewritten and we can begin to see the end shaping up. The United States is furious at Pakistan for its willingness to protect American enemies. Pakistan is furious at the United States for conducting attacks on its sovereign territory. In the end it doesn’t matter. They need each other. In the affairs of nations, like and dislike are not meaningful categories, and bullying and treachery are not blocks to cooperation. <a class="strat_tip_off" title="Watch Video: Agenda: U.S.-Pakistan After bin Laden"><img src="http://media.stratfor.com/stratfor_images/playbuttonsmall.gif" /> The two countries need each other</a> more than they need to punish each other. Great friendships among nations are built on less.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/us-and-pakistan-afghan-strategies_27.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:47:00-07:00">7:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3414827123485802815">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3414827123485802815&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/U.S.%20and%20Pakistan%3A%20Afghan%20Strategies" rel="tag">U.S. and Pakistan: Afghan Strategies</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5926140628376341020"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/obamas-afghanistan-plan-and-realities.html">Obama's Afghanistan Plan and the Realities of Withdrawal</a> </h3> <div class="post-body entry-content"> <h1 class="title">Obama's Afghanistan Plan and the Realities of Withdrawal</h1><p><strong>By Nathan Hughes</strong></p> <p><a href="http://www.stratfor.com/geopolitical_diary/20110622-obamas-announcement-and-future-afghan-war">U.S. President Barack Obama announced June 22 </a>that the long process of drawing down forces in Afghanistan would begin on schedule in July. Though the <a class="strat_tip_off" title="Watch Video: Dispatch: Re-examining the U.S. Withdrawal from Afghanistan"><img src="http://media.stratfor.com/stratfor_images/playbuttonsmall.gif" /> initial phase of the drawdown appears limited</a>, minimizing the tactical and operational impact on the ground in the immediate future, the United States and its allies are now beginning the inevitable process of <a href="http://www.stratfor.com/analysis/20110620-afghanistan-weekly-war-update">removing their forces from Afghanistan</a>. This will entail the risk of greater Taliban battlefield successes.</p> <h3>The Logistical Challenge</h3> <p>Afghanistan, a landlocked country in the heart of Central Asia, is one of the most isolated places on Earth. This isolation has posed huge logistical challenges for the United States. Hundreds of shipping containers and fuel trucks must enter the country every day from Pakistan and from the north to sustain the nearly 150,000 U.S. and allied forces stationed in Afghanistan, about half the total number of Afghan security forces. Supplying a single gallon of gasoline in Afghanistan reportedly costs the U.S. military an average of $400, while sustaining a single U.S. soldier runs around $1 million a year (by contrast, sustaining an Afghan soldier costs about $12,000 a year). </p> <p>These forces appear considerably lighter than those in Iraq because Afghanistan’s rough terrain often demands dismounted foot patrols. Heavy main battle tanks and self-propelled howitzers are thus few and far between, though not entirely absent. Afghanistan even required a new, lighter and more agile version of the hulking mine-resistant, ambush-protected vehicle known as the <a href="http://www.stratfor.com/analysis/20100713_week_war_afghanistan_july_7_13_2010">M-ATV</a> (for “all-terrain vehicle”).</p> <p>Based solely on the activity on the ground in Afghanistan today, one would think the United States and its allies were preparing for a permanent presence, not the imminent beginning of a long-scheduled drawdown (a perception the United States and its allies have in some cases used to their advantage to reach political arrangements with locals). A 3,500-meter (11,500-foot) all-weather concrete and asphalt runway and an air traffic control tower were completed this February at Camp Leatherneck and Camp Bastion in Helmand province. Another more than 2,700-meter runway was finished at Shindand Air Field in Herat province last December.</p> <a href="http://web.stratfor.com/images/asia/art/Iron_mountain_1280.jpg"> <div class="media media-image floatright" style="width:400px"> <div class="inner"> <div class="media-item"><img src="http://media.stratfor.com/files/mmf/a/7/a75b39160ca1d5aeb967c3f83e89c2dd954fb99a.jpg" alt="Obama's Afghanistan Plan and the Realities of Withdrawal" title="" /></div> <div class="media-caption">(click here to enlarge image)</div> </div> </div> </a> <p>Meanwhile, a so-called iron mountain of spare parts needed to maintain vehicles and aircraft, construction and engineering equipment, generators, ammunition and other supplies — even innumerable pallets of bottled water — has slowly been built up to sustain day-to-day military operations. There are fewer troops in Afghanistan than the nearly 170,000 in Iraq at the peak of operations and considerably lighter tonnage in terms of armored vehicles. But short of a hasty and rapid withdrawal reminiscent of the chaotic American exit from Saigon in 1975 (which no one currently foresees in Afghanistan), the logistical challenge of withdrawing from Afghanistan — at whatever pace — is perhaps even more daunting than the drawdown in Iraq. The complexity of having nearly 50 allies with troops in country will complicate this process.</p> <p>Moreover, coalition forces in Iraq had ready access to well-established bases and modern port facilities in nearby Kuwait and in Turkey, a long-standing NATO ally. Though U.S. and allied equipment comes ashore on a routine basis in the Pakistani port city of Karachi, the facilities there are nothing like what exists in Kuwait. Routes to bases in Afghanistan are anything but short and established, with locally contracted fuel tankers and other supplies not only traveling far greater distances but also regularly subject to harassing attacks. They are inherently vulnerable to aggressive interdiction by militants fighting on terrain far more favorable to them, and to <a href="http://www.stratfor.com/analysis/20101005_week_war_afghanistan_sept_29_oct_5_2010">politically motivated interruptions by Islamabad</a>. The American <a href="http://www.stratfor.com/geopolitical_diary/20101004_uss_logistical_need_pakistan">logistical dependence</a> on Pakistani acquiescence cannot be understated. Most supplies transit the isolated <a href="http://www.stratfor.com/analysis/20081230_pakistan_khyber_pass_and_western_logistics_afghanistan">Khyber Pass</a> in the restive Pakistani Federally Administered Tribal Areas west of Islamabad. As in Iraq, the United States does have an alternative to the north. But instead of Turkey it is the Northern Distribution Network (NDN), which runs through Central Asia and Russia (Moscow has agreed to continue to expand it) and entails a 5,150-kilometer (3,200-mile) rail route to the Baltic Sea and ports in Latvia, Lithuania and Estonia.</p> <p><a href="http://web.stratfor.com/images/asia/map/Afghan_weekly_800_062211.jpg"> </a></p><div class="media media-image floatleft" style="width:400px"><a href="http://web.stratfor.com/images/asia/map/Afghan_weekly_800_062211.jpg"> <div class="inner"> <div class="media-item"><img src="http://media.stratfor.com/files/mmf/7/6/76c265d055b3f23eeed611575924cbe3954df83b.jpg" alt="Obama's Afghanistan Plan and the Realities of Withdrawal" title="" /></div> <div class="media-caption">(click here to enlarge image)</div> </div> </a></div><a href="http://web.stratfor.com/images/asia/map/Afghan_weekly_800_062211.jpg"> </a> <p>Given the extraordinary distances involved, the metrics for defining whether something is worth the expense of <a href="http://www.stratfor.com/geopolitical_diary/20081215_geopolitical_diary_breakdown_transporting_supplies_afghanistan">shipping back from Afghanistan</a> are unforgiving. Some equipment will be deemed too heavily damaged or cheap and will be sanitized if necessary and discarded. Much construction and fortification has been done with engineering and construction equipment like Hesco barriers (which are filled with sand and dirt) that will not be reclaimed, and will continue to characterize the landscape in Afghanistan for decades to come, much as the Soviet influence was perceivable long after their 1989 withdrawal. Much equipment will be handed over to Afghan security forces, which already have begun to receive up-armored U.S. HMMWVs, aka “humvees.” Similarly, some 800,000 items valued at nearly $100 million have already been handed over to more than a dozen Iraqi military, security and government entities.</p> <p>Other gear will have to be stripped of sensitive equipment (radios and other cryptographic gear, navigation equipment, <a href="http://www.stratfor.com/pros_and_cons_ied_electronic_countermeasures">jammers for improvised explosive devices</a>, etc.), which is usually flown out of the country due to security concerns before being shipped overland. And while some Iraqi stocks were designated for redeployment to Afghanistan or prepared for long-term storage in pre-positioned equipment depots and aboard maritime pre-positioning ships at facilities in Kuwait, most vehicles and supplies slated to be moved out of Afghanistan increasingly will have to be shipped far afield. This could be from Karachi by ship or to Europe by rail even if they are never intended for return to the United States.</p> <h3>Security Transition</h3> <p>More important than the fate of armored trucks and equipment will be the process of rebalancing forces across the country. This will involve handing over outposts and facilities to Afghan security forces, who <a href="http://www.stratfor.com/analysis/20110613-afghanistan-weekly-war-update-infiltration-challenge">continue to struggle to reach full capability</a>, and scaling back the extent of the U.S. and allied presence in the country. In Iraq, and likely in Afghanistan, the beginning of this process will be slow and measured. But its pace in the years ahead remains to be seen, and <a href="http://www.stratfor.com/weekly/20110620-us-and-pakistan-afghan-strategies">may accelerate considerably</a>.</p> <p><a href="http://web.stratfor.com/images/asia/map/Afghan_transportation_800.jpg"> </a></p><div class="media media-image floatright" style="width:400px"><a href="http://web.stratfor.com/images/asia/map/Afghan_transportation_800.jpg"> <div class="inner"> <div class="media-item"><img src="http://media.stratfor.com/files/mmf/3/c/3cbebc03edf0f886cb9f9f2f9db7d18ead07e125.jpg" alt="Obama's Afghanistan Plan and the Realities of Withdrawal" title="" /></div> <div class="media-caption">(click here to enlarge image)</div> </div> </a></div><a href="http://web.stratfor.com/images/asia/map/Afghan_transportation_800.jpg"> </a> <p>The first areas slated for <a href="http://www.stratfor.com/analysis/20110328-week-war-afghanistan-march-16-29-2011">handover to Afghan control</a>, the provinces of Panjshir, Bamiyan and Kabul — aside the restive Surobi district, though the rest of Kabul’s security effectively has been in Afghan hands for years — and the cities of Mazar-e-Sharif, Herat, Lashkar Gah and Mehtar Lam have been relatively quiet places for some time. Afghan security forces increasingly have taken over in these areas. As in Iraq, the first places to be turned over to indigenous security forces already were fairly secure. Handing over more restive areas later in the year will prove trickier.</p> <p>This process of pulling back and handing over responsibility for security (in Iraq often termed having Iraqi security forces “in the lead” in specific areas) is a slow and deliberate one, not a sudden and jarring maneuver. Well before the formal announcement, Afghan forces began to transition to a more independent role, conducting more small-unit operations on their own. International Security Assistance Force (ISAF) troops slowly have transitioned from joint patrols and tactical overwatch to a more operational overwatch, but have remained nearby even after transitions formally have taken place.</p> <p>Under the current training regime, Afghan units continue to require advice and assistance, particularly with matters like intelligence, planning, logistics and maintenance. The ISAF will be cautious in its reductions for fear of pulling back too quickly and seeing the situation deteriorate — unless, of course, Obama directs it to conduct a hastier pullback.</p> <p>As in Afghanistan, in Iraq the process of drawing down and handing over responsibility in each area was done very cautiously. There was a critical distinction, however. A <a href="http://www.stratfor.com/analysis/20100506_afghanistan_understanding_reconciliation">political accommodation</a> with the Sunnis facilitated the apparent success of the Iraqi surge — something that <a href="http://www.stratfor.com/weekly/now_hard_part_iraq_afghanistan">has not been (and cannot be) replicated in Afghanistan</a>. Even with that advantage, Iraq remains in an unsettled and contentious state. The <a href="http://www.stratfor.com/analysis/20100830_afghanistan_why_taliban_are_winning">lack of any political framework</a> to facilitate a military pullback leaves the prospect of a viable transition in restive areas where the <a href="http://www.stratfor.com/analysis/20100214_afghanistan_campaign_special_series_part_1_us_strategy">U.S. counterinsurgency-focused strategy</a> has been focused tenuous at best — particularly if timetables are accelerated.</p> <p>In June 2009, U.S. forces in Iraq occupied 357 bases. A year later, U.S. forces occupied only 92 bases, 58 of which were partnered with the Iraqis. The pace of the transition in Afghanistan remains to be seen, but handing over the majority of positions to Afghan forces will fundamentally alter the situational awareness, visibility and influence of ISAF forces.</p> <h3>Casualties and Force Protection</h3> <p>The security of the remaining outposts and ensuring the security of U.S. and allied forces and critical lines of supply (particularly key sections of the <a href="http://www.stratfor.com/analysis/20100316_afghanistan_battle_ring_road">Ring Road</a>) that sustain remaining forces will be key to crafting the withdrawal and pulling back to fewer, stronger and more secure positions. As that drawdown progresses — and particularly if a more substantive shift in strategy is implemented — the increased pace begins to bring new incentives into play. Of particular note will be both a military and political incentive to reduce casualties as the endgame draws closer.</p> <p>The desire to accelerate the consolidation to more secure positions will clash with the need to pull back slowly and continue to provide Afghan forces with advice and assistance. The reorientation may expose potential vulnerabilities to Taliban attack in the process of transitioning to a new posture. Major reversals and defeats for Afghan security forces at the hands of the Taliban after they have been left to their own devices can be expected in at least some areas and will have wide repercussions, perhaps even <a href="http://www.stratfor.com/analysis/20100401_afghanistan_talibans_point_view">shifting the psychology and perception of the war</a>.</p> <p>When ISAF units are paired closely with Afghan forces, those units have a stronger day-to-day tactical presence in the field, and other units are generally operating nearby. So while they are more vulnerable and exposed to threats like IEDs while out on patrol, they also — indeed, in part because of that exposure — have a more alert and robust posture. As the transition accelerates and particularly if Washington accelerates it, the posture and therefore the vulnerabilities of forces change.</p> <p>Force protection remains a key consideration throughout. The United States gained considerable experience with that during the Iraq transition — though again, a political accommodation underlay much of that transition, which will not be the case in Afghanistan.</p> <p>As the drawdown continues, ISAF will have to balance having advisers in the field alongside Afghan units for as long as possible against pulling more back to key strongholds and pulling them out of the country completely. In the former case, the close presence of advisers can improve the effectiveness of Afghan security forces and provide better situational awareness. But it also exposes smaller units to operations more distant from strongholds as the number of outposts and major positions begins to be reduced. And as the process of pulling back accelerates and particularly as allied forces increasingly hunker down on larger and more secure outposts, their <a href="http://www.stratfor.com/analysis/20100316_afghanistan_battle_ring_road">already limited situational awareness</a> will decline even further, which opens up its own vulnerabilities.</p> <p>One of these will be the impact on not just situational awareness on the ground but intelligence collection and particularly exploitable relationships with local political factions. As the withdrawal becomes more and more undeniable and ISAF pulls back from key areas, the human relationships that underlie intelligence sharing will be affected and reduced. This is particularly the case in places where the Taliban are strongest, as villagers there return to a strategy of hedging their bets out of necessity and focus on the more enduring power structure, which in many areas will clearly be the Taliban.</p> <h3>The Taliban</h3> <p>Ultimately, the Taliban’s incentive vis-a-vis the United States and its allies — especially as their exit becomes increasingly undeniable — is to conserve and maximize their strength for a potential fight in the vacuum sure to ensue after the majority of foreign troops have left the country. At the same time, any “revolutionary” movement must be able to <a href="http://www.stratfor.com/analysis/20090526_afghanistan_nature_insurgency">consolidate internal control and maintain discipline</a> while continuing to make itself relevant to domestic constituencies. The Taliban also may seek to take advantage of the shifting tactical realities to <a href="http://www.stratfor.com/analysis/20110517-afghanistan-weekly-war-update-larger-taliban-attacks">demonstrate their strength</a> and the extent of their reach across the country, not only by targeting newly independent and newly isolated Afghan units but by attempting to kill or even kidnap now-more isolated foreign troops. </p> <p>Though this year the Taliban have demonstrated their ability to <a href="http://www.stratfor.com/analysis/20110531-afghanistan-weekly-war-update-attacks-herat-and-taloqan">strike almost anywhere in the country</a>, they so far have failed to demonstrate the ability to penetrate the perimeter of large, secured facilities with a sizable assault force or to bring crew-served weapons to bear in an effective supporting manner. Given the <a href="http://www.stratfor.com/analysis/20101019_week_war_afghanistan_oct_13_19_2010">intensity and tempo of special operations forces raids</a> on Taliban leadership and weapons caches, it is unclear whether the Taliban have managed to retain a significant cache of heavier arms and the capability to wield them.</p> <p>The <a href="http://www.stratfor.com/weekly/20091201_obamas_plan_and_key_battleground">inherent danger of compromise</a> and penetration of indigenous security forces also <a href="http://www.stratfor.com/analysis/20110613-afghanistan-weekly-war-update-infiltration-challenge">continues to loom large</a>. The vulnerabilities of ISAF forces will grow and change while they begin to shift as mission and posture evolve — and those vulnerabilities will be particularly pronounced in places where the posture and presence remains residual and a legacy of a previous strategy instead of more fundamental rebalancing. The shift from a dispersed, counterinsurgency-focused orientation to a more limited and more secure presence will ultimately provide the space to reduce casualties, but it will necessarily entail more limited visibility and influence. And the transition will create space for potentially more significant Taliban successes on the battlefield.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/obamas-afghanistan-plan-and-realities.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:44:00-07:00">7:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5926140628376341020">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5926140628376341020&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/Obama%27s%20Afghanistan%20Plan" rel="tag">Obama's Afghanistan Plan</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Realities%20of%20Withdrawal" rel="tag">Realities of Withdrawal</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4635577399726427093"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/zetas-raid-or-rescue.html">Zetas Raid or Rescue?</a> </h3> <div class="post-body entry-content"> Mexico Security Memo: <span style="font-weight: bold;font-size:180%;">Confusing Reports of a Battle in Matamoros Zetas Raid or Rescue?</span><br /><br />Around 5 a.m. on June 17, simultaneous firefights reportedly broke out between elements of the Gulf and Los Zetas cartels in several locations in Matamoros, Tamaulipas state, a Gulf stronghold. The Mexican military has confirmed that a gunbattle did indeed take place in the Colonia Pedro Moreno area but has not confirmed media reports of additional firefights in the Mariano Matamoros, Valle Alto, Puerto Rico and Seccion 16 neighborhoods. The military also has not confirmed a reported gunbattle in the rural area of Cabras Pintas, where six Mexican soldiers are said to have been killed.<br /><br /><br />View an interactive map of hot spots this week in Mexico<br /><br />Details of the confirmed firefight remain unclear, but from all indications, a large movement of Zeta forces into a Gulf stronghold did occur, and it suggests a heightened operational tempo in the war between these two cartels. In the coming months, this increasing violence is likely to continue in Gulf-held Reynosa and Zeta-held Monterrey as well as Matamoros.<br /><br />The Mexican military said the June 17 gunbattle in Matamoros’ Colonia Pedro Moreno neighborhood resulted in three deaths and nine arrests, while an unnamed U.S. law enforcement official said four Gulf cartel gunmen died in the exchange of fire. According to a Mexican army officer quoted in border media, a Mexican army “mechanized regiment” was patrolling in trucks in downtown Matamoros when the fighting erupted but did not participate. The media also quoted a U.S. law enforcement official confirming the presence of another mechanized regiment and claiming that this other regiment of soldiers traveling in trucks supported Los Zetas in an attempt to rescue 11 Zeta operatives, both male and female, who had been captured by the Gulf cartel June 16.<br /><br />For its part, the Mexican military said a motorized army unit rescued 17 civilians who had been kidnapped, although it is uncertain how an army unit could have achieved this without being a part of the operation or participating in the firefight. At some point during the gunbattle, the leader of Los Zetas, Heriberto “El Lazca” Lazcano Lazcano, was reportedly killed, although STRATFOR doubts that he was present.<br /><br />While reports of the Matamoros battle are conflicting, it is very likely that a large firefight did occur in the city between the Gulf cartel and Los Zetas and that it was initiated by the latter. Due to the conflicting information, we have been unable to determine the motive behind the Zeta assault, which reportedly involved a force of armed Zetas in 130 SUVs. However, we have seen several large Zeta raids into Gulf territory in recent months intended to undercut Gulf’s support network, and this raid into Matamoros would have been the largest one yet (at least that we are aware of).<br /><br />Zetas leader Lazcano, a former member of the army’s Grupo Aeromovil de Fuerzas Especiales (GAFES), an elite special operations unit, is an “old Zeta.” He has good tactical and operational awareness and has proved himself to be a very rational decision-maker. Moving a convoy of 130 SUV’s nearly a half mile long (if they were bumper to bumper) into the heart of Gulf territory could not have achieved any element of surprise, which means Lazcano probably thought his force was large enough to accomplish the mission even if it was detected well in advance.<br /><br />If the objective of this raid was to recover the 11 Zetas reportedly captured by Gulf forces, those prisoners must have been extremely valuable to the Zetas and possibly to Lazcano personally. Low-ranking members of an organization are typically not worth potential losses incurred in such an operation.<br /><br />The reports that a motorized Mexican army regiment took part in the firefight alongside Zetas gunmen are likely untrue. While there is a corrupt element within the military, the chance of an entire regiment operating with cartel gunmen is quite remote. It is not uncommon for individual soldiers and smaller military units to be found in the employ of cartels, and perhaps a small element was working with the Zetas, but it could not have been a Mexican army regiment, which would number some 1,000 to 3,000 troops.<br /><br />Whether the Zetas Matamoros raid was a deliberate strike against the Gulf cartel’s power base or an attempt to rescue a group of Zetas prisoners, we have been expecting to see this type of Zetas offensive for several months now. People and businesses should be aware of the probability of increasing violence in the coming months in Matamoros, Reynosa and Monterrey. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/zetas-raid-or-rescue.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:42:00-07:00">7:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4635577399726427093">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4635577399726427093&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/or%20Rescue" rel="tag">or Rescue</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Zetas%20Raid" rel="tag">Zetas Raid</a> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3646182367285158457"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/personal-income-increased-03-in-may.html">Personal income increased 0.3% in May,</a> </h3> <div class="post-body entry-content"> Data Watch<br />________________________________________<br /><span style="font-weight: bold;font-size:180%;">Personal income increased 0.3% in May, while personal consumption was unchanged</span><br />Brian S. Wesbury - Chief Economist<br />Robert Stein, CFA - Senior Economist<br /><br />Personal income increased 0.3% in May, slightly less than the consensus expected. Personal consumption was unchanged, also slightly less than the consensus expected. In the past year, personal income is up 4.2% while spending is up 4.7%.<br />Disposable personal income (income after taxes) was up 0.2% in May. Disposable income is up 3.1% versus a year ago. The gain in May was led by private-sector wages and salaries, which are up 3.6% from a year ago.<br /><br />The overall PCE deflator (consumer inflation) increased 0.2% in May and is up 2.5% versus a year ago. The “core” PCE deflator, which excludes food and energy, was up 0.3% in May and is up 1.2% since last year.<br /><br />After adjusting for inflation, “real” consumption dipped 0.1% in May but is up 2.1% versus a year ago.<br /><br />Implications: Consumer spending got slammed by Japan in May, with purchases of durable goods like autos down 1.5% for the month. As a result, total consumer spending was unchanged for the month. With consumption prices up 0.2% in May – that was before the recent dip in oil prices – “real” (inflation-adjusted) consumer spending fell slightly. As we have said repeatedly, we believe these effects are temporary and will result in a forceful rebound in spending later this summer. Late this Friday (July 1), we expect automakers to report the start of the rebound, with sales bouncing up off the May low despite very skimpy manufacturer and dealer incentives in June. Longer term, consumer spending should strengthen. Consumer balance sheets are healthier and their financial obligations (monthly payments like mortgages, rent, car loans/leases, as well as other debt service), are the smallest share of disposable income since 1994. Meanwhile, the underlying trend in worker income continues in a favorable direction, with private-sector wages and salaries up at a 4.5% annual rate in the past six months. This is more than enough to outpace inflation and that gap should widen in the next few months due to the recent drop in oil prices. The problem for the Federal Reserve is that its favored measure of “core” inflation, which excludes food and energy, is accelerating, up only 1.2% versus a year ago but up at a 2.4% annual rate in the past three months. This is an economic problem that calls out for a tighter monetary policy, not the continuation of an overly loose policy.<br />________________________________________ </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/06/personal-income-increased-03-in-may.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-06-27T19:40:00-07:00">7:40 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3646182367285158457">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3646182367285158457&from=pencil" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" height="18" width="18" /> </a> </span> </span> <span class="post-labels"> Labels: <a href="http://intermexfreemarket.blogspot.com/search/label/increased%200.3%25%20in%20May" rel="tag">increased 0.3% in May</a>, <a href="http://intermexfreemarket.blogspot.com/search/label/Personal%20income" rel="tag">Personal income</a> </span> </div> </div> </div> </div> <a name="8992736562420499761"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/06/no-us-is-not-greece.html">No, The US Is Not Greece</a> </h3> <p class="MsoNormal"><b><span style="font-size:14.0pt;font-family:"Arial","sans-serif"">Monday Morning Outlook</span></b> </p> <div class="MsoNormal" style="text-align:center" align="center"> <hr style="color:black" align="center" noshade="noshade" size="1" width="100%"> </div> <p style="font-family: georgia; font-weight: bold; text-align: left;" class="MsoNormal"><span style="font-size:100%;"><span style="font-size:180%;">No, The US Is Not Greece </span><span class="small"><span style="font-size: 8pt;"></span></span><br /><span style="font-size: 10pt;">Brian S. Wesbury - Chief Economist<br />Robert Stein, CFA - Senior Economist</span></span> <span style="font-size:100%;"><br /><span style="font-size: 8pt;">Date: 6/27/2011</span></span> </p><div style="text-align: left;"> </div><p style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Two-hundred and thirty-five July 4<sup>th</sup>’s ago, the United States became reality. While there have been plenty of stumbles along the way, other than during the Civil War, doubts about its continued existence have been few and far between. Lately, however, government spending and debt levels have created a mainstream fear that the US is possibly on its last legs – destined to become a future version of Greece.</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">We don’t agree and, no, we are not sticking our heads in the sand. Our problems are clear. The budget deficit will be about 8.5% of GDP in 2011, down slightly from 9% in 2010 and 10% in 2009. These deficits are impossible to sustain over the longer run.</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Meanwhile, the total public debt of the US is now $14.3 trillion and future promised, but as yet unfunded, Social Security and Medicare benefits amount to about $60 trillion in present value terms. Combined, this $75 trillion is roughly five times annual GDP. With numbers like these, how could we not think serious, economy-threatening problems are on the way?</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Well, for one thing, the very obvious problems in Greece (and other countries and the states) and the fact that politicians can’t hide from the Internet are forcing the issue. Second, the political landscape in the US has changed – perhaps because of point one. Third, the solutions are relatively simple in reality, even though very complicated politically.</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Part of the solution is higher revenues, and this will happen <i>even if tax rates are not increased</i>. In the past 12 months, revenues have climbed by about $220 billion over the previous 12 months – or, about 0.5% of GDP. We expect revenues to continue this trend, rising from their current level of 14.5% of GDP back to about 18.5% of GDP (a 4% move).</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Meanwhile, current debt-limit negotiations are likely to cut federal discretionary (non-entitlement, non-interest) spending. In the 1990s, discretionary spending fell from about 9% of GDP to 6%. So let’s say, we go from 9% today to 7.5%, which could be a “low hurdle” given the eventual reduction in operations in Iraq and Afghanistan. Combining this 1.5% of GDP cut with the 4% rise in revenues (total of 5.5%), could bring the annual deficit down to 3% of GDP. </span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Of course, that still leaves the long-term entitlement problem. But even there we can see the outlines of solutions looming in the distance. For Medicare and Medicaid, which are much bigger problems than Social Security, we think ultimately the forces of smaller government win. We do not know whether it will be in 2012, 2016, or 2020. But one of those elections is likely to result in a Republican in the White House with control of both the US Senate and House. And at that point, they can enact major reforms along the lines of some recent proposals to turn Medicare into premium support and turn Medicaid into block grants to the states.</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">Parliamentary rules will allow the GOP to enact these changes with only a simple majority in the Senate (with no chance for a Democratic filibuster). And to reverse these reforms, because it would make future budget deficits larger, Democrats would need 60 votes in the Senate!</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><p class="MsoNormal" style="font-family: georgia; font-weight: bold; text-align: left;"><span style="font-size:100%;"><span style="font-size: 10.5pt;">On Social Security, any change requires 60 votes in the Senate. This means tax hikes (to fill the gap) are as much in play as benefit cuts and this is why it will likely be put off for many years into the future. In the meantime, news stories suggest even AARP is now willing to consider some reductions in benefits. In other words, fiscal reality is beginning to bite.</span><span style="font-size: 10pt;"></span></span></p><div style="text-align: left;"> </div><p style="font-family: georgia; font-weight: bold; text-align: left;" class="MsoNormal"><span style="font-size:100%;"><span style="font-size: 10pt;"> </span></span></p><div style="text-align: left;"> </div><span style="font-weight: bold;font-size:100%;"><span style="font-size: 10.5pt; font-family: georgia;">In the end, the road to fiscal redemption is a long one and we’ll be on it for many years. But we think the ultimate destination will be smaller government and more manageable deficits than most investors realize.</span></span>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-69508885392393049242011-06-07T13:03:00.001-07:002011-06-07T13:03:41.093-07:00<h1> The Fundamental Difference between Fairs and Markets</h1><div class="meta"> <strong>Mises Daily:</strong> by <a href="http://mises.org/daily/author/1603/ARJ-Turgot" id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author">A.R.J. Turgot</a> </div><div class=" fb_reset" id="fb-root"> <span></span> </div><div class="editorial-preface"> [Excerpted from chapter 4 in part 1 of the <a href="http://mises.org/store/Turgot-Collection-Pocket-Edition-P10466.aspx"><i>The Turgot Collection</i></a> (2011). Originally written in 1757.]<br />
</div><div class="figure"><img alt="Flemish Fair by Pieter Brueghel the Younger" border="0" src="http://images.mises.org/FlemishFair.jpg" /></div>The word <i>fair</i>, which is derived from <i>forum</i>, a public square, was originally synonymous with that of <i>market</i>, and is still so in certain respects. Both signify a gathering of sellers and buyers at a set time and place, but the word <i>fair</i> seems to present the idea of a more numerous, more solemn, and consequently, less common gathering. The use of these two words in ordinary language appears to be determined by this distinction, which is immediately perceptible, but which itself arises from a less obvious, and, as it were, more radical, difference between these two things. This will be developed further.<br />
It stands to reason that sellers and buyers cannot gather together at certain times and places without an attraction or an interest which compensates for or which even exceeds the expenses of the journey and of the transportation of the produce and merchandise. Without this attraction, each would remain at home. The stronger it is, the longer the transportation which the produce can support, the more numerous and solemn the gathering of merchants and customers will be, and the more the district which has this gathering as its center, can be extended.<br />
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The natural course of trade in itself is enough to fashion this gathering and to increase it up to a certain point. The competition of the sellers limits the price of the produce, and the price of the produce in turn limits the number of sellers. Indeed, since all trade must support the person who undertakes it, it is essential that the number of sales compensates the merchant for the low profit which he makes on each sale, and that, consequently, the number of merchants is proportioned to the current number of consumers, so that each merchant is matched by a certain number of the latter.<br />
Recognizing this, I assume that the price of a commodity is such that in order to support the trade in it, it has to be sold in a market of 300 families. It is obvious that three villages, each containing only 100 families, will be able to support only a single merchant of this commodity. This merchant will probably live in that village of the three where the largest number can gather most conveniently and at the least expense, because this curtailment of expenses will give the merchant who is established in this village an advantage over those who would be tempted to set up business in any of the others.<br />
But several types of commodities would probably be in the same category and the merchant of each of these commodities would set up in the same place because of the curtailment of the expenses and because someone who needs two types of commodities prefers making one journey to making two; it is really as if he were paying less for each piece of merchandise. Once a place has become notable because of this self-same gathering together of different trades, it becomes more and more important, because all artisans who are not confined to the countryside by the nature of their work, and all those whose wealth permits them to be idle assemble there to obtain the conveniences of life.<br />
<div class="figure-left"><a href="http://mises.org/store/History-The-Struggle-for-Liberty-A-Seminar-with-Ralph-Raico-MP3-CD-P184.aspx"><img src="http://mises.org/store/Assets/ProductImages/CD3150master.jpg" /></a></div>The competition of buyers draws the merchants in the hope of sales, and several of them set up business to deal in the same commodities. The competition of the merchants draws buyers in the hope of a good bargain, and both of them continue to increase in turn up to the point where for the remote buyers the disadvantage of the distance offsets the cheapness of the commodities caused by competition, and even what custom and force of habit add to the attraction of a good bargain. In this manner different centers of commerce, or <i>markets</i>, are naturally formed, to which correspond an equal number of districts or departments of various sizes, according to the nature of the commodities, the relative ease of communications and the condition and relative size of the population. And such is, by the way, the most important and the most common origin of small market towns and cities.<br />
The same reason of convenience which settles the gathering of buyers and sellers at certain places also confines it to certain days, when the commodities are too paltry to support long transportation and when the district is not sufficiently populous to provide an adequate, daily market. These days are settled on through a form of silent agreement, for which the smallest circumstances provide a reason. The number of days' journey between the most important places in the neighborhood, together with certain dates which give rise to the departure of travelers, such as the proximity of certain feast days, certain days hallowed by usage for the payments of rents, all types of recurring solemnities — in short, all the types of occasions which bring together a group of people on specific days — become the principle for the establishment of a market on these same days, because traders have an interest in searching out buyers and vice versa.<br />
But it takes only a fairly short distance for this interest, and the low prices resulting from competition, to be offset by the expenses of travel and of the transportation of the produce. Therefore it is not to the natural course of a commerce animated by freedom that one should attribute these splendid fairs, where the products of part of Europe are assembled at great expense and which appear to be the rendezvous of nations. The gain which must compensate for these exorbitant expenses does not arise from the natural order of things but results from the privileges and franchises granted to trade at certain times and places, while everywhere else it is overburdened with taxes and duties.<br />
It is not surprising that the lack of freedom and the customary obstructions with which commerce has been burdened for so long in all of Europe has forcibly directed it to those places where it was granted a little more freedom. This is how princes, by granting exemptions from duty, have created so many fairs in the various parts of Europe; and it stands to reason that these fairs are all the more important as the trade is more overburdened with duties in normal times.<br />
<div class="bigger pullquote">"The competition of buyers draws the merchants in the hope of sales. … The competition of the merchants draws buyers in the hope of a good bargain."</div>A fair and a market are therefore both a gathering of merchants and customers at a set time and place. But in the case of markets the merchants and buyers are brought together by the mutual interest they have in seeking each other, while in the case of fairs it is the desire to enjoy certain privileges — from which it follows that this gathering is inevitably much more numerous and solemn at fairs. Although the natural course of commerce is sufficient to establish markets, as a result of the unfortunate principle which in nearly all governments has infected the administration of commerce — I mean, the mania of directing all, regulating all, and of never relying on the self-interest of man — it has happened, in order to establish markets, that the police<a class="noteref" href="http://mises.org/daily/5319/The-Fundamental-Difference-between-Fairs-and-Markets#note1" name="ref1">[1]</a> has been made to interfere; that the number of markets has been limited on the pretext of preventing them from becoming harmful to each other; that the sale of certain goods has been prohibited except at certain appointed places, either for the convenience of the clerks charged with receiving the duty with which they are burdened, or because the goods were required to be subjected to the formalities of testing and marking, while offices cannot be established everywhere.<br />
The opportunity cannot be grasped too often to attack this system so fatal to industry; it can be found more than once in the <i><a href="http://en.wikipedia.org/wiki/Encyclop%C3%A9die">Encyclopédie</a></i>. The most celebrated fairs in France are those of Lyons, Bordeaux, Beaucaire, etc.; in Germany, those of Leipzig, Frankfurt, etc. My objective here is neither to list them nor to give a detailed exposition of the privileges granted by various sovereigns either to fairs in general or to any one fair in particular. I shall limit myself to some reflection against the common enough illusion which makes some people cite the importance and the extent of the trade at certain fairs as a proof of the greatness of the commerce of a state.<br />
Undoubtedly, a fair must enrich the place where it is held and bring about the importance of a particular town. And when the whole of Europe was groaning under the manifold shackles of feudal government — when each village was, as it were, an independent and sovereign state, when the lords enclosed in their castles envisaged commerce only as an opportunity of increasing their revenue by subjecting all those who were forced of necessity to cross their territory to a tax or to an exorbitant toll — there is no doubt that those who were the first to be sufficiently enlightened to feel that, in slightly relaxing the severity of their duties, they would be more than compensated by the increase of commerce and consumption soon observed the enrichment, the growth, and the improvement of their places of residence.<br />
It is certain that when kings and emperors had sufficiently increased their authority to remove the taxes levied by their vassals from the merchandise destined for the fairs of certain towns which they wished to favor, these towns necessarily became the centers of an exceedingly large commerce and saw the increase of their power as well as of their wealth. But since all these small sovereign states have been united into a single state, under a single prince, is it not strange that, if negligence, force of habit, the difficulty of redressing abuses even if desired, and the difficulty of desiring it, if these things have combined to keep the constraints in existence — namely these local duties and privileges which were established when each province and each village owed allegiance to a different sovereign — is it not strange, I repeat, that this haphazard result has not only been praised but even imitated as if it were the act of rational policy?<br />
Is it not strange that with very good intentions, and with a view to making trade flourishing, new fairs have again been established, the privileges and exemptions of certain towns have yet again been increased, that certain branches of commerce have even been prevented from settling in the midst of the poor provinces for fear of hurting some other towns which for a long time have been enriched by these same branches of commerce? And what does it matter whether Peter or Jack, Maine or Brittany, manufacture this or that commodity, provided that the state is enriched and Frenchmen are earning their living? What does it matter whether a piece of cloth is sold at Beaucaire or in its place of manufacture, provided that the laborer receives the value of his work?<br />
<div class="figure-left"><a href="http://mises.org/store/Case-for-Legalizing-Capitalism-P10395.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/SS544_T.jpg" /></a></div>An enormous mass of trade, gathered together in one place and lumped closely together, will attract the attention of shallow politicians in a much more obvious manner. Water artificially brought together in lakes and canals amuses the traveler as a display of frivolous luxury, but the water which the rain uniformly diffuses over the fields, and which is only guided by the incline of the terrain and distributed through all the valleys, forming pools there, carries wealth and fecundity everywhere. What does it signify that a great deal of trading takes place in a certain spot on certain occasions, if this momentary trade is large only through the same causes which obstruct trade and which tend to decrease it at all other times and over the whole extent of the state?<br />
"Is it necessary," said the civic magistrate to whom we owe the translation of Child (M. de Gournay) and to whom France will one day perhaps owe the destruction of the obstacles which have been placed in the way of commerce in the desire to promote it — "is it necessary to fast all year in order to live sumptuously on certain days? In Holland there are no fairs at all, but the whole extent of the state and the whole year are, as it were, a continuous fair, because commerce in that country is always and everywhere equally flourishing."<br />
It is said,<br />
<blockquote>The State cannot do without the revenue; in order to provide for its needs it must burden commodities with various taxes. However, it is no less necessary to facilitate the sale of our products, above all abroad, which cannot be done without lowering their prices as much as possible. Now these two objectives are reconciled by appointing places and times of immunity from duty, where the low price of the commodity attracts the foreigner and causes an extraordinary consumption, while the everyday consumption of necessaries sufficiently supplies the public revenue. The very desire to profit from these occasions of grace gives sellers and buyers an eagerness which the solemnity of these <i>great</i> fairs enhances even more by a type of enticement, from which an increase in the whole of commerce results.</blockquote>Such are the pretexts which are alleged to uphold the usefulness of the great <i>fairs</i>. But it is not difficult to be convinced that it is possible, by general agreement, and while favoring equally all members of the state, to reconcile much more advantageously the two objectives which the government may have in view. Indeed, since the prince agrees to lose part of his duties and consents to sacrifice them in the interest of commerce, nothing prevents him, in making the duties uniform, from diminishing the total of what he agrees to forego. The objective of exempting the sales abroad from duty while letting them survive only on domestic consumption would be even more easily carried out by exempting from duty all the goods which leave the country, for, after all, it cannot be denied that our <i>fairs</i> supply a large part of our domestic consumption.<br />
Under this arrangement, the extraordinary consumption which occurs at the time of fairs would greatly diminish. But it stands to reason that the reduction of the duties in ordinary times would make the general consumption a great deal more abundant. With this difference — that in the case of a uniform but moderate duty — commerce would gain all that the prince is willing to sacrifice to it; whereas in the case of a general and heavier duty, with local and temporary exemptions, the king may sacrifice much, and commerce gain almost nothing. Or, what is the same thing, the commodities and merchandise can be lowered in price to a much lesser extent than the duties are lowered, and this because it is necessary to subtract from the advantages which this decrease yields, the costs of transportation of the produce and merchandise to the place designated for the <i>fair</i>, the change of abode, the rents of the marketplace increased yet again through the monopoly of the proprietors, and finally the risk of not selling in a rather short time, and of having made a long journey to no avail.<br />
<div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Turgot-Collection-Pocket-Edition-P10466.aspx"><img border="0" src="http://mises.org/store//Assets/ProductImages/B958.jpg" width="200" /></a></div><div class="book-price"> <a href="http://mises.org/store/Turgot-Collection-Pocket-Edition-P10466.aspx"><span style="text-decoration: line-through;">$20</span> $12</a><br />
</div></div>Now, it is always necessary that the merchandise pay for all these expenses and these risks. It is far from true, therefore, that the sacrifice of duties by the prince is as useful to commerce in the form of temporary and local exemptions as it would be in the form of a slight reduction over the whole of the duties. It is far from true, therefore, that the extraordinary consumption increases by special exemptions as much as the daily consumption is diminished through customary overtaxing. Add to this that there are no special exemptions which do not give rise to frauds in order to profit by them, to new constraints, to increases in the number of clerks and inspectors to prevent these frauds, and to the trouble of punishing them. This is another loss of men and money to the state.<br />
Let us conclude that the <i>great</i> fairs are never as useful as the constraints which they imply are harmful; and that, far from being the proof of the flourishing condition of commerce, they can only exist, on the contrary, in states where commerce is restricted, burdened with duties, and, consequently, indifferent.Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-52418019436085274212011-05-05T19:52:00.001-07:002011-05-05T19:52:44.178-07:00<div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">NATO in Libya</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">A Fire That Could Burn Everyone</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By FIDEL CASTRO</span></p> <p class="style2"><span class="style50">Y</span>ou may agree or not with Gaddafi’s political ideas, but no one has the right to question the existence of Libya as an independent state and member of the United Nations. </p> <p class="style2">The world has not yet reached the point which, in my view, is an essential condition for the survival of our human species: access by all the peoples to the material resources of this planet. There is no other in the Solar System that we know that has the most elemental conditions for life. </p> <p class="style2">The United States itself always tried to be a melting pot of all races, all beliefs and all nations: white, black, yellow, the Indians and mixed races, with no other differences than those between the masters and slaves, the rich and poor; but all within its borders: To its North was Canada; to the South, Mexico; to the East, the Atlantic Ocean and to the West, the Pacific Ocean. Alaska, Puerto Rico and Hawaii were simple historical accidents. </p> <p class="style2">What makes the issue complicated is that it does not imply the noble wish of those fighting for a better world, which deserves as much respect as the peoples’ religious beliefs do. It would only take some kind of radioactive isotopes that stemmed from the enriched uranium used by thermonuclear plants in relatively small amounts—since they do not exist in nature—to put an end to the fragile existence of our species. Keeping those wastes in increasing volumes, under reinforced concrete and steel coffins, is one of the major challenges for technology. </p> <p class="style2">Events like the Chernobyl accident or the earthquake in Japan have revealed those mortal risks.</p> <p class="style2">This is not the issue I’d like to address today, but how amazed I was yesterday to see, on Walter Martinez’s show “Dossier” on Venezuelan television, the filmed images of the meeting between the chief of the US Department of Defense Robert Gates and the U.K. Defense Minister, Liam Fox, who visited the United States to discuss the criminal war unleashed by NATO against Libya. It was something difficult to believe, the British minister won an “Oscar”; he was a bundle of nerves, he was tense and spoke like crazy; and he gave the impression that he was just spitting out the words.</p> <p class="style2">Of course, he first got to the entrance of the Pentangon, where Gates was awaiting him with a smile. The flags of both countries, the one of the ancient British colonial empire and that of its stepson, the United States Empire, flew high on both sides as the two national anthems were played. Right hand on chest, the rigorous and solemn military salute of the ceremony given by the host country. This was the initial act. Later, the two ministers stepped into the US Defense building. They are supposed to have spoken for a long time, given the images I saw, as each of them returned with a speech in hand, undoubtedly prepared in advance.</p> <p class="style2">The context of this entire scenario was made up by personnel in uniform. On the left I could see a tall, slim young soldier, who seemed to have a shaved redhead, wearing a cap with the black peak pulled nearly down to his throat, presenting his bayoneted rifle. He did not blink nor seem to breathe, like the figure of a soldier ready to shoot a rifle bullet or a nuclear rocket with a destructive capacity of 100 thousand tons of TNT. Gates spoke showing the smile and natural manners of a host. The British man, however, did so in the way I explained.</p> <p class="style2">I have not often seen anything more horrifying than this; he was releasing hatred, frustration, fury and using threatening language against the Libyan leader and urging his unconditional surrender. He looked indignant because the powerful NATO warplanes had not been able to crush the Libyan resistance in 72 hours.</p> <p class="style2">He was only missing the exclamation: “blood, sweat and tears,” just like Winston Churchill when he calculated the price to be paid by his country in the fight against the Nazi warplanes. But in this case, the Nazi-fascist role is being played by NATO with its thousands of bombing missions by the most modern aircraft ever known by the world. </p> <p class="style2">To cap it all came the decision by the US administration to authorize the use of drones to kill Libyan men, women and children, like in Afghanistan, thousands of kilometers from Western Europe, but this time against an Arab and African country, before the eyes of hundreds of millions of Europeans and no less than in the name of the United Nations Organization.</p> <p class="style2">Russia’s Prime Minister Vladimir Putin yesterday said that these acts of war were illegal and they are outside the framework of the accords adopted by the UN Security Council.</p> <p class="style2">The crude attacks against the Libyan people, which have taken on a Nazi-fascist character, may be used against any Third World nation. </p> <p class="style2">I am really amazed at the resistance posed by Libya.</p> <p class="style2">The belligerent organization now depends on Gaddafi. If he resists and does not yield to their demands, he will enter history as one of the great figures of the Arab nations. </p> <p class="style2">NATO is poking a fire that could burn everyone!</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/fire-that-could-burn-everyone.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:49:00-07:00">7:49 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=989278821819738957">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=989278821819738957" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7958193889099053322"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/obamas-broken-guantanamo-promise_05.html">Obama's Broken Guantánamo Promise</a> </h3> <div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">Betraying the Constitution</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">Obama's Broken Guantánamo Promise</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By SHELDON RICHMAN</span></p> <p class="style2"><span class="style50">I</span>The latest leaks of classified documents, which show that the U.S. government imprisoned hundreds of men at Guantánamo Bay on the most dubious "evidence," brings to mind the question, Why hasn't President Obama kept his promise to close the infamous prison that will forever stain America's honor?<br /> <br /> As the UK Guardian, one of the newspapers that disclosed the documents, reported, "The U.S. military dossiers ... reveal how, alongside the so-called 'worst of the worst', many prisoners were flown to the Guantánamo cages and held captive for years on the flimsiest grounds, or on the basis of lurid confessions extracted by maltreatment.... More than two years after President Obama ordered the closure of the prison, 172 are still held there.... The files depict a system often focused less on containing dangerous terrorists or enemy fighters, than on extracting intelligence."<br /> <br /> Many men were detained on the basis of hearsay after the U.S. government paid bounties for information. Some detainees had traveled to Afghanistan to fight for the Taliban in the civil war, then were declared enemies of the United States after its invasion in October 2001. After years in custody hundreds of men whom the Bush administration had branded as the monsters were released, indicating they were no threat at all. For this reason Guantánamo is an international symbol of American criminality.<br /> <br /> In March Obama signed an executive order permitting him to hold detainees indefinitely without charge or trial. The administration wishes to keep some prisoners in custody even though the supposed evidence against them would not be admissible in a court or even in a military tribunal, which has far less protection for defendants. Some of that evidence was obtained by methods most would regard as torture.<br /> <br /> More than a year after Guantánamo was to be closed it remains open. Why, and why has Obama largely escaped criticism for breaking such an important pledge?<br /> <br /> Previously the president's defenders have claimed that his efforts to close the prison were thwarted by members of Congress, mostly Republicans. Is that true?<br /> <br /> Obama signed an executive order calling for the closure two days after he was inaugurated in 2009, when the facilities held 241 prisoners. But "the fanfare never translated into the kind of political push necessary to sustain the policy," reports the Washington Post. "The White House, often without much internal deliberation, retreated time and again in the face of political opposition."<br /> <br /> Obama did not want to risk political capital on the matter, and no leader in Congress was willing to go out on a limb without presidential backing.<br /> <br /> The Post reports that Obama was shocked to learn that only 20–36 of the detainees could be brought to trial: "White House officials were in such disbelief that they asked Justice Department participants to write up a memo explaining exactly why they couldn't bring more of the men to trial. In many cases, the intelligence gathered on the men was not court-worthy evidence."<br /> <br /> Administration officials claim to be surprised that in May 2009 the Senate voted overwhelmingly against an appropriation to close Guantánamo. But how could they really have been surprised when they did little or nothing to support the objective? The Post makes clear that public opinion polls running against closure also played a role in Obama's retreat. His advisors warned that the issue would imperil his larger agenda.<br /> <br /> Thus President Obama, the man heralded as a new kind of politician, is revealed as just another officeholder looking out for his own political fortunes. The United States had betrayed its commitment to due process and the rule of law, but rectifying that shameful record could not be allowed to impede the president's political objectives. That demonstrates a perverse set of priorities.<br /> <br /> It's par for the course with Obama. Since taking office he has escalated the covert wars in Pakistan, Yemen, and Somalia and has doubled down on Afghanistan. The resulting casualties and destruction have fueled further anti-American resentment. Now he is using drones over Libya, recklessly endangering the innocent. He has done what few once thought possible: out-war-mongered the Bush-Cheney gang.<br /> <br /> And for the most part, the phony anti-war activists of the Bush years have lost their voices.<br /> <br /> <strong>Sheldon Richman</strong> is senior fellow at <a href="http://www.fff.org/">The Future of Freedom Foundation</a> and and editor of The Freeman magazine. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/obamas-broken-guantanamo-promise_05.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:48:00-07:00">7:48 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7958193889099053322">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7958193889099053322" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8212809295003434113"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/why-are-we-still-in-afghanistan.html">Why are We Still in Afghanistan?</a> </h3> <div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">If This is Victory, Shouldn't US Forces Go Home?</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">Why are We Still in Afghanistan?</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By ROBERT FISK</span></p> <p class="style2"><span class="style50">S</span>o why are we in Afghanistan? Didn't the Americans and the British go there in 2001 to fight Osama bin Laden? Wasn't he killed on Monday? There was painful symbolism in the Nato airstrike yesterday – scarcely 24 hours after Bin Laden's death – that killed yet more Afghan security guards. For the truth is that we long ago lost the plot in the graveyard of empires, turning a hunt for a now largely irrelevant inventor of global jihad into a war against tens of thousands of Taliban insurgents who have little interest in al-Qa'ida, but much enthusiasm to drive Western armies out of their country.</p> <p class="style2">The gentle hopes of Hamid Karzai and Hillary Clinton – that the Taliban will be so cowed by the killing of Bin Laden that they will want to become pleasant democrats and humbly join the Western-supported and utterly corrupt leadership of Afghanistan – shows just how out of touch they are with the blood-soaked reality of the country. Some of the Taliban admired Bin Laden, but they did not love him and he had been no part of their campaign against Nato. Mullah Omar is more dangerous to the West in Afghanistan than Bin Laden. And we haven't killed Omar.</p> <p class="style2">Iran, for once, spoke for millions of Arabs in its response to Bin Laden's death. "An excuse for alien countries to deploy troops in this region under the pretext of fighting terrorism has been eliminated," its foreign ministry spokesman has said. "We hope this development will end war, conflict, unrest and the death of innocent people, and help to establish peace and tranquility in the region."</p> <p class="style2">Newspapers across the Arab world said the same thing. If this is such a great victory for the United States, it's time to go home; which, of course, the US has no intention of doing just now.</p> <p class="style2">That many Americans think the same thing is not going to change the topsy-turvy world in which US policy is framed. For there is one home truth which the world still has not grasped: that the revolutions in Tunisia and Egypt – and, more pressing, the bloodbaths in Libya and Syria and the dangers to Lebanon – are of infinitely graver importance than blowing away a bearded man who has been elevated in the West's immature imagination into Hitlerian proportions.</p> <p class="style2">Turkish prime minister Erdogan's brilliant address in Istanbul yesterday – calling for the Syrians to stop killing their people and for Gaddafi to leave Libya – was more eloquent, more powerful and more historic than the petty, boastful, Hollywood speeches of Obama and Clinton on Monday. We are now wasting our time speculating who will "take over" al-Qa'ida – Zawahiri or Saif al-Adel – when the movement has no "leadership" as such, Bin Laden being the founder rather than the boss.</p> <p class="style2">But, a day being a long time in the killing fields of the Middle East, just 24 hours after Osama Bin Laden died, other questions were growing thicker yesterday. If, for example, Barack Obama really thinks the world is "a safer place" after Bin Laden's death, how come the US has increased its threat alert and embassies around the world are being told to take extra precautions against attack?</p> <p class="style2">And just what did happen in that tatty compound – no longer, it seems, a million-dollar "mansion" – when Bin Laden's sulphurous life was brought to an end? Human Rights Watch is unlikely to be the only institution to demand a "thorough, transparent investigation" into the killing.</p> <p class="style2">There was an initial story from Pentagon "sources" which had two of Bin Laden's wives killed and a woman held as a "human shield" dying too. Within hours, the wives were alive and in some accounts, the third woman simply disappeared.</p> <p class="style2">And then of course, there's Pakistan, eagerly telling the world that it participated in the attack on Bin Laden, only to have President Zardari retract the entire story yesterday. Two hours later, we had an American official describing the attack on Bin Laden as a "shared achievement".</p> <p class="style2">And there's Bin Laden's secret burial in the Arabian Sea. Was this planned before the attack on Bin Laden, with the clear plan to kill rather than capture him? And if it was carried out "according to Islamic rights" – the dead man's body washed and placed in a white shroud – it must have taken a long time for the officer on the USS Carl Vinson to devise a 50-minute religious ceremony and arrange for an Arabic-speaking sailor to translate it.</p> <p class="style2">So now for a reality check. The world is not safer for Bin Laden's killing. It is safer because of the winds of freedom blowing through the Middle East. If the West treats the people of this region with justice rather than military firepower, then al-Qa'ida becomes even more irrelevant than it has been since the Arab revolutions.</p> <p class="style2">Of course, there is one positive side for the Arab world. With Bin Laden killed, the Gaddafis and the Salehs and the Assads will find it all the more difficult to claim that a man who is now dead is behind the popular revolutions trying to overthrow them.</p> <p class="style2"><strong>Robert Fisk</strong> writes for the <a href="http://www.independent.co.uk/">Independent</a>, where this column originally appeared.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/why-are-we-still-in-afghanistan.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:47:00-07:00">7:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8212809295003434113">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8212809295003434113" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3270316797331626794"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/obama-kills-osama.html">Obama Kills Osama</a> </h3> <div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">What a Difference a Consonant Makes!</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">Obama Kills Osama</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By Dr. SUSAN BLOCK</span> </p> <p class="style2"><span class="style50">W</span>hat a difference a consonant makes: "b" instead of "s" makes you President as opposed to dead. Together they spell BS.</p> <p class="style2">Of course, there's a lot more to the death of Osama bin Laden. First, it is, as of this writing, only vaguely verified, since the body was buried "out at sea" within 24 hours after the killing is said to have occurred. I'm not big on conspiracy theories, so I <em>guess </em>the 6'4" bearded dude American Navy Seals say they axed and tossed in the waves was probably "Geronimo" (code for Osama), but <img src="http://counterpunch.org/shamir05052011_clip_image001.png" alt="http://bloggamy.com/wp-includes/js/tinymce/plugins/wordpress/img/trans.gif" width="1" height="1" />I have to say something smells fishy about the whole heroic tale, and it’s not just because they turned OBL into fish food<em>.</em> </p> <p class="style2">Supposedly, American high command decided to bury the guy right away in "accordance with Muslim custom." Umm...since when has America bowed to "Muslim custom" when it comes to dealing with so-called "enemy combatants," let alone Public Enemy #1? I'm sure we're breaking all kinds of rules and customs when we bomb Muslim villages and wedding parties, not to mention incarcerate, <a href="http://www.drsusanblock.com/editorial/terror/terror17.htm">torture</a> and kill innocent people, but that's never stopped us from doing those things. Why suddenly so much respect for Islam for Osama's sake? Why not even a routine autopsy? Is it because the bin Laden family has clout? Or because somebody doesn't want everybody to see <em>that</em> body?</p> <p class="style2">For these reasons, I'm about as convinced that we're getting all the facts about this Osama killing as I am sure that he was <em>the</em> mastermind of <a href="http://www.drsusanblock.com/editorial/terror/index.htm">9/11</a>.</p> <p class="style2">Again, I'm not claiming conspiracies, and I know, there's that tape of the guy who seems to be Osama praising the flamboyant, devastating and psychologically <a href="http://www.drsusanblock.com/editorial/terror/terror2.htm">castrating</a> attacks on the World Trade Centers, America's great phallic towers of power: Dick 1 and Dick 2. The organization Osama helped create, Al Qaeda, has done tremendous and despicable harm in multiple places around the world. No doubt, he was responsible for the deaths of many innocents. Still, without hard evidence, a trial, a conviction, etc., I can't be sure of exactly how OBL was involved in 9/11.</p> <p class="style2">Obviously, all those folks who favored invading Iraq "because of 9/11" were confused enough that they were willing to lay the blame on <a href="http://bloggamy.com/2007/01/08/baghdad-cockfight-climaxes-in-saddam-snuff-film/">Saddam Hussein</a> and his mob without any evidence whatsoever. Not that most of America's war-mongering elite were <em>genuinely </em>confused; they just wanted an <a href="http://www.drsusanblock.com/editorial/terror/terror7.htm">excuse</a> to <a href="http://www.drsusanblock.com/editorial/terror/terror10.htm">invade Iraq</a>.</p> <p class="style2">At the time, some people, myself included, decried the <a href="http://www.drsusanblock.com/editorial/terror/terror24.htm">Bush</a> administration for invading a country that had nothing to do with 9/11 and didn't even harbor Al Qaeda at the time (though now Al-Qaeda-in-Iraq practically runs the place), as well as for bombing innocent people who happened to live in Afghanistan as opposed to focusing our best intelligence and the legendary courage of our Navy Seals to somehow getting this guy Osama.</p> <p class="style2">So now it seems that the "mission" has been "accomplished" (maybe). Obama got Osama (I guess), and he announced it on the 66th anniversary of the announcement of Hitler's death (did the White House PR team have a hand in choosing the date for this attack?). Well, at least the Navy Seals don't appear to have murdered too many others in the operation, so kudos for that. But please no huzzahs. Even assuming OBL was indeed <em>the </em>evil mastermind of 9/11, this is a time for reflection, not rejoicing, and the crowds around the White House and elsewhere celebrating and shouting "USA!" are, to say the least, rude and unseemly, reminding the world of what insensitive jerks Americans can be, giving fuel to the fire of Al Qaeda's fatwas and its supporters' passionate determination to destroy America and Americans.As I see it, this is a time for us to take a moment to reflect on the devastation of this so-called <a href="http://www.drsusanblock.com/editorial/terror/terrorjournal.htm">War on Terror</a> that has evolved into our current State of Perma-War, this endless carnage and occupation which our power-loving leaders of mobs, great nations and rebel gangs around the world have wrought. This is a time to contemplate all people who have been murdered in the many perma-wars that have plagued human civilization throughout history and, I believe, a time to resolve to help bring about a more peaceful, cooperative, <a href="http://drsusanblock.com/ethicalhedonism.htm">pleasure</a>-oriented future for our world, a path I call the <a href="http://blockbonobofoundation.org/">Bonobo Way</a>.</p> <p class="style2">I won't say "Rest in Peace, Osama" (like some <a href="http://twitter.com/drsuzy">Twitter</a>ites who don’t appear to know what RIP means). But I will not join the celebration (and as those of you who know me know, I'll use almost any excuse to celebrate!). I won't pray either, since I'm not religious in that way. I'll just think and plan and hope…and wonder.</p> <p class="style2">The elites sometimes give a "present" to the people on May Day to take their minds off revolution; this year it was the death of Osama. But that gift is often a Trojan horse filled with stuff we really don't want, so let's be wary of being pushed further and deeper into perma-war on the coattails of "victory."</p> <p class="style2">And that reminds me: It’s May!<em> </em>Merry <a href="http://bloggamy.com/2010/05/01/masturbation-month/">Masturbation Month</a>! Here's my mantra for the month: <em><a href="http://drsusanblockinstitute.com/guided-masturbation/"><strong>Masturbation</strong></a><strong> Not <a href="http://www.drsusanblock.com/editorial/terror/terror11.htm">Occupation</a></strong>!</em> But first, like I said, a little contemplation. We've got the rest of the month--and our lives--to wank. And that's no BS. </p> <p class="style2">© May 2, 2011. Dr. Susan Block is an internationally renowned LA sex therapist and author <em>of The 10 Commandments of Pleasure</em>, occasionally seen on HBO and other channels.<em> </em>Commit Bloggamy with her at <a href="http://drsusanblock.com/blog/">http://drsusanblock.com/blog/</a> Follow her on Twitter @DrSuzy. Email comments to her at <a href="mailto:liberties@blockbooks.com">liberties@blockbooks.com</a></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/obama-kills-osama.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:46:00-07:00">7:46 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3270316797331626794">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3270316797331626794" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5021858185540617866"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/libyan-war-crime.html">The Libyan War Crime</a> </h3> <div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">Did the UN Security Council Authorize Assassination?</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">The Libyan War Crime</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By ISRAEL SHAMIR</span> </p> <p class="style2"><span class="style50">T</span>he chief prosecutor of the International Criminal Court announced on Thursday that he would soon stand before the United Nations and report on alleged Libyan war crimes. We can only hope that his brief will include the latest war crime, the murder of Qaddafi’s family, his son and three grandchildren, and the assassination attempt on the life of the Libyan leader on May Day, 2011. Cameron, Sarkozy, the NATO field commanders and the Danish air crew should all be indicted for this crime. </p> <p class="style2">UNSC Resolution 1970 is not a licence to commit mass murder. The resolution simply established a no-fly zone; it was designed to stem the violence, not turn Tripoli into a killing field. This is a clear case of coldly calculated targeted murder, as ruthless and brutal as any other form of political assassination. The date of the operation was known well beforehand, and had already been openly discussed in late April by the Russian Secret Service <em>SVR</em> (External Intelligence Service). On April 29th, a Russian netzine published an <a href="http://www.iarex.ru/articles/14859.html">article</a> by Kirill Svetitsky who quoted an anonymous source within SVR: </p> <blockquote> <p class="style2">“There will be an attempt to kill Muammar Qaddafi on or before May 2. The governments of France, Britain and the US decided on it, for the warfare in Libya does not proceed well for the anti-Libyan alliance: the regular army has substantial gains; Bedouin tribes entered the fight on the government’s side; in Benghazi, a “second front” was opened by the armed local militias who are tired of rebels’ presence, their incessant fights and robberies. </p> <p class="style2">“But the main reason for the timing is that the Italian parliament plans to discuss Italy’s involvement in Libyan campaign on May 3. Until now, decisions were taken by Berlusconi, but there are strong differences of opinion within the government coalition regarding the Libyan war, and they will probably bring the government down on May 3, and Italy will effectively leave the anti-Libyan alliance. It is likely to have a domino effect. For this reason leaders of the UK, the US and France decided to eliminate Qaddafi not later than May 2d, before the session of the Italian parliament on May 3d.”</p> </blockquote> <p class="style2">Unlike many Internet predictions, this one turned out to be timely and exact. On May 1, the US, France and the UK made a failed attempt on the life of Muammar Qaddafi, although they did succeed in killing his son and three grandchildren. Such unusual operative foreknowledge implies that Western leaders had advised the Russians of the planned attack, and that the SVR had then leaked the plans. </p> <p class="style2">The attack itself imitated the Israeli technique of “targeted killings”. The Israeli Air Force is notorious for dropping a one-ton (1800 pounds) bomb on a Gazan house in an attempt to liquidate Salah Shehadeh, a Hamas leader, in 2002. As “collateral damage” 13 civilians, mostly women and children, were killed and many others injured. Among the dead were Shehadeh's wife Layla and his 15-year-old daughter Iman, who happened to be with him in the house at the time. This act of mass murder was publicly described as “a war crime”, and Israeli military personnel were later indicted in Spain and the UK. </p> <p class="style2">If God does not punish Las Vegas then he owes an apology to Sodom, quipped Jay Leno. Likewise, if the initiators of the Qaddafi assassination attempt are not called to justice, then Europe owes an apology to the Israeli military. </p> <p class="style2">This assassination attempt should open the eyes of those in Europe and the US who still believe that this war is ‘just’, or at least ‘justifiable’. The true reasons behind Western neocolonial interventions in the Middle East now stand revealed to all. One small example: the same source in Russian Intelligence also leaked a <a href="http://pics.livejournal.com/kir_t34/pic/0002eg15/">document</a>, a letter from Libyan rebel leaders promising France 35 per cent of all Libyan oil. So much for humanitarian reasons! </p> <p class="style2">It appears more and more that the whole Libyan affair was done up with smoke and mirrors. Initially the Benghazi Uprising was nothing more than a small local riot; the rebellion was unknown in other cities. Soon, however, the government was destabilized by Al-Jazeera, as the popular Arab network broadcast the “news” that Muammar Qaddafi and his sons had fled the country for Venezuela and that his black mercenaries were about to unleash another holocaust on hapless Libyans. Al-Jazeera’s lies have proven to be more damaging even than NATO’s bombs; they have fought Qaddafi tooth and nail, from the first rebel yell to the last foul scene of murder. Even today, while the bodies of Qaddafi’s family were spread before Libyan churchmen, al-Jazeera continued to broadcast denials from Benghazi. Stephen Lendman correctly notes that “Jazeera has become a more efficient propaganda machine against the Arab minds than the BBC ever was”. The uprising was led by Guantanamo detainees like Abu Sufian Hamuda bin Kumu. Perhaps they should be put onto the next flight back to the USA: <em>thanks, but no thanks</em>. </p> <p class="style2">The Libyan campaign deserves to end like its predecessor,the Suez campaign – with the embarrassing withdrawal of NATO forces, and the sooner the better. Enough is enough! Let the Libyans solve their differences themselves. </p> <p class="style2"><strong>First Libya, Then Syria?</strong> </p> <p class="style2">Even as Libya settles into the typical intervention quagmire, developments in Syria are starting to heat up. While Russian President Medvedev did manage to override his own Foreign Office and Putin’s government, pulling off an abstention during the UNSC vote on the Libyan intervention, there is not the slightest chance for a similar trick regarding Syria. Syria has a Russian naval base in Tartus, practically the only base Russia has managed to keep out of the many Soviet bases lost, from Cuba to Vietnam. Moreover, Syria has a large Orthodox Christian community that openly supports President Bashar el Assad and is plainly nervous about the possible success of the Dera’a uprising. They believe the rebels are Salafist anti-Christian fanatics armed by the Saudis. Russia has always been the traditional protector of the Christian Orthodox in the Middle East, and is not likely to renege on its responsibilities towards these communities. </p> <p class="style2">The Syrian Christian view of the protesters was expressed by the Latin Patriarch of Antioch: </p> <blockquote> <p class="style2">“… some groups whose main objective is to provoke a violent response from the government are infiltrating the protests that originally grew from social and economic problems. Tension is stoked to the point of gaining the international community’s condemnation. There are criminals involved in the protest; there is a massive introduction of weapons in the country to provoke a confrontation... Sure, there are young, frustrated people, but many say that among them are criminals and even fundamentalist Muslims who cry for jihad. I think the tactics of a phony war are being used against Syria.” </p> </blockquote> <p class="style2">It’s likely that Russia will defend Syria even if its government decides to crush the protesters with an iron fist, just as Hafez el Assad quelled the 1982 Hama revolt. There is a <em>realpolitik</em> basis for this unconditional support: Bahrain is the base of the US Fifth fleet, and that’s why Bahrain’s rulers were allowed to suppress their “freedom seekers”; Syria is the main base for the Russian Mediterranean fleet and Russia intends to keep it that way. But there is an additional reason as well: the Syrians and their Russian friends believe that the riots are instigated by foreign agencies: Saudis, Americans, Israelis. They point out that the border town of Dera’a (besides being the place where Lawrence of Arabia was flogged and abused, by his own account in the <em>Seven Pillars of Wisdom</em>) is a hotbed for militant Islamic radicalism of the al Qaeda variety, and is located close to the Jordanian city of Ramtha, another safe-house for Muslim radicals heavily infiltrated by the Israeli secret services. </p> <p class="style2">A conspiracy theory? Perhaps, but it is a theory confirmed by the conspirators themselves. President Bashar el Assad was offered a deal by the US Under Secretary of Defense for Policy Michèle Flournoy: break your ties with Hezbullah and Iran, and we will end the riots. Mostafa Zein of the knowledgeable <em>Dar al Hayyat</em> summed it up like this: </p> <blockquote> <p class="style2">“The United States has drafted a roadmap for the Syrian regime, so that it may emerge from its worsening crisis, suggesting that it holds the magic key to make the protesters leave the streets. Flournoy said: “Syria must distance itself from Iran and join the Gulf states, as well as move forward in the peace process with Israel”… The Syrian regime considers such a roadmap to be a “conspiracy” targeting it from within, after the failure of pressure on it from abroad.” </p> </blockquote> <p class="style2">As in the case of Qaddafi, the Syrian leader is not totally blameless. But, like Qaddafi, Bashar el Assad can make things better by trusting in the Syrian people, namely:</p> <ul><li class="style2">By giving more freedom to the Syrian people and less to his <em>Mukhabarat</em>, the Internal Secret Service;</li><li class="style2"> By correcting an unjust distribution of wealth and government positions between the religious and ethnic communities of Syria (the minorities – Jews, Alawites, and Christians – have it too good at the expense of the Sunni majority); </li><li class="style2">By allowing political activity beyond the moribund Baath party;</li><li class="style2">By making peace with Muslim believers;</li><li class="style2">By permitting economic and social mobility and allowing elites to fail. </li></ul> <p class="style2">These goals can be obtained without catastrophic cataclysms and so they should. Granted, the Syrians have become bored with their staple diet; they want more variety. However, this desire must be achieved without destroying the country. </p> <p class="style2">Syria is needed for the Middle East: it is the centerpiece of <em>Mashreq</em>, the Fertile Crescent, the only state in the region not subdued by the US and Israel. It is the defender of Hezbullah and an important partner of Iran. Syria is the home of Hamas émigrés, home to hundreds of thousands of Palestinian and Iraqi refugees. Syria is the last refuge for the non-American Arab world. </p> <p class="style2">In Israel, there are two schools regarding Syria development: the conservatives and the adventurers. The conservatives say: ‘we lived for a long time alongside the Assads, and it was safe; let us keep it this way.’ The adventurers say: ‘let us undo Syria, break it to pieces, destroy Hezbollah, eliminate Iran’s forward base and make the world safe for a generation.’ Alarmingly, Netanyahu is developing more and more connections to adventurers. He may even try to attack Lebanon, thinking that Assad has his hands too full to get involved. However, such an attack might tempt Bashar el Assad to externalize his political problem by meeting their challenge. He may decide it is better to die a martyr in a war with the Zionist enemy than suffer the fate of Saddam and Qaddafi. David Hirst, the best British expert on the Middle East, prophesied about this war in his recent (2010) book <em>Beware of Small States</em>. This war may become a turning point for the Middle East, with far-reaching repercussions. </p> <p class="style2">There is a way out: let Turkey don the Ottoman mantle and guide the Middle East to safety. With Russian, Iranian and Chinese support, Turkey will be able to reassert its influence over its former provinces torn away by French and British armies in 1917. Regional problems should be solved regionally, without Western interference. </p> <p class="style2"><strong>Israel Shamir</strong> can be reached at <a href="mailto:adam@israelshamir.net">adam@israelshamir.net</a>. He thanks Paul Bennett for his input. </p> <span style="font-family:Verdana, Arial, Helvetica, sans-serif;font-size:-1;"> </span> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/libyan-war-crime.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:45:00-07:00">7:45 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5021858185540617866">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5021858185540617866" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1977901421056390429"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/contrarian-speculation-on-wall-streets.html">Contrarian Speculation on Wall Street’s Future</a> </h3> <div class="post-body entry-content"> <h1 class="documentFirstHeading">Pride and Prejudice: Contrarian Speculation on Wall Street’s Future</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Peter%20A.%20Coclanis">By Peter A. Coclanis</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">Why Larry Summers’s experience on Wall Street is cause for hope.</div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/april/pride-and-prejudice-contrarian-speculation-on-wall-streets-future/FeaturedImage" class="image-left" /> <p>It is a truth universally acknowledged that Larry Summers is really, really smart. All discussions regarding Summers start with bloodlines: He’s the son of two distinguished economists, and the nephew of not one, but two Nobel laureates in economics (Paul Samuelson and Kenneth Arrow). That said, Summers made the most of genetic good fortune, whizzing through the Massachusetts Institute of Technology and Harvard University, becoming at the age of 28 one of the youngest tenured professors in Harvard’s history. Working in a variety of fields in economics, he quickly rose to the top of the profession, and in 1993 was awarded the John Bates Clark Medal, awarded every two years by the American Economic Association to “that American economist under the age of forty who is judged to have made the most significant contribution to economic thought and knowledge.” Perhaps even more impressive is the fact that in 1987 Summers became the first social scientist to win the National Science Foundation’s Alan T. Waterman Award, made in recognition of “ the talent, creativity, and influence of a singular young researcher.”</p> <p>This story isn’t intended as a paean to Summers—he hardly needs a testimonial from me—so I’ll not tarry over his long career in public service or his shorter career as president of Harvard. Suffice it to say that, all things considered, no economist in the world can match his résumé. In light of his background and achievements, it was hardly surprising that shortly after vacating the presidency at Harvard he assumed a part-time position with a financial house, in this case the D.E. Shaw investment group in New York. The surprising thing was the way he was recruited, which is what I’d like to focus on here.</p> <blockquote class="pullquote">As part of the screening process, the folks at Shaw actually asked Summers—one of the world’s greatest economists—to solve math puzzles!</blockquote> <p>First, a word or two about Shaw. Almost from the time of its establishment in 1988, D.E. Shaw has been pushing the boundaries of computational finance, in so doing, developing a reputation as perhaps the geekiest quantitative investment house in New York, a financial nerdistan populated by scores of brilliant PhDs in math, computer science, economics, and engineering. Since April 2009, when reports first surfaced that Summers pocketed over $5 million in his last year at D.E. Shaw before joining the Obama administration as director of the National Economic Council, the media, when mentioning Summers and Shaw in the same story, have seldom missed an opportunity to highlight the economist’s earnings at the firm. Louise Story’s April 6, 2009, piece in the New York Times, entitled “A Rich Education for Summers (After Harvard)” is somewhat exceptional in this regard, for she focuses as much or more on the knowledge and insights Summers gained by working in such a stimulating environment.</p> <p>One little tidbit in Story’s article is worth a closer look, for it gives me at least a margin of hope about our much beleaguered financial community going forward. According to Story, as part of the screening process, the folks at Shaw actually asked Summers—one of the world’s greatest economists—to solve math puzzles! Talk about meritocracy (the firm, by the way, is said to accept only 1 of every 500 applicants). Equally impressive to me is the fact that Summers didn’t tell his grand inquisitors to take a hike or just walk out of the interview. He accepted their challenge, solved the math problems posed, and was offered a job. Tell me, where else in America, or, indeed, in the world, would a senior person with Summers’s track record be asked to bring it in this way? Nowhere.</p> <blockquote class="pullquote">Failure is indispensable to successful design. Problems virtually always arise when engineers innovate.</blockquote> <p>Now cynics reading this piece might suggest that this story is apocryphal or at the very least made up of cloth almost whole. I had the opportunity to speak with Summers last November when he was down at the University of North Carolina-Chapel Hill for an event sponsored by the UNC’s Global Research Institute, which I direct. While he was down here, we talked a bit about his hiring at Shaw and he confirmed that things occurred pretty much as outlined above. That’s when I started thinking about writing this article.</p> <p>The financial industry certainly has its problems and it deserves its fair share of the blame for the onset of the Great Recession. Moreover, quants and the innovative financial products they “engineered” were at the center of many of the problems that arose. But quants are human (more or less!) and engineering innovations of all types have always been prone to problems early on. Although one can take the analogy too far—obviously, the innovations produced by financial engineers are not based on physical laws in the same way that innovations in construction, electrical, or chemical engineering are—in all of these areas it is humans doing the innovating. And humans, being mortals, sometimes misjudge, miscalculate, and make mistakes.</p> <blockquote class="pullquote">To fully realize the potential of recent financial innovations, we need to develop more sophisticated models of financial markets, learn how to evaluate risk more accurately, and better understand the complexities of human behavior.</blockquote> <p>A quarter century ago, in his classic book <span style="font-style: italic;">To Engineer is Human</span>, Henry Petroski demonstrated rather convincingly that failure is indispensable to successful design. Problems virtually always arise when engineers innovate—think here of collapsing bridges, exploding engines, and crashing airplanes—and, once problems are exposed, engineers have generally set to work on such problems and been able to surmount them over time. In so doing, they have enhanced efficiency and improved people’s lives in many, many ways.</p> <p>A similar process will likely occur in financial engineering as well. In the past, other types of financial innovations—the discounting of bills of exchange, the creation of futures markets, the advent of non-investment grade (“junk”) bonds, etc.—have had rocky starts and have faced plenty of opposition. Over time, such innovations have generally proved their worth. The same may well hold true even for many of the so-called exotic financial instruments created in recent decades; certainly, some forms of securitization have already shown their value. To fully realize the potential of recent financial innovations, though, we need to develop more sophisticated models of financial markets, learn how to evaluate risk more accurately, and better understand the complexities of human behavior. We will need to make sure that we get right the context in which financial innovation occurs, whether through more effective regulation, better incentive structures, or more training in business ethics, if not all of these things.</p> <p>But I’m confident that we can do what is necessary, and I’d place my money in particular on places such as D.E. Shaw (which, admittedly, has been having a tough time of late), where brilliant people work and merit rules. Paul Volcker’s line about the ATM being the most important financial innovation of the past 25 years is a good one, but it might not be accurate if Wall Street’s meritorious quants can be tamed. Don’t bet against them.</p> <p><span style="font-weight: bold;">Peter A. Coclanis is Albert R. Newsome Distinguished Professor of History and director of the Global Research Institute at the University of North Carolina-Chapel Hill.</span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/contrarian-speculation-on-wall-streets.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:44:00-07:00">7:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1977901421056390429">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1977901421056390429" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1718185144099703372"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/economists-in-wild.html">Economists in the Wild</a> </h3> <div class="post-body entry-content"> <h1 class="documentFirstHeading">Economists in the Wild</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Steven%20F.%20Hayward">By Steven F. Hayward</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">Far from damaging brains and killing seals, applying basic economics to the environment preserves it.</div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/april/economists-in-the-wild/FeaturedImage" class="image-left" /> <p>The industrial revolution that began about 200 years ago has changed humanity’s relation to, and attitudes about, nature completely—and sometimes it has generated new views about God and nature, such as from the Transcendentalists of the 19th century. In the first half of the 19th century, Alexis de Tocqueville reflected that in America, civilization ended where the wilderness began; life along the frontier was one of “wretchedness,” and the wilderness itself generally “impenetrable.” To de Tocqueville, the scattered frontier settlers represented “an ark of civilization in the middle of an ocean of leaves.”<sup>i</sup> How different from the Puritans’ “errand into the wilderness” of the 17th century, or de Tocqueville’s rendering of the American frontier, is the Transcendentalist attitude toward the wilderness that quickly emerged along with industry, as best expressed in William Wordsworth’s poem:</p> <p style="margin-left: 40px;">One impulse from a vernal wood<br />May teach you more of man,<br />Of moral evil and of good<br />Than all the sages can.<sup>ii</sup></p> <p>Perry Miller, the great scholar of American Puritanism, reflects on the implications of the Transcendental view of nature:</p> <p style="margin-left: 40px;">From vernal wood (along with Niagara Falls, the Mississippi, and the prairies) [America] can learn more from that source more conveniently than from divine revelation? Not that the nation would formally reject the Bible. On the contrary, it could even more energetically proclaim itself Christian and cherish the churches; but it could derive its inspiration from the mountains, the lakes, the forests. There was nothing mean or niggling about these, nothing utilitarian. Thus, superficial appearances to the contrary, America was not crass, materialistic: it is Nature’s nation, possessing a heart that watches and receives.<sup>iii</sup></p> <p>In practical terms, we can see that in wealthy industrialized nations, it became no longer necessary for the vast majority of people to be “tillers of the soil,” securing a tenuous existence through sweaty labor over “cursed” ground. Indeed, in the United States and Europe over the last century, the proportion of the population engaged in farming has fallen from more than 75 percent to less than 5 percent.</p> <blockquote class="pullquote">The central insight of environmentalism is that humanity’s great leap in material progress has come at a high cost to nature.</blockquote> <p>The rapid material advance of the last 200 years has provided more comfortable lives in several meaningful ways: It has led to longer lifespans, conquest of diseases, and the ability of the human population to grow more rapidly and securely than at any time in previous history. (It also has provided the means of transforming social and family relations, liberating women from historically “women’s work” on the farm or in the home.) In other words, human ingenuity, technology, and innovation have largely succeeded, in wealthy nations at least, in approximating the abundance of the Garden of Eden.</p> <p>However, no exertion on humanity’s part, and no conceivable innovation in technology, can succeed in re-creating the original innocence of humans in the Garden of Eden. There is perhaps a corollary here: This approximation of Eden still partakes fully of human sin.</p> <p>The central insight of environmentalism is that humanity’s great leap in material progress has come at a high cost to nature: we tear down entire mountains for their minerals; divert rivers and streams and drain swamps to provide water for modern agriculture and urban use; clear large amounts of forests for other uses, often disrupting crucial habitat for rare animal species; and too often dump our waste byproducts thoughtlessly into the air, water, and land.</p> <blockquote class="pullquote">Human ingenuity, technology, and innovation have largely succeeded, in wealthy nations at least, in approximating the abundance of the Garden of Eden.</blockquote> <p>But this insight contains a paradox. Environmentalism arose precisely because we have mitigated the material harshness of human life through the Industrial Revolution; as Aldo Leopold, author of the classic environmental book A <span style="font-style: italic;">Sand County Almanac</span>, put it: “These wild things had little human value until mechanization assured us of a good breakfast.”<sup>iv</sup> It is no coincidence that environmental sensibility arose first and has its strongest influence in wealthy nations. The affluent society does not wish to be the effluent society. Meanwhile, the poorest and most undeveloped nations of Africa, Asia, and Latin America today suffer the worst environmental degradation and have the least public support for environmental protection. The wealth and technological innovation (spurred more by markets than government dictates) of industrialized nations provides the means for environmental improvement and remediation.</p> <p>Air and water pollution in the United States and Europe, for example, have fallen substantially over the last 40 years (and will continue to abate in the coming decades), although they are still worsening in most underdeveloped nations. Forestlands, according to recent United Nations (UN) data, are expanding in the United States, Europe, and parts of Asia, but are still contracting in underdeveloped nations.</p> <p>The point is that our conquest of nature through technology and material progress has enabled our increasing appreciation and concern for it. “The wilderness” is now regarded not as an inhospitable realm to avoid or conquer, but as a source of wonder to be celebrated and preserved. This change in outlook, however, extends beyond just our attitudes and sentiments: prosperity has also become the foundation for improving our environment.</p> <p style="font-weight: bold;">The Revolution in Environmental Economics</p> <p>At first sight, the connection between rising material standards and environmental improvement seems a paradox, because for a long time many considered material prosperity and population growth the irreversible engines of environmental destruction. Paul Ehrlich, the famous author of <span style="font-style: italic;">The Population Bomb</span>, which predicted that runaway population growth would lead to mass starvation and ecological devastation, offered a seemingly scientific formula for this relationship: I = PAT, where I = impact on the planet, P = population, A = affluence, and T = technology. In other words, to minimize our impact on the planet, there need to be fewer humans, we need to be poorer, and we need to have less technology.<sup>v</sup></p> <blockquote class="pullquote">Our conquest of nature through technology and material progress has enabled our increasing appreciation and concern for it.</blockquote> <p>In the 1970s, the common theme was that the world was in danger of running out of key natural resources perhaps as soon as the year 2000. The 1972 <span style="font-style: italic;">Limits to Growth</span> study, for example, predicted that the world would run out of gold, zinc, mercury, and oil before 1992;<sup>vi</sup> the U.S. government’s1980 <span style="font-style: italic;">Global 2000</span> report predicted that the world would face an oil shortage of 20 million barrels a day by 2000 and that oil would cost $100 a barrel. As recently as 1993, David Brower published a full-page ad in the New York Times featuring a headline that read, “Economics is a form of brain damage.” Not long before, at the 1992 Earth Summit in Rio de Janeiro, environmental activist Hazel Henderson suggested that economists should be sent to re-education camps.<sup>vii</sup></p> <p>Today, the “population bomb” looks very different than in 1968, and there has been a revolution in thought about how to regard resource scarcity. Far from experiencing runaway population growth, fertility rates have fallen so fast around the world that the UN now forecasts global population will peak sometime after mid-century—within the lifetime of young adults alive today—and then probably begin declining by the end of the century. There are many factors in the fertility rate decline, but the most powerful correlation appears to be the spread of individual freedom and democracy.</p> <p>Population growth is still the chief driver of serious environmental problems in the developing world, but it no longer appears that planet is fated to experience runaway population growth and mass starvation because of the simple fact that we have been able to expand food production much more quickly than population over the last two generations. Mass famines—once a regular occurrence in the human story—now seldom occur, and when they do chiefly result from wars or political disruptions rather than an intrinsic shortage of foodstuffs or basic resource constraints. In the light of this experience, the Evangelical Environmental Network’s “Declaration on the Care of Creation” strikes an obsolete note by saying that “these [environmental] degradations are signs that we are pressing against the finite limits God has set for creation. With continued population growth, these degradations will become more severe.”<sup>viii</sup></p> <blockquote class="pullquote">The role of markets and property rights in promoting environmental protection is conspicuously missing from most evangelical literature about the environment.</blockquote> <p>Environmental economics has undergone a revolution over the last generation as well, such that almost no environmentalist today would repeat Brower’s slogan that “economics is a form of brain damage.” To the contrary, one of the most widely accepted ideas in the field today is a concept known as the “Environmental Kuznets Curve” (EKC), named for Nobel laureate Simon Kuznets, who postulated in the 1950s that income inequality first increases and then declines with economic growth as nations develop and grow. Over the last two decades, more and more economists have come to recognize and provide empirical support for applying Kuznets’s concept to the environment.</p> <p>The EKC holds that the relationship between economic growth and environmental quality is an inverted U-shape, according to which environmental conditions deteriorate during early stages of economic growth, but begin to improve after a certain threshold of wealth is achieved. For example, not a single American city ranks among the World Bank’s ranking of the 50 most polluted cities in the world, and only one European city—Athens—makes the top 50. It is possible to observe the EKC in action in some developing nations where pollution is now falling after decades of growing worse. Air pollution in Mexico City, for example, has been falling for the last decade, though Mexico City still has a long way to go to match the progress of American cities.</p> <p>Recently surveying this new thinking, University of California physicist Jack Hollander concluded that “the essential prerequisites for a sustainable environmental future are a global transition from poverty to affluence, coupled with a transition to freedom and democracy.”<sup>ix</sup> Both the World Bank and the UN Environment Program recognize the applicability of the EKC in their latest thinking about sustainable development. The Evangelical Environmental Network’s “Declaration on the Care of Creation” gets this point right in its statement that “We recognize that poverty forces people to degrade creation in order to survive; therefore we support the development of just, free economies which empower the poor and create abundance without diminishing creation’s bounty.”<sup>x</sup></p> <p style="font-weight: bold;">Property Rights Preserve Nature</p> <blockquote class="pullquote">It is no coincidence that environmental sensibility arose first and has its strongest influence in wealthy nations.</blockquote> <p>At the heart of this economic development rest secure property rights. Just as environmentalists now more widely appreciate the role of economic incentives, the key role of property rights—often very insecure in undeveloped, undemocratic nations—is coming into sharper focus as well. Owning parts of nature—whether habitat or actual rare species—sounds counterintuitive to the secular mind (though plainly not to the Old Testament fathers), but more and more case studies demonstrate the effectiveness of property rights approaches to protecting the environment, from ocean fisheries to African and South American forests and even elephants. The role of markets and property rights in promoting environmental protection is conspicuously missing from most evangelical literature about the environment.<sup>xi</sup><br /><br />A simple thought experiment explains the logic of extending property rights to environmental goods. Suppose our beef cattle industry were organized the same way our ocean fishing tends to operate—a world in which ranchers did not have ranches surrounded by fences, but instead roamed the plains and shot or rounded up as many cows as they wanted. Obviously, we would run out of cows fairly soon because the incentives would be wrong; anyone who left a cow behind would be risking that someone else would get to it next. This is a well-known concept known as the “tragedy of the commons,” arising from the medieval practice in England of allowing anyone to graze as many animals as they wished to on public land. The land quickly became overgrazed. Yet this is exactly how we manage ocean fisheries—fish are a “common pool” resource in the ocean owned by no one, such that the perverse incentive for every individual fisher is to catch as many fish as possible. A fish left behind is a fish for someone else. This is the chief cause of the collapse of so many ocean fisheries.</p> <blockquote class="pullquote">Air and water pollution in the United States and Europe have fallen substantially over the last 40 years, although they are still worsening in most underdeveloped nations.</blockquote> <p>Some nations—Iceland and New Zealand are the best examples—have effectively preserved and expanded their fisheries through a property rights system known as “catch shares.” Essentially, this means designating ownership of territorial waters to individual fishers, who can buy, sell, and trade the rights to catch fish in the area. It is the oceanic equivalent of fencing ranchland for the private ownership and cultivation of cattle and sheep on land. In the United States, Maine’s once-threatened lobster industry adopted this approach, and today the lobster beds and lobster fishing industry are both thriving. Nations that have attempted to manage their fisheries through centralized bureaucratic management have been much less successful. Canada, for example, tried to prevent its Atlantic cod fisheries from collapse, starting 25 years ago with a bureaucratic regulatory program; yet the cod fisheries have continued toward catastrophic collapse.</p> <p>One can find many examples of property rights’ beneficent effects on other areas of environmental concern, such as endangered species and reforestation—often in less-developed nations. While Africa is still experiencing net deforestation, according to the UN’s most recent Global Forest Resources Assessment, significant reforestation is taking place in one African nation: Niger. New studies show that Niger is now greener than it was 30 years ago. “Millions of trees are flourishing,” New York Times reporter <span class="link-external"><a target="_blank" href="http://www.nytimes.com/2007/02/11/world/africa/11niger.html">Lydia Polgreen noted</a></span>; more than 7 million acres of land have been reforested “without relying on the large-scale planting of trees and other expensive methods often advocated by African politicians and aid groups for halting desertification.” What explains this turnaround? Polgreen outlines the role of property rights:</p> <p style="margin-left: 40px;">Another change was the way trees were regarded by law. From colonial times, all trees in Niger had been regarded as the property of the state, which gave farmers little incentive to protect them. Trees were chopped for firewood or construction without regard to the environmental costs. Government foresters were supposed to make sure the trees were properly managed, but there were not enough of them to police a country nearly twice the size of Texas.</p> <p style="margin-left: 40px;">But over time, farmers began to regard the trees in their fields as their property, and in recent years the government has recognized the benefits of that outlook by allowing individuals to own trees. Farmers make money from the trees by selling branches, pods, fruit and bark. Because those sales are more lucrative over time than simply chopping down the trees for firewood, the farmers preserve them.</p> <p>Far from damaging brains and killing seals, applying basic economics to the environment preserves it.</p> Steven F. Hayward is the F.K. Weyerhaeuser Fellow at the <span class="link-external"><a href="http://www.aei.org/" target="_blank">American Enterprise Institute</a></span>. This article is adapted from his book <span class="link-external"><a href="http://www.aei.org/book/100065" target="_blank"><span style="font-style: italic;">Mere Environmentalism: A Biblical Perspective on Humans and the Natural World</span></a></span> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/economists-in-wild.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:43:00-07:00">7:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1718185144099703372">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1718185144099703372" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1039997874439093398"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/why-isnt-china-democratizing.html">Why Isn’t China Democratizing?</a> </h3> <div class="post-body entry-content"> <h1 class="documentFirstHeading">Why Isn’t China Democratizing? Because It’s Not Really Capitalist</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Dan%20Blumenthal">By Dan Blumenthal</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">The presence of markets and economic exchange does not make a country capitalist.</div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/april/why-isn2019t-china-democratizing-because-it2019s-not-really-capitalist/FeaturedImage" class="image-left" /> <p>Why isn’t China democratizing? The Chinese Communist Party’s continued firm monopoly on political power is particularly puzzling to policy makers: China was supposed to liberalize after its abandonment of Maoist Communism. For Washington the stakes are high: it made a huge bet on Chinese democratization, assuming that if China was encouraged to enter the international economy it would become capitalist and then democratic. Accordingly, Washington has helped integrate China into the liberal international order. Yet Chinese democracy is nowhere to be found.</p> <p>Some analysts have tried to explain the absence of Chinese democracy by describing China’s political-economic system as a new form of “state” or “authoritarian” capitalism. This argument holds that the Party has found a way to have its cake and eat it too: it can be wealthy and authoritarian. If this argument is correct, the implications for the future of democracy and capitalism are profound. A new, successful “Beijing Model” of what some call “authoritarian capitalism” would break the relationship between free markets and political liberty. If Beijing has found a way to sever the capitalism-democracy link then the United States should re-think many of its foreign and economic policy assumptions. But fortunately for proponents of democracy and capitalism, China has not invented a new political-economic system of “authoritarian capitalism.” China is definitely authoritarian but it is not really capitalist at all.</p> <blockquote class="pullquote">Washington has helped integrate China into the liberal international order. Yet Chinese democracy is nowhere to be found. </blockquote> <p>At first glance, the notion that China is not capitalist seems preposterous. Much of China’s economy is organized around market principles and the country is deeply embedded in the international trading and production system. But the presence of markets and economic exchange does not make a country capitalist. The “founding fathers” of capitalism conceived of it as a moral and social order—a way of ordering economic as well as social life.</p> <p>At base, the capitalist order is supposed to provide its citizens with three things. First, it provides the opportunity for all citizens to become wealthier. Second, capitalism encourages maximum individual liberty. Citizens are free to pursue the work they want and are rewarded based on enterprise and initiative rather than birthright. At the core of this idea is the notion that property rights are sacrosanct. Individuals own what they buy or make, and are then free to invest, save, and give away charity as they please. Third, capitalism is supposed to ennoble public virtues by encouraging free exchange among citizens and opportunities for self-betterment. Capitalism frees individuals to develop the “better angels of their nature”—sympathy, generosity, integrity, self-reliance, and self-restraint. All of these virtues are conducive to a system of political liberty and democracy. That is why democracy theorists and policy makers assume that free markets are a necessary if not sufficient condition of democracy.</p> <blockquote class="pullquote">Some analysts have tried to explain the absence of Chinese democracy by describing China’s political-economic system as a new form of ‘state’ or ‘authoritarian’ capitalism. </blockquote> <p>But the Chinese system has made good on only one of these promises, albeit on a massive scale. Almost all Chinese citizens are better off since the abandonment of Maoism. This is no small achievement. Since Chinese leaders allowed markets to operate in the Chinese economy, hundreds of millions of Chinese people have been lifted out of poverty. But individual liberty consistent with a capitalist order is severely curtailed. Physical and intellectual property are owned by the state and the Party puts stringent restrictions on where a Chinese citizen can invest and save money or give away acquired wealth. “Private” entrepreneurs are at the whim of the Party for the resources they require to form and run enterprises: financing, land, and the enforcement of contracts. Most remarkably, a Chinese citizen is even told how many children to have. A state that engages in forced family planning is shockingly at variance with capitalism’s core tenets.</p> <p>The last of capitalism’s promises—the ennobling of virtue—has also been undermined by the Chinese state. Absent freedom of association, freedom of religion, and the protection of individual rights, it is very difficult for citizens to be virtuous. The Chinese state prohibits the formation of organizations that it cannot control, thus suppressing charity. In capitalist societies, virtues such as generosity, public spiritedness, and sympathy are often expressed through religious practice. But the Chinese state has repressed religious institutions as well. Moreover, without the protection of property rights or contracts, it is difficult for a Chinese entrepreneur to maintain integrity. It is therefore no surprise that corruption and cheating are endemic to China. And since the state controls the resources the entrepreneur needs, self-reliance cannot flourish.</p> <blockquote class="pullquote">A state that engages in forced family planning is shockingly at variance with capitalism’s core tenets. </blockquote> <p>The Chinese people are obviously very enterprising and capable of great generosity. Indeed, under China’s repressive social and economic arrangements, it is remarkable that Chinese entrepreneurs have done as well as they have. And the outpouring of charity after the Sichuan earthquake showed that the Chinese people can be animated by public-spiritedness. The growth of religion in China despite efforts to repress it means Chinese are searching for deeper meaning and values beyond Deng Xiaoping’s famous admonition to his people that “to get rich is glorious.” For many Chinese, getting rich is not enough. But China’s repressiveness is corrosive of the spirit of capitalism—the empowering of citizens to better themselves morally as well as materially. This is not just a problem for Chinese people searching for greater meaning in their lives. It is a problem for capitalism. Masses of people have become cynical about a “capitalist” system that makes good on only one of capitalism’s three promises.</p> <p>Recently, Premier Wen Jiabao has taken to mentioning his admiration for Adam Smith, capitalism’s most prominent theorist. But if Premier Wen wants China to remain a dictatorship, then Smith’s teaching should scare him. Smith never used the word capitalism in his writing—he spoke of “a system of natural liberty.” This system, today called capitalism, has been a successful training camp for self-government precisely because it has permitted citizens the liberty to pursue self-betterment and self-reliance tempered by virtues such as restraint and sympathy. Capitalists have thus played leading roles in democratic transitions. They have been powerful forces for change, making ever greater claims against state injustice and rapaciousness. But in China, entrepreneurs are dependent upon or given special privileges by the state. The incentive or even opportunity to form a distinct “class” of burgeoning democrats does not yet exist. Absent the existence of such a class whose interests sometimes clash with the state, the formation of democracy is very unlikely.</p> <p>The Chinese Communist Party has managed to benefit from the employment of some market principles to grow the Chinese economy and essentially buy off many of its people through the provision of material gains. But this social compact is increasingly unsatisfactory to many Chinese, who are searching for meaning beyond riches. The current economic arrangements in China are not capitalist—“authoritarian,” “state,” or otherwise. Rather, China mixes markets with heavy doses of mercantilism and corporatism. This socioeconomic order is meant to strengthen the state rather than the individual. Until Premier Wen and his comrades allow Adam Smith’s capitalism to take root, China will simply remain a more prosperous dictatorship.</p> <p><span style="font-weight: bold;">Dan Blumenthal is a resident fellow at the <span class="link-external"><a href="http://www.aei.org/" target="_blank">American Enterprise Institute</a></span>.</span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/why-isnt-china-democratizing.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:42:00-07:00">7:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1039997874439093398">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1039997874439093398" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5785787392227227943"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/fed-vs-fdic-on-lehmans-failure.html">The Fed vs. the FDIC on Lehman’s Failure</a> </h3> <div class="post-body entry-content"> <h1 class="documentFirstHeading">The Fed vs. the FDIC on Lehman’s Failure</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Peter%20J.%20Wallison">By Peter J. Wallison</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">A recent FDIC report on Lehman Brothers’s financial condition before its failure puts in doubt the Federal Reserve’s account of its decision- making, and raises significant questions about the nature of the financial crisis.</div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/april/the-fed-vs-the-fdic-on-lehmans-failure/FeaturedImage" class="image-left" /> <p>As we all know, the 2008 financial crisis began in earnest when Lehman Brothers filed for bankruptcy. It has always been a question why Lehman was allowed to fail when Bear Stearns—a smaller firm—was rescued with $30 billion of Federal Reserve financial support to JP Morgan Chase. Questions were even more pointed when the Fed rescued AIG only days after it let Lehman descend into bankruptcy. Now the U.S. Federal Deposit Insurance Corporation (FDIC) has shed its own light on the issue. In <span class="link-external"><a target="_blank" href="http://www.fdic.gov/bank/analytical/quarterly/2011_vol5_2/lehman.pdf">a report</a></span> last week, the FDIC claimed that the losses would have been far smaller than initially estimated if Lehman Brothers had received government financial support to avert its bankruptcy and eventually been wound down or sold.</p> <blockquote class="pullquote">The trigger for the financial crisis, in other words, appears to have been the market’s loss of confidence in a solvent firm.</blockquote> <p>After the calamitous market reaction to Lehman’s failure in September 2008, the Treasury Department and the Fed initially argued that the Fed did not have the legal authority to rescue Lehman. This turned out to be a bit of obfuscation when a Fed lawyer testified to the Financial Crisis Inquiry Commission that it was only necessary for the Fed’s Board of Governors to have adopted an appropriate resolution. In his testimony to the FCIC, Fed Chairman Ben Bernanke did not dispute this fact, but said it would not have been responsible to rescue Lehman because it was so far under water that the Fed would simply have been throwing good money after bad. “There was not nearly enough collateral to provide enough liquidity to meet the run [on Lehman]. The company would fail anyway, and the Federal Reserve would be left holding this very illiquid collateral, a very large amount of it.” In other words, the Fed did not save Lehman the way it saved Bear because Lehman simply did not have enough available collateral to protect the Fed against losses if it attempted, with liquidity support, to stop the run.</p> <p>In its new report, however, the FDIC claims that if it had been able to use the resolution powers later granted under the Dodd-Frank Act, losses to Lehman’s creditors would have been limited to three cents on the dollar—far less than the losses Bernanke had suggested. Given the uncertainties associated with the facts of the Lehman case and the FDIC’s own inexperience with resolving nonbank financial institutions, one should take this estimate with a large grain of salt.</p> <blockquote class="pullquote">The FDIC’s contention that Lehman’s creditors would have lost only three cents on the dollar again calls into question the U.S. government’s decision to let Lehman fail.</blockquote> <p>Still, if it is anywhere close to reality, the FDIC’s contention that Lehman’s creditors would have lost only three cents on the dollar again calls into question the U.S. government’s decision to let Lehman fail. Clearly, after Bear Stearns’s rescue, the financial markets were assuming that the United States would rescue all larger firms. This was confirmed by <span class="link-external"><a target="_blank" href="http://lehmanreport.jenner.com/">Anton Valukas’s report</a></span> as an examiner for the U.S. bankruptcy court. Most market participants, he reported, including Lehman, could not imagine why the Fed would rescue Bear Stearns and not Lehman. When Lehman was allowed to fail, market participants realized that they did not know who would survive and who would not. A massive panic ensued as financial institutions hoarded cash.</p> <p>Indeed, in the Valukas and FDIC accounts, Lehman does not look like the basket case Bernanke portrayed. According to the Valukas report, Lehman had raised at least $10 billion dollars in additional capital in April and June 2008, and the FDIC noted that in September 2008—the month Lehman filed for bankruptcy—the firm had equity and subordinated debt of $35 billion. It also had $50 to $70 billion in impaired assets of questionable value, most of which had been identified by the diligence examinations of various suitors. Assuming a loss ratio of 60 to 80 percent on these assets, the FDIC estimated that Lehman in liquidation would have lost about $5 billion.</p> <blockquote class="pullquote">When Lehman was allowed to fail, market participants realized that they did not know who would survive and who would not. A massive panic ensued as financial institutions hoarded cash.</blockquote> <p>The difference between the FDIC and the Fed about the financial condition of Lehman before its failure is no small matter. It not only puts in doubt the Fed’s account of its decision-making, but it also raises significant questions about the nature of the financial crisis. If Lehman’s creditors would have lost only 3 percent in a liquidation, the firm might actually have been solvent as a going concern. As difficult as it is to imagine, the trigger for the financial crisis, in other words, could have been the market’s loss of confidence in a solvent firm.</p> <p>The financial crisis was triggered by the meltdown of the U.S. housing bubble, which in turn caused the collapse of the market for mortgage-backed securities. With that market gone, mark-to-market accounting required the write-down of asset values on the balance sheets of financial institutions around the world. In many cases, these losses turned out to be temporary accounting losses. U.S. banks today are adding back into their earnings the heavy provisions that they had made for losses on mortgage-backed securities. Was the financial crisis, then, a recognition of real losses and weaknesses in the financial system—as initially portrayed—or only a world-class panic induced by investor uncertainty about the scope of housing losses, made worse by a series of major policy-maker errors?</p> <p style="font-weight: bold;">Peter J. Wallison is the Arthur F. Burns Fellow in Financial Policy Studies at the <span class="link-external"><a href="http://www.aei.org/" target="_blank">American Enterprise Institute</a></span>. He was a member of the Financial Crisis Inquiry Commission.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/fed-vs-fdic-on-lehmans-failure.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T19:41:00-07:00">7:41 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5785787392227227943">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5785787392227227943" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1036389892397851980"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/paul-craig-roberts-osama-bin-ladens_05.html">Paul Craig Roberts: Osama bin Laden's Useful Death 2/2</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/paul-craig-roberts-osama-bin-ladens_05.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T13:55:00-07:00">1:55 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1036389892397851980">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1036389892397851980" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3022382615311877733"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/paul-craig-roberts-osama-bin-ladens.html">Paul Craig Roberts: Osama bin Laden's Useful Death 1/2</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/paul-craig-roberts-osama-bin-ladens.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T13:54:00-07:00">1:54 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3022382615311877733">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3022382615311877733" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1061048183753915932"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/war-ron-paul-and-conservatism.html">War, Ron Paul, and Conservatism</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/war-ron-paul-and-conservatism.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-05T12:05:00-07:00">12:05 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1061048183753915932">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1061048183753915932" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <h2 class="date-header"><span>Wednesday, May 4, 2011</span></h2> <div class="post-outer"> <div class="post hentry"> <a name="1864175633803639227"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/assange-facebook-appalling-spying.html">Assange: Facebook 'an appalling spying machine'</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/05/assange-facebook-appalling-spying.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-05-04T22:17:00-07:00">10:17 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1864175633803639227">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1864175633803639227" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="6754615131635105677"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/05/in-afghanistan-no-time-to-celebrate.html">In Afghanistan, No Time to Celebrate</a> </h3> <span class="timestamp published" title="2011-05-04T12:00:38+00:00"> <span class="date"><br /><em></em></span></span> <h3 class="entry-title"><span style="font-size:180%;"><a href="http://atwar.blogs.nytimes.com/2011/05/04/in-afghanistan-no-time-to-celebrate/" rel="bookmark" title="Permanent Link to In Afghanistan, No Time to Celebrate">In Afghanistan, No Time to Celebrate</a></span></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/first-lt-holly-hernandez/" class="url fn" title="See all posts by FIRST LT. HOLLY HERNANDEZ">FIRST LT. HOLLY HERNANDEZ</a></address> <div class="entry-content"><div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-a-soldier-writes.gif" alt="Commentary: A Soldier Writes" /></div> <p>Osama bin Laden is dead. The news was announced in tickers, as I entered my office at Bagram Airfield in Afghanistan on Monday morning. Everyone was gathered around the television, intently sitting on the edge of their black swivel chairs. “All right, let’s pack up now — it’s time to go home,” one of the sergeants in the room said. “I want to see a death certificate,” our chiseled former infantry first sergeant said. “We all know Donald Trump is going to demand to see one.” The blond newscaster described how Bin Laden had been hiding in a luxurious compound 60 miles outside of Islamabad. She exclaimed, “Who would have thought he would be hiding in Pakistan all along?” One sergeant jumped up, muttering, “I would have thought that.” We all laughed. </p> <p>It is difficult to watch some of these news stories. President Hamid Karzai’s reaction to the capture was to say: “Every day we have said that the war on terror is not in Afghan villages, not in Afghan houses of the poor and oppressed. The war against terrorism is in its sources, in its financial sources, its sanctuaries, in its training bases, not in Afghanistan.” And yet I am still here. Here in Afghanistan, a country that by its president’s own admission is “war weary.” This is my first deployment; I have been here 10 months, and I can assure you I am tired of working every day. Weekends don’t exist in war zones. It is difficult to fathom the degree of exhaustion for a country continually at war for years. </p> <p> <a href="http://atwar.blogs.nytimes.com/2011/05/04/in-afghanistan-no-time-to-celebrate/#more-34397" class="more-link">Read more…</a></p> </div> <div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/05/04/in-afghanistan-no-time-to-celebrate/">1 Comment</a></li><li class="email-this"><form method="post" name="emailThis_34397" id="emailThis_34397" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/05/04/in-afghanistan-no-time-to-celebrate/?pagemode=print" rel="nofollow">Print</a></li><li id="share34397" class="closed share"><a id="sharebox34397"> Share</a> <ul class="hide" id="sharelist34397" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34397" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34435"> <span class="timestamp published" title="2011-05-04T08:54:13+00:00"> <span class="date">May 4, 2011, <em>8:54 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/05/04/bin-ladens-killing-helps-presidents-poll-numbers/" rel="bookmark" title="Permanent Link to Bin Laden’s Killing Helps President’s Poll Numbers">Bin Laden’s Killing Helps President’s Poll Numbers</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/at-war/" class="url fn" title="See all posts by AT WAR">AT WAR</a></address> <div class="entry-content"><p>Our colleagues James Dao and Dalia Sussman report that the operation in Pakistan that killed Osama bin Laden has given <a href="http://www.nytimes.com/2011/05/05/us/politics/05poll.html">President Obama a sharp bump in his job performance approval rating</a> among both Republican and Democratic voters, climbing to 57 percent from 46 percent in April. Many more Americans now approve of the job he is doing as president and of the way he is handling foreign policy, the war in Afghanistan and the threat of terrorism, according to the latest New York Times/CBS News poll.</p> <div class="w190 right"><img src="http://graphics8.nytimes.com/images/2011/05/04/blogs/atwar-poll/atwar-poll-articleInline.jpg" id="100000000803410" alt="" width="190" height="98" /><span class="credit">The New York Times</span> <span class="caption">Click <a href="http://www.nytimes.com/interactive/2011/05/04/us/20110504-the-presidents-approval-rating-after-bin-laden.html">here</a> for poll results.</span></div> <p>However, the poll also revealed that the euphoric response to Bin Laden’s death was hemmed in by worries that his killing could set off retaliatory attacks from terrorist groups in the short term. More than 6 in 10 Americans said that killing Bin Laden was likely to increase the threat of terrorism against the United States in the short term. A large majority also said that the death of the leader of Al Qaeda did not make them feel any safer. Just 16 percent said they personally felt more safe now. </p> <p>The New York Times/CBS Poll found that while nearly half of Americans thought the nation should decrease troops levels in Afghanistan, more than six in 10 felt that the American mission there was not finished, despite Bin Laden’s death. That would suggest that public opinion is not clear on when or how the United States should leave Afghanistan. </p> <p> <a href="http://atwar.blogs.nytimes.com/2011/05/04/bin-ladens-killing-helps-presidents-poll-numbers/#more-34435" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/05/04/bin-ladens-killing-helps-presidents-poll-numbers/">Add a comment</a></li><li class="email-this"><form method="post" name="emailThis_34435" id="emailThis_34435" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/05/04/bin-ladens-killing-helps-presidents-poll-numbers/?pagemode=print" rel="nofollow">Print</a></li><li id="share34435" class="closed share"><a id="sharebox34435"> Share</a> <ul class="hide" id="sharelist34435" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34435" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34349"> <span class="timestamp published" title="2011-05-03T12:28:18+00:00"> <span class="date">May 3, 2011, <em>12:28 pm</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/05/03/we-got-him/" rel="bookmark" title="Permanent Link to ‘We’ Got Him">‘We’ Got Him</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/rebekah-sanderlin/" class="url fn" title="See all posts by REBEKAH SANDERLIN">REBEKAH SANDERLIN</a></address> <div class="entry-content"><div class="w480"><img src="http://graphics8.nytimes.com/images/2011/05/03/blogs/atwar-we-got-him/atwar-we-got-him-blog480.jpg" id="100000000801860" alt="People gathered in New York's Times Square on Sunday night to celebrate the news of Osama bin Laden's death." width="480" height="320" /><span class="credit">Chip East/Reuters</span><span class="caption">People gathered in New York’s Times Square on Sunday night to celebrate the news of Osama bin Laden’s death.</span></div> <div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-voices.gif" alt="Voices" /></div> <p> In early November 2004, I kissed my husband goodbye as he left for his first deployment to Afghanistan. I told him, my voice trembling as he walked toward the war, “Go and kill Bin Laden.” </p> <p>Seven and a half years later, after three deployments to Afghanistan and five elsewhere, we learned with the rest of the world that the terrorism mastermind was dead. We watched on television as people around the country waved flags and sang the national anthem, celebrating the end of a man who had caused so much pain for so many.</p> <p>It was a very good day, a day that stood in stark contrast to that day in November 2004 when my and my husband’s portion of the war began. </p> <p>I tried to look brave that day as I bid goodbye to the love of my life, wondering if I would ever see him again. Just three weeks earlier I had given birth to our first child and, with that tiny baby hanging from the crook of my arm in his infant carrier, I watched my lifeline walk away. I had no idea how to be a mother or what to expect from the coming months. I was alone in a military town where I had very few friends and no family members, and I didn’t want my husband to know that I was scared. <a href="http://atwar.blogs.nytimes.com/2011/05/03/we-got-him/#more-34349" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/05/03/we-got-him/">30 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34349" id="emailThis_34349" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/05/03/we-got-him/?pagemode=print" rel="nofollow">Print</a></li><li id="share34349" class="closed share"><a id="sharebox34349"> Share</a> <ul class="hide" id="sharelist34349" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34349" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34331"> <span class="timestamp published" title="2011-05-03T06:48:40+00:00"> <span class="date">May 3, 2011, <em>6:48 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/05/03/bin-ladens-death-expected-to-have-little-impact-on-al-qaeda-in-iraq/" rel="bookmark" title="Permanent Link to Bin Laden’s Death Expected to Have Little Impact on Al Qaeda in Iraq">Bin Laden’s Death Expected to Have Little Impact on Al Qaeda in Iraq</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/michael-s-schmidt/" class="url fn" title="See all posts by MICHAEL S. SCHMIDT">MICHAEL S. SCHMIDT</a></address> <div class="entry-content"><div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-baghdad-bureau.gif" alt="Baghdad Bureau" /></div> <p> BAGHDAD — Eight years ago <a href="http://topics.nytimes.com/top/reference/timestopics/people/b/osama_bin_laden/index.html">Osama bin Laden</a> called on his followers to head to Iraq to fight the United States. Within months, Al Qaeda in Mesopotamia took form, eventually allying itself with militants from the country’s Sunni minority. The group took a leading role in the insurgency that plunged Iraq into a bloody sectarian war. </p> <p>Today, Al Qaeda in Mesopotamia is a shell of the organization that was once led by Abu Musab al-Zarqawi, the one that beheaded hostages on camera and controlled significant portions of the country.</p> <p>Although the group still conducts attacks across Iraq — typically roadside bombs, suicide bombings and assassinations — the number of violent incidents the group has been involved in has plummeted since the height of the sectarian war in 2006.</p> <p>“We hear about a few operations here or there of Al Qaeda trying to send a message that it is still in” Iraq, said Samir al-Mahemdi, a lawyer in Falluja and an expert on extremist groups. <a href="http://atwar.blogs.nytimes.com/2011/05/03/bin-ladens-death-expected-to-have-little-impact-on-al-qaeda-in-iraq/#more-34331" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/05/03/bin-ladens-death-expected-to-have-little-impact-on-al-qaeda-in-iraq/">3 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34331" id="emailThis_34331" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/05/03/bin-ladens-death-expected-to-have-little-impact-on-al-qaeda-in-iraq/?pagemode=print" rel="nofollow">Print</a></li><li id="share34331" class="closed share"><a id="sharebox34331"> Share</a> <ul class="hide" id="sharelist34331" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34331" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34299"> <span class="timestamp published" title="2011-05-02T08:08:05+00:00"> <span class="date">May 2, 2011, <em>8:08 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/05/02/thoughts-on-bin-ladens-death-after-10-years-at-war/" rel="bookmark" title="Permanent Link to Thoughts on Bin Laden’s Death After 10 Years at War">Thoughts on Bin Laden’s Death After 10 Years at War</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/stephen-farrell/" class="url fn" title="See all posts by STEPHEN FARRELL">STEPHEN FARRELL</a></address> <div class="entry-content"><div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-voices.gif" alt="Voices" /></div> <p> It has been nearly a decade since Osama bin Laden’s Al Qaeda carried out the most devastating attack on American soil. Many of our readers are in the armed forces and have had their lives changed profoundly since that day in September 2001. We would like to hear from you. Share your thoughts about the news of <a href="http://www.nytimes.com/2011/05/02/world/asia/osama-bin-laden-is-killed.html">Bin Laden’s death</a> and how the post-9/11 world has affected your life.</p> <p>Whether you’re in the armed forces or are a civilian in America or in Iraq, Pakistan or Afghanistan, At War is interested in knowing how much and in what ways your life was changed by the events of Sept. 11. Were you at school a decade ago? Were you in a different career? Did you enlist in the armed forces after Sept. 11 — because of the events of that day? Where has it taken you? What have you learned? Has it directly affected your family? And what do you think America and its allies should do now, in Afghanistan, Pakistan, Iraq and elsewhere?</p> <p>Post a comment below.</p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/05/02/thoughts-on-bin-ladens-death-after-10-years-at-war/">11 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34299" id="emailThis_34299" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/05/02/thoughts-on-bin-ladens-death-after-10-years-at-war/?pagemode=print" rel="nofollow">Print</a></li><li id="share34299" class="closed share"><a id="sharebox34299"> Share</a> <ul class="hide" id="sharelist34299" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34299" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34279"> <span class="timestamp published" title="2011-05-01T22:51:22+00:00"> <span class="date">May 1, 2011, <em>10:51 pm</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/05/01/bin-laden-is-dead-u-s-official-says/" rel="bookmark" title="Permanent Link to Bin Laden Is Dead, President Obama Says">Bin Laden Is Dead, President Obama Says</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/the-new-york-times/" class="url fn" title="See all posts by THE NEW YORK TIMES">THE NEW YORK TIMES</a></address> <div class="entry-content"><p> </p><div class="w480"><br /> </div> <p><a href="http://www.nytimes.com/2011/05/02/world/asia/osama-bin-laden-is-killed.html">Osama bin Laden has been killed</a>, President Obama announced Sunday night, almost 10 years after the September 11 attacks on the World Trade Center and the Pentagon. </p> <p>The text of the president’s television address is <a href="http://www.nytimes.com/2011/05/02/world/middleeast/02obama-text.html">here.</a> The Times describes the <a href="http://www.nytimes.com/2011/05/02/nyregion/amid-cheers-a-message-they-will-be-caught.html">scenes</a> at the World Trade Center, Times Square and Washington. Our colleagues on The Lede blog are also following reaction from around the world, <a href="http://thelede.blogs.nytimes.com/2011/05/02/following-the-reaction-to-bin-ladens-death/?hp">here,</a> and political reaction on The Caucus blog, <a href="http://thecaucus.blogs.nytimes.com/2011/05/02/after-killing-of-bin-laden-reaction-pours-in/?hp">here.</a></p> <p>From Kabul, The New York Times’s bureau chief Alissa J. Rubin writes, <a href="http://atwar.blogs.nytimes.com/%3Cbr%20/%3Ehttp://www.nytimes.com/2011/05/03/world/asia/03afghanistan.html">‘Afghans Fear West May See Death as the End’:</a></p> <blockquote><p>KABUL, Afghanistan — In Afghanistan, where Osama bin Laden was based for many years and where Al Qaeda helped to train and pay insurgents, there was relief and uncertainty about how his death would play out in the fraught regional power politics now shaping the war.</p> <p>While senior political figures welcomed the news of his death, they cautioned that it did not necessarily translate into an immediate military victory over the Taliban, and urged the United States and NATO not to use it as a reason to withdraw…</p> <p>Former members of the Taliban who are now part of the reconciliation efforts with the movement said they believed that Bin Laden’s death would drive the Taliban to make a deal to stop fighting and become a political force in Afghanistan.</p> <p>The Afghan Taliban had no immediate statement.</p></blockquote> <p>Of Pakistan’s role, Times correspondent Jane Perlez <a href="http://atwar.blogs.nytimes.com/%3Cbr%20/%3Ehttp://www.nytimes.com/2011/05/03/world/asia/03pakistan.html">writes:</a></p> <blockquote><p>The killing of Osama bin Laden deep inside Pakistan in an American operation, almost in plain sight in a medium-sized city that hosts numerous Pakistani forces, seems certain to further inflame tensions between the United States and Pakistan and raise significant questions about whether elements of the Pakistani spy agency knew the whereabouts of the leader of Al Qaeda.</p> <p>The presence of Bin Laden in Pakistan, something Pakistani officials have long dismissed, goes to the heart of the lack of trust Washington has felt over the last 10 years with its contentious ally, the Pakistani military and its powerful spy partner, Inter-Services Intelligence. </p></blockquote> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/05/01/bin-laden-is-dead-u-s-official-says/">4 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34279" id="emailThis_34279" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/05/01/bin-laden-is-dead-u-s-official-says/?pagemode=print" rel="nofollow">Print</a></li><li id="share34279" class="closed share"><a id="sharebox34279"> Share</a> <ul class="hide" id="sharelist34279" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34279" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34211"> <span class="timestamp published" title="2011-04-28T09:54:11+00:00"> <span class="date">April 28, 2011, <em>9:54 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/28/stanford-debates-r-o-t-c-s-return/" rel="bookmark" title="Permanent Link to Stanford Debates R.O.T.C.’s Return">Stanford Debates R.O.T.C.’s Return</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/tim-hsia/" class="url fn" title="See all posts by TIM HSIA">TIM HSIA</a></address> <div class="entry-content"><p><span id="t10h18m" class="update"><strong> April 29, 10:18 a.m. | Vote Results</strong></span> After two hours of debate, the Stanford faculty senate voted to bring ROTC back on campus: 28 members voted for its return, 9 voted against it and 3 abstained. During the faculty senate meeting, Former Secretary of Defense William Perry discussed how bringing ROTC back to Stanford could help the military by providing better trained and educated leaders. Much of the debate was centered on the military’s posture toward transgendered people and also on whether academic credit would be granted to ROTC courses. An amendment to the resolution of bringing ROTC back to campus was added that stated the faculty senate’s objection concerning the military’s treatment towards transgender people.</p> <div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-a-soldier-writes.gif" alt="Commentary: A Soldier Writes" /></div> <p>Since Congress voted to end the “don’t ask, don’t tell” law, several “elite” universities, including Harvard and Columbia, have decided to <a href="http://www.nytimes.com/2011/03/04/education/04rotc.html">reinstate R.O.T.C.</a> programs. Stanford might be next. Last week, an ad hoc R.O.T.C. committee at the university <a href="http://facultysenate.stanford.edu/2010_2011/reports/SenD6491_ROTC_rpt_April_2011.pdf">unanimously recommended</a> that President John L. Hennessy invite the program back on campus. Today, the Stanford Faculty Senate is expected to support the idea as well. </p> <p>R.O.T.C., the Reserve Officers Training Corps, is a program for college students. R.O.T.C. cadets supplement their undergraduate academic curriculum with military and leadership training. Upon graduating and successfully completing the program, college seniors are commissioned as second lieutenants. Roughly 60 percent of <a href="http://www.goarmy.com/rotc/legacy-and-value.html">newly commissioned officers </a> in the Army come from R.O.T.C. programs, and more than 40 percent of general officers in the Army are R.O.T.C. graduates. The military pays for many cadets’ entire undergraduate education. <a href="http://atwar.blogs.nytimes.com/2011/04/28/stanford-debates-r-o-t-c-s-return/#more-34211" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/28/stanford-debates-r-o-t-c-s-return/">6 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34211" id="emailThis_34211" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/28/stanford-debates-r-o-t-c-s-return/?pagemode=print" rel="nofollow">Print</a></li><li id="share34211" class="closed share"><a id="sharebox34211"> Share</a> <ul class="hide" id="sharelist34211" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34211" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34193"> <span class="timestamp published" title="2011-04-27T17:34:41+00:00"> <span class="date">April 27, 2011, <em>5:34 pm</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/27/court-rules-against-v-a-on-fiduciaries/" rel="bookmark" title="Permanent Link to Court Rules Against V.A. on Fiduciaries">Court Rules Against V.A. on Fiduciaries</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/john-schwartz/" class="url fn" title="See all posts by JOHN SCHWARTZ">JOHN SCHWARTZ</a></address> <div class="entry-content"><p>A federal appeals court has told the Department of Veteran’s Affairs to loosen its grip on benefits decisions for veterans who have been declared incompetent.</p> <p>The department appoints fiduciaries to manage the benefits of veterans who are no longer able to take care of themselves. There are 110,000 veterans’ accounts under fiduciary management, and the total value is about $3.2 billion.</p> <p>Veterans’ families have argued in several recent cases that they do not want the financial minders appointed by the department, as an <a href="http://www.nytimes.com/2011/04/08/us/08vets.html">article in The New York Times </a>reported earlier this month. </p> <p>When families have sued, however, the department has generally argued that while families may have input in the decision to appoint a fiduciary, once the minder is in place the relationship is solely within the jurisdiction of the Department of Veterans Affairs and is not subject to judicial review. <a href="http://atwar.blogs.nytimes.com/2011/04/27/court-rules-against-v-a-on-fiduciaries/#more-34193" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/27/court-rules-against-v-a-on-fiduciaries/">2 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34193" id="emailThis_34193" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/27/court-rules-against-v-a-on-fiduciaries/?pagemode=print" rel="nofollow">Print</a></li><li id="share34193" class="closed share"><a id="sharebox34193"> Share</a> <ul class="hide" id="sharelist34193" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34193" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34179"> <span class="timestamp published" title="2011-04-27T08:43:02+00:00"> <span class="date">April 27, 2011, <em>8:43 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/27/nato-officials-acknowledge-frustration-in-libya-campaign/" rel="bookmark" title="Permanent Link to NATO Officials Acknowledge Frustration in Libya Campaign">NATO Officials Acknowledge Frustration in Libya Campaign</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/thom-shanker/" class="url fn" title="See all posts by THOM SHANKER">THOM SHANKER</a></address> <div class="entry-content"><p>WASHINGTON – Defense Secretary Robert M. Gates stood on the steps of the Pentagon late Tuesday alongside Liam Fox, his counterpart from Britain, America’s closest ally. Questions swirled here, in Europe and across North Africa whether NATO was specifically trying to find and kill Col. Muammar el-Qaddafi, the Libyan leader, with airstrikes.</p> <p>Mr. Gates patiently repeated the alliance’s longstanding policy that it was attacking only legitimate military targets in Libya in order to degrade the ability of the government’s forces to threaten its civilian population. There was no targeted assassination effort under way.</p> <p>“We have considered all along command-and-control centers to be a legitimate target, and we have taken those out elsewhere,” Mr. Gates said. <a href="http://atwar.blogs.nytimes.com/2011/04/27/nato-officials-acknowledge-frustration-in-libya-campaign/#more-34179" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/27/nato-officials-acknowledge-frustration-in-libya-campaign/">6 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34179" id="emailThis_34179" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/27/nato-officials-acknowledge-frustration-in-libya-campaign/?pagemode=print" rel="nofollow">Print</a></li><li id="share34179" class="closed share"><a id="sharebox34179"> Share</a> <ul class="hide" id="sharelist34179" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34179" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34139"> <span class="timestamp published" title="2011-04-25T08:26:53+00:00"> <span class="date">April 25, 2011, <em>8:26 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/25/war-wives-and-a-near-suicide/" rel="bookmark" title="Permanent Link to War, Wives and a Near Suicide">War, Wives and a Near Suicide</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/alison-buckholtz/" class="url fn" title="See all posts by ALISON BUCKHOLTZ">ALISON BUCKHOLTZ</a></address> <div class="entry-content"><div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-voices.gif" alt="Voices" /></div> <p> “If you are reading this, you should know that I am dead,” began the blog of a 27-year-old Army wife named Jessica Harp. “At least I hope I’m dead,” she added. “It would be awful to fail at your own suicide.”</p> <p>The entry, posted to the blog “(Mis)Adventures of an Army Wife” on April 11, was titled <a href="http://misadventuresofanarmywife.blogspot.com/2011/04/final-goodbye.html?showComment=1302528466628#c6985380465543951113">“A Final Goodbye.” </a> Its broad outlines, though not dramatic conclusion, are recognizable to many in the post-9/11 generation of military spouses. In 4,100 words, Ms. Harp chronicled her husband’s severe depression after his unit’s deployment to Afghanistan in 2009, and her own subsequent depression, for which she sought counseling and medication. </p> <p>After her husband’s return and their cross-country move to Fort Jackson, S.C., so he could attend an eight-month officers’ course, she was told she could not join the base’s family support group because her husband was only a student there. She tried to put to use her master’s degree in financial counseling, but was told she was unemployable because she would be leaving the area before the year’s end. Her husband’s erratic behavior, coupled with his drinking, convinced her that he was an alcoholic, and she encouraged him to get help.</p> <p>“The doctor immediately put him on antidepressants and sleeping pills,” she recounts. “And that was it. No counseling. No getting to the root cause of the issue. Just drugs.” She writes that he mixed his prescriptions with alcohol and at times became violent.</p> <p> <a href="http://atwar.blogs.nytimes.com/2011/04/25/war-wives-and-a-near-suicide/#more-34139" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/25/war-wives-and-a-near-suicide/">31 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34139" id="emailThis_34139" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/25/war-wives-and-a-near-suicide/?pagemode=print" rel="nofollow">Print</a></li><li id="share34139" class="closed share"><a id="sharebox34139"> Share</a> <ul class="hide" id="sharelist34139" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34139" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34101"> <span class="timestamp published" title="2011-04-22T14:41:55+00:00"> <span class="date">April 22, 2011, <em>2:41 pm</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/22/service-held-in-benghazi-for-combat-photographers-and-physician-killed-in-misurata/" rel="bookmark" title="Permanent Link to Service Held for Combat Photographers and Doctor Killed in Misurata">Service Held for Combat Photographers and Doctor Killed in Misurata</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/cj-chivers/" class="url fn" title="See all posts by C.J. CHIVERS">C.J. CHIVERS</a></address> <div class="entry-content"><div class="w480"><img src="http://graphics8.nytimes.com/images/2011/04/22/blogs/atwar-service/atwar-service-blog480.jpg" id="100000000787066" alt="Sidney Kwiram, right, of Human Rights Watch, and Alexander Dziadosz of Reuters leave candles in a bouquet next to a pair of cameras placed in rememberance of Tim Hetherington and Chris Hondros, at a small memorial service held by colleagues in Benghazi on Thursday." width="480" height="360" /><span class="credit">Bryan Denton for The New York Times</span> <span class="caption">Sidney Kwiram, right, of Human Rights Watch, and Alexander Dziadosz of Reuters leave candles in a bouquet next to a pair of cameras placed in rememberance of Tim Hetherington and Chris Hondros at a small memorial service held by colleagues in Benghazi on Thursday.</span></div> <p><em>This is an e-mail sent this morning from C.J. Chivers to the editors at Getty Images and Vanity Fair, describing events in Benghazi, Libya, since the remains of Tim Hetherington and Chris Hondros arrived at the Benghazi port Thursday night. Mr. Hetherington, the conflict photographer and director of the Afghan war documentary <a href="http://www.nytimes.com/2010/06/20/movies/20restrepo.html">“Restrepo,”</a> and <a href="http://lens.blogs.nytimes.com/2011/04/20/parting-glance-chris-hondros/">Mr. Hondros,</a> one of the top war photographers of his generation, were killed Wednesday in Misurata, Libya. </em></p><em> </em><p><em>The editors of Getty Images and Vanity Fair shared this e-mail with the men’s families, who, after slight redaction (of e-mail addresses and of some internal discussion about with whom to share this) approved it for public release. Sebastian Junger has written a moving tribute to Mr. Hetherington, his co-director on “Restrepo,” for <a href="http://www.vanityfair.com/magazine/2011/04/sebastian-junger-remembers-tim-hetherington-201104">Vanity Fair</a>.</em></p> <hr /> <div class="w190 right"><img src="http://graphics8.nytimes.com/images/2011/04/21/world/21photographers/21photographers-articleInline.jpg" id="100000000783340" alt="Tim Hetherington in 2008.<br />” /><span class=" width="190" height="139" />Eddy Risch/European Pressphoto Agency <span class="caption">Tim Hetherington in 2008. <a href="http://www.vanityfair.com/magazine/2011/04/sebastian-junger-remembers-tim-hetherington-201104" target="new">Read Sebastian Junger’s remembrance of Mr. Hetherington on the Vanity Fair Web site.</a><br /></span></div> <p>Pancho, Hugh, David,</p> <p>This morning the bodies of Chris and Tim, along with that of a Ukrainian doctor killed in Misurata the same day, were blessed in a small, private ceremony at the Benghazi Medical Center, where the three spent the night. </p> <p>The ceremony was organized by the British consular office here, and attended by about eight people. </p> <p>The blessing was administered by Sylvester Magro, the Bishop of Benghazi. Father Magro leads the Roman Catholic diocese of eastern Libya, a spiritual footprint remaining from the decades of Italian presence here. </p> <p>The bishop was kind and soft-spoken, and clearly touched. He began by asking the Lord to, “Hear our prayers for these, our brothers, who you have called in peace.” His primary reading was a set of excerpts from the Gospel of John, Chapter 11, on the death and resurrection of Lazarus. </p> <p>The lines I remember most from it were these: </p> <p>Martha said to Jesus, “Lord, if you had been here, my brother would not have died. </p> <p>But even now I know that whatever you ask of God, God will give you.” </p> <p>Jesus said to her, “Your brother will rise.” </p> <div class="w190 right"><img src="http://graphics8.nytimes.com/images/2011/04/21/world/21photographers3/21photographers3-articleInline.jpg" id="100000000784310" alt="Chris Hondros was killed Wednesday in Libya." width="190" height="246" /><span class="credit">Getty Images</span> <span class="caption">Chris Hondros was killed Wednesday in Libya.</span></div> <p>After the gospel reading, the bishop led the group in prayer and sprinkled the three with holy water. </p> <p>We then went outside, where the Human Rights Watch representative present (who with <a href="http://www.hrw.org/en/bios/peter-bouckaert">Peter Bouckaert</a> arranged Chris’s and Tim’s swift exit by sea from Misurata) picked flowers from the hospital grounds and passed them around. </p> <p>We all took care to thank the attending diplomat for arranging all of this and for allowing us to be there. It’s worth noting here, even though I’m sure you all know this from your own bittersweet experiences these past days, how deeply Chris’s and Tim’s deaths have resonated among even those who did not know them. After the ceremony, the bishop and John (last name not given), one of the diplomat’s security escorts, lingered. They very much wanted to hear stories of the two, and how they had died, to provide some sense and meaning to the loss. Even among these men, no strangers to war, there were reddened eyes. </p> <p>This was the second service for Chris and Tim since their arrival in Benghazi port last night. Shortly before midnight a candle-lit public event was held at one of the local hotels, and attended by 35 or 40 people, including Christopher Prentice, the UK envoy here, and Chris Stevens, the American envoy. After each attendee was handed a lit candle, both men were invited to speak, and they did. Mr. Prentice noted in particular the powerful words of condolences he has heard from Libyans, who see Chris and Tim as heroes. </p> <p>There were also readings. </p> <p>David, at your recommendation we opened with the inscription from Tim’s book: “For He Who Gives His Life Shall Always Be My Brother.” This, appropriately, allowed our friends to be the guides in. It also, in its way and perhaps more appropriately, had Tim and Chris shepherding us. Thank you for pointing us to it. </p> <p>Next came a few more. </p> <p>The first was from Gustave Mahler, 9th Symphony, 4th Movement. This was recommended via Stephanie Sinclair of the VII photo agency. Bryan Denton received an e-mail yesterday with a note saying Chris had sent this to her when she was grieving a family death. Marc Burleigh, from Agence France-Presse, read it in the sort of rich voice I wish I had. Marc had bunked with Tim and Chris on the sea passage to Misurata early in the week, and had come back to Benghazi with them on the Ionian Spirit. </p> <p>Here is the selection of verse: </p> <blockquote><p>Often I think they’ve gone outside!<br />Soon they will get back home again!<br />The day is lovely! Don’t be anxious,<br />They’re only taking a long walk,<br />They’ve only gone out before us,<br />And will not long to come home again.<br />We’ll catch up with them on yonder heights<br />In the sunshine!<br />The day is fine on yonder heights!</p></blockquote> <p>After Marc sat down, Bryan read this from Plato:</p> <blockquote><p>The souls of people, on their way to Earth-life, pass through a room<br />full of lights; each takes a taper — often only a spark — to guide it in<br />the dim country of this world. But some souls, by rare fortune, are<br />detained longer — have time to grasp a handful of tapers, which they<br />weave into a torch. “These are the torch-bearers of humanity — its<br />poets, seers, and saints, who lead and lift the race out of darkness,<br />toward the light. They are the law-givers, the light-bringers,<br />way-showers, and truth-tellers, and without them humanity would lose<br />its way in the dark.</p></blockquote> <p>And then Chris Stevens, the U.S. envoy, gave a brief speech about Tim and Chris’s work, and discussed the need to respect and protect journalists. He ended with a reading from Isaiah, (25:6, 7-9), that Bryan had chosen in the afternoon.</p> <blockquote><p>On this mountain the LORD of hosts will provide for all peoples. On<br />this mountain he will destroy the veil that veils all peoples, the web<br />that is woven over all nations; he will destroy death forever. The<br />Lord GOD will wipe away the tears from all faces; the reproach of his<br />people he will remove from the whole earth; for the LORD has spoken.<br />On that day it will be said: “Behold our God, to whom we looked to<br />save us! This is the LORD for whom we looked; let us rejoice and be<br />glad that he has saved us!”</p></blockquote> <p>We thought we were finished, and would light more candles, but a representative from the rebel government rose and asked to say a few words. I am half-deaf and he spoke softly, so I missed his name but will get it later. His words focused on the appreciation, even wonder, that many eastern Libyans feel that foreign journalists have come to live within another people’s struggle, and that people like Chris and Tim would give their lives to record what is happening here. </p> <p>When he finished, the attendees gathered around the pair of cameras on the table and lit bouquets of candles. </p> <p><a href="http://english.aljazeera.net/indepth/spotlight/libya/2011/04/20114225920217386.html">Evan Hill of Al Jazeera wrote something of the ceremony.</a> In a very brief update, <a href="http://cjchivers.com/post/4833123684/in-libya-remembering-chris-tim">I linked to it here.</a> </p> <p>As for next steps, Chris and Tim are in the good hands of the medical authorities here and their arrangements are being looked after by the diplomats. I sense that all of you have a strong sense of the schedule for bringing them home. So I will leave the logistics to others, and sign off. </p> <p>If any of you have questions, Bryan and I are ready and happy to answer them. As for photos, AFP filed from the memorial last night. We have other images if you wish to see them. </p> <p>On the matter of unfinished business, I will try to find more on the Ukrainian doctor. His name, we believe, taken from the small slip of paper that accompanied him as he was blessed, is Anatoly Nagaiko. We want to provide you more information of a man who died on the same day, in the same city, and was prayed over together along with two men you love.</p> <p>With respect, and sorrow,<br />Chris</p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/22/service-held-in-benghazi-for-combat-photographers-and-physician-killed-in-misurata/">6 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34101" id="emailThis_34101" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/22/service-held-in-benghazi-for-combat-photographers-and-physician-killed-in-misurata/?pagemode=print" rel="nofollow">Print</a></li><li id="share34101" class="closed share"><a id="sharebox34101"> Share</a> <ul class="hide" id="sharelist34101" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34101" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34035"> <span class="timestamp published" title="2011-04-22T06:00:11+00:00"> <span class="date">April 22, 2011, <em>6:00 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/22/coming-home-as-an-interpreter/" rel="bookmark" title="Permanent Link to Coming Home, as an Interpreter">Coming Home, as an Interpreter</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/first-lt-holly-hernandez/" class="url fn" title="See all posts by FIRST LT. HOLLY HERNANDEZ">FIRST LT. HOLLY HERNANDEZ</a></address> <div class="entry-content"><div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-a-soldier-writes.gif" alt="Commentary: A Soldier Writes" /></div> <p> It was 1 in the afternoon. I was looking through the mess hall in Bagram Airfield north of Kabul, scanning the faces to find Parween. I had met her a few days before as she commented on a book I was reading about Afghanistan; her first name was the same as that of the main character. The book was “Lipstick in Afghanistan” by <a href="http://robertagately.com/">Roberta Gately</a>, a fictional account of an American nurse volunteering in Bamiyan Province after 9/11. Unlike the nurse in my book, Parween had grown up in Kabul in a highly educated family. Her father had attended Columbia University and worked as an ambassador for Afghanistan to Ethiopia. Now, she worked as a translator for American military forces in Afghanistan.</p> <p>I found her sitting at a small table, her black hair combed neatly back from her forehead. She smiled at me and invited me to sit across from her. Parween, who was perhaps in her late 40s, had beautifully distinctive features highlighted by wrinkles of happiness. “I’m so glad you had time to get lunch with me today,” I told her. “It is a pleasure,” she said, rising from her chair to hug me. We settled back into our seats, picking up our utensils to eat.</p> <p>I asked her what it was like growing up in Afghanistan. “Well, my father wanted to leave this country, but the government wouldn’t let him,” she said. “My father was always abroad, but he raised us in the Western tradition.” The government would not have allowed him to leave again had he returned home, she said, so he stayed away, traveling for the foreign service, until he finally settled in the United States.</p> <p>But the Afghan government “kept us, his family, imprisoned here,” she said. “My mother was incredible. She kept our entire family together, all seven of us, raising us all without him.”<br /><a href="http://atwar.blogs.nytimes.com/2011/04/22/coming-home-as-an-interpreter/#more-34035" class="more-link">Read more…</a></p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/22/coming-home-as-an-interpreter/">7 Comments</a></li><li class="email-this"><form method="post" name="emailThis_34035" id="emailThis_34035" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/22/coming-home-as-an-interpreter/?pagemode=print" rel="nofollow">Print</a></li><li id="share34035" class="closed share"><a id="sharebox34035"> Share</a> <ul class="hide" id="sharelist34035" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34035" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-34039"> <span class="timestamp published" title="2011-04-21T11:51:34+00:00"> <span class="date">April 21, 2011, <em>11:51 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/21/the-challenge-of-covering-iraqi-justice/" rel="bookmark" title="Permanent Link to The Challenge of Covering Iraqi Justice">The Challenge of Covering Iraqi Justice</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/tim-arango/" class="url fn" title="See all posts by TIM ARANGO">TIM ARANGO</a></address> <div class="entry-content"><div class="w480"><img src="http://graphics8.nytimes.com/images/2011/04/21/blogs/atwar-court1/atwar-court1-blog480.jpg" id="100000000784892" alt="Former Baath Party officials on trial for the 1994 murder of Sheikh Taleb al-Suhail sat in a Baghdad courtroom on Thursday. Front row, from left: Tariq Aziz, Abud Hassan Abd al-Majid al-Tikriti, Farooq Abdullah Yahya and Hadi Hassoun Najim. Back row, from left: Sabawi Ibrahim al-Tikriti, Saber Abdul Aziz Hussein and Ahmed Khudair Sabah." width="480" height="320" /><span class="credit">Ayman Oghanna for The New York Times</span> <span class="caption">Former Baath Party officials on trial in a Baghdad courtroom on April 21. Front row, from left: Tariq Aziz, Abud Hassan Abd al-Majid al-Tikriti, Farooq Abdullah Yahya and Hadi Hassoun Najim. Back row, from left: Sabawi Ibrahim al-Tikriti, Saber Abdul Aziz Hussein and Ahmed Khudair Sabah.</span></div> <div class="w75 left"><img src="http://graphics8.nytimes.com/images/blogs_v3/atwar/pog-baghdad-bureau.gif" alt="Baghdad Bureau" /></div> <p> BAGHDAD — Iraq has been castigated of late by human rights groups for violently cracking down on journalists at protests. </p> <p>Photographers, in particular, have an especially difficult time here taking pictures of government proceedings and scenes of violence — as a blog post last year by my colleague <a href="http://atwar.blogs.nytimes.com/2010/04/07/see-no-evil/">Joao Silva described in detail.</a></p> <p>But like nearly everything in Iraq, the issues of press freedom are never simple. Sometimes it’s a matter of showing up and schmoozing to gain access in a way that would be unheard of back home.</p> <p>On Thursday morning, I, our photographer Ayman Oghanna and our Iraqi newsroom manager visited the criminal court in the heavily guarded Green Zone, just across from the American Embassy, to see the verdicts delivered in a case against several defendants on trial for the 1994 murder of Sheik Taleb al-Suhail, then an Iraqi exile living in Lebanon.</p> <p>Initially, we were told that taking photographs in the courtroom was forbidden. But that was just the first answer, and we knew from experience that it was subject to negotiation. </p> <p>We spoke to the security officials and then popped into the presiding judge’s office. And before we knew what was happening, court security officers were shuffling the eight defendants into the courtroom for a quick and private photo shoot, before the judge entered the room to read out each of the men’s sentences. (I immediately recalled <a href="http://www.nytimes.com/2010/07/20/world/middleeast/20samarra.html">a similar experience last year when we visited Samarra</a>. After chai and polite conversation with the police colonel, we were ushered into a room to meet the prisoner we had been hoping to see, a young man who had just killed his father. )</p> <p>Some of the men in the courtroom, including <a href="http://topics.nytimes.com/top/reference/timestopics/people/a/tariq_aziz/index.html">Tariq Aziz,</a> the former foreign minister, and Abed Hammoud, a presidential secretary, were on the famous American deck of cards of the most wanted members of Saddam Hussein’s government after the invasion in 2003.</p> <p>One of the men, Abed Hassan al-Majied, the brother of the former government official known as Chemical Ali, who was <a href="http://www.nytimes.com/2010/01/26/world/middleeast/26execute.html">executed in January 2010,</a> asked about us, “What are they doing here?”</p> <p>“This is just for the memories,” said the head of the court’s security detail.</p> <p>Mr. Hammoud, who covered his face with a notebook as the pictures were being snapped, asked, “Why are these Americans taking pictures of us?”</p> <p>After a few minutes, the court session was about to begin and we were asked to go to the spillover room in the back. As we walked out, Mr. Hammoud looked at me and shouted an expletive to describe former President George W. Bush in particular and all Americans in general. </p> <p>As the proceedings began, Mr. Majied, before hearing that he would be sentenced to hang for his role in the murder, rose and addressed the court. </p> <p>“Just 10 minutes ago, there were two Americans here,” he said. “By what right can they come into this court and photograph us? Who are they, and what is behind this?”</p> <p>The judge replied, “They are from the press, so just be quiet.”</p> <div class="w480"><img src="http://graphics8.nytimes.com/images/2011/04/21/blogs/atwar-court2/awar-court2-blog480.jpg" id="100000000784897" alt="Tariq Aziz awaiting the judge's verdict. He was acquitted, but has already been sentenced to death for crimes committed during the administration of Saddam Hussein." width="480" height="319" /><span class="credit">Ayman Oghanna for The New York Times</span> <span class="caption">Tariq Aziz awaiting the judge’s verdict. He was acquitted, but has already been sentenced to death for crimes committed during the administration of Saddam Hussein.</span></div> <p>Then, one by one, the judge read the sentences for each man in the trial, which began in 2009. Three were sentenced to death, two to life sentences, one to 15 years in prison. Two others, including Mr. Aziz, were acquitted. <a href="http://www.nytimes.com/2010/10/27/world/middleeast/27iraq.html">Mr. Aziz, however, has already been sentenced to death</a> in another case involving crimes of the former government. </p> <p>After the defendants were taken from the courtroom, <a href="http://query.nytimes.com/gst/fullpage.html?res=9C00E2DF103BF930A35751C0A9639C8B63">Safia al-Suhail,</a> the daughter of the victim who became an international symbol of Saddam Hussein’s repression as a guest of the Bush White House at the State of the Union address in 2005, stood in the lobby.</p> <p>“Justice is there, after 16 years,” said Ms. Suhail, who is now a member of Parliament and a prominent activist.</p> <p><em>Duraid Adnan contributed reporting from Baghdad.</em> </p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/21/the-challenge-of-covering-iraqi-justice/">1 Comment</a></li><li class="email-this"><form method="post" name="emailThis_34039" id="emailThis_34039" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/21/the-challenge-of-covering-iraqi-justice/?pagemode=print" rel="nofollow">Print</a></li><li id="share34039" class="closed share"><a id="sharebox34039"> Share</a> <ul class="hide" id="sharelist34039" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead34039" class="ad"><br /></li></ul> </li></ul> </div><div class="entry hentry" id="entry-33993"> <span class="timestamp published" title="2011-04-20T18:32:19+00:00"> <span class="date">April 20, 2011, <em>6:32 pm</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/20/restrepo-director-is-killed-in-libya/" rel="bookmark" title="Permanent Link to ‘Restrepo’ Director Is Killed in Libya">‘Restrepo’ Director Is Killed in Libya</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/stephen-farrell/" class="url fn" title="See all posts by STEPHEN FARRELL">STEPHEN FARRELL</a></address> <div class="entry-content"><p>Tim Hetherington, a British photographer based in New York who was a director and producer of the film “Restrepo,” was <a href="http://www.nytimes.com/2011/04/21/world/africa/21photographers.html">killed in the besieged Libyan city of Misurata</a> on Wednesday, our Times colleague C.J. Chivers reports. Three photographers were wounded in the same attack, and one of them, Chris Hondros of Getty Images, died.</p> <p>The four had reached the city by sea from Benghazi, the rebel capital. “Early reports said they had been working together near the front lines when they were struck by a rocket-propelled grenade,” Mr. Chivers wrote.</p> <p>During the making of “Restrepo,” Mr. Hetherington and his co-director Sebastian Junger spent 14 months with a platoon of United States soldiers in the Korangal Valley in Afghanistan in 2007 and 2008. A Times review of “Restrepo” can be read <a href="http://www.nytimes.com/2010/06/20/movies/20restrepo.html">here.</a></p> <p>Our colleagues on the Lens blog have a slide show of <a href="http://lens.blogs.nytimes.com/2011/04/20/parting-glance-tim-hetherington/"> Mr. Hetherington’s work</a> and one of <a href="http://lens.blogs.nytimes.com/2011/04/20/chris-hondros-at-work-in-libya/"> images</a> by Mr. Hondros. The pictures by Mr. Hondros were taken earlier Wednesday. Also, the photographers Guy Martin and Michael Christopher Brown were wounded in the attack. </p> </div> </div><div class="entry-meta"> <ul class="entry-tools"><li class="comment-link"><a class="post-comment" href="http://community.nytimes.com/comments/atwar.blogs.nytimes.com/2011/04/20/restrepo-director-is-killed-in-libya/">4 Comments</a></li><li class="email-this"><form method="post" name="emailThis_33993" id="emailThis_33993" style="display: inline;" enctype="application/x-www-form-urlencoded" action="http://www.nytimes.com/mem/emailthis.html"> </form> <a class="post-email">E-mail This</a> </li><li class="print"><a href="http://atwar.blogs.nytimes.com/2011/04/20/restrepo-director-is-killed-in-libya/?pagemode=print" rel="nofollow">Print</a></li><li id="share33993" class="closed share"><a id="sharebox33993"> Share</a> <ul class="hide" id="sharelist33993" style="opacity:0; filter:alpha(opacity=0);"><li class="linkedin"><br /></li><li class="digg"><br /></li><li class="facebook"><br /></li><li class="mixx"><br /></li><li class="myspace"><br /></li><li class="permalink"><br /></li><li id="sharead33993" class="ad"><br /></li></ul> </li></ul> </div> <span class="timestamp published" title="2011-04-20T09:13:53+00:00"> <span class="date">April 20, 2011, <em>9:13 am</em></span></span> <h3 class="entry-title"><a href="http://atwar.blogs.nytimes.com/2011/04/20/pentagon-is-quiet-on-three-cups-of-tea-questions/" rel="bookmark" title="Permanent Link to Pentagon Is Quiet on ‘Three Cups of Tea’ Questions">Pentagon Is Quiet on ‘Three Cups of Tea’ Questions</a></h3> <address class="byline author vcard">By <a href="http://atwar.blogs.nytimes.com/author/elisabeth-bumiller/" class="url fn" title="See all posts by ELISABETH BUMILLER">ELISABETH BUMILLER</a></address> <div class="entry-content"><p>Pentagon officials continued their silence on Tuesday about <a href="http://www.nytimes.com/2011/04/18/business/media/18mortenson.html">allegations against Greg Mortenson, the co-author of the best-selling “Three Cups of Tea,”</a> after a fellow best-selling author and mountaineer, Jon Krakauer, released an article on <a href="http://www.byliner.com/">byliner.com</a> raising his own questions about the accuracy of Mr. Mortenson’s book and the management of his charity.</p> <div class="w190 right"><img src="http://graphics8.nytimes.com/images/2010/07/18/world/18tea2/18tea2-articleInline.jpg" id="100000000291078" alt="" width="190" height="293" /><span class="credit"></span> <span class="caption"></span></div> <p>But <a href="http://www.nytimes.com/2010/07/18/world/asia/18tea.html">Col. Christopher D. Kolenda,</a> one of the United States military officials who first reached out to Mr. Mortenson because of the book’s inspirational lessons about girls’ education in Central Asia, said that Mr. Mortenson’s work had been vital to the American war effort in Afghanistan.</p> <p>“My personal and professional interaction with Greg and his organization has proved invaluable in terms of contacts with elders from across the country and support for education in some critical areas,’’ Colonel Kolenda, now a senior adviser to Michele A. Flournoy, the under secretary of defense for policy, said in a brief phone conversation on Tuesday.</p> <p>Colonel Kolenda declined any comment on the allegations against Mr. Mortenson, first by the CBS News program <a href="http://www.cbsnews.com/stories/2011/04/15/60minutes/main20054397.shtml">“60 Minutes”</a> on Sunday and then by Mr. Krakauer in his article on Monday. </p> <p>Both CBS and Mr. Krakauer said that the central, inspirational anecdote of the book was false: Mr. Mortenson, they said, never stumbled disoriented into the warm embrace of the village of Korphe in northeast Pakistan after failing to reach the summit of K2 and then in gratitude returned to build a school. CBS and Mr. Krakauer also said that Mr. Mortenson had grossly mismanaged the finances of his charity set up to build schools, mostly for girls, in Afghanistan and Pakistan. </p> <p>Mr. Mortenson has forcefully countered the allegations. </p> <p>Colonel Kolenda, who read “Three Cups of Tea” in late 2007 when his wife sent it to him while he was commanding 700 American soldiers in the mountains of eastern Afghanistan, was so taken with a central lesson in the book – reaching out to the local residents – that he contacted Mr. Mortenson. By June 2008, Mr. Mortenson’s Central Asia Institute had built a school near Colonel Kolenda’s base, in Kunar Province, close to the border with Pakistan. Although CBS and Mr. Krakauer said that some of Mr. Mortenson’s schools were empty, or did not even exist, Colonel Kolenda said that the school near his base, at least as of 2010, had students and was operating.</p> <p>By 2009, Mr. Mortenson had become an unofficial adviser to the United States military in Afghanistan. That summer, Colonel Kolenda has recalled, Mr. Mortenson was in meetings in Kabul with him, village elders and at times Gen. Stanley A. McChrystal, then President Obama’s top commander in the country.</p> </div>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-2351287480959790072011-04-28T15:48:00.001-07:002011-04-28T15:48:52.793-07:00<div class="post-body entry-content"> <h1>Obama Chooses ‘Safe’ U.S. National Security Team with Panetta, Petraeus</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Roxana Tiron and Tony Capaccio</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Obama Picks ‘Safe’ National Security Team " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iO1p.aYQ72BQ" /> </div> <p class="caption">Leon Panetta served in the House of Representatives from 1977 to 1993, then as budget director and White House chief of staff in the Clinton administration. Photographer: Saul Loeb/AFP/Getty Images </p> </div> </div> </div> <p>President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> has stuck with a “safe” team of leaders he knows by choosing Leon Panetta as his next defense secretary and Army General David Petraeus as director of the Central Intelligence Agency, according to analysts and former national security officials. </p> <p>Panetta, the current CIA director, and Petraeus, the top U.S. commander in Afghanistan, already are part of Obama’s national security structure. If confirmed by the Senate, they will be in position to follow through on security priorities they helped form as Obama heads into an election year. </p> <p>“The big message here is no change in policy, and that means a careful and centrist approach on national security issues,” said John Ullyot, who worked on the Republican staff of the Senate Armed Services Committee and is now a senior vice president at Hill & Knowlton in Washington. </p> <p>Troop reductions are planned to begin in <a href="http://topics.bloomberg.com/afghanistan/">Afghanistan</a> in July, with the withdrawal of an unspecified number this year. The military is also winding down in <a href="http://topics.bloomberg.com/iraq/">Iraq</a>. The U.S. is taking a measured role in the North Atlantic Treaty Organization’s mission in Libya. At the same time, and with possible threats remaining from <a href="http://topics.bloomberg.com/iran/">Iran</a> and <a href="http://topics.bloomberg.com/north-korea/">North Korea</a>, Obama has ordered new cuts in national security spending. </p> <p>Panetta, 72, a California Democrat who served in the U.S. House of Representatives from 1977 to 1993 and then as budget director and White House chief of staff in the Clinton administration, has been CIA director since February 2009. </p> <h2>‘Continuity of Leadership’ </h2> <p>He would succeed Defense Secretary <a href="http://topics.bloomberg.com/robert-gates/">Robert Gates</a>, the lone holdover in Obama’s cabinet from the George W. Bush administration, who has said he plans to leave this year. Gates’ resignation will be effective June 30 and Panetta is expected to take over July 1, pending Senate confirmation. </p> <p>During his tenure, Gates “seamlessly integrated the Pentagon’s goals into America’s broader foreign policy agenda,” said Senator <a href="http://topics.bloomberg.com/john-kerry/">John Kerry</a>, the Massachusetts Democrat who leads the Foreign Relations Committee. Panetta and Petraeus “will provide important continuity of leadership, policy and philosophy,” Kerry said. </p> <p>Panetta’s experience as chairman of the House Budget Committee and as director of the Office of Management and Budget would position him as defense secretary to implement the president’s plan to cut $400 billion in national security spending over the next decade, a former colleague said. </p> <h2>Strategic Cuts </h2> <p>“His job will be to make strategic cuts in the military budget using a scalpel, not a sledgehammer. The military budget is going to be a target,” said Jane Harman, the chief executive officer of the Woodrow Wilson International Center for Scholars in <a href="http://topics.bloomberg.com/washington/">Washington</a>. Harman, a California Democrat who retired from Congress in February, dealt with Panetta in her role as a senior member of the House Permanent Select Committee on Intelligence. </p> <p>“Panetta’s value added will be the budget expertise and excellent rapport” with Congress, she said in a telephone interview. “He has proved his loyalty to the administration, and he is their best representative on <a href="http://topics.bloomberg.com/capitol-hill/">Capitol Hill</a>.” </p> <p>Gates made calls yesterday to notify congressional leaders about the nominations, Pentagon spokesman <a href="http://topics.bloomberg.com/geoff-morrell/">Geoff Morrell</a> said. </p> <p>Asked about the national security implications of the U.S. budget deficits during a Feb. 10 House Intelligence Committee hearing, Panetta said “there’s no question that represents a threat that we have to pay attention to.” </p> <h2>‘Safe Choice’ </h2> <p>Dov Zakheim, a former Pentagon comptroller and a senior adviser to the Center for Strategic and International Studies in Washington, called Panetta a “safe choice.” </p> <p>“Clearly the administration needs somebody who will be part of the team,” he said in a telephone interview. The administration faces “a very difficult series of decisions on <a href="http://topics.bloomberg.com/libya/">Libya</a>, tough decisions on Iraq and Afghanistan and tough decisions on the budget.” </p> <p>Panetta’s success shouldn’t be assumed, because running the Pentagon is “radically different than any other task in government,” said <a href="http://topics.bloomberg.com/anthony-cordesman/">Anthony Cordesman</a>, the Arleigh A. Burke Chair in Strategy at the Center for Strategic and International Studies. </p> <p>The job requires implementing “extremely complex decisions” over a long period of time, Cordesman said. Panetta will weigh choices on the future size and structure of the military, weapons costs, long-term financing of the Afghanistan mission, and the U.S. military exit from Iraq. Iran, <a href="http://topics.bloomberg.com/china/">China</a> and North Korea are among the issues where Panetta must strike a hard balance between the military and civilian roles, he said. </p> <h2>Tactical Intelligence </h2> <p>Before taking his current position as top U.S. commander in Afghanistan last summer, Petraeus, 58, was the head of <a href="http://www.centcom.mil/" title="Open Web Site" rel="external">U.S. Central Command</a> with responsibility for the Middle East and Central Asia. </p> <p>“He has been the ultimate consumer of tactical intelligence, and he certainly knows what we do well and what we need to do better,” Harman said. </p> <p>Petraeus, who would move to the CIA in September if confirmed, will enter “an incredibly difficult set of challenges, which are not military,” said Cordesman, including needed improvements in satellite communications, electronic intelligence and cyber security, all of which are in “financial and technical trouble.” </p> <h2>‘Toughest Judge’ </h2> <p>The CIA analysts are in for a “shock,” said <a href="http://www.bingwest.com/" title="Open Web Site" rel="external">Bing West</a>, assistant secretary of defense for international security affairs during the <a href="http://topics.bloomberg.com/reagan-administration/">Reagan administration</a> and the author of several books on war and counterinsurgency. “He’ll be the toughest judge they ever had.” </p> <p>Petraeus may hear concerns from Congress about a four-star general taking a post traditionally held by civilians. Still, the Senate has in the past confirmed both Panetta and Petraeus. </p> <p>“The president has chosen experienced people with unique capabilities to serve our nation at a dangerous time,” said <a href="http://topics.bloomberg.com/senator-lindsey-graham/">Senator Lindsey Graham</a>, a South Carolina Republican on the Armed Services Committee. </p> <p>“Clearly the president has decided to go with safe bets for the nomination, and that will ensure quick nomination and that will also send a message of a steady hand at the wheel,” Ullyot said. </p> <p>Petraeus and Panetta share a “pretty deep skepticism about <a href="http://topics.bloomberg.com/pakistan/">Pakistan</a>’s commitment” to press the offensive against Taliban bases in Afghanistan’s ungoverned northwest region, according to <a href="http://www.brookings.edu/experts/riedelb.aspx" title="Open Web Site" rel="external">Bruce Riedel</a>, a senior fellow at the <a href="http://topics.bloomberg.com/brookings-institution/">Brookings Institution</a>’s <a href="http://www.brookings.edu/saban.aspx" title="Open Web Site" rel="external">Saban Center for Middle East Policy</a> in Washington. </p> <h2>Tension With Pakistan </h2> <p>“There’s a lot of tension in the relationship,” said Riedel, a former CIA and National Security Council official who helped develop the Obama White House’s first Afghanistan strategy in early 2009. </p> <p>Panetta has supported drone strikes in Pakistan. Improved intelligence has enhanced the imagery gathered by unmanned Predators flying 24-hour patrols over the region near the Afghanistan border, making the missile-firing drones more precise, a U.S. official said in January. </p> <p>“This may be part of Obama’s double-down yet again on Afghanistan,” said Steve Clemons, an analyst with the <a href="http://topics.bloomberg.com/new-america-foundation/">New America Foundation</a>, a centrist policy research organization in Washington. </p> <p>Pakistan’s ambassador to the U.S., <a href="http://topics.bloomberg.com/husain-haqqani/">Husain Haqqani</a>, applauded the potential appointments of Panetta and Petraeus, even amid tensions between his country and the U.S. over CIA drone strikes and a shooting involving a CIA contractor. </p> <p>“We have worked very well with Mr. Panetta as director of the CIA and with General Petraeus as both commander of Centcom and the commander in Afghanistan,” Haqqani said. “We have tremendous respect for both of them and their ability to see and understand our perspective.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/obama-chooses-safe-us-national-security.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T15:45:00-07:00">3:45 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6192924377286882673">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6192924377286882673" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7026021101589814134"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/bernanke-must-have-lost-my-list-of.html">Bernanke Must Have Lost My List of Questions</a> </h3> <div class="post-body entry-content"> <h1>Bernanke Must Have Lost My List of Questions: Caroline Baum</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Caroline Baum</span> -</cite></div><br /><div class="story_inline assets"> <img alt="Baum" class="author_photo" src="http://cdn.gotraffic.net/v/20110428_164748/images/authors/baum.jpg" /> <p class="author_caption">Caroline Baum</p> <div class="story_inline attachments"> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Bernanke's Own Words on Fed Policy, QE2, U.S. Economy " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iPJrxc3q0vmM" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/69095940/">Play Video</a></div> </div> <p class="caption"> April 27 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke speaks about the outlook for Fed monetary policy, the impact of ending the central bank's $600 billion bond-buying program on financial markets and the U.S. economy. Bernanke's remarks were made at his first news conference following a meeting of the Federal Open Market Committee. (Excerpts. Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Fed Says Recovery `Moderate'; Bond Buying to End in June " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iiWpuYUJs1Oo" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/69084648/">Play Video</a></div> </div> <p class="caption"> April 27 (Bloomberg) -- Federal Reserve policy makers said the economy is recovering at a “moderate pace” and a pickup in inflation is likely to be temporary, as they agreed to finish $600 billion of bond purchases on schedule in June. Bloomberg's Peter Cook and Michael McKee report. (Source: Bloomberg) </p> </div> </div> </div> <p><a href="http://topics.bloomberg.com/federal-reserve/">Federal Reserve</a> Chairman <a href="http://topics.bloomberg.com/ben-bernanke/">Ben Bernanke</a> took questions from the press for 45 minutes yesterday. His answers were direct, as complete as they could be (given the vagaries of economic forecasting) and even at times groundbreaking. </p> <p>We learned, for example, that when the Fed assures us of low interest rates for an “extended period,” it means for “a couple of meetings.” “We don’t know with certainty,” Bernanke added. </p> <p>There was a lot left unanswered -- and unasked. (I’ll get to my preferred questions in a moment.) </p> <p>Considering how momentous a break from tradition it was for Bernanke to hold the first post-meeting press conference in the Federal Reserve’s 98-year history, the immediate reaction was muted. The earth is still rotating on its axis, the <a href="http://topics.bloomberg.com/new-york/">New York</a> Stock Exchange is set to open at 9:30 a.m. today as planned, and the gods of the markets seem at peace with the outcome. </p> <p>It’s true that, for anyone over the age of 40, the press briefing was a big deal. Prior to 1994, the Fed didn’t even announce its policy changes. Too much information in the hands of the public was thought to be dangerous. </p> <p>It was left to a subspecies of homo sapiens, known as “Fed Watcher,” to analyze the pattern and size of the Fed’s daily open-market operations and divine the central bank’s intent. </p> <p>Such opacity never made any sense. The Fed changes policy because it wants to change behavior, raising or lowering its benchmark interest rate to induce the public to save or spend more. By all rights, it should use a brass band to signal any shift in its stance. </p> <h2>End of an Era </h2> <p>In 1994, the Fed let down its guard ever so slightly and began announcing policy changes. Even then, it hid behind boilerplate language that provided more of an escape hatch for the bank than vital information for the rest of us. </p> <p>If Bernanke’s willingness to quantify “extended period,” a phrase that has been a fixture of every post-meeting <a href="http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm" title="Open Web Site" rel="external">statement</a> from the Fed for the past two years, is a sign of a new openness, yesterday’s press conference was a good start. </p> <p>Herewith is my list of still unraised questions for Bernanke: </p> <p>1. When does the Fed plan to start raising its benchmark rate and/or start shrinking its balance sheet? OK, then a follow-up: What’s your best guess when that will be? </p> <p>2. How low does the <a href="http://topics.bloomberg.com/unemployment-rate/">unemployment rate</a> have to go before you will be comfortable raising interest rates without risking the wrath of Congress for betraying your dual mandate to pursue stable prices and maximum employment? </p> <p>3. Speaking of Congress, how do you put up with those self- serving monologues from committee members that pass as questions without saying, “Go stuff it?” </p> <p>4. What keeps you up at night: concern about deflation or tulip bulbs -- and I’m not referring to the state of your garden? </p> <p>5. Your predecessor, <a href="http://topics.bloomberg.com/alan-greenspan/">Alan Greenspan</a>, prided himself on his ability to obfuscate. Today transparency is the rage. Has the art of central banking changed enough in the past two decades to justify the Fed’s 180-degree turn? </p> <p>6. The Fed lowered its benchmark rate to a range of 0 to 0.25 percent in December 2008. Zero was considered appropriate at a time when the economy was hemorrhaging jobs, credit markets were frozen, banks were on the verge of insolvency and panic was in the air. If zero was the correct setting for the economy then, how do you justify it now? </p> <p>7. In your widely quoted 2002 <a href="http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm" title="Open Web Site" rel="external">speech</a>, “Deflation: Making Sure ‘It’ Doesn’t Happen Here,” you explained that the Fed has “a technology called a printing press that allows it to produce as many dollars as it wants at essentially no cost.” In December 2010, you told “60 Minutes” correspondent Scott Pelley that the Fed was not printing money. Please discuss. </p> <p>8. The “extended period” language in the Fed’s statements about low interest rates was designed to anchor market rates. How do you expect to remove it and hint at the long process of normalizing rates without upending the markets? Do you have economists -- or etymologists -- working on this issue? </p> <p>9. A dollar today buys only 45 cents worth of the goods and services it bought in the early 1980s, according to the Bureau of Labor Statistics. Can you explain why, in a time when prices are supposedly stable, the dollar has lost half its <a href="http://www.bls.gov/news.release/pdf/cpi.pdf" title="Open Web Site" rel="external">purchasing power</a>? </p> <p>10. Do you attach any significance to the fact that the security identification number on the Treasury’s new two-year note, auctioned this week, ends in QE3? </p> <p>In answering the questions he did get, Bernanke reiterated his belief that the current rise in inflation is transitory, a result of higher food and energy prices, not the Fed’s overly aggressive monetary policy. Which brings me to one last question: What if you’re wrong? </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/bernanke-must-have-lost-my-list-of.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T15:43:00-07:00">3:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7026021101589814134">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7026021101589814134" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6155824648878328300"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/dollar-weakens-treasuries-gain-as-us.html">Dollar Weakens, Treasuries Gain as U.S. GDP Slows</a> </h3> <div class="post-body entry-content"> <h1>Dollar Weakens, Treasuries Gain as U.S. GDP Slows; Stocks Rise</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Michael P. Regan and Cordell Eddings</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Dollar Index Drops to Lowest Since 2008 on Fed " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iMGwJI48UXgI" /> </div> <p class="caption">The Dollar Index, which tracks the U.S. currency against those of six major trading partners, fell for an eighth day, the longest stretch of losses since March 2009. Photographer: Tomohiro Ohsumi/Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Barclays's Maki Interview About U.S. Economy, Job Market " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=inuvDEEtvJAc" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/69148330/">Play Video</a></div> </div> <p class="caption"> April 28 (Bloomberg) -- Dean Maki, chief U.S. economist at Barclays Capital Inc., talks about the outlook for the U.S. economy and labor market. The economy slowed more than forecast in the first quarter as government spending declined by the most since 1983 and household purchases cooled. Maki talks with Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="UBS's Maury Harris Interview About U.S. Economy " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=i076_.DclgGY" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/69145448/">Play Video</a></div> </div> <p class="caption"> April 28 (Bloomberg) -- Maury Harris, chief economist at UBS Securities, talks about the impact of energy prices and defense spending on the U.S. economy. The U.S. economy slowed more than forecast in the first quarter as government spending declined by the most since 1983 and household purchases cooled. Harris speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg) </p> </div> </div> </div> <p>The Dollar Index slid to the lowest level since 2008, Treasuries rose and gold rallied to a record after economic growth slowed. The Standard & Poor’s 500 Index climbed an almost three-year high as rising earnings and takeovers overshadowed the report on gross domestic product. </p> <p>The Dollar Index tumbled 0.6 percent at 4:10 p.m. New York time after slumping to 72.871, an almost three-year low. It declined for an eighth straight day, its longest slump since 2009. Ten-year Treasury yields lost five basis points to 3.31 percent, gold jumped as much as 1.4 percent to $1,538.80 an ounce and silver rose for a second day. The <a href="http://topics.bloomberg.com/s%26p-500/">S&P 500</a> climbed 0.4 percent to 1,360.48 while the Russell 2000 Index of smaller U.S. stocks rallied to a record for a second straight day. </p> <p>The dollar and Treasuries reacted to government data showing gross domestic product expanded at a 1.8 percent annual rate in the first quarter. That trailed the 2 percent median forecast in a Bloomberg survey of economists, reinforcing the <a href="http://topics.bloomberg.com/federal-reserve/">Federal Reserve</a>’s assessment that the “moderate” economic recovery still requires record-low <a href="http://topics.bloomberg.com/interest-rates/">interest rates</a>. A separate report showed jobless claims unexpectedly increased. </p> <p>“We’re all reacting to the numbers and looking for sustainable growth,” said Firas Askari, head currency trader in Toronto at Bank of Montreal. “The dollar weakness is a trend that’s hard to break,” he said. “The momentum we did seem to be having in the <a href="http://topics.bloomberg.com/u.s.-economy/">U.S. economy</a> seems to be hitting some headwinds. Best case scenario: the U.S. economy is lukewarm.” </p> <h2>Dollar Slumps </h2> <p>The dollar weakened against 11 of 16 major peers, losing more than 0.7 percent versus the yen and South Korean won. It pared losses after slumping as much as 0.6 percent against the euro to breach $1.48 for the first time since December 2009. </p> <p>Treasuries pared gains after a U.S. auction of $29 billion in seven-year notes drew weaker-than-average demand. The securities yielded 2.712 percent compared with a forecast of 2.698 percent in a Bloomberg News survey of nine of the Fed’s primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of debt offered, was 2.63, the lowest since November, versus a 2.89 average at the past 10 sales. Bonds headed for the biggest monthly gain since August after Fed Chairman <a href="http://topics.bloomberg.com/ben-s.-bernanke/">Ben S. Bernanke</a> said yesterday interest rates will likely remain low. </p> <p>Insurers in the S&P 500 rallied 1.7 percent as Allstate Corp., Aflac Inc. and Lincoln National Corp. posted first- quarter earnings that topped estimates. </p> <h2>Earnings Season </h2> <p><a href="http://www.bloomberg.com/apps/quote?ticker=S:US" title="Get Quote" class="web_ticker">Sprint Nextel Corp. (S)</a> rose 6.7 percent as the third-largest U.S. mobile-phone carrier reported a narrower loss after paring costs to offset contract-customer defections. Constellation Energy Group Inc. added 5.7 percent as Exelon Corp. offered $7.9 billion for the power producer. </p> <p>The S&P 500 has rallied 8.2 percent in 2011 amid higher- than-expected profit and reports on manufacturing and housing bolstered investors’ confidence. Earnings-per-share beat estimates at more than three-quarters of the 269 companies in the S&P 500 that reported results since April 11, according to data compiled by Bloomberg. </p> <p>More than two stocks advanced for each that declined in the Stoxx Europe 600 Index. <a href="http://www.bloomberg.com/apps/quote?ticker=DBK:GR" title="Get Quote" class="web_ticker">Deutsche Bank AG (DBK)</a>, <a href="http://topics.bloomberg.com/germany/">Germany</a>’s biggest bank, surged 5.1 percent after earnings beat estimates. <a href="http://www.bloomberg.com/apps/quote?ticker=SAP:GR" title="Get Quote" class="web_ticker">SAP AG (SAP)</a>, the largest maker of business-management software, slid 6.4 percent after reporting smaller-than-expected growth in profit. </p> <p>The MSCI Asia Pacific Index increased 1.3 percent to a two- month high as <a href="http://topics.bloomberg.com/japan/">Japan</a>’s <a href="http://www.bloomberg.com/apps/quote?ticker=NKY:IND" title="Get Quote" class="web_ticker">Nikkei 225 (NKY)</a> Stock Average rallied 1.6 percent. <a href="http://topics.bloomberg.com/china/">China</a>’s Shanghai Composite Index fell a fifth day, dropping 1.3 percent on speculation the government will increase interest rates as soon as next week to tame inflation. <a href="http://topics.bloomberg.com/india/">India</a>’s index dropped 0.8 percent, declining for a fourth day, after food inflation accelerated to a three-week high. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/dollar-weakens-treasuries-gain-as-us.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T15:42:00-07:00">3:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6155824648878328300">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6155824648878328300" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4009082343054087579"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-i-dont-think-we-should-be.html">Ron Paul "I Don't Think We Should Be The Policemen Of The World"</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-i-dont-think-we-should-be.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T12:48:00-07:00">12:48 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4009082343054087579">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4009082343054087579" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6617957989543403001"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-i-would-cut-massively-on-this_28.html">Ron Paul "I Would Cut Massively On This Overseas Spending! Hundreds Of B...</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-i-would-cut-massively-on-this_28.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T12:47:00-07:00">12:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6617957989543403001">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6617957989543403001" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8185173150479667077"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/could-obamas-birth-certificate-be-fake.html">Could Obama's Birth Certificate Be A Fake?</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/could-obamas-birth-certificate-be-fake.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T12:47:00-07:00">12:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8185173150479667077">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8185173150479667077" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8012541950556916442"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-i-would-cut-massively-on-this.html">Ron Paul "I Would Cut Massively On This Overseas Spending! Hundreds Of B...</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-i-would-cut-massively-on-this.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T12:46:00-07:00">12:46 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8012541950556916442">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8012541950556916442" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="304975805464954470"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/justice-prosser-will-lose-in-wisconsin.html">Justice Prosser Will Lose in the Wisconsin Recount</a> </h3> <div class="post-body entry-content"> <h1 class="entry-title">My Prediction: Justice Prosser Will Lose in the Wisconsin Recount</h1><div class="entry-meta"> <span class="meta-prep meta-prep-author"></span><span class="byline"><span class="meta-sep">by</span> <span class="author vcard"><a class="url fn n" href="http://www.uncoverage.net/author/admin/" title="View all posts by Jane Jamison">Jane Jamison</a></span></span><span class="comments-link"><span class="meta-sep">|</span> <a href="http://www.uncoverage.net/2011/04/my-prediction-justice-prosser-will-lose-in-the-wisconsin-recount/#respond" title="Comment on My Prediction: Justice Prosser Will Lose in the Wisconsin Recount">Leave a comment</a></span></div><div id="attachment_58534" class="wp-caption aligncenter" style="width: 495px"><a rel="attachment wp-att-58534" href="http://www.uncoverage.net/2011/04/my-prediction-justice-prosser-will-lose-in-the-wisconsin-recount/recount-nws-lynn-3/"><img class="size-large wp-image-58534" title="recount, nws, lynn, 3" src="http://www.uncoverage.net/wp-content/uploads/2011/04/mjs-recount_-nws_-lynn_-3-r-485x341.jpg" alt="" width="485" height="341" /></a><p class="wp-caption-text">The Waukesha County Board of Canvassers started its supreme court recount Wednesday April 27, 2011 at the Waukesha County Court House. Photo by Tom Lynn</p></div><p>I hope I am wrong.</p><p><span id="more-58532"></span> I have a sick feeling in my stomach that the Democrats, liberals, and unionists in Wisconsin are going to make sure that liberalista Kloppenburg gets a suitcase or two of “newly-found” votes. Wisconsin Tea Party are you on duty? Battle stations!</p><p>There is a very liberal environomentalist who is Secretary of State, and buried in the story below is the fact that the Republican county clerk who found all the GOP ballots so that Judge Prosser won, has been REMOVED from the recount.</p><p>Why so gloomy? Think: <a href="http://www.usnews.com/opinion/blogs/peter-roff/2010/07/20/Al-Franken-May-Have-Won-His-Senate-Seat-Through-Voter-Fraud">Sen. Al Franken </a>….and <a href="http://www.uncoverage.net/2010/12/public-employee-union-influence-on-california-election-merits-probe/">California.</a> This is verryyy familiar.</p><p>Now the counting and re-counting begins in Wisconsin and here’s what’s happened already:</p><p><strong><a href="http://www.jsonline.com/news/statepolitics/120786814.html"><span style="color: #ff0000;">“Supreme Court recount gets wobbly start in Waukesha County”</span></a></strong></p><blockquote><p>“ After more than a half-hour of meticulous instructions and ground rules from Waukesha County’s chief canvasser, retired Judge Robert G. Mawdsley, questions were raised about the very first bag of ballots to be counted, from the Town of Brookfield.</p><p>As canvassers and tabulators compared a numbered seal on a bag with the number recorded for that bag by a town election inspector who prepared the paperwork on election night, the numbers didn’t match.</p><p>“What a great way to start,” one tabulator said.</p><p>Observers from the campaigns of Justice David Prosser and Assistant Attorney General JoAnne Kloppenburg both agreed, however, that the error seemed to be in the inspector’s use of a “2″ instead of a “3.” Numbers on the sealing tag and on the bag did match. Both sides and the Board of Canvassers agreed that the bag should be opened and the votes counted.</p><p>Statewide, election officials recounted 36,794 ballots on Wednesday. By the end of the day, Prosser was leading, 19,489 to 17,420 for Kloppenburg, with 65 votes cast for write-ins. That left 1.46 million more ballots to count.</p><p>Kloppenburg requested the recount after a canvass showed her losing the Supreme Court race to Prosser by 7,316 votes, a margin of less than 0.5% of the 1.5 million ballots cast. The initial count on election night ended with Kloppenburg up by 204 votes, but that was before Waukesha County Clerk Kathy Nickolaus announced she had accidentally left the entire City of Brookfield out of her original vote total.”<br /></p></blockquote> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/justice-prosser-will-lose-in-wisconsin.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T12:44:00-07:00">12:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=304975805464954470">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=304975805464954470" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1235762424971867103"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/kaspersky-kidnapping-lessons-learned.html">The Kaspersky Kidnapping - Lessons Learned</a> </h3> <div class="post-body entry-content"> <h1 class="title">The Kaspersky Kidnapping - Lessons Learned</h1><p><strong>By Scott Stewart</strong></p> <p>On April 24, officers from the anti-kidnapping unit of Moscow’s Criminal Investigation Department and the Russian Federal Security Service (FSB) rescued 20-year-old Ivan Kaspersky from a dacha in Sergiev Posad, a small town about 40 miles northeast of Moscow. Kaspersky, the son of Russian computer software services billionaire Eugene Kaspersky (founder of Kaspersky Lab), was kidnapped on April 19 as he was walking to work from his Moscow apartment. A fourth-year computer student at Moscow State University, Kaspersky was working as an intern at a software company located near Moscow’s Strogino metro station. </p> <p>Following the abduction, Kaspersky was reportedly forced to call his father and relay his captors’ demands for a ransom of 3 million euros ($4.4 million). After receiving the ransom call, the elder Kaspersky turned to Russian law enforcement for assistance. On April 21, news of the abduction hit the Russian and international press, placing pressure on the kidnappers and potentially placing Kaspersky’s life in jeopardy. In order to defuse the situation, disinformation was leaked to the press that a ransom had been paid, that Kaspersky had been released unharmed and that the family did not want the authorities involved. Kaspersky’s father also contacted the kidnappers and agreed to pay the ransom. Responding to the ruse, four of the five members of the kidnapping gang left the dacha where Kaspersky was being held to retrieve the ransom and were intercepted by Russian authorities as they left. The authorities then stormed the dacha, arrested the remaining captor and released Kaspersky. The five kidnappers remain in custody and are awaiting trial.</p> <p>According to Russia’s RT television network, Russian officials indicated that the kidnapping was orchestrated by an older couple who were in debt and sought to use the ransom to get out of their financial difficulties. The couple reportedly enlisted their 30-year-old son and two of his friends to act as muscle for the plot. Fortunately for Kaspersky, the group that abducted him was quite unprofessional and the place where he was being held was identified by the cell phone used to contact Kaspersky’s father. Reports conflict as to whether the cell phone’s location was tracked by the FSB, the police anti-kidnapping unit or someone else working for Kaspersky’s father, but in any case, in the end the group’s inexperience and naivete allowed for Kaspersky’s story to have a happy ending. </p> <p>However, the story also demonstrates that even amateurs can successfully locate and abduct the son of a billionaire, and some very important lessons can be drawn from this case.</p> <h3>The Abduction</h3> <p>According to the Russian news service RIA Novosti, Kaspersky’s abductors had been stalking him and his girlfriend for several months prior to the kidnapping. This pre-operational surveillance permitted the kidnappers to determine Kaspersky’s behavioral patterns and learn that he did not have any sort of security detail protecting him. Media reports also indicate that the kidnappers were apparently able to obtain all the information they required to begin their physical surveillance of the victim from information Kaspersky himself had posted on Vkontakte.ru, a Russian social networking site. According to RT, Kaspersky’s Vkontakte profile contained information such as his true name, his photo, where he was attending school, what he was studying, who he was dating, where we was working for his internship and even the addresses of the last two apartments where he lived.</p> <p>Armed with this cornucopia of information, it would be very easy for the criminals to establish physical surveillance of Kaspersky in order to gather the additional behavioral information they needed to complete their plan for the abduction. Kaspersky also appears to have not been practicing the level of situational awareness required to detect the surveillance being conducted against him — even though it was being conducted by amateurish criminals who were undoubtedly clumsy in their surveillance tradecraft. This lack of awareness allowed the kidnappers to freely follow him and plot his abduction without fear of detection. Kaspersky made himself an easy target in a dangerous place for high net worth individuals and their families. While kidnapping for ransom is fairly rare in the United States, Russian law enforcement sources report that some 300 people are kidnapped for ransom every year in Russia. </p> <h3>Denial</h3> <p>In terms of being an easy target, Kaspersky was not alone. It is not uncommon for the children of high net worth families to want to break free of their family’s protective cocoon and “live like a regular person.” This means going to school, working, dating and living without being insulated from the world by the security measures in place around their parents and their childhood homes. This tendency was exemplified by the well-publicized example of George W. Bush’s twin daughters “ditching” their Secret Service security details so they could go out and party with their friends when they were in college. </p> <p>Having personally worked as a member of an executive protection detail responsible for the security of a high net worth family, I have seen firsthand how cumbersome and limiting an executive protection detail can be — especially a traditional, overt-security detail. A low-key, “bubble-type” detail, which focuses on surveillance detection and protective intelligence, provides some space and freedom, but it, too, can be quite limiting and intrusive — especially for a young person who wants some freedom to live spontaneously. Because of the very nature of protective security, there will inevitably be a degree of tension between personal security and personal freedom. </p> <p>However, when reacting to this tension, those protected must remember that there are very real dangers in the world — dangers that must be guarded against. Unfortunately, many people who reject security measures tend to live in a state of denial regarding the potential threats facing them, and that denial can land them in trouble. We have seen this mindset most strongly displayed in high net worth individuals who have recently acquired their wealth and have not yet been victimized by criminals. A prime example of this was <a href="http://www.stratfor.com/hvt_kidnappings_going_big_money">U.S billionaire Eddie Lampert</a>, who at the time of his abduction in 2003 did not believe there was any threat to his personal security. His first encounter with criminals was a traumatic kidnapping at gunpoint. But this mindset can also appear in younger members of well-established families of means who have not personally been victimized by criminals.</p> <p>It is important to realize, however, that the choice between security and freedom does not have to be an either/or equation. There are measures that can be taken to protect high net worth individuals and children without employing a full protective security detail. These same measures can also be applied by people of more modest means living in places such as Mexico or Venezuela, where the kidnapping threat is pervasive and extends to almost every strata of society, from middle-class professionals and business owners to farmers. </p> <p>In this type of environment, the threat also applies to mid-level corporate employees who serve tours as expatriate executives in foreign cities. Some of the cities they are posted in are among the most crime-ridden in the world, including such places as Mexico City, Caracas, Sao Paulo and Moscow. When placed in the middle of an impoverished society, even a mid-level executive or diplomat is, by comparison, incredibly rich. As a result, employees who would spend their lives under the radar of professional criminals back home in the United States, Canada or Europe can become prime targets for kidnapping, home invasion, burglary and carjacking in their overseas posts.</p> <h3>The Basics</h3> <p>Before anything else can be done to address the criminal threat, like any other issue, the fact that there is indeed a threat must first be recognized and acknowledged. As long as a potential target is in a state of denial, very little can be done to protect him or her. </p> <p>Once the threat is recognized, the next step in devising a personal protection system is creating a realistic baseline assessment of the threat — and exposure to that threat. This assessment should start with some general research on crime and statistics for the area where the person lives, works or goes to school, and the travel corridors between these places. The potential for natural disasters, civil unrest — and in some cases the possibility of terrorism or even war — should also be considered. Based on this general crime-environment assessment, it might be determined that the kidnapping risk in a city such as Mexico City or Moscow will dictate that a child who has a desire to attend university without a protective security detail might be better off doing so in a safer environment abroad. </p> <p>Building on these generalities, then, the next step should be to determine the specific threats and vulnerabilities by performing some basic analyses and diagnostics. In some cases, these will have to be performed by professionals, but they can also be undertaken by the individuals themselves if they lack the means to hire professional help. These analyses should include: </p> <ul><li>In-depth cyberstalking report. Most of the people for whom we have conducted such reports have been shocked to see how much private information analysts are able to dig up on the Internet. This information is available for free (or for a few dollars) to anyone, including criminals, who might be targeting people for kidnapping, extortion or other crimes. The <a href="http://www.stratfor.com/keeping_private_information_private">problem of personal information being available on the Internet</a> is magnified when potential targets gratuitously post personal information online, as in the Kaspersky case. Even in cases where personal information is available only to online “friends,” it is quite easy for savvy Internet users to use a false social networking account with an attractive photo to social engineer their way into a circle of friends using common pretexting tactics. Therefore, potential targets need to be extremely careful what they post online, and they also must be aware of what information about them is publicly available on the Internet and how that information may make them vulnerable to being targeted. If it is determined that the information available makes them too vulnerable, changes may have to be made. </li></ul> <ul><li>Baseline surveillance diagnostics. Surveillance diagnostics is a blend of surveillance-detection techniques that are designed to determine if an individual is under systematic criminal surveillance. This can be conducted by the potential targets themselves, if they receive the necessary training, or by a specialized professional surveillance-detection team. As the name suggests, this diagnostic level helps establish a baseline from which to plan future security and surveillance-detection operations. </li></ul> <ul><li>Route analysis. This type of analysis examines the regular travel routes of a potential target in order to identify locations such as choke points that can be used by criminals for surveillance or to conduct an attack. Route analysis can be performed by the same team that conducts surveillance diagnostics, or even by a potential target if the person will thoughtfully examine his or her daily travel routes. Such an analysis allows the potential target to be cognizant of such locations and of the need to increase situational awareness for signs of surveillance or a potential attack as he or she passes through them — especially during a highly predictable move like the morning home-to-work commute. </li></ul> <ul><li><a href="http://www.stratfor.com/residential_security_assessing_environment">Physical security surveys</a>. Such surveys are performed for the home, workplace or school of the potential target. While individuals can effectively conduct such surveys using common sense, a professional assessment can be useful and will often be performed for free by alarm companies. Obviously, any security upgrades required at a workplace or school will require coordination with the security managers for these locations. </li></ul> <ul><li>Response capability assessment. This is a realistic assessment of the capabilities and responsiveness of the local police and security forces as well as fire and medical first-responders. In some places, security personnel themselves may be involved in criminal activity, or prove to be generally unresponsive or incompetent. Knowing their true capabilities is necessary to create a realistic security plan. </li></ul> <p>There are some very good private training facilities that can provide individuals with training in things like attack recognition/avoidance, surveillance detection and route analysis as well hands-on skills like tactical driving. </p> <h3>Guns Alone Are Not the Answer</h3> <p>Even if a potential target is being afforded a protection detail, it must be remembered that guards with guns are not in and of themselves a guarantee of security. If a group is brazen enough to undertake a kidnapping, they will in many cases and many places not hesitate to use deadly force in the commission of their crime. If they are given free rein to conduct pre-operational surveillance, they will be able to make plans to overcome any security measures in place, including the neutralizing of armed security personnel. </p> <p>After recognizing that a threat indeed exists, the next key concept that potential targets need to internalize is that criminals are vulnerable to detection as they plan their crimes, and that ordinary people can develop the skills required to detect criminal activity and take measures to avoid being victimized. The fact is, <a href="http://www.stratfor.com/secrets_countersurveillance">most criminals practice terrible surveillance tradecraft</a>. They are permitted to succeed in spite of their lack of skill because, for the most part, people simply do not practice <a href="http://www.stratfor.com/weekly/20100609_primer_situational_awareness">good situational awareness</a>. </p> <p>The good news for potential targets is that being aware of one’s surroundings and identifying potential threats and dangerous situations is more a mindset or attitude than a hard skill. Because of this, situational awareness is not something that can be practiced only by highly trained government agents or specialized surveillance detection teams — it is something that can be practiced by anyone with the will and the discipline to do so. In the Kaspersky case, it is very likely that had the young man been practicing good situational awareness, he would have been able to note the criminals conducting surveillance on him and to take appropriate action to avoid being kidnapped. </p> <p>Armed guards, armored vehicles and other forms of physical security are all valuable protective tools, but they can all be defeated by kidnappers who are allowed to form a plan and execute it at the time and place of their choosing. Clearly, a way is needed to deny kidnappers the advantage of striking when and where they choose or, even better, to stop a kidnapping before it can be launched. This is where the intelligence tools outlined above come into play. They permit the potential target, and any security officers working to protect them, to <a href="http://www.stratfor.com/weekly/proactive_tool_protective_intelligence">play on the action side of the action/reaction equation</a> rather than passively waiting for something to happen.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/kaspersky-kidnapping-lessons-learned.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-28T12:42:00-07:00">12:42 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1235762424971867103">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1235762424971867103" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="1913027655010299338"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/national-health-insurance-socialist.html">National Health Insurance: A Socialist Nightmare</a> </h3> <span style="font-weight: bold;font-size:180%;">National Health Insurance: A Socialist Nightmare</span><br />Russell L. Blaylock, M.D.<br /><br />One characteristic of the collectivists is that when a particular term becomes unpopular, such as the word socialism, they create a succession of more socially friendly terms. For example, in the 1800s they did not shy away from the term socialism, but as people began to understand that socialism was a form of social control and engineering, they dropped the term for more acceptable terms such as liberalism, progressivism and collectivism. The socialist promoting a government-run health care system did likewise. Knowing that the term socialized medicine was frightening to a great number of people, they began to use such terms as national health care, universal health insurance and now single payer system.<br />I find it ironic that no one asks these socialists, who is that mysterious single payer? Should the public consider this for even a moment, they would quickly realize that the single payer is the taxpayer and the administrator of the system is the government via an army of bureaucrats. The socialist has, over the years, become quite adept at selling his wares. It was the Italian communist Antonio Gramsi and earlier the Fabian socialists, who understood that most of the West would never bring about socialism (communism) by violent revolution as had Russia. Rather, they would be more successful by a piecemeal implementation of socialist programs disguised as social reform or as they termed it “change” (this term had been used by the socialist long before Obama).<br />If you read the socialist literature of the 18th and 19th centuries, you will see that a great many men of tremendous social influence and in positions of power, especially in the universities, were promoting most of the programs now being openly discussed—such as population control, eugenics, abortion, social engineering and social control, of course to be administered by elite groups of the “wise”. The ultimate goal was a destruction of the private ownership of property. Many today think these are all new terms and programs.<br />Powerful intellectuals such as Voltarie, Saint-Simon, Auguste Comte, d’Alembert, Condorcet and Turgot set the stage for the subsequent intellectual leaders of the socialist revolution, Marx, Engles, Proudhon, Lenin and Hitler. As stated, it was the brilliance of the communist Antonio Gramsi that taught the radical revolutionaries that they could never succeed by violence alone—society would have to be tricked into accepting socialist ideas.<br />The central core of collectivist ideology is best stated by Eric Voeglin in his scholarly book, From Enlightenment to Revolution, when he states:<br />"In its outline we see the idea of mankind dominated by a chosen people which embodies the progressive essence of humanity. In historical actuality that would mean a totalitarian organization of mankind in which the dominating power would beat down in the name of mankind and freedom everybody who does not conform to the standards."<br />In other words, they believed that society contained men of such vision and anointed wisdom, that it is they who should design all of society and the duty of the people is to follow their stated plans for this new society. This is why Nancy Pelosi boldly states that people are to do what she says and becomes angry when citizens reject the socialist health care plan. They just do not understand, in her mind, their role as her subjects and as the vassals of the collectivist system.<br />In the collectivist mind, the people (the masses in socialist jargon) must be made to adhere to “the plan” because, like children, they do not understand that it is good for them. If they can be made to take their medicine, later they will be thankful. As Voegelin states:<br />“…man is no end in himself but merely an instrument to be used by the legislator. This is the new basic thesis for collectivism in all its variants, down to the contemporary totalitarianism.”<br />The great Austrian economist von Mises stated that a man is a socialist in proportion to his contempt for the common man. That is, man becomes merely a cog in the all-embracing wheel of government.<br />How Socialized Medicine Arose in Western Societies: Building the Foundation<br />This subject is actually far to large to cover in any detail in this short paper, but as with most philosophical and ideological systems, the groundwork had been laid many years before they appeared to the general public. The Fabian Socialists in England and the United States were writing numerous tracts and scholarly books promoting the idea of such a system of health care in the mid to early 1800s.<br />With their position in influential positions, such as educational institutions, as popular writers (H.G. Wells) and politically connected individuals, they were able to move the intellectual elite in the direction of socializing health care. But, the real opportunity came with the war—that is World War II. One learns from reading history that all great political change comes during a crisis—the greater the crisis, the greater the opportunity for radical change. For example, the greatest social changes came with the War for Southern Independence, the Great Depression, World Wars I & II, the burning of the Reichstach and Russia’s involvement in wars with Japan.<br />In each case there was a call for massive social planning and social engineering. The idea of social engineering and social control became the obsession of the Rockefellers and the Carnegies as far back as the early 1920s. In her book, The Molecular Visions of Life, a detailed history of the rise of molecular biology, Lily E. Kay states:<br />"By the time of the launching of the molecular biology program, the Rockefeller philanthropies had considerable experience with eugenics. … they did support eugenics projects, such as the sterilization campaign of the National Committee for Mental Hygiene to restrict breeding of the feeble-minded. The Rockefeller philanthropies also acted in the area of eugenics through the Bureau of Social Hygiene (BSL) and the Laura Spelman Rockefeller Memorial (LSRM). The BSH was incorporated in 1913 for the purpose of “the study, amelioration, and prevention of those social conditions, crimes and diseases which adversely affect the well being of society, with special reference to prostitution and the evils associated therein.”<br />She goes on to explain that the BSH had a 30 year history of promoting, via educational material and other projects, population control and birth control—all long before it became universally accepted and funded by the federal government.<br />If one studies the power of the Rockefeller family and the Carnegies they find that their influence and control of education was extensive and ever growing. By massive funding of selected institutions, such as Cal Tech, Johns Hopkins, Harvard and especially the University of Chicago, as well as using their powerful influence to assure their people were appointed as department heads and presidents of these prestigious universities, they guided the direction of research toward a “progressive” direction—that is, toward social engineering. It was primarily through their control of the University of Chicago, the Rockefeller Institute for Medical Research and the General Education Board (founded in 1903) that they, in essence, promoted and controlled their “science of man” research, which was a way to mold people in the image imagined by the wise elite. Those considered unfit, were to be eliminated by eugenic methods, both positive and negative.<br />All of this activity was setting the stage for an eventual acceptance by the public of their ideas concerning the social engineering of man, the core of which was eugenics. This would require intense, massive educational efforts. Through his General Education Board, Rockefeller was able to design the education of the population from cradle to grave. John Dewey’s new ideas on education were heavily supported by foundation money, all from the shadows. It is also instructive to note that Margaret Sanger, a virtually unknown person at the time, was also heavily funded and promoted by Rockefeller money, which brought her to great prominence. Remember, Sanger was primarily a eugenicist—her books and later work clearly indicates that she had little concern for poor, pregnant women.<br />In her book, The Cruelty of Charity she states that charity should be discouraged because we want these people to die, even if by starvation.<br />"Fostering the good-for-nothing at the expense of the good is an extreme cruelty. It is a deliberate storing up of miseries for future generations."<br />This financial support by the great foundations explains the phenomenal growth of Planned Parenthood and why the clinics are strategically placed in poorer neighborhoods. It is interesting to note that the “charming” Southern girl was considered “borderline feebleminded” and should be a target for forced sterilization by the state. It gets even worse.<br />An ophthalmologist by the name of Lucien Howe, who was the president of the American Ophthalmologic Society at the time, became obsessed with controlling blindness and started a campaign to sterilize blind people and prevent marriage between the blind, even though only 7% of blindness was hereditary. He was also the president of the Eugenics Research Association. In 1918 he initiated a census of all blind people in America and found that 90% had no blind relatives.<br />In conjunction with the AMA and the Eugenics Research Office, Dr. Howe drafted a law that would permit the government to prohibit marriage between people with imperfect vision and to either isolate these unfortunates or forcibly sterilize them. It also encouraged neighbors to turn in those who were suspected to have “imperfect vision”. Notice how the criteria quickly went from hereditary blindness, to any blindness to even those wearing glasses. We see this in a great deal of future socialist legislation. They present a worse case to gain the sympathy of the public and it quickly becomes an all encompassing program to include virtually everyone or a large targeted group (Like the elderly).<br />Dr. Howe and the AMA’s justification for such a draconian program was that taxpayers were spending far too much money on blind people—the money could be better spent on other medical projects. You will notice that this is the same justification for Obama’s health plan—that the young can benefit more from the health care dollar we are spending on those who are older or those with chronic conditions.<br />On April 5, 1921 this frightening idea was introduced as Bill # 1597 in the New York legislature. Fortunately, it did not pass. Dr. Howe and his backers failed to give up. Next they proposed having the State Board of Health and schools hunt down defective members of families having blind or vision-impaired children. He also proposed that the law have a provision that would allow imprisonment of the visually impaired. He even submitted a bill that would require the “unfit” to post a bond with state health officials for $14,000 (equal to $130,000 today) which would be forfeit should they become pregnant.<br />It is instructive to note that the Carnegie Foundation was sponsoring Dr. Howe’s efforts and formulating deportation specifics for these “unfit” members of society. The only reason his plans were not eventually implemented is that he died. Even today the American Ophthalmology Association awards a Lucien Howe Medal for service to the profession and mankind. (See Edwin Blacks’ well-researched book—War Against the Weak, for more details.)<br />It is important to keep in mind that these were not a small group of deranged psychopaths of no real influence, these were men and women in very powerful positions, educated in some of our finest institutions and strongly connected to the politically powerful. Most important is their support by the powerful, enormously wealthy tax-exempt foundations—especially the Rockefeller Foundation, Carnegie Foundation and the Laura Spelman Foundation. They poured millions of dollars into educational propaganda, flooding schools; appointed believers in eugenics to high positions in universities and strongly supported political candidates that were true believers, such as Theodore Roosevelt. It also included the superrich such as E.H. Harriman, the railroad magnate and his wife; James Wilson, secretary of the Department of Agriculture (1910); Dr. John Harvey Kellogg (the cereal king); Irving Fisher, an economist from Yale University; professors of medicine from Harvard, Columbia, Yale, Brown, Emory and Johns Hopkins, and the list goes on an on.<br />The lesson here is that when the intellectuals and elite put their stamp of approval on an idea, it can lead to monstrous policies that can ruin the lives of millions. As the title to Richard Weaver’s most important book says—Ideas Have Consequences. The great Austrian economist, Ludwig von Mises in his book, Bureaucracy stated that:<br />"It is remarkable that the educated strata are more gullible than the less educated. The most enthusiastic supporters of Marxism, Nazism, and Fascism were the intellectuals, not the boors."<br />The people in the Obama administration, and those operating this government from the shadows, are driven by equally dangerous ideas, which to them, as with the early eugenicists, seem reasonable and logical. They truly believe that reducing human populations worldwide is critical and is an emergency. This means that the elite must decide who lives and who dies, but unlike Hitler, Stalin and Mao, they will do it, in their mind, in a more compassionate, subtle way. Yet, the victims will be just as dead as those placed in gas chambers, executed in Stalin’s gulags or slaughtered by Mao’s cultural revolutionary gangs.<br />War Crisis Sets the Tone<br />During war, governments are allowed to execute emergency measures that would never be allowed during peacetime—that is, until today. This can entail, controlling movement of citizens, food rationing, rationing critical war material and even dictating professions. My father told me that during World War II, you could not move without the government’s permission and changing jobs was controlled as well. People were given food and gas ration tickets. In the UK food was severely rationed, near starvation levels. The people tolerate this as necessary to win the war, but they expect it to end when the war ends.<br />One of the first socialized medical systems arose in post-war England. The rational was that war planning had been a success in winning the war and supplying critical essentials so it surely would work during peacetime. One can forgive the British for their foolishness because no Western nation had really experimented with a planned society on such a grand scale. There is no excuse today, since there are so many examples of failure and harm to the public by socialized medicine.<br />To really get a grasp on the effects of national planning, a code word for socialism, one should read the book by John Jewkes—Ordeal by Planning, written in 1948. For example, he shows the fallacy of the efficiency of wartime planning. He says:<br />"Great Britain is one very good illustration of this point. They have produced virtually nothing; almost all technical development in war-time came from the private firms; Government technical experts frowned on nearly every one of the crucial new devices for improving aeronautical performance until the persistence of the entrepreneur settled the dispute beyond doubt. The history of the appalling delay in tank development is another excellent illustration of what a technical bureaucracy is capable."<br />Edmund Burke has said wisely - “The people never give up their liberties but under some delusion”. People in England were sold the disastrous National Health Service based on the illusion that they would receive their health care free, just as we are hearing today. Of course, nothing in this world is free—someone must pay. The delusion is that the wealthy will be the ones to pay—which is a tried and true prescription of the left. Of course two things eventually happen—the “rich” run out of money and two, they find ways to evade the taxes and shift them below.<br />Another delusion is that this health care proposal can actually reduce overall medical cost by streamlining administrative methods and cutting the fat out of actual care. After all, who knows more about fat than the government? One would have to be one of Dr. Howe’s feebleminded to believe that the government can do anything at a lower cost than a free market.<br />Examine any government program, no matter how small or large, and you will observe an exponential growth in cost over time. Medicare and Medicaid cost have increased exponentially since they were originally created and the cost continues to escalate. And in every case the proponents swore that cost would not increase. Those who expressed warnings concerning these programs were attacked viciously—as are those at the townhall meetings. Cecil Plamer, in his book examining the history of British Socialism—The British Socialist Ill-fare State, notes:<br />"The written or printed word is quite another story. The critical condition of contemporary British socialism can be measured by the socialist government’s intemperate disapproval of criticism from any quarter whatsoever. "<br />Others have noticed this propensity of the socialist to react violently when any portions of his grandiose plan is attacked or even questioned. Jewkes, for example, notes that—“For the more threatened it is by failure, the more savage will be the efforts to make it succeed at any cost”. And of course, it extends into their fear of failure. Jewkes again notes—“ For to the politician, a public confession of failure is tantamount to political suicide. The aim must always be, therefore, to cover up mistakes at all cost.”<br />This is a major problem with all socialist plans—as they begin to fail, the more desperate the creators become, not only hiding mistakes, but by making the system more and more oppressive and unbearable. Every failure is not seen as a fault of the plan but sabotage by either their political enemies or uncontrollable forces—such as the doctors or hospital administrators. Each failure calls for more controls. This is the origin of progressive rationing.<br />Every HMO, PPO and collectivist medical care system has experienced this. In the beginning services were abundant, doctors were happy and patients were cared for. But soon, costs begin to mount. This calls for more controls and rationing of services. It also calls for an ever-increasing bureaucracy. As in this plan, they see the biggest enemy as being the specialist—the surgeon, the ophthalmologist, the cardiologist and the endocrinologist. To prevent too many referrals they make the primary care physician (a fancy name for a general practitioner) the triage officer, but they limit the number of specialist referrals he can make each month—if he goes over that limit he is punished financially.<br />This tends to make the primary care physician treat complex cases that he should be referring to a specialist—this can cost lives. My uncle was in an HMO and when he had his stroke he contacted me to see what he should do. I asked him what his CT scan showed. He said they didn’t do one. When I asked why, he said that they told him it wasn’t covered. A brain scan is essential for every stroke patient, since the stroke may be an intracranial bleed, an AVM or even a hemorrhagic tumor. He paid for the CT scan out of his own pocket.<br />When I was in England in the 1980s, I picked up my morning paper-The London Times and there was a headline in which the National Health Service was bragging that it had reduced the waiting period for common elective surgeries from 2 years to 18 months. They were proud of it. Canada is no better.<br />I recently spoke to a fellow from Canada and I made a comment about the Canadian health system and he quickly replied that all those stories about it being bad were myths. He said people in accidents can be seen right alway. I replied that was true no matter the system, but what about elective surgeries and complex treatments. He chuckled and said—“Well of course if you want something special you will have to wait.” He then told me that he had just taken his father, a retired physician, to the hospital for his heart and was on one of the upper floors of the hospital. His father collapsed and no one was around to help. Worse, none of the elevators were working. He remarked—“What kind of hospital doesn’t have working elevators?” Then he said his father whispered to him—“ Get me the hell out of here before they kill me.” This is a major finding in socialized medical care systems that people grow up in—they think the terrible health care they are getting is the norm. Just as with my uncle, he did not know that not getting a CT scan could have cost him his life—he thought he had gotten good health care.<br />All Socialized Planning Requires Progressive Rationing<br />Those of us who have studied socialist planning know that all such plans are sold to the public as being of low cost or even as paying for itself. Then several years later, the costs have risen so rapidly that new regulations have to be implemented to control the ever-escalating cost. The politicians began to panic when the public begins to complain loudly and this forces them to find ways to reduce the services being provided without causing more complaints.<br />One thing health care economists know is that the most expensive care is among the elderly—they have the most complex problems and usually multiple problems. They also have the greatest number of complications during treatments, mainly because they often have poorer healing ability and a fragile constitution. Over fifty percent of health care cost is from caring for those over sixty-five years old. With a growing number of elderly (nearing 50% of the population) the health bureaucrat sees financial disaster looming on the horizon—it’s much like the eugenics and population control fanatics. They see an exploding population as bringing disaster to the world. Both see as the answer reducing the number of people, especially those over age sixty-five, otherwise soon the world will be overcrowded.<br />The number crunchers in government and the think tanks knew that the ever rising number of people living past 70 years was bankrupting the social security system. Now they see it as overwhelming the health care system. In both cases the answer is to reduce the population in question and do it so it doesn’t appear to be murder by the government.<br />Rationing of health care is the perfect answer for these of this mind set. It allows deniability and can be continuously tightened. Because the cost of the national health care system will grow massively, it will also free up more money to buy votes from those who will be voting, especially those who are paying little or no taxes.<br />They see the elderly much in the same way the Defense Department sees the injured soldier—he has served his purpose and is of no further use to the military and, more importantly in their eyes, he is now a liability. The elderly, likewise, have payed taxes all their lives, added considerably to the society in many ways and many have defended their country in time of war, but now they are of little use to the government—worse, they have become a liability.<br />Knowing they cannot easily pass a euthanasia law or just have them rounded up and exterminated, they use the medical care system to speed them along to their deaths. It is done by making critical care difficult to access. By using primary care physicians as triage officers and limiting access to specialists, more elderly with complex illness and the very ill will die sooner.<br />When I was in the military, I could not prescribe second or third generation drugs, only 1st generation. For example, I tried to write a prescription for Lodine for a patient but was told that it was not on the list of permitted drugs. I finally asked what was allowed—indocin they told me. A drug that is associated with frequent stomach pains and bleeding complications as well as liver and kidney damage.<br />As further rationing progresses, you will not be seen even by a primary care doctor, instead you will see a nurse practitioner or physician’s assistance. They have been talking about this for years.<br />Much of the advanced diagnostic equipment will also be rationed, being limited for only approved patients and the waiting list will continuously grow. PET scanners, many MRI units and complex cardiac testing technology will be limited to special regional centers and anointed medical centers. The privileged—politicians, international banking elite and those in foundations and other elitist institutions, will have access to the highest quality medical care and instrumentation without a wait—after all they are the elite—the chosen. The rest of us will patiently wait in line for our turn and those who survive the wait may have access.<br />We have had enough experience with progressive rationing to know that it rarely attains its stated goal, it creates enormous strains on health care delivery and ultimately results in harmed patients. A few examples will help illustrate this.<br />During the 70s, Joseph Califano, then head of HEW, pushed through a number of bureaucratic regulations designed to control hospital cost, which he targeted as the main problem area of rising health care cost. These appeared as utilization review, PSRO regulations, certificate of need rules imposed on states, pre-admission screening and other tinkering. An economic review revealed that instead of saving money it merely shifted spending to other areas, such as bureaucracy and administrative cost.<br />Its main impact was to make treating patients much more difficult for physicians. In a normal economy a contract is between the person seeking a service and those providing the service—that is the patient and the doctor. Suddenly, hundreds of people and agencies were standing between the patient and the doctor, making health care decisions not based on what was best for the patient, rather what would make the bureaucrat and politician look good, what would give the appearance of reducing cost and providing quality and mainly, how would it all be perceived by the always confused media.<br />I can remember dealing with these new bureaucracies. To admit a patient for a condition that all thinking physicians would agree needed admitting would require me to speak to a number of clueless bureaucrats, struggling to make them understand the urgency of the situation. They never understood medical reasoning, rather they spoke of rules, regulations and conditions that had to be met. To go through this with each patient was frustrating, aggravating and time consuming—but the bureaucracy doesn’t really care—they are “just following orders”.<br />In addition, we had the Joint Commission on Accreditation of Hospitals (JCAH) reviewing hospitals, adding and ever-expanding list of conditions for approval. I remember a very humorous episode that happened in my hospital. We had just constructed a new hospital to replace the antiquated older hospital and the JCAH rules for that year said that the ICU had to have a window. The thinking at that time was that the fire department would need access to the unit. So, the compliant hospital put in a window.<br />The next year, the JCAH reviewers passed through on review and spotted the window. They asked—“Why is there a window in the unit?” The surprised hospital administrator stated that it was required by last year’s JCAH rules. The arrogant reviewer shook his head in disgust and said—“ No, the new rules say there can be no window—cover it up.” The incredible reasoning was that a despondent patient might leap out of the window. The hospital spent more money to meet the new requirement.<br />Those experienced with bureaucracies known that often one department rule contradicts another’s rule and that the hapless victim (the doctor or hospital administrator) is left trying to find out whom to obey. Penalties for disobeying rules can be devastating.<br />As the bureaucracy grows the regulations began to grow like crab grass. As the economists F.A. Hayek and Ludwig von Mises have pointed out so many times, in a free economy each intrusion by the government necessitates an ever-expanding array of new regulations to deal with the disruptions cause by the last intervention. The process never ends, but what we see is that slowly the system becomes more and more oppressive and dictatorial and the penalties become increasingly severe.<br />A case in point is an ophthalmologist in California who had a patient in his seventies who was nearly blind from cataracts. The surgeon operated on the man and restored his sight. A competing ophthalmologist turned him in to the Medicare bureaucracy and he was arrested for abusing a Medicare patient—that is, he dared restore useful sight to the man. The Government’s case was based on the idea that the old man wasn’t working and therefore did not need to see—a white stick with a red tip would have been much cheaper. In other words, as with this present administration, the man was not worth the cost.<br />The surgeon was not just fined a huge sum of money he was sent to prison for 10 years for “abusing a federal patient”. The abuse was giving him his sight. This was a young doctor with a number of small children. He was used as a warning to other recalcitrant doctors not to spend too much money saving “useless eaters” as National Socialist classed these unfortunates. Remember the earlier quote by John Jewkes concerning a failing government plan — “For the more threatened it is by failure, the more savage will be the efforts to make it succeed at any cost.”<br />Obama has assured the public that his health plan will solve all problems and save tremendous amounts of money—as it falls far short of this goal, he will turn to ever more desperate rationing methods to save it. And as Jewkes noted, being politicians, they will also do all in their power to hide the monstrous effects of the rationing. Few in the public know of all the horror stories associated with the rationing plans that have been implemented so far, yet they are abundant.<br />Another brilliant plan the rationing bureaucracy had was to limit the number of expensive technologies available to doctors. They reasoned that if every hospital has a CT scanner it would be over utilized. Their answer was to set up certificate-of-need (CON) boards in each state that would decide who could get the technology.<br />Most hospitals figured ways to get around the regulation—mostly by using politically connected individuals. My senior partner served on the board of the CON organization, so our hospital always got what it wanted. But, what if the plan had worked?<br />Let’s say I practice at a hospital that does not have a scanner. The only one allowed in town is at the medical university. My patient needs a scan rather urgently. Under the Obama plan, I would first have to apply to the regional government office for permission to see if there is really a need—and, of course, I will be speaking to a young person with no knowledge of neurosurgery. They search the long list of indications and finally agree—that is, after a number of phone calls and endless pleading.<br />The next step is that I have to have transportation approved from my hospital to the anointed scanning center. More haggling, searching the thousands of pages of regulations and hanging on the line waiting to be transferred to the next bureaucrat in charge of transportation ensues. Finally, all of this is approved. But then I discover that the waiting list at the university is very long and my patient will have to wait behind the university’s urgent cases. Meanwhile my patient is deteriorating steadily. No amount of pleading will move the process forward—it all falls on deaf ears. I know this because I have experience similar frustrations, even with the limited regulations in place now.<br />If my patient is still alive, they are finally transferred to the regional scanning center, where they spend hours waiting in the hallways to be scanned. Then I have to arrange for them to be transported back to my hospital. Now, the report for the scan will take days or even weeks to be read, since the doctor reading the scan will have a stack of scans to review from his own institution as well as all surrounding hospitals and doctor’s offices. This is how it works in Canada and England.<br />The only reason the Canadian system survives is because the medical system in the United States cares for many of their really sick patients. The US scanners in the boarder states work overtime scanning Canadian patients because the wait to be scanned in Canada is so long. We act as the Canadian government’s relief valve, but then what is going to happen when we are strapped with a similar system? I predict both will end up bankrupt. Just our experiment with Medicaid and Medicare alone has been a financial disaster—it is in debt to the tune of 36 trillion dollars, more than the entire GNP of hundreds of nations and costs continues to grow exponentially.<br />The more controls added to the system, that is the more regulations and impediments to access will mean necessarily more dead people, mostly the sickest and the oldest. But then, isn’t that what they have been calling for over 100 years, as quoted earlier? What is ironic about this administration is that those who are making these decision have a long written record of involvement in the population control movement and have expressed, as did the President, that the elderly have lived long enough and that the medical dollar would be better spent on the younger. This of course pits the younger generation against the older.<br />Despite the fact that the socialist bristle at being compared to National Socialist, that is exactly what the German National Socialist government did. It has been noted that in German schools children were given math lessons in which they were asked to calculate how many housing units could be purchased for the young with the money used to treat the elderly, the chronically ill and the infirm. This sounds very close to what Dr. Ezekiel Emanuel states regarding providing too much health care to the “hopeless” and those at the end of their lives. Here are some quotes from the good doctor:<br />“Medical care should not be given to those who are irreversibly prevented from being or becoming participating citizens. An obvious example is not guaranteeing health services to patients with dementia.”<br />“Unlike (health care) allocation by sex or race, allocation by age is not discrimination.”<br />“Doctors take the Hippocratic Oath too seriously as an imperative to do everything for the patient regardless of the cost or the effects on others.”<br />Dr. Emanuel was appointed by the President as the “health czar” and as his chief advisor on designing America’s health care. He is one of many powerful and politically connected individuals who accept the socialist idea that some members of society are of less value than others and that a person’s worth is gauged by his “social worth”. Yet, more important, that it is the duty of the government’s social engineers to correct this problem—that is, to remove these undesirables.<br />If you can no longer work or are retired, pay little or no taxes and receive any federal benefits, you are deemed to be of no value to society—again, as the National Socialist labeled them—you are a “useless eater”.<br />Who Owns Society?<br />The question must be asked—Who owns society? Are we allowed to live in this country only at the behest of the government or a selected group of wise servers who shall decide our worth? Are we to be judged as worthless life, as a social liability because those with power deem it so? Even a perfunctory examination of the thoughts of our founding leaders will answer that question. Nowhere is it stated or even implied that we must show our worth to the elite of the government or be eliminated, even if we are exterminated humanely.<br />I do not wish that my grandmother remained with our family as long as possible because she carries out some useful function to the family, or to the city or the county or the state or the nation. If a person chooses to spend their retirement years just sitting on a porch drinking lemonade, wiling the day away reminiscing about their lives—that is their business and they deserve all the protections guaranteed by the Constitution and Bill of Rights. They do not exist solely by the grace of those with the power of the government and they do not deserve to be eliminated at the whim of the socialist planners.<br />As I read Edwin Black’s book, The War on the Weak and Lily Kay’s book-The Molecular Vision of Life, I was overwhelmed with anxiety, knowing that powerful men, the intellectuals and men of vision, were using that power and vision to redesign man in their image and to create a society that conforms to their utopian plan. Even the pastors were joining in this move to create a designed society. In a sermon called “Qualifying for Survival”, Reverend Robert Freeman in the 1920s told his audience in Pasedena’s Presbyterian church:<br />"Theologians are ready to make large concessions to the theories set forth in the Origins of the Species …in the world of men these two things are true: there are those who survive despite unfitness, and there are those who, though marked by an initial unfitness, make themselves fit to survive. There are the ragweed and the rattler; the mosquito and the despicable housefly in humanity, which although they make no beneficent contributions to life, they only poison and destroy, continue to exist.”<br />It is of note that California, from the 1920s until the 1940s, led the nation in sterilization of the insane, feeble-minded, the unfit and the “morally degenerate”. The idea that such a monstrous plan of designing human society by forced sterilization, prevention of marriages, incarcerations in holding camps and even proposals for extermination through abortions had actually been in place so early in our country’s history is frightening enough, but as Dr. Kay points out these manipulators of mankind did not stop, they merely changed the names of their organization and programs and redirected it toward more advance biological ways to bring about their dream of a perfect society. Massive funding of these projects continues to this day by major tax-exempt foundations and many powerful intellectuals continue to write about the need to eliminate the “unfit”. Obama’s chief health advisor is one of these people.<br />Linus Pauling, a two-time winner of the Nobel Prize and who held a position on the board of the Ford Foundation, in 1968 even publicly promoted a policy very similar to that of the National Socialist in Germany, when he stated:<br />"There should be tattooed on the forehead of every young person a symbol showing possession of the sickle-cell gene or whatever similar gene…It is my opinion that legislation along this line, compulsory testing for defective gene before marriage, and some form of semi-private display of this possession, should be adopted.”<br />In the conclusions to her book, Dr. Kay states:<br />"This view has persisted into the 1990s, backed by the institutional and commercial interest that dwarfed the millions of dollars of the Rockefeller Foundation….This dialectical process of knowing and doing, empowered by a synergy of laboratory, boardroom, and federal lobby, has sustained the rise of molecular biology into the twenty-first century."<br />In other words, they always intended for these political systems of social control and social engineering to be implemented into society by specific legislation. Population control and the weeding out of undesirables and the unfit were central to this process.<br />Reality versus Socialist Dreams<br />Any careful study of socialist planning brings one to the conclusion that they do not live in reality, but rather, in a dream world of their own making. I’m sure they still put their lost teeth under their pillow, fully expecting to be rewarded for their faith by the Tooth Fairy.<br />One of the great myths is that it is the free market system of medical care that needs fixing. We have not had a fully free market in this country since the Great Depression. If one carefully examines the present health care mess one immediately sees that it is the product of a litany of previous meddling by the government—so called, ad hoc socialism.<br />One of the often cited problems is that people lose their insurance coverage when they change jobs or lose their jobs, yet no one bothers to ask the question—Who created the idea that companies should provide heath insurance coverage? The answer is the same people who are now asking for more government intervention—the intellectual collectivists and unions. Today 63% of the insured are receiving their health care coverage through their employers.<br />In an excellent article appearing in the American Spectator by Philip Klein, he shows that government policy even affected the cost of health care for the 6% who have their insurance independent of their employers. This is because the social engineers decided to pass laws in most states requiring insurance companies to offer only comprehensive plans that covered such things as pregnancy benefits, in vitro fertilization and treatment of morbid obesity, etc, etc.<br />He sites statistics from the Council for Affordable Health Insurance, which found that states are requiring some 2000 benefit mandates nationwide, adding a whopping 20 to 50% to the cost of the policy. The Obama plan adds even more such mandates and if your policy does not contain them you, will be forced to accept the socialist plan. If younger, healthier people were able to buy only catastrophic coverage or even stripped down basic plans, health care cost would plummet.<br />The article also cites studies that show that in 2007 the cost of all government health care at all levels increased health care spending by 1 trillion dollars. Today, 31% of people’s health care is paid for by government programs (taxpayers).<br />Another way collectivist meddlers have forced up medical care cost outside the market is the litigation explosion. I remember when I was first going into private practice, I was being recruited by a neurosurgeon from California. He told me that my starting salary would be $50,000, but that my malpractice cost would be $50,000 a year—in other words, I would be working for nothing. Some surgeons today are paying well over $100,000 a year in malpractice premiums. This means specialists have to charge their patients’ insurance companies more to cover a part of this cost, and it goes up each and every year.<br />The litigation boom also changed the way physicians practiced medicine. Instead of ordering tests and admitting patients based on medical necessity, we were instructed by our malpractice insurers to order every tests conceivable and if there is a doubt—admit the patient. Not only did this result in a massive direct increase in cost but it also resulted in a great number of unnecessary procedures and surgeries.<br />If you do, for instance, a chest X-ray and find a small shadow on the film, you must do more tests or risk being sued should something be overlooked. This requires a CT or MRI scan, which can cost several thousand dollars. If you still are not absolutely sure all is well, you must do a guided biopsy of the suspicious shadow. One of the complications of a lung biopsy is a collapsed lung. Now things get real expensive. The patient’s lung collapse and he is rushed to the ICU, the most expensive place in the hospital. A chest tube is inserted and days of intensive care ensues. Because of a chest X-ray, which really never needed to be done, the patient almost dies and ends up with a hospital bill costing close to $100,000. This is defensive medicine, which is now extensively practiced in this country. This scenario actually happened in one of the hospitals I worked in.<br />Defensive medicine not only results in a massive increase in health care expenses each year, but it subjects patients to unnecessary cancer treatments, expensive scans, invasive procedures and prolonged hospitalizations. How did this all come about—the collectivist intellectuals flooded the media with stories of both real and alleged medical malpractice and insisted that patients undergo better diagnostic workups. The attorneys just saw an opportunity to make a killing, and like vultures, descended for the feeding.<br />The lesson, as F.A Hayek has stated repeatedly, is that every time the government planner tampers with the market, it causes a number of disruptions that can increase cost or result in problems of supply. This, in the mind of the collectivist, demands more intervention, which again creates more misallocation of resources. Soon we have system that looks like a diagram of the New York subway system.<br />In the United States, we view the individual as important and attempt to provide everyone with the best medical care we can deliver. Under socialism, the individual doesn’t matter—what matters is the plan and society as a whole—the masses. Under such a system, individuals are mistreated, abused, frustrated and forgotten—they just don’t matter.<br />Mr. Klein cites several cases of medical abuse in countries with socialized medical care. For example, the British Healthcare Commission found between 400 and 1,200 people had died as a result of what they characterized as “appalling care” at the hospitals in Straffordshire. Even more shocking is the case of a man injured in a traffic accident in Japan, who was turned away by 5 emergency rooms because they were overcrowded. Worse was a woman from Osaka who died after being denied emergency care by 30 hospitals.<br />Many Eastern European countries are abandoning their socialist health care systems for private care and dissatisfaction continues to grow worldwide. Only those with minor health problems like the system, because they have the illusion of “free health care” and usually the wait to see a doctor is not that long. It is the seriously ill, those with complex diseases and diseases requiring the care of a specialist that are in real danger. What the healthy young do not appreciate is that one day they may find themselves in this category.<br />No one is cataloging the horror stories, deaths and agony caused by the rationing common in socialist health care systems. It is safe to say that hundreds of thousands die unnecessarily every year under such systems due to neglect and purposeful rationing to prevent access.<br />Kline also cites the case of actress Natasha Richardson, who suffered a head injury while skiing in Quebec. Even though she was conscious shortly after the accident, she was not rushed to the nearest hospital by helicopter, but rather endured a two and a half hour ambulance ride to the trauma center in Montreal. Why was there no helicopter available? Daniel LeFrancois, “director or Quebec’s prehopsital care told the Montreal Gazette that helicopters were expensive, and they weren’t used because medical resources were allocated according to the ‘biggest gain for the biggest need’.” With traumatic brain hemorrhages time is critical—but then she was just an individual.<br />I had a friend from Louisiana relate the following story to me concerning a friend’s experience in the British socialist medical care system:<br />"My wife has a friend in Monroe with a daughter in Medical school. She went to England to do a rotation there because she wanted to see what socialized medicine was like...and she found out first hand. She was there for a few weeks and took pneumonia. They admitted her in the hospital and she didn't see a doctor for 6 days. She was not given any medication. After 6 days she called her mother in the Monroe and told her what was happening. She asked her mother to come get her. Her mother caught a flight and went to the hospital to find her daughter still there with no medication and no doctor visit. The mother asks one of the medical students about her chart and they informed her they were at the nurse's desk so she marching up there and finds the chart. The nurse says...you can't look at her chart and calls the administration. The person in charge comes to the room and informs the mother the chart is private and she has no right to look at it. The mother informs them the information is her daughters' and she has a right to it. The mother takes her daughter out of the hospital and catches a flight back to the States. When they get to Houston they call ahead to Monroe to have ambulance at the airport to take her to the hospital."<br /><br />The Elite Are Different<br />If one studies how we came to this dangerous idea of social control and human engineering, he will find that it is based on the Gnostic idea that some men are born far wiser than the common rabble and they are destined to rule. It is a paternalistic view that the populace (the masses in Marxist jargon) have no idea of the great questions that face mankind and that the wise of society must force them to obey to save society as a whole. They are viewed as small children, that is, ones not privy to the wisdom of their parents.<br />One thing always present when it comes to the elite members of a socialist system--the elite never come under the rules they impose on others and this is not just self preservation, but the idea that the wise do not need to be controlled, after all, they have a superior intellect and moral understanding—they, as Thomas Sowell says, are the anointed.<br />One of the other prime ideas of socialism is egalitarianism as an article of faith. Remember in school when a child was caught chewing gum, and the teacher would scold them by saying—“I hope you bought gum for everyone in the class.” –I think the socialist never got over this.<br />In real politics the prime motive is less philosophical. Take for example, the social security system. The justification given for the program was that the elderly will not save enough money during their earning years to be able to live comfortably in their later years, therefore the government must forcibly take a portion of their money and store it away for them. If we think about it, there are several problems with providing this “supplemental income” to a person based purely on age—that is, those fortunate enough to reach age 65 years.<br />It has been shown that in truth the older person is the richest class in the United States—most own their homes, cars and have significantly fewer bills than younger citizens. We also know that there is a great disparity of this wealth, with some having millions and other lesser sums. So, why not design the system based on need rather than age—in other words target only those below a certain income? Because then the number of recipients would be far lower, hence fewer voters voting in gratitude.<br />The same holds true for Medicare—why give it to everyone once they reach age 65 years, why not have it based on actual need? Again, it would be far less expensive and would be less of a lightening rod for voting. This is also the driving force for most politicians voting for such plans—suddenly the public’s health care, in essence—life and death—is in the hands of politicians. With each election, decisions are going to be based on who will provide even greater funds and coverage for the various plans and who are its enemies. This is why England cannot get rid of its fraudulent and inefficient health care system—that, and the fact that it is supported by 1.4 million health-care bureaucrats—the third largest employer in the world.<br />This is also why those who say we have to do something about the 45 million (the number keep growing in their mind) uninsured. Even though many of these include the 18 million who do not want health insurance, 8.4 million youth who feel they are invulnerable, 12.6 million illegals who shouldn’t even be here, 8 million children whose parent have not signed them up and 3.5 million eligible for Medicare who have just not bothered to sign up, a total of 42.5 million who should be of no concern to the government.<br />Granted, some of the 18 million who chose not to get insurance do so out of family budget constraints. This is a far smaller number than what is being proposed for new coverage by this government—that is, the remainder of the American population. If you wanted to help these young families—just give them a tax break—after all it’s their money anyway—it’s as if the government just didn’t steal it in the first place. The socialists in our government are hungry for every cent the population earns to pay for other socialist schemes—so significant tax breaks are not even an option.<br />Even though politics drives the politician, many of the designers of these socialist programs are dedicated to egalitarianism, these are the intellectual socialists (an oxymoron). We also observe, as stated earlier, that they never include themselves in this egalitarianism. Harry Schwartz, a member of the New York Times editorial board gives a poignant example of their arrogance and elitist attitude.<br />He tells us that when Joseph Califano was head of HEW he insisted that his staff always remain on call 24 hours a day. One of the physicians working on his staff managed to get permission to take his family on a vacation. He was almost at his destination hundreds of miles away when he gets a call from Califano’s staff that the “boss”” needs him right away. He turns around, drives all the way back, goes running up to the boss’ office to see what terrible crisis has exploded. Califano greets him and says—“ Hey, look Joe. I got this tennis elbow. What can you do for me?” You may be asked to wait in line for months or even years, but the “boss” gets seen in his office by his own personal physician.<br />In the Soviet system, the politburo members had expensive dachas on the Black Sea, shopped at special stores stocked with the best Western foods and items and lived in lavish apartments or houses, while the ordinary Russian stood in line all day to get a pair of shoes, often settling for a pair that were of different sizes. Some are more equal than others.<br />This is why the Congress has its own retirement system and will have its own, high quality, no-waiting health care system—it was the only way the designers could get them to support socialist systems for the “masses”.<br />Conclusions<br />The history of socialism, also called collectivism, should teach us that it is extremely elitist, looks upon the common man with disgust and secretly plans to manipulate the population like chess pieces—the people are viewed as mere cogs in an all embracing wheel of the state.<br />Socialism consist of a number of grandiose plans, each designed to create a “better world”. These plans are sold with utopian promises to the public and any dissension is met with violent attacks. It has been said that if you cannot answer a man’s arguments, all is not lost—you can still call him vile names. We see this with the vicious attacks upon townhall attendees and any who even question the new “plan”. Socialism is all about compulsion and regimentation and has no room for dissension—your duty is to do as you are told by the enlightened wise ones.<br />A review of the National Health Act in England, demonstrates that they used many of the same tactics as are being used today. The doctors, and especially their medical societies, were told by its chief architect, Aneurin Bevan that if they helped bring the plan about, they would be included in the decision-making process. They believed him and paid for that error ever since.<br />He promised that he would put them on decision-making boards, which he did. It was all a ruse. In truth, they spent valuable time drafting proposals that would make sure quality was preserved and bureaucracy was minimized. Their suggestions were merely place in a file cabinet and never looked at again. While the doctors were busy drafting proposals, Mr. Bevan was creating the real plan, which was heavy in progressive rationing, regimentation of physicians and controls.<br />The AMA not only has failed to support the private-practicing physician, in my opinion, it has betrayed him at every step. Coding was and is one of the biggest nightmares in the doctor’s practice. Did the AMA fight to stop it? The answer is a resounding—No! Not only that, the AMA has made a windfall profit selling coding manuals, which are updated every few months. In this battle, once again they are silent. Why? Because they want to participate in the system—it can be very lucrative. Why physicians continue to belong to the AMA and provide them with money is a mystery to me.<br />The socialists use emotional cases to sell their plans—a poor single mom with a pre-existing disease that is denied health insurance is displayed. It’s not that she is denied health care—everyone in America that can use a phone can get health care. Emergency rooms are free entrances to all health care. It is illegal to deny them health care in all 50 states. But, if they want to buy health insurance, they will have to pay and meet requirements.<br />I hear politicians and leftist cry that 45 million Americans are without health care, that is a lie. Ironically, the health -care they will get with this socialist plan, over time, will be no better than just going to the emergency room—certainly the service will be much faster with ER visits.<br />They deny that rationing will be used and that quality will be higher. Over 40 years of tinkering with the Medicaid and Medicare programs using every description of quality assurance method has not changed quality of health care in any significant way. They tell the doctor that regimentation will not be used, yet they have already drafted treatment and diagnostic protocols that every physician will be forced to follow or face heavy fines, a loss of license or even criminal penalties. Who makes these protocols?—compliant elitist physicians from medical centers and the AMA, people of the same mind-set as doctor Ezekiel Emmanuel.<br />Every promise and assurance will be given and when the plan actually is implemented, especially as it is fine-tuned after enactment, everything you were assured would not be done, will be done—severe, progressive rationing, regimentation of physicians, abortions, forcing people to give up their current health plans and death counseling. In each instance, the government will tell people that they were forced to do it because of some form of sabotage from the plan’s enemies. Their favorite scapegoat is the physician.<br />When you hear Obama telling you that unscrupulous physicians are doing amputations on diabetics and making $45,000 he is lying—not mistaken—lying. Most of these amputations are done on poor people with advanced diabetes. Most are on Medicaid and this program doesn’t even pay 20 cents on the dollar and they would never even pay close to what a surgeon would charge a private-pay patient for the same procedure. The actual reimbursement for the surgeon is $750 to $1500.<br />What would Mr. Obama and his cronies have the surgeon do—nothing? Failing to amputate a gangrenous leg is a death sentence—but then that is what they want anyway. It would save the state a lot of money. While it is true that some surgeons will do unnecessary surgery just to pad their income, most surgeons are highly skilled, principled men and women. They, unlike doctor Emanuel, uphold the Hippocratic oath. Do they think the unscrupulous surgeons among our profession will just disappear under his plan?—no, they will be sitting on the decision-making boards and bureaucracies that dominate other physicians—that is their nature. They, unlike principled physicians, will do anything to remain on top.<br />As the program evolves it will get worse and worse, because it will quickly fail in most of its objectives. The more it fails the more desperate the planners will become. More scapegoats will be hunted down and slaughtered on the public square for effect. Controls will tighten, physicians will try to leave in droves and the government will make it a crime to quit (called unlawful quitting of profession in socialist systems); the elderly and chronically ill will die in increasing numbers, while the government blames the deaths on medical mysteries, physician corruption or a need for tighter regimentation.<br />As the economy worsen, which they can engineers with their Federal Reserve friends, people will be more accepting of such things as euthanasia on the elderly and terminally ill, the insane, the feeble-minded and the chronically ill.<br />To really understand how these things progress, just observe Dr. Kevorkian. In the beginning, he chose terminal cases that were so pitiful many agreed he was doing a humane thing. Then he moved to people who were fully awake but who faced a strong prospect of dying in the near future. More began to question his judgment. Then he included a woman who was depressed—not terminally ill, or comatose—depressed—and he killed her. We see this in all such programs—just as I outlined in the beginning of this paper.<br />First, it was the mentally subnormal, the severely feeble-minded, the dangerously insane and then it moved to include borderline feeble-minded—that is, women who were “charming” or who were merely illiterate, but had a capacity to learn. Then there was Dr. Howe, a prominent ophthalmologist who started by advocating the sterilization of those with hereditary blindness, then all of the blind and finally those who wore glasses.<br />I has been said that the easiest time to stop totalitarianism is in the beginning, once it is established it becomes all but impossible to reverse. This may be our last opportunity to save this republic.Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-46550511057259601742011-04-22T12:04:00.001-07:002011-04-22T12:04:42.624-07:00<div id="outer"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">US Denies It Is Trying to Undermine Assad</span></p> <div class="details3"> by Samer Araabi and Jim Lobe</div></div> <p>As anti-government protests in Syria showed no sign of abating, the U.S. State Department Monday denied that it was seeking the regime’s ouster.</p> <p>“No, we are not working to undermine that government,” said spokesman Mark Toner in response to a front-page report in Monday’s <i>Washington Post</i> about secret U.S. financing of Syrian opposition groups, including a London-based satellite television channel that has called for the overthrow of the Baathist regime headed by President Bashar Al-Assad. </p> <p> Assad “needs to address the legitimate aspirations of his people,” Toner insisted, noting that Assad himself had spoken over the weekend about implementing “the need to lift the state of emergency as well as implement broader reforms, and certainly, we’re watching closely now to see how those words translate into deed.” </p> <p> Indeed, in a bid to contain the rapidly spreading protests throughout Syria, Assad Saturday swore in a new government headed by former agriculture minister Abdel Safar and pledged, among other measures, to repeal the 48-year-old emergency law “within a week at most.” </p> <p>In striking contrast to his previous public remarks, he also offered condolences and prayers for the “martyrs”—estimated by independent human rights groups at more than 200—who were killed in anti-government demonstrations since the protests began last month. </p> <p> But the appearance Sunday of tens of thousands of demonstrators demanding the regime’s ouster on the streets in towns and cities throughout Syria, as well as renewed protests, particularly in Homs, where as many as two dozen people were killed in protests Sunday evening, suggested to a growing number of analysts that Assad’s concessions may be both too little and too late. </p> <p> “It looks much less likely today than last week that he’s going to be able to either tamp down or stomp out this uprising,” said Joshua Landis, a Syria expert at the University of Oklahoma, who noted that the explicit calls by the demonstrators for Assad’s ouster marked a new stage in the confrontation. </p> <p> “While the opposition may not be able to take over the state, if it can keep mounting big demonstrations, there’s going to be no foreign investment and no tourism, and the economy will founder … and there will be no future for the regime,” Landis, whose <a href="http://syriacomment.com/">SyriaComment.com</a> blog is widely read among regional specialists in Washington, told IPS. </p> <p> Another Syria specialist, Bassam Haddad of George Mason University, also suggested Syria was quickly reaching a tipping point that would make it very difficult for Assad to regain the initiative. </p> <p> “The regime can reverse the process, but it won’t, and it seems we are now approaching a point of no return in terms of the size of the demonstrations and the incapacity of the regime to make real changes that would slow the [opposition’s] momentum,” Haddad told IPS. </p> <p> “I think this will be the most decisive week in determining where the uprising is headed,” he said, noting that the attempted takeover of the central square by thousands of demonstrators in Homs Monday “showed that the level of confidence of the protesters is rising very quickly.” </p> <p> Washington has generally responded cautiously to the uprising. As in Egypt, it initially emphasized the importance of maintaining stability in the country, even as it also appealed for the government to offer democratic reforms and respond nonviolently to the protests. </p> <p> After a particularly bloody incident in Dera’a nearly two weeks ago, President Barack Obama issued a written statement denouncing what he called “the abhorrent violence committed against peaceful protesters,” as well as “any use of violence by protesters.” </p> <p> Opposition representatives who have met with U.S. officials and implored them to at least toughen its language against the regime have expressed disappointment with Obama’s caution. </p> <p> Backed by neoconservative hawks who have long sought regime-change in Damascus, they have urged the administration to follow the same path it trod in isolating Libyan leader Moammar Gadhafi, beginning with a U.N. resolution referring Assad to the International Criminal Court and the appointing of a special rapporteur to investigate alleged abuses by his security forces. </p> <p> Basing its story on recently released WikiLeaks cables, the <i>Post</i> reported Tuesday that the State Department had provided about $6 million to opposition groups since 2006, when U.S.-Syrian relations were at their lowest ebb under former president George W. Bush. </p> <p> Much of the money has reportedly been spent on Barada TV, a satellite network run by Syrian expatriates allegedly linked to the Movement for Justice and Development (MJD), described in one cable as a “moderate Islamist organization that eschews any ideological agenda aside from ending the Asad regime through democratic reform.” </p> <p> Despite Obama’s official policy of engaging Damascus, Barada TV began broadcasting in April 2009 and recently ramped up its operations and now broadcasts 24 hours a day, although various sources said it was virtually unknown within Syria. </p> <p> In his remarks Tuesday, Toner insisted that U.S. support for Barada and civil-society groups in Syria was “no different” from similar “democracy-promotion” programs it supports in other countries around the world. “What’s different … in this situation is that the Syrian government perceives this kind of assistance as a threat to its control over the Syrian people,” he said. He also denied that the U.S. was providing direct support for the MJD. </p> <p> Nonetheless, the disclosures are likely to fuel charges by the Assad regime that the protesters are “dupes” for “foreign agents” working to promote chaos in Syria. </p> <p> The administration and most independent experts , however, strongly disagree and are increasingly worried that chaos may indeed result from the growing polarization between the government and the opposition. </p> <p> Indeed, the administration’s reluctance to speak out more strongly against the regime apparently stems from its doubts about the opposition, doubts that are reportedly shared by its two closest regional allies, Saudi Arabia and Israel, both of whom—at least until now—seem to have preferred to keep “the enemy they know” rather than face the uncertainty of a Syria without Assad. </p> <p> That assessment has actually “emboldened the regime,” according to Haddad. “They have known that the position of the U.S., as well as Israel and Saudi Arabia, is pro-status quo in Syria,” he said, although, as the opposition appears to have gained strength over the last several days, Washington’s position may be changing. </p> <p> “I frankly don’t think they have a clue [about what to do],” Landis said of Washington’s current stance, given the mushrooming of the opposition and the hardening of its demands. “If they’re saying, [Assad] should not use violence, that means they should let the demonstrators overthrow the government, because, at this point, he’s going to have to use violence in order to put this down.” </p> <p> Landis said he’s growing more worried about the reaction of the Alawite minority—of which Assad is the leader and from which the top ranks of the military and security forces are recruited—to the unrest and the possibility that the conflict could take on a sectarian character. </p> <p> That worry is shared by Haddad who noted “serious reports that the latest demonstrations, especially in Homs, have a Salafi Islamist component.” Salafis, who are Sunni Muslims, regard Alawites, who constitute about 12 percent of the total population, as heretics. </p> “Syria is also home to Christian, Druze, and Shi’ite minorities—about 15 percent of the population—and they tend to support the Alawite regime,” according to Mohammed Bazzi, a regional expert at the Council on Foreign Relations. “Along with many secular Sunnis, these minorities look to Assad as a source of stability, and they fear that his fall could precipitate a civil war.”Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-17897284805208200762011-04-22T12:03:00.001-07:002011-04-22T12:03:40.288-07:00<div id="outer"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">Pakistan Moves to Curb More Aggressive US Drone Strikes, Spying</span></p> <div class="details3"> by <a href="http://original.antiwar.com/author/porter/" title="Posts by Gareth Porter">Gareth Porter</a></div></div> <p> The Pakistani military’s recent demands on the United States to curb drone strikes and reduce the number of U.S. spies operating in Pakistan, which have raised tensions between the two countries to a new high, were a response to U.S. military and intelligence programs that had gone well beyond what the Pakistanis had agreed to in past years.</p> <p>The military leadership had reached private agreements in the past on both the drone strikes and on U.S. intelligence activities in Pakistan, but both had changed dramatically in ways that threatened the interests of Pakistan.<br /> <br />The Pakistani military, which holds real power over matters of national security in Pakistan, is now insisting for the first time that Washington must observe strict limits on both the use of drone strikes and on the number of U.S. military and intelligence personnel and contractors in the country. </p> <p> And they have backed up that demand with a suspension of joint intelligence operations with the United States – a program that had been strongly sought after by the Barack Obama administration. </p> <p> The new Pakistani demands for restrictions on U.S. operations are being taken seriously by the United States, because it was Pakistan’s Army chief, Gen. Ashfaq Kayani, who communicated them to U.S. officials, as reported by the <em>New York Times</em> Monday. </p> <p> The detention of U.S. contract spy Raymond Davis for killing three Pakistani citizens in January was a turning point in U.S.-Pakistani relations. But it was only the occasion for the Pakistani military leadership and its Inter-Services Intelligence (ISI) to take a much stronger position on larger issues that concerned them, according to Kamran Bokhari, a specialist on Pakistan for the consulting firm STRATFOR. </p> <p> "What we’re seeing is ISI and the Pakistani state take advantage of the Davis affair to renegotiate the rules of the game with the United States," Bokhari told IPS in an interview. </p> <p> The first move by the Pakistani military and ISI after Davis was detained was to suspend joint intelligence operations between ISI and the CIA, which had been successful in capturing a number of high-ranking Taliban leaders in early 2010. </p> <p> That suspension was kept quiet for months by both sides until it was leaked by a ranking ISI official to Reuters last weekend. It was understood by U.S. officials as a bid by the Pakistanis to force serious changes in U.S. covert activities on Pakistani soil. </p> <p> But Pakistan’s tough line on Davis and on the joint intelligence operations clearly got the attention of the Obama administration. U.S. drone strikes were suspended in January and February while U.S. officials sought to resolve both issues. </p> <p> During the Musharraf administration, the Pakistani military had reached a private understanding with the George W. Bush administration on the use of drones against al Qaeda and its Pakistani allies. </p> <p> But military and intelligence officials had watched with growing concern as the drone program shifted from targeting high level al Qaeda and Pakistani Taliban officials to the rank and file members and supporters of either Afghan or Pakistani Taliban organizations. </p> <p> Pakistani officials had privately sought to convince the Obama administration to narrow its targeting. Senior Pakistani officials had complained that the CIA was increasingly killing "mere foot soldiers," as reported in a Feb. 21 story by <em>The Washington Post</em>‘s Greg Miller. </p> <p> Within hours after Davis was released, however, the drone strikes resumed, as if to make the point that the U.S. had no intention of altering its strategy of reliance on the drones. </p> <p> Then on Mar. 17, a drone strike on a gathering in North Waziristan killed more than 40 people, including some Taliban members but mostly tribal elders and members of the local government militia force. The tribesmen and elders were meeting in a jirga to discuss the issue of payment for the sale of a chromite mine by the Madda Khel tribe, according to local officials. </p> <p> One tribal elder who lost four relatives in the bombing said 44 people were killed, including 13 children. </p> <p> The Pakistani military could hardly be insensitive to the fact that tribal leaders across the North Waziristan region were calling for revenge against the United States after the Mar. 17 bloodbath. "We are a people who wait 100 years to exact revenge. We never forgive our enemy," the elders said in a statement issued immediately after the bombing. </p> <p> It also outraged public opinion all across Pakistan, where the drone war has created growing anger at the United States. </p> <p> Kayani himself issued a strong statement condemning that strike as "intolerable" and said it made it more difficult for the military to fight terrorism. Pakistani officials had long been saying both publicly and privately that the program had become "counterproductive," but it was the first time Kayani himself had weighed in. </p> <p> In the past, Pakistani military and government complaints about drone strikes were "hypocritical," said Anatol Lieven, a specialist at Kings College, Cambridge, and the author of a new book on Pakistan. </p> <p> But Lieven told IPS the Pakistani military leadership appears to have been "seriously annoyed" by that March drone strike and its large number of civilian casualties, because "it was such a public insult." </p> <p> "The Pakistanis are in a deeply humiliating position" in regard to the drone strikes, said Lieven. He said the military leadership no longer trusts the Americans’ judgment on the program, in part because the strikes are killing people in North Waziristan who are willing to make a deal to end their fight against the Pakistani military and government. </p> <p> The Pakistani military’s demand beginning after the Davis arrest that the United States reduce the number of CIA and Special Operations Forces personnel in Pakistan by 25 to 40 percent, as reported by the <em>New York Times</em> Monday, was a response to a dramatic increase in the number of such personnel entering the country without explicit agreement from the Pakistani military, according to Lieven. </p> <p> "What the Pakistanis are demanding is a rollback of a huge influx that has occurred in recent months," Lieven told IPS. "They are for a return to the status quo of last year." They are specifically complaining about more U.S. personnel who had come into the country without explicit permission, said Lieven. </p> <p> The United States had increased the number of "unilateral" intelligence personnel in Pakistan — those who were not specifically involved in joint intelligence efforts — by at least a few hundred in late 2010 and early 2011. </p> <p> Lieven said some U.S. officials had privately agreed that the U.S. spying in Pakistan "has gotten seriously out of hand." </p> <p> The Kings College scholar said he has been assured by Pakistani intelligence officials that they are committed to helping prevent any attack against the United States from Pakistani territory, because "the consequences would be disastrous for Pakistan if there were ever an attack." </p> <p> But that does not apply to the Afghan Taliban presence in Pakistan. "The Pakistanis have been giving very little help on Afghanistan," he said. And that is one reason the U.S. had increased the number of intelligence agents in Pakistan.</p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-12791799023700708672011-04-22T12:02:00.001-07:002011-04-22T12:02:46.222-07:00The Obama-Gates Maneuver on Military Spending<div id="outer"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">The Obama-Gates Maneuver on Military Spending</span></p> <div class="details3"> by <a href="http://original.antiwar.com/author/porter/" title="Posts by Gareth Porter">Gareth Porter</a></div></div> <p> Last week Barack Obama announced that he wants to cut $400 billion in military spending and said he would work Secretary of Defense Robert Gates and the Joint Chiefs on a “fundamental review” of U.S. “military missions, capabilities and our role in a changing world” before making a decision. </p> <p>Spokesman Geoff Morrell <a href="http://www.reuters.com/article/2011/04/13/usa-budget-pentagon-idUSN1328544820110413">responded </a>by hinting that Gates was displeased with having to cut that much from his spending plan. Gates “has been clear that further significant defense cuts cannot be accomplished without future cuts in force structure and military capability,” said Morrell, who volunteered that the secretary not been informed about the Obama decision until the day before. </p> <p>But it is difficult to believe that open display of tension between Obama and Gates was not scripted. In the background of those moves is a larger political maneuver on which the two of them have been collaborating since last year in which they gave the Pentagon a huge increase in funding for the next decade and then started to take credit for small or nonexistent reductions from that increase. </p> <p> The original Obama-Gates base military spending plan – spending excluding the costs of the current wars – for FY 2011 through 2020, called for spending $5.8 trillion, or $580 billion annually, as former Pentagon official <a href="http://www.politico.com/news/stories/0111/48307.html#ixzz1JiinoR29">Lawrence Korb </a>noted last January. That would have represented a 25 percent real increase over the average annual level of military spending, excluding war costs, by the George W. Bush administration. </p> <p> Even more dramatic, the Obama-Gates plan was 45 percent higher than the annual average of military spending level in the 1992-2001 decade, as reflected in <a href="http://comptroller.defense.gov/defbudget/fy2011/FY11_Green_Book.pdf">official DOD data</a>. </p> <p> The Obama FY 2012 budget submission reduced the total increase only slightly – by $162 billion over the four years from 2017 to 2020, according to the careful research of the <a href="http://www.comw.org/wordpress/dsr/do-that-again-saving-400-billion">Project on Defense Alternatives</a> (PDA). That left an annual average base military spending level of $564 billion – 23 percent higher than Bush’s annual average and 40 percent above the level of the 1990s.</p> <p>Central to last week’s chapter in the larger game was Obama’s assertion that Gates had already saved $400 billion in his administration. “Over the last two years,” he said, “Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again.”</p> <p> The $400 billion figure is based primarily on the $330 billion Gates <a href="http://www.foreignpolicy.com/articles/2010/08/16/the_transformer?page=0,2">claimed</a> he had saved by stopping, reducing or otherwise changing plans for 31 weapons programs. But contrary to the impression left by Obama, that figure does not reflect any cut in projected DOD spending. All of it was used to increase spending on operations and investment in the military budget. </p> <p> The figure was concocted, moreover, by using tricky accounting methods verging on chicanery. It was based on arbitrary assumptions about how much all 31 programs would have cost over their entire lifetimes stretching <a href="http://www.foreignpolicy.com/articles/2010/08/16/the_transformer?page=full">decades into the future</a>, assuming they would all reach completion. That methodology offered endless possibilities for inflated claims of savings.</p> <p> The PDA <a href="http://www.comw.org/wordpress/dsr/do-that-again-saving-400-billion">points out</a> that yet another $100 billion that Gates announced in January as cost-cutting by the military services was also used to increase spending on operations and new weapons program that the services wanted. That leaves another $78 billion in cuts over five years also announced by Gates in January, but most of that may have been added to the military budget for “overseas contingency operations” rather than contributed to deficit reduction, <a href="http://www.comw.org/wordpress/dsr/do-that-again-saving-400-billion">according to the PDA</a>. </p> <p>Even if the $400 billion in ostensible cuts that Obama is seeking were genuine, the Pentagon would be still be sitting on total projected increase of 14 percent above the profligate level of military spending of the Bush administration. Last week’s <a href="http://www.whitehouse.gov/the-press-office/2011/04/13/fact-sheet-presidents-framework-shared-prosperity-and-shared-fiscal-resp">White House fact sheet</a> on deficit reduction acknowledged that Obama has the “goal of holding the growth in base security spending below inflation.” </p> <p>The “fundamental review” that Obama says will be carried out with the Pentagon and military bureaucracies will be yet another chapter in this larger maneuver. It’s safe bet that, in the end, Gates will reach into his bag of accounting tricks again for most of the desired total. </p> <p>Despite the inherently deceptive character of Obama’s call for the review, it has a positive side: it gives critics of the national security state an opportunity to point out that such a review should be carried out by a panel of independent military budget analysts who have no financial stake in the outcome – unlike the officials of the national security state. </p> <p>Such an independent panel could come up with a list of all the military missions and capabilities that don’t make the American people more secure or even make them <em>less</em> secure, as well as those for which funding should be reduced substantially because of technological and other changes. It could also estimate how much overall projected military spending should be reduced, without regard to what would be acceptable to the Pentagon or a majority in Congress. </p> <p>The panel would not require White House or Congressional approval. It could be convened by a private organization or, better yet, by a group of concerned Members of Congress. They could use its data and conclusions as the basis for creating a legislative alternative to existing U.S. national security policy, perhaps in the form of a joint resolution. That would give millions of Americans who now feel that nothing can be done about endless U.S. wars and the national security state’s grip on budgetary resources something to rally behind. </p> <p>Three convergent political forces are contributing to the eventual weakening of the national security state: the growing popular opposition to a failed war, public support for shifting spending priorities from the national security sector to the domestic economy and pressure for deficit and debt reduction. But in the absence of concerted citizen action, it could take several years to see decisive results. Seizing the opportunity for an independent review of military missions and spending would certainly speed up that process. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-43449448870438580912011-04-22T11:30:00.000-07:002011-04-22T11:31:04.290-07:00<div class="post-body entry-content"> <h1>Islam Blamers Ignore Real Mideast Trouble Source: Amity Shlaes</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Amity Shlaes</span> -</cite></div><br /><div class="story_inline assets"> <img alt="Shlaes" class="author_photo" src="http://cdn.gotraffic.net/v/20110419_110714/images/authors/shlaes.jpg" /> <p class="author_caption">Amity Shlaes</p> </div> <p>Why is <a href="http://topics.bloomberg.com/libya/">Libya</a> exploding? Why are Iraq and Egypt always, even after many millennia, undemocratic? Why was there scarcely any looting or rioting in Japan even after the triple calamity of tsunami, earthquake and nuclear accident? </p> <p>Blame the rain. Or rather, the lack of it. Egypt and Libya boil over because precipitation levels there are among the lowest in the world. Japan has received enough rain over the centuries to learn how to govern itself. </p> <p>The idea that rainfall amounts might start wars or foster democracy is consistent with new research by <a href="https://iriss.stanford.edu/sshp/haber" title="Open Web Site" rel="external">Stephen Haber</a>, a professor at <a href="http://topics.bloomberg.com/stanford-university/">Stanford University</a>, and <a href="http://www.polisci.washington.edu/NewFaculty.html" title="Open Web Site" rel="external">Victor Menaldo</a>, a professor at the <a href="http://topics.bloomberg.com/university-of-washington/">University of Washington</a>. In their <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1667332" title="Open Web Site" rel="external">paper</a>, Haber and Menaldo sort nations into three categories: those that are persistently authoritarian (<a href="http://topics.bloomberg.com/egypt/">Egypt</a>) or democratic (the U.K.) and ones that cycle between the two. Next, the authors ranked nations by annual precipitation. The authors are talking about rainfall, not water from, say, a river. </p> <p>Haber and Menaldo found that countries where rainfall averages between 50 and 100 centimeters (39.4 inches) a year are more likely to be democratic. In places with less than 50 centimeters annually, dictatorship predominates. </p> <p>What does rain do that rivers don’t? For one thing, politicians can’t control the rain. Their efforts to turn the skies on and off like a faucet -- using cloud seeding or other measures -- were humiliating failures. </p> <h2>Middle-Class Values </h2> <p>In short, rain meant independence. Countries in the rainy midrange are ones whose inhabitants could grow and store grains, legumes and other crops. This meant farmers in temperate regions experienced less starvation than those in other places. They could accumulate enough to invest in more property or education. </p> <p>Farmers working in <a href="http://topics.bloomberg.com/japan/">Japan</a> after World War II, in <a href="http://topics.bloomberg.com/new-england/">New England</a> during the 18th century or in the Netherlands several centuries ago all fostered what we today consider middle-class values. Long after they abandoned agriculture and moved to the city, the farm-borne respect for the rule of law and property rights sustains a society stable. </p> <p>Of course, crops thrive in high rainfall areas. The sugar of the moist Caribbean is one example. However, what’s grown in tropical climates often can’t be stored long. This was especially true in the days before refrigeration. </p> <h2>Ruling a Swamp </h2> <p>Big institutional farmers -- whether colonial governments or wealthy foreign companies -- were the only ones with the resources to make cultivation in such places profitable. Individuals in these regions tended to be laborers, not owners. No middle class arose, and citizens, with less to lose, were more willing to back regime change. That’s why swampy, high- precipitation territories (like the <a href="http://topics.bloomberg.com/philippines/">Philippines</a>) tend to change direction -- heading now toward democracy, then toward dictatorship -- like lightning in a rainstorm. </p> <p>Can irrigation create democracy where rainfall is infrequent? No, because the ruler’s hand is always ready to divert the river or close the dam. All the wealth a farmer has built up is in jeopardy if his water supply can be cut off. </p> <p>There is one example of a heavily irrigated democracy: Israel. However, the authors argue, the immigrants who settled Israel -- whether Germans, Poles or Russians -- came from agricultural countries, and therefore had amassed the human capital necessary for democracy. In other words, Israel’s democracy was created before <a href="http://topics.bloomberg.com/israel/">Israel</a> itself. </p> <h2>Controlling the Flow </h2> <p>Here’s a current example of the Haber-Menaldo theory: <a href="http://topics.bloomberg.com/ethiopia/">Ethiopia</a> wants to dam the Nile, diverting water from Egypt and <a href="http://topics.bloomberg.com/sudan/">Sudan</a> to the benefit of Ethiopia, Kenya or <a href="http://topics.bloomberg.com/uganda/">Uganda</a>, which may provoke yet another round of conflict in <a href="http://topics.bloomberg.com/africa/">Africa</a>. </p> <p>You can see this idea at work even in movies: the parched town of Dirt in the animated film “<a href="http://www.imdb.com/title/tt1192628/" title="Open Web Site" rel="external">Rango</a>” is held hostage by a corrupt mayor who diverts the precious gallons to <a href="http://topics.bloomberg.com/las-vegas/">Las Vegas</a>, driving Dirt’s townsfolk to pick up their pitchforks. </p> <p>In the Biblical story, Joseph stored grain and created wealth for the pharaoh, but that helped neither Jews nor non- royal Egyptians in the long run because “there came a new king, which knew not Joseph,” and didn’t build on Joseph’s contribution. </p> <p>Haber says studying the relationship between rainfall and regimes is useful because it reminds us of our (military) limits: “Societies are an outcome of nature’s constraints,” Haber wrote in an e-mail to me. “<a href="http://topics.bloomberg.com/iraq/">Iraq</a> is highly unlikely to ever look like <a href="http://topics.bloomberg.com/ohio/">Ohio</a>, no matter how much money we pour into it.” </p> <p>Another valuable takeaway: It is more important for a farmer to own a farm than to get subsidies for it. </p> <p>This paper should spur doubt among those who emphasize radical Islam at the expense of other forces at work in the Mideast. “Egypt was a dictatorship long before Islam even existed,” Haber said. “Overall, rain is a better predictor of stable democracy than the percentage of Muslims in a country.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/islam-blamers-ignore-real-mideast.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:27:00-07:00">11:27 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=81351946192662653">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=81351946192662653" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1289590954687987120"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/atlass-ayn-rand-resists-hollywoods-call.html">Atlas’s Ayn Rand Resists Hollywood’s Call</a> </h3> <div class="post-body entry-content"> <h1>Atlas’s Ayn Rand Resists Hollywood’s Call: Caroline Baum</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Caroline Baum</span></cite></div><br /><div class="story_inline assets"> <img alt="Baum" class="author_photo" src="http://cdn.gotraffic.net/v/20110419_110714/images/authors/baum.jpg" /> <p class="author_caption">Caroline Baum</p> </div> <p>How is it a novel so many readers describe as “life-changing” took 54 years and a gaggle of producers, writers and directors to bring to the screen? </p> <p>One answer is Ayn <a href="http://topics.bloomberg.com/rand/">Rand</a> herself, author of “<a href="http://www.amazon.com/Atlas-Shrugged-Ayn-Rand/dp/0394415760/ref=sr_1_4?s=books&ie=UTF8&qid=1302705081&sr=1-4" title="Open Web Site" rel="external">Atlas Shrugged</a>,” which was published in 1957. Earlier attempts to make a movie based on the book were foiled by Rand’s insistence on creative control. </p> <p>The second reason is the nature of the 1,168-page book. It’s about ideas. Rand’s characters are caricatures that reflect her ideas and ideals. Businessmen are good, government bureaucrats are bad. There is no middle ground. </p> <p>A third reason, one implied by those involved, is the nature of the material. </p> <p>“She’s a very controversial author,” said <a href="http://www.theatlasphere.com/columns/101123-aglialoro-atlas-shrugged-movie.php" title="Open Web Site" rel="external">John Aglialoro</a>, one of the film’s producers, who acquired the rights to “Atlas” in August 1992 from Rand’s estate. “She threw selfishness as a virtue in the face of society.” </p> <p>That virtue is better described as rational self-interest. For Rand, capitalism was the only moral system, with each individual acting in his own self-interest. Productive achievement was the noblest activity and happiness, the ultimate goal. </p> <p>You can see how Rand’s philosophy, so outlined, might ruffle the feathers of Hollywood’s do-gooders. Add that to the movie’s history of false starts, including six screenplays commissioned by Aglialoro alone, and it’s not hard to understand the industry’s resistance. </p> <h2>Rush to Production </h2> <p>“It was clear we were not going to get support from the Hollywood machinery, including talent agencies,” said producer <a href="http://www.imdb.com/name/nm0440673/" title="Open Web Site" rel="external">Harmon Kaslow</a>, who hooked up with Aglialoro in April 2010, three months before the rights were set to lapse. </p> <p>Starting with a clean slate, the duo managed to assemble a team, come up with a fresh screenplay, cast the 41 speaking roles and begin “full principal photography” by June 15, 2010, according to Aglialoro. </p> <p>“Atlas Shrugged, Part 1” opens tomorrow in 298 theaters across the U.S. A press release classifies the movie as “drama/mystery.” Veteran Hollywood producer Al Ruddy, who was the first to acquire the rights to “Atlas Shrugged” in 1974, was taken by the <a href="http://www.kcrw.com/media-player/mediaPlayer2.html?type=audio&id=tb080908shrugging_off_atlas_" title="Open Web Site" rel="external">love story</a> before he parted ways with Rand because of her insistence on final script approval. </p> <h2>Without a Trace </h2> <p>“Atlas” doesn’t fit into either genre. For those unfamiliar with Rand’s novel, “Atlas Shrugged” tells the story of the gradual disappearance of the nation’s entrepreneurs as government bureaucrats impose increasingly burdensome rules and regulations to stifle their success and confiscate their wealth. </p> <p>One by one, these captains of copper, steel, and oil industries quit, abandoning the businesses they built, refusing to work for the benefit of anyone except themselves. </p> <p>“Atlas Shrugged, Part I,” takes place in 2016 and ends before we even meet Rand’s hero, John Galt, who is the first to quit and inspires others to join him in his effort to stop the world. (Readers should look for the mysterious man in the raincoat.) </p> <p>“Atlas” is unlikely to win the Palme d’Or at the Cannes film festival this year. I say this as both an admirer of Rand’s ideas and a devotee of the book. </p> <h2>Casting Errors </h2> <p>No one can accuse the producers of type-casting. The actors, pretty much a <a href="http://www.imdb.com/title/tt0480239/" title="Open Web Site" rel="external">cast</a> of unknowns, are too young. James Taggart, president of Taggart Transcontinental, looks 22, unlike the middle-aged, pathetic character, reliant on government favors, that Rand paints for us in the book. </p> <p>“Everything was built around Dagny,” Kaslow told me. </p> <p>Dagny Taggart, James’ sister, is the story’s protagonist, struggling to save her family’s railroad from government bureaucrats out to destroy it. She is young, played by a 26- year-old <a href="http://www.imdb.com/name/nm2279940/" title="Open Web Site" rel="external">Taylor Schilling</a>. Therefore everyone else is young. </p> <p>It was hard to look at the actor playing Francisco d’Anconia, heir to the d’Anconia Copper empire. Couldn’t the producers have found someone more dapper who could speak with a Spanish accent? </p> <p>The pressure to start shooting before the rights lapsed forced the producers to focus on the ideology at the expense of potential cinematic qualities. </p> <p>“We put words from the book into the characters’ mouths,” Kaslow said. </p> <p>I suppose if it had been possible to do otherwise, someone would have done it by now. </p> <h2>A is A </h2> <p>Fans of the book, 7 million and counting, may not notice or care. They’ll get chills, as I did, when Dagny’s new railroad line, the John Galt Line, makes its first run on tracks made of Rearden metal, a new alloy created by fellow industrialist Hank Rearden that threatens to put steel producers out of business. </p> <p>The government tries to scare the public by fabricating stories about the dangers of the new metal. Defiant, Dagny and Hank man the train’s locomotive as it speeds across the Colorado landscape, over the new Rearden bridge made from, of course, Rearden metal. </p> <p>Above all, the movie is faithful to Rand’s philosophy, which is known as <a href="http://www.atlassociety.org/objectivism" title="Open Web Site" rel="external">objectivism</a>: the idea that reality is objective. Or, as encapsulated by Galt in a 60-page monologue near the end of the book, “A is A.” </p> <p>No wonder the faithful are heaping lavish <a href="http://www.atlas-shrugged-movie.com/2011/02/earlybird-reviews-of-the-full-atlas-shrugged-movie-spectacular-solid-faithful/" title="Open Web Site" rel="external">praise</a> on the movie. For them, adherence to Rand’s ideas is enough. A is A. “Atlas Shrugged” is “Atlas Shrugged.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/atlass-ayn-rand-resists-hollywoods-call.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:26:00-07:00">11:26 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1289590954687987120">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1289590954687987120" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3893558792682385254"></a> <div class="post-body entry-content"> <h1>Roots of Crisis Buried Deep After Inquiry: Peter J. Wallison</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Peter J. Wallison</span> -</cite></div><p>No one wants to excuse the managers and regulators of financial companies from responsibility for the financial crisis. But it is too easy to assign blame and walk away, without doing the serious work of finding out what really happened. </p> <p>This observation was triggered by news last week that the U.S. Securities and Exchange Commission is considering an enforcement action against <a href="http://topics.bloomberg.com/daniel-mudd/">Daniel Mudd</a> and Richard Syron, the chief executives of Fannie Mae and Freddie Mac, respectively, before the two government-sponsored enterprises collapsed. </p> <p>If, as news reports suggest, Fannie and Freddie failed to fully disclose the potential subprime mortgage losses, the implications would extend beyond a violation of securities laws. It would also have important implications for the causes of the financial crisis and the thoroughness of the work of the Financial Crisis Inquiry Commission. </p> <p>The commission’s majority <a href="http://fcic.law.stanford.edu/report" title="Open Web Site" rel="external">report</a> blamed the crisis on financial executives who failed to understand or didn’t care about the risks they were taking. Regulators didn’t do their jobs either, according to the commission. </p> <p>The conclusion to draw from this is that the crisis was caused by private greed and the indolence or lack of authority of regulators. The remedy implied by this narrative was tighter regulation, and the now-notorious Dodd-Frank Act was the result. </p> <h2>Nearing Truth </h2> <p>Yet the commission, headed by <a href="http://topics.bloomberg.com/phil-angelides/">Phil Angelides</a>, a former Democratic candidate for governor of <a href="http://topics.bloomberg.com/california/">California</a>, and <a href="http://topics.bloomberg.com/bill-thomas/">Bill Thomas</a>, a former Republican congressman from that state, never investigated what information about Fannie and Freddie’s loans was available at the time, or why investors and regulators continued to believe that mortgage-backed securities were safe. </p> <p>With the SEC’s impending enforcement action, we are getting close to the truth. </p> <p>Under legislation adopted in 1992, Fannie and Freddie were required to meet affordable housing goals when they bought loans from mortgage originators. Initially, the goals required that 30 percent of all mortgage acquisitions had to be classified as affordable -- that is, made to borrowers who were at or below median income in the areas where they lived. </p> <p>Over succeeding years the goals were increased so that, by 2007, 55 percent of all mortgages the two companies acquired had to be made to borrowers at or below median income. </p> <h2>Competing for Loans </h2> <p>It’s possible to find prime borrowers at this income level. But not when more than half of all loans had to meet this test, and especially when the companies were competing for the same loans with the <a href="http://topics.bloomberg.com/federal-housing-administration/">Federal Housing Administration</a>, and insured banks, and savings and loan associations with similar requirements under the Community Reinvestment Act. </p> <p>By 2008, Fannie and Freddie held or had guaranteed 12 million loans that were made to borrowers with FICO credit scores below 660 -- a common definition of a subprime loan -- or were otherwise risky because they had no or very low down payments and other deficiencies. By then, 27 million loans, or half of all U.S. mortgages, were subprime or otherwise risky. </p> <p>When the housing bubble began to deflate, these loans started defaulting at unprecedented rates, dragging down housing prices and the financial companies holding securities backed by these mortgages. </p> <h2>Subprime Exposure </h2> <p>For many years, <a href="http://topics.bloomberg.com/fannie-mae/">Fannie Mae</a> defined subprime mortgages as loans that it bought from subprime lenders, not by credit score. This had the effect of making its investment holdings seem less risky. In its 2007 10-K <a href="http://cfdocs.bbwebds.bloomberg.com:27638/servlet/CfDocument/cfdoc?id=0000950133-08-000795&filesize=0&autodwld=0" title="Open Web Site" rel="external">annual report</a>, for example, the company estimated its subprime exposure at about 0.3 percent of its single-family mortgages. Tables deeper inside the report showed loans with FICO credit scores of less than 660 were 18 percent of the company’s single-family holdings. </p> <p>The significance of this for the financial crisis is that Fannie and Freddie’s reports might have lulled analysts and risk managers into believing that if the housing bubble collapsed, the damage would be limited because the number of risky loans was small. </p> <p>We now know the damage was severe. Had those 12 million Fannie Mae and <a href="http://topics.bloomberg.com/freddie-mac/">Freddie Mac</a> loans been prime instead of subprime, delinquencies and defaults probably would have been around 2 percent, not almost nine times higher. </p> <h2>No Inquiry </h2> <p>In writing my <a href="http://www.aei.org/paper/100190" title="Open Web Site" rel="external">dissent</a> from the commission’s majority report, I searched widely for examples of anyone -- academic researcher, credit rating analyst or housing market expert -- who knew before 2008 that half of all mortgages in the financial system were subprime or otherwise risky, or that Fannie and Freddie had contributed almost half of that total. I found none. </p> <p>The <a href="http://fcic.law.stanford.edu/about/biographies" title="Open Web Site" rel="external">commission</a> had a chance to investigate the risks that Fannie and Freddie were taking and why the information available in the market was so deficient. But this would have required the commission to examine the losses caused by government housing policy. Angelides refused to do so. Instead, Fannie and Freddie’s contribution to the housing crisis was called “marginal” in the commission’s report. </p> <p>As a result, the American people and Congress received a distorted picture of the causes of the financial crisis, not the thorough investigation they deserved. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/roots-of-crisis-buried-deep-after_22.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:25:00-07:00">11:25 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3893558792682385254">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3893558792682385254" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2810748990794036709"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/us-finances-are-unsustainable.html">U.S. Finances Are ‘Unsustainable,’</a> </h3> <div class="post-body entry-content"> <h1>U.S. Finances Are ‘Unsustainable,’ Obama Says at Facebook Town Hall Event</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Roger Runningen and Nicholas Johnston</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Obama, at Facebook, Says U.S. Finances ‘Unsustainable’ " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iRGATY7_qEB4" /> </div> <p class="caption">U.S. President Barack Obama, left, speaks while Mark Zuckerberg, co-founder and chief executive officer of Facebook Inc., listens during a town hall event at Facebook headquarters in Palo Alto, California, U.S. Photographer: David Paul Morris/Bloomberg </p> </div> </div> </div> <p>President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a>, on a cross- country trip to sell his deficit reduction plan, said yesterday that the nation’s finances are “unsustainable.” </p> <p>At a campaign-style town hall meeting at the headquarters of Facebook Inc., Obama described the House Republicans’ budget plan as “fairly radical,” and said members of both political parties in Washington need to work together to start reducing the federal deficit in a “balanced way.” </p> <p>“We have an unsustainable situation,” he said. “We face a critical time where we are going to have to make some decisions -- how do we bring down the debt in the short term, and how do we bring down the debt over the long term?” </p> <p>After his appearance at Facebook, Obama turned his attention to political fundraising. </p> <p>During remarks to Democratic donors today at a <a href="http://topics.bloomberg.com/san-francisco/">San Francisco</a> hotel, a group of people at one table stood and broke into song, demanding the release of Bradley Manning, the U.S. soldier accused of leaking secret documents to the WikiLeaks.com website. Obama brushed off the interruption: “Now there’s an example of creativity,” he said. </p> <p>Obama attended a dinner in San Francisco last night hosted by Marc R. Benioff, chairman and chief executive officer of Salesforce.com, a cloud computing company. </p> <h2>Obama’s ‘Startup’ </h2> <p>Obama spoke after a performance by singer <a href="http://topics.bloomberg.com/stevie-wonder/">Stevie Wonder</a>, telling a roomful of early supporters: “Some of you were involved in startups. Well, I was a startup.” </p> <p>“We started something in 2008,” Obama said of his first presidential campaign. “We haven’t finished it yet,” he said, reeling off needs to overhaul education, improve clean energy programs and reduce debt and deficits. “I’m going to need you to help me finish it.” </p> <p>Tickets for today’s event, which drew about 200 donors, and yesterday’s dinner, attended by about 60 people, cost as much as $35,800 a person, according to a Democratic official who wasn’t authorized to discuss such details publicly. The president yesterday also attended a <a href="http://www.genfortyfour.com/" title="Open Web Site" rel="external">“Gen44”</a> Obama fundraising event at the Nob Hill Masonic Center, where ticket prices ranged between $25 and $2,500, according to another Democratic official. </p> <p>Obama is to fly today to <a href="http://topics.bloomberg.com/nevada/">Nevada</a>, a politically important state in the 2012 campaign. The president is scheduled to hold a town hall meeting in Reno at <a href="http://www.electratherm.com/" title="Open Web Site" rel="external">ElectraTherm Inc.</a>, a small renewable energy company, giving him a chance to reinforce his push for increased spending on clean-energy technology. </p> <h2>Job Approval </h2> <p>A poll released today showed that 42 percent of Americans surveyed approved of Obama’s job performance, down from 48 percent last month. In the poll by American Research Group Inc., of Manchester, <a href="http://topics.bloomberg.com/new-hampshire/">New Hampshire</a>, 53 percent of respondents disapproved of Obama’s performance, up from 47 percent in March. Pollsters questioned 1,100 adults nationwide from April 17-20. The margin of error is plus or minus 2.6 percentage points. </p> <p>Later today, Obama returns to <a href="http://topics.bloomberg.com/california/">California</a> for fundraisers in <a href="http://topics.bloomberg.com/los-angeles/">Los Angeles</a>, including events at Sony Pictures where actor- singer Jamie Foxx is scheduled to appear. </p> <p>The fundraising events in San Francisco and Los Angeles are expected to bring in between $4 million and $5 million, a Democratic official said. </p> <p>Bill Carrick, a Democratic strategist based in Los Angeles, described the trip as “not a full-fledged campaign trip, but it has some of the dynamics of preparing to run a campaign,” such as efforts to “start focusing on swing states early so you can broaden the electoral map.” </p> <h2>Reach Out </h2> <p>Facebook, with more than 500 million users, is the world’s largest social network website. It was founded in 2004 by <a href="http://topics.bloomberg.com/mark-zuckerberg/">Mark Zuckerberg</a>. </p> <p>Obama has used social media sites such as <a href="http://www.bloomberg.com/apps/quote?ticker=GOOG:US" title="Get Quote" class="web_ticker">Google Inc. (GOOG)</a>’s YouTube to reach out to voters. Yesterday’s session is the first time he has appeared on Facebook, which passed Google last year to become the most visited website in the U.S. </p> <p>Zuckerberg, joined by Chief Operating Officer Sheryl Sandberg, moderated the event. Obama took questions filed online through the White House’s <a href="http://www.facebook.com/whitehouse" title="Open Web Site" rel="external">Facebook page</a> and <a href="http://www.whitehouse.gov/" title="Open Web Site" rel="external">website</a>, along with those from an audience of Facebook employees, small-business leaders and Silicon Valley entrepreneurs. </p> <p>Obama said using Facebook allows us to “make sure this isn’t just a one-way conversation.” </p> <p>“This format and this company, I think, is an ideal means for us to be able to carry on this conversation,” the president said. “We’re having a very serious debate right now about the future direction of our country.” </p> <h2>Separate Plans </h2> <p>The White House and <a href="http://topics.bloomberg.com/house-republicans/">House Republicans</a> have offered separate plans to reduce cumulative budget deficits by $4 trillion, over 12 years and 10 years respectively. Obama’s plan would include $1 trillion in tax increases that his advisers say could be raised from families earning at least $250,000, while the Republicans’ measure wouldn’t raise taxes. </p> <p>“The Republican budget that was put forward I would say is fairly radical. I wouldn’t call it particularly courageous,” he said. “I would call it short-sighted.” </p> <p>Obama criticized the Republican plan for preserving tax breaks while chopping funds from programs such as clean energy and for seeking to overhaul Medicare and Medicaid health insurance programs for the elderly and the poor. </p> <p>“Nothing is easier than solving a problem on the backs of people who are poor or people who are powerless,” he said. </p> <h2>Treasury Yields </h2> <p>While the deficit dominates political debate in <a href="http://topics.bloomberg.com/washington/">Washington</a>, bond market yields in the U.S. are lower now than when the government was running a <a href="http://topics.bloomberg.com/budget-surplus/">budget surplus</a> a decade ago even as Treasury Department data show that the amount of marketable debt outstanding has risen to more than $9 trillion from about $4.3 trillion in mid-2007. The yield on the benchmark 10-year note is below the average of about 7 percent since 1980 and the average of 5.48 percent in 1998 through 2001, the last time the U.S. had a budget surplus, according to Bloomberg Bond Trader prices. </p> <p>Ten-year yields fell three basis points, or 0.03 percentage point, to 3.38 percent at 11:48 a.m. in <a href="http://topics.bloomberg.com/new-york/">New York</a>, according to Bloomberg Bond Trader prices. The <a href="http://topics.bloomberg.com/dow-jones-industrial-average/">Dow Jones Industrial Average</a> rose 0.3 percent to 12,492.10 at 12:59 p.m., after surging 1.5 percent yesterday to its highest closing level since June 2008. </p> <h2>Housing Market </h2> <p>The president said the economy is still “not growing quite as fast as we would like” even after creating almost 2 million jobs in the past 18 months. He called the housing market “probably the biggest drag” on the economy. </p> <p>“What I’m really concerned about is making sure that the housing market overall recovers enough that it’s not such a huge drag on the economy because, if it isn’t, then people will have more confidence, they’ll spend more, more people will get hired, and overall the economy will improve,” he said. “It’s still tough out there.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/us-finances-are-unsustainable.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:22:00-07:00">11:22 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2810748990794036709">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2810748990794036709" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3023513994864074542"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/s-tells-biggest-debtor-dont-blow-final.html">S&P Tells Biggest Debtor Don’t Blow Final Act</a> </h3> <div class="post-body entry-content"> <h1>S&P Tells Biggest Debtor Don’t Blow Final Act: Caroline Baum</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Caroline Baum</span> -</cite></div><br /><div class="story_inline assets"> <img alt="Baum" class="author_photo" src="http://cdn.gotraffic.net/v/20110419_110714/images/authors/baum.jpg" /> <p class="author_caption">Caroline Baum</p> </div> <p>Rarely has a credit rating company made such an astute observation of the human condition. </p> <p>“We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013,” <a href="http://topics.bloomberg.com/standard-%26-poor%27s/">Standard & Poor’s</a> said on assigning a negative outlook to the U.S. AAA-credit rating Monday. </p> <p>Any observer of the budget debate in Washington would have to believe there’s a material risk, too. </p> <p>The <a href="http://topics.bloomberg.com/u.s.-treasury/">U.S. Treasury</a>, aware that any rise in <a href="http://topics.bloomberg.com/interest-rates/">interest rates</a> from increased credit risk would further damage its fiscal position, was quick to counter S&P’s shot across the bow. The negative outlook “underestimates the ability of America’s leaders to come together” to solve the debt problem, Assistant Secretary for Financial Markets <a href="http://topics.bloomberg.com/mary-miller/">Mary Miller</a> said. </p> <p>Come together? Miller must be watching a different theatrical production than I am. Treasury Secretary <a href="http://topics.bloomberg.com/tim-geithner/">Tim Geithner</a> was shuttled off to TV business channels yesterday to tell us that, unlike S&P, his outlook on the U.S. fiscal situation isn’t negative. </p> <p>Take a look at the first four acts of this drama, and you decide who’s right. </p> <p>Act I: Dec. 1, 2010. Moment of Truth. </p> <p>President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a>’s National Commission on Fiscal Responsibility and Reform releases its <a href="http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf" title="Open Web Site" rel="external">report</a>. The commission’s plan relies on tax simplification and spending cuts to increase revenue. It aims to save $4 trillion over 10 years, reducing projected budget deficits to 2.3 percent of gross domestic product by 2015 from an estimated 10.9 percent this year. It includes a rise in the Social Security retirement age, lower federal entitlement benefits, a three-year freeze on federal workers’ pay and the elimination of “tax expenditures,” or the estimated $1.1 trillion of revenue lost each year to tax exemptions and loopholes. Small-government conservatives are unhappy that outlays as a share of GDP would increase to 21 percent, above the long-term average. Most everyone else sees the commission’s report as a fine start. </p> <p>Act II: Feb. 14, 2011. La-La Land. </p> <p>Obama ignores the recommendations of the commission and submits his $3.7 trillion budget request for fiscal 2012 to Congress. The blueprint is long on generalities and short on specifics. It purports to return annual deficits to a “sustainable” level by mid-decade but fails to address entitlement spending on programs such as Medicare, Medicaid and Social Security. Obama’s budget looks a lot like the <a href="http://topics.bloomberg.com/congressional-budget-office/">Congressional Budget Office</a>’s baseline, or auto-pilot projection, over the next 10 years and is sustainable only to the extent that the current trajectory of spending and revenue is sustainable. </p> <p>Act III: April 5, 2011. “Path to Prosperity.” </p> <p>House Budget Committee Chairman <a href="http://topics.bloomberg.com/paul-ryan/">Paul Ryan</a>, Republican of <a href="http://topics.bloomberg.com/wisconsin/">Wisconsin</a>, offers his <a href="http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf" title="Open Web Site" rel="external">plan</a> to cut spending and simplify the <a href="http://topics.bloomberg.com/tax-code/">tax code</a>, lowering the rates and broadening the base. Ryan is applauded for his bold vision and reviled (by Democrats) for his bold vision. Ryan’s plan slashes government spending to below 20 percent of GDP and lowers the top <a href="http://topics.bloomberg.com/tax-rate/">tax rate</a> for households and business to 25 percent from its current 35 percent. He claims to find cost savings by harnessing competition, allowing future retirees to choose a Medicare plan from private insurers while providing assistance for lower-income beneficiaries with greater health risks. </p> <p>Act IV: April 13, 2011. Get Serious. </p> <p>Obama tells an audience at George <a href="http://topics.bloomberg.com/washington/">Washington</a> University the U.S. has to live within its means and pay down its debt. Any serious plan to tackle the deficit has to address entitlements, he says. (See Act II for his unserious plan.) The president spends more time explaining how we got here (Bush’s fault) and trashing the Ryan budget than advocating for his own. His role in the debt binge is limited to emergency spending in response to the financial crisis he inherited. Obama proposes to reduce the deficit by $4 trillion in 12 years by cutting discretionary spending, finding savings in the <a href="http://topics.bloomberg.com/defense-budget/">defense budget</a>, reducing the cost of health care via Obamacare and eliminating tax breaks. The president will protect seniors, the middle class and investments in education, medical research and clean energy by taxing the rich. </p> <p>Act V: Sometime in the future. “Pray for the Gang of Six.” </p> <p>In the final act of a Shakespearean tragedy, the conflict is resolved. In real life, the two political parties are on opposite sides of the stage separated by what President <a href="http://topics.bloomberg.com/george-h.w.-bush/">George H.W. Bush</a> called the “vision thing.” </p> <p>Former Senator <a href="http://topics.bloomberg.com/alan-simpson/">Alan Simpson</a>, co-chair of the president’s deficit commission, summed up the impasse after listening to Obama’s partisan speech last week, telling reporters to “Pray for the Gang of Six.” </p> <p>The Senate’s bipartisan “Gang of Six” has yet to complete or release its deficit-reduction proposal. The fact that the three Democrats and three Republicans can be in the same room together offers the best hope for some kind of compromise. Obama has yet to invite Ryan to the White House even though the congressman has been teeing up budget ideas for a couple of years. </p> <p>Some analysts viewed S&P’s surprise shift to a negative outlook for the U.S.’s long-term credit rating as a timely kick in the pants. If the warning of higher borrowing costs -- Treasuries rallied Monday -- creates some urgency to address these problems now, then it was a good thing. </p> <p>Of course, there’s bad news too. As with earlier downgrades to companies about to go under, S&P may already be late. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/s-tells-biggest-debtor-dont-blow-final.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:20:00-07:00">11:20 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3023513994864074542">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3023513994864074542" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1969527997852515330"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/gold-touches-record.html">Gold Touches Record</a> </h3> <div class="post-body entry-content"> <h1>Gold Touches Record, Set for Third Weekly Gain</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Sungwoo Park and Jae Hur</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Gold Climbs to Record on Concern Inflation Accelerating " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iNLa6wOlrMGk" /> </div> <p class="caption">Gold, which has surged 31 percent in the past year, has gained every year since 2001 on increased investment demand for commodities and on concern that currencies may be debased as central banks stimulate their economies. Photographer: Frantzesco Kangaris/Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Minera's McEwen on Gold Price From April 21 " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=i.ALNlIaoV3M" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68947098/">Play Video</a></div> </div> <p class="caption"> April 21 (Bloomberg) -- Robert McEwen, chief executive officer of Minera Andes Inc., talks about the outlook for gold prices. McEwen talks with Julie Hyman on Bloomberg Television's "Fast Forward." (Source: Bloomberg) </p> </div> </div> </div> <p>Gold advanced for a third week as a weaker dollar and debt concerns boosted the metal’s appeal as an alternative investment. Silver gained to the highest level in 31 years. </p> <p>Gold for immediate delivery rose 1.4 percent this week and was little changed at $1,506.85 an ounce at 6:48 p.m. in Paris after climbing to an all-time high of $1,512.47 earlier today. June-delivery futures touched a record $1,509.60 yesterday on the Comex in <a href="http://topics.bloomberg.com/new-york/">New York</a>, the 10th all-time high this month. The exchange is closed today for the Good Friday holiday. </p> <p>“The weak dollar is having the most influence on gold at the moment,” said Chae Un Soo, a Seoul-based trader at Korea Exchange Bank Futures Co. “The market is getting more jittery now that we have sovereign-debt concerns about the U.S. in addition to Europe and the Middle East problems, which increasingly boosts safe-haven demand for gold.” </p> <p>The dollar slid to the lowest level since August 2008 against a basket of six major currencies this week on speculation that the U.S. Federal Reserve will be slow to raise borrowing costs. The Dollar Index is little changed today and is set for a 0.9 percent weekly drop. The Fed has kept the benchmark rate between zero percent and 0.25 percent since December 2008 and pledged to purchase $600 billion in Treasuries through June to stimulate the economy. </p> <p>Standard & Poor’s this week cut its debt outlook for the U.S. to negative from stable. Violence in the Middle East, sovereign-debt turmoil in <a href="http://topics.bloomberg.com/europe/">Europe</a> and <a href="http://topics.bloomberg.com/japan/">Japan</a>’s nuclear crisis have helped propel bullion 31 percent higher in the past year. </p> <p>“Overall trade for gold and other precious metals was extremely thin due to the market holiday in the U.S. and U.K.,” said <a href="http://topics.bloomberg.com/hiroyuki-kikukawa/">Hiroyuki Kikukawa</a>, general manager of research at IDO Securities Co. in Tokyo. </p> <p>Silver for immediate delivery climbed 2.1 percent to $47.25 an ounce, the highest price since 1980. The metal has climbed 11 percent this week, a fifth weekly advance and the biggest weekly gain since Feb. 18. </p> <p>Spot palladium fell 0.1 percent to $767.50 an ounce, while cash platinum was 0.3 percent higher at $1,822.50 an ounce. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/gold-touches-record.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:18:00-07:00">11:18 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1969527997852515330">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1969527997852515330" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8122955700232976258"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/libya-rebels-need-more-help.html">Libya Rebels Need More Help</a> </h3> <div class="post-body entry-content"> <h1>Libya Rebels Need More Help, McCain Says in Benghazi as Drones Take Flight</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Benjamin Harvey, Maher Chmaytelli</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Libya Rebels Urge More NATO Force to Avert Misrata Massacre " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ijJfyuWZ_AyY" /> </div> <p class="caption">Rebel fighters gear up on the main highway awaiting a rumored Libyan Army advance between the crucial towns of Ajdabiyah and Brega, Libya, on April 11, 2011. Photographer: Chris Hondros/Getty Images </p> </div> </div> </div> <p>The U.S. and its allies should provide more air support and financial aid to Libyan rebels, Senator <a href="http://topics.bloomberg.com/john-mccain/">John McCain</a> said in Benghazi after President Barack Obama sent armed Predator on missions to the nation. </p> <p>Those seeking to oust Muammar Qaddafi’s regime are “patriots who want to liberate their nation, they are not al- Qaeda,” McCain told a press conference today in the rebel capital city. </p> <p>The Arizona Republican said North Atlantic Treaty Organization states need to “urgently” increase close air support for rebel ground operations. He also said the rebels’ Transitional National Council should receive some of Qaddafi’s frozen assets to fund its operations and that the Council should be recognized as Libya’s government. </p> <p>McCain made his comments after <a href="http://topics.bloomberg.com/france/">France</a>, <a href="http://topics.bloomberg.com/italy/">Italy</a> and the U.K. sent military advisers to help rebels with communications and training and the U.S. authorized drones armed with Hellfire missiles in a bid to break the stalemated campaign against Qaddafi’s 42-year rule without sending troops into combat. </p> <p>“I fear a stalemate could give rise to radical Islamic forces,” McCain told the press conference. </p> <p>“We need to step up the pressure on every front” short of sending ground troops, U.K. Prime Minister <a href="http://topics.bloomberg.com/david-cameron/">David Cameron</a> said yesterday on BBC Scotland radio. Troops are prohibited under the United Nations Security Council resolution authorizing the no- fly zone. </p> <h2>Drones, Advisers </h2> <p>The drones, unmanned aircraft, previously have been used for reconnaissance. They provide better visibility of targets. That’s important when Qaddafi’s forces are fighting in and around cities, said Marine General James Cartwright, vice chairman of the Joint Chiefs of Staff. </p> <p>The remotely piloted aircraft were unable to complete missions on their first outing yesterday due to bad weather, Cartwright said yesterday. The Predator is made by closely held General Atomics Aeronautical Systems of San Diego. </p> <p>The European military advisers, who will total fewer than 50, will be the first official Western military forces in <a href="http://topics.bloomberg.com/libya/">Libya</a> since the Western intervention began a month ago. The NATO-led, <a href="http://daccess-dds-ny.un.org/doc/UNDOC/GEN/N11/268/39/PDF/N1126839.pdf?OpenElement" title="Open Web Site" rel="external">UN-sanctioned</a> mission is to police a no-fly zone, protect civilians and enforce an arms embargo on the Qaddafi regime. </p> <p>The uprising, which began in mid-February, has ground to a military stalemate near the central oil-port city of Brega. </p> <h2>Oil Exports </h2> <p>Fighting has halted most oil exports from Libya, which has Africa’s biggest oil reserves, as regional turmoil has sent <a href="http://topics.bloomberg.com/oil-prices/">oil prices</a> up more than 30 percent from a year ago. Crude oil for June delivery rose 84 cents to settle at $112.29 a barrel on the <a href="http://topics.bloomberg.com/new-york-mercantile-exchange/">New York Mercantile Exchange</a>. Markets were closed for the Good Friday holiday today. </p> <p>Residents of the rebel-held western city of Misrata, besieged for more than six weeks, suffer daily shelling by Qaddafi’s forces. </p> <p>Pilots in <a href="http://www.nato.int/cps/en/natolive/71679.htm" title="Open Web Site" rel="external">North Atlantic Treaty Organization</a> warplanes have had difficulty identifying Qaddafi’s forces once they move into cities and have had to exercise extra caution to avoid civilian casualties. The Predator gives NATO the ability to get closer to possible targets, review the scene and strike with precision. </p> <p>Earlier this week, the U.S. said it would provide $25 million in non-lethal aid, such as radios and body armor, to Libya’s rebels. </p> <p>U.S. Secretary of State <a href="http://topics.bloomberg.com/hillary-clinton/">Hillary Clinton</a> yesterday called for “some degree of patience” about the outcome of the conflict. She referred to the fact that the U.S. and its NATO allies bombed <a href="http://topics.bloomberg.com/serbia/">Serbia</a> for 78 days in 1999, during the presidency of her husband, <a href="http://topics.bloomberg.com/bill-clinton/">Bill Clinton</a>, to stop its attacks on Kosovo. The air campaign over Libya began just over a month ago. </p> <p>“It is always a temptation in any conflict to expect there to be a resolution quickly,” she told reporters after meeting with Dutch Foreign Minister Uri Rosenthal in <a href="http://topics.bloomberg.com/washington/">Washington</a>. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/libya-rebels-need-more-help.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:17:00-07:00">11:17 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8122955700232976258">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8122955700232976258" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1227728344998917646"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/geithner-downgrades-his-credibility-to.html">Geithner Downgrades His Credibility to Junk</a> </h3> <div class="post-body entry-content"> <h1>Geithner Downgrades His Credibility to Junk: Jonathan Weil</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Jonathan Weil</span> - <span class="datestamp"></span></cite></div><div class="story_inline assets"> <img alt="Weil" class="author_photo" src="http://cdn.gotraffic.net/v/20110419_110714/images/authors/weil.jpg" /> <p class="author_caption">Jonathan Weil</p> </div> <p>Fox Business reporter <a href="http://www.foxbusiness.com/watch/anchors-reporters/peter-barnes-bio/" title="Open Web Site" rel="external">Peter Barnes</a> began his televised interview with Treasury Secretary <a href="http://topics.bloomberg.com/tim-geithner/">Tim Geithner</a> two days ago with this question: “Is there a risk that the <a href="http://topics.bloomberg.com/united-states/">United States</a> could lose its AAA credit rating? Yes or no?” </p> <p>Geithner’s response: “No risk of that.” </p> <p>“No risk?” Barnes <a href="http://video.foxbusiness.com/v/4651704/geithner-no-risk-us-will-lose-aaa-credit-rating" title="Open Web Site" rel="external">asked</a>. </p> <p>“No risk,” Geithner said. </p> <p>It’s enough to make you wonder: How could Geithner know this to be true? The short answer is he couldn’t. </p> <p>All you have to do is read the research <a href="http://www2.standardandpoors.com/spf/pdf/events/UnitedStatesofAmericaRatingAffirmedOutlookRevisedToNegative.pdf" title="Open Web Site" rel="external">report</a> <a href="http://topics.bloomberg.com/standard-%26-poor%27s/">Standard & Poor’s</a> published on April 18 about its sovereign-credit rating for the U.S., and you will see it estimated the risk of a downgrade quite succinctly. “We believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years,” said S&P, which reduced its outlook on the government’s debt to “negative” from “stable.” </p> <p>There you have it: Geithner says the chance of a downgrade is zero. S&P says the odds it will cut its <a href="http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline;%20filename=041811RevisionUSGovernmentRating,1.pdf&blobheadername2=Content-Disposition&blobheadervalue1=applicati" title="Open Web Site" rel="external">rating</a> might be greater than one out of three. So who are you going to believe? Geithner? Or the people at S&P who actually will be deciding what S&P will do about S&P’s own rating of U.S. sovereign debt? </p> <p>It would be one thing to express the view that a downgrade would be unwarranted, or that the chance of it happening is remote. Either of these positions would be defensible. Geithner went beyond that and staked out an absolutist stance that reeks of raw arrogance: There is no risk a rating cut will occur. He left no room for a trace of a possibility, ever. </p> <h2>Battling Barney </h2> <p>The mystery is why Geithner would say such a thing. What’s he going to do if S&P or some other rating company winds up disagreeing with him? Send <a href="http://topics.bloomberg.com/barney-frank/">Barney Frank</a> to beat them up? The problem for leaders who make indefensible claims like this one is that, after a while, nobody knows whether to believe anything they say. Just remember all those government officials in <a href="http://topics.bloomberg.com/greece/">Greece</a>, Ireland and <a href="http://topics.bloomberg.com/portugal/">Portugal</a> who kept saying their countries didn’t need bailouts, long after it became clear they did. </p> <p>This was the same answer Geithner gave during an ABC News interview in February 2010, when asked if the U.S. might lose its AAA rating. “Absolutely not,” he said. “That will never happen to this country.” So, an asteroid could destroy the entire Eastern seaboard 100 years from now. And, in the world according to Geithner, we’re supposed to believe America’s top rating would be safe. </p> <p>Perhaps Geithner would be well-positioned to make such assessments if he were the only person on the planet with the authority to grade sovereign debt -- and if there were zero risk that he would ever die. Not only is Geithner mortal, he doesn’t even work for a <a href="http://sec.gov/spotlight/dodd-frank/creditratingagencies.shtml" title="Open Web Site" rel="external">nationally recognized statistical rating organization</a>. </p> <h2>Great Error </h2> <p>In one of the great errors of financial history, the U.S. long ago bestowed that vaunted designation on the likes of S&P and <a href="http://www.moodys.com/credit-ratings/United-States-of-America-Government-of-credit-rating-790575" title="Open Web Site" rel="external">Moody’s Investors Service</a>. The raters showed they could be <a href="http://levin.senate.gov/newsroom/supporting/2011/PSI_WallStreetCrisis_041311.pdf" title="Open Web Site" rel="external">corrupted</a> when they put their AAA marks on countless subprime mortgage bonds that quickly turned sour. Unlike the companies that bought those labels, though, the U.S. government didn’t solicit S&P’s ranking of its debt. Trying to predict with certainty what the raters may do next is a fool’s game. </p> <p>Sure, it’s conceivable the government might threaten to strip the raters of their officially recognized franchise as retaliation if they dared to downgrade the U.S. We can only hope this isn’t what Geithner had in mind when he made his bold prediction. A move like that would risk a major scandal, and it might not even work. </p> <h2>Unwilling Leaders </h2> <p>Nothing the raters say should matter, of course. The markets are well aware the <a href="http://topics.bloomberg.com/u.s.-debt/">U.S. debt</a> is on its way to surpassing the country’s annual gross domestic product, and that few leaders in <a href="http://topics.bloomberg.com/washington/">Washington</a> are willing to get federal spending under control again. </p> <p>The least Geithner could have done was take a page from <a href="http://topics.bloomberg.com/lloyd-blankfein/">Lloyd Blankfein</a>, the chairman and chief executive officer of <a href="http://www.bloomberg.com/apps/quote?ticker=GS:US" title="Get Quote" class="web_ticker">Goldman Sachs Group Inc. (GS)</a>, and throw in a wiggle word or two. Testifying last year at a hearing led by Democratic Senator <a href="http://topics.bloomberg.com/carl-levin/">Carl Levin</a> of <a href="http://topics.bloomberg.com/michigan/">Michigan</a>, Blankfein said “we didn’t have a massive short against the housing market,” notwithstanding that Goldman made about $500 million shorting the housing market in 2007. </p> <p>Levin says he wants to refer the matter to the <a href="http://topics.bloomberg.com/justice-department/">Justice Department</a> for a perjury investigation. Blankfein, of course, included the word “massive” in his statement, whatever that’s supposed to mean. Geithner could have done something similar. Yet for some inexplicable reason he didn’t, which, if nothing else, should tell us he probably wouldn’t have much of a future as a top executive at Goldman Sachs. </p> <p>No risk at all? If Geithner is really as smart as his friends say he is, he doesn’t believe it either. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/geithner-downgrades-his-credibility-to.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:16:00-07:00">11:16 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1227728344998917646">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1227728344998917646" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3281193970779116902"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/most-asian-stocks-decline.html">Most Asian Stocks Decline</a> </h3> <div class="post-body entry-content"> <h1>Most Asian Stocks Decline, Led by China</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Stephen Kirkland</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="China Stocks " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iCw9DjhWvdqY" /> </div> <p class="caption">An investor monitors stock prices at a securities exchange firm in Shanghai. Photographer: Qilai Shen/Bloomberg </p> </div> </div> </div> <p>Most stocks fell in <a href="http://topics.bloomberg.com/asia/">Asia</a> as Chinese shares slipped on speculation the country’s central bank may let the yuan strengthen to cool inflation. <a href="http://topics.bloomberg.com/china/">China</a>’s currency touched a 17-year high against the dollar, gold climbed to a record and shares in <a href="http://topics.bloomberg.com/russia/">Russia</a> rose. </p> <p>Declines by technology and materials stocks were offset by gains in automakers and industrial shares leaving the MSCI Asia Pacific Index unchanged at 138.82 even as six stocks retreated for every five that advanced. The Shanghai Composite Index slid 0.5 percent, while the yuan gained 0.2 percent to 6.5067. Gold increased to $1,512.47 an ounce, before trading at $1,506.85 at 5:25 p.m. in <a href="http://topics.bloomberg.com/london/">London</a>. Russia’s Micex jumped 0.8 percent. </p> <p>More rapid appreciation of the yuan may be a tool for curbing prices, Wang Yong, a professor at the People’s Bank of China’s training center in the city of <a href="http://topics.bloomberg.com/zhengzhou/">Zhengzhou</a>, wrote in a commentary published in today’s Securities Times newspaper. Stocks in Asia pared declines after <a href="http://www.bloomberg.com/apps/quote?ticker=6723:JP" title="Get Quote" class="web_ticker">Renesas Electronics Corp. (6723)</a>, a Japanese chipmaker, said it will restart operations at a plant damaged by the quake. Most markets in Europe and the Americas were closed today for Good Friday. </p> <p>“It’s a difficult environment for investors to take a proactive stance right now,” said <a href="http://topics.bloomberg.com/yoshinori-nagano/">Yoshinori Nagano</a>, a senior strategist in <a href="http://topics.bloomberg.com/tokyo/">Tokyo</a> at Daiwa Asset Management Co., which oversees about $104 billion. “There are still a lot of uncertainties for the global economy.” </p> <p>The MSCI Asia Pacific gauge advanced 2.2 percent this week. Samsung Electronics Co. slid 2.6 percent today. The memory-chip producer said it sued Apple Inc. claiming patent infringement, a week after the iPhone maker filed a complaint in <a href="http://topics.bloomberg.com/u.s.-federal-court/">U.S. federal court</a> alleging the South Korean company copied its products. </p> <h2>Toyota, Honda </h2> <p>Renesas Electronics advanced 1.4 percent after the chipmaker that supplies <a href="http://topics.bloomberg.com/japan/">Japan</a>’s carmakers said it plans to resume operations at its Naka plant in Ibaraki prefecture. <a href="http://www.bloomberg.com/apps/quote?ticker=7203:JP" title="Get Quote" class="web_ticker">Toyota Motor Corp. (7203)</a>, the world’s biggest carmaker, Honda Motor Co. and Nissan Motor Co. gained more than 2 percent. </p> <p>The Shanghai Composite Index extended this week’s decline to 1.3 percent, its worst week in three months. The yuan gained after the central bank set the currency’s reference rate 0.11 percent stronger at 6.5156 per dollar, the highest level since July 2005. Twelve-month non-deliverable forwards rose 0.38 percent to 6.3235 per dollar. </p> <p>Four interest-rate increases and higher bank reserve requirements have failed so far to curb prices, with the consumer-price index rising 5.4 percent in March. A stronger currency makes the country’s exports less competitive. </p> <p>Gold for immediate delivery advanced 1.4 percent so far this week. Silver for immediate delivery climbed 1.4 percent to $47.25 an ounce, the highest price since 1980. </p> <p>Emerging <a href="http://topics.bloomberg.com/europe/">Europe</a> </p> <p>Higher precious metals prices lifted OAO Polymetal, a Russian gold and silver producer, 2.1 percent higher, helping the biggest advance in the Micex. Benchmark equity indexes in <a href="http://topics.bloomberg.com/hungary/">Hungary</a> and the <a href="http://topics.bloomberg.com/czech-republic/">Czech Republic</a> declined, snapping three days of gains. </p> <p>Japan’s bonds rose, pushing 10-year yields to a four-week low, after Prime Minister <a href="http://topics.bloomberg.com/naoto-kan/">Naoto Kan</a>’s government compiled a 4 trillion yen ($49 billion) extra budget that didn’t include new debt sales. The yield on the 2021 bond fell 1.5 basis points to 1.21 percent. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/most-asian-stocks-decline.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:14:00-07:00">11:14 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3281193970779116902">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3281193970779116902" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2816576437980767190"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/warning-shot.html">A warning shot</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">The credit-rating outlook</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">A warning shot</span></div> <h1 class="rubric">S&P’s bombshell means more politically than economically </h1> <p class="ec-article-info"> <em>Washington, DC </em></p><div class="ec-article-content clear"> <p>SCEPTICS have wondered how long America could use its control of the world’s reserve currency as an excuse to rack up huge debts. Now they may have their answer. On April 18th Standard & Poor’s (S&P), a credit-rating agency, said it had lowered the outlook for America’s AAA credit rating, the highest, to negative.</p> <div class="content-image-float clearfix" style="width: 290px;"><img src="http://media.economist.com/images/images-magazine/2011/04/23/US/20110423_USC588.gif" alt="" /><span class="credit"></span></div> <p>Many rich countries have seen their debts and deficits balloon in recent years. According to S&P’s own calculations, America’s net debt of all levels of government, at 75% of GDP, is in the same range as the net debts of Germany, France and Britain, all rated AAA (see chart). But those countries, S&P frets, “are all now doing more about it” than America is. The agency had briefly put Britain’s rating on negative outlook, but lifted it when the coalition government swung towards austerity. The prospects of America following suit, says S&P, are hobbled by the fact that Republicans and Democrats cannot agree on how to tackle the deficit.</p> <p>Although stocks fell and credit-default swaps on American debt widened when the news broke, the bond market remained oddly unruffled: yields ended lower on the day. For all the attention it drew, S&P’s move will have little effect on America’s ability to borrow. As their downgrades to subprime securities during the financial crisis showed, rating agencies usually act long after the economic fundamentals have become obvious.</p> <p>Treasury investors care less about what S&P thinks than about inflation, growth, monetary policy and the relative appeal of other assets. Bond yields have edged lower lately because growth has slowed to a crawl (see <a href="http://www.economist.com/node/18587436">article</a>). Japan lost its AAA rating in 2009 because of a world-leading debt burden. But because of deflation, its bond yields remain at rock-bottom levels. America relies more on foreigners to buy its debt than Japan does, but many of those foreigners are official buyers such as central banks with little alternative.</p> <p>S&P puts the odds of an actual downgrade at one in three. Moody’s Investors Service and Fitch, the two other leading agencies, have left the rating alone. If America actually loses its AAA, some investors who are obliged to own only AAA-rated paper might have to sell. But the sovereign wealth funds, foreign governments and central banks who are the biggest holders of Treasuries invest in a broad range of assets of varying riskiness, notes Dino Kos of Hamiltonian Associates, a firm of economic consultants. China’s central bank, for example, has been buying Spanish government bonds, rated AA.</p> <p>S&P has chosen an odd moment to blame the lack of political action on the long-term deficit for making its move. The odds of such action are now better than they have been for a while, a point Moody’s made the same day as it affirmed its AAA rating. On April 15th the Republican-controlled House of Representatives adopted a budget plan that enacts sweeping cuts to Medicare, Medicaid and other government programmes. Not one Democrat voted for it; but at the same time Barack Obama was hitting the road to sell an alternative plan that relies more heavily on tax increases to achieve somewhat less deficit reduction. Meanwhile, a bipartisan “Gang of Six” senators are labouring towards their own deficit-reduction package.</p> <p>Between mid-May and early June the Treasury will bump up against the legal limit on how much debt it may issue. Failure to raise the limit would force it to renege on payments such as benefits to the elderly and, potentially, interest on the debt. Republicans say they will not vote for an increase without agreement on spending cuts. Mr Obama seems to hope they will settle for a broad agreement on targets and triggers that would automatically cut spending and raise taxes if the targets are not met. That would leave the tougher details until after the 2012 presidential election.</p> <p>For the moment both sides continue to talk tough, but S&P’s action has added to the pressure to strike a deal. After two years of being castigated by politicians for their irresponsible mortgage-ratings work, credit raters have turned the tables.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/warning-shot.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:11:00-07:00">11:11 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2816576437980767190">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2816576437980767190" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5858294524792021910"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/thrusters-v-laggards.html">Thrusters v laggards</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">The 2012 primaries</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Thrusters v laggards</span></div> <h1 class="rubric">The high tide of frontloading has passed and now seems to be ebbing </h1> <p class="ec-article-info"> | <em>WASHINGTON, DC </em></p><div class="ec-article-content clear"> <div class="content-image-float clearfix" style="width: 290px;"><img src="http://media.economist.com/images/images-magazine/2011/04/23/us/20110423_usd001.jpg" alt="" /><span class="credit"></span></div> <p>FOR decades Republicans and Democrats alike have bemoaned “frontloading”: the unseemly scramble among states to move their presidential primaries or caucuses earlier and earlier in election year, in the hope of exerting greater influence over the national result. As states such as Iowa and New Hampshire, which jealously guard the prerogative of going first, respond in kind, the point at which the nomination tends to be decided has retreated from June to March. For a time it looked as if the 2008 primary season might actually slide backwards into 2007, steeping even the Christmas holidays in election mania. In the end, Iowa went first on January 3rd. But that may have marked frontloading’s high tide. Although a few states are still trying to jump in early this time round, a concerted effort by the national leadership of both the Republicans and Democrats, and a desperate squeeze on state budgets, may actually succeed in delaying the primary schedule for once. </p> <p> Uppity legislators in Michigan and Missouri have introduced bills to advance their primaries. But it is Florida, a habitual offender, which is causing the most fuss by trying to hold its primary in January. This violates rules set by both the Democratic and Republican National Committees, which co-ordinate the nominating process and organise the conventions that make the result official. The two parties have barred January primaries, and want only the four habitual starters—Iowa, New Hampshire, Nevada and South Carolina—to hold their contests in February. All other states are supposed to wait until the first Tuesday in March at the earliest.</p> <p>The Republicans have tried to give the laggards extra clout by barring states with primaries in March from using a winner-takes-all voting system. Perhaps more compelling will be the penalties for going early: the loss of half of the offending state’s votes at the convention, which is due to take place in Tampa, Florida, in August 2012. Also at risk, the RNC says, are perks such as plum seating and accommodation at the convention and extra passes for guests: not trivial things, as state parties use them to butter up big donors. </p> <p>Nonetheless, Florida’s Republicans are undeterred. They control the state legislature, and have so far refused to budge from January 31st. Republican officials in Iowa, New Hampshire and South Carolina are so incensed that they have asked the party to move the convention to a more law-abiding state. But Florida’s Republican bigwigs are unconcerned, suggesting (probably rightly) that the party would not dare to snub the voters of a large swing state.</p> <p>If the RNC can somehow resolve this impasse, points out Josh Putnam, an academic who runs Frontloading HQ, a website which tracks such rows, most other states should fall into line, undoing some of the frontloading of recent years. In fact, several states are now in the process of postponing their primaries. Virginia has already set its date almost a month later than last time; Maryland and Washington, DC are on the verge of delaying by two months or more. Some Republican officials in Texas are toying with a move from March to April.</p> <p>The biggest proposed change would be in California, the most populous state, where legislation is in train to shift the primary from February to June. This is intended to save $100m by combining the presidential primary with those for other offices. Chris Christie, the Republican icon who is governor of New Jersey, wants to do the same. Washington state may scrap its primary altogether, leaving the parties to organise their own caucuses.</p> <p>Suspicious minds suggest that states dominated by Democrats are particularly keen to delay their primaries, in an attempt to ensure that conservative states have a lopsided influence over the early part of the race—thus increasing the likelihood of an unelectable firebrand clinching the Republican nomination. But gaming the system does not always work as planned: last time round, the early birds ended up with less clout in the Democratic race, as the battle for the nomination dragged on through every last primary. At any rate, Republican officials do not sound too worried—although their main goal may be to preserve a primary-free Christmas.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/thrusters-v-laggards.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-22T11:10:00-07:00">11:10 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5858294524792021910">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5858294524792021910" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="4286065467147603637"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/trump-this.html">Trump this</a> </h3> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Trump this</span></div> <h1 class="rubric">Just when you thought American politics could not become more bizarre </h1><div id="block-ec_components-share_inline_header" class="block block-ec_components"><div class="content clearfix"> </div> </div> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/23/us/20110423_usd000.jpg" alt="" /></div> <p>IN AMERICAN politics, as at the theatre, it can help to suspend your disbelief. That helps you to entertain even the most improbable of possibilities, such as the possibility that Donald Trump, TV showman and property billionaire, really intends to seek, and may actually win, the presidency of the United States. There is, certainly, no questioning the putative candidate’s own gargantuan self-belief. In recent weeks he has left interviewers slack-jawed with amazement as he throws out his thoughts on how he would behave as president. In Libya, for example, he would have intervened only if America could keep its oil afterwards. “In the old days,” he reminisced, “when you have a war and you win, that nation is yours.”</p> <p>You think such a man could not be president? Stifle that disbelief! An NBC News/<em>Wall Street Journal</em> poll at the beginning of this month suggested otherwise. When Republican and Republican-leaning primary voters were asked whom they would favour as a presidential nominee, Mr Trump scored 17%, sharing second place with Mike Huckabee, ahead of Sarah Palin and not impossibly far behind Mitt Romney, the front-runner, who was favoured by 21%. Since then his numbers have risen. A poll published on April 14th by Public Policy Polling put Mr Trump in the lead, with 26% to Mr Huckabee’s 17%.</p> <p><a name="born_in_the_usa,_if_nothing_else"></a><strong>Born in the USA, if nothing else</strong></p> <p>Like most of the Republican field, Mr Trump has not yet confirmed that he is a candidate. He says he may signal his announcement in the live finale of his reality-TV show, “Celebrity Apprentice”, which airs on May 22nd. But why shouldn’t he run? True, he claims to be happy and successful enough already (“I have fairly but intelligently won many billions of dollars”), and would far prefer to stand back if another “fantastic” candidate hove into view. Sad to say, none has done so yet. And America, after all, needs saving. Under its present management, laments Mr Trump (“our current president came out of nowhere”), it is sorely disrespected. It has become an international “whipping post” and “the laughing stock of the world”, jigged around by currency-manipulating Chinese and price-manipulating oil producers. When he is president, “We’ll be taking in hundreds of billions of dollars from other countries that are screwing us.”</p> <p>Mr Trump has another big thing going for him. He was born in the United States, and he has the birth certificate to prove it, having paid New York the $38 required to have it sent to him. Until recently he thought that Barack Obama was born in America too, but now he is not so sure. Mr Trump has sent a team of investigators to Hawaii to look into the issue. But, in the meantime, he is positive that Mr Obama’s first book, “Dreams From My Father”, was written by Bill Ayers, the Vietnam-era terrorist. That book, after all, was “Ernest Hemingway-plus”, whereas the second book Mr Obama claims to have written, “The Audacity of Hope”, was plainly written by “someone much more average”. </p> <p>Would it be unfair to attribute Mr Trump’s sudden popularity among Republicans to his sudden conversion to “birtherism”? There are certainly votes to be scooped up that way. More than a third of Republican voters do not believe that Mr Obama was born in America, and most conservative politicians are a little more restrained on the subject. A few, such as Michele Bachmann, try to have it both ways, saying on the one hand that they will accept the president’s word that he was born in Hawaii, while still implying on the other that there is room for doubt. But most steer clear of this canard for fear of looking foolish. (For the record, nobody needs to rely on Mr Obama’s word: the birth certificate has been posted online for all to see, and his birth was announced, at the time, in a local newspaper.) </p> <p>Here, perhaps, is one secret of Mr Trump’s success so far. Though it is obvious that he is no fool, he has no fear of saying foolish things. People are used to it. Indeed, he seems impervious to criticism of almost any kind except of his remarkable hairstyle (or, the unkind aver, his hairpiece). At public meetings or in television interviews he brushes off boos, taunts and evidence with a supreme insouciance. He has little to lose by flirting with politics, and, when you think about it, rather a lot to gain. </p> <p>No matter how he made his claimed billions, a part of his fortune depends now on his celebrity. Hence the appeal of another shot at politics. Outrageousness begets attention, being well-known helps you to run for president, and threatening to run for president makes you more famous still. As in the case of Mrs Palin, a whole sub-branch of psephology is now dedicated to figuring out whether Mr Trump is “serious” about running or merely burnishing his brand. </p> <p>Now re-engage your disbelief. Polls taken this far before a primary campaign are notoriously useless. Mr Trump’s sudden good showing may say more about the weakness of the rest of the present Republican field than his own strengths. Though he has deep pockets, spending a fortune is not decisive in small states that take their caucuses and primaries seriously, such as all-important Iowa and New Hampshire. And trying to outflank them, like Rudy Giuliani in 2008, has proved a weak strategy. </p> <p>Once serious Republicans take a closer look at Mr Trump, they are liable to be unimpressed. Like his party affiliations (he has in his time been a Democrat and a member of the tiny Reform Party as well as a Republican), his policy positions have meandered all over the place. In a book he wrote in 2000 while angling for the Reform Party nomination, he praised Canada’s single-payer health-care system. This is anathema to most Republican voters, who think Obamacare radical enough. In short, for all his undoubted entertainment value, there is virtually no chance of Mr Trump becoming president. Thank goodness. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-86984413426567053882011-04-20T12:54:00.000-07:002011-04-20T12:55:00.196-07:00<div class="post-body entry-content"> <h1 class="title"><span style="font-size:130%;">China and the End of the Deng Dynasty</span></h1><p><strong>By Matthew Gertken and Jennifer Richmond</strong></p> <p>Beijing has become noticeably more anxious than usual in recent months, launching one of the more high-profile security campaigns to suppress political dissent since the aftermath of the Tiananmen Square crackdown in 1989. Journalists, bloggers, artists, Christians and others have been arrested or have disappeared in a crackdown prompted by fears that foreign forces and domestic dissidents have hatched any number of “Jasmine” gatherings inspired by recent events in the Middle East. More remarkable than the small, foreign-coordinated protests, however, has been the state’s aggressive and erratic reaction to them.</p> <p>Meanwhile, the Chinese economy has maintained a furious pace of credit-fueled growth despite authorities’ repeated claims of working to slow growth down to prevent excessive inflation and systemic financial risks. The government’s cautious approach to fighting inflation has emboldened local governments and state companies, which benefit from rapid growth. Yet the risk to socio-political stability posed by inflation, expected to peak in springtime, has provoked a gradually tougher stance. The government thus faces twin perils of economic overheating on one side and overcorrection on the other, either of which could trigger an outburst of social unrest — and both of which have led to increasingly erratic policymaking.</p> <p>These security and economic challenges are taking place at a time when the <a href="http://www.stratfor.com/analysis/20100910_looking_2012_china_next_generation_leaders">transition from the so-called fourth generation of leaders to the fifth generation in 2012</a> is under way. The transition has heightened disagreements over economic policy and insecurities over social stability, further complicating attempts to coordinate effective policy. Yet something deeper is driving the Communist Party of China’s (CPC’s) anxiety and heavy-handed security measures: the need to transform the country’s entire economic model, which carries hazards that the Party fears will jeopardize its very legitimacy.</p> <h3>Deng’s Model</h3> <p>Former paramount leader Deng Xiaoping is well known for launching China’s emergence from Mao’s Cultural Revolution and inaugurating the rise of a modern, internationally oriented economic giant. Deng’s model rested on three pillars.</p> <p>The first was economic pragmatism, allowing for capitalist-style incentives domestically and channels for international trade. Deng paved the way for a growth boom that would provide employment and put an end to the preceding decade of civil strife. The CPC’s legitimacy thus famously became linked to the country’s economic success rather than to ideological zeal and class warfare.</p> <p>The second pillar was a foreign policy of cooperation. The lack of emphasis on political ideology opened space for international maneuver, with economic cooperation the basis for new relationships. This gave enormous impetus to the Sino-American detente Nixon and Mao initiated. In Deng’s words, China would maintain a low profile and avoid taking the lead. China would remain unobtrusive to befriend and do business with almost any country — as long as it recognized Beijing as the one and only China.</p> <p>The third pillar was the primacy of the CPC’s system. Reform of the political system along the lines of Western countries could be envisioned, but in practice would be deferred. That the reform process in no way would be allowed to undermine Party supremacy was sealed after the mass protests at Tiananmen, which the military crushed after a dangerous intra-Party struggle. The People’s Liberation Army (PLA) and the People’s Armed Police would serve as Deng’s “Great Wall of steel” protecting the Party from insurrection.</p> <p>For three decades, Deng’s model remained mostly intact. Though important modifications and shifts occurred, the general framework stands because Chinese-style capitalism and partnership with the United States have served the country well. Deng also secured his policy by establishing a succession plan: He was instrumental in setting up his immediate successor, <a href="http://www.stratfor.com/analysis/china_year_crackdown_part_3_uncertain_future">Jiang Zemin</a>, and Jiang’s successor, <a href="http://www.stratfor.com/china_100_days_hu">current President Hu Jintao</a>.</p> <p>Hu’s policies have not differed widely in practice from Deng’s. <a href="http://www.stratfor.com/weekly/20090223_internal_divisions_and_chinese_stimulus_plan">China’s response to the global economic crisis in 2008</a> revealed that Hu sought recourse to the same export- and investment-driven growth as his predecessors. Hu’s plans of boosting household consumption have failed, the economy is <a href="http://www.stratfor.com/analysis/20100419_china_shaky_structure_economic_miracle">more off-balance than ever</a>, and the interior remains badly in need of development. But along the general lines of Deng’s policy, the country has continued to grow and stay out of major conflict with the United States and others, and the Party has maintained indisputable control.</p> <h3>Emergent Challenges</h3> <p>Unprecedented challenges to Deng’s model have emerged in recent years. These are not challenges involving individuals; rather, they come from changes in the Chinese and international systems.</p> <p>First, more clearly than ever, <a href="http://www.stratfor.com/analysis/20110119-chinas-economic-challenges-year-ahead">China’s economic model is in need of restructuring</a>. Economic crisis and its aftermath in the developed world have caused a shortfall in foreign demand, and rising costs of labor and raw materials are <a href="http://www.stratfor.com/analysis/20100609_china_labor_unrest_inflation_and_restructuring_challenge">eroding China’s comparative advantage</a> even as its export sector and industries have built up extraordinary overcapacity.</p> <p>Theoretically, the answer has been to boost household consumption and rebalance growth — the Hu administration’s policy — but this plan carries extreme hazards if aggressively pursued. If consumption cannot be generated quickly enough to pick up the slack — and it cannot within the decade period that China’s leaders envision — then growth will slow sharply and unemployment will rise. These would be serious threats to the CPC, the legitimacy of which rests on providing growth. Hence, the attempt at economic transition has hardly begun.</p> <p>Not coincidentally, movements have arisen that seek to restore the Party’s legitimacy to a basis not of economics but of political power. Hu’s faction, rooted in the <a href="http://www.stratfor.com/analysis/20110203-chinese-party-secretarys-campaign">Chinese Communist Youth League (CCYL)</a>, has a doctrine of wealth redistribution and Party orientation. It is set to expand its control when the <a href="http://www.stratfor.com/analysis/20101230-chinese-provincial-reshuffling-and-6th-generation-leadership">sixth generation of leaders</a> arrives. This trend also exists on the other side of the factional divide. Bo Xilai, the popular Party chief in Chongqing, is a “princeling.” Princelings are the children of Communist revolutionaries, who often receive prized positions in state leadership, large state-owned enterprises and the military. This group is expected to gain the advantage in the core leadership after the 2012 transition. Bo made himself popular by striking down organized-crime leaders who had grown rich and powerful from new money and by bribing officials. Bo’s campaign of nostalgia for the Mao era, including singing revolutionary songs and launching a <a href="http://www.stratfor.com/analysis/20101222-chinese-microblogs-and-government-spin">“Red microblog”</a> on the Internet, has proved hugely popular. It also has added an unusual degree of public support to his bid for a spot on the Politburo Standing Committee in 2012. Both sides appeal to the inherent value of the Party, rather than its role as economic steward, for justification.</p> <p>The second challenge to Deng’s legacy has arisen from the military’s growing self-confidence and confrontational attitude toward foreign rivals, a stance popular with an increasingly nationalist domestic audience. The foreign policy of inoffensiveness for the sake of commerce thus has been challenged from within. Vastly more dependent on foreign natural resources, and yet insecure over prices and vulnerability of supply lines, China has turned to the PLA to take a greater role in protecting its global interests, <a href="http://www.stratfor.com/analysis/20090323_part_1_china_s_new_need_maritime_focus">especially in the maritime realm</a>. As a result, the <a href="http://www.stratfor.com/weekly/20110117-chinas-military-comes-its-own">PLA has become more forceful in driving its policies</a>.</p> <p>In recent years, China has pushed harder on territorial claims and more staunchly defended partners like North Korea, Iran, Pakistan and Myanmar. This trend, especially observable throughout 2010, has alarmed China’s neighbors and the United States. The PLA is not the only institution that seems increasingly bold. Chinese government officials and state companies have also caused worry among foreigners. But the military acting this way sends a particularly strong signal abroad.</p> <p>And third, Deng’s avoidance of political reform may be becoming harder to maintain. The stark disparities in wealth and public services between social classes and regions have fueled dissatisfaction. Arbitrary power, selective enforcement of the law, official and corporate corruption, and other ills have gnawed at public content, giving rise to more and more frequent incidents and outbursts. The social fabric has been torn, and leaders fear that it could ignite with widespread unrest. Simultaneously, rising education, incomes and <a href="http://www.stratfor.com/analysis/20110308-intelligence-guidance-jasmine-gatherings">new forms of social organization</a> like non-governmental organizations and the Internet have given rise to greater demands and new means of coordination among dissidents or opposition movements.</p> <p>In this atmosphere, Premier Wen Jiabao has become outspoken, <a href="http://www.stratfor.com/analysis/20101013_oct_11_petition_and_political_reform_china">calling for the Party to pursue political reforms</a> in keeping with economic reforms. Wen’s comments contain just enough ambiguity to suggest that he is promoting substantial change and diverging from the Party, though in fact he may intend them only to pacify people by preserving hope for changes in the unspecified future. Regardless, it is becoming harder for the Party to maintain economic development without addressing political grievances. Political changes seem necessary not only for the sake of pursuing oft-declared plans to unleash household consumption and domestic innovation and services, but also to ease social discontent. The Party realizes that reform is inevitable, but questions how to do it while retaining control. The possibility that the Party could split on the question of political reform, as happened in the 1980s, thus has re-emerged.</p> <p>These new challenges to the Deng approach reveal a rising uncertainty in China about whether his solutions are adequate to secure the country’s future. Essentially, the rise of Maoist nostalgia, the princelings’ glorification of their Communist bloodline and the CCYL’s promotion of ideology and wealth redistribution imply a growing fear that the economic transition may fail, and that the Party therefore may need a more deeply layered security presence to control society at all levels and a more ideological basis for the legitimacy of its rule. Meanwhile, a more assertive military implies growing fears that a foreign policy of meekness and amiability is insufficient to protect China’s access to foreign trade from those who feel threatened by China’s rising power, such as Japan, India or the United States. Finally, a more strident premier in favor of political reform suggests fear that growing demands for political change will lead to upheaval unless they are addressed and alleviated.</p> <h3>Containing the Risks</h3> <p>These emerging trends have not become predominant yet. At this moment, Beijing is struggling to contain these challenges to the status quo within the same cycle of tightening and loosening control that has characterized the past three decades. Though the cycle is still recognizable, the <a href="http://www.stratfor.com/weekly/20100308_chinas_challenge">fluctuations are widening</a> — and the policy reactions are becoming more sudden and extreme.</p> <p>The country is continuing to pursue the same path of economic development, even sacrificing more ambitious rebalancing to re-emphasize, in the <a href="http://www.stratfor.com/analysis/20110206-china-economic-memo-feb-6-2011">2011-15 Five-Year Plan</a>, what are basically the traditional methods of growth. These include massive credit expansion fueling large-scale infrastructure expansion and technology upgrades for the export-oriented manufacturing sector, all provided for by transferring wealth from depositors to state-owned corporations and local governments. Modifications to the status quo have been slight, and radical transformation of the overall growth model has not yet borne fruit.</p> <p>In 2011, China’s leaders also have signaled a swing away from last year’s foreign policy assertiveness. <a href="http://www.stratfor.com/analysis/20110117-friendly-facade-us-china-talks">Hu and Obama met in Washington in January</a> and declared a thaw in relations. Recently, Hu announced a <a href="http://www.stratfor.com/analysis/20110414-chinas-charm-offensive-and-brics-summit">“new security concept”</a> for the region. He said that cooperation and peaceful negotiation remain official Chinese policy, and that China respects the “presence and interests” of outsiders in the region, a new and significant comment in light of the <a href="http://www.stratfor.com/analysis/20100811_us_china_conflicting_interests_southeast_asia">U.S. re-engagement with the region</a>. The United States has approved China’s backpedaling, saying the Chinese navy has been less assertive this year than the last, and Washington has since toned down its own threats. China’s retreat is not permanent, and none of its neighbors have forgotten its more threatening side. But China has signaled an attempt to diminish tensions, as it has done in the past, to avoid provoking real trouble abroad (while focusing on troubles at home) for the time being.</p> <p>Finally, the security crackdown under way since February — part of a longer trend of security tightening since at least 2008, but with remarkable new elements — shows that the state remains committed to Deng’s general deferral of political reform, <a href="http://www.stratfor.com/analysis/20110221-jasmine-protests-and-chinese-social-management">choosing strict social control</a> instead.</p> <p>The Deng model thus has not yet been dismantled. But the new currents of military assertiveness, ideological zeal and demand for political reform have revealed not only differences in vision among the elite, but a rising concern among them for their positions ahead of the leadership transition. Sackings and promotions already are accelerating. Unorthodox trends suggest that leaders and institutions are hedging political bets to protect themselves, their interests and their cliques in case the economic transition goes wrong or foreigners take advantage of China’s vulnerabilities, or ideological division and social revolt threaten the Party. And this betrays deep uncertainties.</p> <h3>The Gravity of 2012</h3> <p>As the jockeying for power ahead of the 2012 transition has already begun in earnest, signs of vacillating and conflicting policy directives suggest that the regime is in a constant state of policy adjustment to try to avoid an extreme shift in one direction or another. Tensions are rising between leaders as they try to secure their positions without upsetting the balance and jeopardizing a smooth transfer of power. The government’s arrests of dissidents underline its fear of these growing tensions, as well as its sharp reactions to threats that could disrupt the transition or cause broader instability. Everything is in flux, and the cracks in the system are widening.</p> <p>One major question is how long the Party will be able to maintain the current high level of vigilance without <a href="http://www.stratfor.com/analysis/20110405-china-security-memo-april-6-2011">triggering a backlash</a>. The government effectively has silenced critics deemed possible of fomenting a larger movement. The masses have yet to rally in significant numbers in a <a href="http://www.stratfor.com/analysis/20110223-challenges-dissent-inside-china">coordinated way that could threaten the state</a>. But the regime has responded disproportionately to the organizational capabilities that the small Jasmine protests demonstrated, and has extended this magnified response to a number of otherwise-familiar <a href="http://www.stratfor.com/analysis/20110317-sichuan-self-immolation-spark-unrest">spontaneous protests and incidents of unrest</a>.</p> <p>As security becomes more oppressive in the lead up to the transition — with any easing of control unlikely before then or even in the following year as the new government seeks to consolidate power — the heavy hand of the state runs the risk of provoking exactly the type of incident it hopes to prevent. Excessive brutality, or a high-profile mistake or incident that acts as a catalyst, could spark spontaneous domestic protests with the potential to spread.</p> <p>Contrasting Deng’s situation with Hu’s is illuminating. When Deng sought to step down, his primary challenges were how to loosen economic control, how to create a foreign policy conducive to trade, and how to forestall democratic challenges to the regime. He also had to leverage his prestige in the military and Party to establish a reliable succession plan from Jiang to Hu that would set the country on a prosperous path.</p> <p>As Hu seeks to step down, his challenges are to prevent economic overheating, counter any humiliating turn in foreign affairs such as greater U.S. pressure, and forestall unrest from economic left-behinds, migrants or other aggrieved groups. Hu cannot allow the Party (or his legacy) to be damaged by mass protests or economic collapse on his watch. Yet, like Jiang, he has to control the process without having Deng’s prestige among the military ranks and without a succession plan clad in Deng’s armor.</p> <p>More challenging still, he has to do so without a solid succession plan. Hu is the last Chinese leader Deng directly appointed. It is not clear whether China’s next generation of leaders will augment Deng’s theory, or discard it. But it is clear that China is taking on a challenge much greater than a change in president or administration. It is an existential crisis, and the regime has few choices: continue delaying change even if it means a bigger catastrophe in the future; undertake wrenching economic and political reforms that might risk regime survival; or retrench and sacrifice the economy to maintain CPC rule and domestic security. China has already waded deep into a total economic transformation unlike anything since 1978, and at the greatest risk to the Party’s legitimacy since 1989. The emerging trends suggest a likely break from Deng’s position toward heavier state intervention in the economy, more contentious relationships with neighbors, and a Party that rules primarily through ideology and social control.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/china-and-end-of-deng-dynasty.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T12:39:00-07:00">12:39 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3606670757955436377">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3606670757955436377" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3738406083106353448"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/existing-home-sales-rose-37-in-march.html">Existing home sales rose 3.7% in March</a> </h3> <div class="post-body entry-content"> Data Watch<br />________________________________________<br /><span style="font-weight: bold;font-size:180%;">Existing home sales rose 3.7% in March </span><br />Brian S. Wesbury - Chief Economist<br />Robert Stein, CFA - Senior Economist<br />Date: 4/20/2011<br />Existing home sales rose 3.7% in March to an annual rate of 5.10 million units, above the consensus expected pace of 5.00 million units. Existing home sales are down 6.3% versus a year ago.<br />Sales in March were up in the Northeast, Midwest, and South, but down in the West. Sales rose for both single-family homes and condos/coops.<br /><br />The median price of an existing home rose to $159,600 in March (not seasonally adjusted), but is down 5.9% versus a year ago. Average prices are down 3.5% versus last year.<br /><br />The months’ supply of existing homes (how long it would take to sell the entire inventory at the current sales rate) fell to 8.4 from 8.5 in February. The drop in the months’ supply was due to faster sales pace, which offset an increase in inventories.<br /><br />Implications: Just when you started to believe the pundits were right and housing would never come back, the data have made a nice turn to the upside. After pulling back in February (by less than first estimated), existing home sales increased to a 5.10 million unit annual pace in March. This is the fourth strong monthly gain in the past five months and existing home sales are now 32.1% above their low of 3.86 million in July 2010. Sales gains were widespread, increasing in most major regions of the country. On the price front, the median price of an existing home rose to $159,600, although prices are still down 5.9% in the past year. The rebound in housing data in the past few days is positive, but does not signal a miraculous return to pre-crisis conditions. There are many positive developments (higher wages, job growth, low interest rates, and great prices), but credit conditions remain tight. So, while we expect the sales of existing homes to climb back to their long-term trend of about 5.5 million units annually, the process will remain volatile. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/existing-home-sales-rose-37-in-march.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T12:37:00-07:00">12:37 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3738406083106353448">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3738406083106353448" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4010779966604019659"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/brian-doherty-on-forgotten-history-of.html">Brian Doherty on The Forgotten History of the Antiwar Right</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/brian-doherty-on-forgotten-history-of.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T11:44:00-07:00">11:44 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4010779966604019659">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4010779966604019659" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="9116847343459105199"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/principles-of-economics-robert-p-murphy.html">Principles of Economics | Robert P. Murphy</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/principles-of-economics-robert-p-murphy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T11:36:00-07:00">11:36 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9116847343459105199">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9116847343459105199" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6027148923812654964"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/what-ever-happened-to-constitution.html">What Ever Happened to the Constitution? | Andrew Napolitano</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/what-ever-happened-to-constitution.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T11:34:00-07:00">11:34 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6027148923812654964">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6027148923812654964" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2834868465084899374"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/jack-hunter-on-freedom-watch-033111.html">Jack Hunter on Freedom Watch 03/31/11</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/jack-hunter-on-freedom-watch-033111.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T11:33:00-07:00">11:33 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2834868465084899374">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2834868465084899374" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2095777798315291769"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-on-hardball-041911.html">Ron Paul on Hardball 04/19/11</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-on-hardball-041911.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T11:32:00-07:00">11:32 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2095777798315291769">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2095777798315291769" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1815809833204121895"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/three-more-attacks-on-civilization.html">Three More Attacks on Civilization</a> </h3> <div class="post-body entry-content"> <h1 align="center"><span style="font-family:Times New Roman, Times, serif;font-size:6;"><b> <span style="font-size:130%;">Three More Attacks on Civilization</span></b></span></h1> <p align="center"><span style="font-family:Georgia, Times New Roman, Times, serif;font-size:100%;"><b><span style="font-family:Times New Roman, Times, serif;">by Jeffrey A. Tucker</span></b></span></p><p style="font-family: georgia;"><span style="font-size:100%;">Thank goodness we’ve got a global marketplace where banned and nearly banned products can be purchased with a click. This is how I obtained a box of <a href="http://www.amazon.com/Savogran-10622-Trisodium-Phosphate-TSP/dp/B000AXE7CY/lewrockwell">Savogran Trisodium Phosphate</a>, which sounds like an explosive but is really just a cleanser that was in every dish-washing soap until last year. It is made of phosphorous, an element from bone ash or urine that was discovered in Germany in the 17th century. It is also the reason that dishwashers once cleaned dishes perfectly, leaving no residue or spots. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Remember the old Calgon commercial that showed food falling off plates and glasses left gleaming at the end of a wash? That was phosphorous at work. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">It is still a must in commercial establishments like restaurants and hotels. But 17 states have already banned the product for consumers, causing most all makers of the detergent to remove it from their product, which vastly degraded its value. The detergent makers saw the writing on the wall and this time decided to get out in front of the regulatory machine, anticipating a federal ban before it actually takes place. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Most consumers are clueless as to how sometime in the last year, their dishwashers stopped working properly. They call in the repairman, who fiddles with things and announces a fix. But it is not fixed. The glass are gritty and the plates often need to be rinsed again after washing. Many households have bought new machines or resorted to just running the dishes through twice. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">The creation of phosphorous-free detergent is the real reason. As Jonathan Last <a href="http://www.weeklystandard.com/articles/another-triumph-greens_536862.html">explains </a>in the <i>Weekly Standard</i>, the anti-phosphate frenzy began in Washington State, which was attempting to comply with a Clean Air Act mandate that a certain river be swimable and fishable. This was a problem because tests found inordinate amounts of phosphate in the river. As part of the effort to comply, the state banned phosphates from detergents. That was in 2008, but the way politics works these days, the banning spread to state after state – again with the backing of federal law. </span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="left" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">Now, it is clear that the law’s proponents knew exactly what the results would be. It would increase dishwasher use and even end up leading people to abandon dishwashers altogether, and either solution leads to much more water and energy use. In other words, even by the goofy environmentalists own standards, this is no savings. It might end up in the reverse. </span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">Studies since the ban have even shown that phosphorous reduction in the Washington State river is entirely due to a new filtering system and, further, that it turns out that the phosphorous in the river was not even a problem in the first place! </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Of course the facts don’t matter. Our conveniences like clean plates and machines that makes them so must be sacrificed to the false gods of environmentalism. One of the great innovations in human history must be reverted because governments are enthralled by the witchdoctors of mother earth. And thus must mankind take yet another step background on the trajectory toward social progress. And to heck with your fetish for clean things! </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">A similar impulse is driving the new attack on ice makers. Jeffrey Kluger <a href="http://ecocentric.blogs.time.com/2011/04/14/how-the-ice-in-your-drink-is-imperiling-the-planet/">writes </a>in <i>Time Magazine</i> a typically hectoring piece that claims that one way to say the earth is to "buy a couple of ice trays. To the long list of human inventions that are wrecking global climate – the internal combustion engine, the industrial era factory – add the automatic ice maker."</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Of course we don’t use ice makers for completely arbitrary reasons. It is because it is a pain in the neck to carry a full tray across the room, spill a bit here and there, and then balance it carefully in the freezer. And then when you take it out, your fingers stick to the trays and you have to break the tray and dump the cubes into something and re-freeze what you do not use, and then the cubes stick together and so on. That’s why we use ice makers. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">But, still, the Department of Energy hates them. And so it has warned all makers of freezers that it will lower the energy-compliance rating of any freezer that keeps them. Or, another way to make a freezer with an ice maker is to degrade the refrigerator and freezer itself, leaving most of the energy use for the ice maker. </span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="left" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">This whole model forgets a perfectly obvious point: having an ice maker often means that you have an ice dispenser on the outside of the fridge, meaning that you do not have to open the door to get your ice. This is surely an energy saver. Having to open the freezer far more often only ends up wasting energy, which is another reason for the ice maker in the first place (saves on electrical bills). </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Here again, facts don’t matter. If there is something you like and makes your life better, you can bet that some bureaucrat somewhere has targeted it for destruction. Saving the planet is the most convenient excuse around. <i>Time Magazine</i> would contribute more to "Saving the Planet" by putting an end to its print publication. </span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">We can see where this is headed. Just as people hoard old toilet tanks and old washing machines that actually use water to wash clothes, so too people will now have to hoard their old refrigerators because they work. We are becoming like the Cubans with their 1950s model cars, holding on to them for dear life if only to preserve some elements of civilization in the face of government attacks. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Now let’s talk drain openers. Everyone knows that the best chemical drain opener is lye, or solium hydroxide. It is wicked stuff that cuts through grease, hair, or just about anything else. It was burn right through human flesh and leaving terrible scarring. But for drains, nothing else compares. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Now that less and less water is flowing through our homes, thanks to regulatory attacks on water use, and the water we use is ever more tepid, thanks to regulatory attacks on hot-water heaters, it is no surprise that clogged drains are ever more common, thus making lye an essential household chemical. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">If you can get it. The mainstream hardware stores have stopped carrying the stuff. So have the grocery stores. When I asked around, I thought I would hear stories involving liability for injuries, but no: instead the excuse is the drug war. It turns out that this stuff is an ingredient in the making of methamphetamine, and hence it too is on the regulatory hit list. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Fortunately you can still buy it through Amazon, but how many people know this? How many people are buying liquid drain openers only to discover that they don’t actually work? Surely millions are doing this. So far as I can tell, there is nothing but hush hush about the strangely disappearance of lye-based crystal drain openers from our shelves. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><img src="http://www.lewrockwell.com/tucker/tucker2.jpg" vspace="7" width="165" align="left" height="150" hspace="15" />So there we go: we must also live with clogged drains, so that not even the pathetic drizzles of tepid water that come out of our faucets can flow down the drain, and we must stand in pools of bacteria-breeding water as we take our short, cold showers. It’s back to the 19th century for all of us! </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">In these three examples, we can see the model at work: puritans and paranoids work with bureaucrats to unravel all the gains that markets have made for civilization. And they do this not with persuasion or an attempt to convert us to their primitive faith. Instead, they do it by force, driving us back to the compost pile, the river for cleaning, and, eventually, having to hunt and gather for our food that we take back to our caves, which serve as domestic environs for those lucky enough to survive their regime of coerced poverty. </span> </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/three-more-attacks-on-civilization.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T09:02:00-07:00">9:02 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1815809833204121895">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1815809833204121895" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1216008372029842270"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/us-to-recoup-libya-oil-from-china.html">'US To Recoup Libya Oil From China'</a> </h3> <div class="post-body entry-content"> <h1 align="center"><span style="font-family:Georgia, Times New Roman, Times, serif;font-size:130%;"><b><span style="font-family:Times New Roman, Times, serif;">'US To Recoup Libya Oil From China'</span></b></span></h1> <p align="center"><span style="font-family:Georgia, Times New Roman, Times, serif;font-size:100%;"><b><span style="font-family:Times New Roman, Times, serif;">Interview with <a href="mailto:paulcraigroberts@yahoo.com">Paul Craig Roberts</a></span></b></span></p><p style="font-family: georgia;"><span style="font-size:100%;"><i>Press TV has interviewed Dr. Paul Craig Roberts, former assistant secretary of US Treasury from Panama City, who gives his insight on the revolution in Libya and why US President Barack Obama needs to overthrow Qaddafi when no other US presidents did.</i></span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV: </b>Russia has criticized NATO for going far beyond its UN mandate. In other news a joint Op Ed is going to be written by Obama, Cameron and Sarkozy who have said that “leaving Qaddafi in power would be an unconscionable betrayal to the Libyan people”.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">We do know that the mandate does not call for regime change; the Obama administration has been saying they are not in there for regime change; but things seem a little different now don't they?</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts: </b>Yes they do. First of all, notice that the protests in Libya are different from the ones in Egypt or Yemen or Bahrain or Tunisia and the difference is that this is an armed rebellion.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">There are more differences: another is that these protests originated in the eastern part of Libya where the oil is – they did not originate in the capital city. And we have heard from the beginning credible reports that the CIA is involved in the protests, and there have been a large number of press reports that the CIA has sent back to Libya its Libyan asset to head up the Libyan rebellion.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">In my opinion, what this is about is to eliminate China from the Mediterranean. China has extensive energy investments and construction investments in Libya. They are looking to Africa as a future energy source.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">The US is countering this by organizing the United States African Command (USAC), which Qaddafi refused to join. So that's the second reason for the Americans to want Qaddafi out.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">And the third reason is that Libya controls part of the Mediterranean coast and it's not in American hands.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV:</b> Who are the revolutionaries. The US say they don't know who they're dealing with, but considering the CIA is on the ground in contact with revolutionaries – Who are the people under whom Libya will function in any post-Qaddafi era?</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts: </b>Whether or not Libya functions under “revolutionaries” depends if the CIA wins – we don't know that yet. As you said earlier, the UN resolution puts constraints on what the European and American forces can achieve in Libya. They can have a no fly zone, but they are not supposed to be in there fighting together with the rebels.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">But of course the CIA is. So we do have these violations of the UN resolution. If NATO, which is now the cover for the “world community,” succeeds in overthrowing Qaddafi, the next target will be Syria. Syria has already been demonized.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Why are they targeting Syria? – Because the Russians have a very large naval base in Syria. And it gives the Russian navy a presence in the Mediterranean; the US and NATO do not want that. If there is success in overthrowing Qaddafi, Syria is next.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Already, they are blaming Iran for Syria and Libya. Iran is a major target because it is an independent state that is not a puppet of the Western colonialists.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV: </b>With regards to the expansionist agenda of the West, when the UN mandate on Libya was debated in the UN Security Council, Russia did not veto it. Surely Russia must see this expansionist policy of the US, France and Britain.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts: </b>Yes they must see that; and the same for China. It's a greater threat to China because it has 50 major investment projects in eastern Libya. So the question is why did Russia and China abstain rather than veto and block? We don't know the answer.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Possibly the countries are thinking to let the Americans get further over- extended, or they may not have wanted to confront the US with a military or diplomatic position and have an onslaught of Western propaganda against them. We don't know the reasons, but we know they did abstain because they did not agree with the policy, and they continue to criticize it.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV: </b>A sizeable portion of Qaddafi's assets have been frozen in the US as well as some other countries. We also know that the Libyan revolutionaries have set up a central bank and that they have started limited production of oil and they are dealing with American and other Western firms. It begs the question that we've never seen something like this happen in the middle of a revolution. Don't you find that bizarre?</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts:</b> Yes it's very bizarre and very suggestive. It brings back the fact of all the reports that the CIA is the originator of this so-called revolt and protest and is fomenting it and controlling it in a way that excludes China from its own Libyan oil investments.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">In my opinion, what is going on is comparable to what the US and Britain did to Japan in the 1930s. When they cut Japan off from oil, from rubber, from minerals; that was the origin of World War II in the pacific. And now the Americans and the British are doing the same thing to China.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">The difference is that China has nuclear weapons and it also has a stronger economy than do the Americans. And so the Americans are taking a very high risk not only with themselves, but with the rest of the world. The entire world is now at stake on American over-reach; American hubris – the drive for American hegemony over the world is driving the rest of the world into a World War.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV:</b> In the context of America's expansionist policies, how far do you think the US will stretch beyond the UN mandate? Are we going to see boots on the ground?</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts:</b> Most likely – unless they can find some way of defeating Qaddafi without that. Ever since we've had Bill Clinton, George W. Bush and now Obama, what we've learned is law means nothing to the executive branch in the US. They don't obey our own laws; they don't obey international law; they violate all the civil liberties and buried the principal of habeas corpus, no crime without intent, and the ability for a defendant to be legally represented.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They don't pay any attention to law so they're not going to pay any attention to the UN. The UN is an American puppet organization and Washington will use it as a cover. So, yes, if they cannot run Qaddafi out they will put troops on the ground – that's why we have the French and the British involved. We're using the French elsewhere in Africa also; we use the British in Afghanistan – they're puppets.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">These countries are not independent. Sarkozy doesn't report to the French people – he reports to Washington. The British PM doesn't report to the English people he reports to Washington. These are puppet rulers of an empire; they have nothing to do with their own people and we put them in office.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV: </b>So these other countries would welcome having NATO troops on the ground?</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts: </b>Of course. They are in the CIAs pocket. It's a CIA operation, not a legitimate protest of the Libyan people. It's an armed rebellion that has no support in the capital city. It's taking place in the east where the oil is and is directed at China.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Press TV: </b>Where do you see the situation headed? There seems to be a rift between NATO countries with Britain and France wanting to increase the momentum of these air strikes, but the US saying no, there is no need.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts:</b> The rift is not real. The rift is just part of the cover, just part of the propaganda. Qaddafi has been ruling for 40 years – he goes back to Gamal Abdel Nasser (before Anwar Sadat) who wanted to give independence to Egypt.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">He (Qaddafi) was never before called a brutal dictator that has to be removed. No other president has ever said Qaddafi has to go. Not even Ronald Reagan who actually bombed Qaddafi's compound. But all of a sudden he has to go. Why?</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Because he's blocking the US African Command, he controls part of the Mediterranean and he has let China in to find its energy needs for the future. Washington is trying to cripple its main rival, China, by denying China energy. That's what this is really about; a reaction by the US to China’s penetration of Africa.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">If the US was concerned about humanitarianism, it wouldn't be killing all these people in Afghanistan and Pakistan with their drones and military strikes. Almost always it's civilians that are killed. And the US is reluctant to issue apologies about any of it. They say we thought we were killing Taliban or some other made-up enemy.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><img src="http://www.lewrockwell.com/roberts/roberts2.jpg" vspace="7" width="120" align="right" height="165" hspace="15" /><b>Press TV:</b> Who will benefit from all of this other than the US? The other countries that comply with US wishes – What do they stand to gain from this?</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b>Roberts: </b>We are only talking about NATO countries, the American puppet states. Britain, France, Italy, Germany, all belong to the American empire. We've had troops stationed in Germany since 1945. You're talking about 66 years of American occupation of Germany. The Americans have military bases in Italy – how is that an independent country? France was somewhat independent until Washington put Sarkozy in power. So they all do what they're told.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Washington wants to rule Russia, China, Iran, and Africa, all of South America. Washington wants hegemony over the world. That's what the word hegemony means. And Washington will pursue it at all costs. </span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/us-to-recoup-libya-oil-from-china.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T09:00:00-07:00">9:00 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1216008372029842270">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1216008372029842270" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7651643628190108094"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/celente-predicts-food-riots-tax.html">Celente Predicts , Food Riots, Tax Rebellions.</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/celente-predicts-food-riots-tax.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T08:59:00-07:00">8:59 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7651643628190108094">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7651643628190108094" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7147737378784183712"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/government-gambling-monopoly.html">The Government Gambling Monopoly</a> </h3> <div class="post-body entry-content"> <h1 style="font-family: georgia;" align="center"><span style="font-size:130%;"><b><b><b>The Government Gambling Monopoly</b></b></b></span></h1> <p style="font-family: georgia;" align="center"><span style="font-size:100%;"><b> by <a href="mailto:cgmoshman@yahoo.com">Collin Moshman</a></b></span></p> <p style="font-family: georgia;" align="center"> <a href="http://www.addthis.com/bookmark.php"><img src="http://s7.addthis.com/static/btn/lg-share-en.gif" alt="" width="125" border="0" height="16" /></a> </p> <p style="font-family: georgia;"><span style="font-size:100%;">On April 15, the federal government <a href="http://www.denverpost.com/breakingnews/ci_17863491">busted</a> online poker behemoths Pokerstars, Full Tilt Poker, and Absolute Poker. The Department of Justice issued a <a href="http://www.scribd.com/doc/53107543/Indictment-DOJ-vs-Scheinberg-Bitar-Tom-et-al">57-page indictment</a> against the owners, accusing them of such crimes as "Operation of an Illegal Gambling Business." The FBI also seized their domains.</span></p> <p style="font-family: georgia;" align="center"><a href="http://www.lewrockwell.com/orig12/internet-seizure-panel.gif"><img src="http://www.lewrockwell.com/orig12/internet-seizure-panel-th.gif" width="600" border="0" height="444" /></a></p> <p style="font-family: georgia;"><span style="font-size:100%;"> US players are now restricted from playing on the two largest US online poker sites, Pokerstars and Full Tilt, with the status of many millions of dollars in online poker balances in limbo. Even for sites allowing players to withdraw this money, many worry it will be <a href="http://www.businessinsider.com/online-poker-players-locked-accounts-seized-fbi-crackdown-2011-4">seized or indefinitely delayed</a> if cashed out.</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">There is widespread outrage within the poker community concerning these events, among both professional and recreational players, as well as those in the extensive poker media and side businesses. After all, online poker is a voluntary activity. Participants choose to devote their own time and risk their own money when playing, and willingly pay the house rake for this privilege. So how do we understand the government’s aggressive actions in this case? </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">By definition, the US government has a monopoly on the use of force in the US. They may therefore claim a monopoly on any industry they wish, such as protection or the sale of alcohol. For instance there are government-run liquor stores. For private restaurants and businesses wishing to sell alcohol, however, the only option is expensive licensing for the privilege of competing with the government. If you don’t make the right payoff to get one of these licenses, you’re running an illegal operation and risk being shut down.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Similarly, the US government has a monopoly on gambling. If you want to gamble in the US, you can participate in a state-run lottery or play in a government-licensed casino. But despite <a href="http://www.pokernewsdaily.com/bluefire-poker-issues-challenge-to-barack-obama-1409/">poker being a game of skill</a>, the government treats it as part of this gambling monopoly. Just try running a raked homegame and <a href="http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=poker+game+raid">see what happens</a>.</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="left" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">While the DOJ indictment against the poker site owners has many counts, including money laundering, the core of the bust is clearly protecting the gambling monopoly. After all, <a href="http://forumserver.twoplustwo.com/showpost.php?p=26080061&postcount=1">8 of the 9 counts</a> pertain to gambling that the government has deemed unlawful. Pokerstars, based in the Isle of Man, is not part of the US government, nor licensed by the US government, and therefore violates the gambling monopoly. Meanwhile <a href="http://www.gamblingsites.com/history/poker-stars/">a recent estimate</a> has the company generating <i>daily</i> revenue of $1.37 million. For the government, this situation is unacceptable.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Government-approved solutions have been proposed, such as last month’s H.R. 1174:</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><i>If enacted, this legislation would allow the Director of the Financial Crimes Enforcement Network (FINCEN) to adopt a framework for legal internet gambling. Specifically, FINCEN would be authorized to license online gambling sites annually and require the sites to use age identification technologies and pay the appropriate licensing fees, which would cover the cost of monitoring online gambling sites. Importantly, online gambling sites which are not licensed by FINCEN would be considered illegal…</i></span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Indeed, the standard stance among the more optimistic US players is that now that the government has forced out the major sites which allowed US players, the next step is a site that does comply with the US monopoly.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">As a player, I have no choice but to hope for this outcome as well, as the alternative is to play on smaller and dodgier sites, where it is increasingly difficult to deposit and withdraw. It’s important for us to remember, however, that the government monopoly-approved outcome would only be a victory in terms of allowing poker players to continue playing the game they love. When it comes to the basic principle that businesses and individuals should be allowed to participate in voluntary transactions without violent interference, we all lose.</span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/government-gambling-monopoly.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T08:57:00-07:00">8:57 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7147737378784183712">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7147737378784183712" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3335009512742553219"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/myth-of-debt-free-living.html">The Myth of Debt-Free Living</a> </h3> <div class="post-body entry-content"> <h1 align="center"><span style="font-family:Times New Roman, Times, serif;"> <span style="font-family: georgia;">The Myth of Debt-Free Living</span></span></h1> <p style="font-family: georgia;" align="center"><span style="font-size:100%;"><b>by <a href="mailto:garynorth@garynorth.com">Gary North</a></b></span></p> <p style="font-family: georgia;" align="center"><span style="font-size:100%;"><i>Recently by Gary North: </i><a href="http://www.lewrockwell.com/north/north968.html"><i>The Billion-Dollar Loser</i></a></span></p> <p style="font-family: georgia;" align="center"> <a href="http://www.addthis.com/bookmark.php"><img src="http://s7.addthis.com/static/btn/lg-share-en.gif" alt="" width="125" border="0" height="16" /></a> </p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="315" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td width="15"><br /></td> <td> <div align="right"> <div id="google_ads_div_B2_ad_container"> <ins style="width: 300px; height: 250px; display: inline-table; position: relative; border: 0pt none;"><ins style="width: 300px; height: 250px; display: block; position: relative; border: 0pt none;"></ins></ins></div> </div> <br /></td> </tr> <tr> <td width="15"><br /></td> <td><br /></td> </tr> </tbody></table> <p style="font-family: georgia;"> <span style="font-size:100%;">I have set up a <a href="http://deliverancefromdebt.com/">free website</a> for people who are deep in consumer debt.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">I am a great believer in getting out from under the burden of consumer debt. But I am not a believer in getting out of debt. There is a reason for this. The only way to get out of debt is to die.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Here are two great myths of the American dream: (1) financial independence; (2) debt-free living.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Why are they myths? Because life involves both.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Finances require money. Money involves the division of labor. We are all interdependent. Even a hermit is dependent on others: the owners of the land he secretly lives on and secretly poaches on.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">People say "financial independence" when they really mean "no dependence on a salary." They can achieve this if they own lots of income-generating assets. They do not have to show up at a job. But they are not financially independent. They are dependent on all those people whose productivity enables companies or governments to keep paying on the assets that the job-free people have invested in. This is not financial independence. It is independence from a salaried job. Let's keep our terminology clear.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Trust fund kids are not financially independent. They are dependent on the decisions of their trust funds' managers, who are in turn dependent on the productivity of the companies whose shares and bonds they have purchased.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">In a division of labor economy, there is no independence.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Second, what about debt-free living? Why is it a myth? Let me offer an example.</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;"><i><b>FEAR OF DEBT</b></i></span></p> <p style="font-family: georgia;"><span style="font-size:100%;">One of my subscribers has a problem. He must overcome his young wife's fear of debt. He wants to invest in real estate. But he faces a problem: "My wife is very risk-averse. She doesn't like debt."</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">She is 27. He is 32. It is clear that his wife does not understand debt. She is in debt up to her ears.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">She is five years younger than he is. On average, American wives outlive their husbands by 4 years. So, in terms of statistical probability, she will have no financial support from him in her last nine years of life. If he retires early, they will live off of their savings. Then he will die, leaving her with reduced capital for her final years. She may have no capital remaining by age 80.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">In those not-so-golden years, she will be physically weaker than she is today. She will probably be unable to earn money in the labor market. She will be dependent on others.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">She has lifetime obligations that are inescapable: she will consume resources. That is what life requires. If she ceases to be able to work to pay those obligations, she will become dependent on others to pay. For her to think that she can safely live debt-free is to think that others are in some way in debt to her: the government, the pension fund asset managers, or her children. Maybe all of them.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">She is saying that she is offering credit today – FICA taxes, pension investments, care for her children – and that these investments will pay off. If they don't, she will die in a hovel, unless she and her husband invest wisely.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Debt is inescapable for as long as we live. We will owe others whatever our support in old age will require.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">We can begin to prepare now to deal with this in mind, or else we can roll the statistical dice and say, "I'll pass this debt onto someone else. I hope they pay off." In short, the person tries to get his future debt paid by others.</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;"><b><i>GETTING STIFFED</i></b></span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Politicians around the West have made promises to their entire populations regarding retirement living. They have promised voters that, in their old age, the government will take over their medical expenses. In most Western European nations, the government already pays for most medical costs. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">This expense will bankrupt all nations without exception. The governments' statisticians have known this for at least two decades, but the politicians keep this hidden from public view as much as possible.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Voters are like rich, ugly heiresses: they want to be lied to. If they didn't, they would not re-elect politicians who do not publicly announce the inevitable bankruptcy of socialized medicine and old-age retirement programs. They reject any candidate who tells the truth about Medicare. In short, "Don't tell me I'm a rich, ugly woman. Tell me I'm beautiful, and you just can't live without me." Her wish is their command.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Voters do not want to save enough money for their retirement. They want to eat, drink, and be merry, and then go onto a tax-funded life-support system. They do not want to hear about "tomorrow we die." They reply: "That's old-fashioned thinking. That's mere accounting. That's ideology." They do not want to count the cost. They want their cake, and they want to eat it, well into their nineties. And they want someone else to fund it.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">This desire is universal in the West. Voters look at the costs of old age, which are very high for most people, and they want to pass on the Old Maid's expenses to younger voters.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">So, politicians make a promise: "Pay taxes today that fund the expenses of oldsters, and we promise to pass on the costs of supporting you to younger voters when you're old." In short, "You're beautiful, and I just can't live without you." </span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">The voters forget the obvious: younger voters giveth, and younger voters taketh away. When the existing arrangement seems to be front-loaded with costs and back-loaded with benefits, younger voters are going to pull the plug. They are going to say, "We won't pay." In short, "You've spent your inheritance, you ugly old hag. I'm outta here."</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">All the talk about burdening out children and grandchildren with enormous debt is naive. Talk changes nothing. There are no revisions in the programs. When older voters hear the words, "burdening our children with debt," the vast majority conclude: "Yea! Stick it to them good and hard! We deserve everything we can squeeze out of them." </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">This reliance on politicians' promises will backfire on the oldsters who vote for them today and expect to be paid. The kids – all grown up – will have the votes to elect a new generation of Congressmen and Senators, who will announce revisions in the programs. The revisions will come at the expense of new entrants onto the rolls of the old-age welfare programs. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">The modern welfare state began in Prussia in the 1880s, when conservative Chancellor Otto Von Bismarck got the legislature to provide government-funded old age programs. The modern welfare state will abandon those programs. The state giveth, and the state will take away. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;"> <b><i>RUNNING UP THE TAB</i></b></span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Oldsters think they are in the catbird's seat politically. They can get politicians to keep the Ponzi scheme rolling. They do not save as much as they should. They borrow from the future politically. They buy the good life today on the assumption that the state will take care of them in their old age.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They are running up the tab. They think that younger voters will pay off their tab. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">As they get closer to the day of reckoning, they refuse to change their habits. They do not look at a retirement calculator. They do not estimate how much income they will need, and for how long, and at what rate of price inflation, to live in comfort in the last 15 years of their lives (men) or 29 years (women). <a href="http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp">Here is one. </a>Are you willing to do the homework? Your peers aren't.</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">They think they are not going in debt, but they are. They think others will pick up their tab. They think they have the votes to coerce others to pay their tabs. They do have this power today; they will not have it a decade from now, let alone two decades from now.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They do not think of themselves as accumulating debts. They think they will get through old age by passing on the debts of old age to others. Because they do not understand that future voters will renounce their obligations, either openly (national default) or by hyperinflation, or by raising the age for access to collect these benefits. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They are adding to their debts, yet they do not perceive this. Why not? Because they really believe the mantra: "We're passing these debts to our grandkids." They are not incensed by its implications. They rejoice in its implications.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">It started with our parents and grandparents in 1935: Social Security. The mindset of the New Deal was to get something at the expense of someone else. It escalated in 1965: Medicare. This has become the outlook of the West. It has accelerated.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">China is taking advantage of this. China has no developed welfare programs for oldsters. So, their people save for the future. Their supply of capital increases. Their output increases. They are not burdened with FICA taxes. They are not expecting anyone to care for them in their old age, other than their one son. Half of them have no son.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Westerners stick it politically to everyone's children and grandchildren. The Chinese assume that they will be responsible for aged parents and themselves, so they save close to half of their income, if we are to believe the statistics provided by the Chinese government. This generation of Chinese does not expect the state to care for them in their old age. They are working hard to accumulate capital, so that they will not fall into poverty in old age. They do not expect everyone else's children to pick up their tab in old age.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"> <b><i>REAL ESTATE AS A SOLUTION</i></b></span></p> <p style="font-family: georgia;"><span style="font-size:100%;">When people ask me what the best way to retire is, I say "With a new career."</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Most of them reply: "That's not what I mean. I do not want to work after age 65."</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">I ask them to go through the following mental exercise. First, estimate how much monthly income it would take today for them to be comfortable if they lost their job and could not get a new one.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They come up with a figure. Let's say that it's $5,000 a month before taxes.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Second, I tell them that they need about six 3-bedroom, 2-bath houses that generate $1,000 a month net income before income taxes.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">It is possible to get this in some regions from a house that costs under $150,000.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Their goal should be to own six debt-free houses at age 65.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">If they buy one house per year for six years, using owner-financed financing, they can then sit back and let renters pay off the mortgages.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They could buy one a year for a decade. They may want to own ten. Or maybe they can sell two or three of them and pay off the others.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">This is the strategy recommended by <a href="http://johnschaub.com/">John Schaub</a>.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">My view is that it's better to take on real estate investment debt today, when you are young, and let renters pay it off. Then, at age 65, you have a portfolio of ten debt-free houses or more. Your renters will pay you until you die.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">You now have motivated people to pay your expenses. They don't pay you because they have a contract with you. They pay because they want a roof over their heads. They are highly motivated to pay your debts.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">You have spread your risk. You will not be heavily dependent on government. Your children will not regard you as a burden. You will not be dependent on a pension fund, which may or may not fulfill its obligations.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">We cannot escape debt. Debt is basic to life. It is therefore a question of how we secure income to pay off our debt.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Taking on real estate debt at low rates to buy a bargain-priced home is a way to build up a portfolio of houses that will provide income when you are old and infirm.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;"> <i><b>CONCLUSION</b></i></span></p> <p style="font-family: georgia;"><span style="font-size:100%;"><b><i><img src="http://www.lewrockwell.com/north/gary.jpg" vspace="7" width="120" align="left" height="138" hspace="15" /></i></b>There is no escape from debt. Anyone who tells you that you can ever live debt-free has not thought through the implications of what he is saying.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">It is possible to live debt-free on a net basis. You can have monthly income that more than pays for your monthly debt. But there is always the possibility that your income will disappear. </span></p> <p style="font-family: georgia;"><span style="font-size:100%;">I contend that it is more likely to disappear if it comes from the government than from renters.</span> </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/myth-of-debt-free-living.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-20T08:55:00-07:00">8:55 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3335009512742553219">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3335009512742553219" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="5551516308036577747"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/ronald-reagan-autopsy.html">Ronald Reagan: An Autopsy</a> </h3> <span style="font-weight: bold;font-size:180%;">Ronald Reagan: An Autopsy</span><br /><br />by Murray N. Rothbard<br /><br />Eight years, eight dreary, miserable, mind-numbing years, the years of the Age of Reagan, are at long last coming to an end. These years have surely left an ominous legacy for the future: we shall undoubtedly suffer from the after-shocks of Reaganism for years to come. But at least Himself will not be there, and without the man Reagan, without what has been called his "charisma," Reaganism cannot nearly be the same. Reagan’s heirs and assigns are a pale shadow of the Master, as we can see from the performance of George Bush. He might try to imitate the notes of Reagan, but the music just ain’t there. Only this provides a glimmer of hope for America: that Reaganism might not survive much beyond Reagan.<br /><br />Reagan the Man<br /><br />Many recent memoirs have filled out the details of what some of us have long suspected: that Reagan is basically a cretin who, as a long-time actor, is skilled in reading his assigned lines and performing his assigned tasks. Donald Regan and others have commented on Ronald Reagan’s strange passivity, his never asking questions or offering any ideas of his own, his willingness to wait until others place matters before him. Regan has also remarked that Reagan is happiest when following the set schedule that others have placed before him. The actor, having achieved at last the stardom that had eluded him in Hollywood, reads the lines and performs the action that others – his script-writers, his directors – have told him to follow.<br /><br />Sometimes, Reagan’s retentive memory – important for an actor – gave his handlers trouble. Evidently lacking the capacity for reasoned thought, Reagan’s mind is filled with anecdotes, most of them dead wrong, that he has soaked up over the years in the course of reading Reader’s Digest or at idle conversation. Once an anecdote enters Reagan’s noodle, it is set in concrete and impossible to correct or dislodge. (Consider, for example, the famous story about the "Chicago welfare queen": all wrong, but Reagan carried on regardless.)<br /><br />In the early years of Reagan rule, the press busily checked out Reagan’s beloved anecdotes, and found that almost every one of them was full of holes. But Reagan never veered from his course. Why? God knows there are plenty of correct stories about welfare cheats that he could have clasped to his bosom; why stick to false ones? Evidently, the reason is that Reagan cares little about reality; he lives in his own Hollywood fantasy world, a world of myth, a world in which it is always Morning in America, a world where The Flag is always flying, but where Welfare Cheats mar the contentment of the Land of Oz. So who cares if the actual story is wrong? Let it stand, like a Hollywood story, as a surrogate for the welfare cheats whom everyone knows do exist.<br /><br />The degree to which Reagan is out of touch with reality was best demonstrated in his concentration camp story. This was not simply a slip of the tongue, a Bushian confusion of December with September. When the Premier of Israel visited Reagan at the White House, the President went on and on for three quarters of an hour explaining why he was pro-Jewish: it was because, being in the Signal Corps in World War II, he visited Buchenwald shortly after the Nazi defeat and helped to take films of that camp. Reagan repeated this story the following day to an Israeli ambassador. But the truth was 180-degrees different; Reagan was not in Europe; he never saw a concentration camp; he spent the entire war in the safety of Hollywood, making films for the armed forces.<br /><br />Well, what are we to make of this incident? This little saga stayed in the back pages of the press. By that point the media had realized that virtually nothing – no fact, no dark deed – could ever stick to the Teflon President. (Iran-Contra shook things up a bit, but in a few months even that was forgotten.)<br /><br />There are only two ways to interpret the concentration camp story. Perhaps Reagan engaged in a bald-faced lie. But why? What would he have to gain? Especially after the lie was found out, as it soon would be. The only other way to explain this incident, and a far more plausible one, is that Ronnie lacks the capacity to distinguish fantasy from reality. He would, at least in retrospect, have liked to be filming at Buchenwald. Certainly, it made a better story than the facts. But what are we to call a man who cannot distinguish fantasy from reality?<br /><br />It is surely frightening to think that the most powerful position in the world has been held for eight years by a man who cannot tell fact from fancy. Even more frightening is the defection of the media, who early lost heart and played the role of a submissive receptacle for photo opportunities and press-release handouts. One reason for this defection was the discovery of Reagan’s Teflon nature. Another likely reason was that journalists who were too feisty and independent would be deprived of their precious access to the Presidential plane or to inside scoops or leaks from the White House. And a third reason was probably the desire not to dwell on the vital and hair-raising fact that the President of the United States, "the leader of the free world" and all that jazz, is nothing more than a demented half-wit.<br /><br />But why the Teflon? Because of the incredible love affair that Ronald Reagan has enjoyed with the American people. In all my years of fascination with American politics (my early childhood memories are couched in terms of who was President or who was Mayor of New York City or who won what election), I have never seen anything remotely like it. Anyone else universally beloved? Franklin D. Roosevelt was worshipped, to be sure, by most of the American electorate, but there was always a large and magnificent minority who detested every inch of his guts. Truman? He was almost universally reviled in his time; he has only been made an icon in retrospect by the conservative movement. Jack Kennedy, too, is only a hero now that he has been safely interred; before his assassination he was cordially detested by all conservatives. Nobody ever loved Nixon. The closest to universal lovability was Ike, and even he did not inspire the intense devotion accorded to Ronnie Reagan; with Ike it was more of a tranquilized sense of peace and contentment.<br /><br />But with Reagan, it has been pure love: every nod of the head; every wistful "We-e-ll," every dumb and flawed anecdote, every snappy salute, sends virtually every American into ecstasy. From all corners of the land came the cry, "I don’t like his policies very much, but I lo-o-ve the man." Only a few malcontents, popping up here and there, in a few obscure corners of the land, emerged as dedicated and bitter opponents. As one of this tiny minority I can testify that it was a lonely eight years, even within the ranks of the libertarian movement. Sometimes I felt like a lone and unheeded prophet, bringing the plain truth to those who refused to understand. Very often I would be at free-market gatherings, from living rooms to conferences, and I would go on and on about the deficiencies of Reagan’s policies and person, and would be met with responses like "Well of course, he’s not a PhD."<br /><br />Me: "No, no, that’s not the point. The man is a blithering idiot. He makes Warren Harding tower like Aristotle."<br /><br />Responder: "Ronald Reagan has made us feel good about America."<br /><br />Perhaps that’s part of the explanation for the torrent of unconditional love that the American public has poured onto Ronald Reagan. Lost in Hollywood loony-land, Ronnie’s sincere optimism struck a responsive chord in the American masses. The ominous fact that he "made us" feel good about the American State and not just about the country is lost even on many libertarians.<br /><br />But, in that case, why didn’t Hubert Humphrey’s egregious "politics of joy" evoke the same all-inclusive love? I don’t know the answer, but I’m convinced it’s not simply because Hubert was captive to the dreaded "L-word’ whereas Ronnie is a conservative. It’s lot deeper than that. One of the remarkably Teflon qualities of Reagan is that, even after many years as President, he is still able to act as if he were totally separate from the actions of the government. He can still denounce the government in the same ringing terms he used when he was out of power. And he gets away with it, probably because inside his head, he is still Ronnie Reagan, the mother of anti-government anecdotes as lecturer for General Electric.<br /><br />In a deep sense, Reagan has not been a functioning part of the government for eight years. Off in Cloud-Cuckoo-Land he is the obedient actor who recites his lines and plays his appointed part. Some commentators have been critical of Reagan for napping in the afternoons, for falling asleep at crucial meetings, for taking long vacations at his beloved ranch. Well, why not? What else does he have to do? Reagan doesn’t actually have to do anything; like Peter Sellers in his last film, all he has to do is be there, the beloved icon, giving his vital sanction to the governmental process.<br /><br />Reagan’s handlers perceived early on that one threat to Reagan’s Teflon rule would be allowing him to mix it up with members of the press. Away from his teleprompter, Ronnie was a real problem. So very soon, any sort of real press conference, including uninhibited questions and answers, was done away with. The only press "conferences" became shouted questions as Reagan walked quickly to and from the White House helicopter. One of his handlers has written that, despite all efforts, they couldn’t stop Reagan from exercising one peculiar personality trait: his compulsion to answer every question that he hears. But fortunately, not much was risked, since the noise of the helicopter engines would drown out most of the repartee.<br /><br />The worst moment for the Reagan handlers came, of course during the first debate with Mondale in 1984. For one glorious moment, during the give and take of the debate, the real Reagan emerged: confused, befuddled, out of it. It was a shaky moment, but all the handlers needed to do was to reassure the shocked masses that their beloved President was still sentient, was still there to be a totem to his flock. The handlers blamed Reagan’s showing on "over coaching" they made sure that he slept a lot just before the second debate, and they fed him a snappy mock self-deprecating one-liner about his age. The old boy could still remember his jokes: he got off his lovable crack, and the American masses, with a sigh of relief, clasped him to their bosoms once again.<br /><br />The Reagan Years: Libertarian Rhetoric, Statist Policies<br /><br />How did Reagan manage to pursue egregiously statist policies in the name of liberty and of "getting government off our backs?" How was he able to follow this course of deception and mendacity?<br /><br />Don’t try to get Ronnie off the hook by blaming Congress. Like the general public – and all too many libertarians – Congress was merely a passive receptacle for Ronnie’s wishes. Congress passed the Reagan budgets with a few marginal adjustments here and there – and gave him virtually all the legislation, and ratified all the personnel, he wanted. For one Bork there are thousands who made it. The last eight years have been a Reagan Administration for the Gipper to make or break.<br /><br />There was no "Reagan Revolution." Any "revolution" in the direction of liberty (in Ronnie’s words "to get government off our backs") would reduce the total level of government spending. And that means reduce in absolute terms, not as proportion of the gross national product, or corrected for inflation, or anything else. There is no divine commandment that the federal government must always be at least as great a proportion of the national product as it was in 1980. If the government was a monstrous swollen Leviathan in 1980, as libertarians were surely convinced, as the inchoate American masses were apparently convinced and as Reagan and his cadre claimed to believe, then cutting government spending was in order. At the very least, federal government spending should have been frozen, in absolute terms, so that the rest of the economy would be allowed to grow in contrast. Instead, Ronald Reagan cut nothing, even in the heady first year, 1981.<br /><br />At first, the only "cut" was in Carter’s last-minute loony-tunes estimates for the future. But in a few short years, Reagan’s spending surpassed even Carter’s irresponsible estimates. Instead, Reagan not only increased government spending by an enormous amount – so enormous that it would take a 40 percent cut to bring us back to Carter’s wild spending totals of 1980 – he even substantially increased the percentage of government spending to GNP. That’s a "revolution"?<br /><br />The much-heralded 1981 tax cut was more than offset by two tax increases that year. One was "bracket creep," by which just inflation wafted people into higher tax brackets, so that with the same real income (in terms of purchasing power) people found themselves paying a higher proportion of their income in taxes, even though the official tax rate went down. The other was the usual whopping increase in Social Security taxes which, however, don’t count, in the perverse semantics of our time, as "taxes"; they are only "insurance premiums." In the ensuing years the Reagan Administration has constantly raised taxes – to punish us for the fake tax cut of 1981 – beginning in 1982 with the largest single tax increase in American history, costing taxpayers $100 billion.<br /><br />Creative semantics is the way in which Ronnie was able to keep his pledge never to raise taxes while raising them all the time. Reagan’s handlers, as we have seen, annoyed by the stubborn old coot’s sticking to "no new taxes," finessed the old boy by simply calling the phenomenon by a different name. If the Gipper was addled enough to fall for this trick, so did the American masses – and a large chuck of libertarians and self-proclaimed free-market economists as well! "Let’s close another loophole, Mr. President." "We-e-ell, OK, then, so long as we’re not raising taxes." (Definition of loophole: Any and all money the other guy has earned and that hasn’t been taxed away yet. Your money, of course, has been fairly earned, and shouldn’t be taxed further.)<br /><br />Income tax rates in the upper brackets have come down. But the odious bipartisan "loophole closing" of the Tax Reform Act of 1986 – an act engineered by our Jacobin egalitarian "free market" economists in the name of "fairness" – raised instead of lowered the income tax paid by most upper-income people. Again: what one hand of government giveth, the other taketh away, and then some. Thus, President-elect Bush has just abandoned his worthy plan to cut the capital gains tax in half, because it would violate the beloved tax fairness instituted by the bipartisan Reganite 1986 "reform."<br /><br />The bottom line is that tax revenues have gone up an enormous amount under the eight years of Reagan; the only positive thing we can say for them is that revenues as percentage of the gross national product are up only slightly since 1980. The result: the monstrous deficit, now apparently permanently fixed somewhere around $200 billion, and the accompanying tripling of the total federal debt in the eight blessed years of the Reagan Era. Is that what the highly touted "Reagan Revolution" amounts to, then? A tripling of the national debt?<br /><br />We should also say a word about another of Ronnie’s great "libertarian" accomplishments. In the late 1970’s, it became obvious even to the man in the street that the Social Security System was bankrupt, kaput. For the first time in fifty years there was an excellent chance to get rid of the biggest single racket that acts as a gigantic Ponzi scheme to fleece the American taxpayer. Instead, Reagan brought in the famed "Randian libertarian" Alan Greenspan, who served as head of a bipartisan commission, performing the miracle of "saving Social Security" and the masses have rested content with the system ever since. How did he "save" it? By raising taxes (oops "premiums"), of course; by that route, the government can "save" any program. (Bipartisan: both parties acting in concert to put both of their hands in your pocket.)<br /><br />The way Reagan-Greenspan saved Social Security is a superb paradigm of Reagan’s historical function in all areas of his realm; he acted to bail out statism and to co-opt and defuse any libertarian or quasi-libertarian opposition. The method worked brilliantly, for Social Security and other programs.<br /><br />How about deregulation? Didn’t Ronnie at least deregulate the regulation-ridden economy inherited from the evil Carter? Just the opposite. The outstanding measures of deregulation were all passed by the Carter Administration, and, as is typical of that luckless President, the deregulation was phased in to take effect during the early Reagan years, so that the Gipper could claim the credit. Such was the story with oil and gas deregulation (which the Gipper did advance from September to January of 1981); airline deregulation and the actual abolition of the Civil Aeronautics Board, and deregulation of trucking. That was it.<br /><br />The Gipper deregulated nothing, abolished nothing. Instead of keeping his pledge to abolish the Departments of Energy and Education, he strengthened them, and even wound up his years in office adding a new Cabinet post, the Secretary of Veterans Affairs. Overall, the quantity and degree of government regulation of the economy was greatly increased and intensified during the Reagan years. The hated OSHA, the scourge of small business and at the time the second most-hated agency of federal government (surely you need not ask which is the first most-hated), was not only not abolished; it too was strengthened and reinforced. Environmentalist restrictions were greatly accelerated, especially after the heady early years when selling off some public lands was briefly mentioned, and the proponents of actually using and developing locked-up government resources (James Watt, Anne Burford, Rita Lavelle) were disgraced and sent packing as a warning to any future "anti-environmentalists."<br /><br />The Reagan Administration, supposedly the champion of free trade, has been the most protectionist in American history, raising tariffs, imposing import quotas, and – as another neat bit of creative semantics – twisting the arms of the Japanese to impose "voluntary" export quotas on automobiles and microchips. It has made the farm program the most abysmal of this century: boosting price supports and production quotas, and paying many more billions of taxpayer money to farmers so that they can produce less and raise prices to consumers.<br /><br />And we should never forget a disastrous and despotic program that has received unanimous support from the media and from the envious American public: the massive witch hunt and reign of terror against the victimless non-crime of "insider trading." In a country where real criminals – muggers, rapists, and "inside" thieves – are allowed to run rampant, massive resources and publicity are directed toward outlawing the use of one’s superior knowledge and insight in order to make profits on the market.<br /><br />In the course of this reign of terror, it is not surprising that freedom of speech was the first thing to go by the boards. Government spies and informers busily report conversations over martinis ("Hey Joe, I heard that XYZ Corp. is going to merge with ABC.") All this is being done by the cartelizing and fascistic Securities and Exchange Commission, the Department of Justice and its much-hailed Savanarola in New York, Rudolf Giuliani. All this is the work of the beloved Gipper, the "free-market," "libertarian" Reagan Administration. And where are the "conservative libertarians"? Where are the "free market economists" to point this out and condemn it?<br /><br />Foreign aid, a vast racket by which American taxpayers are mulcted in order to subsidize American export firms and foreign governments (mostly dictatorships), has been vastly expanded under Reagan. The Administration also encouraged the nation’s banks to inflate and pour money down Third World rat-holes; then bailed out the banks and tin-pot socialist dictatorships at the expense of U.S. taxpayers (via tax increases) and consumers (via inflation). Since the discrediting of Friedmanite monetarism by the end of the first Reagan term, the original monetarist policy of allowing the dollar to fluctuate freely has been superseded by Keynesian Secretary of Treasury James Baker, who has concerted with foreign central banks to try to freeze the dollar within various zones. The interference has been, as usual, futile and counterproductive, but that will not stop the soon-to-be even more powerful Baker from trying to fulfill, or at least move strongly toward, the old Keynesian dream of one world fiat paper currency (or at least fixed exchange rates of the various national currencies) issued by one world Central Bank – in short, economic world government.<br /><br />But didn’t Ronnie "bring down inflation"? Sure, but he did it, not by some miracle, but the old-fashioned way: by the steepest recession (read: depression) since the 1930s. And now, as a result of his inflationary monetary policies, inflation is back with a roar – which the Teflon President will leave as one of his great legacies to the Bush Administration.<br /><br />And then there is another charming legacy: the reckless inflationary course, encouraged by the Reagan Administration, of the nation’s savings-and-loan banks. Virtually the entire industry is now bankrupt, and FDIC – the federal agency supposedly "insuring" S&L depositors – is bankrupt. Instead of allowing the banks and their deluded depositors to pay the price of their profligacy, everyone of both parties, including our "free-market" Reaganauts, is prepared to use taxpayer money or the printing press to bail out the entire industry – to the tune of an estimated 50 to 100 billion dollars. (These estimates, by the way, come from government sources, which notoriously underestimate future costs of their programs.)<br /><br />I have been cleaving to the strictly economic realm because even the staunchest pro-Reagan libertarian will not dare to claim that Ronnie has been a blessing for civil liberties. On the contrary. In addition to his reign of terror on Wall Street (who cares about the civil liberties of stock traders anyway?), Reagan worked to escalate toward infinity the insane "war against drugs." Far from the 1970s movement toward repealing marijuana laws, an ever greater flow of men and resources – countless billions of dollars – are being hysterically poured into combating a drug "problem" that clearly gets worse in direct proportion to the intensity of the "war."<br /><br />The outbreak of drug fascism, moreover, is a superb illustration of the interconnectedness of civil liberty and economic freedom. Under cover of combating drugs, the government has cracked down on our economic and financial privacy, so that carrying cash has become prima fade evidence of "laundering" drug money. And so the government steps up its long-cherished campaign to get people to abstain from cash and into using government-controlled banks. The government is already insinuating foreign exchange controls – now the legal obligation to "report" large amounts of cash taken out of the country – into our personal and economic life.<br /><br />And every day more evil drugs are being found that must be denounced and outlawed: the latest is the dread menace of anabolic steroids. As part of this futile war, we are being urged by the Reaganites to endure compulsory urine testing (supervised, of course, since otherwise the testee might be able to purchase and substitute black market drug-free urine). In this grotesque proposal, government is not only not off our backs, it is now also insisting on joining us in the bathroom.<br /><br />And in the bedroom, too, if Ronnie has his way. Although abortion is not yet illegal, it is not for lack of effort by the Reagan Administration. The relentless Reaganite drive to conservatize the judiciary will likely recriminalize abortion soon, making criminals out of millions of American women each year. George Bush, for less than twenty-four glorious hours, was moved to take a consistent position: if abortion is murder, then all women who engage in abortion are murderers. But it took only a day for his handlers to pull George back from the abyss of logic, and to advocate only criminalizing the doctors, the hired hands of the women who get abortions.<br /><br />Perhaps the Gipper cannot be directly blamed – but certainly he has set the moral climate – for the increasingly savage Puritanism of the 1980s: the virtual outlawry of smoking, the escalating prohibition of pornography, even the partial bringing back of Prohibition (outlawing drunken driving, raising the legal drinking age to 21, making bartenders – or friendly hosts – legally responsible for someone else’s drunken driving, etc.).<br /><br />Under Reagan, the civil liberties balance has been retipped in favor of the government and against the people: restricting our freedom to obtain government documents under the Freedom of Information Act and stepping up the penalties on privately printed and disseminated news about activities of the government, on the one hand; more "freedom" for our runaway secret police, the CIA, to restrict the printing of news, and to wiretap private individuals, on the other. And to cap its hypocrisy, as it escalated its war on drugs, the Reagan Administration looked the other way on drug running by its own CIA.<br /><br />On foreign policy, the best we can say about Ronnie is that he did not launch World War III. Apart from that, his foreign policy was a series of murdering blunders:<br /><br /> His idiotic know-nothing intervention into the cauldron of Lebanon, resulting in the murder of several hundred US Marines.<br /> His failed attempt – lauded by Reaganites ever since – to murder Colonel Khadafy by an air strike – and succeeding instead in slaying his baby daughter, after which our media sneered at Khadafy for looking haggard, and commented that the baby was "only adopted."<br /> His stumblebum intervention into the Persian Gulf, safeguarding oil tankers of countries allied to Iraq in the Iraq–Iran war. (Ironically, the US. imports practically no oil from the Gulf, unlike Western Europe and Japan, where there was no hysteria and who certainly sent no warships to the Gulf.) In one of the most bizarre events in the history of warfare, the Iraqi sinking of the U.S.S. Stark was dismissed instantly – and without investigation, and in the teeth of considerable evidence to the contrary – as an "accident," followed immediately by blaming Iran (and using the sinking as an excuse to step up our pro-Iraq intervention in the war). This was followed by a US warship’s sinking of a civilian Iranian airliner, murdering hundreds of civilians, and blaming – you guessed it! – the Iranian government for this catastrophe. More alarming than these actions of the Reagan Administration was the supine and pusillanimous behavior of the media, in allowing the Gipper to get away with all this.<br /><br />As we all know only too well, the height of Reagan’s Teflon qualities came with Iran-Contra. At the time, I naïvely thought that the scandal would finish the bastard off. But no one saw anything wrong with the Administration’s jailing private arms salesmen to Iran, while at the very same time engaging in arms sales to Iran itself. In Reagan’s America, apparently anything, any crookery, any aggression or mass murder, is OK if allegedly performed for noble, patriotic motives. Only personal greed is considered a no-no.<br /><br />I have not yet mentioned the great foreign-policy triumph of the Reagan Administration: the invasion and conquest of tiny Grenada, a pitiful little island-country with no army, air force, or navy. A "rescue" operation was launched to save US medical students who never sought our deliverance. Even though the enemy consisted of a handful of Cuban construction workers, it still took us a week to finish the Grenadans off, during the course of which the three wings of our armed forces tripped over each other and our military distinguished itself by bombing a Grenadan hospital. The operation was as much a botch as the Carter attempt to rescue the American hostages. The only difference was that this time the enemy was helpless.<br /><br />But we won didn’t we? Didn’t we redeem the US loss in Vietnam and allow America to "stand tall"? Yes, we did win. We beat up on a teeny country; and even botched that! If that is supposed to make Americans stand tall, then far better we sit short. Anyway, it’s about time we learned that Short is Beautiful.<br /><br />The US war against the Sandinistas on the other hand, which has been conducted at enormous expense and waged hand-in-hand with Guatemalan, Honduran, and Salvadoran dictators, is going down the drain, despite illegal CIA mining of harbors and injury to neutral shipping. Even the nearly comatose American public is giving up on the idea of supporting bandit guerrillas, so long as they are anti-Communist, despite the best efforts of Ollie and Secord and Singlaub and Abrams and all the rest of the war crowd.<br /><br />The Reagan Administration’s continued aid and support to Pol Pot in Cambodia, the most genocidal butcher of our time, is more reprehensible but less visible to most Americans. As a result, Pol Pot’s thugs are mobilizing at this very moment on the Thai border to return and take over Cambodia as soon as the Vietnamese pull out, presumably to renew their bizarre mass murders. But you see, that’s okay with the Reaganites because the Cambodian Commies are guerrilla fighters against the Vietnamese (pro-Soviet) Commies, who by definition are evil. Pol Pot’s butchers as "freedom fighters" show us that, in the arsenal of the Reaganite Right, "freedom," like "taxes" and many other crucial words, means, as in the case of Humpty Dumpty, whatever they choose it to.<br /><br />Grenada was the perfect war as far as many conservatives (and apparently much of the American public) were concerned: it was quick and easy to win, with virtually no risk of loss, and allowed ample opportunities to promote the military (and their Commander-in-Chief) as heroes while bragging up the victory on television – in short, allowing the U.S. to glory in its status as a bully. (It helped eradicate the awful memory of Vietnam, which was the perfect war for American centrist liberals: virtually impossible to win, horribly expensive in terms of men and property – and best of all, it could go on forever without resolution, like the War on Poverty, fueling their sense of guilt while providing safe but exciting jobs for members of their techno-bureaucratic class.)<br /><br />While the American masses do not want war with Russia or even aid to the bandit Contras, they do want an ever-expanding military and other aggravated symbols of a "strong," "tough" America, an America that will, John Wayne-like, stomp on teeny pests like Commie Grenada, or, perhaps, any very small island that might possess the tone and the ideology of the Ayatollah.<br /><br />Setting the Stage: The Anti-Government Rebellion of the 1970s<br /><br />I am convinced that the historic function of Ronald Reagan was to co-opt, eviscerate and ultimately destroy the substantial wave of anti-governmental, and quasi-libertarian, sentiment that erupted in the U.S. during the 1970s. Did he perform this task consciously? Surely too difficult a feat for a man barely compos. No, Reagan was wheeled into performing this task by his Establishment handlers.<br /><br />The task of co-optation needed to be done because the 1970s, particularly 1973–75, were marked by an unusual and striking conjunction of crisis – crises that fed on each other to lead to a sudden and cumulative disillusionment with the federal government. It was this symbiosis of anti-government reaction that led me to develop my "case for libertarian optimism" during the mid-1970’s, in the expectation of a rapid escalation of libertarian influence in America.<br /><br />1973–74 saw the abject failure of the Nixon wage-price control program, and the development of something Keynesians assumed could never happen: the combination of double-digit inflation and a severe recession. High unemployment and high inflation happened again, even more intensely, during the greater recession of 1979–82. Since Keynesianism rests on the idea that government should pump in spending during recessions and take out spending during inflationary booms, what happens when both occur at the same time? As Rand would say: Blankout! There is no answer. And so, there was disillusionment in the government’s handling of the macro-economy, deepening during the accelerating inflation of the 1970s and the beginnings of recession in 1979.<br /><br />At the same time, people began to be fed up, increasingly and vocally, with high taxes: income taxes, property taxes, sales taxes, you name it. Especially in the West, an organized tax rebel movement developed, with its own periodicals and organizations However misguided strategically, the spread of the tax rebellion signaled a growing disillusion with big government. I was privileged to be living in California during the election year of 1978, when Proposition 13 was passed. It was a genuinely inspiring sight. In the face of hysterical opposition and smears from the entire California Establishment Democratic and Republican, Big Business and labor, academia, economists, and all of the press the groundswell for Prop 13 burgeoned. Everyone was against it but the people. If the eventual triumph of Ronald Reagan is the best case against "libertarian populism," Prop. 13 was the best case in its favor.<br /><br />Also exhilarating was the smashing defeat of US imperialism in Vietnam in 1975 – exhilarating because this first loss of a war by the United States, many of us believed, was bound to get Americans to rethink the disastrous warmongering bipartisan foreign policy that had plagued us since the unlamented days of Woodrow Wilson.<br /><br />On the civil liberties front, the de facto legalization of marijuana was a sign that the nonsense of drug prohibition would soon be swept away. (Ye gods! Was that only a decade ago?) Inflationary recession; high taxes; prohibition laws; defeat in foreign war; across the board, the conditions seemed admirable for a growing and triumphant libertarianism.<br /><br />And to top it off, the Watergate crisis (my particular favorite) destroyed the trust of the American masses in the Presidency. For the first time in over a hundred years, the concept of impeachment of the President became, first thinkable, and then a living and glorious process. For a while, I feared that Jimmy Carter, with his lovable cardigan sweater, would restore Americans’ faith in their president, but soon that fear proved groundless.<br /><br />Surely, it is no accident that it was precisely in this glorious and sudden anti-government surge that libertarian ideas and libertarian scholarship began to spread rapidly in the United States. And it was in 1971 that the tiny Libertarian Party emerged, in 1972 that its first, embryonic presidential candidacy was launched, and 1973 when its first important race was run, for mayor of New York City. The Libertarian Party continued to grow rapidly, almost exponentially, during the 1970s, reaching a climax with the Clark campaign for governor of California during the Prop 13 year of 1978, and with the Clark campaign for the Presidency in 1980. The morning my first article on libertarianism appeared in the New York Times in 1971, a very bright editor at Macmillan, Tom Mandel, called me and asked me to write a book on the subject (it was to become For a New Liberty). Not a libertarian himself, Mandel told me that he believed that libertarianism would become a very important ideology in a few years – and he turned out to be right.<br /><br />So libertarianism was on a roll in the 1970s. And then Something Happened.<br /><br />Enter the Neocons<br /><br />What happened was Ronald Wilson Blithering Reagan. Obviously Reagan did not suddenly descend out of the clouds in 1980. He had been the cherished candidate of the conservative movement, its chosen route to power, ever since Goldwater’s defeat. Goldwater was too blunt and candid, too much an unhandleable Real Person. What was needed was a lovable, manipulable icon. Moreover, Goldwater’s principles were too hard-edged: he was way too much a domestic libertarian, and he was too much an eager warmonger. Both his libertarianism and his passion for nuclear confrontation with the Soviet Union scared the bejesus out of the American masses, as well as the more astute leadership of the conservative movement.<br /><br />A reconstituted conservative movement would have to drop any libertarian ideology or concrete policies, except to provide a woolly and comfortable mood for suitably gaseous anti-government rhetoric and an improved foreign policy that would make sure that many more billions would go into the military-industrial complex, to step up global pressure against Communism, but avoiding an actual nuclear war. This last point was important: As much as they enjoy the role of the bully, neither the Establishment nor the American people want to risk nuclear war, which might, after all, blow them up as well. Once again, Ronnie Reagan looked like the Answer.<br /><br />Two important new ingredients entered into, and helped reshape, the conservative movement during the mid 1970’s. One was the emergence of a small but vocal and politically powerful group of neo-conservatives (neocons), who were able, in a remarkably short time, to seize control of the think tanks, the opinion-molding institutions, and finally the politics, of the conservative movement. As ex-liberals, the neocons were greeted as important new converts from the enemy. More importantly, as ex-Trotskyites, the neocons were veteran politicos and organizers, schooled in Marxian cadre organizing and in manipulating the levers of power. They were shrewdly eager to place their own people in crucial opinion molding and money-raising positions, and in ousting those not willing to submit to the neocon program. Understanding the importance of financial support, the neocons knew how to sucker Old Right businessmen into giving them the monetary levers at their numerous foundations and think tanks. In contrast to free-market economists, for example, the neocons were eager to manipulate patriotic symbols and ethical doctrines, doing the microequivalent of Reagan and Bush’s wrapping themselves in the American Flag. Wrapping themselves, also, in such patriotic symbols as The Framers and the Constitution, as well as Family Values, the neocons were easily able to outflank free-market types and keep them narrowly confined to technical economic issues. In short the neocons were easily able to seize the moral and patriotic "high ground."<br /><br />The only group willing and able to challenge the neocons on their own moralizing on philosophic turf was, of course, the tiny handful of libertarians; and outright moral libertarianism, with its opposition to statism, theocracy, and foreign war, could never hope to get to first base with conservative businessmen, who, even at the best of times during the Old Right era, had never been happy about individual personal liberty, (e.g. allowing prostitution, pornography, homosexuality, or drugs) or with the libertarians’ individualism and conspicuous lack of piety toward the Pentagon, or toward the precious symbol of the Nation-State, the US flag.<br /><br />The neocons were (and remain today) New Dealers, as they frankly describe themselves, remarkably without raising any conservative eyebrows. They are what used to be called, in more precise ideological days, "extreme right-wing Social Democrats." In other words, they are still Roosevelt-Truman-Kennedy-Humphrey Democrats. Their objective, as they moved (partially) into the Republican Party and the conservative movement, was to reshape it to become, with minor changes, a Roosevelt-Truman-etc. movement; that is, a liberal movement shorn of the dread "L" word and of post-McGovern liberalism. To verify this point all we have to do is note how many times Roosevelt, Truman, Kennedy, et al., properly reviled by conservatives while they were alive, are now lauded, even canonized, by the current neocon-run movement, from Ronnie Reagan on down. And no one calls them on this Orwellian revision of conservative movement history.<br /><br />As statists-to-the-core the neocons had no problem taking the lead in crusades to restrict individual liberties, whether it be in the name of rooting out "subversives," or of inculcating broadly religious ("Judeo-Christian") or moral values. They were happy to form a cozy alliance with the Moral Majority, the mass of fundamentalists who entered the arena of conservative politics in the mid-1970s. The fundamentalists were goaded out of their quietist millenarian dreams (e.g., the imminent approach of Armageddon) and into conservative political action by the accumulation of moral permissivism in American life. The legalization of abortion in Roe v. Wade was undoubtedly the trigger, but this decision came on top of a cumulative effect of the sexual revolution, the militant homosexual movement "out of the closet" and into the streets, the spread of pornography, and the visible decay of the public school system. The entry of the Moral Majority transformed American politics, not the least by furnishing the elite cadre of neocons with a mass base to guide and manipulate.<br /><br />In economic matter, the neocons showed no more love of liberty, though this is obscured by the fact that the neocons wish to trim the welfare state of its post-Sixties excrescences, particularly since these were largely designed to aid black people. What the neocons want is a smaller, more "efficient" welfare state, within which bounds they would graciously allow the market to operate. The market is acceptable as a narrow instrumental device; their view of private property and the free market is essentially identical to Gorbachev’s in the Soviet Union.<br /><br />Why did the Right permit itself to be bamboozled by the neocons? Largely because the conservatives had been inexorably drifting Stateward in the same manner. In response to the crushing defeat of Goldwater, the Right had become ever less libertarian and less principled, and ever more attuned to the "responsibilities" and moderations of Power. It is a far cry from three decades ago when Bill Buckley used to say that he too is an "anarchist" but that we have to put off all thoughts of liberty until the "international Communist conspiracy" is crushed. Those old Chodorovian libertarian days are long gone, and so is National Review as any haven for libertarian ideas. War mongering, militarism, theocracy, and limited "free" markets – this is really what Buckleyism amounted to by the late 1970s.<br /><br />The burgeoning neocons were able to confuse and addle the Democratic Party by breaking with the Carter Administration, at the same time militantly and successfully pressuring it from within. The neocons formed two noisy front groups, the Coalition for a Democratic Majority and the Committee on the Present Danger. By means of these two interlocking groups and their unusual access to influential media, the neocons were able to pressure the Carter Administration into breaking the détente with Russia over the Afghanistan imbroglio and influencing Carter to get rid of the dove Cyrus Vance as Secretary of State and to put foreign policy power into the hands of the Polish émigré hawk and Rockefeller Trilateralist, Zbigniew Brzezinski. In the meantime, the neocons pushed the hysterically hawkish CIA "B" Team report, wailing about alleged Soviet nuclear superiority, which in turn paved the way for the vast gift of spending handed to the military-industrial complex by the incoming Regan Administration. The Afghanistan and "B" Team hysterias, added to the humiliation by the Ayatollah, managed not only to kill off the bedeviled Carter Administration, but also to put the boots to non-intervention and to prepare the nation for a scrapping of the "post-Vietnam syndrome" and a return to the warmongering of the pre-Vietnam Era.<br /><br />The Reagan candidacy of 1980 was brilliantly designed to weld a coalition providing the public’s instinctive anti-government mood with sweeping, but wholly nonspecific, libertarian rhetoric, as a convenient cover for the diametrically opposite policies designed to satisfy the savvy and politically effective members of that coalition: the neocons, the Buckleyite cons, the Moral Majority, the Rockefellers, the military-industrial complex, and the various Establishment special interests always clustering at the political trough.<br /><br />Intellectual Corruption<br /><br />In the face of the stark record, how were the Reaganites able to get away with it? Where did Ronnie get his thick coat of Teflon? Why was he able to follow statist policies and yet convince everyone, including many alleged libertarians, that he was successfully pursuing a "revolution" to get government off our backs?<br /><br />The essential answer was provided a century ago by Lysander Spooner. Why does the public obey the State, and go further to endorse statist policies that benefit the Power Elite at the public’s own expense? The answer, wrote Spooner, is that the State is supported by three powerful groups: knaves, who know what is going on and benefit from State rule; dupes, who are fooled into thinking that State rule is in their and everyone else’s interest; and cowards, who know the truth but are afraid to proclaim that the emperor has no clothes. I think we can refine Spooner’s analysis and merge the Knave and Coward categories; after all, the renegade sellout confronts the carrot and the stick: the carrot of wealth, cushy jobs, and prestige if he goes along with the Emperor; and the stick of scorn, exclusion from wealth, prestige, and jobs – and perhaps worse – if he fails to go along. The reason that Reagan got away with it – in addition to his aw-shucks "lovability" – is that various powerful groups were either duped or knave-cowardly corrupted into hailing his alleged triumphs and deep-sixing his evident failures.<br /><br />First, the powerful opinion-molding media. It is conventional wisdom that media people are biased in favor of liberalism, No doubt. But that is not important, because the media, especially elite media who have the most to lose, are also particularly subject to the knave/coward syndrome. If they pander to Reaganism, they get the approval of the deluded masses, their customers, and they get the much-sought-after access to the President and to other big-wigs in government. And access means scoops, carefully planted exclusive leaks, etc. Any sort of effective opposition to the President means, on the other hand, loss of access; the angering of Reagan-deluded masses; and also the angering of their bosses, the owners of the press and television, who are far more conservative than their journalist employees.<br /><br />One of Reagan’s most notable achievements was his emasculation of the liberal media because of his personal popularity with the masses. Note, for example, the wimpy media treatment of Iran-Contra as compared to their glorious attack on Watergate. If this is liberal media bias, then the liberals need to be saved from their friends.<br /><br />If the media were willing to go along with Reaganite duplicity and hokum, then so were our quasi-libertarian intellectual leaders. It is true of the libertarian-inclined masses as it has been always true of the conservative masses: they tend to be not too swift in the upper story. During the late 1970s, libertarian intellectuals and free-market economists were growing in number, but they were very few, and they had not yet established institutions with firm ties to journalistic and mass opinion. Hence, the libertarian mood, but not the informed thought, of the masses, was ready for co-optation, especially if led by a charismatic, beloved President.<br /><br />But we must not under weigh the importance of the traitorous role performed by quasi-libertarian intellectuals and free-market economists during the Reagan years. While their institutions were small and relatively weak, the power and consistency of libertarian thought had managed to bring them considerable prestige and political influence by 1980 – especially since they offered an attractive and consistent alternative to a statist system that was breaking down on all fronts.<br /><br />But talk about your Knaves! In the history of ideological movements, there have always been people willing to sell their souls and their principles. But never in history have so many sold out for so pitifully little. Hordes of libertarian and free-market intellectuals and activists rushed to Washington to whore after lousy little jobs, crummy little grants, and sporadic little conferences. It is bad enough to sell out; it is far worse to be a two-bit whore. And worst of all in this sickening spectacle were those who went into the tank without so much as a clear offer: betraying the values and principles of a lifetime in order to position themselves in hopes of being propositioned. And so they wriggled around the seats of power in Washington. The intellectual corruption spread rapidly, in proportion to the height and length of jobs in the Reagan Administration. Lifelong opponents of budget deficits remarkably began to weave sophisticated and absurd apologias, now that the great Reagan was piling them up, claiming, very much like the hated left-wing Keynesians of yore, that "deficits don’t matter."<br /><br />Shorn of intellectual support, the half-formed libertarian instincts of the American masses remained content with Reaganite rhetoric, and the actual diametrically opposite policies got lost in the shuffle.<br /><br />Reagan’s Legacy<br /><br />Has the Reagan Administration done nothing good in its eight ghastly years on earth, you might ask? Yes, it has done one good thing; it has repealed the despotic 55-mile-per-hour highway speed limit. And that is it.<br /><br />As the Gipper, at bloody long last, goes riding off into the sunset, he leaves us with a hideous legacy. He has succeeded in destroying the libertarian public mood of the late 1970’s, and replaced it with fatuous and menacing patriotic symbols of the Nation-State, especially The Flag, which he first whooped up in his vacuous reelection campaign in 1984, aided by the unfortunate coincidence of the Olympics being held at Los Angeles. (Who will soon forget the raucous baying of the chauvinist mobs: "USA! USA!" every time some American came in third in some petty event?) He has succeeded in corrupting libertarian and free-market intellectuals and institutions, although in Ronnie’s defense it must be noted that the fault lies with the corrupted and not with the corrupter.<br /><br />It is generally agreed by political analysts that the ideological mood of the public, after eight years of Reaganism, is in support of economic liberalism (that is, an expanded welfare state), and social conservatism (that is, the suppression of civil liberties and the theocratic outlawing of immoral behavior). And, on foreign policy, of course, they stand for militaristic chauvinism. After eight years of Ronnie, the mood of the American masses is to expand the goodies of the welfare-warfare state (though not to increase taxes to pay for these goodies), to swagger abroad and be very tough with nations that can’t fight back, and to crack down on the liberties of groups they don’t like or whose values or culture they disagree with.<br /><br />It is a decidedly unlovely and unlibertarian wasteland, this picture of America 1989, and who do we have to thank for it? Several groups: the neocons who organized it; the vested interests and the Power Elite who run it; the libertarians and free marketeers who sold out for it; and above all, the universally beloved Ronald Wilson Reagan, Who Made It Possible.<br /><br />As he rides off into retirement, glowing with the love of the American public, leaving his odious legacy behind, one wonders what this hallowed dimwit might possibly do in retirement that could be at all worthy of the rest of his political career. What very last triumph are we supposed to "win for the Gipper"?<br /><br />He has tipped his hand: I have just read that as soon as he retires, the Gipper will go on a banquet tour on behalf of the repeal of the 22nd ("Anti-Third Term") Amendment – the one decent thing the Republicans have accomplished. In the last four decades. The 22nd Amendment was a well-deserved retrospective slap at FDR. It is typical of the depths to which the GOP has fallen in the last few years that Republicans have been actually muttering about joining the effort to repeal this amendment. If they are successful, then Ronald Reagan might be elected again, and reelected well into the 21st century.<br /><br />In our age of High Tech, I’m sure that his mere physical death could easily have been overcome by his handlers and media mavens. Ronald Reagan will be suitably mummified, trotted out in front of a giant American flag, and some puppet master would have gotten him to give his winsome headshake and some ventriloquist would have imitated the golden tones: "We-e-ell..." (Why not? After all, the living reality of the last four years has not been a helluva lot different.)<br /><br />Perhaps, after all, Ronald Reagan and almost all the rest of us will finally get our fondest wish: the election forever and ever of the mummified con King Ronnie.<br /><br />Now there is a legacy for our descendants!Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-58506094131090786142011-04-15T16:22:00.001-07:002011-04-15T16:22:54.608-07:00<div class="post-body entry-content"> <h1 class="documentFirstHeading">Would You Settle Your Claims on Social Security for 83 Cents on the Dollar? (I Would)</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Alex%20J.%20Pollock">By Alex J. Pollock</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">Here’s a win-win proposition for all involved. </div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/april/would-you-settle-your-claims-on-social-security-for-83-cents-on-the-dollar-i-would/FeaturedImage" class="image-left" /> <p>If a debt cannot be paid, it will not be paid—at least not paid in full. In dealing with such debts, the fundamental logic is to settle unpayable debts at a discount, at less than 100 cents on the dollar. This can happen by voluntary agreement when a mortgage loan is settled for less than the amount of the loan through a “short sale,” for example (an increasingly familiar transaction in the wake of the burst housing bubble). It can happen when a troubled company buys back its own bonds from the market at a discount. Of course, it can also happen in a reorganization under the bankruptcy code. In all cases, the point is for the parties to put past mistakes behind them and for life to go on.</p> <p>Let us consider the Social Security program. The interaction of its design by politicians with the demographic and economic facts has the unavoidable and well-known result that its debt (its “promises,” if you prefer) cannot be paid in full.</p> <p>Could Social Security’s debt be settled at a discount by voluntary transactions with its creditors, namely American citizens? I propose that it could. Every time this happened, it would reduce Social Security’s net deficit, because its debt would go down by more than its assets, just as with any individual or company in a similar situation. This is basic balance sheet arithmetic: if your debt goes down more than your assets do, your net position improves.</p> <blockquote class="pullquote">Could Social Security’s debt be settled at a discount by voluntary transactions with its creditors, namely American citizens? I propose that it could.</blockquote> <p>Would at least some Americans be interested in such a transaction? Large numbers of people, especially young people, do not believe that they will ever fully collect on Social Security’s promises, that is, its debt at par—and they are right. So I believe significant numbers of people <span style="font-style: italic;">would </span>be interested. These might well include the 68 percent of respondents aged 19 to 29 who were “not confident at all” (48 percent), or “not so confident” (20 percent), that they would get their full benefits, according to a 2009 poll.<sup>1</sup> In a 2011 poll, the grand total of those aged 25-34 who were “very confident” that they would get Social Security benefits at least equal to today’s value was 2 percent!<sup>2</sup></p> <p>What might be a fair price to settle Social Security’s debt?</p> <p>To answer this question, we need to focus on that part of Social Security dealing with pensions. This part, called “OASI”—“Old Age and Survivors Insurance” —represents about 85 percent of Social Security and is in large measure designed as a forced savings program. (The other 15 percent or “DI”—“Disability Insurance”—is a program for forced insurance, not savings, and is a different discussion.)</p> <p>The present value of all future income of the OASI program is $34.5 trillion, according to the Social Security Trustees 2010 Report.<sup>3</sup> This is using the Intermediate Assumptions as the best guess estimate. It values all the future cash payments to the government from OASI—these are the real total assets.<sup>4</sup></p> <p>Against the $34.5 trillion in OASI assets, there are liabilities of $41.4 trillion. This is the present value of all the future cash outflows promised by Social Security. The liabilities are obviously $6.9 trillion greater than the assets. If your liabilities exceed your assets, you are by definition insolvent—and your creditors have reason to think about how they might wish to deal with that.</p> <blockquote class="pullquote">For those who choose to stay fully in the Social Security program, the Social Security net worth deficit becomes smaller every time someone else settles for 83 cents on the dollar.</blockquote> <p>Putting these numbers together, the $34.5 trillion in assets of Social Security available to pay promised pensions are only about 83 percent of the promises of $41.4 trillion. Since the assets are equal to about 83 percent of the liabilities, this gives us a reasonable estimate of the fair way to settle the debt of Social Security to its creditors (namely, us): 83 cents on the dollar.</p> <p>The Social Security Trustees also express the finances of Social Security in terms of future cash receipts and future cash outflows as percentages of the total projected taxable payrolls. In the intermediate estimate, OASI cash receipts will be 11.3 percent of future payrolls, and the cash cost will be 13.6 percent,<sup>5</sup> so receipts will be 83 percent of costs: another way to say 83 cents on the dollar.</p> <p>So would you rather have 83 cents of your own, which you could invest to earn interest you would own, or would you prefer 100 cents of future claims on an admittedly insolvent government pension program? Personally, I’d take the 83 cents in a heartbeat, and so would most other people to whom I’ve put the question. But I think the matter should be entirely voluntary.</p> <p>For those who choose to stay fully in the Social Security program, the Social Security net worth deficit becomes smaller every time someone else settles for 83 cents on the dollar.</p> <p>So I propose that Americans be given a choice (imagine that). You could stay in Social Security as it is. Or you could elect to settle for 83 cents, paid in U.S. Treasury inflation-indexed bonds, which you would own outright. These bonds, with all future interest payments on them, would constitute true retirement savings, protected from inflation.<sup>6</sup> In exchange, you would forego formula benefits equal to the value of the bonds you received divided by 0.83. You would have made up your own mind about the chances of such promised Social Security benefits actually being paid.</p> <p>This is clear enough in principle, but how might it work mechanically? Perhaps like this: If you as a creditor of Social Security elect the proposed settlement, each quarter thereafter you would receive a rebate of all the Social Security tax you paid—6.2 percent of your wages is subject to the tax.<sup>7</sup> You would receive this in the form of inflation-indexed Treasury bonds deposited in your own tax-deferred retirement savings account. You now have real assets and savings to replace some of the unenforceable, complicated, politicized promises of an insolvent program, and are happy with your choice. Moreover, it is now easy to understand exactly what you have.</p> <blockquote class="pullquote">You now have real assets and savings to replace some of the unenforceable, complicated, politicized promises of an insolvent program, and are happy with your choice.</blockquote> <p>As Professor Laurence Kotlikoff rightly said in the Social Security debates of three decades ago, “The perception of Social Security as a savings account has been fostered by every major piece of Social Security legislation since the program’s inception in 1935. Perhaps it is time to make de jure what has long been a de facto relationship.”<sup>8</sup> My proposal would achieve just that.</p> <p>Your rebate would effectively reduce the Social Security portion of your payroll tax to zero. Not bad.</p> <p>Of course, your employer pays another 6.2 percent Social Security tax, so ordinarily the total tax is 12.4 percent of your wages. The employer’s contribution, like all your past Social Security taxes paid, would continue to be paid and to generate benefits for you. From the government’s point of view, its Social Security income from your wages going forward would have dropped by 50 percent.</p> <p>But the government would be happy about this. The entire transaction means that its total government liabilities have gone down and its Social Security deficit has been reduced. This is because for every 83 cents in bonds the government issued as rebates, it reduced its Social Security liability by one dollar. In other words, the government bought a dollar for 83 cents and is definitely ahead.</p> <p>The mechanics of Social Security benefit calculations for those participating in such a Social Security debt settlement, might work like this. The government would calculate your Social Security benefits by the normal formulas, in the normal, convoluted, opaque way. These benefit payments over time would then be reduced by the actuarial equivalent of all the Treasury bonds you received divided by 0.83.</p> <p>This proposal is a win-win proposition, which improves the financial position of all four parties involved: those who choose to settle the debt of an insolvent debtor at a discount; those who choose to hold the existing Social Security promises; the Social Security program; and the government as a whole.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/would-you-settle-your-claims-on-social.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:18:00-07:00">4:18 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7467223335840845550">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7467223335840845550" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3211830369434067432"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/atlas-shrugs-off-opportunity.html">Atlas Shrugs Off an Opportunity</a> </h3> <div class="post-body entry-content"> <h1 class="documentFirstHeading">Atlas Shrugs Off an Opportunity, Alienates Viewers</h1> <p id="article-byline"> <span class="article_author highlight"><a href="http://www.american.com/author_search?Creator=Joy%20Pullmann">By Joy Pullmann</a></span> <span class="article_issue discreet"></span></p><div> </div> <div class="documentDescription">Most Americans will find Ayn Rand’s worldview distasteful, immoral, and absurd. </div> <img id="bernarticle-featured-image" src="http://www.american.com/archive/2011/april/atlas-shrugs-off-an-opportunity-alienates-viewers/FeaturedImage" class="image-left" /> <p>Few mainstream movies celebrate business owners and entrepreneurs. Indeed, as Jay Richards <a href="http://www.american.com/archive/2009/december-2009/the-miser-versus-the-entrepreneur" target="_blank">has written</a> on these pages, “Survey novels, plays, and movies with business people as characters. Ordinarily, those characters are the villains, not the heroes.” Though he and <span class="link-external"><a href="http://blog.american.com/?p=8945" target="_blank">Michael Auslin</a></span> later <span class="link-external"><a href="http://blog.american.com/?p=8914" target="_blank">followed up</a></span> with scattered suggestions, the trend holds strong.</p> <p>Contra this Hollywood tendency, Ayn Rand’s <span style="font-style: italic;">Atlas Shrugged: Part 1</span> will pierce theaters on April 15, 2011, in a strong adaptation of her popular novel glorifying the innovative, productive individual. Part 2 is slated for 2012, and Part 3 for 2013.</p> <p>“Creative people, the ones [studios] empower to make movies, are the ones for the most part not familiar with the book or who despise its philosophy,” producer Harmon Kaslow said in an interview.</p> <p style="font-weight: bold;">The Audience for Objectivism</p> <p><span style="font-style: italic;">Atlas Shrugged</span> has several cultural tradewinds blowing in its favor. For one, despite Hollywood’s lack of fare to serve this interest, Americans like entrepreneurs. Polls confirm that Americans hold hugely positive views of small business, entrepreneurs, and capitalism: 95, 84, and 61 percent, respectively, view these positively in <span class="link-external"><a href="http://www.gallup.com/poll/125645/Socialism-Viewed-Positively-Americans.aspx" target="_blank">Gallup’s latest poll</a></span>, for example. So pro-entrepreneur plots have a large potential audience.</p> <blockquote class="pullquote">The vision undergirding <span style="font-style: italic;">Atlas Shrugged</span> ultimately alienates viewers from the consumer-oriented, selfishness-curbing benefits at the very heart of American free enterprise.</blockquote> <p>Rand’s novel has captured this audience for decades. Back in 1991, a joint survey by the Library of Congress and Book of the Month Club dubbed <span style="font-style: italic;">Atlas Shrugged </span>the “second most influential book for Americans today,” after the Bible. Since the financial crisis hit in 2008, <span style="font-style: italic;">Atlas Shrugged</span> sales have surged. In 2009, <span class="link-external"><a href="http://www.aynrand.org/site/News2?id=24817" target="_blank">the book sold</a></span> half a million copies, and more than 7 million copies have sold since it published in 1957. The book is No. 2 on Amazon’s bestseller list for political fiction and No. 2 for classic fiction.</p> <p>Another tradewind: Americans doubt that activist government measures such as the stimulus have done much to ameliorate the recent recession, and are increasingly wary of government regulation.</p> <p style="font-weight: bold;">Atlas Shrugged: The Movie</p> <p>Into this climate steps the steely Rand via her heroine, Dagny Taggart. Taggart runs Taggart Transcontinental, a train line central to American transportation because oil shocks and world disasters have destroyed road and air shipping. When a train running through Colorado derails, Taggart must navigate crippling federal regulations while attempting to rebuild the track. She puts her trust and money in a new metal invented by Hank Rearden, and the two battle inside and out against legislators, business partners, and family members sponging off Taggart and Rearden’s hard work and ingenuity. Rearden and Taggart also attempt to track the inventor of a new type of super-efficient engine.</p> <blockquote class="pullquote">Despite Hollywood’s lack of fare to serve this interest, Americans like entrepreneurs.</blockquote> <p>At the same time, the world’s brilliant businessmen and inventors keep disappearing after whispering the repeated phrase, “Who is John Galt?” The film (part one of a trilogy) ends in a fiery climax as one of Taggart’s new business partners abruptly vanishes amid explosions lighting his Colorado oil wells.</p> <p>The movie version of <span style="font-style: italic;">Atlas Shrugged </span>has been held up for years due to concerns from her estate and those who bought the movie rights about keeping the screenplay on message. Indeed, Rand was writing her own adaptation of <span style="font-style: italic;">Atlas Shrugged</span> at her death in 1982 because the film of another of her books, <span style="font-style: italic;">The Fountainhead</span>, did not ultimately fit her vision and frustrated her. And concerns about ideological purity have also precluded Angelina Jolie and other A-listers from taking the lead role, as such top-tier actresses demand and get influence over the script, casting, and other creative aspects of movies.</p> <p>“What guided me was having the words and the meaning be philosophically pure. 100 percent. No compromise to the greatest of my ability. Have the approved script, have the words philosophically make sense according to Ayn Rand,” <span class="link-external"><a href="http://dailycaller.com/2011/03/04/10-questions-with-the-producer-of-atlas-shrugged-john-aglialoro/#ixzz1INjFJcls" target="_blank">said the </a></span>movie’s producer and financial backer John Aglialoro.</p> <blockquote class="pullquote">Ayn Rand appeals to the natural and highly American intolerance of abused authority; but she locates a replacement authority inside the individual himself, stripping away any mediating institutions, deity, or natural law.</blockquote> <p>Refusing a philosophical compromise on the book’s message makes the script and its performance, in some scenes, as unconvincing as the book. For example, [spoiler alert!] as Taggart and Rearden successfully drive their first train on the rebuilt Colorado line, the music builds as they forge westward, Taggart tears up slightly, and the two are overjoyed when they finally arrive in the western United States with no trouble from Rearden’s “untested” metal tracks. Many movies pivot on scenes of emotional triumph, but most moviegoers will find it difficult to find great sympathy at an impersonal scene of mechanical victory. Though the movie has decent technical quality and the acting and settings are generally vivid and believable, sticking rigidly to Rand’s message has, more than anything, underlaid the movie with cold, inhuman steel—as if Rearden’s metal, and not blood, runs through <span style="font-style: italic;">Atlas Shrugged</span>’s veins.</p> <p style="font-weight: bold;">Ayn Rand: The Philosopher</p> <p>Rand’s fiction illustrated and glorified her philosophy, a set of ideas she named Objectivism. The basic tenets, as <span class="link-external"><a href="http://www.aynrand.org/site/PageServer?pagename=objectivism_intro" target="_blank">she described them</a></span> in 1962: a metaphysics of objective reality, an epistemology of reason, an ethics of self-interest, and a politics of capitalism.</p> <blockquote class="pullquote">Ayn Rand preaches innovation, creativity of thought and expression, self-direction, and the overruling demands of Nietzschean super-geniuses. But she never allowed deviation from her rules and preferences among her followers.</blockquote> <p>Rand attacks both liberals and conservatives (take, for example, her speech, “<span class="link-external"><a href="http://www.ontheborderline.net/wp-content/uploads/2009/04/rand-_conservatismanobituary.pdf" target="_blank">Conservatism: An Obituary</a></span>”); but it’s her attack on conservatism that’s worth visiting here, since it’s so out of touch with the American character. She appeals to the natural and highly American intolerance of abused authority; but she locates a replacement authority inside the individual himself, stripping away any mediating institutions, deity, or natural law. Man becomes his own measure; yet somehow never disintegrates in her fiction the way he does so often when adopting this mentality in real life.</p> <p>This Rand hallmark makes her extremely attractive to young people and those whom government has abused or burdened. Rand is an intellectual Siren; she attracts travelers with the sweet songs of freedom, individual responsibility, and creativity; yet her narrow worldview in the end also hacks these ideals to bits.</p> <p>The case against Rand was perhaps most forcefully made <span class="link-external"><a href="http://www.nationalreview.com/articles/222482/big-sister-watching-you/flashback" target="_blank">by Whittaker Chambers</a></span> in National Review in 1957. Benjamin Wiker makes a more recent, and more biographical, case against her in chapter 15 of his recent <span class="link-external"><a href="http://www.amazon.com/Books-Every-Conservative-Must-Read/dp/1596986042" target="_blank"><span style="font-style: italic;">10 Books Every Conservative Must Read</span></a></span>. And AEI’s own Charles Murray <span class="link-external"><a href="http://www.claremont.org/publications/crb/id.1708/article_detail.asp" target="_blank">discussed her relative merits and demerits</a></span> in the context of two excellent new Rand biographies in the Claremont Review of Books.</p> <p>Rand’s philosophy is solipsist: since, for consistency if nothing else, man must have guiding principles, institutions, or ideas, she removes all others and places herself in their stead. Rand preaches innovation, creativity of thought and expression, self-direction, and the overruling demands of Nietzschean super-geniuses. But she never allowed deviation from her rules and preferences among her followers, even to the most minuscule instances. She liked Chopin and disliked Bach; therefore for anyone else to enjoy Bach indicated mental weakness. She wanted to have an affair with Nathaniel Branden, a married man; therefore, it was rational for her to do so and destroy his marriage and wife.</p> <blockquote class="pullquote">Concerns about ideological purity have precluded Angelina Jolie and other A-listers from taking the lead role in <span style="font-style: italic;">Atlas Shrugged</span>.</blockquote> <p>This mode of living she celebrated as exemplifying the “virtue” of selfishness. As she said, “My personal life is a postscript to my novels; it consists of the sentence: <span style="font-style: italic;">And I mean it</span>.” If anything, her life and novels as illustrations of and promotions for her philosophy illustrate exactly the dangers and shortcomings of Objectivism, not just personally, but morally, and for society. Perhaps Rand didn’t care for society, except of her own making—that’s probably why her geniuses in <span style="font-style: italic;">Atlas Shrugged</span> withdraw to a secluded mountain to let the rest of humanity crumble under its own weight. But most Americans, as human beings and citizens with a national heritage of voluntary community resourcefulness and charity, would find this not only distasteful, but immoral and absurd.</p> <p style="font-weight: bold;">Back to the Big Screen</p> <p>At times <span style="font-style: italic;">Atlas Shrugged: Part 1</span> strikes sound and timely notes. When Taggart meets a union representative, he tells her his members will not run trains without raises, want better working conditions, and don’t want to use Rearden’s metal. At this point, the company is straining for money and needs the metal to survive. She snaps back: "You want me to provide the jobs <span style="font-style: italic;">and</span> you want to make it impossible for me to have any jobs to provide?"</p> <p>Excited by this, Tea Party-influenced and other grassroots conservative groups have expanded the number of theaters and markets where <span style="font-style: italic;">Atlas Shrugged</span> will open on April 15 (yes, Tax Day, and deliberately) from 11 cities to <span class="link-external"><a href="http://www.atlasshruggedpart1.com/theaters" target="_blank">more than 100</a></span> and counting. They believe a movie with anti-government, pro-enterprise themes will appeal to a broader audience than Hollywood.</p> <p>So the unfortunate part of this tale is that finally a pro-enterprise, pro-individual movie based on a bestselling book comes to market using serious actors and production; yet the vision undergirding it ultimately alienates viewers from the consumer-oriented, <a href="http://www.american.com/archive/2009/october/greed-is-not-good-and-its-not-capitalism" target="_blank">selfishness-curbing benefits</a> at the very heart of American free enterprise.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/atlas-shrugs-off-opportunity.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:16:00-07:00">4:16 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3211830369434067432">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3211830369434067432" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2704746698049352757"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/masses-blow-raspberry.html">The masses blow a raspberry</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">Peru's presidential election</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">The masses blow a raspberry</span></div> <h1 class="rubric">Voters engineer an unappealing choice between two contrasting populists, Ollanta Humala (below left) and Keiko Fujimori (right) </h1> <p class="ec-article-info"> <em>LIMA </em></p><div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/16/am/20110416_amp001.jpg" alt="" /></div> <p>IT IS hard to think of two politicians less attractive or qualified to run a country of 29m. But the outcome of a presidential election on April 10th means that Peruvians will have to choose in a run-off on June 5th between Ollanta Humala, a former army officer with no government experience backed by the far left, and Keiko Fujimori, whose father is a conservative ex-president serving a 25-year sentence for human-rights abuses and corruption.</p> <p>Both Mr Humala, who won 32% of the vote, and Ms Fujimori (23.5%) embody a vein of populist authoritarianism running through Peru’s history. They harvested a protest vote against the moderate democratic politicians who have governed the fastest-growing of Latin America’s larger economies over the past decade, but who have failed to curb corruption and crime or do enough to improve social conditions. </p> <div class="content-image-float clearfix" style="width: 290px;"><img src="http://media.economist.com/images/images-magazine/2011/04/16/am/20110416_amm924.gif" alt="" /><span class="credit"></span></div> <p>The democratic centre-right vote added up to 44%, but was fatally split between a trio of candidates. Alejandro Toledo, the president in 2001-06, led the polls with 28% six weeks ago, but took just over half as much in the election. Pedro Pablo Kuczynski, who served as finance minister under Mr Toledo, stressed reform within the existing free-market economic regime and managed 18.5%, with his support concentrated among wealthier voters in and around Lima (see map). That was not bad for a former investment banker and IMF official, but not enough. Luis Castañeda, a former mayor of Lima, took 10%.</p> <p>In the 2006 election Mr Humala won 31% of the vote in the first round, only to be narrowly beaten by Alan García, who has governed as a conservative. Then Mr Humala was close to Venezuela’s Hugo Chávez. He looks better placed this time: Ms Fujimori is a less skilful rival than Mr García, and Mr Humala has moved towards the centre. His inspiration now is Brazil’s former president, Luiz Inácio Lula da Silva, whose Workers’ Party has offered him advisers. As Lula did before him, he has swapped his red T-shirt for business suits.</p> <p>Mr Humala once talked of expropriating foreign mining and gas companies and creating new state enterprises. By the end of the campaign he sounded almost like Mr Kuczynski. He talked of legalising Peru’s vast informal economy, negotiating higher taxes on mining and improving schools. But if Mr Humala is to allay suspicion about his plans among two-thirds of the electorate, he must repudiate his far-left written manifesto, drop talk of changing the constitution—the formula used by Mr Chávez to cling to power—and promise to appoint competent technocrats.</p> <p>If Mr Humala arouses fears for the future, Ms Fujimori awakens fears of the past. Her father, Alberto Fujimori, defeated the Maoist terrorists of the Shining Path and implemented free-market reforms that laid the foundations of Peru’s boom. But he used tanks to shut down Congress, rode roughshod over the constitution and presided over systematic corruption. His daughter has played down an earlier pledge to seek an amnesty for him. She promises continuity in economic policy mixed with social giveaways and illiberal talk of using the death penalty and anti-terrorist laws against crime. She may win the backing of many better-off Peruvians. </p> <p>If Mr Humala eventually wins, in what remains a tight campaign, it will hardly amount to a triumphant leftist wave of the sort that propelled Bolivia’s Evo Morales to power in 2006. His party will have only 46 seats in the 130-strong Congress. The constitution gives the Central Bank independence. Free-trade agreements with the United States, the European Union and China place limits on economic change. And, as Mr Humala’s Brazilian advisers may point out, one secret of Lula’s success was his decision to respect existing contracts and not reverse his predecessor’s privatisations. </p> <p> But the single-minded pursuit of foreign investment and economic growth that marked Mr García’s presidency now seems to be drawing to an end. Many Peruvian democrats will have nightmares in the coming weeks. A generation ago Peru’s social fabric was rent apart by economic collapse and political violence. Around two-thirds of Peruvians still work in the informal economy. Although life has improved in the past decade, many are still susceptible to the appeals of would-be saviours—and there is more money to be grabbed to finance a bid for elected autocracy. The democrats will have to work hard to ensure that whoever wins on June 5th leaves promptly five years later. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/masses-blow-raspberry.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:12:00-07:00">4:12 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2704746698049352757">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2704746698049352757" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="823480010127713613"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/rise-of-anti-keynesians.html">The rise of the anti-Keynesians</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">Republican economics</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">The rise of the anti-Keynesians</span></div> <h1 class="rubric">Paul Ryan’s intellectual hinterland </h1> <p class="ec-article-info"> <em>WASHINGTON, DC </em></p><div class="ec-article-content clear"> <p>WHEN Republicans proposed slashing billions of dollars from federal spending this year, Democrats circulated predictions by economists that jobs and growth would be hit. John Boehner, the Republican speaker in the House of Representatives, countered with an economic expert of his own: John Taylor of Stanford University. “Nothing could be more contrary to basic economics, experience and facts,” Mr Taylor asserted on his blog, which Mr Boehner cited. By cutting government spending, he said, the Republicans would “crowd in” private investment and create jobs. </p> <p>Mr Taylor, a prominent monetary academic, served under both George Bush senior and junior and advised John McCain during his presidential campaign. In the past few years he has become a strident and prolific critic of the monetary and fiscal stimuli deployed by the Federal Reserve and the Obama administration respectively, views that have received a warm welcome from House Republicans. For if there is one ideology that unites today’s Republicans, it is Keynesianism, whose nefarious influence they are determined to stamp out. “Young Guns”, the book-sized manifesto of Eric Cantor, Kevin McCarthy and Paul Ryan, leading Republican House members, devotes several pages to the evils of Keynesian activism and its exponents in the administration.</p> <p>The budget Mr Ryan proposed on April 5th seemed to herald the return of supply-side economics, the notion that cutting taxes can generate so much more work and investment that tax revenues rise. In the 1990s Mr Ryan was a speechwriter for Jack Kemp, the effervescent congressman who, in the late 1970s and early 1980s, made supply-side economics a centrepiece of Republican electoral ambitions. </p> <p>Perhaps that is why Mr Ryan turned to the Heritage Foundation, a conservative think-tank, to produce a wildly optimistic analysis of his budget’s economic impact. It did not say Mr Ryan’s cuts to personal and corporate tax rates pay for themselves; though it reckons they recoup a still hefty 50% of their costs. But it projected an investment boom that would lift output and drive unemployment down to 2.8%, a rate not seen for 57 years. Few economists dispute that lower tax rates boost labour supply and investment. But Menzie Chinn, an economist at the University of Wisconsin at Madison, reckons the Heritage Foundation assumes a boost five to eight times more powerful than conventional models.</p> <p>Supply-side economics, though, is only one piece of Mr Ryan’s intellectual furniture. He has also paid homage to Ayn Rand, Milton Friedman, Friedrich Hayek and Robert Mundell, a Nobel laureate who champions the monetary straitjacket of fixed exchange rates. His budget cites approvingly the work of Carmen Reinhart and Kenneth Rogoff on how debt cripples growth and Niall Ferguson, a historian, on how it brings down empires. For on-tap advice Republicans regularly turn to Douglas Holtz-Eakin, a former McCain adviser who now runs the American Action Forum, a think-tank, and Mr Taylor, who keeps a flat in Washington, DC. </p> <p>Republicans may have found intellectual satisfaction in their opposition to fiscal and monetary stimulus. Whether voters will thank them is another matter. The danger is that, when interest rates are stuck near zero, austerity is more likely to hurt growth than help. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/rise-of-anti-keynesians.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:09:00-07:00">4:09 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=823480010127713613">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=823480010127713613" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6649220856189849862"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/tormented-isthmus.html">The tormented isthmus</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">Central America</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">The tormented isthmus</span></div> <h1 class="rubric">Big-time drug trafficking has arrived in Central America. Its poor, politically polarised countries must now try to cope </h1> <p class="ec-article-info"> <em>GUATEMALA CITY, SAN JOSÉ AND TEGUCIGALPA </em></p><div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/16/fb/20110416_fbp001.jpg" alt="" /></div> <p>WHEN Eduardo’s father came back to Guatemala after a spell in the United States, the tattoos up his arms gave away his roots in the <em>mara</em> (gang). Before long a rival gang had planted a knife in his back; when that failed to kill him they returned to finish him off in the street near his home. Eduardo (not his real name) was only eight at the time. But to avenge his father he joined his gang as a <em>sicario</em> (hitman), and killed his father’s murderer. Eduardo is now trying to find out whether life can offer any of the happiness he says he has never known. Since January he has been studying computing with La Ceiba, an NGO. As for that murder: “I enjoyed it,” he says blankly.</p> <p>The bullet scar on Eduardo’s chest and the beaten right arm hanging limply by his side are signs of the violence that has come to engulf Guatemala and much of the Central American isthmus. No region on earth is more routinely murderous. Guatemala’s rate of 46 murders per 100,000 people is more than twice as high as Mexico’s, and nearly ten times greater than that of the United States. Honduras and El Salvador—the other two countries that make up Central America’s “northern triangle”, as it is called—are more violent still (see chart in map). Nicaragua, Costa Rica and Panama, the quietest members of the group, have also seen violence increase in recent years, as has Belize.</p> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/16/fb/20110416_fbm920.gif" alt="" /></div> <p>These man-made tragedies are matched by natural disasters. Four of the seven Central American countries are among the 20 reckoned to be the most vulnerable in the world to destructive weather. Hurricanes, floods, landslides, earthquakes and volcanic eruptions are frequent and deadly events. They add to the steady grind of poverty and malnutrition. </p> <p>Costa Rica and Panama are much better off and better governed than their neighbours. Costa Rica is one of the world’s oldest democracies; life expectancy there is on a par with the United States. The others have suffered torpid economic growth in the past decade. Nicaragua is the poorest country in mainland Latin America. Almost half of Guatemala’s children are chronically malnourished—a rate worse than Ethiopia’s, and said by the World Bank to be the third-worst in the world. The damage is visible. Eduardo the ex-<em>sicario</em> looks much younger than his 18 years; as he recounts his murderous apprenticeship, he shuffles child-sized shoes.</p> <p>Political conflict compounds these problems. The civil wars that ravaged Central America in the 1970s and 1980s between dictators backed by the United States and guerrillas backed by the Soviet Union and Cuba are over, but a crippling polarisation of right and left remains. In 2009 the president of Honduras fell victim to a coup prompted by fears—or paranoia—about his ties to Venezuela’s Hugo Chávez. This year will see a bitter election in Guatemala and a dubious one in Nicaragua, where Daniel Ortega will seek a third presidential term in violation of the constitution. </p> <p>As if being battered by nature, bad government and youth gangs were not enough, Central America now finds itself thrust into the front line of the drugs trade and prey to big-time organised crime. Nearly all the world’s cocaine is produced in Colombia, Peru and Bolivia. The biggest consumer is the United States, where the wholesale price of a kilo of the stuff, even full of impurities, starts at $12,500. The route to market used to run from Colombia to the tip of Florida, across the Caribbean. But the United States Coast Guard shut down that corridor by the early 1990s, and shipments switched to the Pacific coast of Mexico. Now Mexico, too, has increased the pressure on the traffickers, just as Colombia has done in the south. </p> <p>Ever supple, the drugs business has sought new premises. Somewhere between 250 and 350 tonnes of cocaine—or almost the whole amount heading for the United States—now pass through Guatemala each year, according to American officials. Whereas a decade ago Central America seized less cocaine than either Mexico or the Caribbean, in 2008 it intercepted three times more than the other two combined. Mexico’s Sinaloa, Gulf and Zetas mobs are now active through much of the isthmus, often with local allies. Unlike the Colombians, they pay their local help in drugs, not cash.</p> <div class="content-image-float clearfix" style="width: 290px;"><img src="http://media.economist.com/images/images-magazine/2011/04/16/fb/20110416_fbp002.jpg" alt="" /><span class="caption">Overwhelmed in Panama</span><span class="credit"></span></div> <p>The impact has been lethal. Guatemala’s murder rate has doubled in the past decade. In both Guatemala and El Salvador, the rate of killing is higher now than during their civil wars. Guatemala’s government reckons that about two-fifths of murders are linked to the drugs business. Even Panama, much richer than many Central American countries and a favourite retirement spot for wealthy foreigners, has seen its murder rate almost double in the past three years.</p> <p>As well as using Central America as a corridor, the traffickers are moving more of their operations there. “We went through a phase in which we made the mistake of seeing ourselves as a supply transit centre, so we just had to interdict. That’s not enough. In Central America drugs are produced, processed and consumed,” says Laura Chinchilla, Costa Rica’s president. In March, to official surprise, what looked like a Mexican cocaine factory was uncovered in Honduras. </p> <p> As well as taking lives, insecurity carries a heavy economic cost. All in all, dealing with crime and violence costs Central America around 8% of its GDP, according to a report this month by the World Bank. In the most violent countries, cutting the murder rate by 10% could boost income growth per head by up to 1% a year, the bank reckons. Security-related costs are equal to around 4% of private businesses’ sales. Alberto Díaz Lobo of Constructora Eterna, a building firm in Honduras, says his security bill has gone up about 20% in the past five years. Walmart recently moved some of its Central American operations from Guatemala to Costa Rica, partly because of higher insurance premiums caused by insecurity, according to a former manager.</p> <p>In the northern triangle, weak law enforcement and tracts of wilderness make a perfect environment for organised crime. The Petén, a sprawling, sparsely populated jungle region in northern Guatemala, has become a landing zone for clandestine flights from Colombia and Venezuela. In the Laguna del Tigre national park lies a “cemetery” of more than 30 crashed light aircraft which had been used to ferry cocaine. (The drugs business is so profitable that aircraft are considered disposable.) Locals are paid by narcos to keep the runways open, and sometimes clear more themselves to attract business. </p> <p>The government does not have the resources to police such an area. Under the peace agreement of 1996 that ended the guerrilla war, the country was supposed to slash the army and expand the police. Only the first happened. The army was cut by two-thirds, but the police force of 25,500 is less than half the size required, says Carlos Menocal, the interior minister. Last year Álvaro Colom, the president, declared a state of emergency in the northern department of Alta Verapaz and sent in the army. He claims that only two drugs flights have landed there since, whereas “before it was like an international airport”. The state of emergency was lifted in February. But Mr Colom concedes that there are still four areas of the country where the drug barons have “temporary control”. To recover them he would need 10,000 more soldiers and 15,000 extra police, he says. </p> <p>Honduras ordered the army on to the streets of its cities in March; El Salvador did the same last September. Costa Rica abolished its armed forces in 1948. Its 11,000 police are “badly trained, badly armed and equipped and badly housed”, admits José María Tijerino, the interior minister. Plans to recruit an extra 1,000 officers a year for the next four years will still not be enough, he says. The entire force has two two-man helicopters. Its coastguard has a dozen second-world-war-era patrol boats to police two coasts and territorial waters that are 11 times bigger than the country’s land area.</p> <p><a name="education_and_the_lack_of_it"></a><strong>Education and the lack of it</strong></p> <p>Organised crime feeds on Central America’s other weaknesses. In several of the countries these start with the economy. This has traditionally been based on the export of coffee and other crops. In the 1990s foreign investors set up textile factories to supply the United States market. Nevertheless, income per head in the northern triangle, plus Nicaragua, rose by 1.6% a year between 1995 and 2009, barely above the Latin American average of 1.5%. Central America’s ties to the United States meant that it was badly affected by the recession. It also depends on imported oil and food. As commodity prices rose, poverty increased in the region even before recession struck. </p> <p>By contrast with its neighbours to the north Costa Rica remains a success story, though not without problems. It is more egalitarian than the others, and since the 19th century has made an effort to educate its people. After opening up its economy in the 1980s, Costa Rica saw foreign direct investment and exports flourish. It is now home to an Intel silicon-chip plant, a cluster of medical-equipment manufacturers and back-office operations of multinationals such as Hewlett-Packard and Procter & Gamble. “This was an educated country that had no economic use for that education,” says Alberto Trejos of INCAE, a business school. “Now foreign investment has turned education into a key comparative advantage.” If Costa Rica faces a shortage of engineers and English-speakers, that is a problem of success. Panama is doing something similar by using its canal to turn itself into a regional business hub.</p> <p>Contrast that with Guatemala, home to a third of Central America’s 42m people. It has a few institutions that work reasonably well, such as the central bank and the private universities. But it has failed to invest in its people. Recent governments have made some effort. But the average Guatemalan has just 4.1 years of schooling. The shocking prevalence of malnutrition rises to up to 80% of children in some rural villages. The health and schooling of the 45% of the population who speak a Mayan language has been especially neglected. Mr Colom admits to “shame” over that, but few other Guatemalans seem to.</p> <p> In a vicious circle of opportunity forgone, most Central American countries fail to generate enough jobs for their unschooled people. Only 27% of Central Americans (and just 10% of Nicaraguans) are enrolled in their national social-security systems, according to Miguel Gutiérrez Saxe, a Costa Rican economist who compiles regional data. The rest labour in the informal economy, or are among the 11% of youths who neither study nor work. This idleness feeds the <em>maras</em>: in El Salvador some 800 juveniles languish in jail, more than double the number in 2004. At least 15% of Central Americans (6m of them) have emigrated, most to the United States.</p> <p>One way of injecting more dynamism into Central America’s economies would be by improving transport links and cutting red tape. Astonishingly, it can be cheaper to ship goods to the United States from China than from Central America, according to a World Bank study. Border hold-ups and bottlenecks through towns mean that it can take up to five days for a truck to travel the 870km (540 miles) from Guatemala City to San José. Some 80% of Costa Rica’s exports and imports, and a chunk of Nicaragua’s, pass along a single-carriageway road and a modest wharf at the run-down Caribbean port of Limón.</p> <p>But governments are now struggling just to maintain existing infrastructure. Central America has long suffered natural disasters. But these now seem to be more frequent—something its leaders attribute to climate change. After a severe drought in 2009, Guatemala suffered its worst recorded flooding last year; together these caused losses of $1.5 billion, according to Mr Colom. Between 2005 and 2009 natural disasters cost Costa Rica 0.8% of GDP, equivalent to around 18% of public investment. </p> <p><a name="states_without_cash"></a><strong>States without cash</strong></p> <p>While the demands on governments multiply, their cash does not. Even by Latin American standards, the state in Central America is weak and poor. In Guatemala the tax take is just 10.4% of GDP. To reach Costa Rica’s social indicators of 2010 would need a tax take of 18% for ten years, reckons Edelberto Torres Rivas, a consultant to the UN Development Programme.</p> <p>But fiscal reform is a hostage to Guatemala’s political deadlock, blocked by the country’s powerful business lobby. Businessmen complain, reasonably enough, of government corruption and say that the civil service needs reform. But their implacable opposition to a modest cash-transfer programme for the poorest, implemented by Mr Colom’s wife, Sandra Torres, betrays a complete lack of social solidarity. The contrast with Colombia is instructive. Álvaro Uribe, Colombia’s stern former president, who made his country safer and also implemented a similar transfer programme, has become the hottest conference speaker in Central America. Businessmen in Guatemala last October loudly applauded his message about security; but when he exhorted them to pay their taxes, he was met with silence. Even in Costa Rica, “Tax evasion is the national sport,” says Ofelia Taitelbaum, the ombudsman. </p> <p>That is partly because the better-off in Central America make private arrangements not just for health and education but for security. Private security guards are reckoned to outnumber the police and the army by a ratio of about five to one in Guatemala and four to one in Honduras. Everyone pays for protection, “including the poor, who pay for poor security”, according to Pedro Trujillo, a former colonel in the Spanish army turned political scientist at Francisco Marroquín University in Guatemala City. He found that in the 12 years following Guatemala’s peace accords in 1996, 110 private security firms were registered in the country; the previous three decades had seen fewer than 40. In San Pedro Sula, the economic capital of Honduras, the chamber of commerce reports that security is the biggest cost for its members after manpower and electricity.</p> <div class="content-image-float clearfix" style="width: 290px;"><img src="http://media.economist.com/images/images-magazine/2011/02/05/WO/20110205_WOP563_290.jpg" alt="" /><span class="caption"><strong>Explore the drugs paradox north of the region with our </strong><a target="_blank" href="http://www.economist.com/blogs/dailychart/2011/02/daily_chart_drugs_mexico" title=" (opens in a new window) "><strong>interactive map</strong></a><strong> of Mexico's traffic routes, "cartels" and violence</strong></span><span class="credit"></span></div> <p>Change can come only through political consensus. But Central America’s political systems are nearly all dysfunctional. Nicaragua’s democracy has been castrated by Mr Ortega, whose party orchestrated widespread fraud in local elections in 2008. In Guatemala, no political party has held office for more than one presidential term since democracy was restored in 1986. By contrast, in El Salvador it was only in 2009 that the opposition managed to end two decades of rule by Arena, a powerful conservative party. The new president, Mauricio Funes, is a moderate left-winger; he must battle against his own party, many of whose leaders are pro-Cuban. Honduras has paid a high price in lost aid money and investment for its political strife. </p> <p>Panama has built an increasingly solid democracy since American troops overthrew General Manuel Noriega in 1989, but its politics have been marred by corruption and high-handedness. Even Costa Rica faces political problems. A stable two-party system broke down when one of the parties, the Social Christians, imploded after corruption scandals. Lacking a majority in Congress, Ms Chinchilla faces a struggle to win approval for extra taxes to pay for her modest security build-up. </p> <p>Not everything is gloomy in Central America. The Central American Common Market has survived political conflicts among the neighbours—including an incursion into Costa Rican territory last year by Nicaraguan troops. Most countries are making efforts to respond to the security threat. Honduras last year passed an asset-seizure law, copied from Colombia. In Guatemala, a UN-sponsored anti-impunity commission, known by its Spanish initials as CICIG, has secured such innovations as wiretaps, plea-bargaining and witness protection. But the country still lacks a computerised intelligence platform. The World Bank cites estimates of 2m guns in the country, of which less than 10% are legally registered. And Francisco Dall’Anese, CICIG’s head, has faced a campaign of vilification from businessmen. </p> <p><a name="uncle_sam’s_role"></a><strong>Uncle Sam’s role</strong></p> <p>Not surprisingly, Central America’s leaders think the United States should do more to help tackle the consequences of its own demand for cocaine. Though the region is more violent than both Mexico and Colombia, Central America receives much less American aid. The Central American Regional Security Initiative, the latest aid scheme, offers just $260m over three years to the seven countries. “A drop in a bucket,” says Óscar Álvarez, Honduras’s security minister. “Costa Rica is not a country that goes begging,” says Ms Chinchilla. But she is frustrated that when the Americans come to help, “they always arrive late. When they give significant aid it’s when countries have been invaded by organised crime. They think Nicaragua, Costa Rica and Panama are OK.” Seizures of drugs are neither a good measure nor a good solution to the problem, she says.</p> <p>The Obama administration has at least shown “an understanding that the problem isn’t just ours,” says Mr Colom. “They are looking for a different plan, because the plan they already have isn’t working,” he believes. Though American officials stress that the strategy will come from Central America and not from Washington, there are some signs of a shift in thinking. William Brownfield, a former ambassador to Colombia who is now the State Department’s top anti-drug man, visited Guatemala, Honduras and El Salvador in February, his first trip in his new job. Mr Obama visited El Salvador in March, when he announced a modest increase in anti-drugs aid to the region, if Congress agrees. There is a feeling that in the isthmus, aid delivers “more bang for your buck” than in Mexico or Colombia, one diplomat suggests. With cash scarce in Washington, aid may be redistributed rather than increased. </p> <p>Some things are getting better in Central America. But the problem, as an American diplomat in the region says, is that whereas the improvements are linear, the threats are growing exponentially. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tormented-isthmus.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:06:00-07:00">4:06 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6649220856189849862">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6649220856189849862" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4141633966751481010"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/chinas-crackdown.html">China's crackdown</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">China's repressive new rulers</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">China's crackdown</span></div> <h1 class="rubric">The vindictiveness of China’s rulers betrays their nervousness </h1><div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/16/ld/20110416_ldd001.jpg" alt="" /></div> <p>LIKE so much else under Heaven, repression in China has often seemed to go in cycles. Every now and then it has suited the country’s leaders to relax their steely grip on the country and allow a modicum of political liberty.</p> <p>Freer criticism in the media has helped give the party a veneer of credibility. Lip-service to the law and due process has won plaudits overseas and boosted the economy at home. So a thaw would set in for a while, a “Beijing spring”. A freeze would always follow. But, until lately, in each new cycle the springs were seeming warmer and the freezes not quite so harsh. When the country was starting to liberalise, Westerners justified doing business with China on just such grounds. More economic openness would surely lead to more openness of other kinds.</p> <p>The latest freeze casts this widespread hope into doubt, for three reasons. The first is the scale of the crackdown. Ai Weiwei, China’s best-known artist and dissident, who was detained at Beijing airport on April 3rd, is only the most notable figure to be caught by it. Calls on the internet for a “jasmine revolution” have prompted armed police and plain-clothes goons to descend in huge numbers on public places to stop people from “strolling”, as a veiled form of protest.</p> <p><a name="baby,_it’s_cold_outside"></a><strong>Baby, it’s cold outside</strong></p> <p> Dozens have been detained and now face criminal charges in relation to these inchoate calls. Others have faced different kinds of harassment, including beatings and house arrest. But the freeze runs deeper. Since February some of the country’s top defence lawyers have vanished. Activists for villagers’ rights and the environment have faced repression. Bloggers have been rounded up. Members of a big underground (ie, non-state) church in Beijing, stopped from meeting in their usual building, were arrested as they tried to worship outside.</p> <p>A second reason for doubt is the duration of the crackdown. With hindsight, it began after Tibetan riots in 2008 drew a harsh response. Since then, two events, the Beijing Olympics later that year and the Shanghai World Expo of 2010, might have served as coming-out parties for a rising China. They offered the regime the chance to show the world a more confident face. Yet both were accompanied by harsh treatment of anyone deemed likely to embarrass the government. Tens of thousands of unwashed migrant workers were forced out of Beijing for lowering the tone. Outspoken activists were kept out of sight.</p> <p> Even natural disasters have triggered repression. Mr Ai’s first serious run-in with the authorities came when he attempted to account for all the schoolchildren killed during the Sichuan earthquake in 2008, many as a result of corrupt building practices. Taking in all its manifestations, which include tightened internet censorship and a stifling of public debate, the latest crackdown on political dissent certainly constitutes the worst since Tiananmen Square in 1989 and its aftermath.</p> <p> A third reason to doubt the notion of gradual warming lies in the method of repression. Even the post-Tiananmen crackdown had a semblance of due process. Now such pretence is out of the window. People are picked up under arbitrary detention rules and then made to disappear. Mr Ai has not been heard of since being bundled away. Violence is part of the mix. Mr Ai needed brain surgery in 2009 after being beaten up by goons. Foreign journalists are being harassed on a scale unseen since Tiananmen Square. Vaguely defined “state security” is used as a reason to round people up. For perceived “troublemakers” such as Mr Ai, the government says, “no law can protect them.”</p> <p>Western observers tend to describe the crackdown as a massive overreaction to perceived threats, but it may well be that China’s rulers know better. True, no seething mass stands ready to overthrow the regime. But in a vast country, many aggrieved people, from dispossessed villagers through unemployed graduates to angry bloggers, resent the state. The government is quite capable of handling each of these groups separately. But were those with grievances ever to coalesce, especially if the growth slows—as it will sooner rather than later (see <a href="http://www.economist.com/node/18560195">article</a>)—they would represent a potent force. </p> <p>The view from Beijing, thus, is different to the view from abroad. Whereas the outside world regards China’s rulers as all-powerful, the rulers themselves detect threats at every turn. The roots of this repression lie not in the leaders’ overweening confidence but in their nervousness. Their response to threats is to threaten others.</p> <p> Imminent political change may also play a part. Next year a crucial party congress will anoint a new generation of leaders, led by Xi Jinping, now the country’s vice-president, to take over the running of the country. Repression is the job of China’s powerful “security state”—the regular and secret police. Sensing rudderlessness at the top, it may be particularly inclined to flex its muscles now.</p> <p><a name="the_fear_of_hanging_separately"></a><strong>The fear of hanging separately</strong></p> <p>Many of China’s new leaders come from the “princeling” class, an aristocracy of families with revolutionary credentials from the days of Mao Zedong (see <a href="http://www.economist.com/node/18561005">article</a>). Some have lucrative positions which give them a financial interest in tighter party control over both the economy and society. Others use their ideological pedigrees to advocate a neo-Maoist approach, which includes scant regard for the law. There is plenty of resentment within the system at the growing power of this aristocracy, and repression can be used to defang opposition. A nastier China is the result.</p> <p> In the short term at least, these troubling developments undermine the comforting idea that economic openness necessarily leads to the political sort. All the more reason, then, for the West to hold China to account. America and the European Union are right strongly to condemn Mr Ai’s detention, though it would have been better had they taken a stand sooner. Speaking out might just help constrain the regime’s behaviour. It will certainly give succour to those in China working bravely to create a better future.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/chinas-crackdown.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:02:00-07:00">4:02 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4141633966751481010">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4141633966751481010" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3687510088409892412"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/drug-war-hits-central-america.html">The drug war hits Central America</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">Central America's woes</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">The drug war hits Central America</span></div> <h1 class="rubric">Organised crime is moving south from Mexico into a bunch of small countries far too weak to deal with it </h1><div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/16/ld/20110416_ldp003.jpg" alt="" /></div> <p>FOR most of the 20th century, the small countries of Central America were a backwater, a tropical playground for dictators and adventurers. In the 1970s and 1980s they turned briefly into a violent cockpit of the cold war as Marxist-inspired guerrillas battled US-backed tyrants. Places like El Salvador and Nicaragua generated daily headlines around the world and bitter partisan battles in Washington. When the cold war ended, peace and democracy prevailed and Central America slipped back into oblivion. But its underlying problems—which include poverty, torpid economies, weak states, youth gangs, corruption and natural disasters—never went away. </p> <p>Now violence is escalating once more in Central America, for a new reason. Two decades ago the United States Coast Guard shut down the Caribbean cocaine route, so the trade shifted to Mexico. Mexico has started to fight back; and its continuing offensive against the drugs mafias has pushed them down into Central America. </p> <p>Whatever the weaknesses of the Mexican state, it is a Leviathan compared with the likes of Guatemala or Honduras. Large areas of Guatemala—including some of its prisons—are out of the government’s control; and, despite the efforts of its president, the government is infiltrated by the mafia. The countries of Central America’s northern triangle (Guatemala, Honduras and El Salvador) are now among the most violent places on earth, deadlier even than most conventional war zones (see <a href="http://www.economist.com/node/18558254">article</a>). So weak are their judicial systems that in Guatemala, for example, only one murder in 20 is punished. </p> <div class="related-items"> <strong>Related items</strong><ul class="related-item-list"><li><a href="http://www.economist.com/node/18557847">Letters: On Cyprus, intervention, political dynasties, the state, companies as people</a><span>Apr 14th 2011</span></li><li><a href="http://www.economist.com/node/18558254">Central America: The tormented isthmus</a><span>Apr 14th 2011</span></li></ul><hr class="related-item-separator"><strong>Related topics</strong><div class="item-list"><ul class="related-item-list"><li class="first"><a href="http://www.economist.com/topics/honduras" class="related-inline-topics">Honduras</a></li><li class=" even"><a href="http://www.economist.com/topics/mexico" class="related-inline-topics">Mexico</a></li><li><a href="http://www.economist.com/topics/central-america" class="related-inline-topics">Central America</a></li><li class=" even last"><a href="http://www.economist.com/topics/united-states" class="related-inline-topics">United States</a></li></ul></div> </div> <p>A collapse in social order, however bloody, is normally an internal matter. Yet it would be wrong to leave Central America to its own unhappy devices. Although the new violence thrives on the weakness of the state in those countries, its origins lie elsewhere. Demand for cocaine in the United States (which, unlike that in Europe, is fed through Central America), combined with the ultimately futile war on drugs, has led to the upsurge in violence. It is American consumers who are financing the drug gangs and, to a large extent, American gun merchants who are arming them. So failing American policies help beget failed states in the neighbourhood.</p> <p><a name="reason_to_worry"></a><strong>Reason to worry</strong></p> <p>The United States is involved in Central America’s troubles not just because it helped cause them, but also because it will feel their consequences. By air, Central America is less than three hours from Miami. It is the gringo “near abroad”, a destination for elderly Americans looking for a warm place to retire, though violence will stem the flow. Already the lethal combination of conflict and lack of opportunity is driving thousands of Central Americans to brave the threat of kidnap and extortion to migrate to the United States. More will follow if conditions worsen. </p> <p>A generation ago, the United States rightly concluded that it had much to gain if the Americas became a community of prospering democracies. Yet it is in Central America that democracy is under greatest threat. The isthmus seethes with ideological polarisation and political mistrust. China is active there. Venezuela’s Hugo Chávez is stirring things up. In Nicaragua Daniel Ortega is set to win an illegal third term in an election this year, in part thanks to Mr Chávez’s largesse. Honduras saw a coup that ousted an elected, albeit irresponsible, president in 2009. Some Central American countries are doing better: Costa Rica is still one of the safest places in the Americas, for example. But its economic success is based on attracting foreigners as tourists, investors or retired residents. A deteriorating security situation will jeopardise its prosperity—and undermine democracy throughout the region.</p> <p><a name="escaping_the_hobbesian_trap"></a><strong>Escaping the Hobbesian trap</strong></p> <p>Central American governments have begun to recognise the scale of the battle they face. But stopping their slide into violent chaos requires many things: reform of the police, prisons and courts; better intelligence and information-sharing; a huge effort to provide more legal opportunities for young men, not least by educating them properly; and more hardware, such as helicopters and patrol boats. </p> <div class="content-image-float clearfix" style="width: 290px;"><img src="http://media.economist.com/images/images-magazine/2011/02/05/WO/20110205_WOP563_290.jpg" alt="" /><span class="caption"><strong>Explore the drugs paradox north of the region with our </strong><a target="_blank" href="http://www.economist.com/blogs/dailychart/2011/02/daily_chart_drugs_mexico" title=" (opens in a new window) "><strong>interactive map</strong></a><strong> of Mexico's traffic routes, "cartels" and violence</strong></span><span class="credit"></span></div> <p>All this, of course, will have to be paid for. Central American governments do not collect enough tax revenue to provide the rudiments of a modern state: security, education and health for their people, and transport infrastructure to allow their economies to reap the full benefit of their privileged position close to the United States. Central America has fallen into a Hobbesian trap: the better-off make private arrangements—there are five times as many private security guards as policemen or soldiers in Guatemala, and four times as many in Honduras—and therefore block efforts to levy the tax revenues necessary to strengthen the state. There is a lesson for Central America’s governments in Colombia: the tide turned against <em>los violentos </em>only when Álvaro Uribe introduced a wealth tax to pay for a security build-up. </p> <p>But the Central American governments are not solely responsible for the countries’ problems. The drugs policies of the United States are also to blame. And, to cap it all, climate change—to which the unfortunate Central Americans have contributed virtually nothing—seems to be increasing the ferocity of nature in the isthmus. Catastrophic flooding is killing people with increasing frequency, and raising the cost of maintaining infrastructure.</p> <p>When the guerrilla wars of the 1970s and 1980s ended, Americans forgot about Central America. It is time they remembered it again, and offered some help. They could, for example, lead an aid programme that would tie money for roads, ports and security hardware to increases in the tax take to pay for better security and social conditions. </p> <p>Such schemes will not, however, solve the fundamental problem: that as long as drugs that people want to consume are prohibited, and therefore provided by criminals, driving the trade out of one bloodstained area will only push it into some other godforsaken place. But unless and until drugs are legalised, that is the best Central America can hope to do.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/drug-war-hits-central-america.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T16:00:00-07:00">4:00 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3687510088409892412">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3687510088409892412" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3589467864795842139"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/roots-of-crisis-buried-deep-after.html">Roots of Crisis Buried Deep After Inquiry</a> </h3> <div class="post-body entry-content"> <h1>Roots of Crisis Buried Deep After Inquiry: Peter J. Wallison</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Peter J. Wallison</span></cite></div><p>No one wants to excuse the managers and regulators of financial companies from responsibility for the financial crisis. But it is too easy to assign blame and walk away, without doing the serious work of finding out what really happened. </p> <p>This observation was triggered by news last week that the U.S. Securities and Exchange Commission is considering an enforcement action against <a href="http://topics.bloomberg.com/daniel-mudd/">Daniel Mudd</a> and Richard Syron, the chief executives of Fannie Mae and Freddie Mac, respectively, before the two government-sponsored enterprises collapsed. </p> <p>If, as news reports suggest, Fannie and Freddie failed to fully disclose the potential subprime mortgage losses, the implications would extend beyond a violation of securities laws. It would also have important implications for the causes of the financial crisis and the thoroughness of the work of the Financial Crisis Inquiry Commission. </p> <p>The commission’s majority <a href="http://fcic.law.stanford.edu/report" title="Open Web Site" rel="external">report</a> blamed the crisis on financial executives who failed to understand or didn’t care about the risks they were taking. Regulators didn’t do their jobs either, according to the commission. </p> <p>The conclusion to draw from this is that the crisis was caused by private greed and the indolence or lack of authority of regulators. The remedy implied by this narrative was tighter regulation, and the now-notorious Dodd-Frank Act was the result. </p> <h2>Nearing Truth </h2> <p>Yet the commission, headed by <a href="http://topics.bloomberg.com/phil-angelides/">Phil Angelides</a>, a former Democratic candidate for governor of <a href="http://topics.bloomberg.com/california/">California</a>, and <a href="http://topics.bloomberg.com/bill-thomas/">Bill Thomas</a>, a former Republican congressman from that state, never investigated what information about Fannie and Freddie’s loans was available at the time, or why investors and regulators continued to believe that mortgage-backed securities were safe. </p> <p>With the SEC’s impending enforcement action, we are getting close to the truth. </p> <p>Under legislation adopted in 1992, Fannie and Freddie were required to meet affordable housing goals when they bought loans from mortgage originators. Initially, the goals required that 30 percent of all mortgage acquisitions had to be classified as affordable -- that is, made to borrowers who were at or below median income in the areas where they lived. </p> <p>Over succeeding years the goals were increased so that, by 2007, 55 percent of all mortgages the two companies acquired had to be made to borrowers at or below median income. </p> <h2>Competing for Loans </h2> <p>It’s possible to find prime borrowers at this income level. But not when more than half of all loans had to meet this test, and especially when the companies were competing for the same loans with the <a href="http://topics.bloomberg.com/federal-housing-administration/">Federal Housing Administration</a>, and insured banks, and savings and loan associations with similar requirements under the Community Reinvestment Act. </p> <p>By 2008, Fannie and Freddie held or had guaranteed 12 million loans that were made to borrowers with FICO credit scores below 660 -- a common definition of a subprime loan -- or were otherwise risky because they had no or very low down payments and other deficiencies. By then, 27 million loans, or half of all U.S. mortgages, were subprime or otherwise risky. </p> <p>When the housing bubble began to deflate, these loans started defaulting at unprecedented rates, dragging down housing prices and the financial companies holding securities backed by these mortgages. </p> <h2>Subprime Exposure </h2> <p>For many years, <a href="http://topics.bloomberg.com/fannie-mae/">Fannie Mae</a> defined subprime mortgages as loans that it bought from subprime lenders, not by credit score. This had the effect of making its investment holdings seem less risky. In its 2007 10-K <a href="http://cfdocs.bbwebds.bloomberg.com:27638/servlet/CfDocument/cfdoc?id=0000950133-08-000795&filesize=0&autodwld=0" title="Open Web Site" rel="external">annual report</a>, for example, the company estimated its subprime exposure at about 0.3 percent of its single-family mortgages. Tables deeper inside the report showed loans with FICO credit scores of less than 660 were 18 percent of the company’s single-family holdings. </p> <p>The significance of this for the financial crisis is that Fannie and Freddie’s reports might have lulled analysts and risk managers into believing that if the housing bubble collapsed, the damage would be limited because the number of risky loans was small. </p> <p>We now know the damage was severe. Had those 12 million Fannie Mae and <a href="http://topics.bloomberg.com/freddie-mac/">Freddie Mac</a> loans been prime instead of subprime, delinquencies and defaults probably would have been around 2 percent, not almost nine times higher. </p> <h2>No Inquiry </h2> <p>In writing my <a href="http://www.aei.org/paper/100190" title="Open Web Site" rel="external">dissent</a> from the commission’s majority report, I searched widely for examples of anyone -- academic researcher, credit rating analyst or housing market expert -- who knew before 2008 that half of all mortgages in the financial system were subprime or otherwise risky, or that Fannie and Freddie had contributed almost half of that total. </p> <p>The <a href="http://fcic.law.stanford.edu/about/biographies" title="Open Web Site" rel="external">commission</a> had a chance to investigate the risks that Fannie and Freddie were taking and why the information available in the market was so deficient. But this would have required the commission to examine the losses caused by government housing policy. Angelides refused to do so. Instead, Fannie and Freddie’s contribution to the housing crisis was called “marginal” in the commission’s report. </p> <p>As a result, the American people and Congress received a distorted picture of the causes of the financial crisis, not the thorough investigation they deserved. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/roots-of-crisis-buried-deep-after.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T15:58:00-07:00">3:58 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3589467864795842139">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3589467864795842139" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3764414648797130833"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/paul-ryan-plan-or-higher-taxes-take_15.html">Paul Ryan Plan or Higher Taxes, Take Your Pick</a> </h3> <div class="post-body entry-content"> <h1>Paul Ryan Plan or Higher Taxes, Take Your Pick: Amity Shlaes</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Amity Shlaes</span> - <span class="datestamp"></span></cite></div><div class="story_inline assets"> <img alt="Shlaes" class="author_photo" src="http://cdn.gotraffic.net/v/20110414_114204/images/authors/shlaes.jpg" /> <p class="author_caption">Amity Shlaes</p> </div> <p>This week President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> is offering his plan to solve America’s debt problem. The president’s approach will include tax increases. </p> <p>Republicans will huff that the Grand Old Party will never raise taxes. They will tell the president that they want to be like <a href="http://topics.bloomberg.com/ronald-reagan/">Ronald Reagan</a> or <a href="http://topics.bloomberg.com/calvin-coolidge/">Calvin Coolidge</a> or Andrew Mellon, the Treasury secretary from 1921 to 1932. Mellon, who cut income tax rates to 25 percent from 73 percent in the 1920s, is the tax- cutters’ deity. His anti-tax manifesto, “<a href="http://www.archive.org/stream/taxationthepeopl033026mbp/taxationthepeopl033026mbp_djvu.txt" title="Open Web Site" rel="external">Taxation: The People’s Business</a>,” is so hot that a first edition sells for $1,250. </p> <p>What Mellon’s admirers overlook is that that those cuts made up only part of his program. Mellon also cut the budget. Several years into the Great Depression experts concerned with widening deficits went to the Treasury Department, demanding <a href="http://topics.bloomberg.com/tax-rate/">tax-rate</a> increases, levies on autos and radios and even a creepy tax on checks. </p> <p>Did the legendary Treasury secretary tell those wonks to take a hike? He did not. Mellon duly trashed his own legacy and pushed the top <a href="http://www.taxfoundation.org/publications/show/151.html" title="Open Web Site" rel="external">tax rate</a> right back up, to 63 percent. </p> <p>What caused Mellon’s humiliating surrender? Timing. By December 1931, it was too late for him to do anything else but raise taxes. </p> <p>Mellon was trapped by errors made in preceding years, at home and abroad. His own <a href="http://topics.bloomberg.com/republican-party/">Republican Party</a> had pushed through a nasty tariff, <a href="http://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html" title="Open Web Site" rel="external">Smoot-Hawley</a>. Investors had pushed stock prices too high. The U.S. was on the gold standard, and people feared that gold and dollars would flow overseas if the U.S. deficit deepened too much. </p> <h2>Dwindling Options </h2> <p>The French were hogging gold at the time. Less gold in the U.S. meant less currency in circulation, and the Great Depression got even worse. Mellon had also tried raising money by selling <a href="http://topics.bloomberg.com/government-bonds/">government bonds</a>, but he believed the bond tool was exhausted. In 1931 Mellon feared the U.S. would lose its status on the world stage if the country couldn’t prove it was solvent. That winter’s tax increase was his, and the nation’s, last worst resort. </p> <p>Here’s what the Mellon story tells us: there comes a point when even the most devoted tax cutter will raise taxes. The trick for the country is to avoid getting to that point. In our own cycle, that point of needing a dramatic tax increase is just years, possibly even months, away. </p> <h2>Time Running Out </h2> <p>There was an era when U.S. politicians had the luxury of ample time, and their motto could be “tax cuts first, deficits second.” Another maxim was also popular: “deficits don’t matter because we outgrow them.” In many instances from the 1960s to the 1990s, tax cuts did indeed promote growth and prevent deficits. </p> <p>The argument that tax cuts were the one answer for growth was plausible because the U.S. lacked competition. <a href="http://topics.bloomberg.com/europe/">Europe</a> was still divided by multiple currencies. China wasn’t yet on the scene. Republicans could tell themselves that even ridiculous <a href="http://topics.bloomberg.com/tax-code/">tax code</a> changes such as child credits helped the economy. The <a href="http://topics.bloomberg.com/u.s.-economy/">U.S. economy</a> was doing so well that a Republican who grumbled about the debt looked like an irrelevant Scrooge. </p> <p>Some Republicans still think this way. Indeed, Republican denial about the damage of deficits neatly parallels Democratic denial about the damage of high wages. Republicans pretend they are living in the 1980s. Democrats pretend they are living in the 1950s. Both parties ignore the fact that international competition has now changed our situation. </p> <h2>Inhibiting Growth </h2> <p>What about today? We all are starving for growth. This week I’ll be in <a href="http://topics.bloomberg.com/dallas/">Dallas</a> at a conference on economic growth hosted by the new <a href="http://www.georgewbushcenter.com/lp/institute.php" title="Open Web Site" rel="external">George W. Bush Institute</a>. It’s part of the group’s ambitious <a href="http://www.bushcenter.com/economic-growth/4percent-project#overview" title="Open Web Site" rel="external">4% Project</a>, which seeks ways to achieve long-term economic growth of 4 percent. </p> <p>This time yearly growth in the U.S. can’t reach 4 percent, or even 3 percent by tax changes alone. Cuts in debt and entitlement reform are also necessary. The federal debt is too big to outgrow, especially with <a href="http://topics.bloomberg.com/interest-rates/">interest rates</a> heading up. The very structure of our entitlement programs guarantees that greater economic growth will yield larger budgetary shortfalls. The formula for Social Security is pegged to the average real wage. When the economy grows, that wage increases, driving up the government’s pension obligations commensurately. </p> <p>And this time, the competition from China and Europe, in terms of their economies and currencies, will not go away. America’s next big financial crisis will be a money crisis. To survive, the dollar will have to demonstrate that it’s not based upon ever-widening debt and is worthy of investment by foreigners. </p> <h2>Best Strategy </h2> <p>The best move for anyone of either party who wants even a shot at blocking tax increases before it’s too late ought to line up behind House Budget Committee Chairman <a href="http://topics.bloomberg.com/paul-ryan/">Paul Ryan</a> like a recruit at basic training. </p> <p>Ryan’s proposal is imperfect, but the plan is at least ready. Critics unhappy with elements of it can add their own changes to the next budget, once unity creates momentum. In short, the U.S. has to show it realizes it is confronting an existential threat. <a href="http://topics.bloomberg.com/monetary-policy/">Monetary policy</a> must also change. Arbitrary moves like the <a href="http://topics.bloomberg.com/federal-reserve/">Federal Reserve</a>’s second round of quantitative easing make the U.S. look unreliable to investors with other options. </p> <p>This past weekend Ryan said, “we need a clean break” with old history. True enough. But those who can’t remember Mellon’s past are condemned to repeat it. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/paul-ryan-plan-or-higher-taxes-take_15.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T15:56:00-07:00">3:56 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3764414648797130833">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3764414648797130833" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3183203513867305291"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/venezuela-raises-some-food-costs-48.html">Venezuela Raises Some Food Costs 48%</a> </h3> <div class="post-body entry-content"> <h1>Venezuela Raises Some Food Costs 48% Amid Inflation Surge</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Charlie Devereux</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Hugo Chavez " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iG6trVquJGPU" /> </div> <p class="caption">Hugo Chavez, Venezuela's president, speaks at a meeting during the COP15 United Nations Climate Change Conference at the Bella Centre in Copenhagen. Photographer: Chris Ratcliffe/Bloomberg </p> </div> </div> </div> <p><a href="http://topics.bloomberg.com/venezuela/">Venezuela</a> raised government-set price caps on some food products by as much as 48 percent even as President <a href="http://topics.bloomberg.com/hugo-chavez/">Hugo Chavez</a>’s government struggles to contain one of the highest inflation rates in the world. </p> <p>The government raised the price on cans of powdered milk 48 percent to 23.7 bolivars ($5.50) and on corn oil by 36 percent, according to a resolution published today in the Official Gazette. The costs of sunflower oil and mixed vegetable oil were also raised. </p> <p>Venezuela, a net importer of food, avoided raising prices caps following a devaluation of the bolivar earlier in the year in a bid to stave off an inflationary spike. Food is the principal driver of inflation in Venezuela, according to the central bank, and consumer prices may climb more than 4 percent in April with today’s decision, said <a href="http://topics.bloomberg.com/boris-segura/">Boris Segura</a>, a Latin America economist at Nomura Securities International. </p> <p>“That’s the problem with price controls - they are unsustainable,” Segura said in a phone interview from <a href="http://topics.bloomberg.com/new-york/">New York</a>. “The trigger is a devaluation but the reality is that Venezuela has severe inflationary inertia.” </p> <p>Consumer prices in Venezuela rose 27.4 percent in March from a year earlier, the most among 78 economies tracked by Bloomberg. Prices rose by 5.2 percent, the most in seven years, in April 2010 from a month earlier after the government raised price caps on dairy products and cheese. </p> <h2>IMF Forecast </h2> <p>The <a href="http://topics.bloomberg.com/international-monetary-fund/">International Monetary Fund</a> forecast inflation in Venezuela will accelerate 29.8 percent to 31.3 percent in 2011, according to its <a href="http://www.imf.org/external/pubs/ft/weo/2011/01/index.htm" title="Open Web Site" rel="external">World Economic Outlook report</a> released this month. </p> <p>Chavez devalued the bolivar for the second time in less than a year in January by weakening the <a href="http://topics.bloomberg.com/exchange-rate/">exchange rate</a> on so- called essential goods such as food and medicine by 40 percent to 4.3 bolivars per dollar and unifying the two fixed foreign- exchange rates. </p> <p>The government, which controls the price of more than 100 basic food goods, raised price caps on bread and pasta last month by as much as 33 percent. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/venezuela-raises-some-food-costs-48.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T15:55:00-07:00">3:55 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3183203513867305291">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3183203513867305291" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2220775070520683208"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/house-passes-ryan-plan.html">House Passes Ryan Plan</a> </h3> <div class="post-body entry-content"> <h1>House Passes Ryan Plan That Will Help Guide U.S. Budget Debate</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Brian Faler</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Representative Paul Ryan, a Republican from Wisconsin " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ijYPR3PMlBIU" /> </div> <p class="caption">The Republican-controlled House will set the stage for an even bigger fight with its expected passage of Representative Paul Ryan’s bid to slash spending by more than $6 trillion over the next 10 years. Photographer: Brendan Hoffman/Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Cato's Tanner on Obama, Ryan Deficit-Cutting Plans " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ilyJwVaTsiR4" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68740052/">Play Video</a></div> </div> <p class="caption"> April 15 (Bloomberg) -- Michael Tanner, a senior fellow at the Cato Institute in Washington, talks about federal deficit-reduction plans by President Barack Obama and House Budget Committee Chairman Paul Ryan. He speaks with Bloomberg's Melissa Long on Bloomberg Television's "Fast Forward." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Urban League's Morial Interview About Ryan Budget Plan " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iddg06ZPmCwk" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68742850/">Play Video</a></div> </div> <p class="caption"> April 15 (Bloomberg) -- Marc Morial, president and chief executive officer of the National Urban League, talks about House Budget Committee Chairman Paul Ryan's budget proposal. The House today passed the measure that would cut U.S. spending by more than $6 trillion over a decade and privatize Medicare. Morial speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Marron Interview on U.S. Deficit " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=icLetvdUSU1k" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68740056/">Play Video</a></div> </div> <p class="caption"> April 15 (Bloomberg) -- Donald Marron, director of the Urban-Brookings Tax Policy Center, talks about the U.S. deficit and its implications for economic growth. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Obama's Own Words on U.S. Deficit, Tax Code, Ryan Plan " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iRjqnamDshhg" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68651488/">Play Video</a></div> </div> <p class="caption"> April 13 (Bloomberg) -- U.S. President Barack Obama speaks about his proposal to cut $4 trillion in cumulative deficits within 12 years. In presenting his long-term plan for closing the budget shortfall, Obama set a target of reducing the annual U.S. deficit to 2.5 percent of gross domestic product by 2015, compared with 10.9 percent of GDP projected for this year. (Excerpts. Source: Bloomberg) </p> </div> </div> </div> <p>The U.S. House passed a Republican budget that would cut spending by more than $6 trillion over a decade and privatize Medicare in a party-line vote that will help define the fight over the deficit into next year’s elections. </p> <p>Lawmakers approved House Budget Committee Chairman <a href="http://topics.bloomberg.com/paul-ryan/">Paul Ryan</a>’s proposal today on a 235-193 vote, one day after wrapping up their first budget battle of the year with passage of a $38.5 billion spending cut for 2011. </p> <p>“Yesterday we cut billions, today we cut trillions,” said Representative <a href="http://topics.bloomberg.com/kevin-mccarthy/">Kevin McCarthy</a> of <a href="http://topics.bloomberg.com/california/">California</a>, the House’s third- ranking Republican. </p> <p>The measure is certain to die in the Senate where Democratic leaders have endorsed President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a>’s competing call to reduce the deficit through a combination of tax increases and spending cuts. </p> <p>“The <a href="http://topics.bloomberg.com/house-republicans/">House Republicans</a> have let Tea Party zeal get the better of them, and this vote will reverberate for a long time,” said Senator <a href="http://topics.bloomberg.com/charles-schumer/">Charles Schumer</a>, his chamber’s third- ranking Democrat. “In the months to come, we will not miss a single opportunity to remind the public that Republicans voted to end Medicare in order to give extra tax breaks for millionaires.” </p> <h2>Vote Breakdown </h2> <p>No Democrats <a href="http://clerk.house.gov/evs/2011/roll277.xml" title="Open Web Site" rel="external">voted</a> today for Ryan’s plan while four Republicans opposed it: Representatives Denny Rehberg of <a href="http://topics.bloomberg.com/montana/">Montana</a>, David McKinley of <a href="http://topics.bloomberg.com/west-virginia/">West Virginia</a>, Walter Jones of <a href="http://topics.bloomberg.com/north-carolina/">North Carolina</a> and <a href="http://topics.bloomberg.com/ron-paul/">Ron Paul</a> of <a href="http://topics.bloomberg.com/texas/">Texas</a>. </p> <p>Rehberg, who is running next year for the Senate, said in a statement: “There are still too many unanswered questions with regard to Medicare reform, and I simply won’t support any plan until I know for a fact that Montana’s seniors will be protected.” </p> <p>White House spokesman <a href="http://topics.bloomberg.com/jay-carney/">Jay Carney</a> said “the president agrees with House Republicans that we must reduce our deficit and put our country on a fiscally sound path, but we disagree with their approach.” </p> <p>Carney also said “any solution will require Republicans and Democrats working together, and we are committed to that process.” </p> <h2>Spending Cuts </h2> <p>Ryan’s proposal relies exclusively on spending cuts to reduce the government’s deficit, slicing $6.2 trillion over 10 years from Medicare and scores of other programs including Medicaid, <a href="http://topics.bloomberg.com/food-stamps/">food stamps</a>, <a href="http://topics.bloomberg.com/farm-subsidies/">farm subsidies</a> and Pell college tuition grants. </p> <p>It calls for replacing the traditional Medicare health-care system for the elderly with subsidies to buy private insurance starting with people who turn 65 in 2022. It would also cut the top corporate and individual tax rates from 35 percent to 25 percent. The plan wouldn’t balance the government’s books until 2040. </p> <p>Most Americans would pay more for their health care under the plan, according to the <a href="http://www.cbo.gov/ftpdocs/121xx/doc12128/04-05-Ryan_Letter.pdf" title="Open Web Site" rel="external">Congressional Budget Office</a>, while states may have to cut participants in Medicaid, the federal- state health-care program that serves the poor. </p> <p>Representative Allen West, a freshman Republican from <a href="http://topics.bloomberg.com/florida/">Florida</a>, said he is ready to take the plan to his constituents. </p> <p>“I’m not up here to worry about being re-elected,” West said. “There is a dire situation” and “we have to explain it to the people, not stand up and demagogue it and just try to scare people.” </p> <h2>‘Defining Moment’ </h2> <p>Representative Lou Barletta, a Pennsylvania Republican, called the vote a “defining moment,” saying “we’re doing it even at risk of our own political future -- but we’re doing it for the next generation and that’s what I came here to do.” </p> <p>After today’s vote, the chamber will need to produce additional legislation to make specific changes to tax and spending policies. That process could produce bills deviating from Ryan’s plan, and some Republicans said it allows them to back his budget even if they don’t support his policy prescriptions. </p> <p>“I don’t necessarily think that just by voting for the budget, you’re signing on” to his proposals, said Missouri Representative Jo Ann Emerson, co-chairwoman of a group of Republican moderates known as the Tuesday Group. </p> <p>“He doesn’t have control over what the committees do,” she said. “You know what happens once the committee process starts. It turns out to be a lot different.” </p> <h2>Framing Debate </h2> <p>Each side is seeking to frame the debate over Ryan’s budget around large themes. </p> <p>“It’s important to define ourselves with our actions and show the country that we’re serious about getting this debt under control,” Ryan said in an interview. “To sit back and not do anything about it because of politics would be a huge moral failing.” </p> <p>Representative Rosa DeLauro, a Connecticut Democrat, said the Republicans’ budget “throws seniors to the wolves.” </p> <p>Today’s vote opens another round of fighting over the so- called discretionary part of the budget -- the areas lawmakers control through annual appropriations bills. Ryan’s plan calls for $31 billion in 2012 cuts, on top of the $38.5 billion in savings approved yesterday after negotiations that almost led to a government shutdown. </p> <p>“We’ll be going through this same battle all over again,” said Representative <a href="http://topics.bloomberg.com/scott-garrett/">Scott Garrett</a>, a New Jersey Republican on the Budget Committee. </p> <p>Ryan said the fact that his plan is coming to a vote shows how “times have changed.” A similar budget plan by Ryan attracted just 14 co-sponsors last year when Democrats controlled the House. Ryan credited his party’s 87-member House Republican freshman class, many elected with the help of Tea Party activists, for the change. </p> <p>“They brought a whole new perspective. They brought a lot of energy, a lot of gumption, a lot of backbone to Congress,” Ryan said. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/house-passes-ryan-plan.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-15T15:53:00-07:00">3:53 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2220775070520683208">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2220775070520683208" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="2780788830121684724"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/republican-horror-movie.html">Republican Horror Movie</a> </h3> <h1>Republican Horror Movie Sequel Hits Theaters: Jonathan Alter</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Jonathan Alter</span> - <span class="datestamp"></span></cite></div><div class="story_inline assets"> <img alt="Alter" class="author_photo" src="http://cdn.gotraffic.net/v/20110414_114204/images/authors/alter.jpg" /> <p class="author_caption">Jonathan Alter</p> </div> <p>Republicans jumped all over President Barack Obama’s budget speech at George <a href="http://topics.bloomberg.com/washington/">Washington</a> University as political, and they are absolutely right. </p> <p>It was the old Obama, the one who changed history in 2008, and he is back on his game, both thematically and tactically. The domestic debate now is much clearer and the takeaway for Republicans is out of a horror movie: Be afraid. Be very afraid. </p> <p>Obama was elected as a story-teller. Beginning with his famous <a href="http://www.americanrhetoric.com/speeches/convention2004/barackobama2004dnc.htm" title="Open Web Site" rel="external">speech</a> to the Democratic National Convention in 2004, he weaved a personal narrative about Africa, Hawaii and community organizing in <a href="http://topics.bloomberg.com/chicago/">Chicago</a> into a compelling message of “Change we can believe in.” </p> <p>His first two years as president brought plenty of change. He responded to the worst economic conditions since the Great Depression with the most legislation since the Great Society. Yet somewhere along the line Obama lost the thread of his narrative. He was no longer telling a story about America, where it had been and where it is going. </p> <p>The <a href="http://topics.bloomberg.com/george-washington/">George Washington</a> speech signaled the return of an overarching idea. Obama said that while we’re a nation of “rugged individualists,” this country has always understood that public investments in education, research and infrastructure -- what Republicans call “wasteful spending” -- helped make us great. </p> <h2>National Amnesia </h2> <p>He told a story that national amnesia has somehow erased: that through the combined efforts of the first President Bush and President Clinton, we balanced the budget in the 1990s. It was only in the last decade when Republicans put two wars, a prescription-drug benefit and massive tax cuts on the <a href="http://topics.bloomberg.com/credit-card/">credit card</a> that we got the trillion-dollar deficits that confronted him when he took office. Most important, the president stressed the fundamental American values of fairness and compassion. </p> <p>The plan offered by Republican House Budget Committee Chairman <a href="http://topics.bloomberg.com/paul-ryan/">Paul Ryan</a> that will likely pass the House by the end of the month would lower the top marginal <a href="http://www.ctj.org/pdf/regcg.pdf" title="Open Web Site" rel="external">tax rate</a> to 25 percent, another trillion-dollar windfall for the wealthy. And it would, as the president said, “end Medicare as we know it” by turning that hallowed program into a voucher system that has already proven to be a failure when tried in a few states. </p> <p>The Ryan proposal would also effectively gut Medicaid, under which the elderly poor get to live in nursing homes instead of in their children’s homes. </p> <h2>Popular Programs </h2> <p>While everyone agrees that Medicare and Medicaid must be reformed, the basic programs remain wildly popular. The GOP understood this as recently as last fall, when it took control of the House with the help of scare ads across the country saying “Obamacare will slash $500 billion from Medicare.” Now the same freshmen elected on that message will vote to end Medicare -- and in many cases end their political careers. </p> <p>Older, independent voters that Republicans won in 2010 will despise the Ryan plan once it filters down to them. A Democratic war cry of “They’re killing Medicare!” isn’t demagoguery this time. It’s true. </p> <p>The president offered few specifics about how to save $4 trillion over 12 years beyond letting the tax cuts for wealthy expire in late 2012. That won’t be enough. But teeing up tax cuts for the rich as a campaign issue will clearly help the Democrats, as it did in 2008. </p> <p>The president sounded concerned about the deficit but understated the threat. As <a href="http://topics.bloomberg.com/david-stockman/">David Stockman</a>, who served as <a href="http://topics.bloomberg.com/ronald-reagan/">Ronald Reagan</a>’s budget director, told me last week, the $4 trillion in savings now embraced by both parties is woefully inadequate to the scope of the challenge. He was particularly withering in his critique of what he called the “religious obsession” within the GOP to keep cutting taxes amid terrifying deficits. </p> <h2>Known Folly </h2> <p>Even Republican Senator <a href="http://topics.bloomberg.com/tom-coburn/">Tom Coburn</a>, a conservative member of the Bowles-Simpson deficit commission, knows that this part of the Ryan plan is folly. </p> <p>At George Washington, Obama announced that Vice President <a href="http://topics.bloomberg.com/joe-biden/">Joe Biden</a> would head the effort to negotiate with Congress. Emotions are running too high for any agreement this summer on where to find huge savings. The president made it clear he would veto any bill resembling the House plan. </p> <p>With the Senate still controlled by Democrats, it’s unlikely anything significant will reach his desk any time soon. The important part of his proposal was a “fail-safe” provision to compel huge savings if Congress can’t reach agreement by a certain date. The idea of adding teeth to budget cutting worked in the 1990s and can work again. </p> <h2>Default Crisis </h2> <p>After a lot of posturing and finger-pointing, this might be just enough to get Washington through the treacherous waters of raising the debt ceiling and avoiding a default crisis. The specifics on where to cut will await the results of the 2012 presidential election, which is now teed up by Obama as a referendum on competing visions of what we owe each other as a people. </p> <p>“One vision has been championed by Republicans in the <a href="http://topics.bloomberg.com/house-of-representatives/">House of Representatives</a> and embraced by several of their party’s presidential candidates,” the president said, a clear sign that he intends to wrap the Ryan plan around the neck of the eventual Republican nominee. </p> <p>Ever since he agreed to extend the Bush tax cuts in a deal last winter, some progressives have doubted whether <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> had the intestinal fortitude to stand up for the great social contract of the 20th century -- the one most Americans still support. Now we know. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-22265216916584244502011-04-13T16:08:00.001-07:002011-04-13T16:08:37.535-07:00<div class="post-body entry-content"> <h2 style="color: rgb(204, 0, 0);"><span style="font-size:180%;"><span style="font-size:130%;">CHINA SYNDROME: China’s Growing Presence in Latin America</span></span></h2> <p><strong></strong><strong>by </strong><a href="http://www.cipamericas.org/archives/author/marrero/" title="Posts by Carmelo Ruiz Marrero">Carmelo Ruiz Marrero</a></p> <p><strong><a href="http://www.cipamericas.org/wp-content/uploads/2011/04/jintao_silva_onpage1.jpg"><img class="alignright size-medium wp-image-4268" title="jintao_silva_onpage" src="http://www.cipamericas.org/wp-content/uploads/2011/04/jintao_silva_onpage1-300x154.jpg" alt="" width="300" height="154" /></a>For four centuries before the 1898 Spanish-American war, Europe was practically the only destination of Latin America’s much-coveted raw materials, from gold and silver to sugar cane and spices. Then in the 20th century the United States took Europe’s place as main importer of these commodities.</strong></p> <p>Now in the 21st century, China is fast overtaking and displacing both the United States and Europe in Latin American trade. Latin American business elites and governments on the left and the right, hungry for foreign investment and exchange, welcome the opportunity to do business with the Chinese. But environmentalists and progressives in the region are concerned about China’s growing influence, decrying that much of its investment is going into environmentally unsustainable activities and is putting local and national sovereignty into question.</p> <p>“China is a net commodity importer with vast foreign reserves looking to diversify its resource supply and to secure upstream and downstream ownership stakes where necessary”, according to the Emerging Markets website. “Moreover, many South American countries have abundant natural resources but lack investment capital, and are keen to cultivate new investment and trade partners, not least to break a long-standing dependence on the US.”<a href="http://www.cipamericas.org/archives/4266#_edn1">[i]</a></p> <p>“The implications of this sudden influx of Chinese capital are less obvious”, warns Emerging Markets. ”Although the inflows have served as a major short-term boost to regional economies, they could exacerbate long-term overreliance on commodity exports and hinder diversification. What’s more, growing Chinese trade and investment in the region is likely to shift the economic centre of gravity of the region further away from the U.S., and increasingly towards emerging Asia, and China in particular.”</p> <p>The sheer scale of Chinese investment in Latin America in recent years is staggering. From January 2000 to January 2010, Latin American imports into China increased by 1,800%, while Chinese exports into the region increased 1,153% over the same period. In 2004 Chinese president Hu Jingtao predicted that his country’s trade with the region would reach $100 billion by 2010, but it reached that goal by 2007. China is today Brazil and Chile’s main trading partner and occupies the number-two spot in Peru and Argentina.</p> <p>Just in the first ten months of 2010 China engaged in nine major business transactions in Latin America with a total value of $22.74 billion, according to a report of the Washington-based Interamerican Development Bank. These include the China National Offshore Oil Company (CNOOC) purchase of 50% of Argentina’s Bridas Holdings for $3.1 billion. CNOOC, founded in 1982 and headquartered in Hong Kong, is a state-controlled yet publicly traded company with oil operations in diverse locations, including Australia, Indonesia and Nigeria.</p> <p>Bridas, founded by the influential Bulgheroni family in 1948, is one of Argentina’s major oil producers and has international operations as far away as Central Asia. Bridas in turn had a 40% stake in Pan American Energy (PAE), which owns oil and gas reserves in Argentina and Bolivia. By the end of the year, the CNOOC-controlled Bridas bought Pan American’s remaining 60% stake, which belonged to BP, for $7.06 billion.</p> <p>Another of these major 2010 transactions is Sinopec’s $7.1 billion investment in the Brazilian subsidiary of the Spanish giant, Repsol. The resulting partnership is one of the largest energy companies in Latin America, with a $17.8 billion value. Sinopec, ranked at #9 in Fortune’s Global 500 list in 2009, is China’s largest oil company, with operations in over 20 countries.</p> <p>Other major 2009 China-Latin America deals include Petrochina’s $1 billion oil-for-loan deal with Ecuador’s state-run Petroecuador oil company and a Chinese Development Bank $10 billion loan to Brazil’s Petrobras. In exchange, Petrobras will supply Sinopec with 200,000 barrels of oil a day for nine years.</p> <p>Latin America is also becoming a major importer of finished goods from China. Chinese electric home appliance manufacturer Haier is selling telephones and air conditioners in Argentina, which will soon be assembled in factories in Cuba and Venezuela.</p> <p>By all indications, Chinese investment in the Latin America sector will continue to grow and diversify. According to a 2010 article in Argentina’s daily La Nación:</p> <p>“Among the investment opportunities in Argentina, PAE and Bridas president Alejandro Bulgheroni pointed to the wind energy sector. Fan Jixiang, director general of China’s leading hydro dam builder, SinoHydro, said he is pushing for projects in the country. China Radio’s International Executive Vicepresident Ma Bohui said they will soon install a broadcast station in Buenos Aires. Gao Xiching, president of the world’s fifth largest sovereign wealth fund in the world, the China Investment Corporation, pointed out opportunities in forestry, highways, airports, ports and bullet trains.<a href="http://www.cipamericas.org/archives/4266#_edn2">[ii]</a></p> <p><strong>China</strong><strong> and Venezuela</strong></p> <p>China and Venezuela have particularly close trade relations. In September 2010 both countries signed a deal whereby Venezuela gets a $20 billion line of credit in exchange for crude: 200,000 barrels daily in 2010, no less than 250,000 in 2011, and 300,000 daily by 2012. This means that Venezuela will soon be exporting more than a million barrels a day to China—roughly equivalent to exports to the United States.<a href="http://www.cipamericas.org/archives/4266#_edn3">[iii]</a></p> <p>“All the petroleum that China could need to consolidate itself as a great power is right here”, said Chavez on September 18 upon receiving the accord’s first $4 billion.</p> <p>“China also made other investments in Venezuela linked to mining which include 50 projects for the exploitation of aluminum, bauxite, coal, iron and gold, and another agreement to enter the Orinoco oil basin for $16 billion which will permit PDVSA (Venezuela’s state oil company) to raise production by almost a million barrels daily”, writes analyst Raul Zibechi. There are also plans to be completed by 2030 for “the integral development of eight sectors: electricity, transport, mining, housing, finance, oil, gas and petrochemicals. (They) include the joint manufacture of oil drills, platforms, railways that will cross the Orinoco basin, and 20,000 housing units in Venezuela’s southeast.”</p> <p><strong>Land grab in Rio Negro</strong></p> <p>Concerns about China’s growing presence infringing on local sovereignty have reached their highest point in Argentina, where the government of the Rio Negro province signed a 2010 agreement with China’s Beidahaung Group to lease some 320,000 hectares of its finest farmland for the production of soy, wheat, canola and other products. The company, which is one of China’s largest rice millers and soy processors, will invest in this venture $1.45 billion over twenty years.</p> <p>This deal, which was made public only after it was signed, has generated enormous local and national opposition. The Foro Permanente por una Vida Digna, a local community organization declared, “We oppose the agricultural export megaproject being carried out by the national and provincial governments, which jeopardizes 320,000 ha of land and nature in our province by handing it over to the Republic of China to do with it as it sees fit. This violates our sovereign laws, posits a future of farming without farmers, and contaminates us with pesticides. It is a project that does great harm to this generation and the ones to come.”</p> <p>The international organization GRAIN criticized the agreement in a January 2011 report, asking, ” Why is the government paving the way for these deals, with all sorts of privileges promised to the Chinese investors, and not considering the implications for the region’s food sovereignty<em>?</em>“<a href="http://www.cipamericas.org/archives/4266#_edn4">[iv]</a></p> <p>According to Argentina’s Grupo de Reflexión Rural, “unconditional set-asides of land for China to produce Roundup Ready soy represent an immeasurably greater risk than the impacts of large-scale chemical agriculture itself. If this project goes ahead, an enclave would be formed in Patagonia on a scale similar to what China and several European countries are doing in Africa; namely, they are buying up and taking vast areas of land out of circulation to meet their own food and forage production demands.”<a href="http://www.cipamericas.org/archives/4266#_edn5">[v]</a></p> <p>The Rio Negro deal is part of a larger worldwide phenomenon documented in recent years by NGO’s such as GRAIN, La Via Campesina and the Oakland Institute, known as the ‘global land grab’. Farmland-poor, heavily populated states with emerging economies, such as China, India, South Korea and the Persian Gulf states, are buying or leasing farmlands in poorer countries, mainly in Africa and S0uth America, to insure their food security. These are joined by speculators and hedge funds that view farmland as a sure bet among volatile markets.</p> <p>China is the leading player in this land grab. “China is ostensibly self-sufficient in food, but its population is gigantic, its farmland is disappearing under the encroachment of industry, its water supply is under intense pressure, and the Communist Party has a long-term future to think about”, says GRAIN. ”With 40% of the world’s farmers but only 9% of its farmland, China has understandably made food security one of the main points on its agenda. And with over $1.8 trillion in currency reserves, China has enough money to invest in its own food security overseas.”</p> <p>Argentine economist Claudio Katz warns of a downside to Chinese investment, “When (China) comes to countries like Peru and Argentina it establishes terms of investment which are at least exactly the same as those established by any foreign investor, assuring itself of conditions for profitability, low taxes, subsidies.”<a href="http://www.cipamericas.org/archives/4266#_edn6">[vi]</a></p> <p>“It’s very aggressive in demanding conditions of free trade and placement guarantees for its manufactured products, and this is deadly for Latin American industry, which obviously cannot compete with a country like China that has extremely low wages.” Katz concludes that “If Latin America’s trade profile with China repeats the traditional profile we had with Europe in the 19th century and with the United States in the 20th, we’ll be providers of raw unprocessed materials and after a while we’ll be left with little mining, little water, few oil and food resources, and no degree of industrial development.”</p> <p><em>Carmelo Ruiz-Marrero is an independent environmental journalist and an environmental analyst for the CIP Americas</em> <em>Program (<a href="http://www.cipamericas.org/">www.cipamericas.org</a>), a Fellow of the Oakland Institute and a Senior Fellow of the Environmental Leadership Program. In addition, he is founder and director of the Puerto Rico Biosafety Project</em> <em>(<a href="http://bioseguridad.blogspot.com/">bioseguridad.blogspot.com</a>).</em> <em>His bilingual web page (<a href="http://carmeloruiz.blogspot.com/">carmeloruiz.blogspot.com</a>) is dedicated to global environmental and development</em> <em>concerns.</em></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/china-syndrome-chinas-growing-presence.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T16:00:00-07:00">4:00 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8842916914098516374">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8842916914098516374" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6919526390762416545"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/why-mexicos-drug-war-is-unwinnable.html">Why Mexico's Drug War is Unwinnable</a> </h3> <div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">Time to End Prohibition</span></em></h1> <h1 style="font-family: georgia;" align="left"><span style="font-size:130%;color:#990000;">Why Mexico's Drug War is Unwinnable</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By LAURA CARLSEN</span></p> <p class="style2"><span class="style50">I</span>n Matamoros, Tamaulipas, schools close down after officials receive bomb threats. Newspapers timidly report that the threats "could be related to" Gulf Cartel retaliation for the killing of one of their leaders, Tony Tormenta, in a military operation days earlier. President Obama calls President Calderon to congratulate him on taking down the drug lord. Mexican authorities predict a new wave of violence in the state, as the Zetas move in to wrest control from the weakened Gulf Cartel.</p> <p class="style2">Whether measured by increased public safety, reduced supply of illegal drugs on the U.S. market, or the dismantling of drug trafficking organizations, the war on drugs is failing. It has been four years since President Felipe Calderon announced the offensive and sent tens of thousands of soldiers into the streets. The results are a record 37,000 drug-war related homicides so far and thousands of complaints of human rights abuses by police and armed forces. Arrests of drug kingpins and lesser figures have set off violent turf wars, with no discernible effect on illicit flows. The murder of politicians, threats to civilians and disruption of daily life have furthered the downward spiral.</p> <p class="style2">None of this should come as a surprise. Although Secretary of State Hillary Clinton has held up Plan Colombia as a model for Mexico, the drug war didn't work there either. A full decade and $7 billion dollars after Plan Colombia began, regional drug production remains stable and smaller paramilitary groups have replaced the large cartels as traffickers. Some violent crimes, such as kidnappings, have gone down but corruption has deepened with scores of Congressional representatives under investigation, prosecution or sentencing for ties to paramilitaries.</p> <p class="style2">Militarization with the combined rationale of the war on drugs and counterinsurgency has left Colombia with one of the worst human rights record in the hemisphere. Diplomatic relations have been affected as many neighboring nations view U.S. military presence and involvement in Colombia's drug war as a threat to regional self-determination.</p> <p class="style2">Despite these results, the Obama administration has announced plans to extend indefinitely the Merida Initiative, designed by the Bush administration to last three years and cost $1.3 billion dollars. The administration has asked requested $282 million for Mexico under the initiative in the 2012 budget.</p> <p class="style2">The problem is, the drug war is not underfunded; it's unwinnable. As long as a lucrative market exists, the cartels will find a way to serve it. Eliminating operatives, even high-level leaders, merely diversifies and redistributes the business. Cartels have years of experience building flexible structures, with new leaders or rival gangs replacing displaced or weakened ones. At the lower levels, they draw from an inexhaustible pool of young men with few prospects in life, who have adopted the slogan, "Better to die young and rich than old and poor."</p> <p class="style2">If the war on drugs is unwinnable, does that mean we have to resign ourselves to the unbridled power of the drug cartels? </p> <p class="style2">No. The other tragedy of the war on drugs is that it precludes potentially more effective strategies by posing as the only option. As the U.S. government spends millions of taxpayer dollars to pay U.S. private security and defense firms to "fix" Mexico, it has done little to nothing to address the parts of transnational organized crime that exist within its borders—demand, transport and distribution, corrupt officials, gun-running and money laundering.</p> <p class="style2">Rethinking the drug war is not tantamount to surrender. Here are a few key elements of an alternative strategy:</p> <p class="style2">Follow the money. Instead of shoot-outs in the streets, far more could be done in both countries to attack the financial structures of criminal organizations. Billions of dollars are laundered in mainstream financial institutions and businesses. If we're serious about weakening organized crime, it's time to be serious about cracking down on illicit financial flows—even when it affects powerful interests.</p> <p class="style2">Increase funding for drug abuse prevention and treatment. Approaching illegal drug use as a health issue is a win-win strategy. Education teaches young people the costs of addiction and abuse, and treatment and harm reduction programs can improve lives and reduce costs to society, as well as cutting demand for illicit substances.</p> <p class="style2">End prohibition, beginning with marijuana. Without the billions of dollars in revenue that pot provides, drug cartels have fewer resources to recruit youth, buy arms and corrupt politicians.</p> <p class="style2">Give communities a role besides "victim". As Mexican funds and U.S. aid have been diverted to the drug war, social programs in Mexico have been severely cut back. This is exactly backward. Strong communities—ones with jobs, ample educational opportunities and coverage of basic needs and services–are better able to resist the infiltration of organized crime.</p> <p class="style2">The war on drugs strategy lacks benchmarks or any real analysis of the root causes of the violence. Each day it digs itself deeper into a hole. That hole has become a mass grave for thousands of Mexicans, mostly youth.</p> <p class="style2">The Obama administration has announced plans to intensify the drug war in Mexico and extend the model to Central American and Caribbean nations. Congress appears willing to follow suit. This would usher in a new era of military-led relations with our Latin American neighbors and unleash violent conflict in those countries as it has in Mexico.</p> <p class="style2">If that happens, horror stories like the ones from Ciudad Juarez and Matamoros will sadly become the norm rather than the exception.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/why-mexicos-drug-war-is-unwinnable.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T15:57:00-07:00">3:57 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6919526390762416545">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6919526390762416545" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4716198877018307594"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/bahrain-and-saudi-arabias-rulers-goose.html">Bahrain and Saudi Arabia's Rulers Goose-Step to the Brink of the Abyss</a> </h3> <div class="post-body entry-content"> <h1 align="left"><em><span style="font-family:Times New Roman, Times, serif;font-size:+1;">A Genuine Tragedy Unfolds</span></em></h1> <h1 align="left"><span style="font-family:Times New Roman, Times, serif;font-size:130%;color:#990000;">Bahrain and Saudi Arabia's Rulers Goose-Step to the Brink of the Abyss</span></h1> <p><span style="font-family:Times New Roman, Times, serif;font-size:+1;">By PETER LEE</span></p> <p class="style2"><span class="style50">T</span>hile we are diverted by the opera-bouffe spectacle of the civil war in Libya’s desert, a genuine tragedy—and potential geopolitical trainwreck—is unfolding in Bahrain. </p> <p class="style2">Those plucky demonstrators we saw occupying the Pearl Square roundabout in Manama, the capital of Bahrain, have been swept away by government security forces—together with the 300 foot monument at the roundabout, which came to symbolize the aspirations of the protesters and was therefore demolished by the government in a representative display of heavy-handedness. </p> <p class="style2">The Bahraini government received an important assist from Saudi Arabia, which dispatched troops and tanks under a mutual security pact of the Gulf Co-Operation Council called Peninsula Shield. </p> <p class="style2">The government has gone to great and dangerous lengths to paint the democratic aspirations of the peaceful, largely Shi’a demonstrators for democracy as a sectarian assault on the emirate backed by that Gulf boogeyman, Iran. </p> <p class="style2">The repression has turned into an operation of conspicuous bigotry, brutality, and mendacity that does not bode well for the future of the emirate, political liberalization inside Saudi Arabia, or peaceful coexistence between Iran and the Gulf states. </p> <p class="style2">In recent days, Bahrain has used live ammunition—shotguns—against demonstrators and blanketed Manama with checkpoints, some manned by personnel masked with sinister black balaclavas. After a group of Shia legislators resigned in protest, the government officially accepted their resignations—so they could strip the legislators of their immunity and render them liable to criminal charges. Main opposition newspaper—shut down. Only hospital in Manama—occupied by security forces so that wounded demonstrators can be apprehended, abused, and/or disappeared. </p> <p class="style2">In classic doublespeak, the government declared that the hospital had been “liberated”. “Liberating” the hospital apparently involved beating at least one male nurse senseless in the parking lot. </p> <p class="style2">Beneath it all, a dangerous undercurrent of government fear and rage. </p> <p class="style2">It looks like the Bahrain and Saudi security forces are utterly out of their depth. Their state of reference is pursuing and suppressing terrorists. By treating these peaceful, non-sectarian demonstrators as sectarian terrorists, they seem to be sowing the seeds of the emirate’s eventual destruction. </p> <p class="style2">The expected outcome of systematic government-directed hatred would be ethnic cleansing, but there’s one problem with that. Shi’a are not a marginalized and easily purged minority; they are the majority, accounting for about 70 per cent of the native population. The Sunni—who dominate the island in cooperation with their Saudi allies—are the minority. If one counts the large army of foreign workers in the emirate, the Sunni bosses account for less than 10 per cent of the population. </p> <p class="style2">No wonder the Sunni emir felt he needed some Saudi muscle. </p> <p class="style2">The prognosis seems to be embittered Shi’a majority and paranoid Sunni rulers in Bahrain. Even under ordinary circumstances, Shi’a are inclined to a lively sense of grievance concerning historical and current Sunni persecution, raising the prospect of security problems for Saudi Arabia in handling its own Shi’a minority (about 15 per cent) even after the stompings and beatings quiet things in Manama. </p> <p class="style2">The big story in the Gulf appears to be that many of the governments, with weak to non-existent popular bases, vulnerability to democratic agitation, an inability to accommodate dissent (unless “accommodation” means bouncing a nightstick off somebody’s head and hauling them away), and an uncertain though increasingly optimistic sense of where the Obama administration stands on the whole "democratic values vs. strategic interests" conundrum, are panicking and in need of a scapegoat to justify heavy-handed security measures that will otherwise alienate significant (ironically, significant moderate) sections of their populace. </p> <p class="style2">The spooked regimes are justifying their disproportionate reaction by claiming the demonstrations are part of a seditious scheme sponsored by Iran and Hezbollah. A war of words has already broken out between Iran and Bahrain and Saudi Arabia over the issue. Turning the Gulf states’ rhetoric against them, Iran declared that Bahrain has forfeited its legitimacy, implying that Iran can do an R2P (“right to protect”) intervention on behalf of the embattled Shi’a of Bahrain like the humanitarian intervention the Gulf Co-operation Council incited in Libya. </p> <p class="style2">The clownish nature of reporting on Bahrain was revealed when a leader declared he wanted the emirate to solve its problems without outside interference, Iranian or Saudi. This was of course headlined in the Saudi-owned al Arabiya as <a href="http://www.alarabiya.net/mob/en/143598.html">Bahrain’s Shiite opposition asks Iran not to meddle</a>. </p> <p class="style2">The seemingly suicidal line of framing the issue as Iran-fueled sectarian jealousy instead of legitimate democratic agitation was carried on in the article by a Bahraini official: </p> <blockquote> <p class="style2">"We want to affirm to the world that we don't have a problem between the government and the opposition ... There is a clear sectarian problem in Bahrain. There is division within society," Sheikh Khaled said. </p> </blockquote> <p class="style2">Don’t forget Kuwait, which is about to execute two Iranians and a Kuwaiti for spying, is expelling three Iranian diplomats from Kuwait, and has withdrawn its ambassador from Tehran. </p> <p class="style2">An informative article on the Kuwait affair in <a href="http://www.arabtimesonline.com/NewsDetails/tabid/96/smid/414/ArticleID/167422/reftab/36/t/Kuwait-to-oust-3-Iranian-diplomats-in-spy-row/Default.aspx"><em>Arab Times</em></a> quotes an analyst in Dubai as saying that “the Kuwaiti government was ‘under huge pressure from Sunni MPs ... and the media to take action, not to let this go without proving their displeasure.’” </p> <p class="style2">An April 8 article in <em>Arab Times</em>, <a href="http://www.arabtimesonline.com/NewsDetails/tabid/96/smid/414/ArticleID/167527/t/Persian-conspiracy-seen-to-target-GCC-countries/Default.aspx"><em>Persian Conspiracy seen to target GCC countries</em></a>, gives another hint of where things are going, along the line of runaway paranoia, scaremongering, and propaganda overreach, courtesy of that ubiquitous government mouthpiece, "Sources say": </p> <blockquote> <p class="style2">“KUWAIT CITY, April 3: The Iranian plan includes dangerous plots against the Gulf nations, not just Bahrain. Kuwait, in particular, is one of the targets and the spy network is only a tip of the iceberg, because the main objective is for the Iranian Naval Forces to invade some islands in the country and other Gulf nations under the pretext of protecting Shiites in Bahrain, say security sources in the Gulf. </p> <p class="style2">“Sources disclosed the Bahraini and Kuwaiti foreign ministers revealed the conspiracy uncovered by the security departments in both countries in the recently-concluded meeting of the GCC foreign ministers in Riyadh. After hearing the report, the GCC foreign ministers presented recommendations, which will be implemented soon, because the GCC nations are keen on revealing the truth to the international community. </p> <p class="style2">“Sources said the implementation of the Iranian plan started several months ago, claiming the chaos and conflicts in Bahrain are just the beginning of an attempt to disrupt peace in the Kingdom. Sources revealed the initial plan was for the unrest to continue for two to three weeks in order to give the Iranian, other Arab and international satellite stations enough time to extensively cover the massacre of Shiites in the country.” </p> </blockquote> <p class="style2">Consider that plot to have the international media to "extensively cover the massacre of Shiites" pretty much foiled. </p> <p class="style2">One doesn’t hear much about the brutal suppression of dissent in Bahrain in the Western media. </p> <p class="style2">Ssome say the Libyan adventure was part of a plan to distract the West with a lovely little war against a crazy dictator so the journos wouldn’t be out covering the over-the-top suppression of a bona fide democracy movement by Saudi Arabia’s BFF (and host to Commander, United States Naval Forces Central Command (COMUSNAVCENT) / United States Fifth Fleet and 1500 US personnel) Bahrain. </p> <p class="style2">Credit where credit is due: Newsmax, which often traffics in eye-rolling right-wing paranoia, had a good <a href="http://www.newsmax.com/KenTimmerman/Bahrain-SheikhAliSalman-SaudiArabia-Iran/2011/04/01/id/391468">article</a> on Bahrain by Ken Timmerman. When Newsmax has to carry the load for American news organizations, you know the situation is pretty grim. </p> <p class="style2">Iran’s PressTV has tried to make Bahrain their CNN/Al Jazeera moment. </p> <p class="style2">There is a sizable void to fill, since CNN has reported very little on Bahrain (four of their correspondents were detained and released only after <a href="http://www.khaleejtimes.com/darticlen.asp?xfile=data/middleeast/2011/April/middleeast_April2.xml&section=middleeast">signing</a> "an undertaking not to exceed the limits of their mission"--they ostensibly entered Bahrain to report on "social media" but instead tried to report on the disturbances). </p> <p class="style2">I didn't find any signs that the U.S. State Department stood up for America's press freedom agenda in this particular case. </p> <p class="style2">Al Jazeera, owned by Qatar, has no interest in airing the dirty and/or bloody linen of the emir next door. </p> <p class="style2">Bahraini hospitality toward news-gatherers of the Persian menace obviously has its limits. </p> <p class="style2">Press TV's most recent report featured its Bahrain correspondent, Aris Roussinos, pushing a luggage cart through Heathrow Airport while giving an informative and thoughtful <a href="http://presstvmobile.com/blog/2011/04/04/video-bahrain-revolution/">interview</a> on the kinds of things that the Bahrain government was apparently not at all keen on him seeing as he spent a week in Bahrain evading the authorities and observing the crackdown. </p> <p class="style2">If freedom-loving consumers of global media find Iranian reporting intolerable, however, here’s a 17-minute clip from an Australian investigative show called <em>Dateline</em>. It features nervy reporting by reporter Yaara Bou Melhem from inside Bahrain, and a stark picture of the hidden war that we’re not supposed to see. </p> <p class="style2">The <a href="http://www.sbs.com.au/dateline/story/watch/id/601061/n/Bahrain-s-Dark-Secret">report</a> can be viewed in its entirety at <em>Dateline</em>'s website. </p> <p class="style2">The reporting is deliberately low-key, a welcome contrast to the hyperventilating outrage needed to keep the humanitarian intervention balloon inflated in Libya (or the anti-Iranian jihad barreling along in the Gulf states, for that matter). </p> <p class="style2">In one sequence, a Human Rights Watch representative directs the reporter’s attention to a crime scene that has come to symbolize the worst excesses of Bahrain’s riot police: the place where a young man, Hani Jumah, was beaten. Apparently, he was not a demonstrator; he was just in the wrong place at the wrong time as riot police swept the area. The camera pans on the bloodstained floor of a deserted construction site as the HRW staffer relates with forensic detachment: “We found fragments of his kneecap...we also found one of his teeth.” And you’re left to wonder: how does someone get beaten so severely a piece of his kneecap is dislodged from his body? The young man was taken to the hospital for treatment, then got disappeared from the hospital. His family was summoned to retrieve his body four days later. </p> <p class="style2">I originally found the <em>Dateline</em> clip on the <a href="http://www.facebook.com/pages/Nabeel-Rajab/194515507249804">Facebook page</a> of Bahrain’s leading human rights activist, Nabeel Rajab. He’s featured in the report, describing how 25 masked security personnel paid him a night visit to object to his activities with a three-hour session of interrogation and verbal and physical abuse. </p> <p class="style2">A consistent theme is the persistent efforts of the regime and its personnel to characterize opposition as “sectarian”. One wounded protester described being beaten in the hospital (before he was transported to a police station for further beatings) and being told that he had ruined the country and would be “sent back to Iran.” </p> <p class="style2">Najeeb’s site is mostly in Arabic. But if you open Google translator in a separate tab, you can cut and paste the text and a surprisingly good English translation floats onto the screen like a message from another world—which, if you think in terms of the media blackout in Bahrain, is exactly where it’s coming from.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/bahrain-and-saudi-arabias-rulers-goose.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T15:56:00-07:00">3:56 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4716198877018307594">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4716198877018307594" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8249175152013618587"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-courageously-speaks-truth.html">Ron Paul Courageously Speaks the Truth</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/ron-paul-courageously-speaks-truth.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T15:45:00-07:00">3:45 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8249175152013618587">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8249175152013618587" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6784569423191273924"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/jesse-ventura-would-run-w-ron-paul-as.html">Jesse Ventura: Would Run w/ Ron Paul as Independent & We Need More WikiL...</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/jesse-ventura-would-run-w-ron-paul-as.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T15:44:00-07:00">3:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6784569423191273924">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6784569423191273924" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="9147309310270881509"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/jesse-ventura-rt-interview-enough.html">Jesse Ventura RT Interview: Enough Government Cover-ups! US Revolt needed!</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/jesse-ventura-rt-interview-enough.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T15:43:00-07:00">3:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9147309310270881509">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9147309310270881509" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5318488911994699393"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/spending-restraint-part-ii-lessons-from.html">Spending Restraint, Part II: Lessons from Canada, Ireland, Slovakia, and...</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/spending-restraint-part-ii-lessons-from.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T14:09:00-07:00">2:09 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5318488911994699393">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5318488911994699393" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4121475897810407905"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/irs-running-amok-forcing-americans.html">The IRS Running Amok: Forcing Americans Banks to Put Foreign Tax Law Abo...</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/irs-running-amok-forcing-americans.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T14:09:00-07:00">2:09 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4121475897810407905">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4121475897810407905" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="120441562446625283"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/americas-fiscal-future-and-battle-for.html">America’s Fiscal Future and the Battle for the GOP’s Soul</a> </h3> <div class="post-body entry-content"> <div class="post-8480 post type-post status-publish format-standard hentry category-big-government category-class-warfare category-debt category-deficit category-economics category-fiscal-policy category-government-spending category-higher-taxes category-obama category-tax-increase category-taxation tag-class-warfare tag-debt tag-deficits tag-economics tag-fiscal-policy tag-government-spending tag-higher-taxes tag-obama tag-tax-increase tag-taxation" id="post-8480"><br /></div> <div class="posttitle"> <h2><span style="font-size:180%;"><a href="http://danieljmitchell.wordpress.com/2011/04/13/americas-fiscal-future-and-the-battle-for-the-gops-soul/" rel="bookmark" title="Permanent Link to America’s Fiscal Future and the Battle for the GOP’s Soul">America’s Fiscal Future and the Battle for the GOP’s Soul</a></span></h2> <p class="postmetadata"> by <a href="http://danieljmitchell.wordpress.com/author/danieljmitchell/" title="Posts by Dan Mitchell">Dan Mitchell</a> </p> </div> <p>Thanks to demographics and ill-conceived entitlement programs, America is on a path to becoming a bankrupt European-style welfare state. We know how to fix this problem, but whether we make the necessary reforms depends on the heart and soul of the GOP.</p> <p>Are Republicans a bunch of hard-right Tea Party types, salivating at the thought of reversing the welfare state and ushering a new ear of limited government?</p> <p>Or are GOPers a bunch of political hacks who have decided the cesspool of Washington is really a hot tub and merely pretend to be fiscally conservative to appease the conservative base?<img class="alignright" src="http://www.thousandtyone.com/blog/content/binary/AngelDevilOnProgrammersShoulders.gif" alt="" width="242" height="218" /></p> <p>The answer is yes and yes.</p> <p>More specifically, almost all politicians are some combination of these two descriptions. It’s almost like they have an angel on one shoulder and a devil on the other.</p> <p>They usually have some underlying principles, and they would like to do the right thing and make America a better place.</p> <p>Yet they also want to get reelected and accumulate power, and this lures them into casting votes that they know are bad for the country.</p> <p>Sometimes the devil has the most influence. During the Bush years, for instance, most Republicans on Capitol Hill went along with Bush’s bad proposals, such as the no-bureaucrat-left-behind education bill, the prescription drug entitlement, the corrupt farm bills, the pork-filled transportation bills, and the TARP bailout. The lawmakers will admit, especially in private, that those were bad votes, but they “went along to get along.”</p> <p>Yet every so often the angel gets control. All Republicans, including the ones who were in office and doing the wrong thing during the Bush years, presumably are going to vote for Congressman Paul Ryan’s budget later this week, which would limit the growth of federal spending and fundamentally reform Medicare and Medicaid. And they’ll cast that vote even though they’ll get demagogued in 2012.</p> <p>So what decides whether the angel or devil is in charge? I may not have learned much in my 25 years in Washington, but I think a key factor is that politicians are often willing to take political risks and do the right thing if they think there’s actually a chance of implementing good policy.</p> In other words, there is a chance of saving America. I think Republicans can be convinced to charge the machine gun nests of big government. But we need to create the right set of circumstances – and that means persuading them that the long-run policy benefits will offset the short-run political risks </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/americas-fiscal-future-and-battle-for.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T14:06:00-07:00">2:06 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=120441562446625283">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=120441562446625283" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="507608001140837616"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/obamas-tax-increase-trigger.html">Obama’s Tax Increase Trigger</a> </h3> <div class="post-body entry-content"> <div class="posttitle"> <h2><span style="font-size:180%;">Obama’s Tax Increase Trigger: Punishing Taxpayers with Automatic Tax Hikes When Politicians Overspend</span></h2> <p class="post-info"> by <a href="http://danieljmitchell.wordpress.com/author/danieljmitchell/" title="Posts by Dan Mitchell">Dan Mitchell</a> </p> </div> <p>Responding to widespread criticism of his AWOL status on the budget fight, President Obama today unveiled a fiscal plan. It already is being criticized for its <a href="http://danieljmitchell.wordpress.com/2009/06/15/obamas-tax-policy-threatens-americas-economy/">class warfare approach to tax policy</a>, but the most disturbing feature may be a provision that punishes the American people with higher taxes if politicians overspend.<img class="alignright" src="http://media.eyeblast.org/newsbusters/static/2010/05/CNN%20Money%27s%20Plan%20to%20Save%20Social%20Security%20Raise%20Taxes,%20Soak%20the%20Rich.jpg" alt="" width="112" height="151" /></p> <p>Called a “debt failsafe trigger,” Obama’s scheme would automatically raise taxes if politicians spend too much. According to the talking points distributed by the White House, the automatic tax increase would take effect “if, by 2014, the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade.”</p> <p>Let’s ponder what this means. If politicians in Washington spend too much and cause more red ink, which happens on a routine basis, Obama wants a provision that automatically would raise taxes on the American people.</p> <p>In other words, they play and we pay. The last thing we need is a perverse incentive for even more reckless spending from Washington.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/obamas-tax-increase-trigger.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T14:05:00-07:00">2:05 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=507608001140837616">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=507608001140837616" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8757058128460698327"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/tax-freedom-day-not.html">Tax Freedom Day -- Not</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Tax Freedom Day -- Not</span></h1> <p>by Doug Bandow </p><p class="first">Americans finally finish working for the federal government on April 12 this year. That's three days later than last year, but still a couple weeks earlier than Tax Freedom Day in 2006 and 2007, April 24. The record in both peace and war was May 1 in 2000. Had Al Gore defeated George W. Bush in that year, TFD probably would have continued rising, as it had since Bill Clinton's election in 1992.</p> <p>Unfortunately, April 12 still isn't much to be happy about. TFD rose to April 12 in 1962, but quickly fell back. In 1967 TFD again hit April 12, eventually oscillating between April 16 and 24. TFD fell to April 19 in 1992 before beginning another sharp rise. As a percentage of income taxes hit 30 percent in 1969 and hovered around the level for years. The tax burden did not fall below 29.1 percent until 2003. This year that percentage will be 27.7, a welcome but only marginal improvement.</p> <p>Total taxes this year will cost Americans more than what they'll spend on food, shelter, and clothing combined. Not all of these purchases will prove worthwhile for all people, obviously. But compare their value to what the government does with their money. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/doug-bandow">Doug Bandow</a> is a Senior Fellow at the Cato Institute and the Senior Fellow in International Religious Persecution at the Institute on Religion and Public Policy. A former Special Assistant to President Ronald Reagan, he is author of </em><a href="http://www.amazon.com/Beyond-Good-Intentions-Christian-Worldview/dp/0891074988/?tag=catoinstitute-20">Beyond Good Intentions: A Biblical View of Politics</a><em> (Crossway).</em></p> <a class="head" href="http://www.cato.org/people/doug-bandow">More by Doug Bandow</a></div></div> <p>Taxpayers are bailing out virtually every interest known to man — plus a few not previously recognized. Banks get money. Auto companies get aid. Labor unions get benefits. Homeowners get help. Insurance companies get cash. Investment funds get guarantees. Property sellers get subsidies. Taxpayers get the bill.</p> <p>But all this pales in comparison with the cost of last year's health care legislation. Everyone knows that the administration and Congress, like the famed Isuzu salesman, were lying. Taxpayers soon will be paying off insurance companies, doctors, and pharmaceutical companies — just coincidentally all among the bill's most avid supporters — as well as people forced to buy high-priced health insurance. </p> <p>Americans also get the pleasure of subsidizing a gaggle of rich allies around the world, such as the Europeans, who are too busy supporting welfare states to maintain effective militaries. South Korea and Japan also are on the U.S. military dole, leaving the heavy lifting to Americans. Even corrupt Third World politicians, like Hamid Karzai, are on Washington's military payroll. America's ungrateful dependents now include the Libyan rebels, who blame the U.S. for the failure of their untrained, uncoordinated, and divided forces.</p> <p>Taxpayers pay for domestic "welfare" too, which has done so much to destroy families and communities. Welfare reform in 1996 reduced the damage, but the so-called "stimulus" bill reversed course. The latter also wasted money without promoting long-term growth. In fact, the Congressional Budget Office figured that this legislation, after providing a short-term boost, will permanently <em>reduce</em> economic activity starting around 2015. Which means working families will earn less while paying higher federal interest payments on the borrowed funds.</p> <p>There's so much more. A crowd favorite is pork barrel projects, used by big spending politicians to generate political support. Yes, I'm a thief, the lawmaker admits, and I stole from you, but I'll share a bit of the ill-gotten loot. Vote for me! Such is the appeal of democracy.</p> <p>No wonder two-thirds of Americans believe they are overtaxed. Eight of ten mainstream voters believe that they pay too much. But not the political class. According to Rasmussen Reports, 87 percent of America's governing elite, who decide how to spend everyone else's earnings, disagree. They see a penny not taxed as a penny not spent, defeating their role in life.</p> <p>More significantly, TFD doesn't mean much anymore. Taxes provided a relatively accurate measure of the burden of government when the budget was balanced — most recently in 2001. (Guess which president was most responsible for that budget: It wasn't a Republican.) When you finished paying taxes, you were actually done paying for government.</p> <p>No longer.</p> <p>The federal budget this year will run about $3.8 trillion, give or take a few dozen billion dollars, which hardly counts anymore. Borrowing will account for between $1.5 trillion and $1.65 trillion, depending on who is doing the estimating. That is roughly <em>40 percent of total federal outlays</em>. Unless Uncle Sam defaults on his obligations — a tempting thought, since it would cut taxpayers' present obligations while making future borrowing much more difficult — that money will eventually have to be paid.</p> <p>Although the borrowing binge is occurring during Barack Obama's presidency, the Republicans also are responsible. George Bush and the GOP Congress turned a surplus into a big deficit. </p> <p>They increased federal spending across-the-board. They created the Medicare drug benefit, with an unfunded liability of around $15 trillion. The president launched and Congress funded two unnecessary nation-building expeditions in distant Third World lands. And President Bush was the driving force behind TARP and assorted other bail-outs. Indeed, his officials admitted that they had no "metric" for the $700 billion TARP proposal; they just wanted a "big number." And they got it.</p> <p>In short, the GOP created a solid foundation for President Obama's Big Government empire.</p> <p>The Tax Foundation, which estimates Tax Freedom Day, acknowledges the problem. Since 2008, observes the Foundation, "deficits have been massive by any measure, and as a result, Tax Freedom Day may give the impression that the burden of government is smaller than it is. If the federal government were planning to collect enough in taxes during 2011 to finance all of its spending, it would have to collect about $1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12."</p> <p>That revised TFD would set a peacetime record. You have to go back to World War II to find a time when the U.S. government spent a larger proportion of the economy. And World War II was the greatest conflict in human history. A little "kinetic military action" in Libya for who knows what purpose doesn't come close.</p> <p>Unfortunately, there is little reason for optimism about the future. The congressional Republicans originally proposed to cut $61 billion from this year's expenditures, about 1.6 percent. Now they've settled for $22.5 billion less.</p> <p>House Budget Committee Chairman Paul Ryan has offered a thoughtful long-term plan that would make major reductions in entitlements as well as discretionary spending. But its political future is, to put it kindly, uncertain. It won't go anywhere with a Democratic Senate and president. It might not go anywhere even if the Republicans win control of both ends of Pennsylvania Avenue next year.</p> <p>The current budget numbers look frightening enough. But more spending is inevitable. Fannie Mae and Freddie Mac continue to lose money. The Federal Housing Administration is insuring more problem mortgages than ever. The FDIC continues to close banks. The Pension Benefit Guaranty Corporation continues to take over the pension plans of failed businesses. All of these and many other bills will eventually come due.</p> <p>The Obama administration has got America into its third unnecessary Middle Eastern war in a decade. With military forces still occupying Iraq eight years later and still fighting in Afghanistan nearly ten years later, who knows how long the U.S. will be stuck fighting, occupying, and reconstructing Libya. War is just another Big Government program with an equally large unfunded liability.</p> <p>Then there's Obamacare, assuming it is not repealed by Congress or overturned by the Supreme Court. By one estimate the legislation imposed an unfunded liability of over $13 trillion. No one knows for sure, since the official estimates were fudged by Congress. Permanent, non-political officials at the Centers for Medicare and Medicaid Services have repeatedly said, ever so politely, that the Democrats lied about the numbers. The Medicare cuts that were necessary to fund the program simply aren't going to happen: they are "very unlikely to be viable indefinitely," under the new reimbursement rates providers "would eventually be unwilling or unable to treat Medicare beneficiaries," and projections based on these changes "are very likely to seriously understate actual Medicare costs in the long-range future."</p> <p>Finally, there are the unfunded liabilities for Social Security, Medicare, and Medicaid. The federal government only develops an estimate for the first two, and their combined future red ink came to $107 trillion in 2009, the last reliable estimate. Medicaid is on a similar trajectory. Left unchanged, these three programs alone will eventually destroy federal finances. Yet even many avid members of the Tea Party don't want to touch what they see as "their" benefit programs.</p> <p>The fiscal train wreck is approaching. "The federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long-run," warned the CBO. Looking ahead just a decade, the agency reported: "To keep annual deficits and total federal debt from reaching levels that would substantially harm the economy, lawmakers would have to increase revenues significantly as a percentage of GDP, decrease projected spending sharply, or enact some combination of the two."</p> <p>Indeed, after the coming tsunami of spending, deficits, and debt, one hates to imagine the date of future Tax Freedom Days. Will there even be a tax freedom day? Maybe taxpayers will face the ultimate simplified tax form of just two lines: "1) How much did you earn? 2) Send it in."</p> <p>With the president and Congress attempting to provide a full service global welfare state, the IRS is likely to become a little like the Eagles' Hotel California, where you can check out but never leave. You will be able to earn money, but never spend it. After all, everything you own was long ago promised by Uncle Sam to someone else.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tax-freedom-day-not.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:47:00-07:00">12:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8757058128460698327">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8757058128460698327" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="182812427342108127"></a> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/blog-post_13.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:45:00-07:00">12:45 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=182812427342108127">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=182812427342108127" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5838316169380765406"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/when-intervention-is-easy.html">When Intervention Is Easy</a> </h3> <div class="post-body entry-content"> <h1>When Intervention Is Easy</h1> <p>by Harvey Sapolsky and Benjamin H. Friedman </p><p class="first"> </p><p class="first">America's halfhearted adventure in Libya falls within a cycle of U.S. military intervention since the end of the Cold War: Success brings hubris, hubris causes overreach and failure, and failure breeds caution - though not necessarily restraint. Once another cautious intervention seems to succeed, the cycle begins anew.</p> <p> The first major post-Cold War U.S. military intervention was cautious. Once an American-led coalition ejected Iraqi forces from Kuwait, in 1991, the first Bush administration resisted pressure to overthrow Saddam Hussein by marching on to Baghdad or fighting alongside Shiite insurgents. But many Americans saw their military's swift success as evidence that it could do nearly anything at low cost, including make nations from chaos.</p> <p> Two years later, the debacle in Somalia showed otherwise, fueling the timidity that followed in the face of the Rwandan genocide and the murderous disintegration of Yugoslavia. The Clinton administration did not stay out of the Balkan conflicts, of course, just as it did not quit enforcing no-fly zones over Iraq. But it limited the risks to U.S. forces, bombing from great heights and deploying peacekeepers only after the fighting had ceased.</p><blockquote class="pullquote"><p>Success brings hubris, hubris causes overreach and failure, and failure breeds caution - though not necessarily restraint.</p></blockquote> <p> That was the first post-Cold War cycle. The second, which began with the relatively cautious invasion of Afghanistan after 9/11, is now ending.</p> <p> The exaggeration of our successes in Bosnia and Kosovo - both of which became dysfunctional international protectorates that only nation-building enthusiasts can regard as victories - dimmed memories of Vietnam and Somalia. Rapid initial progress in Afghanistan encouraged the hubris that led to the disastrous Iraq war, as well as a more extensive and ever more frustrating effort in Afghanistan.</p> <p> But the flow of American blood and treasure required to prop up venal governments in those states eventually undercut enthusiasm for occupational warfare, especially amid an economic downturn.</p> <p> Power gives American presidents more choices than other leaders. U.S. military capabilities and wealth make almost any global action possible. And the Cold War that checked much of our proclivity for intervention is over.</p> <p> To fight as we do in Afghanistan, even most wealthy nations would have to hike taxes or slash other expenditures, provoking domestic opposition. We do it with less than 1 percent of gross domestic product, mostly borrowed. </p> <p> Because we can intervene relatively cheaply, temptation always beckons. The world never lacks for civil unrest whose victims we might save. Congress' halls are rarely free of emissaries claiming we could advance liberty by fighting for the would-be nation they represent. And few years pass without outraged editorials arguing that American values and interests compel our troops to occupy some bloody corner of the Earth. Unhappy memories of recent wars are one of the few domestic forces that restrain us from those fights.</p><div class="box2"> <div class="boxcontent"><p style="font-family:Georgia;"><em>Harvey M. Sapolsky is a professor emeritus of public policy and organization at the Massachusetts Institute of Technology. <a href="http://www.cato.org/people/benjamin-friedman">Benjamin H. Friedman</a> is a doctoral candidate at MIT and a research fellow at the Cato Institute.</em></p> <a class="head" href="http://www.cato.org/people/benjamin-friedman">More by Benjamin H. Friedman</a></div></div> <p> These contradictory impulses explain the incoherence of the U.S. war in Libya. The Obama administration naturally sympathized with rebels claiming to be democrats and overmatched by a particularly odious despot. But the two unpopular occupations already under way encouraged caution. The compromise is a limited air war meant to overthrow Moammar Gadhafi while minimizing the risk to U.S. service members and the cost to taxpayers.</p> <p> The president ruled out ground forces before he articulated war aims. He resists arming the rebels, has handed over combat missions to our allies, and pretends we are enforcing a no-fly zone only to protect civilians - a fiction required to maintain the alliance. Rarely has a nation gone to such lengths to show its disinterest in winning a war it is fighting.</p> <p> The allies' success defending rebel territory has not allowed the insurgents to fell the regime. If the stalemate lingers and costs mount, or anarchy engulfs post-Gadhafi Libya, the war will reinforce the caution brought about by Iraq and Afghanistan. But if things work out well enough for hawks to declare victory - if air power quickly allows the rebels to establish a revolutionary government - the resulting hubris will encourage more reckless campaigns. </p> <p> Caution in American military policy is fleeting. We are so powerful and secure that even military debacles are insufficient to permanently teach us restraint. That is both a good thing and an endless source of trouble. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/when-intervention-is-easy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:44:00-07:00">12:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5838316169380765406">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5838316169380765406" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6991247068717843266"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/congress-has-become-least-dangerous.html">Congress Has Become the Least Dangerous Branch</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Congress Has Become the Least Dangerous Branch</span></h1> <p>by Gene Healy </p><p class="first">In last week's budget standoff, the headlines had President Obama repeatedly "summoning" the speaker and the Senate majority leader to the White House. "Why," my colleague David Boaz asked, "doesn't the speaker 'summon' the president to what I think is the real seat of government?"</p> <p>It's a good point: Whether or not you score the budget deal as a win for the GOP, the casual way the media describes the president's role shows how dangerously far we've drifted toward one-branch rule.</p> <p>Congressmen of old "would have received as a personal affront" any message from the president calling on them to change their position, Massachusetts Sen. George Hoar wrote in his 1903 memoirs: "If they visited the White House, it was to give, not to receive advice." "In a republican government," the Federalist explains, "the legislative authority necessarily predominates," and is therefore most to be feared.</p> <blockquote class="pullquote"><p>In the shell game of modern American governance, we've let ourselves become easy marks.</p></blockquote> <p>Today, not so much. Consider the controversial "policy riders" that almost sank the budget deal. The measure defunding Planned Parenthood got most of the coverage, overshadowing important provisions aimed at restricting the Environmental Protection Agency's power to regulate greenhouse gases.</p> <p>Seizing on the Supreme Court's 2007 ruling that the Clean Air Act's definition of "pollutant" was broad enough to encompass CO2 — a gas essential to life on Earth — the Obama administration has begun to "legislate" global warming policy in an end-run around Congress.</p> <p>Whatever your views on climate change, you ought to find it unsettling that, here and elsewhere, most of the actual "law" in this country is crafted by unelected executive-branch bureaucrats.</p> <p>But that's where we are. A few months back, the <em>New York Times</em> reported that some 230 health regulators had descended on Bethesda — paying double rent for office space so they could immediately begin drafting more than 300 rules implementing Obamacare. Thanks to "mega-bills passed by Congress," the <em>Times</em> explained, regulators are issuing "hundreds of sweeping financial and health care regulations that will ultimately affect most Americans."</p> <p>As at home, so too abroad: having ceded its constitutional power, Congress sits on the sidelines and carps while the president wages war.</p> <p>Two weeks ago — nine days after we started bombing Libya — President Obama got around to explaining why. His televised address ran more than 3,000 words, but "Constitution" never appears — and "Congress" occurs only once: a passing reference to "consulting the bipartisan leadership of Congress."</p> <p>The president's supposed to do more than "consult"; the real "decider" is Congress. Our Constitution grants the legislature sufficient power to make talk of "co-equal branches" a misnomer.</p> <div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/gene-healy">Gene Healy</a> is a vice president at the Cato Institute and the author of </em><a href="http://www.cato.org/store/books/cult-presidency-america-s-dangerous-devotion-executive-power-paperback">The Cult of the Presidency</a><em>.</em></p> <a class="head" href="http://www.cato.org/people/gene-healy">More by Gene Healy</a></div></div> <p>The constitutional scholar Charles Black once commented, "My classes think I am trying to be funny when I say that, by simple majorities," Congress could shrink the White House staff to one secretary, and that, with a two-thirds vote, "Congress could put the White House up at auction." (I sometimes find myself wishing they would.)</p> <p>But Professor Black wasn't trying to be funny: it's in Congress' power to do that. And if Congress can sell the White House, surely it can defund an illegal war and rein in a runaway bureaucracy.</p> <p>If they don't, it's because they like the current system. And why wouldn't they? It lets them take credit for passing high-minded, vaguely worded statutes, and take it again by railing against the bureaucracy when it imposes costs in the course of deciding what those statutes mean.</p> <p>But it's our fault as well. In the shell game of modern American governance, we've let ourselves become easy marks. Unless and until voters wise up and demand accountability, Congress will continue to take our money and shirk its duty.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/congress-has-become-least-dangerous.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:43:00-07:00">12:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6991247068717843266">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6991247068717843266" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7239816252331517310"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/fed-obliterates-savings-ethic.html">The Fed Obliterates the Savings Ethic</a> </h3> <div class="post-body entry-content"> <h1> The Fed Obliterates the Savings Ethic</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/627/Doug-French">Doug French</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/RainyDayPigs.jpg" alt="" border="0" /></div> <p>Depression babies learned early that "saving for a rainy day" was not something one hopes to do but a requirement. The saying originated when most people worked on the farm. And when it rained, the fields were too wet to plow, and the farmer — not to mention the hired hands — made no money.</p> <p>Of course, my grandfather was the diligent sort who would use rainy days to do required maintenance on his implements, noting with derision other farmers who spent rainy days at the bar in town. He believed they would surely end up with broken equipment when the sun would reappear, keeping them from making hay.</p> <p>So the idea of savings is not necessarily the return one receives on the money that's socked away, but the piece of mind that, when the weather doesn't cooperate, the saver has a little stash to tide him over. Of course, the vast majority of us don't have to worry about the weather.</p> <p>But an economic storm hit a couple years ago and plenty of people have not had work, rain or shine. Those who took heed of that old saw have no doubt weathered the storm better than those who didn't. Most financial advisors recommend that a person have three month's worth of living expenses saved — and some say six months worth, just in case. But how many people heed that advice?</p> <p>There is no caveat to the counsel that says, "Keep six months of savings around if the money is earning at least six percent." Even if the money sits there all shiny, not earning a thing, it's the liquidity and insurance against the unknown that's the issue.</p> <p>Unfortunately, a central bank's debauchery of the currency serves to raise people's time preferences and impair their judgment. In a blog post recently, I highlighted the advice of life coach and author John P. Strelecky, who <a href="http://www.marketwatch.com/Story/story/print?guid=2251581E-5BDD-11E0-9F0E-00212804637C">advises</a> people to spend their tax refunds on an experience they will remember forever, rather than saving the few hundred or thousand dollars that the IRS may be giving back.</p> <p>Live your life for today, says the life coach — a couple thousand bucks isn't going to matter anyway. I <a href="http://blog.mises.org/16324/life-coach-says-blow-that-refund-check/">posted to the Mises Blog</a> to point out how ludicrous this advice is. But most who commented sided with Strelecky:</p> <blockquote> <p>I think his advice is spot-on, at least given the constraints of the times in which we live. What's the point in saving if inflation will ravage whatever you manage to accumulate?</p> </blockquote> <blockquote> <p>You play by the rules of the game. Your savings growth will be puny due to pathetic interest rates, erased by inflation, and confiscated by a rapacious state. So go ahead, enjoy the "money" now, while it still has some value.</p> </blockquote> <blockquote> <p>Most people don't really have a better place to put the money than into a pleasurable experience, which is all you will want in the end.</p> </blockquote> <blockquote> <p>Gotta agree with the comments. Maybe not trips or other "experiences." But I feel safer with stuff than I do with Federal Reserve notes going forward.</p> </blockquote> <p>That's just what central bankers like to hear. They are worried about deflation. A few months ago, the Chicago Fed's Charles Evans <a href="http://online.wsj.com/article/SB10001424052748703843804575534043689519572.html">said</a>,</p> <blockquote> <p>It seems to me if we could somehow get lower real interest rates so that the amount of excess savings that is taking place relative to investment is lowered, that would be one channel for stimulating the economy.</p> </blockquote> <p>Lord Keynes was constantly worried that people were saving too much and consuming too little — thus the need for more and cheaper money to stimulate the economy. Mr. Bernanke is nothing if not a good Keynesian, and his low rates make even the savviest question whether to forgo consumption.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Walk-Away-The-Rise-and-Fall-of-the-Home-Ownership-Myth-P10434.aspx"><img src="https://mises.org/store/Assets/ProductImages/SS566.jpg" width="200" /></a></div> <div class="book-price"> <p><a href="http://mises.org/store/Walk-Away-The-Rise-and-Fall-of-the-Home-Ownership-Myth-P10434.aspx"><span style="text-decoration: line-through;">$10</span> $8</a></p> </div> </div> <p>And likely no retiree, when contemplating leaving the workforce, figured 1 percent interest rates (or less) into their retirement cash-flow planning. In a <a href="http://online.wsj.com/article/SB10001424052748703410604576216830941163492.html">front-page article</a>, the <i>Wall Street Journal</i> took a look at "retirees who find themselves on the wrong end of the Federal Reserve's epic attempt to rescue the economy with cheap money."</p> <p>The <i>WSJ</i> rightly points out that the Fed's low rates have been a windfall for banks and borrowers, but a problem for those needing income from their savings to live on. People who thought they played the game right, worked hard, saved money, and now want to take it easy, are panicked that money-market funds are throwing off but 24 basis points. "That's one-tenth the level of late 2007 and the lowest on records dating back to 1959," the <i>Journal</i> reports.</p> <p>As bad as the Fed-engineered low rates are for those trying to live off past savings, reporter Mark Whitehouse makes the point that the low rates keep young people from building up funds for the future — whether it's for emergencies or retirement. Working Americans put less money into financial assets last year than at anytime on record — except 2009, when people pulled money out. And while the Department of Commerce says the personal savings rate has risen to 5.8 percent, Whitehouse explains, "That's in large part because it counts reductions in personal debt, such as mortgages and credit-card balances, as savings." But most debt reduction, Whitehouse writes, has been driven by defaults, rather than saving.</p> <p>The Fed's interest-rate policy also leads people into taking more risk with their savings than they should. "That's why most of us are in the stock market, because there's no place else to go," says 70-year-old John Lehman, who would rather have his money in bank certificates of deposit but must resort to speculating. "I hope my assets don't run out before I die."</p> <p>Many retire with next to nothing as it is. According to AARP, 16 percent of Americans have not saved a dime for retirement, and nearly half have saved less than $50,000.</p> <p>Those with no savings are more dependent on government and others when the unexpected occurs, whether it's job loss or the washing machine quits. Professor Paul Cantor reminds us in his article, "Hyperinflation and Hyperreality: Mann's 'Disorder and Early Sorrow,'" that "money is a central source of stability, continuity, and coherence in any community. Hence to tamper with the basic money supply is to tamper with a community's sense of value."</p> <p>When the Fed makes saving seem futile and immediate pleasure seem rational, the world has been diabolically turned upside down. Just one step away from hyperinflation, the central banks' actions are threatening "to undermine and dissolve all sense of value in a society."</p> <p>"Thus inflation serves to heighten the already frantic pace of modern life, further disorienting people and undermining whatever sense of stability they may still have," Cantor explains.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Literature-and-the-Economics-of-Liberty-Spontaneous-Order-in-Culture-P642.aspx"><img src="http://images.mises.org/CantorCoxBook.jpg" border="0" /></a></div> </div> <p>The social order is upended in Mann's story as wealth is transferred from those who diligently saved all of their lives to speculators. As it was in the Weimar Germany that Mann describes, so it is today, as people believe it futile to sock away a little money here and there, and instead feel compelled to either speculate or just blow what they have on good times.</p> <p>And while the retirees mentioned in the <i>WSJ</i> article are being crippled financially, Cantor points out that Mann's portrayal of hyperinflation uncovers "something psychologically more debilitating happening to the older generation." Impetuous, high-time-preference behavior displayed by the young appears rational in an inflationary period, while prudence and conservatism appear to be not even quaint but downright silly.</p> <p>As Mann described so long ago, the world of inflation is the illusion of wealth, created by the government's printing press, distorting everything we see and perverting our judgment. Meanwhile the cry for stimulus continues, while our culture and values are buried under a pile of paper.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/fed-obliterates-savings-ethic.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:40:00-07:00">12:40 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7239816252331517310">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7239816252331517310" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="427599010181822961"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/why-monetary-expansion-must-stop.html">Why Monetary Expansion Must Stop</a> </h3> <div class="post-body entry-content"> <h1> Why Monetary Expansion Must Stop</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/1498/Patrick-Barron">Patrick Barron</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="editorial-preface"> <p>[Address delivered at the European Parliament in Brussels on March 16, 2011]</p> </div> <div class="figure"><img src="http://images.mises.org/PopGreenBalloon.jpg" alt="" border="0" /></div> <h2>Introduction: The Illusion of Unlimited Resources</h2> <p>The current problems faced by all the world's economies stem, primarily, from one source: the demise of sound money, whose quantity could not be increased without significant cost, and its replacement with fiat money that can be inflated to infinite amounts at almost no cost to the producer.</p> <p>Expansion of fiat money makes it appear to <i>all</i> market participants, including financial regulators, that there are more resources available than really exist. Thusly, all participants, including governments, embark on programs that cannot be completed; there just are not enough resources in the economy.</p> <p>Not only does fiat money create the illusion of greater wealth, it makes embarking on new projects irresistible. After all, does it not always appear that lack of money is all that stands between man and the fulfillment of all his dreams? Now, with unlimited quantities of fiat money, the day seems to have arrived when anything is possible. But this is an illusion.</p> <p>Throughout my talk I will refer to economic laws that act as impenetrable barriers to achieving the goals sought by monetary expansion. These are laws of human nature — to ignore them brings serious adverse consequences.</p> <p>Economics is a social and not a natural science, because man is a social being. His actions are not governed by physical stimuli but by preferences derived from subjective valuations, all of which are unknowable, undergo constant change, and therefore cannot be predicted. Nevertheless, we do know that man is rational; that he acts to attain goals which he believes will improve his satisfaction; that he employs scarce means to do so and that means imply costs; but since he expects to improve his satisfaction, he expects the costs to be less than the satisfaction to be attained; so man expects to profit from his actions. From this brief explanation of man as a rational being, we can derive irrefutable economic laws.</p> <h2>Two Evils of Monetary Expansion</h2> <p>There are two main evils of monetary expansion: (1) recurring financial crises and (2) expansion of the wealth-destroying welfare-warfare state.</p> <p>I'll start with why we continue to have recurring and ever more damaging financial crises. Then I will discuss very briefly the expansion of the wealth-destroying welfare-warfare state.</p> <h3>No Societal Benefit from Monetary Expansion</h3> <p>Expansion of fiat money denies the irrefutable economic law that money is subject to the <a href="http://wiki.mises.org/wiki/Marginal_utility">law of diminishing marginal utility</a>. This insight was explained by Ludwig von Mises in his 1912 classic, <i><a href="http://mises.org/resources/194/The-Theory-of-Money-and-Credit">The Theory of Money and Credit</a></i>. Mises explained that money is not "neutral"; money is a good and is subject to all the laws of economics as are all other goods. Because each new marginal unit conveys less utility than all previous units, and because money is fungible — meaning that each new unit is indistinguishable from monetary units already existing — then the purchasing power of all money is reduced.</p> <p>The first users of the new money benefit most from the newly created money. This is a tight circle nearest the event of the new money being created. Those furthest away from this event, who are in a wider circle of the general economy, all lose because this new money dilutes the value of each unit of money they are already holding. Think of it as pouring water into milk. Therefore, expansion of the money supply conveys no overall societal benefit.</p> <h3>Money Expansion Is Not Stimulative</h3> <p>Immediately we see that an increase in money cannot be stimulative overall. Although it can stimulate some parts of the economy (those who get the new money first), it can do so only at the expense of all other parts, violating another immutable law of economics, <a href="http://wiki.mises.org/wiki/Say%27s_law">Say's Law</a>, which essentially tells us that we can't get something for nothing. With the creation of new fiat money, wealth has been redistributed from the current holders of money — the rightful owners — to illegitimate new allocators who steal, without getting noticed, other people's money. The first or early receivers of the new money benefit at the expense of those who receive it later, through the market process, or do not receive it at all — for example, retirees living on privately accumulated wealth. The early receivers buy at existing lower prices, while later receivers pay higher prices.</p> <p>As this newly created money dilutes the existing money's purchasing power, we see this as high prices — later and not immediately. Higher overall prices are the logical consequence of any expansion of money. The price level can be thought of as the result of total monetary spending divided by the total supply of goods and services offered on the market. If the numerator (total spending) goes up or the denominator (total market supply of goods) goes down, the price level increases.</p> <p>Some may object to this explanation, saying that sometimes the price level remains relatively flat despite an increase in the quantity of money, because the total supply of goods increases enough to offset increases in total spending. My answer is that this is a justification for slow, planned inflation, which ignores damaging structural changes that still occur in the economy. I discuss these changes below.</p> <h3>The Prosperity Illusion Caused by a Rising Gross National Product</h3> <p>Unfortunately, increased spending creates the illusion of increased prosperity, because we measure prosperity by the growth in Gross National Product (GNP), a measure only of total spending, the numerator in the quantity-theory-of-money equation. Under sound money, GNP remains the same, because the quantity of money — and thusly, the quantity of total spending — remains unchanged.</p> <p>But fiat-money inflationary spending, caused by planned inflation of the money supply, is described as economic "growth." The more government inflates the quantity of money, the greater economic growth appears to be as measured by GNP. But this is an illusion. It is not growth at all. It is just a consequence of measuring higher prices.</p> <p>So far we have seen that fiat money does not stimulate the economy overall; it merely rewards some at the expense of others and creates higher overall prices. But the main structural damage, to which I earlier referred, occurs in the structure of production as manifested by recurring boom/bust cycles. Here is where fiat money and credit expansion cause pure capital consumption, robbing the future productive capability of the economy.</p> <h2>Malinvestment and the Austrian Business Cycle</h2> <p>In the mistaken belief that the economy can be stimulated into a higher level of production by more money, central bankers lower interest rates below the natural, market rate. The ultimate result of such intervention is destruction of capital through what Austrian economists call malinvestment. Capital is devoted to lines of production, primarily into longer-term investments, that will never be profitably completed.</p> <p>We must address this most pressing question: Why do so many businesses fail at the same time? Can it be that a mass incompetence spreads through the economy so that we experience a large-scale bust from time to time? Governments and central bankers focus on this bust and try to postpone it, thinking that this bust is the problem.</p> <div class="bigger pullquote">"Lower interest rates and increased government oversight provide nothing more than full employment for bureaucrats."</div> <p>But, ladies and gentlemen, I am here to tell you that the bust is not the problem. The problem is the boom and what created it in the first place. Fortunately this business-cycle phenomenon has been very well explained by Austrian economics. For those of you who have the time, I will be happy to explain the details of this after my talk. Suffice it to say that it is the intervention of the central bank that puts into motion the culprit of "artificial interest rates." These are false signals to businesses that there are new, real resources for investing in longer-term, capital-expansion projects. But there are no new, real resources for the successful and profitable completion of all new boom-time projects.</p> <h3>Coercion Is No Solution</h3> <p>Rather than cease its monetary intervention, government counters these consequences with coercion in the form of increasing bureaucratic oversight of banks, mandatory increases in bank capital requirements, and the creation of bailout funds.</p> <p>Increasing bureaucratic oversight rests on two false ideas — that bureaucrats <i>can</i> discern potential problems to which bankers are blinded and that, unlike bankers, bureaucrats are not greedy by nature, so they will not take on increased risk. But government bureaucrats can no more detect errors, culpable or otherwise, than can the financial community they are supposed to regulate. The normal economic cues are hidden by expansion of money and manipulation of the interest rate. Regulators and systemic-risk analysts are no more able to detect these errors than anyone else. All the oversight boards will accomplish is adding cost to the banking system and possibly creating what <a href="http://en.wikipedia.org/wiki/Wilhelm_R%C3%B6pke">Wilhelm Röpke</a> called repressed inflation (what we today call stagflation), whereby production declines and employment falls while prices rise.</p> <p>Bailout funds are the culprits behind any increased risk taking by greedy bankers. These funds create moral hazard, whereby market participants know that some or all of the cost of increased risk will be borne by others but that benefits will not be shared. In addition, due to the law of diminishing marginal utility of money, the funds themselves continue, rather than cure, the problem initially caused by money expansion, for the funds are formed by even more money expansion.</p> <p>All of this intervention leads back to the evils of redistribution of wealth, higher prices, and more malinvestment — a vicious and destructive cycle.</p> <h3>The Cognitive Dissonance of Money Expansion Followed by Increased Coercion</h3> <p>This entire process creates a psychological phenomenon called cognitive dissonance; that is, holding two conflicting thoughts in the mind at the same time. Expansion of the money supply and lowering of interest rates in order to stimulate the economy is not compatible with increased bank capital requirements and oversight boards to detect systemic risk.</p> <p>The government expects that a lower rate of interest will promote more economic activity through increased lending. Yet the law of diminishing marginal utility applies also to lending . The only way to make more loans is to lend to less creditworthy customers. Yet this is the situation that more oversight attempts to prevent. Therefore, even if the government's oversight boards could detect less creditworthy borrowers, the very purpose of lower interest rates is to make loans to such people.</p> <p>This makes no sense from an economic or financial point of view, but it does make sense from a political, command-and-control point of view. So lower interest rates and increased government oversight become nothing more than full employment for bureaucrats, who enjoy the perks of power and who bear none of the responsibility for their actions.</p> <p>The choice is clear: either more of the same — that is, more fiat-money pumping and more regulation, with increasingly worse outcomes — or an abandonment of monetary expansion and bank oversight by government along with their replacement by sound money and the normal checks and balances of the free market.</p> <h2>Expansion of the Welfare-Warfare State</h2> <p>I'll now discuss the second main evil of fiat-money growth: expansion of the wealth-destroying welfare-warfare state.</p> <p>Because the wealth-generating sector of society has nothing to gain and everything to lose by the expansion of the welfare-warfare state, under a sound-money environment these wealth-destroying activities would be vigorously opposed. But under a fiat-money system, many of those who benefit from the unhampered market economy are blinded by the money illusion and believe that government spending does not come out of their own pockets. Therefore, it is no coincidence that the Progressive movement in the late-19th and early-20th centuries coincided with both increased government spending <i>and</i> an increase in the money supply to be provided by central banks.</p> <p>Like all unsustainable enterprises, the welfare-warfare state depends upon ever-increasing injections of fiat money; otherwise, its programs collapse rather quickly. Ever-larger increases in fiat money merely delay the day of reckoning, because the ordinary cues of higher taxes and higher interest rates are avoided for a time. So fiat money leads government to make promises that it ultimately cannot deliver.</p> <p>When government finally becomes aware that it <i>is</i> limited in what it can accomplish, it is faced with a stark choice. If it scraps programs, it risks civil unrest from the program constituents. The alternative is to continue the programs in name only, resorting to price controls and rationing. National healthcare systems are the best examples of this phenomenon. Not only is demand for healthcare services greatly increased — a true tragedy of the commons, whereby commonly held resources are plundered to extinction — but the quantity and quality of services actually decline.</p> <p>The Medicare system in America tries to solve this problem by underpaying for services and then forcing providers, via threats to pull their business licenses, to absorb Medicare losses in the hopes of making up the difference with private-pay patients. To avoid losses and remain in business, medical practices counter with lower service quality and delays. Our neighbor to the north rations care to those who can live and suffer long enough to advance to the front of long waiting lists. In a recent suit brought by a Canadian patient, a Canadian judge stated that "access to a waiting list is not access to healthcare."</p> <h2>The Long-Term Solution: Liberate Money and the Economy from Government Control</h2> <p>A free-market economy, which includes money freely chosen by the market, does not suffer disequilibria, periodic booms and busts, or high unemployment. The constant search of market participants to better themselves will result in cooperation, rather than confrontation, with all peoples everywhere. The liberal order, as envisioned by scholars such as Ludwig von Mises, can expand to encompass the entire world, resulting in peace and ever-expanding prosperity for all cooperating men everywhere.</p> <p>Sound money is essential; therefore, the first order of business for Europe is to stabilize the euro. Stop inflating its supply. Stop purchasing sovereign debt. Anchor the euro in gold and/or silver. Try to gain international cooperation when doing so, in order to prevent large swings in gold and silver imports and exports when other nations see that they must emulate Europe. Nevertheless, if this is not possible, anchor the euro in gold or silver anyway.</p> <p>Then begin the process of privatizing money by eliminating legal-tender laws. Let the market use whatever money it chooses, even multiple monies. Some Austrian economists believe that eliminating legal-tender laws is all that is required of government, that the free market will choose the money that it finds best suits its purposes. This may be the case; the attempt is certainly worth the effort. A practical step would be to relax legal-tender laws in one or both of two ways: the nonenforcement of legal-tender laws or the decriminalization of private money production. Nonprosecution would open the door to private, competing monies.</p> <p>End all regulation of banking, including deposit guarantees, which only cause moral hazard. But enforce 100 percent reserves against money certificates and demand deposits. Reform the commercial code to provide legal protections for bank depositors just as is the case with any warehouse bailment.</p> <p>But allow complete freedom of loan banking, whereby the banker takes legal ownership of funds for some set period of time, with a promise to return the funds, plus interest, at the end of the contract. This form of loan banking can be risk free, as when customer loans to the bank are less than the bank's capital account. It is also noninflationary, because the bank lends only funds that have been transferred to it and it alone — the depositor gives up his claim to the funds for the length of the contract. Undoubtedly, under such legal protections and known risks, the public would be better served than by the current, fractional-reserve system of constant expansion and contraction of the money supply via bank lending.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/What-Has-Government-Done-to-Our-Money-P262.aspx"><img alt="WHGDtOM?" src="http://mises.org/store/Assets/ProductImages/B777.jpg" width="200" border="0" /></a></div> </div> <h3>Rules for the Statesman</h3> <p>Those in positions of power, such as all of you here, must be guided by reason and not emotion. Adopt as your motto <a href="http://en.wikipedia.org/wiki/Kant">Immanuel Kant's</a> categorical imperative. Pass only laws that are universally applicable — that benefit all men at all times and in all places. Treat men as ends in themselves rather than as means to other ends, such as national or regional pride.</p> <p>Not many laws will meet these high standards. Certainly, printing money, which reduces the purchasing power of money already in circulation and benefits some at the expense of others, fails this test, as does buying sovereign debt at subsidized interest rates. Both of these practices lead not to freedom and security but to suffering and conflict. I ask you to lead as statesmen always do: based on principles that work, are true, and are real.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/why-monetary-expansion-must-stop.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:39:00-07:00">12:39 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=427599010181822961">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=427599010181822961" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="4584784257924857997"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/mind-of-hans-hermann-hoppe.html">The Mind of Hans-Hermann Hoppe</a> </h3> <h1> The Mind of Hans-Hermann Hoppe</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/164/HansHermann-Hoppe">Hans-Hermann Hoppe</a> </p> <div class=" fb_reset" id="fb-root"> </div> <div class="figure"><img src="http://images.mises.org/HoppePoster.jpg" alt="HOPPE" /></div> <div class="editorial-preface"> <p>[The <i>Daily Bell</i>, exclusive interview, March 27, 2011.]</p> </div> <p><strong>DAILY BELL:</strong> Please answer these questions as our readers were not already aware of your fine work and considered opinions. Let's jump right in. Why is democracy "<a href="https://mises.org/resources/2179/democracy-the-god-that-failed">The God That Failed</a>?"</p> <p><strong>DR. HANS-HERMANN HOPPE:</strong> The traditional, premodern state form is that of a (absolute) monarchy. The democratic movement was directed against kings and the classes of hereditary nobles. Monarchy was criticized as being incompatible with the basic principle of "equality before the law." It rested on privilege and was unfair and exploitative. Democracy was supposed to be the way out. In opening participation and entry into state-government to everyone on equal terms, so the advocates of democracy claimed, equality before the law would become reality and true freedom would reign. But this is all a big error.</p> <p>True, under democracy everyone can become king, so to speak, not only a privileged circle of people. Thus, in a democracy no <em>personal</em> privileges exist. However,<em> functional</em> privileges and privileged functions exist. Public officials, if they act in an official capacity, are governed and protected by "public law" and thereby occupy a privileged position vis-à-vis persons acting under the mere authority of "private law." In particular, public officials are permitted to finance or subsidize their own activities through taxes. That is, they are permitted to engage in, and live off, what in private dealings between private law subjects is prohibited and considered "theft" and "stolen loot." Thus, privilege and legal discrimination — and the distinction between rulers and subjects — will not disappear under democracy.</p> <p>Even worse: Under monarchy, the distinction between rulers and ruled is clear. I know, for instance, that I will never become king, and because of that I will tend to resist the king's attempts to raise taxes. Under democracy, the distinction between rulers and ruled becomes blurred. The illusion can arise "that we all rule ourselves," and the resistance against increased taxation is accordingly diminished. I might end up on the receiving end: as a tax <em>recipient</em> rather than a tax <em>payer</em>, and thus view taxation more favorably.</p> <p>And moreover, as a hereditary monopolist, a king regards the territory and the people under his rule as his personal property and engages in the monopolistic exploitation of this "property." Under democracy, monopoly and monopolistic exploitation do not disappear. Rather, what happens is this: instead of a king and a nobility who regard the country as their private property, a temporary and interchangeable caretaker is put in monopolistic charge of the country. The caretaker does not own the country, but as long as he is in office he is permitted to use it to his and his protégés' advantage. He owns its current use — <em>usufruct</em> — but not its capital stock. This does not eliminate exploitation. To the contrary, it makes exploitation less calculating and carried out with little or no regard to the capital stock. Exploitation becomes shortsighted and capital consumption will be systematically promoted.</p> <p><strong>DAILY BELL:</strong> If democracy has failed what would you put in its place? What is the ideal society? Anarchocapitalism?</p> <div class="figure-left"><a href="http://mises.org/store/Democracy-The-God-That-Failed-P240.aspx"><img src="http://mises.org/store/Assets/ProductImages/B283.jpg" /></a></div> <p><strong>HOPPE:</strong> I prefer the term "private-law society." In a private-law society, every individual and institution is subject to one and the same set of laws. No public law granting privileges to specific persons or functions exists in this society. There is only private law (and private property), equally applicable to each and everyone. No one is permitted to acquire property by means other than through original appropriation of previously unowned things, through production, or through voluntary exchange; and no one possesses a privilege to tax and expropriate. Moreover, no one is permitted to prohibit anyone else from using his property in order to enter any line of production he wishes and compete against whomever he pleases.</p> <p><strong>DAILY BELL:</strong> How would law and order be provided in this society? How would your ideal justice system work?</p> <p><strong>HOPPE:</strong> In a private-law society the production of law and order — of security — would be undertaken by freely financed individuals and agencies competing for a voluntarily paying (or not-paying) clientele — just like the production of all other goods and services. How this system would work can be best understood in contrast to the workings of the present, all-too-familiar statist system. If one wanted to summarize in one word the decisive difference — and advantage — of a competitive security industry as compared to the current statist practice, it would be: <em>contract</em>.</p> <p>The state operates in a legal vacuum. There exists no contract between the state and its citizens. It is not contractually fixed what is actually owned by whom, and what, accordingly, is to be protected. It is not fixed what service the state is to provide, what is to happen if the state fails in its duty, nor what the price is that the "customer" of such "service" must pay. Rather, the state unilaterally fixes the rules of the game and can change them, per legislation, during the game.</p> <p>Obviously, such behavior is inconceivable for freely financed security providers. Just imagine a security provider, whether police, insurer, or arbitrator, whose offer consisted in something like this: I will not contractually guarantee you anything. I will not tell you what I oblige myself to do if, according to your opinion, I do not fulfill my service to you — but in any case, I reserve the right to unilaterally determine the price that you must pay me for such undefined service. Any such security provider would immediately disappear from the market due to a complete lack of customers.</p> <p>Each private, freely financed security producer must instead offer its prospective clients a contract. And these contracts must, in order to appear acceptable to voluntarily paying consumers, contain clear property descriptions as well as clearly defined mutual services and obligations. Each party to a contract, for the duration or until the fulfillment of the contract, would be bound by its terms and conditions; and every change of terms or conditions would require the unanimous consent of all parties concerned.</p> <p>Specifically, in order to appear acceptable to security buyers, these contracts must contain provisions about what will be done in the case of a conflict or dispute between the protector or insurer and his own protected or insured clients as well as in the case of a conflict between different protectors or insurers and their respective clients.</p> <div class="bigger pullquote"><strong>DAILY BELL:</strong> Are you denying, then, that we need the state to defend us?<br /> <strong>HOPPE:</strong> Indeed.</div> <p>And in this regard only one mutually agreeable solution exists: in these cases the conflicting parties contractually agree to arbitration by a mutually trusted but independent <em>third party</em>. And as for this third party: it, too, is freely financed and stands in competition with other arbitrators or arbitration agencies. Its clients, i.e., the insurers and the insured, expect of it that it come up with a verdict that is recognized as fair and just by all sides. Only arbitrators capable of forming such judgments will succeed in the arbitration market. Arbitrators incapable of this and viewed as biased or partial will disappear from the market.</p> <p><strong>DAILY BELL:</strong> Are you denying, then, that we need the state to defend us?</p> <p><strong>HOPPE:</strong> Indeed. The state does not defend <em>us</em>; rather, the state aggresses against us and it uses <em>our </em>confiscated property to defend <em>itself</em>. The standard definition of the state is this: The state is an agency characterized by two unique, logically connected features. First, the state is an agency that exercises a territorial monopoly of ultimate decision making. That is, the state is the ultimate arbiter and judge in every case of conflict, including conflicts involving itself and its agents. There is no appeal above and beyond the state. Second, the state is an agency that exercises a territorial monopoly of taxation. That is, it is an agency that can unilaterally fix the price that its subjects must pay for the state's service as ultimate judge.</p> <p>Based on this institutional setup you can safely predict the consequences: First, instead of preventing and resolving conflict, a monopolist of ultimate decision making will <em>cause and provoke</em> conflict in order to settle it to its own advantage. That is, the state does not recognize and protect existing law, but it perverts law through legislation. Contradiction number one: the state is a lawbreaking law protector. Second, instead of defending and protecting anyone or anything, a monopolist of taxation will invariably strive to <em>maximize his expenditures</em> on protection and at the same time <em>minimize the actual production</em> of protection. The more money the state can spend and the less it must work for this money, the better off it is. Contradiction number two: the state is an expropriating property protector.</p> <p><strong>DAILY BELL:</strong> Are there any good laws and regulations?</p> <p><strong>HOPPE:</strong> Yes. There are a few, simple, good laws that almost everyone intuitively recognizes and acknowledges and that can also be <em>demonstrated</em> to be "true" and "good" laws. <em>First</em>: If there were no interpersonal conflicts and we all lived in perfect harmony there would be no need for any law or norm. It is the purpose of laws or norms to help <em>avoid</em> otherwise unavoidable conflict. Only laws that achieve this can be called good laws. A law that <em>generates</em> conflict rather than helps to avoid it is contrary to the purpose of laws, i.e., it is a bad, dysfunctional or perverted law.</p> <div class="figure-left"><a href="http://mises.org/media.aspx"><img src="http://mises.org/images3/misesmedia.gif" width="200" /></a></div> <p><em>Second:</em> Conflicts are possible only if and insofar as goods are <em>scarce</em>. People clash because they want to use one and the same good in different, incompatible ways. Either I win and get my way or you win and get your way. We cannot both be "winners." In the case of scarce goods, then, we need rules or laws helping us decide between rival, conflicting claims. In contrast, goods that are "free," i.e., goods that exist in superabundance, that are inexhaustible or infinitely reproducible, are not and cannot be a source of conflict. Whenever I use a nonscarce good it does not in the slightest diminish the supply of this good available to you. I can do with it what I want and you can do with it what you want at the same time. There is no loser. We are both winners; and hence, as far as nonscarce goods are concerned, there is never any need for laws.</p> <p><em>Third:</em> All conflict concerning scarce goods, then, can be avoided only if every good is <em>privately owned</em>, i.e., exclusively controlled by one specified individual(s) rather than another, and it is always clear which thing is owned, and by whom, and which is not. And in order to avoid all possible conflict<em> from the beginning of mankind on</em>, it is only necessary to have a rule regulating the first, <em>original appropriation</em> of previously unowned, nature-given goods as private property.</p> <p>In sum then, there are essentially three "good laws" that assure conflict-free interaction, or "eternal peace": (a) he who first appropriates something previously on-owned is its exclusive owner (as the <em>first</em> appropriator he cannot have come into conflict with anyone else as everyone else appeared on the scene only <em>later</em>); (b) he who produces something with his body and homesteaded goods is owner of his product, provided he does not thereby damage the physical integrity of others' property; and (c) he who acquires something from a previous or earlier owner by means of voluntary exchange, i.e., an exchange that is deemed <em>mutually</em> beneficial, is its owner.</p> <p><strong>DAILY BELL:</strong> How, then, does one define freedom? As the absence of state coercion?</p> <p><strong>HOPPE:</strong> A society is free if every person is recognized as the exclusive owner of his own (scarce) physical body, if everyone is free to appropriate or "homestead" previously unowned things as private property, if everyone is free to use his body and his homesteaded goods to produce whatever he wants to produce (without thereby damaging the physical integrity of other peoples' property), and if everyone is free to contract with others regarding their respective properties in any way deemed mutually beneficial. Any interference with this constitutes an act of aggression, and a society is unfree to the extent of such aggressions.</p> <p><strong>DAILY BELL:</strong> Where do you stand on copyright? Do you believe that intellectual property doesn't exist as Kinsella has proposed?</p> <div class="figure"><a href="http://mises.org/store/Against-Intellectual-Property-P523.aspx"><img src="http://mises.org/store/Assets/ProductImages/SS362.jpg" /></a> <div class="pullquote">"In fact, the entire world can copy me,<br /> and yet nothing is taken from me."</div> </div> <p><strong>HOPPE:</strong> I agree with my friend Kinsella that the idea of intellectual property rights is not just wrong and confused but dangerous. And I have already touched upon why this is so. Ideas — recipes, formulas, statements, arguments, algorithms, theorems, melodies, patterns, rhythms, images, etc. — are certainly goods (insofar as they are good, not bad, recipes, etc.), but they are not scarce goods.</p> <p>Once thought and expressed, they are free, inexhaustible goods. I whistle a melody or write down a poem, then you hear the melody or read the poem and reproduce or copy it. In doing so you have not taken anything away from me. I can whistle and write as before. In fact, the entire world can copy me, and yet nothing is taken from me. (If I didn't want anyone to copy my ideas I only have to keep them to myself and never express them.)</p> <p>Now imagine I had been granted a property right in my melody or poem such that I could prohibit you from copying it or demand a royalty from you if you do. First: Doesn't that imply, absurdly, that I, in turn, must pay royalties to the person (or his heirs) who invented whistling and writing, and further on to those, who invented sound making and language, and so on?</p> <p>Second: In preventing you from or making you pay for whistling my melody or reciting my poem, I am actually made a (partial) owner of <em>you</em> — of your physical body, your vocal chords, your paper, your pencil, etc. — because you did not use anything but your own property when you copied me. If you can no longer copy me, then, this means that I, the intellectual property owner, have expropriated you and your "real" property. Which shows: intellectual property rights and real property rights are incompatible, and the promotion of intellectual property must be seen as a most dangerous attack on the idea of "real" property (in scarce goods).</p> <p><strong>DAILY BELL:</strong> We have suggested that if people want to enforce generational copyright that they do so on their own, taking on the expense and attempting through various means to confront copyright violators with their own resources. This would put the onus of enforcement on the pocket book of the individual. Is this a viable solution — to let the market itself decide these issues?</p> <p><strong>HOPPE:</strong> That would go a long way in the right direction. Better still: more and more courts in more and more countries, especially countries outside the orbit of the US-dominated, Western-government cartel, would make it clear that they don't hear cases of copyright and patent violations any longer and regard such complaints as a ruse for big Western-government-connected firms, such as pharmaceutical companies, for instance, to enrich themselves at the expense of other people.</p> <p><strong>DAILY BELL:</strong> What do you think of Ragnar Redbeard's <a href="http://en.wikipedia.org/wiki/Might_is_Right">Might Is Right</a>?</p> <p><strong>HOPPE:</strong> You can give two very different interpretations of this statement. I see no difficulty with the first one. It is that I know the difference between "might" and "right," and, as a matter of empirical fact, might is in fact frequently right. Most if not all of "public law," for instance, is might masquerading as right.</p> <p>The second interpretation is that I don't know the difference between "might" and "right," because there <em>is</em> no difference. Might <em>is</em> right and right <em>is</em> might. This interpretation is self-contradictory; because if you wanted to defend this statement as a true statement in an argument with someone else you are in fact recognizing your opponent's property right in his own body. You do not aggress against him in order to bring him to the correct insight. You allow him to come to the correct insight on his own.</p> <p>That is, you admit, at least implicitly, that you <em>do</em> know the difference between right and wrong. Otherwise there would be no purpose in arguing. The same, incidentally, is true for Hobbes's famous dictum that one man is another man's wolf. In claiming this statement to be true, you actually prove it to be false.</p> <p><strong>DAILY BELL:</strong> It has been suggested that the only way to reorganize society is via a return to the clans and tribes that characterized <i>Homo sapiens</i> communities for tens of thousands of years. Is it possible that as part of this devolution, clan or tribal justice could be reemphasized?</p> <p><strong>HOPPE:</strong> I don't think that we, in the Western world, can go back to clans and tribes. The modern, democratic state has destroyed clans and tribes and their hierarchical structures, because they stood in the way of the state's drive toward absolute power. With clans and tribes gone, we must try it with the model of a private law-society that I have described. But wherever traditional, hierarchical clan and tribe structures still exist, they should be supported; and attempts to "modernize" "archaic" justice systems along Western lines should be viewed with utmost suspicion.</p> <p><strong>DAILY BELL:</strong> You have also written extensively on money and monetary affairs. Is a gold standard necessary for a free society?</p> <div class="figure"><a href="http://mises.org/store/Case-for-a-100-Percent-Gold-Dollar-The-P64.aspx"><img src="http://mises.org/store/Assets/ProductImages/B162.jpg" /></a></div> <p><strong>HOPPE:</strong> In a free society, the market would produce money, as all other goods and services. There would be no such thing as money in a world that was perfectly certain and predictable. But in a world with unpredictable contingencies people come to value goods also on account of their marketability or salability, i.e., as media of exchange. And since a more easily and widely salable good is preferable to a less easily and widely salable good as a medium of exchange, there is an inevitable tendency in the market for a single commodity to finally emerge that differs from all others in being the most easily and widely salable commodity of all. This commodity is called money.</p> <p>As the most easily salable good of all, it provides its owner with the best humanly possible protection against uncertainty, in that it can be employed for the instant satisfaction of the widest range of possible needs. Economic theory has nothing to say as to what commodity will acquire the status of money. Historically, it happened to be gold. But if the physical makeup of our world would have been different or is to become different from what it is now, some other commodity would have become or might become money. The market will decide.</p> <p>In any case, there is no need for government to get involved in any of this. The market has provided and will provide <em>some</em> money commodity, and the production of that commodity, whatever it is, is subject to the same forces of supply and demand as the production of everything else.</p> <p><strong>DAILY BELL:</strong> How about the free-banking paradigm? Is private fractional banking ever to be tolerated or is it a crime? Who is to put people in jail for private fractional banking?</p> <p><strong>HOPPE:</strong> Assume gold is money. In a free society you have free competition in gold mining, you have free competition in gold minting, and you have freely competing banks. The banks offer various financial services: of money safekeeping, clearing services, and the service of mediating between savers and borrower-investors. Each bank issues its own brand of "notes" or "certificates" documenting the various transactions and resulting contractual relations between bank and client. These bank notes are freely tradable. So far so good.</p> <p>Controversial among free bankers is only the status of fractional-reserve deposit banking and bank notes. Let's say A deposits ten ounces of gold with a bank and receives a note (a money substitute) redeemable at par on demand. Based on A's deposit, then, the bank makes a loan to C of nine ounces of gold and issues a note to this effect, again redeemable at par on demand.</p> <p>Should this be permitted? I don't think so. For there are now two people, A and C, who are the exclusive owner of one and the same quantity of money. A logical impossibility. Or put differently, there are only ten ounces of gold, but A is given title to ten ounces and C holds title to nine ounces. That is, there are more property titles than there is property. Obviously this constitutes fraud, and in all areas except money, courts have also considered such a practice fraud and punished the offenders.</p> <p>On the other hand, there is no problem if the bank tells A that it will pay interest on his deposit, invest it, for instance, in a money-market mutual fund made up of highly liquid short-term financial papers, and make its best efforts to redeem A's shares in that investment fund on demand in a fixed quantity of money. Such shares may well be very popular and many people may put their money into them instead of into regular deposit accounts. But as shares of investment funds they would never function as money. They would never be the most easily and widely saleable commodity of all.</p> <p><strong>DAILY BELL:</strong> Where do you stand on the current central-banking paradigm? Is central banking as it is currently constituted the central disaster of our time?</p> <div class="figure-left"><a href="http://mises.org/store/End-the-Fed-P619.aspx"><img src="http://mises.org/store/Assets/ProductImages/B938.jpg" /></a></div> <p><strong>HOPPE:</strong> Central banks are certainly one of the greatest mischief-makers of our time. They, and in particular the Fed, have been responsible for destroying the gold standard, which has always been an obstacle to inflationary policies, and replacing it, since 1971, with a pure paper money standard (fiat money). Since then, central banks can create money virtually out of thin air.</p> <p>More paper money cannot make a society richer, of course — it is just more printed paper. Otherwise, why is it that there are still poor countries and poor people around? But more money makes its monopolistic producer (the central bank) and its earliest recipients (the government and big, government-connected banks and their major clients) richer at the expense of making the money's late and latest receivers poorer.</p> <p>Thanks to the central banks' unlimited money-printing power, governments can run ever-higher budget deficits and pile up ever more debt to finance otherwise impossible wars, hot and cold, abroad and at home, and engage in an endless stream of otherwise unthinkable boondoggles and adventures. Thanks to the central bank, most "monetary experts" and "leading macro-economists" can, by putting them on the payroll, be turned into government propagandists "explaining," like alchemists, how stones (paper) can be turned into bread (wealth).</p> <p>Thanks to the central bank, interest rates can be artificially lowered all the way down to zero, channeling credit into less and least credit-worthy projects and hands (and crowding out worthy projects and hands), and causing ever greater investment bubble-booms, followed by ever-more spectacular busts. And thanks to the central bank, we are confronted with a dramatically increasing threat of an impending hyperinflation when the chickens finally come home to roost and the piper must be paid.</p> <p><strong>DAILY BELL:</strong> We have often pointed out that the Seven Hills of Rome were initially independent societies, just like the Italian city-states during the Renaissance and the 13 colonies of the US republic. It seems great empires start as individual communities where people can leave one community if they are oppressed and go nearby to start afresh. What is the driving force behind this process of centralization? What are the building blocks of empire?</p> <p><strong>HOPPE:</strong> All states must begin small. That makes it easy for people to <a href="http://mises.org/daily/4881/The-Art-of-Not-Being-Governed">run away</a>. Yet states are by nature aggressive, as I have already explained. They can externalize the cost of aggression onto others, i.e., hapless taxpayers. They don't like to see productive people run away, and so they try to capture them by expanding their territory. The more productive people the state controls, the better off it will be.</p> <p>In this expansionist desire, they run into opposition by other states. There can be only one monopolist of ultimate jurisdiction and taxation in any given territory. That is, the competition between different states is eliminative. Either A wins and controls a territory, or B. Who wins? At least in the long run, that state will win — and take over another's territory or establish hegemony over it and force it to pay tribute — that can parasitically draw on the comparatively more productive economy. That is, other things being the same, internally more "liberal" states (in the classic European sense of "liberal") will tend to win over less "liberal," i.e., illiberal or oppressive states.</p> <p>Looking only at modern history, we can so explain first the rise of liberal Great Britain to the rank of the foremost world empire and then, subsequently, that of the liberal United States. And we can understand a seeming paradox: why it is, that internally liberal imperial powers like the United States tend to be more aggressive and belligerent in their foreign policy than internally oppressive powers, such as the former Soviet Union. The liberal US empire was sure to win with its foreign wars and military adventures, while the oppressive Soviet Union was afraid that it might lose.</p> <p>But empire building also bears the seeds of its own destruction. The closer a state comes to the ultimate goal of world domination and one-world government, the less reason there is to maintain its internal liberalism and do instead what all states are inclined to do anyway, i.e., to crack down and increase their exploitation of whatever productive people are still left.</p> <p>Consequently, with no additional tributaries available and domestic productivity stagnating or falling, the empire's internal policies of bread and circuses can no longer be maintained. Economic crisis hits, and an impending economic <a href="http://mises.org/store/Meltdown-P557.aspx">meltdown</a> will stimulate decentralizing tendencies, separatist and secessionist movements, and lead to the breakup of empire. We have seen this happen with Great Britain, and we are seeing it now with the United States and its empire apparently on its last leg.</p> <p>There is also an important monetary side to this process. The dominant empire typically provides the leading international-reserve currency, first Britain with the pound sterling and then the United States with the dollar. With the dollar used as reserve currency by foreign central banks, the United States can run a permanent "deficit without tears."</p> <p>That is, the United States need not pay for its steady excesses of imports over exports as is normal between "equal" partners, in having to ship increasingly more exports abroad (exports paying for imports). Rather, instead of using their export earnings to buy American goods for domestic consumption, foreign governments and their central banks, as a sign of their vassal status vis-à-vis a dominant United States, use their paper-dollar reserves to buy up United States government bonds to help <em>Americans</em> to continue consuming beyond their means.</p> <div class="figure-left"><a href="http://mises.org/store/Bull-in-China-A-P10419.aspx"><img src="http://mises.org/store/Assets/ProductImages/B977.jpg" /></a></div> <p>I do not know enough about China to understand why it is using its huge dollar reserves to buy up US-government bonds. After all, China is not supposed to be a part of the US empire. Maybe its rulers have read too many American economics textbooks and now believe in alchemy, too. But if only China would dump its US treasuries and accumulate gold reserves instead, that would be the end of the US empire and the dollar as we know it.</p> <p><strong>DAILY BELL:</strong> Is it possible that a shadow of impossibly wealthy families located in the city of London is partially responsible for all this? Do these families and their enablers seek world government by elites? Is it a conspiracy? Do you see the world in these terms: as a struggle between the centralizing impulses of elites and the more democratic impulses of the rest of society?</p> <p><strong>HOPPE:</strong> I'm not sure if conspiracy is still the right word, because in the meantime, thanks to people such as <a href="http://en.wikipedia.org/wiki/Carroll_Quigley">Carroll Quigley</a>, for instance, much is known about what is going on. In any case, it is certainly true that there are such impossibly rich families, sitting in London, New York City, Tel Aviv, and elsewhere, who have recognized the immense potential for personal enrichment in the process of state- and empire-building.</p> <p>The heads of big banking houses played a key role in the founding of the Fed, because they realized that central banking would allow their own banks to inflate and expand credit on top of money and credit created by the central bank — and that a "lender of last resort" was instrumental in allowing them to reap private profits as long as things would go well and to socialize costs if they wouldn't.</p> <p>They realized that the classical gold standard stood as a natural impediment to inflation and credit expansion, and so they helped set up first a phony gold standard (the gold-exchange standard) and then, after 1971, a pure fiat-money regime. They realized that a system of freely fluctuating national-fiat currencies was still imperfect as far as inflationist desires are concerned, in that the supremacy of the dollar could be threatened by other, competing currencies such as a strong German mark, for instance; and in order to reduce and weaken this competition, they supported "monetary integration" schemes such as the creation of a European Central Bank (ECB) and the euro.</p> <div class="figure"><a href="http://mises.org/store/Tragedy-of-the-Euro-P10439.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/SS570_T.jpg" /></a></div> <p>And they realized that their ultimate dream of unlimited counterfeiting power would come true only if they succeeded in creating a US-dominated world central bank issuing a world paper currency such as the bancor or the phoenix; and so they helped set up and finance a multitude of organizations, such as the Council on Foreign Relations, the Trilateral Commission, the Bilderberg Group, etc., that promote this goal. As well, leading industrialists recognized the tremendous profits to be made from state-granted monopolies, from state-subsidies, and from exclusive cost-plus contracts in freeing or shielding them from competition, and so they, too, have allied themselves to and "infiltrated" the state.</p> <p>There are "accidents" in history, and there are carefully planned actions that bring about consequences that are unintended and unanticipated. But history is not just a sequence of accidents and surprises. Most of it is designed and intended. Not by common folks, of course, but by the power elites in control of the state apparatus. If one wants to prevent history from running its present, foreseeable course to unprecedented economic disaster, then, it is indeed imperative to arouse public indignation by exposing, relentlessly, the evil motives and machinations of these power elites, not just of those working within the state apparatus, but in particular also of those staying outside, behind the scenes and pulling the strings.</p> <p><strong>DAILY BELL:</strong> It has been our contention that just as the Gutenberg press blew up existing social structures in its day, so the Internet is doing that today. We believe the Internet may be ushering in a new Renaissance after the Dark Age of the 20th century. Agree? Disagree?</p> <p><strong>HOPPE:</strong> It is certainly true that both inventions revolutionized society and greatly improved our lives. It is difficult to imagine what it would be to go back to the pre-Internet age or the pre-Gutenberg era. I am skeptical, however, if technological revolutions in and of themselves also bring about moral progress and an advance toward greater freedom. I am more inclined to think that technology and technological advances are "neutral" in this regard.</p> <p>The Internet can be used to unearth and spread the truth as much as to spread lies and confusion. It has given us unheard of possibilities to evade and undermine <a href="http://mises.org/resources/4685/Our-Enemy-The-State">our enemy the state</a>, but it has also given the state unheard of possibilities of spying on us and ruining us. We are richer today, with the Internet, than we were, let's say, in 1900, without it (and we are richer not because of the state but in spite of it). But I would emphatically deny that we are freer today than we were in 1900. Quite to the contrary.</p> <p><strong>DAILY BELL:</strong> Any final thoughts? Can you tell us what you are working on now? Any books or websites you would like to recommend?</p> <div class="book-ad" id="main-ad"> <div class="caption">The Hoppe Collection</div> <div class="book-img"><a href="http://mises.org/store/Hoppe-Collection-P494.aspx"><img src="http://mises.org/store/Assets/ProductImages/HHHCC.jpg" width="200" border="0" /></a></div> <div class="caption">Save 15% when you buy all 9 books!</div> </div> <p><strong>HOPPE:</strong> I once deviated from my principle not to speak about my work until it was done. I have regretted this deviation. It was a mistake that I won't repeat. As for books, I recommend above all reading the major works of my two masters, <a href="http://mises.org/store/Mises-The-Complete-Collection-P258.aspx">Ludwig von Mises</a> and <a href="http://mises.org/store/Rothbard-The-Complete-Collection-P259.aspx">Murray Rothbard</a>, not just once, but repeatedly from time to time. Their work is still unsurpassed and will remain so for a long time to come. As for websites, I go most regularly to <a href="http://mises.org/">Mises.org</a> and to <a href="http://www.lewrockwell.com/">lewrockwell.com</a>.</p> <p>As for other sites, I have been called an extremist, a reactionary, a revisionist, an elitist, a supremacist, a racist, a homophobe, an anti-Semite, a right-winger, a theocrat, a godless cynic, a fascist and, of course, a must for every German, a Nazi. So, it should be expected that I have a foible for politically "incorrect" sites that every "modern," "decent," "civilized," "tolerant," and "enlightened" man is supposed to ignore and avoid.</p> <p><strong>DAILY BELL:</strong> Thank you for your time in answering these questions. It has been a special honor to address them to you in the context of your remarkable work.</p> <p><strong>HOPPE:</strong> You're welcome.</p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-44638000301696049612011-04-13T12:49:00.001-07:002011-04-13T12:49:49.880-07:00<div class="post-body entry-content"> <h1><span style="font-size:130%;">Tax Freedom Day -- Not</span></h1> <p>by Doug Bandow </p><p class="first">Americans finally finish working for the federal government on April 12 this year. That's three days later than last year, but still a couple weeks earlier than Tax Freedom Day in 2006 and 2007, April 24. The record in both peace and war was May 1 in 2000. Had Al Gore defeated George W. Bush in that year, TFD probably would have continued rising, as it had since Bill Clinton's election in 1992.</p> <p>Unfortunately, April 12 still isn't much to be happy about. TFD rose to April 12 in 1962, but quickly fell back. In 1967 TFD again hit April 12, eventually oscillating between April 16 and 24. TFD fell to April 19 in 1992 before beginning another sharp rise. As a percentage of income taxes hit 30 percent in 1969 and hovered around the level for years. The tax burden did not fall below 29.1 percent until 2003. This year that percentage will be 27.7, a welcome but only marginal improvement.</p> <p>Total taxes this year will cost Americans more than what they'll spend on food, shelter, and clothing combined. Not all of these purchases will prove worthwhile for all people, obviously. But compare their value to what the government does with their money. </p><div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/doug-bandow">Doug Bandow</a> is a Senior Fellow at the Cato Institute and the Senior Fellow in International Religious Persecution at the Institute on Religion and Public Policy. A former Special Assistant to President Ronald Reagan, he is author of </em><a href="http://www.amazon.com/Beyond-Good-Intentions-Christian-Worldview/dp/0891074988/?tag=catoinstitute-20">Beyond Good Intentions: A Biblical View of Politics</a><em> (Crossway).</em></p> <a class="head" href="http://www.cato.org/people/doug-bandow">More by Doug Bandow</a></div></div> <p>Taxpayers are bailing out virtually every interest known to man — plus a few not previously recognized. Banks get money. Auto companies get aid. Labor unions get benefits. Homeowners get help. Insurance companies get cash. Investment funds get guarantees. Property sellers get subsidies. Taxpayers get the bill.</p> <p>But all this pales in comparison with the cost of last year's health care legislation. Everyone knows that the administration and Congress, like the famed Isuzu salesman, were lying. Taxpayers soon will be paying off insurance companies, doctors, and pharmaceutical companies — just coincidentally all among the bill's most avid supporters — as well as people forced to buy high-priced health insurance. </p> <p>Americans also get the pleasure of subsidizing a gaggle of rich allies around the world, such as the Europeans, who are too busy supporting welfare states to maintain effective militaries. South Korea and Japan also are on the U.S. military dole, leaving the heavy lifting to Americans. Even corrupt Third World politicians, like Hamid Karzai, are on Washington's military payroll. America's ungrateful dependents now include the Libyan rebels, who blame the U.S. for the failure of their untrained, uncoordinated, and divided forces.</p> <p>Taxpayers pay for domestic "welfare" too, which has done so much to destroy families and communities. Welfare reform in 1996 reduced the damage, but the so-called "stimulus" bill reversed course. The latter also wasted money without promoting long-term growth. In fact, the Congressional Budget Office figured that this legislation, after providing a short-term boost, will permanently <em>reduce</em> economic activity starting around 2015. Which means working families will earn less while paying higher federal interest payments on the borrowed funds.</p> <p>There's so much more. A crowd favorite is pork barrel projects, used by big spending politicians to generate political support. Yes, I'm a thief, the lawmaker admits, and I stole from you, but I'll share a bit of the ill-gotten loot. Vote for me! Such is the appeal of democracy.</p> <p>No wonder two-thirds of Americans believe they are overtaxed. Eight of ten mainstream voters believe that they pay too much. But not the political class. According to Rasmussen Reports, 87 percent of America's governing elite, who decide how to spend everyone else's earnings, disagree. They see a penny not taxed as a penny not spent, defeating their role in life.</p> <p>More significantly, TFD doesn't mean much anymore. Taxes provided a relatively accurate measure of the burden of government when the budget was balanced — most recently in 2001. (Guess which president was most responsible for that budget: It wasn't a Republican.) When you finished paying taxes, you were actually done paying for government.</p> <p>No longer.</p> <p>The federal budget this year will run about $3.8 trillion, give or take a few dozen billion dollars, which hardly counts anymore. Borrowing will account for between $1.5 trillion and $1.65 trillion, depending on who is doing the estimating. That is roughly <em>40 percent of total federal outlays</em>. Unless Uncle Sam defaults on his obligations — a tempting thought, since it would cut taxpayers' present obligations while making future borrowing much more difficult — that money will eventually have to be paid.</p> <p>Although the borrowing binge is occurring during Barack Obama's presidency, the Republicans also are responsible. George Bush and the GOP Congress turned a surplus into a big deficit. </p> <p>They increased federal spending across-the-board. They created the Medicare drug benefit, with an unfunded liability of around $15 trillion. The president launched and Congress funded two unnecessary nation-building expeditions in distant Third World lands. And President Bush was the driving force behind TARP and assorted other bail-outs. Indeed, his officials admitted that they had no "metric" for the $700 billion TARP proposal; they just wanted a "big number." And they got it.</p> <p>In short, the GOP created a solid foundation for President Obama's Big Government empire.</p> <p>The Tax Foundation, which estimates Tax Freedom Day, acknowledges the problem. Since 2008, observes the Foundation, "deficits have been massive by any measure, and as a result, Tax Freedom Day may give the impression that the burden of government is smaller than it is. If the federal government were planning to collect enough in taxes during 2011 to finance all of its spending, it would have to collect about $1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12."</p> <p>That revised TFD would set a peacetime record. You have to go back to World War II to find a time when the U.S. government spent a larger proportion of the economy. And World War II was the greatest conflict in human history. A little "kinetic military action" in Libya for who knows what purpose doesn't come close.</p> <p>Unfortunately, there is little reason for optimism about the future. The congressional Republicans originally proposed to cut $61 billion from this year's expenditures, about 1.6 percent. Now they've settled for $22.5 billion less.</p> <p>House Budget Committee Chairman Paul Ryan has offered a thoughtful long-term plan that would make major reductions in entitlements as well as discretionary spending. But its political future is, to put it kindly, uncertain. It won't go anywhere with a Democratic Senate and president. It might not go anywhere even if the Republicans win control of both ends of Pennsylvania Avenue next year.</p> <p>The current budget numbers look frightening enough. But more spending is inevitable. Fannie Mae and Freddie Mac continue to lose money. The Federal Housing Administration is insuring more problem mortgages than ever. The FDIC continues to close banks. The Pension Benefit Guaranty Corporation continues to take over the pension plans of failed businesses. All of these and many other bills will eventually come due.</p> <p>The Obama administration has got America into its third unnecessary Middle Eastern war in a decade. With military forces still occupying Iraq eight years later and still fighting in Afghanistan nearly ten years later, who knows how long the U.S. will be stuck fighting, occupying, and reconstructing Libya. War is just another Big Government program with an equally large unfunded liability.</p> <p>Then there's Obamacare, assuming it is not repealed by Congress or overturned by the Supreme Court. By one estimate the legislation imposed an unfunded liability of over $13 trillion. No one knows for sure, since the official estimates were fudged by Congress. Permanent, non-political officials at the Centers for Medicare and Medicaid Services have repeatedly said, ever so politely, that the Democrats lied about the numbers. The Medicare cuts that were necessary to fund the program simply aren't going to happen: they are "very unlikely to be viable indefinitely," under the new reimbursement rates providers "would eventually be unwilling or unable to treat Medicare beneficiaries," and projections based on these changes "are very likely to seriously understate actual Medicare costs in the long-range future."</p> <p>Finally, there are the unfunded liabilities for Social Security, Medicare, and Medicaid. The federal government only develops an estimate for the first two, and their combined future red ink came to $107 trillion in 2009, the last reliable estimate. Medicaid is on a similar trajectory. Left unchanged, these three programs alone will eventually destroy federal finances. Yet even many avid members of the Tea Party don't want to touch what they see as "their" benefit programs.</p> <p>The fiscal train wreck is approaching. "The federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long-run," warned the CBO. Looking ahead just a decade, the agency reported: "To keep annual deficits and total federal debt from reaching levels that would substantially harm the economy, lawmakers would have to increase revenues significantly as a percentage of GDP, decrease projected spending sharply, or enact some combination of the two."</p> <p>Indeed, after the coming tsunami of spending, deficits, and debt, one hates to imagine the date of future Tax Freedom Days. Will there even be a tax freedom day? Maybe taxpayers will face the ultimate simplified tax form of just two lines: "1) How much did you earn? 2) Send it in."</p> <p>With the president and Congress attempting to provide a full service global welfare state, the IRS is likely to become a little like the Eagles' Hotel California, where you can check out but never leave. You will be able to earn money, but never spend it. After all, everything you own was long ago promised by Uncle Sam to someone else.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tax-freedom-day-not.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:47:00-07:00">12:47 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8757058128460698327">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8757058128460698327" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="182812427342108127"></a> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/blog-post_13.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:45:00-07:00">12:45 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=182812427342108127">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=182812427342108127" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5838316169380765406"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/when-intervention-is-easy.html">When Intervention Is Easy</a> </h3> <div class="post-body entry-content"> <h1>When Intervention Is Easy</h1> <p>by Harvey Sapolsky and Benjamin H. Friedman </p><p class="first"> </p><p class="first">America's halfhearted adventure in Libya falls within a cycle of U.S. military intervention since the end of the Cold War: Success brings hubris, hubris causes overreach and failure, and failure breeds caution - though not necessarily restraint. Once another cautious intervention seems to succeed, the cycle begins anew.</p> <p> The first major post-Cold War U.S. military intervention was cautious. Once an American-led coalition ejected Iraqi forces from Kuwait, in 1991, the first Bush administration resisted pressure to overthrow Saddam Hussein by marching on to Baghdad or fighting alongside Shiite insurgents. But many Americans saw their military's swift success as evidence that it could do nearly anything at low cost, including make nations from chaos.</p> <p> Two years later, the debacle in Somalia showed otherwise, fueling the timidity that followed in the face of the Rwandan genocide and the murderous disintegration of Yugoslavia. The Clinton administration did not stay out of the Balkan conflicts, of course, just as it did not quit enforcing no-fly zones over Iraq. But it limited the risks to U.S. forces, bombing from great heights and deploying peacekeepers only after the fighting had ceased.</p><blockquote class="pullquote"><p>Success brings hubris, hubris causes overreach and failure, and failure breeds caution - though not necessarily restraint.</p></blockquote> <p> That was the first post-Cold War cycle. The second, which began with the relatively cautious invasion of Afghanistan after 9/11, is now ending.</p> <p> The exaggeration of our successes in Bosnia and Kosovo - both of which became dysfunctional international protectorates that only nation-building enthusiasts can regard as victories - dimmed memories of Vietnam and Somalia. Rapid initial progress in Afghanistan encouraged the hubris that led to the disastrous Iraq war, as well as a more extensive and ever more frustrating effort in Afghanistan.</p> <p> But the flow of American blood and treasure required to prop up venal governments in those states eventually undercut enthusiasm for occupational warfare, especially amid an economic downturn.</p> <p> Power gives American presidents more choices than other leaders. U.S. military capabilities and wealth make almost any global action possible. And the Cold War that checked much of our proclivity for intervention is over.</p> <p> To fight as we do in Afghanistan, even most wealthy nations would have to hike taxes or slash other expenditures, provoking domestic opposition. We do it with less than 1 percent of gross domestic product, mostly borrowed. </p> <p> Because we can intervene relatively cheaply, temptation always beckons. The world never lacks for civil unrest whose victims we might save. Congress' halls are rarely free of emissaries claiming we could advance liberty by fighting for the would-be nation they represent. And few years pass without outraged editorials arguing that American values and interests compel our troops to occupy some bloody corner of the Earth. Unhappy memories of recent wars are one of the few domestic forces that restrain us from those fights.</p><div class="box2"> <div class="boxcontent"><p style="font-family:Georgia;"><em>Harvey M. Sapolsky is a professor emeritus of public policy and organization at the Massachusetts Institute of Technology. <a href="http://www.cato.org/people/benjamin-friedman">Benjamin H. Friedman</a> is a doctoral candidate at MIT and a research fellow at the Cato Institute.</em></p> <a class="head" href="http://www.cato.org/people/benjamin-friedman">More by Benjamin H. Friedman</a></div></div> <p> These contradictory impulses explain the incoherence of the U.S. war in Libya. The Obama administration naturally sympathized with rebels claiming to be democrats and overmatched by a particularly odious despot. But the two unpopular occupations already under way encouraged caution. The compromise is a limited air war meant to overthrow Moammar Gadhafi while minimizing the risk to U.S. service members and the cost to taxpayers.</p> <p> The president ruled out ground forces before he articulated war aims. He resists arming the rebels, has handed over combat missions to our allies, and pretends we are enforcing a no-fly zone only to protect civilians - a fiction required to maintain the alliance. Rarely has a nation gone to such lengths to show its disinterest in winning a war it is fighting.</p> <p> The allies' success defending rebel territory has not allowed the insurgents to fell the regime. If the stalemate lingers and costs mount, or anarchy engulfs post-Gadhafi Libya, the war will reinforce the caution brought about by Iraq and Afghanistan. But if things work out well enough for hawks to declare victory - if air power quickly allows the rebels to establish a revolutionary government - the resulting hubris will encourage more reckless campaigns. </p> <p> Caution in American military policy is fleeting. We are so powerful and secure that even military debacles are insufficient to permanently teach us restraint. That is both a good thing and an endless source of trouble. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/when-intervention-is-easy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:44:00-07:00">12:44 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5838316169380765406">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5838316169380765406" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6991247068717843266"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/congress-has-become-least-dangerous.html">Congress Has Become the Least Dangerous Branch</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Congress Has Become the Least Dangerous Branch</span></h1> <p>by Gene Healy </p><p class="first">In last week's budget standoff, the headlines had President Obama repeatedly "summoning" the speaker and the Senate majority leader to the White House. "Why," my colleague David Boaz asked, "doesn't the speaker 'summon' the president to what I think is the real seat of government?"</p> <p>It's a good point: Whether or not you score the budget deal as a win for the GOP, the casual way the media describes the president's role shows how dangerously far we've drifted toward one-branch rule.</p> <p>Congressmen of old "would have received as a personal affront" any message from the president calling on them to change their position, Massachusetts Sen. George Hoar wrote in his 1903 memoirs: "If they visited the White House, it was to give, not to receive advice." "In a republican government," the Federalist explains, "the legislative authority necessarily predominates," and is therefore most to be feared.</p> <blockquote class="pullquote"><p>In the shell game of modern American governance, we've let ourselves become easy marks.</p></blockquote> <p>Today, not so much. Consider the controversial "policy riders" that almost sank the budget deal. The measure defunding Planned Parenthood got most of the coverage, overshadowing important provisions aimed at restricting the Environmental Protection Agency's power to regulate greenhouse gases.</p> <p>Seizing on the Supreme Court's 2007 ruling that the Clean Air Act's definition of "pollutant" was broad enough to encompass CO2 — a gas essential to life on Earth — the Obama administration has begun to "legislate" global warming policy in an end-run around Congress.</p> <p>Whatever your views on climate change, you ought to find it unsettling that, here and elsewhere, most of the actual "law" in this country is crafted by unelected executive-branch bureaucrats.</p> <p>But that's where we are. A few months back, the <em>New York Times</em> reported that some 230 health regulators had descended on Bethesda — paying double rent for office space so they could immediately begin drafting more than 300 rules implementing Obamacare. Thanks to "mega-bills passed by Congress," the <em>Times</em> explained, regulators are issuing "hundreds of sweeping financial and health care regulations that will ultimately affect most Americans."</p> <p>As at home, so too abroad: having ceded its constitutional power, Congress sits on the sidelines and carps while the president wages war.</p> <p>Two weeks ago — nine days after we started bombing Libya — President Obama got around to explaining why. His televised address ran more than 3,000 words, but "Constitution" never appears — and "Congress" occurs only once: a passing reference to "consulting the bipartisan leadership of Congress."</p> <p>The president's supposed to do more than "consult"; the real "decider" is Congress. Our Constitution grants the legislature sufficient power to make talk of "co-equal branches" a misnomer.</p> <div class="box2"> <div class="boxcontent"> <span class="author_pub2" id="author_pic"></span><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/gene-healy">Gene Healy</a> is a vice president at the Cato Institute and the author of </em><a href="http://www.cato.org/store/books/cult-presidency-america-s-dangerous-devotion-executive-power-paperback">The Cult of the Presidency</a><em>.</em></p> <a class="head" href="http://www.cato.org/people/gene-healy">More by Gene Healy</a></div></div> <p>The constitutional scholar Charles Black once commented, "My classes think I am trying to be funny when I say that, by simple majorities," Congress could shrink the White House staff to one secretary, and that, with a two-thirds vote, "Congress could put the White House up at auction." (I sometimes find myself wishing they would.)</p> <p>But Professor Black wasn't trying to be funny: it's in Congress' power to do that. And if Congress can sell the White House, surely it can defund an illegal war and rein in a runaway bureaucracy.</p> <p>If they don't, it's because they like the current system. And why wouldn't they? It lets them take credit for passing high-minded, vaguely worded statutes, and take it again by railing against the bureaucracy when it imposes costs in the course of deciding what those statutes mean.</p> <p>But it's our fault as well. In the shell game of modern American governance, we've let ourselves become easy marks. Unless and until voters wise up and demand accountability, Congress will continue to take our money and shirk its duty.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/congress-has-become-least-dangerous.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:43:00-07:00">12:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6991247068717843266">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6991247068717843266" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7239816252331517310"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/fed-obliterates-savings-ethic.html">The Fed Obliterates the Savings Ethic</a> </h3> <div class="post-body entry-content"> <h1> The Fed Obliterates the Savings Ethic</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/627/Doug-French">Doug French</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/RainyDayPigs.jpg" alt="" border="0" /></div> <p>Depression babies learned early that "saving for a rainy day" was not something one hopes to do but a requirement. The saying originated when most people worked on the farm. And when it rained, the fields were too wet to plow, and the farmer — not to mention the hired hands — made no money.</p> <p>Of course, my grandfather was the diligent sort who would use rainy days to do required maintenance on his implements, noting with derision other farmers who spent rainy days at the bar in town. He believed they would surely end up with broken equipment when the sun would reappear, keeping them from making hay.</p> <p>So the idea of savings is not necessarily the return one receives on the money that's socked away, but the piece of mind that, when the weather doesn't cooperate, the saver has a little stash to tide him over. Of course, the vast majority of us don't have to worry about the weather.</p> <p>But an economic storm hit a couple years ago and plenty of people have not had work, rain or shine. Those who took heed of that old saw have no doubt weathered the storm better than those who didn't. Most financial advisors recommend that a person have three month's worth of living expenses saved — and some say six months worth, just in case. But how many people heed that advice?</p> <p>There is no caveat to the counsel that says, "Keep six months of savings around if the money is earning at least six percent." Even if the money sits there all shiny, not earning a thing, it's the liquidity and insurance against the unknown that's the issue.</p> <p>Unfortunately, a central bank's debauchery of the currency serves to raise people's time preferences and impair their judgment. In a blog post recently, I highlighted the advice of life coach and author John P. Strelecky, who <a href="http://www.marketwatch.com/Story/story/print?guid=2251581E-5BDD-11E0-9F0E-00212804637C">advises</a> people to spend their tax refunds on an experience they will remember forever, rather than saving the few hundred or thousand dollars that the IRS may be giving back.</p> <p>Live your life for today, says the life coach — a couple thousand bucks isn't going to matter anyway. I <a href="http://blog.mises.org/16324/life-coach-says-blow-that-refund-check/">posted to the Mises Blog</a> to point out how ludicrous this advice is. But most who commented sided with Strelecky:</p> <blockquote> <p>I think his advice is spot-on, at least given the constraints of the times in which we live. What's the point in saving if inflation will ravage whatever you manage to accumulate?</p> </blockquote> <blockquote> <p>You play by the rules of the game. Your savings growth will be puny due to pathetic interest rates, erased by inflation, and confiscated by a rapacious state. So go ahead, enjoy the "money" now, while it still has some value.</p> </blockquote> <blockquote> <p>Most people don't really have a better place to put the money than into a pleasurable experience, which is all you will want in the end.</p> </blockquote> <blockquote> <p>Gotta agree with the comments. Maybe not trips or other "experiences." But I feel safer with stuff than I do with Federal Reserve notes going forward.</p> </blockquote> <p>That's just what central bankers like to hear. They are worried about deflation. A few months ago, the Chicago Fed's Charles Evans <a href="http://online.wsj.com/article/SB10001424052748703843804575534043689519572.html">said</a>,</p> <blockquote> <p>It seems to me if we could somehow get lower real interest rates so that the amount of excess savings that is taking place relative to investment is lowered, that would be one channel for stimulating the economy.</p> </blockquote> <p>Lord Keynes was constantly worried that people were saving too much and consuming too little — thus the need for more and cheaper money to stimulate the economy. Mr. Bernanke is nothing if not a good Keynesian, and his low rates make even the savviest question whether to forgo consumption.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Walk-Away-The-Rise-and-Fall-of-the-Home-Ownership-Myth-P10434.aspx"><img src="https://mises.org/store/Assets/ProductImages/SS566.jpg" width="200" /></a></div> <div class="book-price"> <p><a href="http://mises.org/store/Walk-Away-The-Rise-and-Fall-of-the-Home-Ownership-Myth-P10434.aspx"><span style="text-decoration: line-through;">$10</span> $8</a></p> </div> </div> <p>And likely no retiree, when contemplating leaving the workforce, figured 1 percent interest rates (or less) into their retirement cash-flow planning. In a <a href="http://online.wsj.com/article/SB10001424052748703410604576216830941163492.html">front-page article</a>, the <i>Wall Street Journal</i> took a look at "retirees who find themselves on the wrong end of the Federal Reserve's epic attempt to rescue the economy with cheap money."</p> <p>The <i>WSJ</i> rightly points out that the Fed's low rates have been a windfall for banks and borrowers, but a problem for those needing income from their savings to live on. People who thought they played the game right, worked hard, saved money, and now want to take it easy, are panicked that money-market funds are throwing off but 24 basis points. "That's one-tenth the level of late 2007 and the lowest on records dating back to 1959," the <i>Journal</i> reports.</p> <p>As bad as the Fed-engineered low rates are for those trying to live off past savings, reporter Mark Whitehouse makes the point that the low rates keep young people from building up funds for the future — whether it's for emergencies or retirement. Working Americans put less money into financial assets last year than at anytime on record — except 2009, when people pulled money out. And while the Department of Commerce says the personal savings rate has risen to 5.8 percent, Whitehouse explains, "That's in large part because it counts reductions in personal debt, such as mortgages and credit-card balances, as savings." But most debt reduction, Whitehouse writes, has been driven by defaults, rather than saving.</p> <p>The Fed's interest-rate policy also leads people into taking more risk with their savings than they should. "That's why most of us are in the stock market, because there's no place else to go," says 70-year-old John Lehman, who would rather have his money in bank certificates of deposit but must resort to speculating. "I hope my assets don't run out before I die."</p> <p>Many retire with next to nothing as it is. According to AARP, 16 percent of Americans have not saved a dime for retirement, and nearly half have saved less than $50,000.</p> <p>Those with no savings are more dependent on government and others when the unexpected occurs, whether it's job loss or the washing machine quits. Professor Paul Cantor reminds us in his article, "Hyperinflation and Hyperreality: Mann's 'Disorder and Early Sorrow,'" that "money is a central source of stability, continuity, and coherence in any community. Hence to tamper with the basic money supply is to tamper with a community's sense of value."</p> <p>When the Fed makes saving seem futile and immediate pleasure seem rational, the world has been diabolically turned upside down. Just one step away from hyperinflation, the central banks' actions are threatening "to undermine and dissolve all sense of value in a society."</p> <p>"Thus inflation serves to heighten the already frantic pace of modern life, further disorienting people and undermining whatever sense of stability they may still have," Cantor explains.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Literature-and-the-Economics-of-Liberty-Spontaneous-Order-in-Culture-P642.aspx"><img src="http://images.mises.org/CantorCoxBook.jpg" border="0" /></a></div> </div> <p>The social order is upended in Mann's story as wealth is transferred from those who diligently saved all of their lives to speculators. As it was in the Weimar Germany that Mann describes, so it is today, as people believe it futile to sock away a little money here and there, and instead feel compelled to either speculate or just blow what they have on good times.</p> <p>And while the retirees mentioned in the <i>WSJ</i> article are being crippled financially, Cantor points out that Mann's portrayal of hyperinflation uncovers "something psychologically more debilitating happening to the older generation." Impetuous, high-time-preference behavior displayed by the young appears rational in an inflationary period, while prudence and conservatism appear to be not even quaint but downright silly.</p> <p>As Mann described so long ago, the world of inflation is the illusion of wealth, created by the government's printing press, distorting everything we see and perverting our judgment. Meanwhile the cry for stimulus continues, while our culture and values are buried under a pile of paper.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/fed-obliterates-savings-ethic.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:40:00-07:00">12:40 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7239816252331517310">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7239816252331517310" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="427599010181822961"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/why-monetary-expansion-must-stop.html">Why Monetary Expansion Must Stop</a> </h3> <div class="post-body entry-content"> <h1> Why Monetary Expansion Must Stop</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/1498/Patrick-Barron">Patrick Barron</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="editorial-preface"> <p>[Address delivered at the European Parliament in Brussels on March 16, 2011]</p> </div> <div class="figure"><img src="http://images.mises.org/PopGreenBalloon.jpg" alt="" border="0" /></div> <h2>Introduction: The Illusion of Unlimited Resources</h2> <p>The current problems faced by all the world's economies stem, primarily, from one source: the demise of sound money, whose quantity could not be increased without significant cost, and its replacement with fiat money that can be inflated to infinite amounts at almost no cost to the producer.</p> <p>Expansion of fiat money makes it appear to <i>all</i> market participants, including financial regulators, that there are more resources available than really exist. Thusly, all participants, including governments, embark on programs that cannot be completed; there just are not enough resources in the economy.</p> <p>Not only does fiat money create the illusion of greater wealth, it makes embarking on new projects irresistible. After all, does it not always appear that lack of money is all that stands between man and the fulfillment of all his dreams? Now, with unlimited quantities of fiat money, the day seems to have arrived when anything is possible. But this is an illusion.</p> <p>Throughout my talk I will refer to economic laws that act as impenetrable barriers to achieving the goals sought by monetary expansion. These are laws of human nature — to ignore them brings serious adverse consequences.</p> <p>Economics is a social and not a natural science, because man is a social being. His actions are not governed by physical stimuli but by preferences derived from subjective valuations, all of which are unknowable, undergo constant change, and therefore cannot be predicted. Nevertheless, we do know that man is rational; that he acts to attain goals which he believes will improve his satisfaction; that he employs scarce means to do so and that means imply costs; but since he expects to improve his satisfaction, he expects the costs to be less than the satisfaction to be attained; so man expects to profit from his actions. From this brief explanation of man as a rational being, we can derive irrefutable economic laws.</p> <h2>Two Evils of Monetary Expansion</h2> <p>There are two main evils of monetary expansion: (1) recurring financial crises and (2) expansion of the wealth-destroying welfare-warfare state.</p> <p>I'll start with why we continue to have recurring and ever more damaging financial crises. Then I will discuss very briefly the expansion of the wealth-destroying welfare-warfare state.</p> <h3>No Societal Benefit from Monetary Expansion</h3> <p>Expansion of fiat money denies the irrefutable economic law that money is subject to the <a href="http://wiki.mises.org/wiki/Marginal_utility">law of diminishing marginal utility</a>. This insight was explained by Ludwig von Mises in his 1912 classic, <i><a href="http://mises.org/resources/194/The-Theory-of-Money-and-Credit">The Theory of Money and Credit</a></i>. Mises explained that money is not "neutral"; money is a good and is subject to all the laws of economics as are all other goods. Because each new marginal unit conveys less utility than all previous units, and because money is fungible — meaning that each new unit is indistinguishable from monetary units already existing — then the purchasing power of all money is reduced.</p> <p>The first users of the new money benefit most from the newly created money. This is a tight circle nearest the event of the new money being created. Those furthest away from this event, who are in a wider circle of the general economy, all lose because this new money dilutes the value of each unit of money they are already holding. Think of it as pouring water into milk. Therefore, expansion of the money supply conveys no overall societal benefit.</p> <h3>Money Expansion Is Not Stimulative</h3> <p>Immediately we see that an increase in money cannot be stimulative overall. Although it can stimulate some parts of the economy (those who get the new money first), it can do so only at the expense of all other parts, violating another immutable law of economics, <a href="http://wiki.mises.org/wiki/Say%27s_law">Say's Law</a>, which essentially tells us that we can't get something for nothing. With the creation of new fiat money, wealth has been redistributed from the current holders of money — the rightful owners — to illegitimate new allocators who steal, without getting noticed, other people's money. The first or early receivers of the new money benefit at the expense of those who receive it later, through the market process, or do not receive it at all — for example, retirees living on privately accumulated wealth. The early receivers buy at existing lower prices, while later receivers pay higher prices.</p> <p>As this newly created money dilutes the existing money's purchasing power, we see this as high prices — later and not immediately. Higher overall prices are the logical consequence of any expansion of money. The price level can be thought of as the result of total monetary spending divided by the total supply of goods and services offered on the market. If the numerator (total spending) goes up or the denominator (total market supply of goods) goes down, the price level increases.</p> <p>Some may object to this explanation, saying that sometimes the price level remains relatively flat despite an increase in the quantity of money, because the total supply of goods increases enough to offset increases in total spending. My answer is that this is a justification for slow, planned inflation, which ignores damaging structural changes that still occur in the economy. I discuss these changes below.</p> <h3>The Prosperity Illusion Caused by a Rising Gross National Product</h3> <p>Unfortunately, increased spending creates the illusion of increased prosperity, because we measure prosperity by the growth in Gross National Product (GNP), a measure only of total spending, the numerator in the quantity-theory-of-money equation. Under sound money, GNP remains the same, because the quantity of money — and thusly, the quantity of total spending — remains unchanged.</p> <p>But fiat-money inflationary spending, caused by planned inflation of the money supply, is described as economic "growth." The more government inflates the quantity of money, the greater economic growth appears to be as measured by GNP. But this is an illusion. It is not growth at all. It is just a consequence of measuring higher prices.</p> <p>So far we have seen that fiat money does not stimulate the economy overall; it merely rewards some at the expense of others and creates higher overall prices. But the main structural damage, to which I earlier referred, occurs in the structure of production as manifested by recurring boom/bust cycles. Here is where fiat money and credit expansion cause pure capital consumption, robbing the future productive capability of the economy.</p> <h2>Malinvestment and the Austrian Business Cycle</h2> <p>In the mistaken belief that the economy can be stimulated into a higher level of production by more money, central bankers lower interest rates below the natural, market rate. The ultimate result of such intervention is destruction of capital through what Austrian economists call malinvestment. Capital is devoted to lines of production, primarily into longer-term investments, that will never be profitably completed.</p> <p>We must address this most pressing question: Why do so many businesses fail at the same time? Can it be that a mass incompetence spreads through the economy so that we experience a large-scale bust from time to time? Governments and central bankers focus on this bust and try to postpone it, thinking that this bust is the problem.</p> <div class="bigger pullquote">"Lower interest rates and increased government oversight provide nothing more than full employment for bureaucrats."</div> <p>But, ladies and gentlemen, I am here to tell you that the bust is not the problem. The problem is the boom and what created it in the first place. Fortunately this business-cycle phenomenon has been very well explained by Austrian economics. For those of you who have the time, I will be happy to explain the details of this after my talk. Suffice it to say that it is the intervention of the central bank that puts into motion the culprit of "artificial interest rates." These are false signals to businesses that there are new, real resources for investing in longer-term, capital-expansion projects. But there are no new, real resources for the successful and profitable completion of all new boom-time projects.</p> <h3>Coercion Is No Solution</h3> <p>Rather than cease its monetary intervention, government counters these consequences with coercion in the form of increasing bureaucratic oversight of banks, mandatory increases in bank capital requirements, and the creation of bailout funds.</p> <p>Increasing bureaucratic oversight rests on two false ideas — that bureaucrats <i>can</i> discern potential problems to which bankers are blinded and that, unlike bankers, bureaucrats are not greedy by nature, so they will not take on increased risk. But government bureaucrats can no more detect errors, culpable or otherwise, than can the financial community they are supposed to regulate. The normal economic cues are hidden by expansion of money and manipulation of the interest rate. Regulators and systemic-risk analysts are no more able to detect these errors than anyone else. All the oversight boards will accomplish is adding cost to the banking system and possibly creating what <a href="http://en.wikipedia.org/wiki/Wilhelm_R%C3%B6pke">Wilhelm Röpke</a> called repressed inflation (what we today call stagflation), whereby production declines and employment falls while prices rise.</p> <p>Bailout funds are the culprits behind any increased risk taking by greedy bankers. These funds create moral hazard, whereby market participants know that some or all of the cost of increased risk will be borne by others but that benefits will not be shared. In addition, due to the law of diminishing marginal utility of money, the funds themselves continue, rather than cure, the problem initially caused by money expansion, for the funds are formed by even more money expansion.</p> <p>All of this intervention leads back to the evils of redistribution of wealth, higher prices, and more malinvestment — a vicious and destructive cycle.</p> <h3>The Cognitive Dissonance of Money Expansion Followed by Increased Coercion</h3> <p>This entire process creates a psychological phenomenon called cognitive dissonance; that is, holding two conflicting thoughts in the mind at the same time. Expansion of the money supply and lowering of interest rates in order to stimulate the economy is not compatible with increased bank capital requirements and oversight boards to detect systemic risk.</p> <p>The government expects that a lower rate of interest will promote more economic activity through increased lending. Yet the law of diminishing marginal utility applies also to lending . The only way to make more loans is to lend to less creditworthy customers. Yet this is the situation that more oversight attempts to prevent. Therefore, even if the government's oversight boards could detect less creditworthy borrowers, the very purpose of lower interest rates is to make loans to such people.</p> <p>This makes no sense from an economic or financial point of view, but it does make sense from a political, command-and-control point of view. So lower interest rates and increased government oversight become nothing more than full employment for bureaucrats, who enjoy the perks of power and who bear none of the responsibility for their actions.</p> <p>The choice is clear: either more of the same — that is, more fiat-money pumping and more regulation, with increasingly worse outcomes — or an abandonment of monetary expansion and bank oversight by government along with their replacement by sound money and the normal checks and balances of the free market.</p> <h2>Expansion of the Welfare-Warfare State</h2> <p>I'll now discuss the second main evil of fiat-money growth: expansion of the wealth-destroying welfare-warfare state.</p> <p>Because the wealth-generating sector of society has nothing to gain and everything to lose by the expansion of the welfare-warfare state, under a sound-money environment these wealth-destroying activities would be vigorously opposed. But under a fiat-money system, many of those who benefit from the unhampered market economy are blinded by the money illusion and believe that government spending does not come out of their own pockets. Therefore, it is no coincidence that the Progressive movement in the late-19th and early-20th centuries coincided with both increased government spending <i>and</i> an increase in the money supply to be provided by central banks.</p> <p>Like all unsustainable enterprises, the welfare-warfare state depends upon ever-increasing injections of fiat money; otherwise, its programs collapse rather quickly. Ever-larger increases in fiat money merely delay the day of reckoning, because the ordinary cues of higher taxes and higher interest rates are avoided for a time. So fiat money leads government to make promises that it ultimately cannot deliver.</p> <p>When government finally becomes aware that it <i>is</i> limited in what it can accomplish, it is faced with a stark choice. If it scraps programs, it risks civil unrest from the program constituents. The alternative is to continue the programs in name only, resorting to price controls and rationing. National healthcare systems are the best examples of this phenomenon. Not only is demand for healthcare services greatly increased — a true tragedy of the commons, whereby commonly held resources are plundered to extinction — but the quantity and quality of services actually decline.</p> <p>The Medicare system in America tries to solve this problem by underpaying for services and then forcing providers, via threats to pull their business licenses, to absorb Medicare losses in the hopes of making up the difference with private-pay patients. To avoid losses and remain in business, medical practices counter with lower service quality and delays. Our neighbor to the north rations care to those who can live and suffer long enough to advance to the front of long waiting lists. In a recent suit brought by a Canadian patient, a Canadian judge stated that "access to a waiting list is not access to healthcare."</p> <h2>The Long-Term Solution: Liberate Money and the Economy from Government Control</h2> <p>A free-market economy, which includes money freely chosen by the market, does not suffer disequilibria, periodic booms and busts, or high unemployment. The constant search of market participants to better themselves will result in cooperation, rather than confrontation, with all peoples everywhere. The liberal order, as envisioned by scholars such as Ludwig von Mises, can expand to encompass the entire world, resulting in peace and ever-expanding prosperity for all cooperating men everywhere.</p> <p>Sound money is essential; therefore, the first order of business for Europe is to stabilize the euro. Stop inflating its supply. Stop purchasing sovereign debt. Anchor the euro in gold and/or silver. Try to gain international cooperation when doing so, in order to prevent large swings in gold and silver imports and exports when other nations see that they must emulate Europe. Nevertheless, if this is not possible, anchor the euro in gold or silver anyway.</p> <p>Then begin the process of privatizing money by eliminating legal-tender laws. Let the market use whatever money it chooses, even multiple monies. Some Austrian economists believe that eliminating legal-tender laws is all that is required of government, that the free market will choose the money that it finds best suits its purposes. This may be the case; the attempt is certainly worth the effort. A practical step would be to relax legal-tender laws in one or both of two ways: the nonenforcement of legal-tender laws or the decriminalization of private money production. Nonprosecution would open the door to private, competing monies.</p> <p>End all regulation of banking, including deposit guarantees, which only cause moral hazard. But enforce 100 percent reserves against money certificates and demand deposits. Reform the commercial code to provide legal protections for bank depositors just as is the case with any warehouse bailment.</p> <p>But allow complete freedom of loan banking, whereby the banker takes legal ownership of funds for some set period of time, with a promise to return the funds, plus interest, at the end of the contract. This form of loan banking can be risk free, as when customer loans to the bank are less than the bank's capital account. It is also noninflationary, because the bank lends only funds that have been transferred to it and it alone — the depositor gives up his claim to the funds for the length of the contract. Undoubtedly, under such legal protections and known risks, the public would be better served than by the current, fractional-reserve system of constant expansion and contraction of the money supply via bank lending.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/What-Has-Government-Done-to-Our-Money-P262.aspx"><img alt="WHGDtOM?" src="http://mises.org/store/Assets/ProductImages/B777.jpg" width="200" border="0" /></a></div> </div> <h3>Rules for the Statesman</h3> <p>Those in positions of power, such as all of you here, must be guided by reason and not emotion. Adopt as your motto <a href="http://en.wikipedia.org/wiki/Kant">Immanuel Kant's</a> categorical imperative. Pass only laws that are universally applicable — that benefit all men at all times and in all places. Treat men as ends in themselves rather than as means to other ends, such as national or regional pride.</p> <p>Not many laws will meet these high standards. Certainly, printing money, which reduces the purchasing power of money already in circulation and benefits some at the expense of others, fails this test, as does buying sovereign debt at subsidized interest rates. Both of these practices lead not to freedom and security but to suffering and conflict. I ask you to lead as statesmen always do: based on principles that work, are true, and are real.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/why-monetary-expansion-must-stop.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:39:00-07:00">12:39 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=427599010181822961">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=427599010181822961" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4584784257924857997"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/mind-of-hans-hermann-hoppe.html">The Mind of Hans-Hermann Hoppe</a> </h3> <div class="post-body entry-content"> <h1> The Mind of Hans-Hermann Hoppe</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/164/HansHermann-Hoppe">Hans-Hermann Hoppe</a> </p> <div class=" fb_reset" id="fb-root"> </div> <div class="figure"><img src="http://images.mises.org/HoppePoster.jpg" alt="HOPPE" /></div> <div class="editorial-preface"> <p>[The <i>Daily Bell</i>, exclusive interview, March 27, 2011.]</p> </div> <p><strong>DAILY BELL:</strong> Please answer these questions as our readers were not already aware of your fine work and considered opinions. Let's jump right in. Why is democracy "<a href="https://mises.org/resources/2179/democracy-the-god-that-failed">The God That Failed</a>?"</p> <p><strong>DR. HANS-HERMANN HOPPE:</strong> The traditional, premodern state form is that of a (absolute) monarchy. The democratic movement was directed against kings and the classes of hereditary nobles. Monarchy was criticized as being incompatible with the basic principle of "equality before the law." It rested on privilege and was unfair and exploitative. Democracy was supposed to be the way out. In opening participation and entry into state-government to everyone on equal terms, so the advocates of democracy claimed, equality before the law would become reality and true freedom would reign. But this is all a big error.</p> <p>True, under democracy everyone can become king, so to speak, not only a privileged circle of people. Thus, in a democracy no <em>personal</em> privileges exist. However,<em> functional</em> privileges and privileged functions exist. Public officials, if they act in an official capacity, are governed and protected by "public law" and thereby occupy a privileged position vis-à-vis persons acting under the mere authority of "private law." In particular, public officials are permitted to finance or subsidize their own activities through taxes. That is, they are permitted to engage in, and live off, what in private dealings between private law subjects is prohibited and considered "theft" and "stolen loot." Thus, privilege and legal discrimination — and the distinction between rulers and subjects — will not disappear under democracy.</p> <p>Even worse: Under monarchy, the distinction between rulers and ruled is clear. I know, for instance, that I will never become king, and because of that I will tend to resist the king's attempts to raise taxes. Under democracy, the distinction between rulers and ruled becomes blurred. The illusion can arise "that we all rule ourselves," and the resistance against increased taxation is accordingly diminished. I might end up on the receiving end: as a tax <em>recipient</em> rather than a tax <em>payer</em>, and thus view taxation more favorably.</p> <p>And moreover, as a hereditary monopolist, a king regards the territory and the people under his rule as his personal property and engages in the monopolistic exploitation of this "property." Under democracy, monopoly and monopolistic exploitation do not disappear. Rather, what happens is this: instead of a king and a nobility who regard the country as their private property, a temporary and interchangeable caretaker is put in monopolistic charge of the country. The caretaker does not own the country, but as long as he is in office he is permitted to use it to his and his protégés' advantage. He owns its current use — <em>usufruct</em> — but not its capital stock. This does not eliminate exploitation. To the contrary, it makes exploitation less calculating and carried out with little or no regard to the capital stock. Exploitation becomes shortsighted and capital consumption will be systematically promoted.</p> <p><strong>DAILY BELL:</strong> If democracy has failed what would you put in its place? What is the ideal society? Anarchocapitalism?</p> <div class="figure-left"><a href="http://mises.org/store/Democracy-The-God-That-Failed-P240.aspx"><img src="http://mises.org/store/Assets/ProductImages/B283.jpg" /></a></div> <p><strong>HOPPE:</strong> I prefer the term "private-law society." In a private-law society, every individual and institution is subject to one and the same set of laws. No public law granting privileges to specific persons or functions exists in this society. There is only private law (and private property), equally applicable to each and everyone. No one is permitted to acquire property by means other than through original appropriation of previously unowned things, through production, or through voluntary exchange; and no one possesses a privilege to tax and expropriate. Moreover, no one is permitted to prohibit anyone else from using his property in order to enter any line of production he wishes and compete against whomever he pleases.</p> <p><strong>DAILY BELL:</strong> How would law and order be provided in this society? How would your ideal justice system work?</p> <p><strong>HOPPE:</strong> In a private-law society the production of law and order — of security — would be undertaken by freely financed individuals and agencies competing for a voluntarily paying (or not-paying) clientele — just like the production of all other goods and services. How this system would work can be best understood in contrast to the workings of the present, all-too-familiar statist system. If one wanted to summarize in one word the decisive difference — and advantage — of a competitive security industry as compared to the current statist practice, it would be: <em>contract</em>.</p> <p>The state operates in a legal vacuum. There exists no contract between the state and its citizens. It is not contractually fixed what is actually owned by whom, and what, accordingly, is to be protected. It is not fixed what service the state is to provide, what is to happen if the state fails in its duty, nor what the price is that the "customer" of such "service" must pay. Rather, the state unilaterally fixes the rules of the game and can change them, per legislation, during the game.</p> <p>Obviously, such behavior is inconceivable for freely financed security providers. Just imagine a security provider, whether police, insurer, or arbitrator, whose offer consisted in something like this: I will not contractually guarantee you anything. I will not tell you what I oblige myself to do if, according to your opinion, I do not fulfill my service to you — but in any case, I reserve the right to unilaterally determine the price that you must pay me for such undefined service. Any such security provider would immediately disappear from the market due to a complete lack of customers.</p> <p>Each private, freely financed security producer must instead offer its prospective clients a contract. And these contracts must, in order to appear acceptable to voluntarily paying consumers, contain clear property descriptions as well as clearly defined mutual services and obligations. Each party to a contract, for the duration or until the fulfillment of the contract, would be bound by its terms and conditions; and every change of terms or conditions would require the unanimous consent of all parties concerned.</p> <p>Specifically, in order to appear acceptable to security buyers, these contracts must contain provisions about what will be done in the case of a conflict or dispute between the protector or insurer and his own protected or insured clients as well as in the case of a conflict between different protectors or insurers and their respective clients.</p> <div class="bigger pullquote"><strong>DAILY BELL:</strong> Are you denying, then, that we need the state to defend us?<br /> <strong>HOPPE:</strong> Indeed.</div> <p>And in this regard only one mutually agreeable solution exists: in these cases the conflicting parties contractually agree to arbitration by a mutually trusted but independent <em>third party</em>. And as for this third party: it, too, is freely financed and stands in competition with other arbitrators or arbitration agencies. Its clients, i.e., the insurers and the insured, expect of it that it come up with a verdict that is recognized as fair and just by all sides. Only arbitrators capable of forming such judgments will succeed in the arbitration market. Arbitrators incapable of this and viewed as biased or partial will disappear from the market.</p> <p><strong>DAILY BELL:</strong> Are you denying, then, that we need the state to defend us?</p> <p><strong>HOPPE:</strong> Indeed. The state does not defend <em>us</em>; rather, the state aggresses against us and it uses <em>our </em>confiscated property to defend <em>itself</em>. The standard definition of the state is this: The state is an agency characterized by two unique, logically connected features. First, the state is an agency that exercises a territorial monopoly of ultimate decision making. That is, the state is the ultimate arbiter and judge in every case of conflict, including conflicts involving itself and its agents. There is no appeal above and beyond the state. Second, the state is an agency that exercises a territorial monopoly of taxation. That is, it is an agency that can unilaterally fix the price that its subjects must pay for the state's service as ultimate judge.</p> <p>Based on this institutional setup you can safely predict the consequences: First, instead of preventing and resolving conflict, a monopolist of ultimate decision making will <em>cause and provoke</em> conflict in order to settle it to its own advantage. That is, the state does not recognize and protect existing law, but it perverts law through legislation. Contradiction number one: the state is a lawbreaking law protector. Second, instead of defending and protecting anyone or anything, a monopolist of taxation will invariably strive to <em>maximize his expenditures</em> on protection and at the same time <em>minimize the actual production</em> of protection. The more money the state can spend and the less it must work for this money, the better off it is. Contradiction number two: the state is an expropriating property protector.</p> <p><strong>DAILY BELL:</strong> Are there any good laws and regulations?</p> <p><strong>HOPPE:</strong> Yes. There are a few, simple, good laws that almost everyone intuitively recognizes and acknowledges and that can also be <em>demonstrated</em> to be "true" and "good" laws. <em>First</em>: If there were no interpersonal conflicts and we all lived in perfect harmony there would be no need for any law or norm. It is the purpose of laws or norms to help <em>avoid</em> otherwise unavoidable conflict. Only laws that achieve this can be called good laws. A law that <em>generates</em> conflict rather than helps to avoid it is contrary to the purpose of laws, i.e., it is a bad, dysfunctional or perverted law.</p> <div class="figure-left"><a href="http://mises.org/media.aspx"><img src="http://mises.org/images3/misesmedia.gif" width="200" /></a></div> <p><em>Second:</em> Conflicts are possible only if and insofar as goods are <em>scarce</em>. People clash because they want to use one and the same good in different, incompatible ways. Either I win and get my way or you win and get your way. We cannot both be "winners." In the case of scarce goods, then, we need rules or laws helping us decide between rival, conflicting claims. In contrast, goods that are "free," i.e., goods that exist in superabundance, that are inexhaustible or infinitely reproducible, are not and cannot be a source of conflict. Whenever I use a nonscarce good it does not in the slightest diminish the supply of this good available to you. I can do with it what I want and you can do with it what you want at the same time. There is no loser. We are both winners; and hence, as far as nonscarce goods are concerned, there is never any need for laws.</p> <p><em>Third:</em> All conflict concerning scarce goods, then, can be avoided only if every good is <em>privately owned</em>, i.e., exclusively controlled by one specified individual(s) rather than another, and it is always clear which thing is owned, and by whom, and which is not. And in order to avoid all possible conflict<em> from the beginning of mankind on</em>, it is only necessary to have a rule regulating the first, <em>original appropriation</em> of previously unowned, nature-given goods as private property.</p> <p>In sum then, there are essentially three "good laws" that assure conflict-free interaction, or "eternal peace": (a) he who first appropriates something previously on-owned is its exclusive owner (as the <em>first</em> appropriator he cannot have come into conflict with anyone else as everyone else appeared on the scene only <em>later</em>); (b) he who produces something with his body and homesteaded goods is owner of his product, provided he does not thereby damage the physical integrity of others' property; and (c) he who acquires something from a previous or earlier owner by means of voluntary exchange, i.e., an exchange that is deemed <em>mutually</em> beneficial, is its owner.</p> <p><strong>DAILY BELL:</strong> How, then, does one define freedom? As the absence of state coercion?</p> <p><strong>HOPPE:</strong> A society is free if every person is recognized as the exclusive owner of his own (scarce) physical body, if everyone is free to appropriate or "homestead" previously unowned things as private property, if everyone is free to use his body and his homesteaded goods to produce whatever he wants to produce (without thereby damaging the physical integrity of other peoples' property), and if everyone is free to contract with others regarding their respective properties in any way deemed mutually beneficial. Any interference with this constitutes an act of aggression, and a society is unfree to the extent of such aggressions.</p> <p><strong>DAILY BELL:</strong> Where do you stand on copyright? Do you believe that intellectual property doesn't exist as Kinsella has proposed?</p> <div class="figure"><a href="http://mises.org/store/Against-Intellectual-Property-P523.aspx"><img src="http://mises.org/store/Assets/ProductImages/SS362.jpg" /></a> <div class="pullquote">"In fact, the entire world can copy me,<br /> and yet nothing is taken from me."</div> </div> <p><strong>HOPPE:</strong> I agree with my friend Kinsella that the idea of intellectual property rights is not just wrong and confused but dangerous. And I have already touched upon why this is so. Ideas — recipes, formulas, statements, arguments, algorithms, theorems, melodies, patterns, rhythms, images, etc. — are certainly goods (insofar as they are good, not bad, recipes, etc.), but they are not scarce goods.</p> <p>Once thought and expressed, they are free, inexhaustible goods. I whistle a melody or write down a poem, then you hear the melody or read the poem and reproduce or copy it. In doing so you have not taken anything away from me. I can whistle and write as before. In fact, the entire world can copy me, and yet nothing is taken from me. (If I didn't want anyone to copy my ideas I only have to keep them to myself and never express them.)</p> <p>Now imagine I had been granted a property right in my melody or poem such that I could prohibit you from copying it or demand a royalty from you if you do. First: Doesn't that imply, absurdly, that I, in turn, must pay royalties to the person (or his heirs) who invented whistling and writing, and further on to those, who invented sound making and language, and so on?</p> <p>Second: In preventing you from or making you pay for whistling my melody or reciting my poem, I am actually made a (partial) owner of <em>you</em> — of your physical body, your vocal chords, your paper, your pencil, etc. — because you did not use anything but your own property when you copied me. If you can no longer copy me, then, this means that I, the intellectual property owner, have expropriated you and your "real" property. Which shows: intellectual property rights and real property rights are incompatible, and the promotion of intellectual property must be seen as a most dangerous attack on the idea of "real" property (in scarce goods).</p> <p><strong>DAILY BELL:</strong> We have suggested that if people want to enforce generational copyright that they do so on their own, taking on the expense and attempting through various means to confront copyright violators with their own resources. This would put the onus of enforcement on the pocket book of the individual. Is this a viable solution — to let the market itself decide these issues?</p> <p><strong>HOPPE:</strong> That would go a long way in the right direction. Better still: more and more courts in more and more countries, especially countries outside the orbit of the US-dominated, Western-government cartel, would make it clear that they don't hear cases of copyright and patent violations any longer and regard such complaints as a ruse for big Western-government-connected firms, such as pharmaceutical companies, for instance, to enrich themselves at the expense of other people.</p> <p><strong>DAILY BELL:</strong> What do you think of Ragnar Redbeard's <a href="http://en.wikipedia.org/wiki/Might_is_Right">Might Is Right</a>?</p> <p><strong>HOPPE:</strong> You can give two very different interpretations of this statement. I see no difficulty with the first one. It is that I know the difference between "might" and "right," and, as a matter of empirical fact, might is in fact frequently right. Most if not all of "public law," for instance, is might masquerading as right.</p> <p>The second interpretation is that I don't know the difference between "might" and "right," because there <em>is</em> no difference. Might <em>is</em> right and right <em>is</em> might. This interpretation is self-contradictory; because if you wanted to defend this statement as a true statement in an argument with someone else you are in fact recognizing your opponent's property right in his own body. You do not aggress against him in order to bring him to the correct insight. You allow him to come to the correct insight on his own.</p> <p>That is, you admit, at least implicitly, that you <em>do</em> know the difference between right and wrong. Otherwise there would be no purpose in arguing. The same, incidentally, is true for Hobbes's famous dictum that one man is another man's wolf. In claiming this statement to be true, you actually prove it to be false.</p> <p><strong>DAILY BELL:</strong> It has been suggested that the only way to reorganize society is via a return to the clans and tribes that characterized <i>Homo sapiens</i> communities for tens of thousands of years. Is it possible that as part of this devolution, clan or tribal justice could be reemphasized?</p> <p><strong>HOPPE:</strong> I don't think that we, in the Western world, can go back to clans and tribes. The modern, democratic state has destroyed clans and tribes and their hierarchical structures, because they stood in the way of the state's drive toward absolute power. With clans and tribes gone, we must try it with the model of a private law-society that I have described. But wherever traditional, hierarchical clan and tribe structures still exist, they should be supported; and attempts to "modernize" "archaic" justice systems along Western lines should be viewed with utmost suspicion.</p> <p><strong>DAILY BELL:</strong> You have also written extensively on money and monetary affairs. Is a gold standard necessary for a free society?</p> <div class="figure"><a href="http://mises.org/store/Case-for-a-100-Percent-Gold-Dollar-The-P64.aspx"><img src="http://mises.org/store/Assets/ProductImages/B162.jpg" /></a></div> <p><strong>HOPPE:</strong> In a free society, the market would produce money, as all other goods and services. There would be no such thing as money in a world that was perfectly certain and predictable. But in a world with unpredictable contingencies people come to value goods also on account of their marketability or salability, i.e., as media of exchange. And since a more easily and widely salable good is preferable to a less easily and widely salable good as a medium of exchange, there is an inevitable tendency in the market for a single commodity to finally emerge that differs from all others in being the most easily and widely salable commodity of all. This commodity is called money.</p> <p>As the most easily salable good of all, it provides its owner with the best humanly possible protection against uncertainty, in that it can be employed for the instant satisfaction of the widest range of possible needs. Economic theory has nothing to say as to what commodity will acquire the status of money. Historically, it happened to be gold. But if the physical makeup of our world would have been different or is to become different from what it is now, some other commodity would have become or might become money. The market will decide.</p> <p>In any case, there is no need for government to get involved in any of this. The market has provided and will provide <em>some</em> money commodity, and the production of that commodity, whatever it is, is subject to the same forces of supply and demand as the production of everything else.</p> <p><strong>DAILY BELL:</strong> How about the free-banking paradigm? Is private fractional banking ever to be tolerated or is it a crime? Who is to put people in jail for private fractional banking?</p> <p><strong>HOPPE:</strong> Assume gold is money. In a free society you have free competition in gold mining, you have free competition in gold minting, and you have freely competing banks. The banks offer various financial services: of money safekeeping, clearing services, and the service of mediating between savers and borrower-investors. Each bank issues its own brand of "notes" or "certificates" documenting the various transactions and resulting contractual relations between bank and client. These bank notes are freely tradable. So far so good.</p> <p>Controversial among free bankers is only the status of fractional-reserve deposit banking and bank notes. Let's say A deposits ten ounces of gold with a bank and receives a note (a money substitute) redeemable at par on demand. Based on A's deposit, then, the bank makes a loan to C of nine ounces of gold and issues a note to this effect, again redeemable at par on demand.</p> <p>Should this be permitted? I don't think so. For there are now two people, A and C, who are the exclusive owner of one and the same quantity of money. A logical impossibility. Or put differently, there are only ten ounces of gold, but A is given title to ten ounces and C holds title to nine ounces. That is, there are more property titles than there is property. Obviously this constitutes fraud, and in all areas except money, courts have also considered such a practice fraud and punished the offenders.</p> <p>On the other hand, there is no problem if the bank tells A that it will pay interest on his deposit, invest it, for instance, in a money-market mutual fund made up of highly liquid short-term financial papers, and make its best efforts to redeem A's shares in that investment fund on demand in a fixed quantity of money. Such shares may well be very popular and many people may put their money into them instead of into regular deposit accounts. But as shares of investment funds they would never function as money. They would never be the most easily and widely saleable commodity of all.</p> <p><strong>DAILY BELL:</strong> Where do you stand on the current central-banking paradigm? Is central banking as it is currently constituted the central disaster of our time?</p> <div class="figure-left"><a href="http://mises.org/store/End-the-Fed-P619.aspx"><img src="http://mises.org/store/Assets/ProductImages/B938.jpg" /></a></div> <p><strong>HOPPE:</strong> Central banks are certainly one of the greatest mischief-makers of our time. They, and in particular the Fed, have been responsible for destroying the gold standard, which has always been an obstacle to inflationary policies, and replacing it, since 1971, with a pure paper money standard (fiat money). Since then, central banks can create money virtually out of thin air.</p> <p>More paper money cannot make a society richer, of course — it is just more printed paper. Otherwise, why is it that there are still poor countries and poor people around? But more money makes its monopolistic producer (the central bank) and its earliest recipients (the government and big, government-connected banks and their major clients) richer at the expense of making the money's late and latest receivers poorer.</p> <p>Thanks to the central banks' unlimited money-printing power, governments can run ever-higher budget deficits and pile up ever more debt to finance otherwise impossible wars, hot and cold, abroad and at home, and engage in an endless stream of otherwise unthinkable boondoggles and adventures. Thanks to the central bank, most "monetary experts" and "leading macro-economists" can, by putting them on the payroll, be turned into government propagandists "explaining," like alchemists, how stones (paper) can be turned into bread (wealth).</p> <p>Thanks to the central bank, interest rates can be artificially lowered all the way down to zero, channeling credit into less and least credit-worthy projects and hands (and crowding out worthy projects and hands), and causing ever greater investment bubble-booms, followed by ever-more spectacular busts. And thanks to the central bank, we are confronted with a dramatically increasing threat of an impending hyperinflation when the chickens finally come home to roost and the piper must be paid.</p> <p><strong>DAILY BELL:</strong> We have often pointed out that the Seven Hills of Rome were initially independent societies, just like the Italian city-states during the Renaissance and the 13 colonies of the US republic. It seems great empires start as individual communities where people can leave one community if they are oppressed and go nearby to start afresh. What is the driving force behind this process of centralization? What are the building blocks of empire?</p> <p><strong>HOPPE:</strong> All states must begin small. That makes it easy for people to <a href="http://mises.org/daily/4881/The-Art-of-Not-Being-Governed">run away</a>. Yet states are by nature aggressive, as I have already explained. They can externalize the cost of aggression onto others, i.e., hapless taxpayers. They don't like to see productive people run away, and so they try to capture them by expanding their territory. The more productive people the state controls, the better off it will be.</p> <p>In this expansionist desire, they run into opposition by other states. There can be only one monopolist of ultimate jurisdiction and taxation in any given territory. That is, the competition between different states is eliminative. Either A wins and controls a territory, or B. Who wins? At least in the long run, that state will win — and take over another's territory or establish hegemony over it and force it to pay tribute — that can parasitically draw on the comparatively more productive economy. That is, other things being the same, internally more "liberal" states (in the classic European sense of "liberal") will tend to win over less "liberal," i.e., illiberal or oppressive states.</p> <p>Looking only at modern history, we can so explain first the rise of liberal Great Britain to the rank of the foremost world empire and then, subsequently, that of the liberal United States. And we can understand a seeming paradox: why it is, that internally liberal imperial powers like the United States tend to be more aggressive and belligerent in their foreign policy than internally oppressive powers, such as the former Soviet Union. The liberal US empire was sure to win with its foreign wars and military adventures, while the oppressive Soviet Union was afraid that it might lose.</p> <p>But empire building also bears the seeds of its own destruction. The closer a state comes to the ultimate goal of world domination and one-world government, the less reason there is to maintain its internal liberalism and do instead what all states are inclined to do anyway, i.e., to crack down and increase their exploitation of whatever productive people are still left.</p> <p>Consequently, with no additional tributaries available and domestic productivity stagnating or falling, the empire's internal policies of bread and circuses can no longer be maintained. Economic crisis hits, and an impending economic <a href="http://mises.org/store/Meltdown-P557.aspx">meltdown</a> will stimulate decentralizing tendencies, separatist and secessionist movements, and lead to the breakup of empire. We have seen this happen with Great Britain, and we are seeing it now with the United States and its empire apparently on its last leg.</p> <p>There is also an important monetary side to this process. The dominant empire typically provides the leading international-reserve currency, first Britain with the pound sterling and then the United States with the dollar. With the dollar used as reserve currency by foreign central banks, the United States can run a permanent "deficit without tears."</p> <p>That is, the United States need not pay for its steady excesses of imports over exports as is normal between "equal" partners, in having to ship increasingly more exports abroad (exports paying for imports). Rather, instead of using their export earnings to buy American goods for domestic consumption, foreign governments and their central banks, as a sign of their vassal status vis-à-vis a dominant United States, use their paper-dollar reserves to buy up United States government bonds to help <em>Americans</em> to continue consuming beyond their means.</p> <div class="figure-left"><a href="http://mises.org/store/Bull-in-China-A-P10419.aspx"><img src="http://mises.org/store/Assets/ProductImages/B977.jpg" /></a></div> <p>I do not know enough about China to understand why it is using its huge dollar reserves to buy up US-government bonds. After all, China is not supposed to be a part of the US empire. Maybe its rulers have read too many American economics textbooks and now believe in alchemy, too. But if only China would dump its US treasuries and accumulate gold reserves instead, that would be the end of the US empire and the dollar as we know it.</p> <p><strong>DAILY BELL:</strong> Is it possible that a shadow of impossibly wealthy families located in the city of London is partially responsible for all this? Do these families and their enablers seek world government by elites? Is it a conspiracy? Do you see the world in these terms: as a struggle between the centralizing impulses of elites and the more democratic impulses of the rest of society?</p> <p><strong>HOPPE:</strong> I'm not sure if conspiracy is still the right word, because in the meantime, thanks to people such as <a href="http://en.wikipedia.org/wiki/Carroll_Quigley">Carroll Quigley</a>, for instance, much is known about what is going on. In any case, it is certainly true that there are such impossibly rich families, sitting in London, New York City, Tel Aviv, and elsewhere, who have recognized the immense potential for personal enrichment in the process of state- and empire-building.</p> <p>The heads of big banking houses played a key role in the founding of the Fed, because they realized that central banking would allow their own banks to inflate and expand credit on top of money and credit created by the central bank — and that a "lender of last resort" was instrumental in allowing them to reap private profits as long as things would go well and to socialize costs if they wouldn't.</p> <p>They realized that the classical gold standard stood as a natural impediment to inflation and credit expansion, and so they helped set up first a phony gold standard (the gold-exchange standard) and then, after 1971, a pure fiat-money regime. They realized that a system of freely fluctuating national-fiat currencies was still imperfect as far as inflationist desires are concerned, in that the supremacy of the dollar could be threatened by other, competing currencies such as a strong German mark, for instance; and in order to reduce and weaken this competition, they supported "monetary integration" schemes such as the creation of a European Central Bank (ECB) and the euro.</p> <div class="figure"><a href="http://mises.org/store/Tragedy-of-the-Euro-P10439.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/SS570_T.jpg" /></a></div> <p>And they realized that their ultimate dream of unlimited counterfeiting power would come true only if they succeeded in creating a US-dominated world central bank issuing a world paper currency such as the bancor or the phoenix; and so they helped set up and finance a multitude of organizations, such as the Council on Foreign Relations, the Trilateral Commission, the Bilderberg Group, etc., that promote this goal. As well, leading industrialists recognized the tremendous profits to be made from state-granted monopolies, from state-subsidies, and from exclusive cost-plus contracts in freeing or shielding them from competition, and so they, too, have allied themselves to and "infiltrated" the state.</p> <p>There are "accidents" in history, and there are carefully planned actions that bring about consequences that are unintended and unanticipated. But history is not just a sequence of accidents and surprises. Most of it is designed and intended. Not by common folks, of course, but by the power elites in control of the state apparatus. If one wants to prevent history from running its present, foreseeable course to unprecedented economic disaster, then, it is indeed imperative to arouse public indignation by exposing, relentlessly, the evil motives and machinations of these power elites, not just of those working within the state apparatus, but in particular also of those staying outside, behind the scenes and pulling the strings.</p> <p><strong>DAILY BELL:</strong> It has been our contention that just as the Gutenberg press blew up existing social structures in its day, so the Internet is doing that today. We believe the Internet may be ushering in a new Renaissance after the Dark Age of the 20th century. Agree? Disagree?</p> <p><strong>HOPPE:</strong> It is certainly true that both inventions revolutionized society and greatly improved our lives. It is difficult to imagine what it would be to go back to the pre-Internet age or the pre-Gutenberg era. I am skeptical, however, if technological revolutions in and of themselves also bring about moral progress and an advance toward greater freedom. I am more inclined to think that technology and technological advances are "neutral" in this regard.</p> <p>The Internet can be used to unearth and spread the truth as much as to spread lies and confusion. It has given us unheard of possibilities to evade and undermine <a href="http://mises.org/resources/4685/Our-Enemy-The-State">our enemy the state</a>, but it has also given the state unheard of possibilities of spying on us and ruining us. We are richer today, with the Internet, than we were, let's say, in 1900, without it (and we are richer not because of the state but in spite of it). But I would emphatically deny that we are freer today than we were in 1900. Quite to the contrary.</p> <p><strong>DAILY BELL:</strong> Any final thoughts? Can you tell us what you are working on now? Any books or websites you would like to recommend?</p> <div class="book-ad" id="main-ad"> <div class="caption">The Hoppe Collection</div> <div class="book-img"><a href="http://mises.org/store/Hoppe-Collection-P494.aspx"><img src="http://mises.org/store/Assets/ProductImages/HHHCC.jpg" width="200" border="0" /></a></div> <div class="caption">Save 15% when you buy all 9 books!</div> </div> <p><strong>HOPPE:</strong> I once deviated from my principle not to speak about my work until it was done. I have regretted this deviation. It was a mistake that I won't repeat. As for books, I recommend above all reading the major works of my two masters, <a href="http://mises.org/store/Mises-The-Complete-Collection-P258.aspx">Ludwig von Mises</a> and <a href="http://mises.org/store/Rothbard-The-Complete-Collection-P259.aspx">Murray Rothbard</a>, not just once, but repeatedly from time to time. Their work is still unsurpassed and will remain so for a long time to come. As for websites, I go most regularly to <a href="http://mises.org/">Mises.org</a> and to <a href="http://www.lewrockwell.com/">lewrockwell.com</a>.</p> <p>As for other sites, I have been called an extremist, a reactionary, a revisionist, an elitist, a supremacist, a racist, a homophobe, an anti-Semite, a right-winger, a theocrat, a godless cynic, a fascist and, of course, a must for every German, a Nazi. So, it should be expected that I have a foible for politically "incorrect" sites that every "modern," "decent," "civilized," "tolerant," and "enlightened" man is supposed to ignore and avoid.</p> <p><strong>DAILY BELL:</strong> Thank you for your time in answering these questions. It has been a special honor to address them to you in the context of your remarkable work.</p> <p><strong>HOPPE:</strong> You're welcome.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/mind-of-hans-hermann-hoppe.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:38:00-07:00">12:38 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4584784257924857997">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4584784257924857997" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5362678727841107757"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/chris-matthews-paul-ryans-medicare-plan.html">Chris Matthews: Paul Ryan's Medicare Plan 'Going to Kill Half the People...</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/chris-matthews-paul-ryans-medicare-plan.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T12:36:00-07:00">12:36 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5362678727841107757">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5362678727841107757" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3097837363447705508"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/clintons-failed-state-warning.html">Clinton's ‘Failed State’ Warning</a> </h3> <div class="post-body entry-content"> <h1>Clinton's ‘Failed State’ Warning Threatens Libya as NATO Can't Stem Chaos</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Flavia Krause-Jackson and Patrick Donahue</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="NATO Secretary General Anders Fogh Rasmussen " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ibn4Z.GKDNRU" /> </div> <p class="caption">NATO Secretary General Anders Fogh Rasmussen. Photographer: John Thys/AFP/Getty Images </p> </div> </div> </div> <p>U.S. Secretary of State Hillary Clinton’s early warning that <a href="http://topics.bloomberg.com/libya/">Libya</a> may become a failed state risks turning into reality as three weeks of Western military intervention have failed to stem the chaos that’s split the country in half. </p> <p>Clinton on March 2 said Libya may become a “giant Somalia.” NATO Secretary General Anders Fogh Rasmussen on April 11 raised the possibility of a Libyan “failed state.” Moussa Koussa, <a href="http://topics.bloomberg.com/muammar-qaddafi/">Muammar Qaddafi</a>’s lieutenant who defected last month, warned also that day of a Somalia-like collapse. </p> <p>“It looks like a very untenable situation,” Geoff Porter, an analyst at North African Risk Consulting, said in an interview from <a href="http://topics.bloomberg.com/new-york/">New York</a>. “Where we are heading is a de facto partition, between Tripolitania and Cyrenaica,” the historic names for western and eastern Libya. </p> <p>The seven-week-old uprising aimed at ending Qaddafi’s 42- year rule has pulled a coalition led by the North Atlantic Treaty Organization into Libya and split the country between the oil-rich east, controlled by rebels, and Qaddafi’s stronghold in the west. <a href="http://www.bloomberg.com/apps/quote?ticker=ENI:IM" title="Get Quote" class="web_ticker">Eni SpA (ENI)</a>, the biggest foreign oil producer in Libya, said last month its worst fear was that a breakdown in authority would shut production for years. </p> <h2>Oil Exports Hurt </h2> <p>Anarchy like that in Somalia, where areas have been ungoverned since a 1991 civil war, or in Sudan, whose southern portion voted to secede this year, would exacerbate concerns about oil investments. Libyan crude oil exports would be limited to about 29 percent of pre-crisis levels at first, if peace permitted all state-operated fields to return to full production, Nomura Holdings Inc. said in an April 7 report. </p> <p>Foreign <a href="http://topics.bloomberg.com/oil-companies/">oil companies</a> evacuated expatriate workers and “the shortage of human capital makes it difficult to bring all the fields back into production,” the report said. </p> <p>Clinton and her NATO counterparts will meet tomorrow in Berlin to discuss next steps for the Libya mission. Foreign ministers and other officials from the “contact group” of nations involved in Libya are meeting today in Doha, Qatar. </p> <p>“If Libya can be held together, it will not be a failed state,” said <a href="http://topics.bloomberg.com/elliott-abrams/">Elliott Abrams</a>, senior fellow at the <a href="http://topics.bloomberg.com/council-on-foreign-relations/">Council on Foreign Relations</a> in Washington. </p> <p>Oil production in Libya, which has <a href="http://topics.bloomberg.com/africa/">Africa</a>’s largest oil reserves, dwindled to a “trickle” last month, according to the <a href="http://topics.bloomberg.com/international-energy-agency/">International Energy Agency</a>. In January, Libya was Africa’s third-largest producer. </p> <h2>Crude Down </h2> <p>Crude oil erased earlier gains in New York to trade near its lowest price in two weeks. Oil for May delivery fell as much as 88 cents, or 0.8 percent, to $105.37 a barrel on the <a href="http://topics.bloomberg.com/new-york-mercantile-exchange/">New York Mercantile Exchange</a>, the lowest price since March 31, and was at $105.50 at 9:08 a.m. London time. </p> <p>If the rebels can control the eastern part of Libya, maximum oil flow will be around 300 million barrels a day, Michael Lo, a Hong Kong-based analyst at Nomura, said in response to an e-mailed question. </p> <p>Preliminary data show global oil supplies beginning to look “thin” as the Libyan fight strains spare production capacity held by the Organization of Petroleum Exporting Countries, the IEA said yesterday in its monthly Oil Market Report. </p> <p>NATO’s Rasmussen said prolonged fighting would invite “terrorists and extremists” such as al-Qaeda to exploit the disarray and called for a political settlement “sooner rather than later.” The danger was also flagged by Koussa, who most recently was Qaddafi’s foreign minister and previously the Libyan regime’s spy chief. </p> <h2>Avoid Civil War </h2> <p>“I ask everybody to avoid taking Libya into civil war,” Koussa told BBC television in his first remarks since abandoning Qaddafi and flying to the U.K. on March 30. “This would lead to so much blood and Libya would be a new <a href="http://topics.bloomberg.com/somalia/">Somalia</a>. More than that, we refuse to divide Libya. The unity of Libya is essential to any solution and settlement.” </p> <p>Somalia has become a haven for extremists in its central and southern regions. A Western-backed government controls a swath of the capital Mogadishu, where it fends off the Islamist al-Shabaab militia, which the U.S. accuses of having links with al-Qaeda. The country also is home to pirates who operate off the Horn of Africa, menacing trade in the <a href="http://topics.bloomberg.com/indian-ocean/">Indian Ocean</a>. </p> <p>Libya, whose post-colonial history has been dominated by Qaddafi’s dictatorship, also has divisions drawn along tribal lines and lacks political parties or a constitution. The country is a colonial construct, forged under Italian rule by fascist dictator Benito Mussolini, who in 1934 combined the once-Ottoman provinces of Tripolitania, Cyrenaica and Fezzan. </p> <h2>Tribal Divisions </h2> <p>David Smock, an analyst at the Washington-based United States Institute of Peace, said Libya’s tribal divisions are parallel to clan rivalries in Somalia, where squabbling and animosity preclude national unity. </p> <p>“Most failed states end up failed states because they have ethnic divisions and it is difficult to coordinate all the groups,” Smock said by phone from <a href="http://topics.bloomberg.com/washington/">Washington</a>. </p> <p>Rebels this week turned down an African Union cease-fire plan that would leave Qaddafi in power. NATO, operating under a United Nations mandate, has used its firepower to cripple Qaddafi’s air force and destroy an estimated 30 percent of the regime’s military hardware. </p> <p>Preventing a partition and forcing Qaddafi’s exit have been non-negotiable conditions set by a coalition still divided on whether to arm rebels in a bid to break the stalemate. </p> <p>U.K. Foreign Secretary <a href="http://topics.bloomberg.com/william-hague/">William Hague</a> said only Qaddafi’s relinquishment of power will mean the end of NATO’s military campaign. “It will end with the departure of Qadaffi,” Hague told BBC Radio 4 from Qatar today. </p> <h2>Artificial State </h2> <p>Alessandro Politi, a former adviser to the Italian Defense Ministry, said by telephone from <a href="http://topics.bloomberg.com/rome/">Rome</a> that keeping Libya whole flies in the face of history. </p> <p>“All this talk of unity is somewhat ridiculous when we are talking about an artificial state,” Politi said. “Qaddafi ruled with an iron fist, keeping it together, but the real Libya is a loose collection of tribes.” </p> <p>Should the impasse continue, Libya risks joining African neighbors Chad and <a href="http://topics.bloomberg.com/sudan/">Sudan</a> to become one of the most unstable nations in a <a href="http://www.foreignpolicy.com/articles/2010/06/21/2010_failed_states_index_interactive_map_and_rankings" title="Open Web Site" rel="external">2010 failed-state index</a>, assembled by Foreign Policy and the Fund for Peace. The index ranks states according to 12 measures including demographic pressures, public services and human rights. It now groups Libya with countries such as Mexico and Ukraine as “borderline.” </p> <p>Somalia, Chad and Sudan top the list. Sudan has become divided since almost 99 percent of Southern Sudanese who cast ballots in a Jan. 9-15 referendum voted for the oil-rich region to secede from Sudan, according to the Southern Sudan Referendum Commission. </p> <h2>Unwelcome Option </h2> <p>Still, such a division appears to be an unwelcome option on both sides of the divide in Libya. </p> <p>Unlike in Somalia, “Libyans on both sides agree that the unity of the country is essential,” said <a href="http://www.ronaldbrucestjohn.com/" title="Open Web Site" rel="external">Ronald Bruce St John</a>, an author of three books about Libya, including “Libya: Continuity and Change” published in February. “The Qaddafi regime will continue to try to reunite the country through force of arms, and the rebel side will continue to insist on a unified Libya without Qaddafi and his family.” </p> <p>Asked about the prospect of a Sudan-like secession, State Department spokesman Mark Toner said it was “premature to talk about any eventuality.” </p> <p>“It is a difficult situation,” Toner told reporters on April 11 in Washington. “We believe that we can continue to apply political pressure on Qaddafi and his regime so that he gets the message that it’s time for him to go.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/clintons-failed-state-warning.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-13T10:23:00-07:00">10:23 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3097837363447705508">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3097837363447705508" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="4083505373732825187"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/obamas-debt-cutting-plan.html">Obama's Debt-Cutting Plan</a> </h3> <h1>Obama's Debt-Cutting Plan Will Confront Challenge of Finding 'Sweet Spot'</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Julie Hirschfeld Davis and Hans Nichols</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="U.S. President Barack Obama " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iwm1rpp6H9pA" /> </div> <p class="caption">U.S. President Barack Obama is expected to announce long-term proposals for cutting the federal deficit tomorrow, following a budget deal he reached with congressional leaders last week that averted a government shutdown. Photographer: Joshua Roberts/Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Shelby Interview on U.S. Budget Deficit " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ix0ZNbNubgDM" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68638246/">Play Video</a></div> </div> <p class="caption"> April 13 (Bloomberg) -- U.S. Senator Richard Shelby, a Republican from Alabama, talks about the need to cut the U.S. budget deficit. President Barack Obama today will outline a path to reining in the nation’s long-term debt through reductions in entitlement spending and increased taxes on the wealthy while seeking to draw a sharp contrast with Republican proposals, according to a person familiar with the plan. Shelby speaks with Peter Cook on Bloomberg Television's "In the Loop." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Comeback America Initiative's Walker Interview " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ieG5J0lrqncE" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68637962/">Play Video</a></div> </div> <p class="caption"> April 13 (Bloomberg) -- David Walker, chief executive officer of Comeback America Initiative, discusses the outlook for the U.S. budget deficit and President Barack Obama's speech today on cutting the nation's debt. Walker speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="UBS's Donovan on U.S., Euro-Zone Debt " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=igncWRxXYmkQ" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68618520/">Play Video</a></div> </div> <p class="caption"> April 13 (Bloomberg) -- Paul Donovan, deputy head of global economics at UBS AG, discusses the debt burden in the euro zone and U.S. He talks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg) </p> </div> </div> </div> <p>President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> joins the discussion today over reducing the nation’s debt in a familiar position: accused of being late to the debate and facing party members on both sides skeptical of his intent. </p> <p>His challenge will be to find some form of middle ground with a plan embracing entitlement cuts anathema to many Democrats and tax increases that Republicans have called a non- starter. </p> <p>The president’s speech today must go beyond the budget he proposed in February so “markets and relatively impartial political observers judge that he met his own mark, without going so far as to further antagonize the unhappy members of his own coalition,” said Bill Galston, a <a href="http://www.brookings.edu/" title="Open Web Site" rel="external">Brookings Institution</a> scholar in Washington. “That’s the sweet spot.” </p> <p>Obama will try to show he’s willing to work with Republicans on debt reduction yet still “preserve the ability to draw a contrast in 2012” as he seeks re-election, said Karen Finney, a former spokeswoman for the <a href="http://topics.bloomberg.com/democratic-party/">Democratic Party</a>. He needs to say that Republicans “want to end Medicare versus here’s what I want to do,” she said. </p> <h2>‘Presidential Dilemma’ </h2> <p>Senator <a href="http://topics.bloomberg.com/richard-durbin/">Richard Durbin</a> of <a href="http://topics.bloomberg.com/illinois/">Illinois</a>, his chamber’s No. 2 Democrat, said Obama faces the “classic presidential dilemma, having been criticized by members of both parties for not stepping in quickly enough on budget issues and now facing fire as he wades into the debt debate. </p> <p>“I suppose they were waiting to see how the conversation would evolve, and where they would be asked to go,” Durbin said today at the Bloomberg Breakfast in Washington, referring to the Obama administration. </p> <p>A broad group of Senate Republicans and Democrats has pressed Obama to endorse a goal of cutting the deficit by at least $4 trillion over 10 years, in line with a report last year by leaders of the his own bipartisan debt commission and a plan released last week by Republican House Budget Committee Chairman <a href="http://topics.bloomberg.com/paul-ryan/">Paul Ryan</a> of <a href="http://topics.bloomberg.com/wisconsin/">Wisconsin</a>. </p> <p>“You need a package that’s in that range -- roughly $4 trillion -- to get the debt back on track and to secure a strong future for the <a href="http://topics.bloomberg.com/united-states/">United States</a>,” Democratic Senator Kent Conrad of <a href="http://topics.bloomberg.com/north-dakota/">North Dakota</a>, head of his chamber’s Budget Committee,, said in an interview yesterday. </p> <h2>‘Specificity’ </h2> <p>“People need to hear his ideas as to how to meet that standard,” said Senator <a href="http://topics.bloomberg.com/rob-portman/">Rob Portman</a>, an Ohio Republican and director of the White House budget office under President <a href="http://topics.bloomberg.com/george-w.-bush/">George W. Bush</a>. “The more specificity, the better, if we’re actually going to get something done.” </p> <p>The president will call for tax increases on higher-income Americans and reductions in entitlement spending, as well as Pentagon cuts topping $150 billion, according to people familiar with the plan. Obama’s approach will draw on the debt panel leaders’ proposal for $3.8 trillion in budget savings through a mix of tax increases and spending reductions. </p> <p>He will reject Ryan’s idea to replace Medicare with a voucher-like system for future recipients, a person familiar with the plan said. </p> <p>Last week’s proposal by Ryan would reduce the deficit by $4.4 trillion over 10 years, mostly through deep spending cuts. It would lower the top corporate and individual tax rates from 35 percent to 25 percent and cap spending on Medicaid health care for the poor. </p> <h2>Income-Tax Cuts </h2> <p>Republicans who criticized Obama for failing to lead on deficit reduction in his February budget proposal are demanding details on how he would curb the growth of Medicare and Medicaid. They also reject any rollback of income-tax cuts for high earners. </p> <p>Senate Minority Leader <a href="http://topics.bloomberg.com/mitch-mcconnell/">Mitch McConnell</a>, a Kentucky Republican, described Obama’s speech as an overdue acknowledgement of “problems that the rest of the country has been waiting for him to address. It’s unfortunate that he had to be dragged into this discussion.” </p> <p>In the House, Speaker <a href="http://topics.bloomberg.com/john-boehner/">John Boehner</a> called tax increases “a non-starter.” </p> <p>Some Democrats had fumed that Obama wasn’t involved enough in talks on the budget for this fiscal year, which began Oct. 1. It wasn’t until a few days before a threatened shutdown last week that the president became directly involved, holding daily meetings at the White House to hash out a deal with Republicans that cuts spending by more than #38 billion. </p> <h2>Prized Programs </h2> <p>Now, some Democrats say they are concerned Republicans are dominating the budget debate and undercutting prized government programs. They are urging Obama not to embrace entitlement changes, particularly given that Ryan’s proposals on Medicare and Medicaid provide a clear contrast to take to voters. </p> <p>“From my perspective, the Medicare program is the best anti-poverty program we have ever put in place in this country,” Senator <a href="http://topics.bloomberg.com/patty-murray/">Patty Murray</a>, the <a href="http://topics.bloomberg.com/washington/">Washington</a> Democrat who heads her party’s Senate campaign arm, said yesterday. “We need to make sure it is there for the future and not undermine it.” </p> <p>Senator <a href="http://topics.bloomberg.com/max-baucus/">Max Baucus</a> of <a href="http://topics.bloomberg.com/montana/">Montana</a>, chairman of the Finance Committee, said he expects Obama to “try to come across as balanced compared to the Ryan plan, which is unbalanced.” </p> <p>“Ryan basically reduces deficits on the backs of average Americans,” Baucus said. “I think the president is going to say, ‘Hey, that’s not fair.’” </p> <h2>Not ‘a Penny’ </h2> <p>Democratic-leaning advocacy groups are pressuring Obama not to endorse more spending cuts, particularly in entitlement programs. The <a href="http://boldprogressives.org/home" title="Open Web Site" rel="external">Progressive Change</a> Campaign Committee in Washington asked Obama supporters to withhold donations to his re-election campaign if he backs cuts to Medicare or Medicaid. </p> <p>Obama shouldn’t “ask for a penny of my money or an hour of my time in 2012” if he supports such reductions, said the group’s e-mail petition to supporters. </p> <p>Obama had little choice but to offer a plan after Ryan grabbed attention with his proposal, said Stephen Hess, a <a href="http://www.brookings.edu/" title="Open Web Site" rel="external">Brookings Institution</a> scholar. </p> <p>“He’s been pushed into a corner by Ryan,” Hess said. “Everybody can be against Ryan, but everybody still pats him on the back for courage, so what kind of a profile in courage will it be if the president just lets Republicans carry the ball?” </p> <p>Sixty-four senators, evenly split between the two parties, wrote to Obama last month pressing him to lead an effort to slash the nation’s debt through spending cuts and tax increases, along the lines of a bipartisan group of six senators working on a plan based on the debt commission leaders’ report. </p> <p>“I continue to believe that if we start from a bipartisan basis, we’ve got a better chance of actually getting the job done,” said Democrat Mark Warner of <a href="http://topics.bloomberg.com/virginia/">Virginia</a>, co-leader of the six senators. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-81116149605741091352011-04-12T15:26:00.001-07:002011-04-12T15:26:57.773-07:00<div class="post-body entry-content"> <h1> The Tyranny of Government Courts and Prisons</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/299/Murray-N-Rothbard">Murray N. Rothbard</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/BehindBars.jpg" alt="" border="0" /></div> <div class="editorial-preface"> <p>[Excerpted from <a href="http://mises.org/resources/1010/For-a-New-Liberty-The-Libertarian-Manifesto"><i>For a New Liberty</i></a> (1973)]</p> </div> <p>Compulsory labor permeates our legal and judicial structure. Thus, much-venerated judicial procedure rests upon <i>coerced testimony</i>. Since it is axiomatic to libertarianism that all coercion — in this case, all coerced labor — against everyone except convicted criminals be eliminated, this means that compulsory testimony must be abolished as well. In recent years, it is true, the courts have been alive to the Fifth Amendment protection that no alleged criminal be forced to testify against himself — to provide the material for his own conviction. The legislatures have been significantly weakening this protection by passing immunity laws, offering immunity from prosecution if someone will testify against his fellows — and, furthermore, compelling the witness to accept the offer and testify against his associates. But compelling testimony from anyone for any reason is forced labor — and, furthermore, is akin to kidnapping, since the person is forced to appear at the hearing or trial and is then forced to perform the labor of giving testimony. The problem is not only the recent immunity laws; the problem is to eliminate <i>all</i> coerced testimony, including the universal subpoenaing of witnesses to a crime, and then forcing them to testify. In the case of witnesses, there is no question whatever of their being guilty of a crime, so the use of compulsion against them — a use that no one has questioned until now — has even less justification than compelling testimony from accused criminals.</p> <p>In fact, the entire power to subpoena should be abolished, because the subpoena power compels attendance at a trial. Even the accused criminal or tortfeasor should not be forced to attend his own trial, since he has not yet been convicted. If he is indeed — according to the excellent and libertarian principle of Anglo-Saxon law — innocent until proven guilty, then the courts have no right to compel the defendant to attend his trial. For remember, the <i>only</i> exemption to the Thirteenth Amendment's prohibition of involuntary servitude is "except as a punishment for crime whereof the party shall have been duly convicted." An accused party has not yet been convicted. The most the court should be able to do, then, is to notify the defendant that he is going to be tried, and <i>invite</i> him or his lawyer to attend; otherwise, if they choose not to, the trial will proceed <i>in absentia</i>. Then, of course, the defendant will not enjoy the best presentation of his case.</p> <p>Both the Thirteenth Amendment and the libertarian creed make the exception for the convicted criminal. The libertarian believes that a criminal loses his rights to the extent that he has aggressed upon the rights of another, and therefore that it is permissible to incarcerate the convicted criminal and subject him to involuntary servitude to that degree. In the libertarian world, however, the <i>purpose</i> of imprisonment and punishment will undoubtedly be different; there will be no "district attorney" who presumes to try a case on behalf of a nonexistent "society," and then punishes the criminal on "society's" behalf. In that world the prosecutor will always represent the <i>individual victim</i>, and punishment will be exacted to redound to the benefit of that victim. Thus, a crucial focus of punishment will be to force the criminal to repay — make restitution to — the victim. One such model was a practice in colonial America. Instead of incarcerating, say, a man who had robbed a farmer in the district, the criminal was coercively indentured out to the farmer — in effect, "enslaved" for a term — there to work for the farmer until his debt was repaid. Indeed, during the Middle Ages, restitution to the victim was the dominant concept of punishment. Only as the State grew more powerful did the governmental authorities — the kings and the barons — encroach more and more into the compensation process, increasingly confiscating more of the criminal's property for themselves and neglecting the hapless victim. And as the emphasis shifted from restitution to punishment for abstract crimes "committed against the State," the punishments exacted by the State upon the wrongdoer became more severe.</p> <p>As Professor Schafer writes, "As the state monopolized the institution of punishment, so the rights of the injured were slowly separated from penal law." Or, in the words of the turn-of-the-century criminologist William Tallack,</p> <blockquote><p>It was chiefly owing to the violent greed of feudal barons and medieval ecclesiastical powers that the rights of the injured party were gradually infringed upon, and finally, to a large extent, appropriated by these authorities, who exacted a double vengeance, indeed, upon the offender, by forfeiting his property to themselves instead of to his victim, and then punishing him by the dungeon, the torture, the stake or the gibbet. But the original victim of wrong was practically ignored.<a class="noteref" name="ref1" href="http://mises.org/daily/5199/The-Tyranny-of-Government-Courts-and-Prisons#note1">[1]</a></p></blockquote> <p>At any rate, while the libertarian does not object to prisons <i>per se</i>, he does balk at several practices common to the present judicial and penal system. One is the lengthy jail term imposed upon the defendant while awaiting trial. The constitutional right to a "speedy trial" is not arbitrary but a way of minimizing the length of involuntary servitude <i>before</i> conviction for a crime. In fact, except in those cases where the criminal has been caught red-handed and where a certain presumption of guilt therefore exists, it is impossible to justify <i>any</i> imprisonment before conviction, let alone before trial. And even when someone is caught red-handed, there is an important reform that needs to be instituted to keep the system honest: subjecting the police and the other authorities to the same law as everyone else. As will be discussed further below, if everyone is supposed to be subject to the same criminal law, then exempting the authorities from that law gives them a legal license to commit continual aggression. The policeman who apprehends a criminal and arrests him, and the judicial and penal authorities who incarcerate him before trial and conviction — all should be subject to the universal law. In short, if they have committed an error and the defendant turns out to be innocent, then these authorities should be subjected to the same penalties as anyone else who kidnaps and incarcerates an innocent man. Immunity in pursuit of their trade should no more serve as an excuse than Lieutenant Calley was excused for committing atrocities at My Lai in the course of the Vietnam war.<a class="noteref" name="ref2" href="http://mises.org/daily/5199/The-Tyranny-of-Government-Courts-and-Prisons#note2">[2]</a></p> <p>The granting of <i>bail</i> is a halfhearted attempt to ease the problem of incarceration before trial, but it is clear that the practice of bail discriminates against the poor. The discrimination persists even though the rise of the business of bail-bonding has permitted many more people to raise bail. The rebuttal that the courts are clogged with cases and therefore cannot grant a speedy trial is, of course, no defense of the system; on the contrary, this built-in inefficiency is an excellent argument for the abolition of government courts.</p> <p>Furthermore, the setting of bail is arbitrarily in the hands of the judge, who has excessive and little-checked power to incarcerate people before they are convicted. This is particularly menacing in the case of citations for <i>contempt of court</i>, because judges have almost unlimited power to slap someone into prison, after the judge himself has acted as a one-man prosecutor, judge, and jury in accusing, "convicting," and sentencing the culprit completely free from the ordinary rules of evidence and trial, and in violation of the fundamental legal principle of not being a judge in one's own case.</p> <p>Finally, there is another cornerstone of the judicial system which has unaccountably gone unchallenged, even by libertarians, for far too long. This is <i>compulsory jury service</i>. There is little difference in kind, though obviously a great difference in degree, between compulsory jury duty and conscription: both are enslavement, both compel the individual to perform tasks on the State's behalf and at the State's bidding. And both are a function of pay at slave wages. Just as the shortage of voluntary enlistees in the army is a function of a pay scale far below the market wage, so the abysmally low pay for jury service insures that, even if jury "enlistments" were possible, not many would be forthcoming. Furthermore, not only are jurors coerced into attending and serving on juries, but sometimes they are locked behind closed doors for many weeks, and prohibited from reading newspapers. What is this but prison and involuntary servitude for noncriminals?</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/For-a-New-Liberty-MP3-CD-P432.aspx"><img src="http://mises.org/store/Assets/ProductImages/CD3186master.jpg" border="0" /></a></div> <div class="book-price"> <p>Print:<br /> <a href="http://mises.org/store/For-A-New-Liberty-P301C18.aspx"><span style="text-decoration: line-through;">$30</span> $27</a></p> <p>MP3 CD:<a href="http://mises.org/store/For-a-New-Liberty-MP3-CD-P432.aspx"><span style="text-decoration: line-through;"><br /></span></a></p> </div> </div> <p>It will be objected that jury service is a highly important civic function, and insures a fair trial which a defendant may not obtain from the judge, especially since the judge is part of the State system and therefore liable to be partial to the prosecutor's case. Very true, but precisely because the service is so vital, it is particularly important that it be performed by people who do it gladly, and voluntarily. Have we forgotten that free labor is happier and more efficient than slave labor? The abolition of jury-slavery should be a vital plank in any libertarian platform. The judges are not conscripted; neither are the opposing lawyers; and neither should the jurors be.</p> <p>It is perhaps not a coincidence that, throughout the United States, lawyers are everywhere exempt from jury service. Since it is almost always lawyers who write the laws, can we detect class legislation and class privilege at work?</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tyranny-of-government-courts-and.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T15:23:00-07:00">3:23 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8491284317058395844">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8491284317058395844" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1694295615311752949"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/guerrilla-hoarding.html">Guerrilla Hoarding</a> </h3> <div class="post-body entry-content"> <h1> Guerrilla Hoarding</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/447/Wendy-McElroy">Wendy McElroy</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/BeachTreasure.jpg" alt="" border="0" /></div> <p>The headlines scream, <a href="http://www.etonline.com/tv/109469_WATCH_Is_this_Baby_in_Danger_Due_to_Hoarding_Grandma/">"Is this Baby in Danger Due to Hoarding Grandma?"</a>; <a href="http://www.nationalpost.com/life/horrors+hoarding/4479171/story.html">"The Horrors of Hoarding"</a>; and <a href="http://www.businessweek.com/lifestyle/content/healthday/651189.html">"Animal 'Hoarding' Often Tied to Mental Illness."</a> Meanwhile, a popular TV series entitled <i>Hoarders</i> focuses upon people whose "inability to part with their belongings is so out of control that they are on the verge of a personal crisis"; like drug addicts, they require an intervention. The vilification of hoarders as mentally ill, child-endangering animal abusers is in full swing.</p> <p>What is this vile and dangerous thing called <i>hoarding</i>? The noun "hoard" is <a name="search"></a>defined as "a store of money or valued objects, typically one that is secret or carefully guarded." The verb means to "<a name="search1"></a>save up as for future use." In common usage, anyone who stores more of a good than their neighbors do is often viewed as a "hoarder."</p> <p>A common example of hoarding is stocking up on durable grocery items — such as canned goods, rice, or pasta — when they are on sale, so that your family has a year's supply of staples in the house. In rural areas, this is known as "keeping a good pantry."</p> <p>Historically, governments have frowned upon hoarding. Especially in bad economic times, stigmatizing the hoarder for "causing" high prices or shortages because he buys more than his "share" serves a useful political purpose. They divert attention away from government policies, such as tariffs, that are the true cause of empty shelves and high prices. By stirring up resentment toward neighbors who own one more can of peas than you do, politicians avoid the full and just brunt of public anger.</p> <p>In times of economic crisis, when governments flirt with rationing and price controls, the frown can turn into a scowl; laws against hoarding are then passed and goods are sometimes confiscated. The most notorious confiscation in America came in 1933 when President Franklin D. Roosevelt signed <a href="http://en.wikipedia.org/wiki/Executive_Order_6102">Executive Order 6102</a>, ostensibly as a measure to combat the Great Depression. The order commanded the American people (with a few exceptions) to relinquish all but a still-permitted $100 worth of gold coins, bullion, and certificates to the Federal Reserve in exchange for a payment of $20.67 per troy ounce. Less than a year later, the government raised the trade rate to $35 per troy ounce. Thus, the government reaped huge profits at the expense of private investors and savers — a.k.a. hoarders of gold.</p> <p>Hoarding, like any other human activity, can become obsessive. But in its common form, hoarding is nothing more than preparing for the future by laying aside a store of items you and your family may need. This is an especially valuable practice during economic instability, when necessary supplies can become scarce or suddenly double in price.</p> <p>The Austrian investment counselor <a href="http://www.lewrockwell.com/blog/lewrw/archives/85033.html">Jack Pugsley</a> once explained another perspective on hoarding: it is an investment. A low-income family may not be able to afford precious metals, but they can afford to invest in dry or canned consumables. Last year, with some frequency, my grocery store sold a 900-gram package of pasta for 99¢. With wheat shortages, and with the American government diverting <a href="http://www.reuters.com/article/2007/06/11/us-usa-ethanol-corn-idUSN1149215820070611">almost 30 percent</a> of corn crops into producing ethanol, food products dependent on grain have skyrocketed. The same package of pasta now regularly costs $2.99. If a struggling family bought 60 packages of the 99¢ pasta for a future consumption of one package a week, then their hoarding would have knocked perhaps $100 off their grocery bill. By consistently buying more than they immediately need of bargain items, the family can build a solid pantry to sustain them through unemployment, inflation or scarcity.</p> <p>Unfortunately, during economic crises, the government also acquires an interest in hoarding — specifically, in punishing the hoarder as unpatriotic. A historical example is the Food and Fuel Control Act, which became law in 1917, during World War I; the acts official name was <a href="http://en.wikipedia.org/wiki/Food_and_Fuel_Control_Act">"An Act to Provide Further for the National Security and Defense by Encouraging the Production, Conserving the Supply, and Controlling the Distribution of Food Products and Fuel."</a> In short, the government became a food dictator, and anyone possessing more than a 30-day supply of food (which was considered reasonable by food administrator Herbert Hoover) could be arrested.</p> <p>The May 30, 1918, <i>New York Times</i> carried the headline, <a href="http://query.nytimes.com/mem/archive-free/pdf?res=940CEEDD1238EE32A25753C3A9639C946996D6CF">"Navy Man Indicted for Food Hoarding."</a> It reported on a man who had invested his wife's inheritance in a year's food for storage; and so they were held on a $3,000 bail each. The food was confiscated.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Freedom-Under-Siege-P429.aspx"><img alt="WHGDtOM?" src="http://mises.org/store/Assets/ProductImages/SS281.jpg" border="0" /></a></div> <div class="caption">Now <a href="http://mises.org/resources/3212/Freedom-Under-Siege">available as an eBook</a></div> </div> <p>The navy man's fate is a cautionary tale in more than one way. The store of food for his family was discovered because a grocer and neighbors informed upon him. Thus, a sad corollary to the wisdom of hoarding food for your family is the need to do so with discretion. This is <i>sad</i>, because the natural impulse of people in a community is to assist those in need. Measures like the Food and Fuel Control Act mean that sharing food with a neighbor who has hungry children is no longer simply a gesture of compassion and generosity; such government acts make sharing into a danger to your safety and your own children's well-being.</p> <p>There is still time to hoard the items upon which your family depends. Prices are rising, to be sure, but the full force of inflation and shortages is probably several months in the future. Hoard now; hoard quietly.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/guerrilla-hoarding.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T15:22:00-07:00">3:22 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1694295615311752949">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1694295615311752949" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8946537211202521971"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/austrian-schools-critique-of-marxism.html">The Austrian School's Critique of Marxism</a> </h3> <div class="post-body entry-content"> <h1> The Austrian School's Critique of Marxism</h1> <p class="meta"> <strong>Mises Daily:</strong>by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/1438/EugenMaria-Schulak">Eugen-Maria Schulak</a> and <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkCoAuthor" rel="coauthor" href="http://mises.org/daily/author/1439/Herbert-Unterk246fler">Herbert Unterköfler</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="editorial-preface"> <p>[Excerpted from <a href="http://mises.org/resources/6136/The-Austrian-School-of-Economics-A-History-of-Its-Ideas-Ambassadors-and-Institutions"><i>The Austrian School of Economics</i></a> (2011). An MP3 audio file of this article, narrated by Paul Strikwerda, is <a href="http://media.mises.org/mp3/audioarticles/5114_Schulak_Unterkofler.mp3?utm_source=mp3&utm_medium=web&utm_campaign=Direct_MP3">available for download</a>.]</p> </div> <div class="figure"><img src="http://images.mises.org/ElkinCarlVsKarl.jpg" alt="" /></div> <p>Council republics were established in Hungary and Bavaria according to the Russian Soviet model shortly after World War I. Violent revolts erupted in many places in Germany. Vienna, too, was dominated by this revolutionary atmosphere, which middle-class circles embraced with calculated opportunism. Ludwig von Mises, who at that time was a civil servant in the chamber of commerce of Lower Austria, recalled the following:</p> <blockquote> <p>People were so convinced of the inevitability of Bolshevism that their main concern was securing a favorable place for themselves in the new order. … Bank directors and industrialists hoped to make good livings as managers under the Bolshevists. (Mises 1978/2009, pp. 14–15)</p> </blockquote> <p>Otto Bauer was state secretary in the foreign department at this time, the leading Austro-Marxist, and later chairman of the nationalization commission. Mises knew him very well; they had attended Böhm-Bawerk's economics seminar together. "At the time," Mises wrote of the winter of 1918–1919 in his <i>Memoirs</i>,</p> <blockquote> <p>I was successful in convincing the Bauers that the collapse of a Bolshevist experiment in Austria would be inevitable in a very short time, perhaps within days. … I knew what was at stake. Bolshevism would lead Vienna to starvation and terror within a few days. Plundering hordes would take to the streets and a second blood bath would destroy what was left of Viennese culture. After discussing these problems with the Bauers over the course of many evenings, I was finally able to persuade them of my view. (Ibid.)</p> </blockquote> <p>In January of 1919, Bauer finally made the announcement in the <i>Arbeiter-Zeitung</i><a class="noteref" href="http://mises.org/daily/5114/The-Austrian-Schools-Critique-of-Marxism#note1" name="ref1">[1]</a> that he wanted to carry out expropriations, with reimbursements in heavy industry and large-scale land holding. Organizational measures were to be taken in preparation for "nationalization" in other industries as well (cf. Bauer 1919).</p> <p>The convincing Mises did in those memorable nighttime discussions was directed toward socialist political intentions that had the potential of endangering the short and unstable store of supplies available to the Viennese population even further. Of all the voluminous literature circulated during the subsequent debate on socialization — Schumpeter noted that even the most able were writing the most banal things (cf. Schumpeter 1922–1923, p. 307) — Mises was one of the few who kept his focus on the possible consequences of state intervention with sobriety and a sense of reality. The government-run "war and transitional economy" had provided numerous examples of the inevitable failure of central economic planning, and had also proven the "lesser economic productivity" of public enterprises (Mises 1919/1983/2000, pp. 220–221). Moreover, Mises realized early on that the interests of the Viennese <i>Sozialisierungskommission</i> ("Commission for Nationalization") were by no means identical to the interests of the federal states (Mises 1920b).</p> <p>In any case, these nightly talks put such a strain on his relationship with Bauer that Mises tended to believe Bauer had tried to have him removed from the teaching staff at the University of Vienna (cf. Mises 1978/2009, p. 15). Mises was indeed no longer considered for the position of tenured professor in Vienna when it became vacant in 1919. It was given instead to Othmar Spann (1878–1950), a former colleague of Bauer in the <i>Wissenschaftliche Komitee für Kriegswirtschaft</i> ("Academic Committee for War Economy") in the royal-imperial Ministry of War.</p> <p>During the course of the nationalization debate of 1919, Mises defended private property and the market economy with the argument of economic efficiency of supply. But he had to argue the position almost single-handedly, as many members of the Austrian School had been appointed to senior positions in the central "war and transition economy" offices, thereby joining the statist camp. It almost seemed as if they had — over the course of their careers — completely forgotten that the academic dispute with Marxism had at no university been so profound and productive as it had been in Vienna.</p> <p>When the subjective theory of value had begun to take hold in the 1880s, other theories that competed with those of the Austrian School had also come to the fore, for example the labor theory of value. In <i>Capital and Interest: A Critical History of Economical Theory</i> (1884), Eugen von Böhm-Bawerk devoted a complete section to socialist notions ("The Exploitation Theory") and subjected them to fastidious and detailed criticism. In 1885, Gustav Gross authored one of the first biographical sketches on Karl Marx. In the very same year he produced a separate biography: <i>Karl Marx:</i> <i>Eine Studie</i> ("Karl Marx: A Study"). Shortly thereafter he reviewed the second volume of <i>Das Kapital</i> (<i>Capital</i>). Hermann von Schullern zu Schrattenhofen's first scholarly publication was <i>Die Lehre von den Produktionsfaktoren in den sozialistischen Theorien</i> (1885) ("Study of the Factors of Production in Socialist Theories").</p> <p>The dispute with the socialists was soon to become a permanent fixture of the Austrian School. It is an irony of history that it was this school of thought that first introduced academic discourse about socialism into the seminar rooms and libraries of established economics departments. Criticism was aimed primarily at the labor theory of value, whose contradictions and shortcomings were thought to have been overcome once and for all with the subjective theory of value. The socialist theory did not represent progress, but rather regression (cf. Zuckerkandl 1889, p. 296). Fierce controversy between Böhm-Bawerk (1890 and 1892a), Dietzel (1890 and 1891), and even Zuckerkandl (1890), among others, brought competition between the two doctrines to a head. Dietzel held to the labor theory of value, and held fast to the view that the principle of marginal utility was, in the end, nothing more than the good old law of supply and demand (Dietzel 1890, p. 570).</p> <p>Disputes with socialism soon went beyond the labor theory of value and brought the "socialist state" into question in many respects. Böhm-Bawerk, for example, regarded interest as an economic category wholly independent of the social system; interest would exist even in the "socialist state" (Böhm-Bawerk 1891/1930, pp. 365–71). Wieser criticized socialist writers for their inadequate teaching of value's role in the socialist state. He came to the conclusion that "not for one day could the [socialist] economic state of the future be administered according to any such reading of value." For Wieser, "in the socialist theory of value pretty nearly everything is wrong" (cf. Wieser 1889/1893, pp. 64–66). Johann von Komorzynski extended the analysis to political science: he distinguished between a "true," "philanthropic socialism," and a "delusory socialism" aimed purely at class interests (Komorzynski 1893).</p> <p>After the posthumous editing of the third volume of <i>Das Kapital</i> (1895), two in-depth contributions of the Austrian School marked the temporary cessation of its critique of Marxism. In one perceptive essay, Komorzynski tried to prove that Marxist theories were "at the greatest possible odds with the real economic processes." The contradiction stemmed "from the basic principle, not from the utopian thinking" (Komorzynski 1897, p. 243). In his famous <i>Zum Abschluß des Marxschen Systems</i> (1896) (<i>Karl Marx and the Close of His System</i>, 1949), Böhm-Bawerk summarized his previous critique and came to the conclusion — based on the well-known contradictions between the first two and the third volumes of <i>Das</i> <i>Kapital</i> — that the final Marxist theory "contains as many cardinal errors as there are points in the arguments." They "bear evident traces of having been a subtle and artificial afterthought contrived to make a preconceived opinion seem the natural outcome of a prolonged investigation" (Böhm-Bawerk 1896/1949, p. 69). "The Marxian system," according to Böhm-Bawerk,</p> <blockquote> <p>has a past and a present, but no abiding future. … A clever dialectic may make a temporary impression on the human mind, but cannot make a lasting one. In the long run, facts and the secure linking causes and effects win the day.</p> </blockquote> <p>Böhm-Bawerk foresaw, that the "belief in an authority, which has been rooted for thirty years" in Marxist apologetics "forms a bulwark against the incursion of critical knowledge" that "will slowly but surely be broken down." And even then, "Socialism will certainly not be overthrown with the Marxian system — neither practical nor theoretical socialism" (ibid., p. 117).</p> <p>By the end of the 1880s, the law faculty of the University of Vienna became a center of research into socialism. In his sensational work <i>Das Recht auf den vollen Arbeitsertrag in geschichtlicher Darstellung</i> (1886) ("A Historical View of The Right to Full Labor Revenue"), Anton Menger (1841–1906), one of Carl Menger's brothers, professor of civil litigation law and the first socialist of the monarchy with a tenured professorship, made a case for the nationalization of the means of production. Carl Grünberg (1861–1940), a "scientific Marxist," taught economics there starting in 1892, and was one among many of Mises's teachers. In 1924 he was appointed to Frankfurt where he founded the <i>Institut für Sozialforschung</i> ("Institute for Social Research") and edited the works of Marx.</p> <p>Anton Menger, Carl Grünberg, and later even Böhm-Bawerk came to attract the young socialist elite: Max and Friedrich Adler, Otto Bauer, Karl Renner, Julius Tandler, Emil Lederer, Robert Danneberg, Julius Deutsch, and Rudolf Hilferding. From Hilferding's pen came the first Marxist anticritique directed at Böhm-Bawerk (cf. Rosner 1994). And his <i>Das Finanzkapital</i> (1910) (<i>Finance Capital</i>, 1981) was a remarkable outcome of the culture of the seminar. In it he comments on the role of banks and their symbiosis with the state, seemingly anticipating the monetary and business-cycle theory of the Austrian School, which was skeptical of both (cf. Streissler 2000b). On the eve of World War I, the continuing exchange of ideas between these talented young people nurtured in Böhm-Bawerk the belief that the labor theory of value had "lost ground in theoretical circles in all countries … in recent times" (Böhm-Bawerk 1890/1959, p. 249n.21).</p> <p>Theoretical arguments that had evolved over the years did not play much of a role in the postwar debate on nationalization at first. In fact, ideas about the organization of the economy and economic policy were prevalent. But it soon appeared that the ideas of nationalization functionaries had been openly inadequate. Many nationalized business establishments fell upon economic hard times (cf. Weissel 1976, pp. 299–320). Entrepreneurs proved reluctant to invest when expropriations were announced, and amazingly enough, Otto Bauer seemed surprised at this reaction (cf. Bauer 1923, pp. 163, 173). In the federal states, state claims made the process of nationalization stall or fail altogether. But most notable was the threat of starvation in Vienna: in 1919, 150,000 of 186,000 school children were undernourished or severely undernourished. This was an indirect consequence of a controlled war economy that had led to a quadrupling of fallow land (cf. Bauer 1923, pp. 118–119). Schumpeter, who in 1919 had had to resign as finance minister over the question of nationalization, took stock two years later:</p> <blockquote> <p>Though it has political appeal, nationalization accompanied by a comfortable lifestyle and a simultaneously abundant provision of goods — and the childish ideal of bedding oneself in existing affluence — is just nonsense. Nationalization which is not nonsense is politically possible today, but only so long as no one attempts it in earnest. (Schumpeter 1922–1923, p. 308)</p> </blockquote> <p>Just when the politics of nationalization were beginning to lose momentum, Mises gained recognition for his spectacular essay, <i>Die Wirtschaftsrechnung im sozialistischen Gemeinwesen</i> (1920a) (<i>Economic Calculation in the Socialist Commonwealth</i>, 1935). It was expanded substantially two years later and published as the book, <i>Die Gemeinwirtschaft: Untersuchungen über den Sozialismus</i> (1922) (<i>Socialism: An Economic and Sociological Analysis</i>, 1936). Mises made the point that "rational" economic management, i.e., resource-conserving production and distribution of goods, which takes consumer preferences into account, can only be guaranteed with a free price system — the free exchange of goods and freedom to implement all possible uses of the goods — and that with central planning these goals can never be achieved. If the means of production are not privately owned, then efficient business leadership and the consequent satisfying of consumer interests cannot be ensured.</p> <p>The core problem, according to Mises, is that</p> <blockquote> <p>in the socialistic community economic calculation would be impossible. In any large undertaking the individual works or departments are partly independent in their accounts. They can reckon the cost of materials and labour, and it is possible at any time … to sum up the results of [their] activit[ies] in figures. In this way it is possible to ascertain with what success each separate branch has been operated and thereby to make decisions concerning the reorganization, limitations or extension of existing branches or the establishment of new ones. … It seems natural then to ask why … a socialistic community should not make separate accounts in the same manner. But this is impossible. Separate accounts for a single branch of one and the same undertaking are possible only when prices for all kinds of goods and services are established in the market and furnish a basis of reckoning. Where there is no market there is no price system, and where there is no price system there can be no economic calculation. (Mises 1922/1936/1951, p. 131)</p> </blockquote> <p>Socialism, therefore, is not able to calculate. This is the main assertion of Mises's argument, otherwise known as the "calculation problem." There would be "neither discernible profits nor discernible losses … ; success and failure remain unrecognized in the dark. … A socialist management would be like a man forced to spend his life blindfolded" (Mises 1944/1983, p. 31).</p> <p>Mises did not allow for the argument made by many "bourgeois" economists: that socialism could not be realized because humans were still too underdeveloped in a moral sense. According to Mises, socialism would be bound to fail, not because of morality, "but because the problems, that a socialist order would have to solve, present insuperable intellectual difficulties. The impracticability of Socialism is the result of intellectual, not moral, incapacity" (Mises 1922/1936/1951, p. 451).</p> <p>Mises's brilliant and overpoweringly logical analysis was not new. Its main features were already part of an inventory belonging to the early marginal-utility theoreticians — but this was little acknowledged. Hermann Heinrich Gossen (1810–1858) had already established that only in a society based on private property could the economy be "adequately" and "most expediently managed": "The central agency assigned by the communists to allocate various jobs," Gossen said, would "learn very soon it had set itself a task whose solution was beyond the ability of human individuals" (Gossen 1854/1987, p. 231).</p> <p>In terms of the earlier Austrian School, Friedrich von Wieser had already placed clear emphasis on the necessity of economic calculation (cf. Wieser 1884, pp. 166–67, 178). He was one of the first economists to recognize the relevance of the informational nature of "value" in an economy: "Value," Wieser stated, "is the form in which utility is calculated" (Wieser 1889/1893, p. 34), and "thus value comes to be the controlling power in economic life" (ibid., p. 36).</p> <p>Apart from a few sporadic contributions in the foreign literature (cf. Schneider 1992, p. 112), the problem of economic calculation in socialism was scarcely considered until 1919 — not even by socialist economists. Erwin Weissel (1930–2005), the Viennese economist and historiographer of the Austro-Marxist debate on socialization, even claimed that "one wanted to ignore the problem" (Weissel 1976, p. 235). At the height of the socialization debate in spring 1919, Menger student and business attorney Markus Ettinger warned that "only market price … [could be] a reliable regulator of demand" and for the "in- and outflow of capital and labor from one area of production to another" (Ettinger 1919, p. 10).</p> <p>It is interesting that Max Weber (1864–1920), who was in close contact with Mises during his stay in Vienna in 1919, also characterized "money calculation" in a book manuscript, unpublished at the time of his death, as a "specific device of the purposive-rational procurement economy" (Weber 1921/1972, p. 45).</p> <p>Mises's fundamental critique received international recognition into the 1920s. The notion that central planning without a price system would automatically be inefficient was seldom denied. But in the early 1930s, economists in the English-speaking world began responding with models for a socialist calculation — in answer to Mises — that included the idea of "competition socialism." It prevailed and survived in socialist circles until the 1980s (cf. Socher 1986, pp. 180–94). The idea was that planners could adequately simulate market development with "trial-and-error loops" in between individual planning periods; subsequent calculations could then be made.</p> <p>Both Mises and Hayek responded in detail and Hayek presented a concise summary of the complete debate in 1935 (Hayek 1935). He first and foremost centered on the hubristic notion of being able to plan economic and social systems comprehensively: socialism in all its right- and left-wing varieties was "an ideology born out of the desire to achieve complete control over the social order, and the belief that it is in our power to determine deliberately in any manner we like, every aspect of this social order" (Hayek 1973/1976/1979, vol. 2, p. 53). In contrast to Mises, Hayek emphasized the indispensable information function of market-induced prices: "that a market system has a greater knowledge of facts than any single individual or even any organization is the decisive reason why the market economy out performs any other economic system" (Hayek 1969a, p. 11). Amid heated debate, the Austrians were hardly aware of the fact that Hayek and Mises were pursuing two ultimately different paradigms (cf. Salerno 1993, pp. 116–117).</p> <p>Mises's massive attack on the utopia of an economically efficient socialism did not evoke much in the way of a direct counterreaction (cf. Mises 1923). Because the instigators of nationalization were aiming only at partial socialization, they were able to "get out of a tight spot" (Weissel 1976, p. 234) by pointing to organizational issues. The counter attack came only after two years, when Helene Bauer (1871–1942) diagnosed the "bankruptcy of the marginal theory of value" in the party organ of the Socialist Party (<i>Bankerott der Grenzwerttheorie</i>, 1924). Using revolutionary rhetoric and warlike language, she insinuated that the marginal-utility theory served a frightened bourgeoisie as a bulwark, and was used as the predominant theory to agitate against Marxism at the university level (Bauer 1924, pp. 106–107). But Bauer touched the Achilles's heel of the marginal-utility theories on one point: she called their imputation theory inadequate (ibid., p. 112). The denunciatory intention of depicting the marginal-utility theory as an ideology of the "bourgeois" owner class was particularly obvious in Russian theoretical economist and philosopher Nicolai Ivanovich Bukharin's (1888–1938) <i>Economic Theory of the Leisure Class</i> (1919/1927). Bukharin's personal attacks on Böhm-Bawerk occasioned an unemotional counter criticism (Köppel 1930).</p> <p>Ludwig von Mises was an especially easy target for this kind of appraisal on the part of socialist authors. Mises held the conviction that liberalism was the only idea that could effectively oppose socialism (cf. Mises 1927/1962/1985, p. 50). Liberalism, said Mises, is "applied economics" (ibid., p. 195); in another work from the previous year he had even stated that "classical liberalism was victorious with economics and through it" (Mises 1926, p. 269; and Mises 1929/1977, p. 22).</p> <p>The theory of marginal utility nevertheless found some support in Germany in the 1920s — even from socialist writers or others with socialist leanings (cf. Kurz 1994, p. 56). While preparing for the Dresden convention of the <i>Verein für Socialpolitik</i> in 1932, Mises repeated his junction of modern economics and liberalism (cf. Mises 1931, p. 283) and was promptly criticized, even by advocates of the subjective theory of value (Weiss 1933/1993, pp. 51–52). Despite the polarization, a young participant of the Dresden convention, the postdoctoral graduate, attorney, and political scientist Hans Zeisl (1905–1992; in the United States he named himself Hans Zeisel) — sports correspondent of the socialist <i>Arbeiter-Zeitung</i> and until 1938 contributor to the now classical <i>Marienthal-Studie</i><a class="noteref" href="http://mises.org/daily/5114/The-Austrian-Schools-Critique-of-Marxism#note2" name="ref2">[2]</a> — attempted the first synthesis in <i>Marxismus und subjektive Theorie</i> (1931) ("Marxism and the Subjective Theory of Value").</p> <div class="book-ad" id="ad-P10453"> <div class="book-img"><a href="http://mises.org/store/The-Austrian-School-of-Economics-A-History-of-Its-Ideas-Ambassadors-and-Institutions-P10453.aspx"><img src="http://mises.org/store/Assets/ProductImages/SS596.jpg" width="200" border="0" /></a></div> </div> <p>According to Zeisl, the notion of value had developed into a concept of "human elective action." The "goods concept" had "given way" to the "relational concept of possible uses" (Zeisl 1931/1993, pp. 180–81). The so-called laws of the subjective theory of value were of a "statistical nature" and received their cognitive value "when they are applied to empirically discerned demand systems" (ibid., p. 191). If one were to replace demand systems with "demand with purchasing power," one would immediately recognize that demand is allocated "according to class." The "crucial Marxist line of thought — that the level of wages and interest rates, etc., are dependent on 'class structure' — could be precisely articulated in the subjectivist theory of value" (ibid., pp. 192–193).</p> <p>Subsequent changes in the political arena rendered any continued development of this interesting synthesis of praxeological thinking and the Marxist theory of distribution impossible.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/austrian-schools-critique-of-marxism.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T15:21:00-07:00">3:21 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8946537211202521971">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8946537211202521971" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5006653298950117975"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/adam-vs-man-episode-1-featuring-stefan.html">Adam Vs The Man: Episode 1 - Featuring Stefan Molyneux of Freedomain Radio</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/adam-vs-man-episode-1-featuring-stefan.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T14:43:00-07:00">2:43 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5006653298950117975">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5006653298950117975" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="682937129472705960"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/tax-inequity.html">Tax Inequity</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:180%;">Tax Inequity</span></h1> <p>by Richard W. Rahn </p><p class="first">So you have just finished preparing your income taxes, but did you understand the tax code? If you said yes, you do not know what you do not know. The U.S. tax code has become so long, complex, contradictory and devoid of common sense that no one can fully understand it — and this includes tax professionals and Internal Revenue Service (IRS) personnel. Can honorable persons of good conscience harass, fine and even imprison their fellow citizens for an alleged violation of laws and regulations they themselves do not completely know? But that is a topic for another column.</p> <p>Tax economists have long argued that the U.S. income tax causes an enormous — and largely unnecessary — dead-weight loss to the economic system. The sheer cost and time burden of businesses and individuals trying to comply with the tax system — let alone the cost of the more than 100,000 bureaucrats at the IRS who claim to be administrating it — waste hundreds of billions of dollars. This waste of resources unnecessarily reduces economic growth and job creation. A major reason this obscenity persists is that few lawmakers and IRS rule makers think seriously about the consequences of what they have done and are doing, or just don't care.</p> <p>One person who does think seriously about tax and other financial issues, including the morality of the tax code, is California venture capitalist and financial scholar Kip Hagopian. Mr. Hagopian has a most timely and provocative article in the April-May issue of Policy Review (a publication of the Hoover Institution at Stanford University) titled "The Inequity of the Progressive Income Tax." The U.S. has had a progressive income tax (in which rates rise at higher income levels) since the beginning of the income tax in 1913. The progressive income tax is considered fair by many people. But is it? Mr. Hagopian argues that if people really think through the issue, they are likely to come to a very different conclusion.</p> <p>Tax scholars have been debating the pros and cons of tax systems for centuries. Taxes on consumption — what people take out of an economy — are generally considered less destructive than taxes on labor and capital, which are inputs into an economy. As Mr. Hagopian notes, there are basically four (broadly defined) income tax systems debated in the literature:</p> <ul><li> A per-capita, or "head" tax, which would require each person to pay his per-capita share of the costs of government.</li><li> A proportionate or "flat" tax, which would tax each dollar of income at a single rate, usually with few if any exemptions or credits.</li><li> A degressive tax, which is a proportionate tax only on income above a certain threshold or exemption. The exemption makes the system progressive but typically much less so than a system of graduated rates.</li><li> A progressive tax, which taxes incremental income at higher marginal rates as income rises, resulting in an increase in taxes as a percentage of income as income increases.</li></ul> <p>The United States has one of the most progressive tax systems in the world. The top 1 percent of taxpayers pay 38 percent of all the income taxes despite having just 20 percent of the income. The top 10 percent of taxpayers pay 70 percent of the income tax while having just 46 percent of the income. At the other end, the bottom 50 percent of taxpayers pay just 2.7 percent of the income tax while having 13 percent of the income.</p> <div class="box2"> <div class="boxcontent"><p style="font-family:Georgia;"><em><a href="http://www.cato.org/people/richard-rahn">Richard W. Rahn</a> is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.</em></p> <a class="head" href="http://www.cato.org/people/richard-rahn">More by Richard W. Rahn</a></div></div> <p>The income tax has become much more progressive in the past 30 years, resulting in a situation in which a relatively small minority of taxpayers pay the bulk of the taxes, while most American pay little or any income tax. This is causing an increasing disconnect between benefits from government and what most citizens pay for. One result is a greater polarization in the political realm where a majority of citizens increasingly demand more government benefits for which they want others to pay.</p> <p>The Swedes were on this same destructive path, but they reversed course over the last couple of decades and made their tax system far less progressive even though their tax rates at all levels are above most of those in the United States. The result has been a tempering of demand for new government services as people at all income levels realize they will be the ones paying for those services and not some mythical "rich" person. The side benefit is that Sweden, as a result of tax and other reforms, now has one of the highest economic growth rates in the world.</p> <p>Mr. Hagopian has carefully looked at the pros and cons of each system in a most dispassionate way, and concludes, "Since there is no perfectly equitable tax system, the goal must be to design the least inequitable system." He concludes that the degressive system is the least inequitable. It is not possible to summarize Mr. Hagopian's arguments for and against each tax system in a newspaper column; hence, I will not attempt the impossible. But for those who think a progressive system is equitable, please explain the equity in taxing one person at a higher rate on each extra hour he or she works to make life better for his family while taxing the less responsible and less industrious person at a lower rate.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tax-inequity.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T11:40:00-07:00">11:40 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=682937129472705960">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=682937129472705960" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6085544041304409614"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/catos-david-boaz-on-principle-of.html">Cato's David Boaz on the Principle of Liberty at ISFLC 2011</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/catos-david-boaz-on-principle-of.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T11:39:00-07:00">11:39 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6085544041304409614">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6085544041304409614" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3276230033191445768"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/disaster-of-me-libertarianism.html">The Disaster of Me Libertarianism</a> </h3> <div class="post-body entry-content"> <h3 class="post-title entry-title"> <span style="font-size:180%;">The Disaster of Me Libertarianism </span></h3> <div class="post-header"> </div> <div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjc3WDBcX0Ze8A7opBC7OQapJYIsU4AbxNFruNoMt7orv5PNHHtacQrrPiOWlGYORZUo5fyeY8jrKSvM_RGbpA6UELvF0DEND741w0zIxMtTHTJS3XW1W809UnJfUM5w1ocVFsS1byIG78/s1600/all-about-me-boy.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjc3WDBcX0Ze8A7opBC7OQapJYIsU4AbxNFruNoMt7orv5PNHHtacQrrPiOWlGYORZUo5fyeY8jrKSvM_RGbpA6UELvF0DEND741w0zIxMtTHTJS3XW1W809UnJfUM5w1ocVFsS1byIG78/s200/all-about-me-boy.jpg" width="175" border="0" height="200" /></a></div>Have you heard any of the following critiques of libertarianism?<br /><br />Libertarians are just conservatives who like drugs!<br /><br />Libertarians are only concerned about themselves!<br /><br />Libertarians don’t care what happens to other people?<br /><br />Libertarians are selfish!<br /><br />This libertarian is dismayed by such comments, but I have to admit that they are often true, at least about many individual libertarians, though they are not true about the philosophy of libertarianism per se.<br /><br />I just spent a couple days at a libertarian conference. It is an experience that I find increasingly dismaying and disappointing because there has been a clear rightward shift in the libertarian movement toward some clearly anti-libertarian viewpoints, if not toward some pure nonsense from the fringe right. It is as if no libertarian today can critique the Federal Reserve without appealing to the pseudo-history conspiracy theories of G. Edward Griffin of the John Birch Society.<br /><br />But what is interesting is listening to libertarians dismiss issues that are important to people who aren’t like them. Let us be truthful: the typical libertarian, and certainly the typical attendee at this conference, is a middle-aged, white, straight male. And they seem utterly incapable of seeing freedom through the lenses of anyone who isn’t the same.<br /><br /><a name="more"></a><br /><br />Mention equal marriage rights for gay people and they simply dismiss it as unimportant. If they aren’t actively opposed—and some were—they see it as inconsequential. If you talk about guns they often are interested since so many of them own firearms. If you talk about pornography they are interested. But when it comes to the barriers to immigration they don’t give a damn since they aren’t immigrants. They hate tax laws but then they pay taxes.<br /><br />They really are libertarians who only see liberty as an issue as it applies to white, middle-aged, straight men (WMASM).<br /><br />David Boaz <a href="http://www.cato.org/pub_display.php?pub_id=11664">wrote</a> about the same thing by implication:<br /><br /><blockquote>The Cato Institute's boilerplate description of itself used to include the line, "Since [the American] revolution, civil and economic liberties have been eroded." Until Clarence Thomas, then chairman of the Equal Employment Opportunity Commission, gave a speech at Cato and pointed out to us that it didn't seem quite that way to black people.</blockquote><br />Clarence Thomas saw the fallacy in the claim because he views history through his own experiences as a black man. He realized that during the “golden age” of liberty, which so many libertarians pine for, that black people were held in slavery. Even after slavery was eventually abolished, government policy actively discriminated against black people. They were subjected to laws mandating they be treated badly by public transportation. They were easily convicted of crimes, including those they didn’t commit, and were happily lynched by rabid mobs of whites who would then slice them up and take body parts as souvenirs. There is a reason Justice Thomas questioned whether the trend in liberty was entirely in one direction—as so many libertarians see it.<br /><br />Women certainly have it much better today than they did during any other period of American history. They can own property on their own. They can easily escape abusive relationships. They can sign legal contracts without the permission of their father or husband. They have control over their reproductive abilities which had previously been denied them by the force of law—and this doesn’t just mean the right to abortion but the right to birth control, something that was previously illegal.<br /><br />What about freedom of religion? Did you know that there were periods where the states made it illegal to be a practicing Catholic? No state does so today. The Pilgrim Fathers—you know the ones you were told came to America for religious freedom—executed Mary Dyer because she was the wrong kind of Christian. Virginia banned the Puritans, Quakers, Catholics and Jews. Maryland had the death penalty for anyone who challenged orthodox Christian beliefs and later made a crime of being a Catholic priest, with a life sentence attached. They also legislated that only Anglicans could hold office and that Catholics were not allowed to vote.<br /><br />Today the main claim of religious persecution made by Christians is from those who feel persecuted when they can’t impose their religious beliefs on others through the force of law. They think that not being allowed to teach religious dogma in public schools is oppressive. But their churches operate openly, they still go door-to-door annoying the unwilling, and they enjoy something denied their secular opponents—tax exemption.<br /><br />All of this is what I call “me” libertarianism. That is the tendency of individual libertarians to interpret political trends only through their own experience,s without caring what the broader reality happens to be.<br /><br />Consider the Gadsden flag, popular with many libertarians, as another example. The motto is “Don’t tread on me.” Again the state of liberty is interpreted only in the self-centered way of how government impacts my life and my life alone.<br /><br />Listening to those libertarians who only see liberty as important to them infuriates me. I realize that their false perceptions of what it means to advocate liberty actually makes it harder to achieve liberty. First, they routinely exclude oppressed people from the liberty movement because they aren’t like them.<br /><br />I don’t mean they actively tell women, gays, blacks, immigrants, Jews, etc., that they are unwelcome. They usually don’t go that far. But what they do is routinely dismiss the concerns of these people as trivial and unimportant. That sends the message that only what impacts WMASM is of importance.<br /><br />I defended Boaz’s comments to a libertarian who immediately dismissed it as worthless and then he recounted ways that WMASM are worse off today than before. That WMASM pay more in taxes today is more important than the fact that blacks are no longer routinely lynched. That WMASM feel hard pressed by affirmative action is a major issue, but the fact that millions of gay people no longer dread imprisonment for loving someone of the same gender is inconsequential.<br /><br />There was a minor <a href="http://social.bioware.com/forum/1/topic/304/index/6661775&lf=8">controversy</a> in the on-line gaming community when Dragon Age 2 included some characters that are gay. One gamer complained because all previous games were designed for straight males and he didn’t see why it had to change. He wanted an option to ban gay characters from the game. David Gaider, the writer of the game, responded. He said that the decisions he made were not about “political correctness”—a favorite scapegoat of the WMASM—but about how “privilege always lies with the majority.” He said that that those who are used to “being catered to… see the lack of catering as an imbalance. They don’t see anything wrong with having things set up to suit them, what’s everyone’s fuss all about? That’s the way it should be, as everyone else should be used to not getting what they want.”<br /><br />Many libertarians are guilty of this. They look at the privileged positions that WMASM have enjoyed for much of human history and then decide the fate of freedom only by how it impacts that privileged minority. That blacks and women and gays make up more of the population than WMASM is irrelevant because they only see history through WMASM eyes.<br /><br />The libertarian tradition was founded by people who were deeply concerned about the liberty of others. The classical liberals did want freedom of thought for themselves but they fought for freedom of thought for religious minorities, even when they themselves were not religious. Jefferson defended freedom of religion even for the Calvinists, whom he despised. The great classical liberals were in the forefront of abolitionism. They wanted to free the black race from the shackles of slavery even though they themselves were not black, nor enslaved.<br /><br />Our namesake, Moorfield Storey, is one of the great unsung libertarian heroes. Yes, he advocated free markets, property rights, and limited government. But he was a leader in the earliest civil rights movement. He was the first president of the National Association for the Advancement of Colored People. He was a lawyer to fought for the rights of black people in the Supreme Court and who defended men who were railroaded by a white mob and sentenced to death. He fought these battles long before Martin Luther King was even born.<br /><br />Two of the greatest classical liberals in England were Richard Cobden and John Bright. Bright and Cobden were relatively privileged men, a manufacturer and a mill owner respectively, wealthy by the standards of the day, who enjoyed all the birthrights of the freest Englishmen of the day. Yet these men poured their heart and soul into the fight to abolish the Corn Laws.<br /><br />The Corn Laws were a plethora of legislation that protected the landed elite in England by banning the importation of grains from outside England. The people who suffered from the laws were the poor who were forced to pay higher prices for bread. Cobden and Bright had little to gain from repeal and managed to offend many of the wealthiest people in England because of their efforts. But they realized that freedom is indivisible. Freedom exists when it applies to all people, not just to the few and privileged.<br /><br />We have millions of our fellow citizens who are freer today than they would have been had they lived in the golden age of liberty—whenever you think that might be. We have to be aware of their concerns as well. “Me” libertarianism references liberty only as it effects the speaker, without consideration of the freedom of others. It does send the message that libertarianism is selfish and about protecting privilege for white males only.<br /><br />Others, who were not so privileged in the past, have trouble seeing how liberty will help them because so many advocates of liberty simply don’t care about how others are oppressed today. These libertarians do care about the issues that impact their own lives, but everyone else is inconsequential. Is it any wonder that so many African-Americans don’t see libertarians as interested in them? Is it really a surprise that libertarian meetings are so overwhelmingly male? Why is anyone surprised when the LBGT community ignores libertarianism, after libertarians have spent decades ignoring them?<br /><br />Oppressed people everywhere ought to be our natural allies in advocating the extension of liberty. But for that to happen we have to prove ourselves advocates for the extension of their liberties as well. As long as issues that impact WMASM take precedence over all other groups libertarians will send the message that they don’t want allies who aren’t like them. I note that young libertarian groups, who often speak of libertarianism as it impacts others, are more racially diverse, have a lot more females (which ought to please straight males) and attract more support from their gay peers.<br /><br />Alexander McCobin, the head of Students for Liberty, was invited to speak at the Conservative Political Action Committee conference and made it clear he was glad that gay people had been included. He noted that liberty does not come in pieces, but applies to all people. The libertarian students applauded and the conservatives heckled.<br /><br /><br /><br />While the Libertarian Party has become a refuge for the WMASM, and seems to be dying, Students for Liberty has exploded on the campuses with over 400 active chapters. They can reach out to everyone because of the message that McCobin, and other young libertarians, are sending. The LP nominated the author of the Defense of Marriage Act for president and seems confined to political oblivion.<br /><br />We need to actively work to abolish “me libertarianism” and focus on "liberty and justice for all" instead. We can still lament the ways that liberty is being denied to WMASM but we should also fight for issues like marriage equality, the rights of immigrants, and reproductive rights for women (which is now again under attack by the Republicans). We need to actively acknowledge that the “golden age” of liberty treated black Americans badly. We need to listen to people who are not like us. We have to solicit the life experiences of people who are not our gender, not our race, not our sexual orientation, not in the economic conditions we experienced, and who had very different experiences from our own.<br /><br />Once we understand some of their life experiences and their views we need to expand our freedom concepts so that we are also trying to liberate others, not just those most like ourselves. We need an outward libertarianism that focuses on the rights of all people if we ever wish to attract all people to our cause. Liberty is doomed if it is perceived as merely a refuge for the privileged few. Self-centered libertarianism gives precisely that impression. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/disaster-of-me-libertarianism.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T11:35:00-07:00">11:35 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3276230033191445768">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3276230033191445768" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7115898068674948337"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/barack-ocommie-obamas-communist-marxist.html">Barack Ocommie - Obama's Communist Marxist Influences</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/barack-ocommie-obamas-communist-marxist.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T11:33:00-07:00">11:33 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7115898068674948337">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7115898068674948337" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7143651106334987637"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/obamas-communist-speech-to-school.html">Obama's Communist Speech to School Students</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/obamas-communist-speech-to-school.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T11:32:00-07:00">11:32 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7143651106334987637">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7143651106334987637" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8261505339645645644"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/alan-keyes-rightly-calls-obama-radical.html">Alan Keyes rightly calls Obama a radical communist</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/alan-keyes-rightly-calls-obama-radical.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T11:32:00-07:00">11:32 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8261505339645645644">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8261505339645645644" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5153351501277028937"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/tom-woods-2-of-2-ron-paul-rally-for.html">Tom Woods (2 of 2) Ron Paul Rally For The Republic</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tom-woods-2-of-2-ron-paul-rally-for.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:43:00-07:00">10:43 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5153351501277028937">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5153351501277028937" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5902628168576190536"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/tom-woods-1-of-2-ron-paul-rally-for.html">Tom Woods (1 of 2) Ron Paul Rally For The Republic</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/tom-woods-1-of-2-ron-paul-rally-for.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:43:00-07:00">10:43 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5902628168576190536">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5902628168576190536" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1649652784409645820"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/establishment-warns-beware-ron-paul.html">Establishment Warns: Beware Ron Paul!</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/establishment-warns-beware-ron-paul.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:42:00-07:00">10:42 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1649652784409645820">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1649652784409645820" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2513431668750844359"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/military-industrial-complex-in-five.html">The Military Industrial Complex in Five Minutes</a> </h3> <div class="post-body entry-content"> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/military-industrial-complex-in-five.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:42:00-07:00">10:42 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2513431668750844359">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2513431668750844359" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6505662992910222114"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/us-president-obamas-weak-message-to.html">US: President Obama’s weak message to Latin America –</a> </h3> <div class="post-body entry-content"> <h2 class="post_name" id="post-7418"><span style="font-size:180%;">US: President Obama’s weak message to Latin America – The Washington Post</span></h2> <div class="post_meta"> </div> <p><a href="http://www.hacer.org/latam/wp-content/uploads/2011/03/Obama_Latin_America_Bati_t607.jpg"><img class="alignleft size-full wp-image-7420" title="Obama_Latin_America_Bati_t607" src="http://www.hacer.org/latam/wp-content/uploads/2011/03/Obama_Latin_America_Bati_t607.jpg" alt="" width="364" height="231" /></a>Though it was inevitable that it would be overshadowed by events elsewhere in the world, we thought President Obama was right to go ahead with his tour of Latin America. To cancel the trip only would have strengthened the view that, as Mr. Obama put it, “there have been times when the United States took this region for granted.” And there is, in fact, much to be done in and with Latin American nations, from strengthening U.S. partnerships with some key countries to standing up to the dismantling of democracy and violations of human rights in others.</p> <p> </p> <p>Unfortunately, while Mr. Obama took the time to travel to Brazil, Chile and El Salvador, his effort to advance this agenda ranged from weak to nonexistent. In Brazil and Chile, the president rightly heaped praise on those countries’ democratic and economic development. He made a strong public pitch for partnership between the United States and South America’s emerging power, saying “the United States doesn’t simply recognize Brazil’s rise, we suppport it enthusiastically.”</p> <p> </p> <p>Yet when it came to issues of particular concern to Brazilians or other Latin Americans, the president had little to offer. Instead he delivered warmed-over restatements of his broad positions on immigration and trade, without mentioning any meaningful new measures. He said his administration “has intensified our efforts to move forward on trade agreements with Panama and Colombia,” but he did not visit either country and offered no timetable for submitting those deals to Congress.</p> <p> </p> <p>Most curious was Mr. Obama’s decision to simply ignore the fact that in large parts of Latin America, the “shared values” that he said bind the hemisphere are being trampled. In a speech directed to the region that he delivered in Santiago, the president declared that “today, Latin America is democratic” – even though rulers in a number of countries are shutting down media, eliminating judicial independence and rigging elections. He said “Latin America is contributing to global prosperity and security,” even though many of those same rulers are forging ties with Iran and have been defending the regime of Libya’s Moammar Gaddafi.</p> <p> </p> <p>Mr. Obama mentioned the Inter-American Democratic Charter, which nominally binds the governments of the hemisphere to act against those who commit political abuses, and said “we have to speak out when we see those principles violated.” Yet he himself did not speak out. Not once during his tour did he mention Venezuela, Nicaragua, Ecuador or Bolivia or their increasingly autocratic rulers.</p> <p> </p> <p>The president did bring up the people of Cuba, who, he said, “are entitled to the same freedom and liberty as everyone else in this hemisphere.” But Cuba, as he pointed out, has been stuck in “this history that’s now lasted for longer than I’ve been alive.” Venezuela and Nicaragua, on the other hand, are teetering between the democracies they had a decade ago and the autocracies their current leaders hope to install. By failing to discuss those fateful struggles, Mr. Obama did a great disservice to those Latin Americans who are fighting to save freedom in their countries, at great personal risk.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/us-president-obamas-weak-message-to.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:37:00-07:00">10:37 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6505662992910222114">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6505662992910222114" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="377976537714282543"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/us-change-words-not-your-mind.html">US: Change the Words, Not Your Mind</a> </h3> <div class="post-body entry-content"> <h2 class="post_name" id="post-810"><span style="font-size:180%;">US: Change the Words, Not Your Mind – by Greg Walcher</span></h2> <div class="post_meta"> </div> <p><a href="http://www.hacer.org/usa/wp-content/uploads/2011/04/clean-energy-people.jpg"><img class="alignleft size-full wp-image-811" title="clean-energy-people" src="http://www.hacer.org/usa/wp-content/uploads/2011/04/clean-energy-people.jpg" alt="" width="300" height="225" /></a>If, despite that clear distinction, you still don’t feel good about multi-trillion-dollar deficits, it’s because you must understand one of the most important techniques in the art of debate – when you’re losing, change the terms. Successful politicians must master that art if they want to push unpopular policies. If “illegal alien” sounds bad, change the words to “undocumented workers.” If “estate tax” sounds OK to people who have no “estate,” call it the “death tax” and it affects everyone who might eventually die. A simple change in terms often changes the outcome of debates, legislative votes, and even elections.</p> <p>Changing the words is a long and proud tradition in the world of conservation, too. That’s how national forest timber management became “below-cost timber sales” and “logging old growth,” the result of which was an almost complete end to active forest management (and today’s dead and dying forests). That’s also how vast tracts of public lands became “the last great places,” which must be protected from public use. It is a technique both sides practice regularly, but that doesn’t make it any more honest or less cynical.</p> <p>One of the great examples is being played out in today’s debate over global warming. As average global temperatures leveled off in the past decade, “global warming” became “climate change,” since that includes both warming AND cooling. As more recent scientific research makes the causes of climate changes less certain, an increasingly skeptical public has begun to shy away from “solutions” that seem harsh, expensive, or difficult. Thus, Congress could not muster enough votes to pass the proposed cap-and-trade bill several years in a row, and the effort now appears dead.</p> <p>Not to be deterred, however, advocates have resorted once again to the tried-and-true technique of changing the terms. It has become unpopular in a time of spiking gas prices to propose the ban on drilling for oil and gas that many environmental activists actually want. They recognize that an end to the use of fossil fuels to power our economy is simply not achievable in the foreseeable future. That’s why they have tried for several years to convince the public that our use of natural resources to create prosperity is evil, and that our pursuit of the good life is destroying the planet. But we all learned about carbon dioxide in school science classes, and we certainly do not intend to stop exhaling. That is why it is now known as a “greenhouse gas” – because “emitting” any “gas” sounds like something we should stop doing. It is a debate such advocates are losing in the court of public opinion, for several reasons:</p> <ul><li> There is a limit to how much Americans can pay for gas, heat, and electricity;</li><li>Many people are no longer convinced of a direct link between their use of energy and any catastrophic change in the Earth’s climate;</li><li>Revelations about fraudulent manipulation of scientific data has damaged the credibility of man-made global warming alarmists;</li><li>The economic recession has “cooled” Americans’ willingness to raise taxes, hinder businesses, and slow job creation – for any reason.</li></ul> <p>Does this mean advocates of a cap-and-trade policy will give up the effort? Of course not. It means they will change the terms, and that effort is well underway now. Witness the new desire on the part of state and federal administrations across the country to adopt policies that promote “clean energy.” What exactly is “clean energy?” At the risk of stating the obvious, it means energy that comes from sources other than oil, gas, coal, methane, biomass, biofuels, nuclear, shale, tar sands, hydropower, or any source that requires pipelines, power lines, or other infrastructure (can we use wind and solar power without power lines?). In a nutshell, it means we should stop using so much energy. It means the same thing all the previous debates meant, just with different words.</p> <p>Expect to hear the term “clean energy” repeated across the political landscape non-stop for the next several years. Experts know that repetition is the key to successfully changing the terms of a debate. As Berkeley Professor George Lakoff advises liberals, <em>“Repetition of such articulations is the key to redefining these words…”</em></p> <p>The Republican “Word Doctor” Frank Luntz explains the importance of repetition: <em>“There’s a simple rule: You say it again, and you say it again, and you say it again, and you say it again, and you say it again, and then again and again and again and again, and about the time that you’re absolutely sick of saying it is about the time that your target audience has heard it for the first time.”</em></p> <p>That is why the debate of the next few years will be about “clean energy.” It is a legitimate debate, so long as everyone knows exactly what it is really about. Just remember, the story you are about to see is true; only the names have been changed to protect the political agenda.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/us-change-words-not-your-mind.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:36:00-07:00">10:36 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=377976537714282543">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=377976537714282543" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7397290347708693605"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/us-power-for-people.html">US: Power for the People</a> </h3> <div class="post-body entry-content"> <h2 class="post_name" id="post-821"><span style="font-size:180%;">US: Power for the People – by Paul Driessen</span></h2> <div class="post_meta"> </div> <p><em><a href="http://www.hacer.org/usa/wp-content/uploads/2011/04/unidad.jpg"><img class="alignleft size-full wp-image-822" title="unidad" src="http://www.hacer.org/usa/wp-content/uploads/2011/04/unidad.jpg" alt="" width="278" height="277" /></a>You cannot champion the poor, but support anti-energy policies that perpetuate poverty.</em></p> <p>In a scene reminiscent of <a href="http://www.history.org/foundation/journal/summer03/cabinet.cfm" target="_blank">Colonial Williamsburg</a>, for 16 years Thabo Molubi and his partner had made furniture in South Africa’s outback, known locally as the “veld,” using nothing but hand and foot power. When an electrical line finally reached the area, they installed lights, power saws and drills. Their productivity increased fourfold, and they hired local workers to make, sell and ship far more tables and chairs of much higher quality, thereby also commanding higher prices.</p> <p>Living standards soared, and local families were able to buy and enjoy lights, refrigerators, televisions, computers and other technologies that Americans and Europeans often take for granted. They could even charge their cell phones at home! The area was propelled into the modern era, entrepreneurial spirits were unleashed, new businesses opened, and hundreds of newly employed workers joined the global economy.</p> <p>People benefited even on the very edge of the newly electrified area. Bheki Vilakazi opened a small shop where people could charge their cell phones before heading into the veld, where instant communication can mean life or death in the event of an accident, automobile breakdown or encounter with wild animals.</p> <p>Thousands of other African communities want the same opportunities. But for now they must continue to live without electricity, or have it only sporadically and unpredictably a few hours each week. Over 700 million Africans – and some two billion people worldwide – still lack regular, reliable electricity and must rely on toxic wood and dung fires for most or all of their heating and cooking needs.</p> <p>Mothers with babies strapped on their backs must bend over open fires, breathing poisonous fumes and being struck down by debilitating, often fatal lung diseases. Homes, schools, shops and clinics lack the most rudimentary electrical necessities. Impoverished families must live in mud-and-thatch or cinderblock houses that allow mosquitoes to fly in, feast on human blood and infect victims with malaria. And parents and children must carry and drink untreated water that swarms with bacteria and parasites which cause cholera, diarrhea and river blindness. When the sun goes down, their lives shut down.</p> <p>The environmental costs are equally high. In Rwanda gorilla habitats are being turned into charcoal, to fuel cooking fires. In Zambia, entrepreneurs harvest trees by the thousands along highways, selling them to motorists heading back to their non-electrified homes in rural areas and even parts of cities. As quickly as First World charities hold plant-a-tree days, Africans cut trees for essential cooking.</p> <p>If eco-activists have their way, it will be like this for decades to come.</p> <p>In his DotEarth blog for the <em>New York Times</em>, columnist Andrew Revkin lamented this intolerable situation. “Access to the benefits that come with ample energy trumps concerns about their tiny contribution of greenhouse gas emissions,” he wrote. But despite agreeing with the Committee For A Constructive Tomorrow on this central issue, Revkin took issue on several items.</p> <p>CFACT’s “Stop energy poverty” slogan is clever, <a href="http://dotearth.blogs.nytimes.com/2011/01/04/stop-energy-poverty-great-slogan-so-how/" target="_blank">he wrote</a>. But where are its “substantive proposals for getting affordable energy” to those who don’t have it? Africa sits on vast deposits of natural gas and liquid condensates. Perhaps CFACT could find a business model that can lead to capturing, instead of flaring, those “orphan fuels,” Revkin suggested, while wondering why the Committee offers solar ovens to a Yucatan village and uses its slogan in part to challenge global warming scares.</p> <p>Converting orphan fuels to productive uses is a terrific idea. That’s why CFACT opposes restrictions on using these fuels and wants to help find investors and build local support for gas-fired power plants that can electrify and modernize homes and businesses, create jobs, improve health and living standards, purify water, and launch companies that can build modern homes. Non-orphan deposits of oil, “tight oil,” natural gas, shale gas and coal could do likewise.</p> <p>Unconventional US shale gas reserves alone are now estimated at about 57 trillion cubic meters (2000 trillion cubic feet) – enough for 100 years at current US consumption rates, on top of conventional reserves. Africa almost certainly has large gas, oil, coal and uranium deposits of its own, lying untapped beneath numerous poor countries, waiting to fuel an economic boom – if environmentalists, self-interested companies and government agencies would stop using global warming and other scares to justify their opposition to large-scale generating plants.</p> <p>Until then, the Committee will continue providing interim measures – solar ovens, used laptops and small solar-powered charging systems – while also training people in computer and business skills, and assisting Yucatan and Ugandan villagers with tree farm and other projects.</p> <p>All these are akin to the help that first responders provide, before getting disaster victims to hospitals. They are important steps toward individual and community empowerment that comes from having property rights, free enterprise, and full access to modern technologies that improve, enhance and safeguard lives. But none of this is possible without reliable, affordable energy to power those technologies.</p> <p>“If abundant, affordable, clean energy and water were readily available to everyone, all the other problems would become much easier to solve,” Nobel Laureate Richard Smalley observed. Of course, “clean” does not have to mean non-carbon dioxide emitting, though Mr. Revkin seems reluctant to support energy that comes from fossil fuels, notes CFACT executive director Craig Rucker. “However, you cannot champion the poor, while supporting policies that perpetuate poverty,” Rucker emphasizes.</p> <p>Modern coal-fired power plants are far cleaner than their predecessors, posing few environmental or health problems, except in the minds and propaganda of eco-activists. They are infinitely cleaner than the open fires that provide pitiful, polluting, often deadly energy for the barest necessities. Gas-fired plants are cleaner still, and safe, modern nuclear plants could also support major economic booms.</p> <p>To suggest that impoverished nations must worry more about CO2 than about tuberculosis, cholera or malaria is absurd. To tell them their energy options must be limited to expensive, unreliable, insufficient wind and solar power is immoral. To impose anti-hydrocarbon restrictions on poor countries ensures that they will remain poor and diseased, with life expectancies in the low forties.</p> <p>As Dambisa Moyo and others suggest, it is time for rich Western nations to provide less aid, fewer restrictions – and much more trade, investment and banking expertise and opportunity; business, agricultural and property rights know-how; and energy technologies that will harness and utilize abundant, reliable, affordable hydrocarbon energy. They also need to stop propagating scare stories and imposing restrictions on the use of hybrid and genetically modified seeds to reduce malnutrition, and insecticides to reduce disease.</p> <p>CFACT’s goal is simple, says Rucker. “Give poor families, communities and nations the same opportunities we had, the same freedoms to chart their destinies, the same rights to create and manage their own wealth, develop their own free and healthy institutions, solve their own environmental and health challenges – and even make their own mistakes along the way.”</p> <p>Brazil, China, India and Indonesia are not about to stop building new coal-fired power plants; nor are developed countries going to tear their plants down or abandon their fossil fuel-powered vehicles. Africa and other poor regions need to adopt the same attitude – and also seek investors and trade opportunities, rather than just more aid that is often merely life support for corrupt dictators and bureaucrats.</p> <p>CFACT’s plan is also simple, Rucker adds. Help now with solar ovens, laptops and other first aid. Challenge and change harmful, immoral, lethal policies that limit access to energy and other modern technologies, hobble job creation, impair health and kill millions. And help persuade investors and Third World communities to provide the energy technologies that will make health and prosperity happen.</p> <p>“We hope Andrew Revkin and millions of other caring people will join us in supporting a <a href="http://www.cfact.org/a/1856/Seeing-the-face-of-energy-poverty-upclose-in-Cancun" target="_blank">global energy quest</a> that advances human progress, while limiting actual environmental risks.”</p> <p><em>* Paul Driessen is senior policy advisor for CFACT and the Congress of Racial Equality.</em></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/us-power-for-people.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:35:00-07:00">10:35 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7397290347708693605">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7397290347708693605" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="267858654436491646"></a> <div class="post-body entry-content"> <div style="width:640px; height: 400; overflow: hidden"> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/blog-post_5643.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:34:00-07:00">10:34 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=267858654436491646">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=267858654436491646" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3209270084924372691"></a> <div class="post-body entry-content"> <div style="width:640px; height: 400; overflow: hidden"> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/blog-post_1073.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:33:00-07:00">10:33 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3209270084924372691">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3209270084924372691" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7314405716893472262"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/us-trade-deficit-narrows.html">U.S. Trade Deficit Narrows</a> </h3> <div class="post-body entry-content"> <h1>U.S. Trade Deficit Narrows Less Than Forecast on Soaring Commodity Prices</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Alex Kowalski</span></cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="U.S. Trade Deficit Narrowed in February as Imports Decrease " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ijXYJPqSbXzU" /> </div> <p class="caption">Imports had reached a more than two-year high in January and exports were at record levels. Photographer: Mark Green/Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Wells Capital's Paulsen Interview on U.S. Dollar, Oil " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iAC23c3V8Ibs" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68600716/">Play Video</a></div> </div> <p class="caption"> April 12 (Bloomberg) -- James Paulsen, chief investment strategist at Wells Capital Management, talks about the outlook for the U.S. dollar and oil prices. Paulsen speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg) </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="U.S. Import Prices Rose 2.7%; Trade Deficit Narrows " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iPxdDpXFkWoE" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68589896/">Play Video</a></div> </div> <p class="caption"> April 12 (Bloomberg) -- Prices of goods imported into the U.S. rose in March by 2.7 percent, the fastest pace since June 2009, Labor Department figures showed today in Washington. A separate report released today by the Commerce Department states the U.S. trade deficit narrowed in February from a seven-month high to $45.8 billion from a larger-than-previously-estimated $47 billion in January. Betty Liu and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg) </p> </div> </div> </div> <p>The <a href="http://topics.bloomberg.com/u.s.-trade-deficit/">U.S. trade deficit</a> narrowed less than forecast in February, indicating soaring commodity prices hurt the world’s largest economy at the start of the year. </p> <p>The gap shrank 2.6 percent to $45.8 billion from a larger- than-previously-estimated $47 billion in January, according to figures from the Commerce Department today in Washington. Another report showed the cost of imported goods jumped in March by the most in almost two years. </p> <p>Economists at Morgan Stanley and Barclays Capital Inc. were among those cutting estimates for first-quarter growth after the data showed exports dropped along with imports, failing to make up for a slowing in consumer spending. The earthquake and tsunami in Japan may further reduce trade in coming months after parts shortages caused some factories to close. </p> <p>“Everything was weaker across the board,” Ted Wieseman, an economist at Morgan Stanley in <a href="http://topics.bloomberg.com/new-york/">New York</a>, said, referring to the trade data. “Import prices are reflecting surging energy prices,” he said, they “are going through the roof and that has been weighing on <a href="http://topics.bloomberg.com/consumer-spending/">consumer spending</a>.” </p> <p>Prices of imported goods rose in March at the fastest pace since June 2009, led by a gain in <a href="http://topics.bloomberg.com/crude-oil/">crude oil</a> and the biggest jump in food costs since 1994, according to figures from the Labor Department. The 2.7 percent increase in the import-price index followed a 1.4 percent rise in February. Costs excluding fuel rose 0.6 percent. </p> <p>Federal Reserve Vice Chairman <a href="http://topics.bloomberg.com/janet-yellen/">Janet Yellen</a> is among policy makers saying the increase in food and fuel costs will have only a temporary impact on inflation and consumer spending and warrants no reversal of record monetary stimulus. </p> <h2>Yellen on Prices </h2> <p>“The surge in commodity prices over the past year appears to be largely attributable to a combination of rising global demand and disruptions in global supply,” Yellen said yesterday in a speech in New York. “These developments seem unlikely to have persistent effects on consumer inflation or to derail the economic recovery and hence do not, in my view, warrant any substantial shift in the stance of monetary policy.” </p> <p>Stocks dropped as sales at Alcoa Inc. missed analyst estimates and Tokyo Electric Power Co. said its earthquake-hit nuclear power plant may release more radiation than Chernobyl. The Standard & Poor’s 500 Index fell 1 percent to 1,311.87 at 11:53 a.m. in New York. Oil fell in the biggest two-day drop in 14 months on the outlook for growth. </p> <h2>Projected Drop </h2> <p>The median forecast of 71 economists surveyed by Bloomberg News projected the <a href="http://topics.bloomberg.com/trade-gap/">trade gap</a> would shrink to $44 billion. Estimates ranged from deficits of $41 billion to $50.5 billion. The Commerce Department had previously estimated the January shortfall at $46.3 billion. </p> <p>Morgan Stanley lowered its tracking estimate for gross domestic product in the first three months of the year to a 1.5 percent annual pace from a 1.9 percent forecast prior to the data. <a href="http://topics.bloomberg.com/barclays-capital/">Barclays Capital</a> in New York lowered it to a range of 1.5 percent to 2 percent, down a half point. GDP climbed at a 3.1 percent pace in the last three months of 2010. </p> <p>After eliminating the influence of prices, which renders the figures used to calculate GDP, the trade deficit narrowed to $49.5 billion from $50.3 billion. The figures exceeded the fourth-quarter average of $45.3 billion. </p> <p>Exports decreased 1.4 percent to $165.1 billion after climbing 2.6 percent in January to a record $167.5 billion. Decreased demand for autos and parts and for capital goods like semiconductors and engines contributed to the drop. </p> <h2>Imports Fall </h2> <p>Imports fell 1.7 percent to $210.9 billion after climbing 5.4 percent in January, the biggest gain since 1993. Decreasing demand for autos and petroleum products led the decline. </p> <p>An early Chinese New Year may have contributed to the volatility in trade this year. Chinese manufacturers typically run flat-out prior to the holiday then shut down for at least a week, according to <a href="http://topics.bloomberg.com/andrew-tilton/">Andrew Tilton</a>, an economist at Goldman Sachs Group Inc. in New York. The Year of the Rabbit was celebrated on Feb. 3, slightly earlier than the average timing. </p> <p>The trade gap with <a href="http://topics.bloomberg.com/china/">China</a> slumped to $18.8 billion from $23.3 billion the prior month. </p> <p>A 6 percent drop in the value of the dollar in the year to April 8 against a weighted basket of currencies from the country’s biggest trading partners is making American-made goods cheaper for buyers abroad. Combined with growth in emerging economies, the decrease will probably lift exports later this year and benefit manufacturers like <a href="http://www.bloomberg.com/apps/quote?ticker=CAT:US" title="Get Quote" class="web_ticker">Caterpillar Inc. (CAT)</a> </p> <h2>Business ‘Booming’ </h2> <p>Caterpillar, the world’s largest maker of construction equipment, is seeing a “slow, steady increase” in demand in <a href="http://topics.bloomberg.com/north-america/">North America</a>, Chief Executive Officer <a href="http://topics.bloomberg.com/doug-oberhelman/">Doug Oberhelman</a> said at an industry conference on March 23. “Business is booming outside the U.S.” </p> <p>The world economy will expand 4.4 percent this year and 4.5 percent in 2012, the Washington-based <a href="http://topics.bloomberg.com/international-monetary-fund/">International Monetary Fund</a> said yesterday in its World Economic Outlook report. Developing nations will grow 6.5 percent this year and next while advanced economies will expand 2.4 percent in 2011 and 2.6 percent in 2012, the IMF said. </p> <p>The earthquake and tsunami in Japan may hamper trade flows as parts shortages shutter factories. </p> <p>“We’re going to have some headwinds in the first half of the year, given the <a href="http://topics.bloomberg.com/japan/">Japan</a> situation, though we do expect trade to pick back up,” said <a href="http://topics.bloomberg.com/omair-sharif/">Omair Sharif</a>, an economist at RBS Securities Inc. in <a href="http://topics.bloomberg.com/stamford/">Stamford</a>, <a href="http://topics.bloomberg.com/connecticut/">Connecticut</a>. “We’re going to have some disruptions in the supply chain, especially in the auto side, with all the news coming out of Japan.” </p> <h2>Crude Oil </h2> <p>Amid stronger global growth and turmoil in the Middle East, commodity costs are on the rise. The average price of a barrel of imported crude oil climbed to $87.17 in February, today’s trade figures showed, the highest since October 2008. Americans responded to the increase by importing 242 million barrels in February, the fewest in 12 years. </p> <p>Increases in food and fuel costs have hurt consumer spending, which accounts for about 70 percent of the economy. Household purchases probably climbed at a 2 percent annual pace in the first quarter, half the 4 percent gain in the previous three months, according to the median forecast of economists surveyed by Bloomberg earlier this month. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/us-trade-deficit-narrows.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-12T10:32:00-07:00">10:32 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7314405716893472262">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7314405716893472262" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="3814761849437833067"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/romney-moves-toward-us-presidential-run.html">Romney Moves Toward U.S. Presidential Run</a> </h3> <h1>Romney Moves Toward U.S. Presidential Run and Focuses Fire on Obama Policy</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Lisa Lerer</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Mitt Romney " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iOZcxkxcUd_4" /> </div> <p class="caption">Republican Mitt Romney announced today he’s forming a committee to explore a race for the presidency next year. Photographer: Tim Sloan/AFP/Getty Images </p> </div> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Romney Announces Exploratory Committee for Presidential Race " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iTiclNzJzavY" /> </div> <p class="caption">Republican Mitt Romney acknowledges the audience before speaking on day three of the Republican National Convention in St. Paul, Minnesota. Photographer: Joshua Roberts/Bloomberg </p> </div> </div> </div> <p>As Republican <a href="http://topics.bloomberg.com/mitt-romney/">Mitt Romney</a> took the first official steps toward a presidential bid yesterday, he attacked President Barack Obama’s economic policies even while questions linger over his commitment to conservative causes. </p> <p>“It is time that we put America back on a course of greatness, with a growing economy, good jobs and fiscal discipline in <a href="http://topics.bloomberg.com/washington/">Washington</a>,” Romney, 64, said in a video posted on his <a href="http://www.mittromney.com/" title="Open Web Site" rel="external">website</a> in which he announced that he is forming a committee to explore a 2012 race for the White House. </p> <p>Romney, a former governor of Massachusetts, is the second Republican to establish a presidential exploratory group, following former Minnesota Governor <a href="http://topics.bloomberg.com/tim-pawlenty/">Tim Pawlenty</a>. Romney’s announcement came on the eve of the fifth anniversary of his signature on a health-care law in <a href="http://topics.bloomberg.com/massachusetts/">Massachusetts</a> that some Republican activists have been urging him to disavow. </p> <p>Romney has been planning a second run for the presidency since losing the Republican nomination in 2008 to Arizona Senator <a href="http://topics.bloomberg.com/john-mccain/">John McCain</a>. National polls of likely Republican primary voters have shown him <a href="http://online.wsj.com/article/SB10001424052748703280904576247210666934664.html" title="Open Web Site" rel="external">leading</a> or one of the top contenders among a large group of potential candidates. Many Republicans view him as the “default candidate” for the nomination, said <a href="http://ase.tufts.edu/polsci/faculty/berry/" title="Open Web Site" rel="external">Jeffrey Berry</a>, a professor of political science at <a href="http://topics.bloomberg.com/tufts-university/">Tufts University</a> in Medford, Massachusetts. </p> <p>Establishment of the Massachusetts-based exploratory committee allows Romney to raise money for a presidential campaign and requires him to file financial reports with the <a href="http://topics.bloomberg.com/federal-election-commission/">Federal Election Commission</a>. </p> <p>As Romney’s efforts progress, he must deal with the challenge of proving his conservative credentials to a wide swath of the Republican political base, Berry said. </p> <h2>Policy Reversals </h2> <p>In the 2008 campaign, he was criticized over his reversals on social issues such as abortion and gay rights, which he no longer supports. When running unsuccessfully against then- Democratic incumbent Edward M. Kennedy for a U.S. Senate seat from Massachusetts in 1994, Romney had backed legal abortion and advocated for gay rights. </p> <p>As governor of Massachusetts from 2003 to 2007, Romney supported a law similar to the national health-care overhaul despised by many fiscal and social conservatives. </p> <p>“He has to convince people he has a backbone, and that backbone is conservative through and through,” Berry said. </p> <p>Romney also struggled in his previous presidential campaign to alley skepticism about his Mormon faith, particularly from evangelical Christians who make up a significant portion of the Republican electorate. If he runs and is elected, he would be the first Mormon president. </p> <p>Romney invested more than $40 million of his own fortune in his 2008 presidential bid. </p> <h2>Business Background </h2> <p>In the video recorded yesterday at the University of <a href="http://topics.bloomberg.com/new-hampshire/">New Hampshire</a> announcing his exploratory committee, he touted his private-sector experience as a co-founder of Boston-based private equity firm Bain Capital LLC and as CEO of the 2002 Salt Lake City Winter Olympics. </p> <p>“From my vantage point in business and in government, I have become convinced that America has been put on a dangerous course by Washington politicians, and it has become even worse during the last two years,” Romney said. “But I am also convinced that with able leadership, America’s best days are still ahead.” </p> <p>“Sometimes I was successful and helped create jobs, other times I was not,” he said. “I learned how America competes with companies in other countries, why jobs leave, and how jobs are created here at home,” he said. </p> <h2>Individual Mandate </h2> <p>Like the federal health-care law that Obama pushed through Congress last year and that Republicans are trying to overturn, the 2006 health-care measure in Massachusetts that Romney shepherded into law includes a mandate requiring individuals to purchase insurance. </p> <p>Democrats are attempting to highlight his support for the state law by hosting mock birthday displays today in early primary states. In addition, Obama and White House officials have praised the Massachusetts law. </p> <p>“I agree with Mitt Romney, who recently said he’s proud of what he accomplished on health care in Massachusetts and supports giving states the power to determine their own health- care solutions,” Obama said Feb. 28 in remarks to the country’s governors. </p> <p>In a Wall Street Journal/NBC News <a href="http://online.wsj.com/article/SB10001424052748704013604576247331658689202.html" title="Open Web Site" rel="external">poll</a> conducted March 31- April 4, 21 percent of Republican primary voters backed Romney, putting him ahead of nine other potential candidates. </p> <h2>Republican Rivals </h2> <p>Former House Speaker <a href="http://topics.bloomberg.com/newt-gingrich/">Newt Gingrich</a> of <a href="http://topics.bloomberg.com/georgia/">Georgia</a> on March 3 announced the start of a <a href="http://www.newtexplore2012.com/" title="Open Web Site" rel="external">website</a> to enable him to raise money and explore a presidential run. Other prospective 2012 Republican candidates include former Arkansas Governor Mike Huckabee, who won the Iowa caucuses in 2008; former Alaska Governor Sarah Palin, the party’s 2008 vice presidential nominee; Governor Mitch Daniels of <a href="http://topics.bloomberg.com/indiana/">Indiana</a>, a former director of the Office of Management and Budget; and former Utah Governor <a href="http://topics.bloomberg.com/jon-huntsman/">Jon Huntsman</a>, who is stepping down as ambassador to <a href="http://topics.bloomberg.com/china/">China</a> this month. </p> <p>Mississippi Governor Haley Barbour has expressed interest in the race and has begun traveling to states that hold early primaries and caucuses, as have former U.S. Senator Rick Santorum of <a href="http://topics.bloomberg.com/pennsylvania/">Pennsylvania</a> and Representative <a href="http://topics.bloomberg.com/michele-bachmann/">Michele Bachmann</a> of <a href="http://topics.bloomberg.com/minnesota/">Minnesota</a>, a Tea Party favorite. </p> <p>Businessman <a href="http://topics.bloomberg.com/donald-trump/">Donald Trump</a> also is flirting with seeking the Republican nomination, saying he will announce in June whether he is a candidate. </p> <p>Obama formally announced his re-election campaign on April 4, releasing a campaign video on his <a href="http://www.barackobama.com/" title="Open Web Site" rel="external">website</a> and sending an e- mail to supporters that said the job of preparing for his campaign “must start today.” The headquarters for his re- election bid will be in <a href="http://topics.bloomberg.com/chicago/">Chicago</a>, his adopted hometown. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-54792407029562856562011-04-07T15:45:00.000-07:002011-04-07T15:46:21.950-07:00Work in Progress: A Boy and His Mom<h1> <span style="font-size:130%;">Work in Progress: A Boy and His Mom</span></h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/369/Robert-Higgs">Robert Higgs</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/5176/BobAndMom.jpg" alt="Bobby Larry and his mom" /> <div class="caption">Bobby Larry and his mom</div> </div> <div class="editorial-preface"> <p>[Independent Institute, the <i>Beacon</i>, April 2011]</p> </div> <p>Anyone who knows me well also knows that I revere my father. Two years ago, on the 100th anniversary of his birth, I wrote <a href="http://www.independent.org/blog/index.php?p=1622">a short remembrance </a>of him as a tribute to the most important man in my life, the kind of man who might well inspire others, as he inspired me. In view of how greatly I esteem my father, someone might infer that I do not have a great deal of appreciation for my mother (Doris Geraldine Higgs, née Leiby, May 14, 1917 – May 25, 1980). Such an inference, however, would be a mistake. Although my mom was in many ways a different sort of person than my dad, she also had a great influence on her younger son (Bobby Larry, as she called me). As I have reflected on my relationship with her, I have come to believe that in an extremely important regard she influenced me in exactly the same way that my dad influenced me — which is to say, she gave me an appreciation of the joy of working, and of doing one's work readily and well, rather than grudgingly and carelessly.</p> <p>Most important, perhaps, mom set a good example: she was a hard worker in her own daily life. Because the town in which she grew up had no high school and her father would not allow her to leave home to continue her education, she had no schooling beyond the eighth grade. When she was 16 years old, she married my father (who was eight years older), and during the 45 years of their marriage (ended by his death in 1977), she kept house as if being a good wife and mother constituted a vital and worthy occupation. </p> <p>Even if she had other things to do, she prepared three full meals (each almost always from scratch) every day. Meal preparation might be a fully integrated production process, starting with killing a chicken, then plucking and gutting it, and cutting it into pieces for frying. I sometimes brought home fish or crawfish I had caught or a cottontail rabbit I had shot, and, with my help in cleaning, shelling, or skinning, as the raw material required, she cooked them for supper. (I also raised rabbits for our table.) After each meal, she washed and dried the dishes (though after supper my dad often dried) and swept the kitchen. She cleaned the entire house daily, keeping it neat and spotless even though we lived in a dusty rural area during most of the years when I was growing up. Monday was laundry day for her, which meant that she labored in the garage with her old-fashioned wringer washer, hanging the damp clothing and other items on the clothesline to dry, and later gathering and carefully folding them and — for items such as shirts, sheets, and pillow cases — ironing them before putting everything away in its proper drawer.</p> <p>Cooking, cleaning, and washing, however, hardly composed the whole of her work. As a young woman, she had "felt the call" to preach the Gospel of Jesus Christ, and by the time I was four or five years old, she had become the pastor of a backwoods Pentecostal church somewhere beyond McAlester, Oklahoma, the town near which we lived at the time. Later, after we moved to California in 1951, she was again a pastor at several different churches in succession. This ministry demanded a great deal of work from her, for preparing sermons, conducting services several times each week (sometimes every night, when a "revival meeting" was going on), and attending to the spiritual and personal needs of her congregation in times of sickness, bereavement, and other troubles. Her natural compassion and sincere sympathy, as well as her religious faith, served her well in this calling.</p> <p>Although being a full-time housewife, mother, and pastor might have been enough, or even too much, for most women, she found time for a great deal of additional activity — her secret was that no matter what task she tackled, she worked very fast. She crocheted and embroidered decorative items, especially doilies and pillowcases, for our home. Once each week, for several hours, she met with other ladies at the church to make quilts in a team effort to help support the church. (I still have some of these beautiful works of folk art.) She tended a large vegetable garden in the spring and summer, as well as her beloved roses and other flowers. At certain times of the year, she went out to the cotton fields, which in those days still required a great deal of hand labor, to work with gangs of laborers in "chopping" (weeding) and "picking" (harvesting) cotton.</p> <div class="figure-left"><img src="http://images.mises.org/5176/BobsMom.jpg" alt="Mrs. Higgs" /> <div class="caption">Doris Geraldine Higgs</div> </div> <p>Because as a young boy I went everywhere she went — I can't recall ever having a babysitter, as such, although I sometimes spent time at a neighbor's house with my friends — I accompanied her in her work outside the house. The earliest such experience had to do with picking cotton, when I was perhaps four or five years old. I was too little to have my own sack, so I would go ahead of her in the row, plucking out the fluffy lint and building up a little pile in the row. When she had picked her way up to my pile, she would deposit it in her sack, and I would move farther ahead of her to repeat the process, again and again. I loved this work. Besides enjoying the picking itself, in good-natured company with a group of other pickers, I had a fine time tossing unopened bolls at other kids, who naturally tossed bolls back at me. By the time I was six years old, I had persuaded mom to make me a sack of my own, which she did by using a potato sack, attaching a strap that I could place over one shoulder, in the standard manner for cotton pickers. When my little sack was stuffed full, I would take it to the scales, have it weighed, collect my per-pound payment, dump the contents of my sack into the trailer (sometimes adding a swan dive into the cotton if it had piled up high in the trailer), and return to the field to fill it again. As I got older, my sacks got bigger. By the time I was 10 or 11 years old, I had graduated to the standard 12-foot sack the adults used, and I was able to pick as much as 200 pounds or so in a day. By the late 1950s, however, picking machines had displaced hand pickers almost completely in our area of California, so my cotton picking with mom ended when I was about 12 or 13 years old.</p> <p>Mom also took me on a variety of ad hoc work outings. In the late summer, we would visit peach and apricot orchards at which the commercial harvesting had ended, notwithstanding that a great deal of fruit remained here and there on the trees. It was going to rot unless someone took the trouble to collect it, so the owners allowed anyone and everyone to come into the orchards to pick it without charge. We would bring home big boxes filled with fruit, which my mom would can for our consumption during the following year. We would also go along the banks of the San Joaquin River where wild blackberries grew profusely and pick great quantities of them. Again, the haul would be canned and — best of all — made into my mom's mouth-watering blackberry cobbler. Also along the river, in season, we found and picked wild mustard greens, a delicacy in my mom's taste, though intolerable in mine.</p> <p>Mom taught me to drive a car. When I was 10 years old, I began to drive on the country roads, and when I was 15, she took me to get a driver's license (six months before I had reached my 16th birthday, which in those days was permitted because I had taken a driver's education course in school). She cringed but did not prevent me from getting my first shotgun at age ten. With my little .410 single-shot gun and an endless expanse of game-rich fields, sloughs, and marshes as my hunting ground, I became a great hunter — in my own mind, at least. (I confess that I was considerably more careful with the gun than I was with the car, and the end result tested my dad's patience on more than one occasion.) Mom taught me how to dress, how to "behave," how to write a check, and how to carry out a thousand other tasks an adult must master. I learned how to cook by watching her and helping with simple jobs in the kitchen, such as cleaning fish and grinding cabbage with the hand-cranked grinder to make coleslaw. Sometimes I helped with the dishwashing after supper.</p> <p>Starting when I was 14, during school vacations in the summer, I worked full-time in regular jobs, alongside the men, first on the ranch where we lived and later at a local box factory. My parents did not demand or even suggest such employment — "you'll have plenty of time to work later," they said — but I had learned from their examples to value earning my own way. So, from my sophomore year in high school onward, I did not need to take any money from them, although I continued to receive my room and board from them, as always.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Crisis-and-Liberty-The-Expansion-of-Government-Power-in-American-History-MP3-CD-P183.aspx"><img src="http://mises.org/store/Assets/ProductImages/CD3100master.jpg" width="200" border="0" /></a></div> </div> <p>When I was a kid, mom allowed me to roam far and wide across the countryside, and my boyhood was occupied not only with attending school and playing on school sports teams — and with working, as I've described — but also with exploring, fishing, hunting, and swimming in the canals. In the evening, when supper was ready, I was often still outside somewhere, and my mom's voice would ring out across the darkening fields to call me in, "Bobby Laaaaaaareeee." In my memory, I hear it still as clearly as I heard it then.</p> <p>Any boy would be fortunate, as I most certainly was, to have such a mother: loving, kind, gentle, compassionate, good-humored, hardworking, dedicated to her family and loyal to her friends, at home in her world, and at peace with her place in it.</p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-74560494948507363512011-04-07T15:43:00.001-07:002011-04-07T15:43:25.494-07:00<div class="post-body entry-content"> <h1> <span style="font-size:130%;">Capitalism at the Farm Stand</span></h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/1608/Stefano-R-Mugnaini">Stefano R. Mugnaini</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/FarmStand.jpg" alt="" border="0" /></div> <p>I laugh to myself every time I pull up to the little farm stand to pick up my weekly share from the Community Supported Agriculture program. I see a hilarious irony in the bumper stickers on the cars, proclaiming the social consciousness and leftist orientation of my fellow CSA members. I chuckle when I see the variety of reusable shopping bags, each proclaiming some message about how they're saving the planet "one bag at a time."</p> <p>As I stand, filling the provided plastic (and supposedly nonreusable) grocery bags, I can barely hide my amusement. I am engaging in an enterprise that is the essence of pure capitalism while surrounded by those to whom the very word "capitalism" is one of the greatest of obscenities. It is voluntary exchange; it is a relationship where everyone feels as if they have won. Isn't that the essence of the free market?</p> <p>To join a Community Supported Agriculture program, you buy a share of the farm's produce each season, which entitles you to a weekly box of locally grown vegetables and fruit. In a sense, members are not purchasing produce per se, but the rights to a certain proportion of produce should it be successfully delivered. It is more analogous to buying mineral rights or investing in stock for the dividends.</p> <p>Most CSAs endeavor to grow without a lot of chemical pesticides and fertilizers, which makes CSAs extremely popular with environmentalists and others of the Left. They think they are doing battle with capitalism and corporate greed; I say it is a pure and beautiful example of a market exchange. They are acting like capitalists, even if they don't know it. To quote one of my favorite lines from <i><a href="http://www.mises.org/resources/5509/Bourbon-for-Breakfast">Bourbon for Breakfast,</a></i> "Capitalism is so darn good at what it does that it can even bamboozle muddleheaded socialists to cough up money for its products; that's wonderful" (p. 60).</p> <p>The evidence of this is found in the details of the exchange. I pay $275 per season for a "medium share," which is more than enough for my family of four. The season lasts roughly 15 weeks, but can be shorter or longer depending on weather. This means I pay about $18 per week for more than ten pounds of produce; an average of less than $2 per pound. If you go and peruse the grocery store, you'll find that fresh produce generally costs more than this — and "organics" are significantly higher — while the quality and flavor is completely inferior.</p> <p>The farm gets an infusion of capital at the beginning of the growing season when they most need it, a guaranteed market for a proportion of their goods, and an opportunity to advertise and sell other items not included in the CSA, such as milk and beef. Additionally, and perhaps most importantly, in the event of crop failures, there is shared risk between the farmer and the consumer. If they have a bad year with some particular crop, then you receive less; if they have a bumper crop, you are given more than you can possibly use. A few seasons ago, we were getting three or four quarts of strawberries a week; more than we could possibly consume, even with my daughter eating half a quart on the way home from the farm stand.</p> <p>The consumer receives better-tasting produce at a lower price than can be had elsewhere. Additionally, for those who care about such things, they are purchasing more than just vegetables: they are purchasing the air of superiority and ecofriendly street cred that comes from shunning the corporate grocery store and sharing in something that they believe to be one step away from a hippie commune. That reality doesn't support such a conclusion is immaterial; if we are driven to act, even based upon some imaginary construct, we are still acting in accordance with market principles. It's an example of the Misesian idea that all human action is an effort to relieve some discomfort about the way things are.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Bourbon-for-Breakfast-P10385.aspx"><img src="http://mises.org/store/Assets/ProductImages/SS532.jpg" border="0" /></a></div> </div> <p>Rather than striking a blow at the evils of the free market, CSA members exemplify voluntary exchange in its purest form. I and the farmer "beat the market" in this transaction, largely because of the direct nature of the buying and selling. I walk away from the exchange having purchased produce at a lower price by accepting a little bit of risk, while the farmer, having cut out the wholesaler, walks away having sold the fruit of his labor at a higher price.</p> <p>Additionally, I purchase the satisfaction of knowing that the "muddleheaded socialists" loading up and comparing their reusable shopping bags are unwitting participants in a market economy that they claim to reject. For me, that satisfaction alone is worth almost the price of membership. The vegetables are just a bonus.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/capitalism-at-farm-stand.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T15:39:00-07:00">3:39 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=9191492284992805260">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=9191492284992805260" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="8971234178822684247"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/murray-my-intellectual-mentor.html">Murray, My Intellectual Mentor</a> </h3> <div class="post-body entry-content"> <h1> Murray, My Intellectual Mentor</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/503/Gene-Epstein">Gene Epstein</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="editorial-preface"> <p>[Introduction to <a href="http://mises.org/store/Economic-Controversies-P10459.aspx"><i>Economic Controversies</i></a> (2011)]</p> </div> <div class="figure"><a href="http://mises.org/store/Economic-Controversies-P10459.aspx"><img src="http://images.mises.org/EconomicControversiesBook.jpg" alt="Economic Controversies" border="0" /></a></div> <p>It was nearly 40 years ago that Murray Rothbard changed my life. I was then a PhD candidate in economics at the New School for Social Research in downtown Manhattan, while also teaching principles courses at a local university. And I was rapidly losing interest in the whole subject.</p> <p>Bored by the prattling of the left-wing crowd who dominated the New School, I could find nothing very satisfying in mainstream economics either. The New School's left-wingers certainly cared about achieving a free society. But their radical agenda mainly consisted of the "instrumentalist" ideas of the econ department's emeritus professor <a href="http://homepage.newschool.edu/%7Ehet/profiles/lowe.htm">Adolph Lowe</a>, which boiled down to coercing people into following the dictates of elitists like him.</p> <p>My only real objection to conventional economics was that it also bored me. If a theory like "perfect competition" was remote from reality, it seemed like a judgment on the imperfections of capitalism. After all, to the degree that capitalism was not perfectly competitive, it fell prey to the evils of "imperfect competition," which might require intervention from antitrust. As a typically zonked-out product of conventional schooling, I vaguely believed that to the degree that any textbook theory failed to explain reality, so much the worse for reality. (Not long ago I spoke with an econ grad student who, when pressed, believed this quite explicitly.)</p> <p>Always a compulsive book browser, I had more than once leafed through a two-volume work titled <a href="http://mises.org/resources/1082/Man-Economy-and-State-with-Power-and-Market"><i>Man, Economy, and State</i></a> in the New School library, whose author, Murray Rothbard, I had barely heard of. After the third or fourth look, I finally began reading the book — and experienced one eureka moment after another. Two especially memorable moments reflected the leftist tradition in which I was then mired.</p> <p>First, I learned that, if leftists thought "capital" deserved no share of the economic bounty, they were in a sense more right than they knew. Rothbard explained that, in a free market, there were no financial returns to owners of capital goods as such. Since capital goods consisted of such items as factories, machinery, offices, and desks, these goods were entirely the product of labor and land (or resources). So the monetary value of newly created capital goods is entirely attributable to the purchase of land and labor, with nothing remaining for capital-goods owners.</p> <p>How, then, did capital-goods owners make any money at all? The money they received came in two forms: interest payments for advancing resources in the present and profits for their entrepreneurial foresight — unless, of course, they were unsuccessful entrepreneurs and suffered losses.</p> <p>Second was Rothbard's devastating refutation of the theory of imperfect or "monopolistic" competition — dear to leftists' hearts, since it highlighted the irrationality of capitalism. A cornerstone of this theory is that a monopolistic competitor like "Marioni Brothers' Barbershop" (monopolistic because there is only one set of Marioni Brothers; competitive, since there are many barbershops), always operate with excess capacity.</p> <p>Economist Paul Samuelson had in fact targeted barber shops in his best-selling <i>Principles</i> text, observing, "The barbershop has excess capacity, with empty chairs much of the time," as he inveighed against the "wasteful social losses" resulting.<a href="http://mises.org/daily/5182/Murray-My-Intellectual-Mentor#note1" name="ref1" class="noteref" id="ref1">[1]</a></p> <p>Even before I read Rothbard, it occurred to me that, in this case at least, Professor Samuelson may have been missing something. Given his flexible work schedule, he may have had a habit of going for his haircut on a weekday, which would explain why he kept noticing empty chairs. Had he gone instead on Saturdays, he might have noticed that all the barber chairs were full, and that business was actually backed up. It then might have occurred to him that our hypothetical Marioni Brothers were not so dumb as to waste their money on excess capacity.</p> <p>The problem they actually faced as businessmen was the classic tradeoff between peaks and troughs in demand. Had they not had empty chairs during the week, they wouldn't have been able to take advantage of the glut in demand on weekends.</p> <p>Such were my tentative doubts. What Rothbard exposed was the preposterousness of the whole formulation. For why assume that all such monopolistic competitors <i>necessarily</i> invest in excess capacity? "To plan a plant for producing x units," he quotes economist Roy Harrod observing, "while knowing that it will only be possible to maintain an output of x−y units, is surely to suffer from schizophrenia."<a href="http://mises.org/daily/5182/Murray-My-Intellectual-Mentor#note2" name="ref2" class="noteref" id="ref2">[2]</a> It made no more sense to believe that all such businessmen would waste funds on excess as it was to believe that they would all consistently underinvest and plan on inadequate capacity.</p> <p>Then came what for me — robotically drawing all those cost and demand curves with the aid of differential calculus — was the coup de grâce. Rothbard demonstrated that the whole naïve error hinged on the technicalities of geometry. The theory was simply a prisoner of the way the demand curve was made tangent to the cost curve! He then adroitly showed two different ways of drawing the graph, without violating any of the assumptions. The miraculous result: The monopolistic competitor was now operating at the low point of his average cost curve, or at full capacity.<a href="http://mises.org/daily/5182/Murray-My-Intellectual-Mentor#note3" name="ref3" class="noteref" id="ref3">[3]</a></p> <p>I found such moments profoundly empowering, making me realize that, whenever I thought about economics outside formal straitjackets, I naturally fell back on modes of reasoning used by Rothbard and his mentor, Ludwig von Mises. That's why the very term "Austrian economics" is a kind of redundancy. Whenever people think sensibly about economics, they think like Austrians — one key reason why even the mainstream can have a few things to teach us, especially when they're writing mere journalism.</p> <p>After finishing <i>Man, Economy, and State</i>, I discovered the Laissez-Faire bookshop, then a well-stocked store on Mercer Street, which regrettably shut down years ago. Browsing at that bookshop virtually every Saturday, I gradually bought up all the Rothbard I could find, plus all the Mises, F.A. Hayek, and Israel Kirzner.</p> <div class="bigger pullquote">"The very term 'Austrian economics' is a kind of redundancy. Whenever people think sensibly about economics, they think like Austrians."</div> <p>I formed a reading group in Austrian economics, attended late-afternoon seminars chaired by Kirzner at New York University — and even barged into one of Rothbard's classes at Brooklyn Polytechnic Institute, where he taught for many years.</p> <p>I say "barged in" because somehow I forgot to ask him if I could sit in and audit. That might explain why he gave me a perplexed look when I raised my hand to ask a question, a reaction that discouraged me from chatting with him afterward. (The session must have been somewhere in the middle of the semester, since it was devoted entirely to the mundane task of reviewing the material to prepare students for the mid-term exam.)</p> <p>When I became a senior economist at the New York Stock Exchange, the director I reported to once told me, "Gene, you're the only guy I ever met who reads economics for fun." I was honestly surprised, and might have remarked that if everyone read Rothbard and the Austrians, they might have just as much fun.</p> <p>My only real, albeit brief, conversation with Rothbard occurred over the phone in October 1993, by which point he was teaching at the University of Nevada in Las Vegas, and I had just begun as a journalist at <i>Barron's</i>. University of Chicago economist Gary Becker had just won the economics Nobel, partly in recognition of his insight that a family was like a firm. (But how much more intriguing to theorize that a firm is like a family!)</p> <p>Asking Rothbard what he thought of Becker's win, I expected him to tell me that he thought applying economics to noneconomic issues was foolish. Instead he began by saying that it was gratifying to see a free-market-oriented economist like Becker gain such recognition.</p> <p>Then I asked, "But what do you think of the theory that a family is like a firm?"</p> <p>Rothbard answered, "I think it's nuts!" And I was thus treated, firsthand, to that nasal voice going squeaky.</p> <p>I had already become familiar with that nasal voice in the scores of audiotapes I'd heard of Rothbard's lectures, along with the salty insights tossed off with dazzling ease, punctuated by the signature giggle. To me, the joy in that giggle bespeaks an indefatigable spirit.</p> <p>In Rothard's lectures on economic history, I caught him in a rare moment of hypocrisy. While he blasted the use of price indexes in his writings, he never hesitated to use a price index to prove a point about historical trends. He was of course quite right to criticize the pseudoscience of price indexes. But he might have acknowledged more explicitly that they sometimes come in handy as a rough approximation of price trends.</p> <div class="figure-left"><a href="http://mises.org/media/category/108/Audio-Mises-Daily"><img src="http://media.mises.org/mp3/Badges_300/MisesDaily_125.png" alt="Audio Mises Daily" border="0" /></a></div> <p>To get a sense of the fun it must have been to be Murray Rothbard or to merely know him, try listening to one of his best lectures, <a href="http://mises.org/media/4589/The-Meaning-of-Ludwig-von-Mises">"The Meaning of Ludwig von Mises."</a></p> <p>We all know there could be no Murray Rothbard the great writer and thinker without his great teacher, Ludwig von Mises. Those who read and love Rothbard would be cheating themselves if they did not also read Mises's many books. In my case, reading Mises's magnum opus<i>, <a href="http://mises.org/resources/3250">Human Action</a></i>, for the first time, I found his discussion of wages finally cemented my understanding of why wages inevitably rise in a free market with rising productivity — an insight that helped seal my conversion to libertarianism.</p> <p>It's remarkable that Mises's books read as well as they do, both in translation and in the English he began to write in at age 60. Rothbard had the advantage of being an extraordinary writer in the language he grew up in, as well as a devoted student of Mises. It was therefore left to him to render Mises's great theories in clear, accessible prose, while often bringing those theories to a new level.</p> <p>So I think of Rothbard as having been Plato to Mises's Socrates — an analogy I might push further if Rothbard were not so critical of Plato. Try his <a href="http://mises.org/daily/3902">discussion</a> of Aristotle's refutation of Plato's communism in <a href="http://mises.org/resources/3985/Economic-Thought-Before-Adam-Smith-An-Austrian-Perspective-on-the-History-of-Economic-Thought-Volume-I"><i>Economic Thought Before Adam Smith</i></a>, the first of his two books on the history of economic thought. Among all of Rothbard's writings — the second volume is called <i>Classical Economics</i> — these two books are the ones I prefer to dip into again when I'm looking for something diverting to reread.</p> <p>The whole informed guided tour of the way people thought about economics is vastly entertaining. My favorite part is probably the <a href="http://mises.org/daily/2012">devastating dissection</a> of the supposed "father" of economics, Adam Smith. It's tragic that Rothbard didn't live to complete the third and final volume, which would have dealt with economic thought in the modern era.</p> <p>Which brings us to <a href="http://mises.org/store/Economic-Controversies-P10459.aspx"><i>Economic Controversies</i></a>. It contains all of Rothbard's best essays. If there is any single book worthy of being called a companion volume to <i>Man, Economy, and State</i>, this is it.</p> <p>You should start, as the book does, with the magisterial essay <a href="http://mises.org/daily/2074">"The Mantle of Science,"</a> in which Rothbard lays the groundwork on how to think about economics. After finishing this essay, you might reflect that all the writer has really done is make explicit a mode of thinking that comes naturally to us all. And just as I felt after I finished <i>Man, Economy, and State</i>, you might find it similarly empowering.</p> <p>Mainstream economics suffers from two main handicaps: </p> <ol class="lower-alpha" style="list-style:lower-alpha" type="a"><li> <p>the desire to sound like a branch of physics, which feeds the elitist fantasies of those who aspire to be professional economists, and </p> </li><li> <p>the desire to sit at the tables of power à la John Maynard Keynes and Alan Greenspan, which spawns such top-down monstrosities as "macroeconomics."</p> </li></ol> <p>Given these handicaps, it's remarkable, as mentioned, that mainstream economists can still be insightful at times, especially in their journalism. I submit it's because even they are still capable of using the mode of thinking Rothbard sets forth in "The Mantle of Science."</p> <p>You might then jump, for comic relief, to <a href="http://mises.org/daily/2337">"The Hermeneutical Invasion of Philosophy and Economics."</a> In that essay, Rothbard makes fun of the heavy thinkers who keep telling us, in effect, that words have no meaning. Of course, if they are right that words have no meaning, we can only respond that this key message of theirs is incomprehensible.</p> <p>For me the greatest eureka moment of all is when I first read Rothbard's essay "The Austrian Theory of Money."<a href="http://mises.org/rothbard/money.pdf"><img src="http://images.mises.org/icons/pdf.png" alt="Download PDF" border="0" /></a> That was when I fully grasped Mises's most beautiful insight, called the "regression theorem," in which Mises was able to show that all money must have originated in some commodity (gold, seashells), that if you regress backward in time, you'll find this had to have been the case. What people think of as government-created money (dollars, euros) is nothing of the kind, but came from those same commodities. For me, the beauty of the regression theorem lies in its power to infer historical fact from simple logic about human action.</p> <p>I did not read Rothbard's 1972 essay "Heilbroner's <i>Economic Means and Social Ends</i>" until years after it was first published. It's a devastating critique of a book edited by New School economics professor Robert Heilbroner about the ideas of the abovementioned Adolph Lowe.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Economic-Controversies-P10459.aspx"><img src="http://mises.org/store/Assets/ProductImages/B962.jpg" alt="Economic Controversies" width="200" border="0" /></a></div> </div> <p>Here, too, Plato comes up. "Professor Lowe's political economics," observes Rothbard, "is of a piece with an unfortunate penchant of intellectuals since the days of Plato: to impose their own arbitrary and static 'order' upon the rest of society, to freeze and annul change by their coercive fiat." Had I read this essay when it first came out, it probably would have gotten me to read more of Rothbard, even if I hadn't been lucky enough to find his economic treatise in the stacks.</p> <p>There are many "first books" on libertarianism in general and Austrian economics in particular. Which one is most suitable depends on the individual. For me, the way in was <i>Man, Economy, and State</i>, which had a great deal to do with me and my circumstances at the time. If my counterpart today finds that book and this one in the stacks, I would say that <i>Economic Controversies</i> is probably the better way in. <i>Man, Economy, and State</i> can come a bit later.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/murray-my-intellectual-mentor.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T15:38:00-07:00">3:38 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=8971234178822684247">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=8971234178822684247" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2295502195307850696"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/crime-of-private-money.html">The "Crime" of Private Money</a> </h3> <div class="post-body entry-content"> <h1> The "Crime" of Private Money</h1> <p class="meta"> <strong>Mises Daily:</strong> by <a id="ctl00_ctl00_ContentPlaceHolder1_ContentPlaceHolder1_lnkAuthor" rel="author" href="http://mises.org/daily/author/380/Robert-P-Murphy">Robert P. Murphy</a> </p> <div class=" fb_reset" id="fb-root"> <span></span> </div> <div class="figure"><img src="http://images.mises.org/DailyArticleBigImages/5184.jpg" alt="" /></div> <p>Bernard von NotHaus was convicted last month in federal court on conspiracy and counterfeiting charges for his development of silver "Liberty Dollars." He faces up to 25 years in prison. Earlier this week the feds moved to <a href="http://finance.yahoo.com/news/Feds-seek-7M-in-privately-apf-641808269.html">seize about $7 million</a> of precious metals from the operation as well.</p> <p>Besides the government's dubious legal maneuvers, its broader message here is clear: "Don't try to provide Americans with any alternative to the fiat dollar, or we will come after you." For those who have always wondered why free-market monies haven't supplanted various state's fiat currencies, we have yet another illustration of the answer.</p> <h2>The Legal Issues</h2> <p>Writing in the <i>Wall Street Journal</i>, <i>New York Sun</i> editor <a href="http://online.wsj.com/article/SB10001424052748704425804576220383673608952.html">Seth Lipsky explained</a> a quirk of the trial and the government's subsequent description of what happened:</p> <blockquote><div class="quote-in"> <p>The warning [against issuers of private currency] is contained in paragraph 33 of the indictment handed up against Mr. von NotHaus in a courtroom at Statesville, N.C. It said:</p> <blockquote><div class="quote-in"> <p>Article 1, Section 8, Clause 5 of the United States Constitution delegates to Congress the power to coin money and to regulate the value thereof. This power was delegated to Congress in order to establish a uniform standard of value. Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money not issued under its own authority, in order to protect and preserve the constitutional currency for the benefit of the nation. Thus, it is a violation of law for private coin systems to compete with the official coinage of the United States.</p> </div></blockquote> <p>Yet a curious thing happened in the courthouse on the day before the jury went to deliberate. According to Aaron Michel, Mr. von NotHaus's attorney, the judge granted Mr. Michel's request to delete paragraph 33 from the indictment.</p> <div class="figure"><a href="http://mises.org/store/Case-for-Gold-Pocket-Edition-P10451.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/SS572_T.jpg" /></a></div> <p>"That is a statement of law that, if it were to be put before the jury at all, should have been a matter of discussion between the parties as to the court's instructions to the jury on the law," Mr. Michel quoted the judge, Richard Voorhees, as saying. "In any event, it does not appear to the court to be a factual predicate that is supported by the evidence in the case."</p> <p>The judge then asked one of the federal prosecutors, Jill Westmoreland Rose, whether she had "any comment on that." "No, Your Honor," Ms. Rose replied, according to Mr. Michel. So the copy of the indictment that went to the jury contained white space where paragraph 33 once was.</p> <p>Yet after Mr. von NotHaus was convicted on March 18, the government issued a press release trumpeting the verdict and repeating the part of the original indictment that the judge had struck out. The release also went further, asserting that Congress's power to coin money under the Constitution was also meant to "insure a singular monetary system for all purchases and debts in the United States, public and private."</p> <p>It again asserted that it is a violation of federal law for individuals … "to create private coin or currency systems to compete with official coinage and currency of the United States." So much for the judge's view that the paragraph was unsupported by evidence in the case. The U.S. Attorney's office did not respond to a request for comment.</p> </div></blockquote> <p>If von NotHaus's attorney's version of events is accurate, it means that the government is falsely describing its court victory as a blow against any issuers of private coin or currency, when in fact that wasn't (apparently) in the actual indictment.</p> <p>Other specifics of the case involve the similarity between von NotHaus's Liberty Dollars and official US currency:</p> <div class="chart"> <div class="single-chart"> <div class="image"><img src="http://images.mises.org/5184/Figure1.jpg" alt="Figure 1" /></div> </div> </div> <p>Even some hard-money enthusiasts concede that the Liberty Dollars (especially the face sides) do bear a superficial similarity to coins issued by the US government, and in that respect von NotHaus made it easier for the government to prosecute him. In particular, the coins featured "$" symbols and the words, "TRUST IN GOD."</p> <p>Having said all that, we should hardly blame the victim. The government went after von NotHaus because he was low-hanging fruit; it was relatively easy to convince a jury that he was engaged in counterfeiting, because his coins share many features with official US coinage.</p> <p>It would be naïve to conclude that von NotHaus would have been safe had he taken more care to distinguish his coins from those of the US mint. For one thing, the government's case was internally contradictory: On the one hand, von NotHaus is accused of <i>counterfeiting</i>, in other words, trying to pass his coins off as authentic US coins. On the other hand, von NotHaus is accused of undermining the "legitimate" US currency by offering a product to <i>compete</i> with it. Indeed, von NotHaus advertised his Liberty Dollars as inflation-proof substitutes for the "genuine" US currency.</p> <p>So which is it? Either von NotHaus was trying to pass his coins off as regular quarters and dollars, or he was trying to convince people that his own coins were superior.</p> <p>Furthermore, it would be rather odd to try to charge people the silver-bullion price (or more) for coins that were intended to be counterfeit US coins. That would be like printing up fake $10 bills and trying to buy $50 worth of merchandise with them.</p> <p>To remove any doubt that this was a politically motivated process — rather than an honest application of the law — consider the government's <a href="http://www.nysun.com/editorials/a-unique-form-of-terrorism/87269/">description of the verdict</a>:</p> <blockquote> <div class="figure"><a href="http://mises.org/store/Freedom-Under-Siege-P429.aspx"><img src="http://mises.org/store/Assets/ProductImages/Thumbnails/SS281_T.jpg" /></a></div> <p>"A unique form of domestic terrorism" is the way the U.S. Attorney for the Western District of North Carolina, Anne M. Tompkins, is describing attempts "to undermine the legitimate currency of this country." The Justice Department press release quotes her as saying: "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country."</p> </blockquote> <p>Besides the absurdity of government officials decrying clear and present dangers to economic stability, there is the chilling fact that these sweeping accusations could be leveled at anyone. For years civil libertarians have been vainly warning Americans against the lawless imprisonment of "War on Terror" suspects, saying that it will not always be radical Muslims with unusual names who are rounded up.</p> <p>By the same token, if von NotHaus's conviction of a "unique form of domestic terrorism" stands, the precedent will be set for the government to go after <i>any</i> group preaching against the evils of fiat currency.</p> <h2>Keeping Us on the Fiat Dollar: More than Just Legal-Tender Laws</h2> <p>As a college professor and lecturer at the <a href="http://mises.org/">Mises Institute</a>, I have always had some difficulty explaining exactly how the government kept everybody using fiat money. Students would often think that legal-tender laws explained everything, but I would point out that they weren't the whole story.</p> <p>It's true, legal-tender laws mean that nobody can refuse to accept Treasury notes (and coins) as payments of dollar-denominated debts. But legal-tender laws per se wouldn't prevent merchants and their customers from using precious-metal coins issued by a private mint.</p> <p>For example, suppose the owner of an electronics store has 50″ 3D plasma screen TVs that he wants to sell for the equivalent of $1,400, but he only wants to accept gold, not paper money. He could get around legal tender laws by posting a sticker price on the TVs saying, "1 oz. of gold, or $10,000." In this way, he would be operating just as merchants near the Mexican-US border, who accept both pesos and dollars while offering exchange rates sometimes far worse than a tourist could obtain at an official currency-exchange booth.</p> <p>When students would press me, I would give two major reasons that Americans still used the fiat dollar, despite the numerous flaws we had studied. First, everyone is born into this system. It's hard for a few individuals to unilaterally "secede" from the dollar standard, because everyone else is still using it. For example, even if the promoters of a hard-money conference paid me in gold coins for my talk, I would probably have to convert the gold into dollars in order to pay my mortgage or utility bill that month. The gold would only be convenient for me if I had intended on saving at least that much and wanted to do so in the form of gold.</p> <p>Second, I would argue that if any attempts to circumvent the dollar actually got off the ground, then the government would find some legal pretext to shut it down. So it was pointless to study the legal code and come up with loopholes, because the government wouldn't play by the rules. It would find a way to shut down a genuine threat to its monopoly on money, meaning no entrepreneur would spend the resources and time trying to launch an alternative system.</p> <p>The fate of Bernard von NotHaus has vindicated my musings.</p> <div class="book-ad" id="main-ad"> <div class="book-img"><a href="http://mises.org/store/Theory-of-Money-and-Credit-The--P57.aspx"><img src="http://mises.org/store/Assets/ProductImages/B121.jpg" border="0" /></a></div> </div> <h2>Conclusion</h2> <p>The conviction and likely asset forfeiture of Bernard von NotHaus shows that our fiat monetary system is not in any way voluntary. People who deride the gold standard as an obsolete relic that "we" abandoned should heed the words of Ludwig von Mises:</p> <blockquote> <p>The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard.<a name="_GoBack"></a> (The <a href="http://mises.org/resources/194/Theory-of-Money-and-Credit-The"><i>Theory of Money and Credit</i></a>, p. 461).</p> </blockquote> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/crime-of-private-money.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T15:37:00-07:00">3:37 PM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2295502195307850696">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2295502195307850696" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4876810045680700757"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/japanese-business-confidence.html">Japanese business confidence</a> </h3> <div class="post-body entry-content"> <h2 class="ec-blog-fly-title"><span style="font-size:180%;">Japanese business confidence</span></h2> <h1 class="ec-blog-headline"> Before and after </h1> <p class="ec-blog-info"> by H.T. | TOKYO </p> <div class="ec-blog-body"> <p>Japan gets all the bad luck these days. Just as economic conditions were finally improving—at least for big business—after the long post-Lehman slump, the March 11th earthquake, tsunami and nuclear power-plant crisis has knocked them for six again. This is clear from an extraordinary release from the Bank of Japan on April 4th which compares results of the Tankan business-conditions survey for which responses were supposed to be submitted by March 11th. Using submissions from before and after that fateful day, it shows just how dramatically business confidence has worsened.</p><p>For example: in the manufacturing sector, the diffusion index for large firms who sent back responses before March 11th was seven, and its forecast was three (a positive reading means optimists outnumber pessimists). Those responding after the earthquake put current conditions at six, but their forecasts had fallen to minus-two. Medium-sized and small enterprises, which make up the bulk of those in the stricken Tohoku region, were less confident about the future than the bigger ones even before the earthquake. But since, small manufacturing firms, whose judgment of actual conditions was minus-six on the index, now have a forecast of minus-18.</p><p>This is hardly surprising. Companies face a looming energy crisis, with planned black-outs that may last into next years, as well as the devastation of parts of Tohoku, which Barclays Capital estimates affects 6-7% of Japanese GDP. On top of that is the spectre of radiation, which is making it difficult for exporters to ship goods abroad because of exaggerated fears in foreign ports, as well as putting off many foreigners from doing business in Japan. Add to this the danger of <em>jishuku</em>, the Japanese notion of self-restraint, which is leading to the cancellation of everything from <em>hanami </em>(cherry-blossom viewing parties) to baseball games, and you have dashed consumer confidence overlaid on waning business confidence.</p><p>Time, then, for the government to get out in front of its own people, and tell them to spend, and to get out in front of foreigners, and tell them that they shouldn't panic. As for companies, the surprise is, they are not more pessimistic. Let's hope that's the positive side of <em>jishuku</em>.</p></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/japanese-business-confidence.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:47:00-07:00">9:47 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4876810045680700757">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4876810045680700757" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7055299416342977551"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/togetherness-in-libya.html">Togetherness in Libya</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">Lexington</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Togetherness in Libya</span></div> <h1 class="rubric">Barack Obama’s awfully big change in America’s use of force </h1> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/02/us/20110402_usd000.jpg" alt="" /></div> <p>IT IS Pavlovian. As soon as a president does something new in foreign policy, the world wants to know whether he has invented a new “doctrine”. The short answer in the case of Libya is that Barack Obama has not invented a new doctrine so much as repudiated an old one. What he is also doing, however, is challenging an American habit of mind.</p> <p>The doctrine Mr Obama has repudiated is the one attributed to Colin Powell, the former chairman of the joint chiefs of staff and George W. Bush’s transparently miserable secretary of state when America invaded Iraq in 2003. That held, among other things, that America ought to go to war only when its vital interests are threatened, when the exit strategy is clear, and when it can apply overwhelming force to ensure that its aims are achieved. Nothing could be more different from the account Mr Obama gave Americans on March 28th of his reasons for using military force in Libya. He does not believe that America’s vital interests are at stake (though some “important” ones are); the exit strategy is not entirely clear (Colonel Qaddafi must go, but who knows when, and not as a direct result of American military action); and the force America is willing to apply (no boots on the ground) is strictly limited.</p> <p>None of this should be a surprise. In “The Audacity of Hope”, the bestseller Mr Obama wrote as a senator in 2006, he set out a theory of military intervention. Like all sovereign nations, he argued, America has the unilateral right to defend itself from attack, and to take unilateral military action to eliminate an imminent threat. But beyond matters of clear self-defence, it would “almost always” be in its interest to use force multilaterally. This would not mean giving the UN Security Council a veto over its actions, or rounding up Britain and Togo and doing as it pleased. It would mean following the example of the first President Bush in the first Gulf war—“engaging in the hard diplomatic work of obtaining most of the world’s support for our actions”. </p> <p>The virtue of such an approach was that America had much to gain in a world that lived by rules. By upholding such rules itself, it could encourage others to do so too. A multilateral approach would also lighten America’s burden at times of war. This might be “a bit of an illusion”, given the modest power of most American allies. But in many future conflicts the military operation was likely to cost less than the aftermath: training police, switching the lights back on, building democracy and so forth.</p> <p>The president, it now emerges, remembers exactly what he wrote. He hesitated about whether to act in Libya (just ask the French and British, who egged him on but came close to losing hope), but he was always clear about how. All the conditions he wished for in that book five years ago have come to pass. In this week’s speech he ticked them methodically off: “an international mandate for action, a broad coalition prepared to join us, the support of Arab countries, and a plea for help from the Libyan people themselves. We also had the ability to stop Qaddafi’s forces in their tracks without putting American troops on the ground.” Under such circumstances, he said, for America to turn a blind eye to the fate of Benghazi would have been “a betrayal of who we are”.</p> <p>Why does this theory of intervention, and the noble sentiment attached to it, fail to qualify as a “doctrine”? Because it is too elastic to provide a guide to future action. Would America “betray” itself by turning a blind eye to atrocities under different, less favourable, circumstances? So it seems. It has, after all, done so before, in Rwanda and Darfur—and Mr Obama appears to accept that it might have to do so again when, say, an alliance would be damaged, as in Bahrain, or the job is too hot to handle, as in Syria or Iran. Also unclear is whether an American interest must also be at stake before Mr Obama invokes the moral case for action. Conveniently (for the purpose of selling this particular war), the president detects a “strategic interest” in preventing Colonel Qaddafi from chilling the wider Arab spring, so nobody knows. </p> <p>In fairness, elasticity is not a sin; and Mr Obama does not claim to have invented anything he calls a “doctrine”. The worst you can say about his approach is that it is merely commonsensical: decide the issues case-by-case while holding some idea of values and interests in mind. Many who say they want more consistency than this (typically by asking some variant of “What about Zimbabwe?”) do so not because they really believe that foreign policy can be run by an algorithm but in order to embarrass Mr Obama in any way they can. Prize chump in the case of Libya this past fortnight has been Newt Gingrich, the Republican presidential hopeful who demanded consistency, called for intervention and turned on a dime the instant Mr Obama answered.</p> <p><a name="after_you,_sarko"></a><strong>After you, Sarko</strong></p> <p>More significant, however, is that habit of mind. In Libya Mr Obama is challenging the assumption of global leadership America has taken for granted ever since the second world war. America has joined coalitions before, but never under a president quite so adamant that America is not in charge—even if the military burden-sharing is indeed a bit of an illusion. </p> <p>Most Republicans and quite a few Democrats hate this. Mr Obama’s hope is that America’s low profile will make the war more palatable not only to the Muslim world but also to the economy-fixated voters at home who question whether America can still afford to play its traditional leadership role. What he may soon discover is that modesty extracts a price of its own. By sharing the leadership with others, he has made his policy hostage to the limited mandate (no use of force for regime change) imposed by the United Nations and the limited means of his allies in Europe and the Middle East. It may not be a doctrine, it should not be a surprise, but nobody can deny that it is a gamble. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/togetherness-in-libya.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:43:00-07:00">9:43 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7055299416342977551">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7055299416342977551" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2699789037040615768"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/praising-congressman-ryan_07.html">Praising Congressman Ryan</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">The Republican budget</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Praising Congressman Ryan</span></div> <h1 class="rubric">At long last somebody is trying to grapple with America’s fiscal troubles</h1> <div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/09/ld/20110409_ldp003.jpg" alt="" /></div> <p>BARACK OBAMA, as we unhappily noted when he produced his budget in February, has no credible plan for getting America’s runaway budget deficit under control. Up to now the Republicans have been just as useless; they have confined themselves to provoking a probable government shutdown in pursuit of a fantasy war against the non-security discretionary expenditures that make up only an eighth of the total budget, rather than tackling the long-term problem posed by the escalating costs of entitlements. The only people with the guts to talk about such things have been various independent commissions which the two parties have ignored.</p> <p>Now that has changed. On April 5th Paul Ryan, the young chairman of the House Budget Committee, laid out a brave counter-proposal for next year’s budget and beyond (see <a href="http://www.economist.com/node/18529785">article</a>)—brave both in identifying the scope of the problem and in proposing the kind of deeply unpopular medicine that will be needed to cope with it. It is far from perfect; but it is the first sign of courage from someone with actual power over the budget.</p> <p> Unlike Mr Obama, Mr Ryan puts fiscal responsibility at the centre of his plan: it aims to bring the budget into primary balance as early as 2015 and federal government spending down to below 20% of GDP in 2018. He also outlines a simplification of America’s mad tax code, bringing the top rate for both individuals and businesses down to 25% by eliminating loopholes. Above all, he aims at the core of the problem, the ever-rising cost of health care for the elderly.</p> <p>At the moment, retirees in America are entitled to Medicare, an all-you-can-eat buffet of care provided by the private sector but paid for by government-run insurance. Under Mr Ryan’s scheme, future retirees would have to take out private insurance plans, helped by a government subsidy. The effect would be a bit like changing from a defined-benefit pension to a defined-contribution one. The savings come because the subsidy would not cover everything that is currently provided: people will either end up with less lavish care or have to pay more. Mr Ryan also wants to turn Medicaid, government-financed health care for the poor, over to the states in the form of “block grants”. This would force them to manage their budgets more responsibly than they have needed to when they have been able to send much of the tab to Washington.</p> <p><a name="let_the_debate_begin"></a><strong>Let the debate begin</strong></p> <p>There is plenty wrong with Mr Ryan’s plan. Too much of the gain goes to the rich, and too much of the pain is felt by the poor. Some of his figures are deeply suspect. Mr Ryan should not have ruled out any revenue gain from broadening the tax base. He says nothing substantive about Social Security. He would cancel Obamacare, which though flawed addresses one of America’s great problems. And there are practical difficulties: his proposals are far too radical to engender the sort of compromise needed in Washington. Even if the plan passes the Republican-controlled House (by no means certain), it will fail in the Democrat-controlled Senate.</p> <p>Yet at least Mr Ryan accepts that the present system is unaffordable and destined to collapse. Everyone else, including Mr Obama, is pretending that it isn’t. Mr Ryan’s willingness to confront the scale of the problem has set a standard by which other proposals will now have to be judged. And there might even be political mileage in telling the truth. Two years ago, when Britain’s prime minister, Gordon Brown was unable to mention the word “cuts”, George Osborne, the Tories’ shadow chancellor, made a speech saying they were inevitable. It changed the political debate. Mr Brown’s protestations looked increasingly ridiculous. Mr Obama should take note. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/praising-congressman-ryan_07.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:41:00-07:00">9:41 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2699789037040615768">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2699789037040615768" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4584617865000302640"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/praising-congressman-ryan.html">Praising Congressman Ryan</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">The Republican budget</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Praising Congressman Ryan</span></div> <h1 class="rubric">At long last somebody is trying to grapple with America’s fiscal troubles </h1><div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/09/ld/20110409_ldp003.jpg" alt="" /></div> <p>BARACK OBAMA, as we unhappily noted when he produced his budget in February, has no credible plan for getting America’s runaway budget deficit under control. Up to now the Republicans have been just as useless; they have confined themselves to provoking a probable government shutdown in pursuit of a fantasy war against the non-security discretionary expenditures that make up only an eighth of the total budget, rather than tackling the long-term problem posed by the escalating costs of entitlements. The only people with the guts to talk about such things have been various independent commissions which the two parties have ignored.</p> <p>Now that has changed. On April 5th Paul Ryan, the young chairman of the House Budget Committee, laid out a brave counter-proposal for next year’s budget and beyond (see <a href="http://www.economist.com/node/18529785">article</a>)—brave both in identifying the scope of the problem and in proposing the kind of deeply unpopular medicine that will be needed to cope with it. It is far from perfect; but it is the first sign of courage from someone with actual power over the budget.</p> <p> Unlike Mr Obama, Mr Ryan puts fiscal responsibility at the centre of his plan: it aims to bring the budget into primary balance as early as 2015 and federal government spending down to below 20% of GDP in 2018. He also outlines a simplification of America’s mad tax code, bringing the top rate for both individuals and businesses down to 25% by eliminating loopholes. Above all, he aims at the core of the problem, the ever-rising cost of health care for the elderly.</p> <div class="related-items"> <strong>Related items</strong><ul class="related-item-list"><li><a href="http://www.economist.com/node/18529785">The budget: The real fight begins</a><span>Apr 7th 2011</span></li></ul><hr class="related-item-separator"><strong>Related topics</strong><div class="item-list"><ul class="related-item-list"><li class="first"><a href="http://www.economist.com/topics/barack-obama" class="related-inline-topics">Barack Obama</a></li><li class=" even"><a href="http://www.economist.com/topics/paul-ryan" class="related-inline-topics">Paul Ryan</a></li><li class="last"><a href="http://www.economist.com/topics/united-states" class="related-inline-topics">United States</a></li></ul></div> </div> <p>At the moment, retirees in America are entitled to Medicare, an all-you-can-eat buffet of care provided by the private sector but paid for by government-run insurance. Under Mr Ryan’s scheme, future retirees would have to take out private insurance plans, helped by a government subsidy. The effect would be a bit like changing from a defined-benefit pension to a defined-contribution one. The savings come because the subsidy would not cover everything that is currently provided: people will either end up with less lavish care or have to pay more. Mr Ryan also wants to turn Medicaid, government-financed health care for the poor, over to the states in the form of “block grants”. This would force them to manage their budgets more responsibly than they have needed to when they have been able to send much of the tab to Washington.</p> <p><a name="let_the_debate_begin"></a><strong>Let the debate begin</strong></p> <p>There is plenty wrong with Mr Ryan’s plan. Too much of the gain goes to the rich, and too much of the pain is felt by the poor. Some of his figures are deeply suspect. Mr Ryan should not have ruled out any revenue gain from broadening the tax base. He says nothing substantive about Social Security. He would cancel Obamacare, which though flawed addresses one of America’s great problems. And there are practical difficulties: his proposals are far too radical to engender the sort of compromise needed in Washington. Even if the plan passes the Republican-controlled House (by no means certain), it will fail in the Democrat-controlled Senate.</p> <p>Yet at least Mr Ryan accepts that the present system is unaffordable and destined to collapse. Everyone else, including Mr Obama, is pretending that it isn’t. Mr Ryan’s willingness to confront the scale of the problem has set a standard by which other proposals will now have to be judged. And there might even be political mileage in telling the truth. Two years ago, when Britain’s prime minister, Gordon Brown was unable to mention the word “cuts”, George Osborne, the Tories’ shadow chancellor, made a speech saying they were inevitable. It changed the political debate. Mr Brown’s protestations looked increasingly ridiculous. Mr Obama should take note. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/praising-congressman-ryan.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:36:00-07:00">9:36 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4584617865000302640">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4584617865000302640" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3073608644354909656"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/70-or-bust.html">70 or bust!</a> </h3> <div class="post-body entry-content"> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">70 or bust!</span></div> <h1 class="rubric">Current plans to raise the retirement age are not bold enough </h1><div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/09/ld/20110409_ldp001.jpg" alt="" /></div> <p>PUT aside the cruise brochures and let the garden retain that natural look for a few more years. Demography and declining investment returns are conspiring to keep you at your desk far longer than you ever expected.</p> <p>This painful truth is no longer news in the rich world, and many governments have started to deal with the ageing problem. They have announced increases in the official retirement age that attempt to hold down the costs of state pensions while encouraging workers to stay in their jobs or get on their bikes and look for new ones. </p> <p>Unfortunately, the boldest plans look inadequate. Older people are going to have to stay economically active longer than governments currently envisage; and that is going to require not just governments, but also employers and workers, to behave differently.</p> <p><a name="trying,_but_not_very_hard"></a><strong>Trying, but not very hard</strong></p> <p>Since 1971 the life expectancy of the average 65-year-old in the rich world has improved by four to five years. By 2050, forecasts suggest, they will add a further three years on top of that. Until now, people have converted all that extra lifespan into leisure time. The average retirement age in the OECD in 2010 was 63, almost one year lower than in 1970. </p> <p> Living longer, and retiring early, might not be a problem if the supply of workers were increasing. But declining fertility rates imply that by 2050 there will be just 2.6 American workers supporting each pensioner and the figures for France, Germany and Italy will be 1.9, 1.6 and 1.5 respectively. The young will be shoring up pensions systems which, as our <a href="http://www.economist.com/node/18433194">special report</a> this week explains, are riddled with problems.</p> <p>Most governments are already planning increases in the retirement age. America is heading for 67, Britain for 68. Others are moving more slowly. Belgium allows women to retire at 60, for instance, and has no plans to change that. Under current policies the mean retirement age by 2050 will still be less than 65, barely higher than it was after the second world war.</p> <p>Because life expectancy continues to rise—people in rich countries are gaining a little under a month a year—even the American and British plans are inadequate. In Europe the retirement age should be raised to 70 by 2040; America, with a younger population, can afford to keep it a smidgen lower. </p> <p>Working longer has three great advantages. The employee gets more years of wages; the government receives more in taxes and pays out less in benefits; and the economy grows faster as more people work for longer. Older workers are a neglected consumer market, as our briefing on the media’s ageing audiences explains (see <a href="http://www.economist.com/node/18527255">article</a>).</p> <p>Yet too many people see longer working lives as a worry rather than an opportunity—and not just because they are going to be chained to their desks. Some fret that there will not be enough jobs to go around. This misapprehension, known to economists as the “lump of labour fallacy”, was once used to argue that women should stay at home and leave all the jobs for breadwinning males. Now lump-of-labourites say that keeping the old at work would deprive the young of employment. The idea that society can become more prosperous by paying more of its citizens to be idle is clearly nonsensical. On that reasoning, if the retirement age came down to 25 we would all be as rich as Croesus.</p> <p>Raising the official retirement age is only part of the solution, for many workers retire before the official age. Martin Baily and Jacob Kirkegaard of the Peterson Institute in Washington, DC, reckon that raising actual EU retirement ages to the official age would offset the impact of an ageing population over the next 20 years.</p> <p>For that to happen, working practices and attitudes need to change. Western managers worry too much about the quality of older workers (see <a href="http://www.economist.com/node/18527063">Schumpeter</a>). In physically demanding occupations, it is true, some may be unable to work into their late 60s. The incapacitated will need disability benefits. Others will need to find a different job. But this should be less of a problem than it used to be now that economies are based on services not manufacturing. In knowledge-based jobs, age is less of a disadvantage. Although older people reason more slowly, they have more experience and, by and large, better personal skills. Even so, most people’s productivity does eventually decline with age; and pay needs to reflect this falling-off. Traditional seniority systems, under which people get promoted and paid more as they age, therefore need to change. </p> <p><a name="the_missing_$3_trillion"></a><strong>The missing $3 trillion</strong></p> <p>The huge cost of pension schemes is being dealt with in the private sector. Final-salary schemes are hardly ever offered to new employees these days. In the public sector, however, they are still standard. In Britain the recent report by Lord Hutton made some sensible suggestions for reform (see <a href="http://www.economist.com/node/18529941">article</a>). The accrued rights of workers should be maintained but their future pension rights should be based on the state retirement age (many public-sector workers currently retire early) and on a career average, rather than final, salary. That would both prevent abuses and make part-time working easier. </p> <p>The public-sector pension problem is sharpest in American states. The deficits in their pension funds may amount to $3 trillion. They face legal and constitutional constraints that prevent them from following the British lead. Unlike wages, pension promises have been deemed, weirdly, to be permanent and sacrosanct. But as budget pressures bite, politicians are going to have to change laws and constitutions.</p> <p>Private-sector workers face a different problem. The demise of final-salary pensions leaves them facing two big risks: that falling markets will undermine their retirement planning, and that they will outlive their savings. So governments should encourage workers to save more, nudging them into pension schemes by requiring them to opt out rather than opt in. And the basic state pension should be high enough to give those unlucky elderly with insufficient savings a decent income, without penalising those who have been thrifty. That is the least people deserve in return for toiling until they are 70. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/70-or-bust.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:33:00-07:00">9:33 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3073608644354909656">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3073608644354909656" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3033810829714612173"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/professors-and-qaddafi.html">The Professors and Qaddafi</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">The Professors and Qaddafi's Extreme Makeover</span></h1> <h2> What was lost when some of America's finest scholars got paid to buff the Libyan dictator's image? </h2> <div id="lede600"> <img src="http://images.businessweek.com/mz/11/16/600/1116_mz_4openingremarks.jpg" alt="http://images.businessweek.com/mz/11/16/600/1116_mz_4openingremarks.jpg" width="600" height="300" /> <p> <span class="photoCredit">Photo Illustration by Maayan Pearl; Foto24/Gallo Images/Getty Images</span></p> </div> <p class="byline">By <a href="http://www.businessweek.com/bios/Paul_Barrett.htm">Paul M. Barrett</a> </p> <p> In 2006 and 2007, a dozen Western intellectuals traveled to the North African desert for intimate conversations with the man who likes to call himself the Brother Leader. Muammar Qaddafi received his visitors in a carpeted Bedouin-style tent, where they sat on plastic chairs and sipped tea while discussing the dictator's thoughts on economics and politics. </p> <p> The meetings were arranged by the Monitor Group, a Cambridge (Mass.) consulting firm co-founded in 1983 by Michael Porter, the Harvard Business School management expert. As Politico first reported on Feb. 21, the Qaddafi regime paid Monitor a fee of $3 million a year, plus expenses, to run what the firm called "a sustained, long-term program to enhance international understanding and appreciation of Libya." Monitor, which has 1,500 employees worldwide, organized roundtables and produced thick studies on stimulating business in the isolated oil state. It provided research for a PhD thesis Qaddafi's son Saif al-Islam submitted to the London School of Economics. </p> <p> At one point, the firm proposed a mass-circulation book—for an additional price of $2.45 million—that according to a Monitor memo would "allow the reader to hear Qaddafi elaborate, in his own words and in conversation with renowned international experts, his core ideas on individual freedom, direct democracy vs. representative democracy, [and] the role of state and religion." </p> <p> The book never materialized, but Monitor succeeded in generating plenty of positive press for Libya. In an interview with <cite>Businessweek</cite> in February 2007, Porter said Saif Qaddafi had helped arrange Monitor's engagement with Libya. "I have gotten to know Saif quite well," Porter said. "He was a doctoral candidate at the London School of Economics, where he studied with some of the best professors. He's very much oriented toward making Libya a member of the modern world community." </p> <p> Monitor brought Benjamin R. Barber, then a professor at the University of Maryland, to Libya for three visits. On Aug. 15, 2007, Barber published an opinion article in <cite>The Washington Post</cite> entitled "Qaddafi's Libya: An Ally for America?" Although "written off not long ago as an implacable despot," Qaddafi "is a complex and adaptive thinker," Barber asserted, "as well as an efficient, if laid-back autocrat." Joseph Nye, a professor at Harvard's Kennedy School of Government, also met Qaddafi. In December 2007 he published an essay in <cite>The New Republic</cite> in which he described the ruler of Libya since 1969 as "an autocrat" and a past "sponsor of terrorism," but also a man of ideas, "actively seeking a new strategy" and interested in "direct democracy." </p> <p> Now that Qaddafi has vowed to hunt down and kill every last dissident in Libya, Monitor's image-buffing campaign has received probing coverage in <cite>The Boston Globe</cite> and <cite>Mother Jones</cite>, and the firm has issued an online apologia. "Given the terrible spectacle of Colonel Qaddafi using force on his own people, it may be difficult to imagine that just a few years ago many saw a period of promise in Libya," the firm said on Mar. 24. "Colonel Qaddafi had renounced terror, forfeited nuclear and chemical weapons and programs, and declared himself ready to rejoin the community of nations." </p> <p> An idea in the abstract may thrill its creator, but an idea that has been tested by reality—and survives intact—can change the world. That's why academics who descend from the ivory tower and subject their theories to the complications of modern life deserve applause. Provided, of course, that their motivations remain pure. Recent history suggests that's a tricky line to walk. </p> <p> A generation of Ivy League economists was enjoying both professional esteem and financial industry paychecks until the Wall Street crisis of 2008 made them look pretty dumb, if not venal. The Academy Award-winning documentary <cite>Inside Job</cite> offered a bipartisan parade of these men—for example, at Harvard, Larry Summers, a Democrat who opposed more oversight of derivatives, also collected generous speaking fees from investment banks, while Frederic Mishkin, a George W. Bush appointee to the Federal Reserve who teaches at Columbia, was paid to co-author a 2006 report praising the Icelandic financial system, which subsequently collapsed. </p> <div id="pageNav"> <span class="pagelinks"> Page <a href="http://www.businessweek.com/magazine/content/11_16/b4224004951872.htm" class="current">1</a> <a href="http://www.businessweek.com/magazine/content/11_16/b4224004951872_page_2.htm" class="last">2</a> </span> <a id="nextBtn" href="http://www.businessweek.com/magazine/content/11_16/b4224004951872_page_2.htm">Next Page</a> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/professors-and-qaddafi.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:29:00-07:00">9:29 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3033810829714612173">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3033810829714612173" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3794283500723453390"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/government-shutdown-threatens-800000-us.html">Government Shutdown Threatens 800,000 U.S. Workers</a> </h3> <div class="post-body entry-content"> <h1>Government Shutdown Threatens 800,000 U.S. Workers as Obama Seeks Solution</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">James Rowley</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="U.S. President Barack Obama " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iGDR23HfFomo" /> </div> <p class="caption">U.S. President Barack Obama said, “People are going to have to understand that a shutdown would have real effects on everyday Americans.” Photographer: Olivier Douliery/Pool via Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="ACG Analytics' Myrow Interview About U.S. Budget " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iNG_du2a53uY" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68450896/">Play Video</a></div> </div> <p class="caption"> April 7 (Bloomberg) -- Stephen Myrow, chief operating officer of ACG Analytics talks about prospects for a federal government shutdown when spending authority expires tomorrow and House Speaker John Boehner's efforts to accomodate Tea Party members in negotiations about budget cuts. Myrow speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg) </p> </div> </div> </div> <p>In the event of a government shutdown, the National Institutes of Health won’t admit new patients, some taxpayers will wait longer for refunds and any furloughed civil servants with federally issued BlackBerrys must turn them off. </p> <p>A failure by Congress to extend the government’s spending authority, which expires tomorrow, would force the closure of national parks, monuments and museums. Federal agencies -- such as the <a href="http://topics.bloomberg.com/national-labor-relations-board/">National Labor Relations Board</a> -- that don’t protect lives, property or national security also would be shuttered. </p> <p>As Democratic and Republican leaders in Congress seek agreement on a spending measure for the rest of the 2011 fiscal year, the Obama administration has warned of economic disruption from even a short shutdown. More than 800,000 “non-essential” federal workers -- out of a civilian workforce of 2.1 million -- would be furloughed until new spending legislation was passed. Agencies have drafted contingency plans for who would work and who wouldn’t. </p> <p>The prospect of a government shutdown, however limited it may be, has placed pressure on the Obama administration and congressional leaders to settle their dispute over $30 billion or more in cuts from the federal budget through September before a suspension -- as of midnight tomorrow -- of all but essential federal services. Leaders of both parties are bracing for the blame that will be attached to their failure to resolve what the White House has described as minimal differences. </p> <p>“People are going to have to understand that a shutdown would have real effects on everyday Americans,” President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> said last night after a meeting with congressional leaders at the White House, where he expressed confidence that a shutdown can be averted. </p> <h2>Elected Officials </h2> <p>Elected officials, including members of Congress and the president, would get paid during a shutdown unless Congress changes the law. Unlike the president and legislators, though, military personnel and federal employees who are deemed “essential” would receive no paychecks. </p> <p>Although troops and the civilian employees who continue to work would get paid for their service after government financing is restored, there is no guarantee that Congress would make furloughed workers whole. </p> <p>“You should plan accordingly,” says a sample <a href="http://cha.house.gov/images/operations_docs/notice_non_essential_employees.pdf" title="Open Web Site" rel="external">letter</a> to non-essential employees prepared by the House Administration Committee that also advises furloughed workers not to log on to government e-mail and to turn off their government-issued BlackBerrys. </p> <h2>$174 Million Per Day </h2> <p>The cost of back pay for furloughed government workers would be $174 million for each day the government is closed, according to data compiled by Bloomberg Government analyst Scott Anchin. </p> <p>The U.S. military’s operations in <a href="http://topics.bloomberg.com/afghanistan/">Afghanistan</a>, <a href="http://topics.bloomberg.com/iraq/">Iraq</a> and <a href="http://topics.bloomberg.com/libya/">Libya</a> would continue under the <a href="http://www.law.cornell.edu/uscode/html/uscode41/usc_sec_41_00000011----000-.html" title="Open Web Site" rel="external">Feed and Forage Act</a>, which guarantees payment of its expenses. The 1861 law “was designed for the cavalry troop that was going through Dodge City and needed to get ammunition for its rifles and food for men and horses,” said John F. Cooney, a former government budget official. It’s “a standing promise” by Congress to “fund any bill troops run up” to defend themselves, he said. </p> <h2>Medicare, Social Security </h2> <p>Medicare and Social Security would continue to pay benefits to elderly Americans because they don’t depend on year-to-year spending measures from Congress, said Cooney, who was deputy general counsel of the Office of Management and Budget under President <a href="http://topics.bloomberg.com/ronald-reagan/">Ronald Reagan</a>. </p> <p>The Social Security Administration plans to continue sending checks during a shutdown and accept new applications for benefits, said spokesman Mark Hinkle. </p> <p>As long as there is money in the Medicare trust fund, Medicare beneficiaries would continue to receive checks, said an administration official who briefed reporters yesterday. The trust fund would only be depleted if there is a lengthy government shutdown, said the official, who spoke on condition of anonymity. </p> <p>The <a href="http://topics.bloomberg.com/internal-revenue-service/">Internal Revenue Service</a> will continue sending refunds to taxpayers who file their returns electronically, Commissioner Douglas Shulman said yesterday. Online filings accounted for 70 percent of all tax returns last year, he said. </p> <p>Taxpayers who filed by mail may have to wait longer to get their money because Shulman says the IRS won’t process their refunds during a shutdown. </p> <p>The IRS would also suspend tax audits, said the administration official. </p> <h2>Financial Markets </h2> <p>The political drama in <a href="http://topics.bloomberg.com/washington/">Washington</a> has not disrupted the prevailing calm in financial markets. Yields on two-year <a href="http://topics.bloomberg.com/treasury-securities/">Treasury securities</a> rose 2 basis points yesterday to 0.83 percent. That is still below the average yield of 2.59 percent in the last decade, according to Bloomberg Bond Trade prices. </p> <p>Those prices reflect expectations by investors that when political leaders “come to the edge of the precipice, a more rational approach should prevail,” said <a href="http://topics.bloomberg.com/john-lonski/">John Lonski</a>, chief economist at Moody’s Capital Markets Group. </p> <p>As White House officials warned of devastating economic consequences, some Republicans attempted to downplay the impact of a shutdown. </p> <p>“There is no such thing as an actual government shutdown,” Representative <a href="http://topics.bloomberg.com/michele-bachmann/">Michele Bachmann</a> of <a href="http://topics.bloomberg.com/minnesota/">Minnesota</a> told a crowd of Tea Party protesters outside the Capitol yesterday. “It is a government slowdown.” </p> <h2>Economic Impact </h2> <p>The economic impact would depend on its duration and whether government workers are repaid. </p> <p>“If they’re not losing their income or some of it is made up, then you have a situation where impacts are minor, relatively,” said <a href="http://topics.bloomberg.com/joel-naroff/">Joel Naroff</a>, president of Naroff Economic Advisors in Holland, <a href="http://topics.bloomberg.com/pennsylvania/">Pennsylvania</a>. </p> <p>There is no precedent for Congress reimbursing the hundreds of thousands of federal contractors or their employees who may be laid off during a shutdown. </p> <p>“A government shutdown would be devastating to small businesses, their employees and their communities,” said Terry Williams, a spokesman for the National Association of Small Business Contractors in Washington. </p> <p>Contractors such as <a href="http://www.bloomberg.com/apps/quote?ticker=SAI:US" title="Get Quote" class="web_ticker">SAIC Inc. (SAI)</a>, <a href="http://www.bloomberg.com/apps/quote?ticker=AVAV:US" title="Get Quote" class="web_ticker">AeroVironment Inc. (AVAV)</a> and <a href="http://www.bloomberg.com/apps/quote?ticker=CMTL:US" title="Get Quote" class="web_ticker">Comtech Telecommunications Corp. (CMTL)</a> face greater financial risk than rivals because they must report earnings after April 30, according to a Lazard Capital Markets LLC report. </p> <p>It will be difficult for such companies to “pick up all that lost revenue” by April 30, <a href="http://topics.bloomberg.com/michael-lewis/">Michael Lewis</a>, the report’s author, said in a telephone interview. </p> <h2>Economic Data Delay </h2> <p>A shutdown would delay release of U.S. economic data, such as the scheduled April 12 release of Labor Department figures on March import prices, Commerce Department numbers on the February trade balance and the Treasury’s budget for last month. </p> <p>Closures of the Small Business Administration and the Federal Housing Administration would suspend processing of business loans and government-insured home mortgages, the administration official said. FHA-insured mortgages account for about 30 percent of the home-loan market, compared with 12 percent during the last two shutdowns in late 1995 and early 1996. </p> <p>And researchers at the <a href="http://topics.bloomberg.com/national-institutes-of-health/">National Institutes of Health</a> would not be allowed to start new clinical trials of experimental treatments or admit new patients, said the administration official. </p> <h2>Open for Business </h2> <p>The Treasury Department will conduct its regular schedule of securities auctions, a government official said yesterday on condition of anonymity. The Federal Reserve Board and its 12 regional banks will continue to operate because the Fed finances its operations from its bond portfolio. </p> <p>Also unaffected would be air-traffic control operations, airplane safety inspections and maintenance of airport communications, Randy Babbitt, head of the <a href="http://topics.bloomberg.com/federal-aviation-administration/">Federal Aviation Administration</a>, told a congressional subcommittee. </p> <p>The FBI’s criminal investigations will likely be “unhindered,” though a shutdown would force the bureau to postpone training and new initiatives, director Robert Mueller told a House subcommittee yesterday. </p> <p>All 116 federal prisons would remain open and criminal investigations and prosecutions would continue, said Justice Department spokeswoman Jessica Smith in an e-mail. The agency would be forced to “stop or significantly curtail” civil litigation, outreach to crime victims and managing grants. </p> <p>The federal court system will use fees paid by litigants and criminal defendants to remain open for about two weeks, said spokesman Dick Carelli. </p> <p>The State Department’s passport and visa services will likely be curtailed, said spokesman Mark Toner. U.S. embassies “will continue to provide services” of an emergency nature to Americans abroad, he said. </p> <p>National parks, monuments and Smithsonian Institution museums would close to visitors. The National Zoo in Washington would continue to employ keepers and veterinarians to care for the animals. </p> <p>The animals “need to have their keepers” for food and “vets on duty” in case they get sick, said spokeswoman Linda St. Thomas. “What they won’t have is visitors.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/government-shutdown-threatens-800000-us.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:25:00-07:00">9:25 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3794283500723453390">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3794283500723453390" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6457130909962084121"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/how-i-learned-to-love-government.html">How I Learned to Love the Government Shutdown</a> </h3> <div class="post-body entry-content"> <h1>How I Learned to Love the Government Shutdown: Caroline Baum</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Caroline Baum</span> -</cite></div><br /><div class="story_inline assets"> <img alt="Baum" class="author_photo" src="http://cdn.gotraffic.net/v/20110405_162600/images/authors/baum.jpg" /> <p class="author_caption">Caroline Baum</p> <div class="story_inline attachments"> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Douglas Holtz-Eakin Interview About Federal Budget " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ic1jy0hEv.kM" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68409302/">Play Video</a></div> </div> <p class="caption"> April 6 (Bloomberg) -- Douglas Holtz-Eakin, president of the American Action Forum, a non-profit group that favors smaller government, and a former director of the Congressional Budget Office, talks about the likelihood of a federal government shutdown if agreement isn't reached on a 2011 spending compromise, and Representative Paul Ryan’s budget proposal for fiscal 2012 that would cut federal spending by $6 trillion over the next decade and end traditional Medicare for future generations. Holtz-Eakin speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg) </p> </div> </div> </div> <p>What if the U.S. government shut down and no one noticed? </p> <p>Even worse (or better, depending on one’s point of view), what if all federal workers went on furlough and the public realized there were benefits, not just costs, to smaller government? </p> <p>The sixth stop-gap spending bill, known as a continuing resolution, expires tomorrow. In the event Democrats and Republicans can’t agree on a budget for fiscal year 2011, which is more than half over, the federal government, or parts of it, will shut down. </p> <p>Essential services will be maintained, including the distribution of Social Security checks. Employees involved in the military, national security and law enforcement will stay on the job. Non-essential workers will be <a href="http://www.opm.gov/furlough2011/" title="Open Web Site" rel="external">furloughed</a>. </p> <p>Neither party seems eager to halt government operations because a) they don’t want to shoulder the blame, as Republicans did in 1995; or b) they don’t want to be subject to repercussions (read: voter backlash) in 2012. </p> <p>President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> says a shutdown would devastate the economy at a time when job growth is struggling to reach a cruising altitude. What’s more, it would further reduce confidence in government. </p> <p>Guess what? It can’t go much lower. The <a href="http://www.gallup.com/poll/146567/congressional-approval-back-below.aspx" title="Open Web Site" rel="external">approval rating for Congress</a> dropped to 18 percent last month, near the lowest in the Gallup poll’s 37-year history of tracking the trend. </p> <p>So stop all the negativity and look at the bright side. A government shutdown would give federal employees a well-deserved respite from those grueling 9-to-5 workdays. Even essential workers deserve a break. </p> <p>My advice is to stop worrying and learn to love a U.S. government shutdown. Just imagine all the benefits… </p> <h2>Count the Ways </h2> <p>President Obama would be able to work on his golf game without the risk of appearing disengaged at a time when the country is involved in an It’s-Not-a-War in <a href="http://topics.bloomberg.com/libya/">Libya</a>. </p> <p>The U.S. State Department would have time to formulate a coherent foreign policy rather than deal with each Middle East uprising on an ad hoc basis. It can start by defining the criteria it uses to differentiate between good dictators (<a href="http://topics.bloomberg.com/saddam-hussein/">Saddam Hussein</a>, <a href="http://topics.bloomberg.com/hosni-mubarak/">Hosni Mubarak</a>, <a href="http://topics.bloomberg.com/muammar-qaddafi/">Muammar Qaddafi</a>) and bad dictators (Saddam Hussein, Hosni Mubarak, Muammar Qaddafi). </p> <p>CIA operatives would have time to hunker down with Rosetta Stone software and become fluent in Arabic so that next time they can provide valuable intel before a region ignites. </p> <p>A government closure would give the investigators at the Securities and Exchange Commission an opportunity to read and respond to information provided by whistleblowers like <a href="http://topics.bloomberg.com/harry-markopolos/">Harry Markopolos</a>. </p> <h2>Light Reading </h2> <p>The residential real estate market might get some breathing room to heal itself without an array of federal programs that create artificial demand for housing, prop up prices and delay the day of reckoning for underwater homeowners. </p> <p>A government shutdown would reduce commuter traffic on the Beltway. Air traffic controllers could catch up on their sleep. Tourists would face shorter lines at <a href="http://topics.bloomberg.com/washington/">Washington</a>’s monuments, although they’d have to sneak in. </p> <p>No lawmakers means no new laws, regulations, targeted tax breaks, exemptions or loopholes. Members of Congress would have much-needed time to read the health-care bill they passed last year, holding then-House Speaker <a href="http://topics.bloomberg.com/nancy-pelosi/">Nancy Pelosi</a> to her word when she said: “We have to pass the bill so you can find out what is in it.” </p> <h2>Bigger Means Smaller </h2> <p>A government shutdown would give family-values Republicans more time to spend with spouses and children (preferably their own). Democrats favoring income redistribution (yours, not theirs) could use the time to consult with their accountants so they can take advantage of the loopholes they write into the <a href="http://topics.bloomberg.com/tax-code/">tax code</a>. Members of both parties would have more time for <a href="http://www.opensecrets.org/" title="Open Web Site" rel="external">fundraising</a>. </p> <p>Too-big-to-fail banks would get a taste of what it’s like to swim without a life preserver should a crisis strike while the government is shuttered. </p> <p>Media companies should see improved profits as paid advertisements replace the endless obligatory coverage of the president and Congress bloviating. </p> <p>Finally, a shutdown would produce such an outcry and warnings of dire consequences from the media, activists and politicians, it might just get open-minded folks to reflect on how the government got so big and why it’s so intertwined in our lives. </p> <p>If that’s the first step to a smaller government, then by all means, shut it down. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/how-i-learned-to-love-government.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:23:00-07:00">9:23 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6457130909962084121">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6457130909962084121" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="424510404170539803"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/initial-jobless-claims-in-us-fell.html">Initial Jobless Claims in U.S. Fell</a> </h3> <div class="post-body entry-content"> <h1>Initial Jobless Claims in U.S. Fell 10,000 Last Week to 382,000</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Alex Kowalski</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Jobless Claims in U.S. Fell 10,000 Last Week to 382,000 " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iV2OaJTSc2hM" /> </div> <p class="caption">Job seeker Walter Hemphill fills out paperwork at the Hiring Our Heroes veterans employment fair sponsored by the United States Chamber of Commerce, the Chicagoland Chamber of Commerce and the Illinois Chamber in Chicago. Photographer: Tim Boyle/Bloomberg </p> </div> </div> </div> <p>Fewer Americans filed first-time claims for <a href="http://topics.bloomberg.com/unemployment-insurance/">unemployment insurance</a> last week, indicating the labor market is recovering. </p> <p>Applications for jobless benefits fell 10,000 in the week ended April 2 to 382,000, the fewest since Feb. 26, Labor Department figures showed today. Economists projected claims would be little changed at 385,000, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls and those collecting extended payments decreased. </p> <p>Fewer firings along with further increases in headcount may help ensure that gains in <a href="http://topics.bloomberg.com/consumer-spending/">consumer spending</a>, which accounts for 70 percent of the economy, are sustained. Unemployment that has declined four straight months supports the view of Federal Reserve policy makers that the job market is showing signs of healing. </p> <p>“The improvement in the labor market is for real,” said <a href="http://topics.bloomberg.com/eric-green/">Eric Green</a>, chief market economist at TD Securities Inc. in <a href="http://topics.bloomberg.com/new-york/">New York</a>. “Growth is on a steady upswing. Sales expectations are rising with more hiring plans.” </p> <p>Estimates for first-time claims ranged from 373,000 to 400,000 in the Bloomberg survey of 44 economists. The Labor Department initially reported the prior week’s applications at 388,000. </p> <p>Stock-index futures maintained gains after the report. The contract on the Standard & Poor’s 500 Index expiring in June rose 0.2 percent to 1,331.9 at 8:42 a.m. in New York. The benchmark 10-year Treasury note fell, pushing up the yield to 3.57 percent from 3.55 percent late yesterday. </p> <h2>Four-Week Average </h2> <p>The four-week moving average, a less volatile measure, dropped to 389,500 from 395,250. </p> <p>The number of people continuing to collect jobless benefits declined by 9,000 in the week ended March 26 to 3.72 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs. </p> <p>Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 91,400 to 4.27 million in the week ended March 19. </p> <p>The <a href="http://topics.bloomberg.com/unemployment-rate/">unemployment rate</a> among people eligible for benefits, which tends to track the national jobless rate, held at 3 percent in the week ended March 26. Thirty-three states and territories reported a decrease in claims, while 20 had an increase. </p> <p>Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. </p> <h2>Jobless Rate </h2> <p>The unemployment rate in the U.S. unexpectedly fell to a two-year low of 8.8 percent in March as employers created more jobs than forecast, the Labor Department said last week. Payrolls rose by 216,000 after a 194,000 gain in February. </p> <p>As employment picks up, consumers have the wherewithal to increase spending, encouraging companies to hire more workers. <a href="http://www.bloomberg.com/apps/quote?ticker=MCD:US" title="Get Quote" class="web_ticker">McDonald’s Corp. (MCD)</a>, the world’s largest restaurant chain by revenue, is seeking about 50,000 workers in the U.S. during its National Hiring Day event on April 19, the company said in a news release this week. </p> <p><a href="http://www.bloomberg.com/apps/quote?ticker=GM:US" title="Get Quote" class="web_ticker">General Motors Co. (GM)</a> is among companies that says the economy is improving, which may lead to more hiring. </p> <p>“We continue to see good solid signs of progress despite some of the challenges that remain” for the economy, <a href="http://topics.bloomberg.com/don-johnson/">Don Johnson</a>, vice president of U.S. sales for GM, said during an April 1 teleconference. “A recovering job market is going to be the most important factor for the <a href="http://topics.bloomberg.com/u.s.-economy/">U.S. economy</a> at this stage, and we do anticipate that this is going to continue to improve.” </p> <h2>‘Moderate Pace’ </h2> <p>The economic recovery “continued to proceed at a moderate pace, with a further gradual improvement in labor market conditions,” minutes of the Fed’s March 15 meeting released this week showed. </p> <p>While U.S. central bankers unanimously decided during that meeting to maintain their $600 billion stimulus, some of the 10 voting members of the committee thought evidence of a stronger recovery, higher inflation and rising inflation expectations “could make it appropriate to reduce the pace or overall size of the purchase program,” according to the minutes. </p> <p>“A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year; a few others noted that exceptional policy accommodation could be appropriate beyond 2011.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/initial-jobless-claims-in-us-fell.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:19:00-07:00">9:19 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=424510404170539803">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=424510404170539803" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2715804883988844406"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/japan-rattled-by-74-quake.html">Japan Rattled by 7.4 Quake</a> </h3> <div class="post-body entry-content"> <h1>Japan Rattled by 7.4 Quake; No New Problems at Nuclear Units</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Greg Chang and Brian K. Sullivan</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Japan Rattled by 7.4 Quake, Tsunami Warning Issued " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ivPgklQooHLA" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/68448236/">Play Video</a></div> </div> <p class="caption"> April 7 (Bloomberg) -- A magnitude 7.4 earthquake hit 215 miles (345 kilometers) northeast of Tokyo, resulting in warnings of a possible tsunami. The quake was measured at a depth of about 25 miles and struck about 11:32 p.m. local time, the U.S. Geological Survey reported on its website. Bloomberg's Brian Fowler talks about the quake with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg) </p> </div> </div> </div> <p>A magnitude-7.1 aftershock, the strongest since the devastating earthquake of March 11, struck <a href="http://topics.bloomberg.com/japan/">Japan</a> today 215 miles (345 kilometers) northeast of <a href="http://topics.bloomberg.com/tokyo/">Tokyo</a>, resulting in warnings of a possible tsunami. </p> <p>The quake was measured at a depth of about 25 miles and struck about 11:32 p.m. local time near the site of last month’s quake, the largest on record in Japan, the <a href="http://earthquake.usgs.gov/earthquakes/eqinthenews/" title="Open Web Site" rel="external">U.S. Geological Survey</a> reported on its website. </p> <p>Japan issued a tsunami alert for a possible two-meter wave. A tsunami wasn’t expected to reach <a href="http://topics.bloomberg.com/hawaii/">Hawaii</a>, according to the Pacific Tsunami Warning Center. </p> <p>“What occurred today is an aftershock in the same area and rupture zone to the magnitude-9 main shock that occurred about a month ago,” said Don Blakeman, a geophysicist in the U.S. <a href="http://earthquake.usgs.gov/regional/neic/" title="Open Web Site" rel="external">National Earthquake Information Center</a> in Golden, <a href="http://topics.bloomberg.com/colorado/">Colorado</a>. “It is tremendously smaller than the main shock. The main shock caused about 80 times more ground movement.” </p> <p>Tokyo Electric Power Co. told reporters that the quake caused no new disruption at the Fukushima Dai-Ichi and Dai-Ni nuclear power units. The Fukushima units were crippled by a 9.0 quake and tsunami on March 11 that left more than 27,000 people dead or missing and caused an estimated 25 trillion yen ($295 billion) in damage. </p> <h2>Power Failures Reported </h2> <p>Today’s quake, initially estimated at a magnitude of 7.4, caused power failures in Sendai, Yamagata and Fukushima City, according to broadcaster NHK. Miyagi Prefecture reported no immediate damage from the quake, which caused the region to close highways, Kyodo said. Bullet trains were also idled. </p> <p>Two of three external <a href="http://topics.bloomberg.com/power-lines/">power lines</a> were knocked out to the Onagawa nuclear plant, north of Fukushima, said Japan’s Nuclear Industrial Safety Agency. The Onagawa plant shut safely during the March 11 quake. </p> <p>Tohoku Electric Power Co.’s Higashidori nuclear plant lost a <a href="http://topics.bloomberg.com/power-source/">power source</a> and is continuing the cooling process for spent fuel with an emergency generator, the Kyodo news service reported. </p> <p>U.S. stocks fell, dragging the <a href="http://topics.bloomberg.com/dow-jones-industrial-average/">Dow Jones Industrial Average</a> down from an almost three-year high, while Treasuries erased losses and the yen rose following news of the latest quake. European stocks fell for the first time in five days. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/04/japan-rattled-by-74-quake.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-04-07T09:18:00-07:00">9:18 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2715804883988844406">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2715804883988844406" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="1580753040578574188"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/04/boehner-paid-as-soldiers.html">Boehner Paid as Soldiers</a> </h3> <h1>Boehner Paid as Soldiers Wait If Government Shuts Down</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Julianna Goldman</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Boehner Paid as Soldiers Wait " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iKHuZ7JUkoeQ" /> </div> <p class="caption">Elected officials, like Speaker of the House John Boehner, would be paid as usual during a shutdown. About 800,000 "non-essential" federal workers would not. Photographer: Alex Wong/Getty Images </p> </div> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="House Speaker John Boehner " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iAJ8iTv3puXo" /> </div> <p class="caption">House Speaker John Boehner. Photographer: Olivier Douliery/Pool via Bloomberg </p> </div> </div> </div> <p>As tomorrow night’s deadline for avoiding a government shutdown nears, about 800,000 “non- essential” federal workers face the prospect of getting no pay at all for time lost to the political impasse. </p> <p>Elected officials, including Republican House Speaker <a href="http://topics.bloomberg.com/john-boehner/">John Boehner</a>, Democratic Senate Majority Leader <a href="http://topics.bloomberg.com/harry-reid/">Harry Reid</a> and President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a>, all would be paid as usual during a shutdown, unless Congress changes the law. Soldiers, law enforcement officers and other government employees whose jobs are deemed essential would continue to work yet wouldn’t get paychecks until the budget standoff is resolved. </p> <p>Workers furloughed as non-essential, however, aren’t guaranteed that they’ll be paid at all for time off when the government closes for business. While they’ve ultimately received back pay after previous shutdowns, it’s up to Congress to “determine whether ‘non-excepted’ employees receive pay for the furlough period,” according to a U.S. Office of Personnel Management website providing <a href="http://www.opm.gov/furlough2011/" title="Open Web Site" rel="external">guidance and information on furloughs</a>. </p> <p>“It is unknown whether legislation will ultimately be passed” to make up lost pay, says a sample letter to non- essential employees prepared by the Committee on House Administration. “We wish that we could provide you with more guidance on this issue but, due to the fluid nature of the situation, we cannot.” </p> <p>Obama said a White House meeting last night with congressional leaders served to “narrow” differences over spending cuts. The government’s current spending authority is set to expire at midnight tomorrow. </p> <h2>‘Everyday Americans’ </h2> <p>“A shutdown could have real effects on everyday Americans,” Obama said late last night at the White House after a meeting where Boehner and Reid failed to reach an agreement. </p> <p>“It means that hundreds of thousands of workers across the country suddenly are without a paycheck. Their families are counting on them being able to go to work and do a good job.” </p> <p>The Senate has passed a measure to dock the pay of lawmakers for the duration of a shutdown. A House measure, part of the largely symbolic Prevention of Government Shutdown Act approved last week, would dock the pay of the president in addition to members of Congress. Neither proposal has taken effect. </p> <p>Members of Congress “shouldn’t be getting paid, just like federal employees shouldn’t be getting paid” during a shutdown, Boehner said today on ABC’s “Good Morning America.” </p> <p>Freshman Democratic Senator <a href="http://topics.bloomberg.com/joe-manchin/">Joe Manchin</a>, of <a href="http://topics.bloomberg.com/west-virginia/">West Virginia</a>, said in a <a href="http://manchin.senate.gov/public/index.cfm/press-releases?ContentRecord_id=a3dff7ee-9b55-4a55-96b3-bb5a72c0e2d5" title="Open Web Site" rel="external">statement</a> on his website that he would forgo his salary during a government shutdown and challenged colleagues to do the same thing. </p> <h2>Bottom Line </h2> <p>“The bottom line is this: I can’t imagine that the president, vice president or any member of Congress --Republican or Democrat -- thinks they should get paid when the government has shut down,” Manchin said. </p> <p>Yields on two-year <a href="http://topics.bloomberg.com/treasury-securities/">Treasury securities</a> fell 2 basis points to 0.81 percent at 10:39 a.m. in <a href="http://topics.bloomberg.com/new-york/">New York</a>, below the average yield of 2.59 percent in the last decade, according to Bloomberg Bond Trader prices. Bond prices reflect expectations that lawmakers will resolve differences over the budget and avoid a crisis of confidence in U.S. assets, said <a href="http://topics.bloomberg.com/john-lonski/">John Lonski</a>, chief economist at Moody’s Capital Markets Group. </p> <p>“I just don’t see where that is exerting much influence over the pricing of financial assets,” Lonski said in a telephone interview from his New York office. Investors foresee that “when you come to the edge of the precipice, a more rational approach should prevail,” he said. </p> <h2>Investor Perception </h2> <p>Contracts that show investor perception of U.S. credit risk rose today, reversing a five-day decline to the lowest since Oct. 19. </p> <p>Credit-default swaps on <a href="http://topics.bloomberg.com/u.s.-government-debt/">U.S. government debt</a>, which investors use to hedge against losses or to speculate on creditworthiness, jumped 4.1 basis points to 40.9 basis points as of 10:53 a.m. in New York, according to data provider CMA. The swaps are down from as high as 51.5 basis points on Jan. 27 </p> <p><a href="http://topics.bloomberg.com/consumer-confidence/">Consumer confidence</a> in the U.S. rose for a second consecutive week as an improving job market helped ease the burden of higher fuel costs. The Bloomberg Consumer Comfort Index climbed to minus 44.5 in the period ended April 3 from minus 46.9 the previous week. </p> <p>In Washington, the shutdown has specific costs. The cost of back pay for furloughed government workers would be $174 million for each day the government is closed, according to data compiled by Bloomberg Government analyst Scott Anchin. </p> <h2>Wait for Paychecks </h2> <p>Unlike the president and legislators, military personnel and essential federal employees who stay on the job would have to wait until government spending authority is restored to get salaries and wages. </p> <p>“Agencies will incur obligations to pay for services performed by excepted employees during a lapse in appropriations,” according to the website. </p> <p>There is no guarantee that Congress would make furloughed workers whole. It is possible they will be eligible for unemployment compensation, though it depends on state requirements, the website says. “Some states require a 1-week waiting period before an individual qualifies for payments,” it says. </p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-16296153128399795032011-03-31T12:59:00.001-07:002011-03-31T12:59:39.179-07:00<div class="post-body entry-content"> <div class="article-title"> <h1 class="header">Barack H. Reagan</h1> <h2><span style="font-size:180%;">Obama goes for the full monty.</span></h2> <div class="article-rss-left"><span class="date uppercase"> By <a href="http://www.weeklystandard.com/tws/aboutus/bio_kristol.asp">WILLIAM KRISTOL</a></span></div><span class="st_email"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets email"></span></span></span> <span class="st_facebook"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets facebook"> </span></span></span> <span class="st_twitter"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets twitter"> </span></span></span> <br /><div class="widget-bar"><span class="st_sharethis"><span class="stButton" style="text-decoration:none;color:#000000;display:inline-block;cursor:pointer;"><span class="chicklets sharethis"></span></span></span><div class="social" style="width: 150px;"> </div> </div> </div> <span class="print-link"></span><p>My Reaganite heart leapt and skipped when I read this article, “<a href="http://www.reuters.com/assets/print?aid=USTRE72T6H220110330">Obama authorizes secret support for Libya rebels</a>,” wherein we learn that “President Barack Obama has signed a secret order authorizing covert U.S. government support for rebel forces seeking to oust Libyan leader Muammar Gaddafi...Obama signed the order, known as a presidential 'finding'....”</p><img src="http://www.weeklystandard.com/sites/all/files/imagecache/teaser-large/images/teasers/obama%20libya.jpg" alt="obama" /> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/obama-goes-for-full-monty.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:37:00-07:00">10:37 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6329568970395426514">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6329568970395426514" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1128118150389360832"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/cia-operative-appointed-to-run-al-qaeda.html">CIA Operative Appointed to Run al-Qaeda Connected Libyan Rebels</a> </h3> <div class="post-body entry-content"> <h1 align="center"><span style="font-family:Georgia, Times New Roman, Times, serif;font-size:100%;"><b><span style="font-family:Times New Roman, Times, serif;font-size:6;"> <span style="font-size:130%;">CIA Operative Appointed to Run al-Qaeda Connected Libyan Rebels</span></span></b></span></h1> <span style="font-family:Georgia, Times New Roman, Times, serif;font-size:100%;"><b><span style="font-family:Times New Roman, Times, serif;"> by Kurt Nimmo</span></b></span><p style="font-family: georgia;"><span style="font-size:100%;">On Saturday, <a href="http://www.mcclatchydc.com/2011/03/26/111109/new-rebel-leader-spent-much-of.html">McClatchy</a> reported that Khalifa Hifter, a former Gaddafi military officer, was appointed to lead the rebel army supported by the United Nations, the United States and the Globalist Coalition.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Hifter spent two decades living in suburban Virginia “where he established a life but maintained ties to anti-Gaddafi groups,” writes Chris Adams for the newspaper. A friend told the journalist he “was unsure exactly what Hifter did to support himself, and that Hifter primarily focused on helping his large family.”</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">As it turns out, Mr. Hifter is a CIA operative, which likely explains his lengthy stay in Virginia. In 1996, the Washington Post reported that a Col. Haftar (a variation on Hifter) had arrived in the United States and he was “reported to be the leader of a contra-style group based in the U.S. called the Libyan National Army,” the <a href="http://www.twf.org/News/Y1997/Libya.html">Wisdom Fund</a> noted at the time. “This group is supported by the U.S., and has been given training facilities in the U.S. It’s a good presumption that Col. Haftar’s group operates in Libya with the blessings of our government.”</span></p><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">In 2001, <i>Le Monde diplomatique</i> published a book entitled <i><a href="http://www.amazon.com/gp/product/2259193196?ie=UTF8&tag=lewrockwell&linkCode=xm2&camp=1789&creativeASIN=2259193196">Manipulations africaines</a></i> stating that Hifter, then a colonel in Gaddafi’s army, was captured while fighting in Chad in a Libyan-backed rebellion against the US-supported government of Hissène Habré. “He defected to the Libyan National Salvation Front (LNSF), the principal anti-Gaddafi group, which had the backing of the American CIA. He organized his own militia, which operated in Chad until Habré was overthrown by a French-supported rival, Idriss Déby, in 1990,” writes <a href="http://www.wsws.org/articles/2011/mar2011/pers-m28.shtml">Patrick Martin</a>.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Chad served as a base of operations to destabilize Libya, according to Paris-based African Confidential newsletter. It reported on January 5th, 1989, that “the US and Israel had set up a series of bases in Chad and other neighboring countries to train 2000 Libyan rebels captured by the Chad army,” writes author <a href="http://www.infowars.com/who-are-the-libyan-freedom-fighters-and-their-patrons/">Peter Dale Scott</a>.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">In <i>The Secret War Against Libya</i>, <a href="http://www.medialens.org/articles/the_articles/articles_2002/rk_secret_war.html">Richard Keeble</a> writes for MediaLens:</span></p> <blockquote style="font-family: georgia;"> <p><span style="font-size:100%;"> US official records indicate that funding for the Chad-based secret war against Libya also came from Saudi Arabia, Egypt, Morocco, Israel and Iraq. The Saudis, for instance, donated $7m to an opposition group, the National Front for the Salvation of Libya (also backed by French intelligence and the CIA). But a plan to assassinate Gaddafi and take over the government on 8 May 1984 was crushed. In the following year, the US asked Egypt to invade Libya and overthrow Gaddafi but President Mubarak refused. By the end of 1985, the Washington Post had exposed the plan after congressional leaders opposing it wrote in protest to President Reagan.</span></p> </blockquote><span style="font-family: georgia;"> </span><table style="font-family: georgia;" width="135" align="right" border="0" cellpadding="0" cellspacing="0"> <tbody><tr> <td> <div align="right"> </div> <br /></td> </tr> </tbody></table> <p style="font-family: georgia;"><span style="font-size:100%;">Hidden in plain view is the fact the CIA and the establishment have appointed a former operative to run the so-called rebel army posed against Gaddafi. In other words, the resistance daily portrayed as heroes by the corporate media – itself controlled by the CIA and the establishment – basically consists of the same folks who opposed the Libyan dictator two decades ago.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">The other CIA front in Libya is al-Qaeda under the banner of <i>al-Jama’a al-Islamiyyah al-Muqatilah bi-Libya</i>, aka the Libyan Islamic Fighting Group, LIFG. The LIFG was founded in 1995 by a group of mujahideen veterans who had fought against the Soviet occupation of Afghanistan. The mujahideen operation was run by the CIA, Pakistan’s ISI, and the Saudis. It eventually became al-Qaeda, the Taliban, and assorted jihadists.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">Meanwhile, over at the Soros operation, <a href="http://thinkprogress.org/2011/03/28/qaddafi-libya-al-qaeda/">Think Progress</a>, the libs are desperate to support Obama’s murderous new war and dismiss anybody who would even suggest the heroic rebels are connected to al-Qaeda and the CIA.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">“It’s necessary to have a public debate about the U.S. role in Libya, but it’s important to get the facts right – al Qaeda is not driving the Libyan resistance,” the foundation and globalist liberals insist.</span></p> <p style="font-family: georgia;"><span style="font-size:100%;">They are right, but not in the way they think. The CIA is the driving force and al-Qaeda is just window dressing consisting of the usual dupes, patsies, useful idiots, and assorted psychopaths on the payroll.</span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/cia-operative-appointed-to-run-al-qaeda.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:26:00-07:00">10:26 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1128118150389360832">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1128118150389360832" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="5174549725192946392"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/libya-libertarianism.html">Libya, Libertarianism</a> </h3> <div class="post-body entry-content"> <p style="font-weight: bold; color: rgb(102, 0, 0);" class="title"><span style="font-size:180%;">Libya, Libertarianism, and the Legacy of Lanny Friedlander</span></p> <p class="pagesub">Why we fight: a reminder</p> <div class="details3"> by <a href="http://original.antiwar.com/author/justin/" title="Posts by Justin Raimondo">Justin Raimondo</a></div><p>This [Sunday] morning, meandering around the Internet, I happened upon the news that <a href="http://reason.com/archives/2011/03/26/lanny-friedlander-founder-of-r">Lanny Friedlander</a>, who founded <em>Reason</em> magazine in 1968, had died in a Veterans Administration hospital, largely forgotten by the modern libertarian movement he did so much to create. This hit home in a way that I can only describe as eerie: for a moment, I was the <a href="http://community2.metalreview.com/cfs-filesystemfile.ashx/__key/CommunityServer.Discussions.Components.Files/7/3755.Eddie-Haskell.jpg">young teenager</a> who’d gotten a long distance phone call from Lanny – long distance was a big deal back then! – on the occasion of <em>Reason</em>‘s first issue, the debut of which was imminent.<br /></p> <p>I never actually met Lanny, being too young to travel on my own to faraway Boston, but we had been communicating quite regularly through the mails – yes, it <em>was</em> <a href="http://www.ourdocuments.gov/doc.php?flash=old&doc=61">a long time ago</a>. Funny how it seems like only yesterday.<br /></p> <p>Back in those days, the libertarian “movement” was more than half teenagers, and a sprinkling of oldsters (over thirty!) representing what we regarded as the previous generation, the <a href="http://www.lewrockwell.com/rothbard/rothbard25.html">scattered remnants</a> of <a href="http://www.amazon.com/gp/product/1933859601/antiwarbookstore">the Old Right</a>. This youth movement expressed itself via a <a href="http://mises.org/publications.aspx">plethora</a> of mimeographed magazines, newsletters, and good old fashioned letter-writing, a flourishing samizdat media that paralleled the much-heralded left-wing underground press of the 1960s. Lanny and I inhabited this small but growing parallel underground, and dreamed of the day when it would go above-ground, and burst onto the national scene.<br /></p> <p>That day seemed not far off when the <em>New York Times</em> magazine published <a href="http://fare.tunes.org/liberty/library/new_right_credo.html" target="_blank"><u>a long piece</u></a> by two young libertarians, Stan Lehr and <a href="http://en.wikipedia.org/wiki/Louis_Rossetto">Louis Rossetto Jr.</a>, that was our “coming out” in the mainstream media. Lehr and Rossetto gave the readers of the <em>Times</em> an overview of what libertarians believed, and who they were, with photos of all the movement stars (including Ayn Rand and Murray Rothbard). Re-reading it today, I am struck by how central foreign policy issues were to the young libertarians of 1971. “Conservatives tended to be nationalistic when it came to foreign policy,” the authors noted, and this put them “in the strange position of advocating a stronger nation-state to preserve freedom.” Furthermore,<br /></p> <p><em>“The conservative movement attracted a disparate assortment of adherents in the early sixties. Some were rabid anti-Communists who would sooner have seen the world decimated in a nuclear holocaust than have given the Communists an inch of some rotting jungle.”</em><br /></p> <p>Yes, the neoconservatives were there, right from the very beginning: as the libertarians were leaving the conservative movement, <a href="http://thinkprogress.org/2007/06/20/podhoretz-bomb/">Norman Podhoretz</a> and his fellow “Neocons for Nixon” were joining it.<br /></p> <p>It was the split on the youthful right over the Vietnam war, the authors remind us, that set the stage for the struggle between libertarians and their “traditionalist” opponents:<br /></p> <p><em>“While traditionalists automatically supported any step the Government chose to take against Communism, libertarians were more concerned about whether the Government had the right to tax and conscript its citizens to undertake so improbable an adventure.”</em></p> <p><em>"Libertarians believed that if the country were really in danger a free citizenry would be more than willing to defend it voluntarily.”</em><br /></p> <p>It was a real question, at the time, whether <a href="http://mises.org/daily/1875">Nixon’s America</a> would long tolerate the concept of a “free citizenry.” The “trads,” as they were known, were the “big government conservatives” of their day: faced with a choice between their ideals and their political alliances, they chose the path of Richard Nixon, who instituted <a href="http://www.econreview.com/events/wageprice1971b.htm">wage and price controls</a>, over their purely theoretical devotion to abstract “liberty.” As Lehr and Rossetto point out, in spite of <a href="http://en.wikipedia.org/wiki/Fusionism">Frank S. Meyer</a>‘s attempt to hold the libertarian-conservative symbiosis together, “the fusionist approach to conservatism was to be relegated to the scrap heap by the tides of war, protest and cultural change.”<br /></p> <p>Forty years later, the tides of war, protest, and cultural change are no less tumultuous, and yet conservatism did <em>not</em> wind up on the scrap heap of history. Instead, a migratory raiding party known as <a href="http://rightweb.irc-online.org/profiles/category/individuals">the neoconservatives</a> came in <a href="http://www.antiwar.com/justin/j052303.html">from the left</a> and took up residence in the hollowed-out husk of the old conservative movement, transforming it into the perfect vehicle for an American tyranny – one that has, so far, nearly succeeded in abolishing the Constitution and destroying the remnants of our old Republic.<br /></p> <p>Forty years later, our old enemies have made considerable progress, effectively <a href="http://www.antiwar.com/justin/j032502.html">seizing control</a> of US foreign policy in the post-9/11 era and taking us on a rampage that started in Afghanistan and seems not to have any logical end. The post-9/11 neoconservative coup was attested to by <a href="http://www.washingtonpost.com/ac2/wp-dyn/A17347-2004Apr16?language=printer">Colin Powell</a>, who witnessed it first hand and related it to Bob Woodward in <em>Plan of Attack</em>,<br /></p> <p><em>“Powell felt Cheney and his allies – his chief aide, I. Lewis ‘Scooter’ Libby, Deputy Defense Secretary Paul D. Wolfowitz and Undersecretary of Defense for Policy Douglas J. Feith and what Powell called Feith’s ‘Gestapo’ office – had established what amounted to a separate government.”</em><br /></p> <p>The American <a href="http://en.wikipedia.org/wiki/Thermidor_reaction">Thermidor</a> took place quietly. There were no tanks in the streets outside the White House, no street fights between competing factions. Indeed, the coup went almost completely unnoticed — <a href="http://www.amconmag.com/article/2003/dec/01/00019/">except</a> by a <a href="http://motherjones.com/politics/2004/01/lie-factory">few</a> such as <a href="http://www.newyorker.com/archive/2003/10/27/031027fa_fact">Seymour</a> <a href="http://www.newyorker.com/archive/2003/05/12/030512fa_fact">Hersh</a>, whose investigations into the “<a href="http://www.google.com/search?hl=&q=Office+of+Special+Plans&sourceid=navclient-ff&rlz=1B3GGLL_enUS412US413&ie=UTF-8#sclient=psy&hl=en&rlz=1B3GGLL_enUS412US413&source=hp&q=Office+of+Special+Plans&aq=f&aqi=&aql=&oq=Office+of+Special+Plans&pbx=1&bav=on.2,or.r_gc.r_pw.&fp=888970748f66ece1">Office of Special Plans</a>” and other parallel ad hoc entities exposed the inner workings of the coup plotters.<br /></p> <p>Far from being thrown on the scrap heap, those “rabid anti-Communists who would sooner have seen the world decimated in a nuclear holocaust than have given the Communists an inch of some rotting jungle” have gone on to bigger and – from their viewpoint – better things. The Communists are long gone, but <a href="http://original.antiwar.com/justin/2011/03/01/the-protocols-of-the-learned-elders-of-opec/">the Muslims</a> have taken their place. Compared to our perpetual “war on terrorism,” <a href="http://video.google.com/videoplay?docid=1018677197583161392#">the Vietnam conflict</a> is mere skirmish.<br /></p> <p>The personalities change – Nixon, Bush, Obama, LBJ – but the essential issues remain fairly constant. The same people are promoting the same policies that have led us to disaster since the 1960s. The same formidable enemy, the War Party, looms over whatever prospects for prosperity and personal happiness we might be so foolhardy as to entertain.<br /></p> <p>Libertarianism has grown by leaps and bounds since the days Lanny Friedlander and I exchanged excited letters about the progress of a movement nobody had ever heard of. It has been a long hard battle, marked by frequent reverses. Back in the early days, when I told people I was a libertarian, I more than once elicited a confused response, such as “Oh, I didn’t know the librarians had their own political movement!”<br /></p> <p>Today, the libertarian brand is so clearly defined as to be unmistakable, and there is no doubt that it has more than lived up to the “Credo” outlined by Lehr and Rossetto in their long ago article. That piece, with its jabs at the neocons and its forthright opposition to interventionism, was undoubtedly influenced by the libertarian theoretician <a href="http://www.antiwar.com/orig/rothbard_on_war.html">Murray Rothbard</a>, whose picture was prominently displayed to illustrate the text. Of course, Ayn Rand, a fanatical cold warrior, was also pictured therein, and yet the piece itself, apart from naming the author of <em>Atlas Shrugged</em> and <em>The Fountainhead</em> as one inspiration among many, clearly bears Rothbard’s <a href="http://www.lewrockwell.com/rothbard/rothbard26.html">mark</a>.<br /></p> <p>Of the three pillars of libertarian “orthodoxy” – a devotion to free markets, civil liberties, and a non-interventionist foreign policy – it was and still is possible to get conservatives, and even some neoconservatives, to agree on the first two. Yet foreign policy is still the stumbling block to any effective unity, although there are many <a href="http://original.antiwar.com/justin/2011/03/24/conservatives-challenge-obama-over-libya/">encouraging indications</a> that this obstacle is crumbling fast.<br /></p> <p>While the conservative critique of the Obama administration’s entry into the Libyan mess is still evolving, some of the “tea party” freshmen in Congress are among the President’s fiercest critics. Can a <a href="http://www.istockanalyst.com/finance/story/5007318/another-voice-us-will-go-bankrupt">bankrupt America</a> afford to “liberate” Libya? These and other questions, such as the proper limits of presidential power, are rapidly leading a number of conservatives into the anti-interventionist ranks.<br /></p> <p>Skeptics may scoff that these freshly baptized converts will soon revert to their old heathen ways once a Republican president is in office and in a position to make war, and yet this ignores the reality that people can learn from their experience. <a href="http://www.obscureprotest.com/wp-content/uploads/2009/12/get_a_brain_morans.jpg">Not all</a> possess the ability to engage is such self-reflection, and yet those that do are invariably the most intelligent, the most thoughtful — in short, the most desirable recruits.<br /></p> <p>All ideologies must stand the test of reality, and the neocons have so far only gotten <a href="http://exiledonline.com/the-great-gazoo-returns-%E2%80%9Cdon%E2%80%99t-scrap-the-missile-shield-dumb-dumbs%E2%80%9D/">failing grades</a>. War-weary Americans thought they had turned them out of office, and foreclosed the possibility of any more foreign wars, only to find that their alleged savior has followed in the neocons’ footsteps more faithfully than even the worst pessimists among us had ever imagined.<br /></p> <p>So we are back art Square One, so to speak. In arriving at this point in history, when both mainstream liberals and the usual neoconservative suspects are <a href="http://walt.foreignpolicy.com/posts/2011/03/21/what_intervention_in_libya_tells_us_about_the_neocon_liberal_alliance">united</a> in supporting yet another US overseas intervention, once again we have the far left and far right “fringes” in opposition. We have a worldwide financial crisis on top of the crisis of empire in the Middle East, similar to — albeit worse than — the economic ructions of Nixon’s day. We have, in short, come full circle to this Yogi Berra moment: “It’s deja-vu all over again!”<br /></p> <p>But for one difference. This time, the libertarian movement is a lot bigger, both in numbers and in resources. Even more important, it is infinitely more principled and hardcore than it was in the early days: the Rothbardian perspective evidenced in the Lehr-Rossetto piece was by no means the only or even the dominant tendency back then. It took a long and often fierce battle – an educational battle – before the essential third pillar of the libertarian “trinity” was finally cemented firmly in place. Today, in spite of a few backsliders and marginal renegades, the libertarian brand has been identified as intransigently anti-war on account of the efforts of <a href="http://original.antiwar.com/paul">Ron Paul </a>and the movement he created. Or, rather, <em>re</em>created – only bigger, and better, this time.<br /></p> <p>Rep. Paul is my <a href="http://www.google.com/search?q=Ron%20Paul&hl=&tbm=vid">favorite politician</a> for the simple reason that he never fails to bring in the foreign policy angle: he takes every opportunity to bring up the ruination that militarism is visiting on our nation, the waste and fraud it enables, the damage it does to our constitutional system of limited government, the dark shadow it casts over the prospects for liberty in our time. This is hardly surprising, as Rothbard was one of Paul’s mentors right up until the great libertarian theorist’s death in 1995.<br /></p> <p>With this movement in place, and growing by the hour, libertarians are facing the current crisis – the twin crisis of fiscal insolvency and imperial decline – armed as never before. Yet we should not approach the battle with any thought that it will be any easier than it was when we were just a bunch of crazy (in a <em>good </em>way!) teenagers out to “smash the State.” Indeed, it will be a lot harder, because we are charged not just with building our own movement but with building a much broader resistance to <a href="http://www.nytimes.com/2011/03/27/us/27fbi.html?ref=us">incipient authoritarianism</a> and <a href="http://www.nytimes.com/2011/03/28/world/africa/28policy.html?hpw">perpetual war</a>.<br /></p> <p>The stakes are a bit higher than they were in the 1960s. Draconian post-9/11 legislation, including but not limited to the misnamed <a href="http://www.youtube.com/watch?v=kNRSs6LsGeI">“PATRIOT” Act</a>, essentially repealed a good deal of the Bill of Rights, and the rest is just a mopping up operation. We are at war on two continents, and the prospect of yet another war or two is just over the horizon. In the meantime, the <a href="http://blog.mises.org/11616/charles-goyette-dollar-meltdown-video-interview/">ticking time-bomb</a> of our financial system can be heard above the gunfire.<br /></p> <p>The scope and severity of the crisis means that we have to build a much broader movement against the dominant trends of authoritarianism and militarism, one that extends far beyond the relatively narrow base of the libertarian movement. We here at Antiwar.com recognized this long ago: this, indeed, is the <a href="http://www.antiwar.com/who.php">entire rationale</a> for the existence of this web site.<br /></p> <p>This is what we need to remember when we agitate against, say, the US intervention in Libya, or any particular policy of our rulers in Washington: it isn’t just about Libya, or the specific details of why our intervention there can only end in disaster. It’s about the larger issue of America’s proper role in the world – and what that role portends for the future of the American republic. Writing about the specifics of this or that crisis, on an almost daily basis, it’s easy for me to get lost in the details: that’s why it’s important to remind ourselves, every once in a while, why we are making this fight.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/libya-libertarianism.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:24:00-07:00">10:24 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=5174549725192946392">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=5174549725192946392" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2319361814637965897"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/you-lie-mr-president.html">You Lie, Mr. President</a> </h3> <div class="post-body entry-content"> <p style="font-weight: bold;" class="title"><span style="font-size:180%;">You Lie, Mr. President</span></p> <p class="pagesub">About Libya, and much else</p> <div class="details3"> by <a href="http://original.antiwar.com/author/justin/" title="Posts by Justin Raimondo">Justin Raimondo</a></div><p>I couldn’t bear to watch the President’s <a href="http://www.whitehouse.gov/the-press-office/2011/03/28/remarks-president-address-nation-libya">why-we’re-in-Libya speech</a> as it was <a href="http://www.youtube.com/watch?v=hUXEiwJiKj4">broadcast</a>: it’s Spring, after all, and my garden needs planting. Priorities, priorities, priorities: so important, in politics and in life. </p> <p>We all have our priorities: I have mine, and the President of the United States <a href="http://www.thenation.com/blog/159336/kucinich-warns-obama-libya-war">has his</a>. As an indication of the latter, I note that Obama waited a whole week after deploying US forces before deigning to explain his actions to the American people. He has yet to go to Congress for authorization, although he made sure he cleared it with our <a href="http://www.politico.com/blogs/bensmith/0311/The_domestic_politics_of_Libya_in_Frnace.html">pushy</a> allies and the UN <a href="http://www.salon.com/news/politics/war_room/2011/03/21/lind_libya_war">Security Council</a>. Having received this double-dispensation, Congress is for him but an <a href="http://webcache.googleusercontent.com/search?q=cache:d2JZZUM189gJ:amerpundit.com/2011/03/28/full-prepared-remarks-of-president-obamas-address-to-the-nation-on-libya/+%22And+so+nine+days+ago,+after+consulting+the+bipartisan+leadership+of+Congress,+I+authorized%22&cd=82&hl=en&ct=clnk&gl=us&source=www.google.com">afterthought</a>. This is the true meaning of “multilateralism”: world opinion matters, American opinion – not so much.</p> <p>When he finally did come before us to justify this latest episode of world-saving, he didn’t address Congress, but “the most servile audience he could find,” as <a href="http://www.antiwar.com/blog/2011/03/28/obamas-biggest-scam/">James Bovard</a> so trenchantly put it, “uniformed military officers at the National Defense University. The room will be full of people who are owned lock, stock, and barrel by the government. The officers have spent their lives working for Uncle Sam, and they know that a single ill-time hoot during Obama’s talk could end their careers.” </p> <p>There would be no “<a href="http://www.youtube.com/watch?v=qgce06Yw2ro">You lie!</a>” moment in this setting. Such safeguards were not for nothing, because practically every other word out of his mouth was either a lie or a truth so veiled in ambiguity that it merges into untruth on closer inspection. </p> <p>He started out with a half-truth, paying tribute to the “courage, professionalism, and patriotism” of “our men and women in uniform,” lauding them for <a href="http://www.bloomberg.com/news/2011-03-29/u-s-defense-department-will-spend-as-much-as-80-million-on-aid-to-japan.html">helping</a> the Japanese in their hour of need. No American could disagree with that: in the rest of the world, however, there is a less worshipful attitude toward the behavior of US troops stationed abroad. We may be inured to evidence of US atrocities, but <a href="http://www.rollingstone.com/kill-team">those photos</a> of US centurions posing next to the corpses of the civilians they slaughtered in Afghanistan were published the day before the President praised the “professionalism” of the US military. </p> <p>I’ll leave it to others to sort out whether this qualifies as an outright lie, or a mere fib-by-omission. Obama is an expert at crafting the plausible untruth: not since FDR <a href="http://www.antiwar.com/rep/flynn1.html">lied us into war</a> – and much else – in the 1930s have we seen such a master of duplicity in the Oval Office. Inserted into this ode to the military was, indeed, one outright lie: “Because of them and our dedicated diplomats, a coalition has been forged and countless lives have been saved.” </p> <p>The lives we “saved” are countless only because they don’t exist: we intervened to prevent a holocaust that <a href="http://webcache.googleusercontent.com/search?q=cache:aIn_zpCMntQJ:www.foreignpolicyi.org/content/president-seems-understand-we-have-win-libya-says-fpi-director-william-kristol+%22threatened+to+go+door+to+door%22&cd=11&hl=en&ct=clnk&gl=us&source=www.google.com">never happened</a> – and there’s no way of knowing (although plenty of reason to doubt) whether it would have happened without Western intervention. This is the kind of lie that Americans like to hear: he’s telling us we’re heroes, not Ugly Americans. </p> <p>Quite literally every other word in his Libya peroration is a lie. Take this paragraph: </p> <p><i>“For generations, the United States of America has played a unique role as an anchor of global security and advocate for human freedom. Mindful of the risks and costs of military action, we are naturally reluctant to use force to solve the world’s many challenges. But when our interests and values are at stake, we have a responsibility to act. That is what happened in Libya over the course of these last six weeks.”</i></p> <p>America has played a role that is neither unique in world history nor notable for its benefit to the cause of human freedom. The <a href="http://i248.photobucket.com/albums/gg198/ProfessorofTruth/1770_Boston_Massacre_Engraving_1-Re.jpg">British</a>, and the <a href="http://www.antiwar.com/engelhardt/?articleid=6300">Romans</a> before them – and before them, <a href="http://www.nytimes.com/2004/03/31/opinion/31iht-edbearden_ed3__3.html">Alexander</a> – thought they could bring order out of the world chaos, and we are merely the latest pretenders to the throne. As for being mindful of the <a href="http://www.commondreams.org/archive/2007/09/14/3839">risks</a> and <a href="http://www.nationaljournal.com/nationalsecurity/costs-of-libya-operation-already-piling-up-20110321">costs</a> of intervention, an audience other than the notables of the National Defense University would be sorely tempted to let loose with a loud guffaw. The really stunning lie that stands out from the crowd, however, is the assertion that “we are naturally reluctant to use force to solve the world’s many challenges.” After our long and ongoing post-9/11 <a href="http://www.alternet.org/world/87235/">rampage</a> across the face of the Middle East, it will be many years before any US President can say this without being laughed at. Force, including the threat of it, is the <a href="http://www.globalsecurity.org/military/facility/afb.htm">main instrument</a> of US foreign policy, a necessity inherent in the nature of any and all empires, and especially one such as ours, with global pretensions. </p> <p>“When our interests and our values are at stake, we have a responsibility to act.” What interests, whose values – and what’s the difference, anyway? The President devotes the rest of his speech to deftly dancing around these three vital questions.</p> <p>Obama stumbles, though, when he gives us a little geography lesson, in that gently condescending professorial tone he affects when directly addressing us ordinary folk: “Libya sits directly between Tunisia and Egypt,” we are told, “two nations that inspired the world when their people rose up to take control of their own destiny.” <a href="http://www.addictedtotravel.com/Resources/Images/2007/6/cdb6a517-fe95-4c4b-a434-797001233f07.jpg">Well, yes</a>, Libya does indeed sit “directly” between Tunisia and Egypt, but even more directly it squats squarely between Algeria and Egypt – and the omission is telling. </p> <p>Algeria, under the self-proclaimed “socialist” dictator turned Western ally <a href="http://en.wikipedia.org/wiki/Abdelaziz_Bouteflika">Abdelaziz Bouteflika</a>, is also experiencing <a href="http://www.google.com/hostednews/afp/article/ALeqM5hobljGcr4NgG0WY3DJhXnuTXnrMw?docId=CNG.06165d12c3afb21c3e4fa4d569c29152.651">anti-government protests</a>, which are being met with <a href="http://english.aljazeera.net/news/africa/2011/03/20113512417540287.html">brutal force</a>. Later on in his speech, Obama notes the disruption an exodus from Libya would have on neighboring countries, which hints at the administration’s real fear: that an influx of revolution-minded Libyans into Algeria would further destabilize the Bouteflika regime. </p> <p><i>“Last month,” continued Obama, Gadhafi’s grip of fear appeared to give way to the promise of freedom. In cities and towns across the country, Libyans took to the streets to claim their basic human rights. As one Libyan said, ‘For the first time we finally have hope that our nightmare of 40 years will soon be over.’”</i></p> <p>Another half-truth. Libyans did indeed take to the streets, but was it really to “claim their basic human rights”? At this point, the demands of the rebels seem to be limited to “<a href="http://www.rnw.nl/international-justice/article/rebels-reject-talks-demand-gaddafi-quits-libya">Gadhafi must go!</a>” What comes after Gadhafi is as much a mystery after Western intervention as it was before. Gadhafi has <a href="http://www.military.com/news/article/gaddafi-blames-alqaeda-for-revolt.html">slimed the rebels</a> as agents of al-Qaeda, which, oddly, puts him in the same camp as <a href="http://pajamasmedia.com/blog/rebel-commander-in-libya-fought-against-u-s-in-afghanistan/?singlepage=true">some extreme neocons</a>, who see the Muslim world as inherently and incorrigibly authoritarian, and some opponents of US intervention, such as <a href="http://www.thefirstpost.co.uk/76789,news-comment,news-politics,alexander-cockburn-libya-rebels-gaddafi-could-be-right-about-al-qaeda,2">Alexander Cockburn</a>, who give credence to some allegedly “secret documents” dug up by US intelligence which point to Libya as a focal point in al-Qaeda’s recruiting efforts. All this because some self-appointed “<a href="http://www.longwarjournal.org/threat-matrix/archives/2011/03/libyan_opposition_leader_wasnt.php">commander</a>” of the rebel forces once fought against the Americans in Iraq. Rather than handing power over to bin Laden, the rebels will more likely want to restore the monarchy and install the heir of King Idris I (there are <a href="http://www.italianinsider.it/?p=3367">two to choose from</a>). </p> <p>In any case, the alleged goodness of the opposition is a difficult case to make, and so the President plays his trump card, the indisputable evil of Gadhafi: </p> <p><i>“Faced with this opposition, Gadhafi began attacking his people. … In the face of the world’s condemnation, Gadhafi chose to escalate his attacks, launching a military campaign against the Libyan people. Innocent people were targeted for killing. Hospitals and ambulances were attacked. Journalists were arrested, sexually assaulted, and killed. Supplies of food and fuel were choked off. The water for hundreds of thousands of people in Misratah was shut off. Cities and towns were shelled, mosques destroyed, and apartment buildings reduced to rubble. Military jets and helicopter gunships were unleashed upon people who had no means to defend themselves against assault from the air.”</i> </p> <p>If, during <a href="http://www.amazon.com/Emancipating-Slaves-Enslaving-Free-Men/dp/0812693124/antiwarbookstore">the Civil War</a>, Confederate newspapers reported that Lincoln had begun “attacking his people,” well, then they weren’t exactly wrong about that. The bald statement of this fact, however, leaves out a certain context. Innocent people are targeted in every war, including those conducted by the United States: take <a href="http://www.democracynow.org/2004/1/26/exclusive_democracy_now_confronts_wesley_clark">the hit</a> on the Serbian state television station during the Kosovo war, a conflict this intervention is often compared to. The Israelis targeted <a href="http://www.amnesty.org/en/library/info/MDE18/007/2006">water supplies</a> in Lebanon, along with churches and factories, and yet we heard not a peep out of any party politician above the rank of dog catcher – and certainly not aspiring politician Obama at the time – on that one. </p> <p>As for the fate of journalists in war zones: the same Al Jazeera that has been singled out by Gadhafi was <a href="http://english.aljazeera.net/focus/theiraqinvasionfiveyearson/2008/04/200861517436910108.html">singled out</a> by the US in Iraq. Journalists are <a href="http://mobile.salon.com/politics/war_room/2011/02/28/iraq_protests_us/index.html">being killed</a> by government-connected death squads in US-occupied Iraq today. As for journalists being sexually assaulted: it happened in Tahrir Square, too, <a href="http://www.huffingtonpost.com/2011/02/15/lara-logan-suffered-bruta_n_823677.html">you’ll recall</a>, but somehow this failed to spur US intervention. </p> <p>I could wade through this miasma of murky logic and dubious doubletalk all day and all night, and still not hone in on the central affront to reason contained therein, and so let me get to that without further ado. After giving us a hair-raising build-up to the climax of his narrative, the President gets down to the nitty-gritty:</p> <p><i>“At this point, the United States and the world faced a choice. Gadhafi declared that he would show ‘no mercy’ to his own people. He compared them to rats, and threatened to go door to door to inflict punishment. In the past, we had seen him hang civilians in the streets, and kill over a thousand people in a single day. Now, we saw regime forces on the outskirts of the city. We knew that if we waited one more day, Benghazi – a city nearly the size of Charlotte – could suffer a massacre that would have reverberated across the region and stained the conscience of the world.</i> </p> <p><i>“It was not in our national interest to let that happen. I refused to let that happen. And so nine days ago, after consulting the bipartisan leadership of Congress, I authorized military action to stop the killing….”</i> </p> <p>Gadhafi never said he would “show ‘no mercy’ to his own people,” but rather that he would show no mercy <a href="http://www.antiwar.com/blog/2011/02/22/qadaffis-norma-desmond-moment/">to the organizers of the rebellion</a> – presumably, the interim “council” that now rules Benghazi, including his own <a href="http://www.guardian.co.uk/world/2011/mar/29/libya-rebel-government-in-waiting">former Interior Minister</a>. These are the “rats” he referred to – defectors from his own government, who deserted what they perhaps rightly regard as a sinking ship. </p> <p>Contrary to the President’s assertion that a massacre was imminent, there is no credible evidence Gadhafi was preparing any such action. Not a shred. Indeed, common sense, and military necessity, would argue against it: after all, having taken Benghazi, the Libyan despot would still have to rule it. It’s easy to demonize Gadhafi as a putative madman, yet he didn’t survive all these years for nothing. Indeed, he does have <a href="http://www.washingtonpost.com/world/crisis-in-the-mideast/2010/08/25/ABHShlRB_print.html">substantial support</a> within the country, centered in the west, around Tripoli, as well as the southern oases of the Fezzan. </p> <p>“America is different,” says the President. That’s why we intervened, because we can’t just stand by while atrocities are being committed – except when we’re the ones <a href="http://www.rollingstone.com/politics/news/the-kill-team-20110327">committing them</a>, that is. Then we not only stand by, we call it “liberation.”</p> <p>Every intervention in the post-cold war world has some significance as a precedent, establishing a new principle governing the ever more expansive definition of US “interests.” This one sets a new standard by positing a <i>potential</i> “humanitarian disaster” as a tripwire that sends American troops into battle. A version of it was utilized in the run-up to the Iraq war, with <a href="http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB80/new/doc%2012/President%20Bush%20Outlines%20Iraqi%20Threat.htm">the President</a> and <a href="http://www.commondreams.org/headlines03/0810-01.htm">his advisers</a> invoking that ever-present “mushroom cloud” as the rationale for war. This time it was a purported madman about to commit mass murder on his own people. Next time – oh, just use your imagination. Any number of possible scenarios, based on factoids of dubious provenance, come to mind – along with a great number of possible targets.</p> <p>Given the routine misery and oppression the governments of the world inflict on their subjects as a matter of course, the opportunity for fresh interventions by the Forces of Goodness & Light is effectively unlimited. In <a href="http://www.juancole.com/2011/03/an-open-letter-to-the-left-on-libya.html">cheerleading</a> Obama’s Libyan adventure, the President’s supporters are signing on to a future of <a href="http://www.libertystickers.com/product/war-from-now-on-SH/">perpetual</a> warfare. </p> <p>To be sure, the righteous tone of the President’s speech was ameliorated by protestations that the action was “limited,” and assurances that we’d soon be handing the effort off to NATO, and that there wouldn’t be any troops on the ground. This last, by the way, is yet another brazen lie: if we don’t have <a href="http://www.mcclatchydc.com/2011/03/26/111109/new-rebel-leader-spent-much-of.html">CIA over there already</a>, aiding the rebels and coordinating air strikes with rebel actions on the ground, then somebody is not doing their job. </p> <p>We are already <a href="http://apnews.myway.com/article/20110327/D9M7JGB00.html">half way down</a> the slippery slope of Libya’s internal turmoil, and we’re in so deep at this point that I cannot see our way out for quite some time. The President is reported to have told congressional leaders that the intervention should last “<a href="http://blogs.abcnews.com/politicalpunch/2011/03/obama-to-members-of-congress-action-versus-libya-in-days-not-weeks.html">days, not weeks</a>,” and this is the biggest lie of all, a lie the President is apparently telling himself as well as us. We now own Libya’s insurrection: its fate belongs to us, and we’ll be wearing that albatross around our necks for quite some time to come.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/you-lie-mr-president.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:23:00-07:00">10:23 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2319361814637965897">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2319361814637965897" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6621100832301263720"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/tom-woods-smacks-down-mark-levin.html">Tom Woods Smacks Down Mark Levin</a> </h3> <div class="post-body entry-content"> <table class="contentpaneopen"><tbody><tr><td class="contentheading" width="100%"><span style="font-weight: bold;font-size:180%;"><a href="http://www.thenewamerican.com/usnews/politics/6871-tom-woods-smacks-down-mark-levin-on-war-powers" class="contentpagetitle">Tom Woods Smacks Down Mark Levin on War Powers</a></span> </td> <td class="buttonheading" width="100%" align="right"><br /></td> <td class="buttonheading" width="100%" align="right"><br /></td> </tr> </tbody></table> <table class="contentpaneopen"> <tbody><tr> <td valign="top"> <span class="small"> Written by Thomas R. Eddlem </span> </td> </tr> <tr> <td class="createdate" valign="top"> <br /></td> </tr> <tr> <td valign="top"> <div class="faceandtweet"><div class="faceandtweet_retweet" style="float:left; width:110px;"><a style="text-decoration: none;" title="" class="google-buzz-button" href="http://www.google.com/buzz/post"><span id="buzz-937317356" dir="ltr" class="buzz-counter-long"><br /></span></a></div></div><p> <img src="http://www.thenewamerican.com/images/stories2011/10aMarch/thomaswoodsandmarklevin-t.001.jpg" style="float: left; margin-right: 4px; margin-left: 4px;" width="85" height="117" />Professor Thomas E. Woods (pictured, left), Jr. has taken syndicated radio talk show host Mark Levin (picture inset) to task for claiming the President can constitutionally bring the nation to war without the permission of Congress.</p> <p> Woods argued that Congress has the exclusive power under Article I, Section 8 of the U.S. Constitution to declare war and to make rules for the military. Levin contended that Woods' argument was "utter nonsense." "He refutes nothing I said," Woods concluded in a March 28 <a href="http://www.lewrockwell.com/woods/woods168.html" target="_blank">column </a>on LewRockwell.com, "and then declares himself the winner."</p> <p> The Internet exchange began after Levin, a lawyer and former Justice Department official, assailed Representative Ron Paul for his antiwar stance on the U.S. attack on Libya on his<a href="http://rope.zmle.fimc.net/player/player.html?url=http%3A%2F%2Fpodloc%2Eandomedia%2Ecom%2FdloadTrack%2Emp3%3Fprm%3D2069xhttp%3A%2F%2Fpodfuse-dl%2Eandomedia%2Ecom%2F800185%2Fpodfuse-origin%2Eandomedia%2Ecom%2Fcitadel_origin%2Fpods%2Fmarklevin%2FLevin03252011%2Emp3" target="_blank"> radio show March 25</a>:</p> <p style="margin-left: 40px;"> I want to repeat this for those out there who write stupid stuff and are a little dense because they’re advancing a dogma rather than an honest assessment of what our history is. You can see some of these morons on television too. The language was originally “Congress shall make war.” The framers rejected that. And instead replaced “make” with “declare.” The president of the United States, well, they made him the commander-in-chief. Now why do you think they did those two things? Out of basic logic. They knew it was a dangerous world — hell they’ve been in a revolution. And by the way, after the revolution and establishment of our government it wasn’t clear still that it would survive given all the threats that we faced.</p> <p> Levin went on to claim that the President can bring the United States government to war without the permission of Congress, adding that Congress' power over the purse was a sufficient check to presidential war-making. Levin <a href="http://rope.zmle.fimc.net/player/player.html?url=http%3A%2F%2Fpodloc%2Eandomedia%2Ecom%2FdloadTrack%2Emp3%3Fprm%3D2069xhttp%3A%2F%2Fpodfuse-dl%2Eandomedia%2Ecom%2F800185%2Fpodfuse-origin%2Eandomedia%2Ecom%2Fcitadel_origin%2Fpods%2Fmarklevin%2FLevin03252011%2Emp3" target="_blank">argued</a>: “And as Hamilton pointed out, it’s the ultimate power — the power of the purse.” Woods <a href="http://www.tomwoods.com/blog/mark-levin-wrong-on-war-powers/" target="_blank">replied</a>:</p> <p style="margin-left: 40px;"> Here Levin is trying to claim that the power of Congress over warmaking is confined to the power to de-fund presidential wars. But as long as Levin wants to quote Hamilton, let’s quote Hamilton, from Federalist #69:</p> <p style="margin-left: 40px;"> “The President is to be commander-in-chief of the army and navy of the United States. In this respect his authority would be nominally the same with that of the king of Great Britain, but in substance much inferior to it. It would amount to nothing more than the supreme command and direction of the military and naval forces, as first General and admiral of the Confederacy; while that of the British king extends to the declaring of war and to the raising and regulating of fleets and armies — all which, by the Constitution under consideration, would appertain to the legislature.”</p> <p style="margin-left: 40px;"> Hamilton elsewhere says that the president’s war powers consist of “the direction of war when authorized or begun.”</p> <p style="margin-left: 40px;"> Well, that’s pretty much the opposite of Levin’s view.</p> <p> In response, Levin published several <a href="http://twitter.com/marklevinshow" target="_blank">tweets</a> and Facebook status remarks quoting Alexander Hamilton vaguely referring to the President as the body in charge of actually waging war once Congress declares the war, such as this quote from Federalist #74:</p> <p style="margin-left: 40px;"> Alexander Hamilton: "Energy in the executive is a leading character in the definition of good government.... It is essential to the protection of the community against foreign attacks."</p> <p> Levin also published a longer <a href="http://www.facebook.com/notes/mark-levin/professor-thomas-woods-cutting-and-pasting-history-for-a-dogma/10150115797525946" target="_blank">Facebook note</a> claiming that Professor Woods was "cutting and pasting history for a dogma." He wrote:</p> <p style="margin-left: 40px;"> I'm embarrassed for Woods. He knows I know he's a propagandist on this issue. His misuse of the Constitutional Convention, the Federalist Papers, and other quotes here and there is politically expedient. There's nothing scholarly about it....</p> <p style="margin-left: 40px;"> History, facts, experience, and events prove the Left [right] and Paulists wrong, like Woods, but they are true believers so it doesn't matter. Woods would fundamentally alter our constitutional construct respecting war, the executive, and legislative functions, fabricating additional power in Congress — even authorizing one House of Congress under the War Powers Act to ensure defeat on the battlefield if the battle is not completed in 90 days through a silent veto — while denuding the commander-in-chief power. Is that what they said at the Constitutional Convention? Is that supported anywhere in our history? Is that how Congress is to legislate under the Constitutio? Utter nonsense.</p> <p> Levin's response was remarkable in one respect: He failed to cite any language in the Constitution to support his case that the President can make war, and failed to cite any federalist supporter of the U.S. Constitution or any Founding Father who argued the President had the ability to initiate war without the permission of Congress. Woods <a href="http://www.lewrockwell.com/woods/woods168.html" target="_blank">replied</a> on March 28:</p> <p style="margin-left: 40px;"> I am accused of misusing the Constitutional Convention, the Federalist, etc., but Levin does not condescend to share any specific examples of this alleged misuse. We are to be satisfied with his<em> ex cathedra </em>pronouncements alone.... And no wonder: there is no evidence for his position at all.</p> <p> Woods <a href="http://www.lewrockwell.com/woods/woods168.html">concluded</a> with a challenge to Levin:</p> <p style="margin-left: 40px;"> Here is my challenge to you. I want you to find me one Federalist, during the entire period in which the Constitution was pending, who argued that the president could launch non-defensive wars without consulting Congress. To make it easy on you, you may cite any Federalist speaking in any of the ratification conventions in any of the states, or in a public lecture, or in a newspaper article — whatever. One Federalist who took your position. I want his name and the exact quotation.</p> <p> It's likely that Levin will reply, though he'll be unable to quote any Founding Father who supported presidential war powers. There<em> is</em> none. Based upon the tenor of Levin's radio talk show, the response to Woods' challenge will be abuse rather than genuine argument.</p> <p> Woods has <a href="http://dailypaul.com/160519/breaking-news-tom-woods-accepts-invitation-to-debate-mark-levin" target="_blank">reportedly</a> said he's willing to debate Levin. But one has to wonder why Levin would ever accept a debate he can't win.</p></td></tr></tbody></table> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/tom-woods-smacks-down-mark-levin.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:21:00-07:00">10:21 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6621100832301263720">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6621100832301263720" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4417642093278368342"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/fed-explains-why-it-is-great.html">The Fed Explains Why It Is Great</a> </h3> <div class="post-body entry-content"> <a name="7937218496978720369"></a> <h3 class="post-title entry-title"> <span style="font-size:180%;"><a href="http://www.economicpolicyjournal.com/2011/03/fed-explains-why-it-is-great.html">The Fed Explains Why It Is Great</a></span> </h3> <div class="post-header"> </div> The American banking system is always on the edge of crisis because of the Federal Reserve System.<br /><br />For all practical purposes, the United States has one bank, the Federal Reserve with a bunch of branches that are treated with different degrees of respect. Some are treated rudely, while others in the eyes of the Fed, can do no wrong.<br /><br />One support method the Fed uses to protect its favored "branches" is the discount rate. At its blog site today, the New York Fed attempts to justify this Fed tool that serves to prop up the entire convoluted Federal Reserve System.<br /><br />We can see a key problem with the, Fed as overlord, current banking system by taking a look at the first paragraph of a psot by NY Fed bloggers applauding themselves. The bloggers <a href="http://libertystreeteconomics.newyorkfed.org/2011/03/why-do-central-banks-have-discount-windows.html">write</a>:<br /><br /><blockquote> ...the basic rationale for [the discount window] is that circumstances can arise, such as bank runs and panics, when even fundamentally sound banks cannot raise liquidity on short notice</blockquote>But how can a "fundamentally sound" bank ever face a liquidity problem? A liquidity problem comes about only because the Federal Reserve system encourages (partly through the discount window) the mismatch between time structure of money deposited at the bank and money loaned out. A liquidity problem simply means that a bank may have loaned out money for 30 years, when a depositor has the right to withdraw such funds after 30 days. Banks aren't too concerned about this mismatch, since they know they can always go to the Fed to get money (via the discount window) if withdrawals are occurring that are greater than cash the bank has on hand or can borrow from other sources.<br /><br />In other words, it is the Fed's backstop that encourages the mismatch between length of deposits and length of loans. Without this backstop, banks would never create such a mismatch. It would be too risky for them (And this is aside from the moral implications of promising to pay in 30ndays some funds on money that has been loaned out for years.)<br /><br />Without a Fed, banks taking in short-term money would loan it out for short-terms and would make long-term loans with money that depositors had agreed to keep on deposit for the long term. End of liquidity problems for banks and the start of truly fundamentally sound banks.<br /><br />The NY Fed bloggers go on to discuss the various ways the discount rate should be implemented by what the Fed bloggers think are somehow "fundamentally sound" banks, when the deposit versus loan time structure of these banks is more distorted than a Dali painting.<br /><br />The final sentence of the final paragraph on the NY Fed post is probably most telling:<br /><blockquote>Admittedly, the existence of the discount window may create some moral hazard, but of course, the Federal Reserve limits moral hazard by restricting discount window access to depository institutions that are closely regulated and supervised by federal banking authorities.</blockquote>Bottom line: The Fed holds all the cards over its "branches", get out of line and they will suddenly see you as an insolvent bank versus a bank with just a liquidity problem. The bloggers admit that some economists don't think the Fed can even technically tell the difference, if they wanted to:<br /><blockquote>Some observers contend that central bankers are no better equipped to distinguish illiquid but solvent banks than are private investors.</blockquote>It's a rigged game, boom, busts, bank failures versus just a liquidity crisis, Ben Bernanke just strokes his beard and decides what's what. (After consulting with his controls, of course.) </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/fed-explains-why-it-is-great.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:20:00-07:00">10:20 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4417642093278368342">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4417642093278368342" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1118427306505569220"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/what-changed-in-1800.html">"What Changed in 1800?</a> </h3> <div class="post-body entry-content"> <div style="font-weight: bold;" class="articleheadline"><span style="font-size:180%;">The Most World's Important Unanswered Historical Question: "What Changed in 1800?"</span></div> <span class="articlebyline" align="left">Gary North<br /><a href="http://www.garynorth.com/public/7817print.cfm"><br /></a></span> <p>The economic historian Gregory Clark summarizes a remarkable fact.</p><blockquote>. . . there is no sign of any improvement in material conditions for settled agrarian societies as we approach 1800. There was no gain between 1800 BC and AD 1800 -- a period of 3,600 years. Indeed the wages for east and south Asia and southern Europe for 1800 stand out by their low level compared to those for ancient Babylonia, ancient Greece, or Roman Egypt.</blockquote><p>Then, around 1800, this all changed. Economic growth began: about 2% per annum, compounded. That brought our world into existence. </p><p>We are the great beneficiaries of a process that few people understand. No one has explained cogently how it came into existence. A rate of growth so slow that no one could perceive it at the time has created a world that would have been inconceivable in 1800.</p><p>This change has taken a mere three generations. This is simply inconceivable.</p><p>My daughter gave me a great Christmas present in 2010. She scheduled an appointment for me to interview a man in her church. His name is Lyon Tyler. My daughter grew up in a city named after his grandfather: Tyler, Texas. His grandfather was John Tyler, the tenth President of the United States. He signed the law that admitted Texas into the Union in 1845.</p><p>John Tyler was born in 1790, the first full year of Washington's Presidency.</p><p>Lyon Tyler's younger brother, also alive, uses the ultimate one-upsmanship one-liner I have ever heard. After chatting for a while with a stranger, he springs it on him.</p><blockquote>"As my grandfather once said to Thomas Jefferson. . . ." </blockquote><p>You can try to top that one. You won't succeed.</p><p>In 1889, the first volume of Henry Adams' history of the administrations of Jefferson and Madison appeared. Adams was the grandson of President John Quincy Adams. He began his book with this paragraph.</p><blockquote>According to the census of 1800, the United States of America contained 5,308,483 persons. In the same year the British Islands contained upwards of fifteen millions; the French Republic, more than twenty-seven millions. Nearly one fifth of the American people were negro slaves; the true political population consisted of four and a half million free white or less than one million able-bodied males, on whose shoulders fell the burden of a continent. Even after two centuries of struggle the land was still untamed; forest covered every portion, except here and there a strip of cultivated soil; the minerals lay undisturbed in their rocky beds, and more than two thirds of the people clung to the seaboard within fifty miles of tide-water, where alone the wants of civilized life could be supplied. The centre of population rested within eighteen miles of Baltimore, north and east of Washington. Except in political arrangement, the interior was little more civilized than in 1750, and was not much easier to penetrate than when La Salle and Hennepin found their way to the Mississippi more than a century before. </blockquote><p>The world of 1800 would have been recognizable to Socrates, except for the printed book. In contrast, the world of 1889 would not have been recognizable to the young John Tyler.</p><p>By 1889, these post-1800 inventions had arrived: gas lighting, electric lighting (arc light), the steam powered ship, the tin can, the macadamized road, photography, the railroad, portland cement, the reaper, anesthesia, the typewriter, the sewing machine, the Colt revolver, the telegraph, the wrench, the safety pin, mass-produced newspapers, pasteurization, vulcanized rubber, barbed wire, petroleum-based industry, dynamite, the telephone, Carnegie's steel mills, the skyscraper, the internal combustion engine, the automobile, and commercial electricity. </p><p>So, as I move toward the day when I am a footnote rather than a participant, I propose a thesis. One unanswered question above all others constitutes the most important historical question in recorded history. Here it is:</p><blockquote><b>What happened around the year 1800 in Great Britain that led to approximately 2% per annum economic growth for the next two centuries?</b></blockquote><p>Some economic historians think this began around 1780. Others, most notably Angus Maddison, believe it began in 1820. The year 1800 is a good middle-ground position.</p><p><b><i>THEN AND NOW</i></b></p><p>Our world is not even remotely like the world of 1800. In contrast, 1800 was recognizably similar A.D. 1. Clark points out that in the Roman Empire in A.D. 1, information traveled at about one mile per hour. In 1800, this had increased to about 1.4 miles per hour. Compare that with the speed of light: 186,000 miles per second. That was what the telegraph did. </p><p>The world of 1876 was not remotely like 1800. Yet compare 1876 with today. A child in 1876 who read a newspaper account of Custer's Last Stand lived long enough to see Neil Armstrong walk on the moon in 1969.</p><p>In 1967, I took a graduate seminar in economic history from Hugh Aitken. I had studied this subject as an undergraduate with him in 1962. Aitken was a great teacher. He is not famous, but several years after I took that seminar, he became the editor of <i>The Journal of Economic History</i>, one of the two major academic English-language journals in the field. In one session, he said this. "There is no agreement on what happened around 1800 to launch the Industrial Revolution." There is still no agreement. </p><p>Here are the questions: (1) Why 1800? (2) Why in in the northern tier of northern Europe?</p><p>In a two-volume series, scheduled to go to six volumes, Prof. Deirdre McCloskey has surveyed the field. McCloskey argues that the fundamental change that made possible the industrial and agricultural revolutions was in the area of society. The age-old hostility to the entrepreneur changed in seventeenth-century Holland and spread to Great Britain. It was a change in ideas that mattered, not a change in property rights or technology.</p><p>The second volume, <i>Bourgeois Dignity: Why Economics Can't Explain the Modern World</i> (2010), is a cogently argued case against all of the arguments from economic efficiency alone. These economic changes were not sufficient to create the transformation.</p><p>The problem is this: the first two volumes do not come close to proving McCloskey's thesis, a thesis that I have wanted to see proved for 40 years, namely, that seventeenth-century Protestantism changed the minds of people in the pews and on court benches regarding the ethical legitimacy of profits and the pursuit of economic self-interest. I wrote my <a href="http://www.garynorth.com/freebooks/docs/pdf/puritan_economics_experiments.pdf">Ph.D dissertation</a> on this topic as it applied in Puritan New England. Maybe the next four volumes will do this through a careful survey of sermons, catechisms, and theological treatises of Dutch Calvinists and their imitators in Scotland and England. I hope so. But this will not be easy to prove. </p><blockquote>[Note to Dr. McCloskey: take a look at the answers to the questions in the Westminster Larger Catechism (1646) on the fifth commandment: questions 126-33. See if they differ from the Lutheran interpretations a century earlier. They promote a hierarchical, status-based society that is hostile to "uppity" people of the lower sorts who start moving up.]</blockquote><p>Dr. Clark has written a good book on the difference that 2% per annum has made, <i>A Farewell to Alms</i> (2006). He offers page after page of examples of how bad things were in 1800. He also offers suggestions regarding why the change took place. Dr. McCloskey challenges all of them.</p><p>And so it goes. The origin of most important transformation of human society in the last 4,000 years has no cogent, plausible, carefully documented explanation.</p><p>It had to do with liberty. But the legal foundations of liberty stretch back into European history. It had to do with technology. But men have always been inventive. Why 1800? Why Great Britain and North America?</p><p>We want this process to continue. It looks as though it will continue. We are future-oriented people. We like to think that tomorrow will be better than yesterday. </p><p>The creativity of billions of people are being coordinated by market processes that we do not understand. As Leonard E. Read wrote in 1958, <a href="http://www.fee.org/pdf/books/I,%20Pencil%202006.pdf">no one knows how to make a pencil</a>.</p><p>We do not know how the process began where it did and when it did, but with the failure of socialism in our era, we now know how to maintain it: through liberty of choice, by allowing people to retain the fruits of their labor, their risk-taking, and their confidence in the future.</p><p>The petty restraints imposed by politicians and bureaucrats will not thwart the growth process for long. The promise of liberty is too widespread today. While the government can and will continue to attempt to appropriate individuals' wealth in the name of the poor, to be administered by upper middle class bureaucrats, the effort will not succeed. The wealth formula is now known. It is simple. "Get the state out of the way of future-oriented people."</p><p><i><b>CONCLUSION</b></i></p><p>Ludwig von Mises argued in 1922 that the greatest strength of the socialists was their belief in the inevitability of victory. But they were wrong. They lost the war on two battlefields: theory and practice.</p><p>This is why, in the long run, the most effective tool in the market for liberty is confidence that individual creativity will produce a better world, as long as people keep their hands off each other's property. "Thou shalt not steal" is a good place to start. "Thou shalt not covet" is the foundation or "thou shalt not steal." </p>The battle is not technological. It is ethical. The good guys will win. That is the lesson of the free market. <b>The free market links personal responsibility with ownership</b>. This is the key to prosperity. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/what-changed-in-1800.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T10:19:00-07:00">10:19 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1118427306505569220">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1118427306505569220" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4942030096770103747"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/birth-of-obama-doctrine_31.html">The birth of an Obama doctrine</a> </h3> <div class="post-body entry-content"> <h2 class="ec-blog-fly-title">Into Libya</h2> <h1 class="ec-blog-headline"> <span size="5">The birth of an Obama doctrine</span> </h1> <p class="ec-blog-info"> by Lexington </p> <div class="ec-blog-body"> <p><img class="imagecache-original-size" src="http://media.economist.com/sites/default/files/imagecache/original-size/20110402_USP502.jpg" alt="" /></p><blockquote><p>Born, as we are, out of a revolution by those who longed to be free, we welcome the fact that history is on the move in the Middle East and North Africa, and that young people are leading the way. Because wherever people long to be free, they will find a friend in the United States. Ultimately, it is that faith – those ideals – that are the true measure of American leadership.</p></blockquote><p>THUS President Barack Obama tonight, speaking to the American people directly for the first time since launching Operation Odyssey Dawn and unleashing American missiles in Libya. He had received a great deal of criticism—for “dithering”, for failing to consult Congress, for going too far and doing too little. Now he has answered back—and provided, at the same time, the clearest explanation so far of an “Obama doctrine” of humanitarian military intervention.<br /><br />Far from “dithering”, goes the White House line, pushed subtly in the speech and explicitly in briefings by senior officials, Mr Obama’s handling of the Libyan crisis has been “relatively extraordinary”. He has in a mere 31 days since the protests started imposed powerful sanctions, frozen Colonel Qaddafi’s assets, secured a robust Security Council resolution, organised an international coalition, executed a near-flawless military campaign, rolled Colonel Qaddafi’s forces back to the west, taken out the colonel’s air defences and knocked out a good deal of his ground forces. All this has been done without having to put American boots on the ground, without American military casualties and with precious few Libyan civilian casualties. Better still, with all this now done, America’s own contribution can decline, NATO can assume command (under an American general but with a Canadian deputy) and the European allies will take on more of the burden. Compare that, say senior administration officials, to the years it took to intervene in Bosnia in the 1990s.</p><p>To those hyper-realists who ask why it was necessary for America to entangle itself in Libya at all, the president’s answer appears to run as follows. First, he will never hesitate to use military power, unilaterally if necessary, in defence of the nation’s core interests. No such core interests were at risk in Libya, but some interests were. For example, the unrest in Libya might have disrupted the far more consequential democratic revolutions in Tunisia and especially Egypt, where America has a good deal more at stake. Moreover, it would not have been right to turn a blind eye to the possibility of Colonel Qaddafi carrying out his blood-curdling threats to show “no mercy” to the inhabitants of Benghazi. In such cases, however, it makes powerful sense, when possible, for America to share the burden with allies under the authority of the United Nations. This is how he put it in his speech:</p><blockquote><p>It is true that America cannot use our military wherever repression occurs. And given the costs and risks of intervention, we must always measure our interests against the need for action. But that cannot be an argument for <em>never </em>acting on behalf of what’s right. In this particular country – Libya; at this particular moment, we were faced with the prospect of violence on a horrific scale. We had a unique ability to stop that violence: an international mandate for action, a broad coalition prepared to join us, the support of Arab countries, and a plea for help from the Libyan people themselves. We also had the ability to stop Qaddafi’s forces in their tracks without putting American troops on the ground. To brush aside America’s responsibility as a leader and – more profoundly – our responsibilities to our fellow human beings under such circumstances would have been a betrayal of who we are. Some nations may be able to turn a blind eye to atrocities in other countries. The United States of America is different. And as President, I refused to wait for the images of slaughter and mass graves before taking action.</p></blockquote><p>To critics on the opposite side of the argument, who ask why Mr Obama does not just finish the job by killing the colonel himself, the White House’s answer is that this would not only exceed the mandate of UN Resolution 1973, which calls only for protecting the civilian population, but risk splintering an artfully assembled alliance. That would leave America “owning” the resulting mess. The administration acknowledges that the denouement in Libya is likely to be messy anyway, but would prefer an internationalised mess to one for which America alone is held responsible. Might this American restraint enable Colonel Qaddafi to hang on for months, even longer, in spite of all the other efforts to squeeze and isolate him? Perhaps: but even if he holds out in some bunker in Tripoli, surrounded by human shields, the White House does not see how he could continue to govern Libya in any practical sense.<br /><br />Another criticism of Mr Obama is that his policy is inconsistent. Why batter Colonel Qaddafi and not intervene on the side of the opposition in Yemen, Bahrain, perhaps even Syria? Mr Obama is thought to be preparing another speech, some time in the next month or two, that will set out his broader thinking on what the Arab awakening means to Arabs and the wider world, and spell out how America might be able to help nudge it in a favourable direction. Yet the president plainly believes that there are so many variables in the present fast-moving circumstances that it is not possible to adopt a single doctrine that fits each case. Bahrain has cracked down forcibly on the opposition but not in the manner of a Qaddafi—and both America, with its naval base, and Saudi Arabia have a powerful strategic interest in the country. Ditto Yemen, a hodge-podge of tribes and factions with a dangerous al-Qaeda presence.</p><p>Until Mr Obama gives his larger speech on the significance of the Arab awakening, much of the White House’s focus will continue to be on developments on the ground in Libya. The next tactical steps are supposedly to be decided by the wider alliance talks taking place this week in London. But senior White House officials say that they will continue to push for military action against the colonel’s military forces whenever they can be construed to be posing a threat to the civilian population. The United States is already in direct contact with the opposition forces, who will also be represented in London. Though not yet ready to recognise them as the Libyans’ legitimate government (as the French already have), it is edging in this direction. Crucially, the administration does not think that Resolution 1973 prevents outsiders from arming the opposition. Mr Obama described the next steps like this:</p><blockquote><p>As the bulk of our military effort ratchets down, what we can do – and will do – is support the aspirations of the Libyan people. We have intervened to stop a massacre, and we will work with our allies and partners as they’re in the lead to maintain the safety of civilians. We will deny the regime arms, cut off its supply of cash, assist the opposition, and work with other nations to hasten the day when Qaddafi leaves power. It may not happen overnight, as a badly weakened Qaddafi tries desperately to hang on to power. But it should be clear to those around Qaddafi, and to every Libyan, that history is not on his side. With the time and space that we have provided for the Libyan people, they will be able to determine their own destiny, and that is how it should be.</p></blockquote><p>It is a good case—and it was a good speech. If Colonel Qaddafi is swept quickly from power, or reduced to impotence in some bunker, nobody will care very much about the manner in which Mr Obama put together his alliance and campaign. It might indeed be remembered as an extraordinary foreign-policy success. After the rescue of Kuwait in 1991, however, the first President George Bush also expected Saddam Hussein's regime to collapse in short order. Mr Obama's team says the circumstances this time are entirely different. They had better be right.</p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/birth-of-obama-doctrine_31.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T09:15:00-07:00">9:15 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4942030096770103747">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4942030096770103747" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="2247602509402212366"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/religion-is-growing-force-in-arab.html">Religion is a growing force in the Arab awakening</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">The uprisings</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Islam and the Arab revolutions</span></div> <h1 class="rubric">Religion is a growing force in the Arab awakening. Westerners should hold their nerve and trust democracy </h1> <div class="ec-article-content clear"> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/04/02/ld/20110402_ldp001.jpg" alt="" /></div> <p>THE sight of corrupt old Arab tyrants being toppled at the behest of a new generation of young idealists, inspired by democracy, united by Facebook and excited by the notion of opening up to a wider world, has thrilled observers everywhere. Those revolutions are still in full swing, albeit at different points in the cycle. In Tunisia and Egypt they are going the right way, with a hopeful new mood prevailing and free elections in the offing. In Libya, Syria and Yemen dictators are clinging on to power, with varying degrees of success. And in the Gulf monarchs are struggling to fend off demands for democracy with oil-funded largesse topped by modest and grudging political concessions. </p> <p>So far these revolts have appeared to be largely secular in character. Westerners have been quietly relieved by that. Not that they are all against religion. Many—Americans in particular—are devout. But by and large, they prefer their own variety to anybody else’s, and since September 11th 2001, they have been especially nervous about Islam. </p> <p>Now, however, there are signs that Islam is a growing force in the Arab revolutions (see <a href="http://www.economist.com/node/18486089">article</a>). That makes secular-minded and liberal people, both Arabs and Westerners, queasy. They fear that the Arab awakening might be hijacked by the sort of Islamists who reject a pluralist version of democracy, oppress women and fly the flag of <em>jihad</em> against Christians and Jews. They worry that the murderous militancy that has killed 30,000 over the past four years in Pakistan (see <a href="http://www.economist.com/node/18488344">article</a>) may emerge in the Arab world too.</p> <p><a name="islam_on_the_rise"></a><strong>Islam on the rise</strong></p> <p>In Libya the transitional national council, slowly gaining recognition as a government-in-waiting, is a medley of secular liberals and Islamists. There are Libyan jihadist veterans of Iraq and Afghanistan among the rebels, though not in big numbers. An American general detects “flickers of al-Qaeda” among the colonel’s foes being helped by the West, raising uncomfortable memories of America’s alliance against the Russians with Afghanistan’s mujahideen, before they turned into al-Qaeda and the Taliban.</p> <p>The Muslim Brotherhood, which has branches all over the region, is the best-run opposition movement in Libya and Egypt; and last week’s constitutional referendum in Egypt went the way the Brothers wanted it to. Its members have long suffered at the hands both of Western-backed regimes, such as Hosni Mubarak’s in Egypt, and of anti-Western secular ones, such as Bashar Assad’s, now under extreme pressure in Syria. In Tunisia, too, the Islamists, previously banned, look well-placed. On the whole, these Brothers have gone out of their way to reassure the West that they nowadays disavow violence in pursuit of their aims, believe in multiparty democracy, endorse women’s rights and would refrain from imposing sharia law wholesale, were they to form a government in any of the countries where they are re-emerging as legal parties.</p> <p>All the same, the Brothers make many people nervous. At one extreme of the wide ideological spectrum that they cover they are not so far from the jihadists, many of whom started off in the Brothers’ ranks. The leading Palestinian Islamist movement, Hamas, an offshoot of the Brotherhood, has been delighted by Mr Mubarak’s fall. It has in the past carried out suicide-bombings in the heart of Israel and refuses to recognise the Jewish state. Some liberals say that more extreme Islamist groups are riding on the more moderate Brothers’ coat-tails. In the flush of prisoner releases, hundreds if not thousands of Egyptian jihadists are once again at large. </p> <p><a name="don’t_despair"></a><strong>Don’t despair</strong></p> <p>Islam is bound to play a larger role in government in the Arab world than elsewhere. Most Muslims do not believe in the separation of religion and state, as America and France do, and have not lost their enthusiasm for religion, as many “Christian Democrats” in Europe have. Muslim democracies such as Turkey, Malaysia and Indonesia all have big Islamic parties.</p> <p>But Islamic does not mean Islamist. Al-Qaeda in the past few years has lost ground in Arab hearts and minds. The jihadists are a small minority, widely hated by their milder co-religionists, not least for giving Islam a bad name across the world. Ideological battles between moderates and extremists within Islam are just as fierce as the animosity pitting Muslim, Christian and Jewish fundamentalists against each other. Younger Arabs, largely responsible for the upheavals, are better connected and attuned to the rest of the modern world than their conservative predecessors were.</p> <p>Moreover, some Muslim countries are on the road to democracy, or already there. Some are doing well. Among Arab countries, Lebanon, with its profusion of religions and sects, has long had a democracy of a kind, albeit hobbled by sectarian quotas and an armed militia, Hizbullah. Iraq has at least elected a genuine multiparty parliament. </p> <p>Outside the Arab world, in Turkey, Malaysia and Indonesia, Islam and democracy are cohabiting fairly comfortably. Many devout Muslims among the Arab protesters, including members of the Brotherhood, cite Turkey as a model. Its mildly Islamist government is showing worrying signs of authoritarianism these days, but it serves its people far better than the generals did. Iran, which once held so much sway, is not talked of as a model: theocracy does not appeal to the youngsters on the Arab street.</p> <p>Still, Muslim countries may well make choices with which the West is not comfortable. But those inclined to worry should remember that no alternative would serve their interests, let alone the Arabs’, in the long run. The old autocrats deprived their people of freedom and opportunity; and the stability they promised, it is now clear, could not endure. Algeria’s civil war in the 1990s remains a horrible warning against depriving Islamists of power they have rightfully won.</p> <p>Islam will never find an accommodation with the modern democratic world until Muslims can take responsibility for their own lives. Millions more have a chance of doing just that. It is a reason more for celebration than for worry. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/religion-is-growing-force-in-arab.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T09:13:00-07:00">9:13 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=2247602509402212366">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=2247602509402212366" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1348594194831290522"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/republicans-and-democrats-begin.html">Republicans and Democrats begin negotiating</a> </h3> <div class="post-body entry-content"> <h1><span style="font-size:130%;">Republicans and Democrats begin negotiating possible budget agreement</span></h1> <div class="relative primary-slot border-top padding-top img-border photo-wrapper photo-wrapper"> <img src="http://www.washingtonpost.com/rf/image_404h/2010-2019/WashingtonPost/2011/03/31/National-Politics/Images/Congress_Spending_03849.jpg" alt="" /> <div class="captionWrap caption"> <p><span class="photo-credit credit">/ - </span> Vice President Joe Biden arrives to meet with Senate leaders to discuss the impasse over the federal budget, at the Capitol in Washington, Wednesday, March 30, 2011. (AP Photo/J. Scott Applewhite) </p></div> </div> <div class="module byline"> <h3>By Paul Kane<span class="updated"><span class="special"></span></span></h3></div> <p>After weeks of arguing, Republicans and Democrats on Capitol Hill began negotiations Wednesday on a possible budget agreement that would slash federal spending by as much as $33 billion and avert a government shutdown.</p><div id="article-side-rail" class="module article-side-rail left padding-right margin-top-7 margin-right"> <p class="tweet flipboard-remove"> </p> <div class="network-news upperpadding-bottomborder-bottommargin-bottom flipboard-remove"> </div><div class="article-video border-top border-bottom padding-top padding-bottom margin-bottom photo-wrapper"> <p class="heading heading3">Graphic</p> <div class="relative "> <a href="http://www.washingtonpost.com/politics/2011/03/29/AFEVSkyB_graphic.html"><img src="http://www.washingtonpost.com/rf/image_296w/2010-2019/WashingtonPost/2011/03/30/Web-Resampled/2011-03-29/296budgetPROMO--296x195.jpg" alt="" /></a> </div> <p class="caption"><strong><strong>Graphic: </strong></strong> </p> </div> <div class="article-video border-bottom padding-top padding-bottom margin-bottom flipboard-remove"> <div class="module e2 e2-1 border-top padding-top padding-bottom flipboard-remove"> <h3 class="question">For Federal Workers</h3> <div class="curved padding-1 quote"> <div class="curved-no-border bkgd-lite-grey-gradient-reverse relative zoom"> <h3 class="relative zoom">"What's life been like on the ground for federal workers these days? How are your agencies functioning day to day with uncertainty?"</h3> </div> </div></div></div><div class="module ads"> </div> </div> <p>“We’re all working off the same number now,” <a href="http://www.whorunsgov.com/Profiles/Joseph_R._Biden">Vice President Biden</a> told reporters after meeting with Senate Democratic leaders at the Capitol on Wednesday evening. “Obviously, there’s a difference in the composition of that number — what’s included, what’s not included. It’s going to be a thorough negotiation.” </p><p>If approved, the deal would be the largest single-year budget cut in U.S. history.</p><p>Lawmakers in both parties are eager to reach such a compromise, which would fund the government through the end of the fiscal year, in September, and end a series of stopgap spending resolutions that have kept Washington operating a few weeks at a time since last fall. The current short-term measure <a href="http://www.washingtonpost.com/politics/as-congress-considers-short-term-budget-cuts-some-decisions-seem-easy/2011/03/17/ABMTJLl_story.html">will expire April 8</a>, and congressional leaders have said they don’t want to pass another one.</p><p>The two sides have already agreed on $10 billion in cuts; now, the House and Senate appropriations committees are searching for an additional $23 billion to extract from the budget, according to lawmakers and aides from both parties.</p><p>“We’re going to try to find some common ground,” House Appropriations Chairman <a href="http://www.whorunsgov.com/Profiles/Harold_Rogers">Harold Rogers </a>(R-Ky.) told reporters. “It’s going to take some time. . . . [But] the leadership has said for us to get started.”</p><p>Congressional leaders cautioned that no final deal has been reached. The talks could break down over disputes about how much to cut and from where.</p><p>“There have been discussion for weeks, and those discussions are continuing,” said Michael Steel, a spokesman for House Speaker<a href="http://www.whorunsgov.com/Profiles/John_A._Boehner"> John A. Boehner</a> (R-Ohio). “There’s no agreement, and nothing will be agreed to until everything is agreed to.”</p><p>Some conservative House Republicans — led by freshmen who came to Washington on a promise to shrink the government — have said they would vote against any proposal that falls short of the <a href="http://blogs.wsj.com/washwire/2011/03/30/gop-freshman-no-split-the-baby-strategy-on-spending/">$61 billion in reductions </a>the House approved on a party-line vote last month. Senate Democrats immediately rejected that measure.</p><p>Spending cuts are not the only issue up for negotiation. As part of their initial budget package, Republicans included unrelated amendments — called “riders” — that would impose restrictions on federal agencies. Democrats have objected to many of them, including one that would prohibit federal funding to Planned Parenthood and another that would weaken the <a href="http://www.whorunsgov.com/institutions/environmental_protection_agency">Environmental Protection Agency</a>’s power to regulate carbon emissions.</p><div id="slug_inline_bb" style="display: block;" class="left margin-right margin-bottom padding-top slug"> </div><p>Some Republicans have suggested that in exchange for giving up some of the spending cuts they want, they will pressure Democrats to accept at least some of these provisions. </p><p>On Wednesday, the vice president indicated that such an agreement was at least a possibility, although he did not give details or say which riders Democrats might be willing to accept.</p><p>The progress in the talks came on the <a href="http://nationaljournal.com/congress/miffed-at-gop-tea-party-group-plans-a-capitol-protest-20110323">eve of a planned rally </a>Thursday by tea party activists on the Capitol lawn, where leaders of the conservative movement are expected to call for no compromise with<a href="http://www.whorunsgov.com/Profiles/Barack_Obama"> President Obama</a> and the Democratic-controlled Senate.</p><p>House Republicans fear that many rank-and-file GOP lawmakers could view a deal with Democrats as a retreat. Conservative Republicans warned that any agreement would require their support in large numbers, indicating that Boehner would not back a spending plan that evenly divided their 241 members. </p><p>The speaker and his leadership team have sought to win the support of their colleagues by promoting a budget compromise as only the first part of a “three bites at the apple” strategy to reduce the size of government. The idea, they say, is to prune as much money as they can from this year’s budget, then move on to bigger fiscal issues: the debate over whether to raise the federal debt limit, expected later this spring, and the negotiations over the 2012 budget. Each of those battles will provide GOP leaders the opportunity to demand even larger cuts.</p><p>In the event that Boehner loses the support of two dozen or more of his GOP colleagues, he could turn to moderate Democrats for support. Republican leaders met privately with a group of Democrats, but stressed Wednesday that those talks focused mostly on longer-term deficit reduction and entitlement reform — issues awaiting congressional action once they get past the current spending fight.</p><p>Democrats are also split over how far they are willing to go in compromising with Republicans. Senate Majority Leader<a href="http://www.whorunsgov.com/Profiles/Harry_M._Reid"> Harry M. Reid</a> (Nev.) faces a protest from liberal Senate Democrats, including advocates for abortion rights and environmental causes who object to the idea that the Planned Parenthood and EPA riders might be part of a deal.</p><p>Reid brought Biden to the Capitol to reassure Democratic leaders that the White House would not undercut them in talks with Boehner.</p><p>“The main reason to be here today is to make sure that Democrats in the Senate and the president and I are on the same page,” Biden said. “We’re on the same page.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/republicans-and-democrats-begin.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-31T09:10:00-07:00">9:10 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1348594194831290522">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1348594194831290522" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="8375777765068443774"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/in-libya-cia-is-gathering-intelligence.html">In Libya, CIA is gathering intelligence on rebels</a> </h3> <h1><span style="font-size:130%;">In Libya, CIA is gathering intelligence on rebels</span></h1> <div class="relative primary-slot padding-top img-border gallery-container photo-wrapper"> <a href="http://www.washingtonpost.com/world/france-says-london-will-host-political-talks-next-week-on-libyas-future/2011/03/23/ABUKXew_gallery.html"><img class="gallery-pic" src="http://www.washingtonpost.com/rf/image_606w/2010-2019/WashingtonPost/2011/03/31/Web-Resampled/2011-03-30/krmm_libzz003-1137--606x404.jpg" /></a> </div> <p class="margin-top caption"><strong>Gallery:</strong> Conflict and chaos in Libya: As international airstrikes continue against forces loyal to Moammar Gaddafi, rebels face difficult battle. </p> <div class="module byline"> <h3> <a href="http://projects.washingtonpost.com/staff/articles/karen+deyoung/">Karen DeYoung</a> <a href="http://projects.washingtonpost.com/staff/articles/greg+miller/">Greg Miller</a><span class="updated"><span class="special"></span></span></h3></div> <p>The Obama administration has sent teams of CIA operatives into Libya in a rush to gather intelligence on the identities and capabilities of rebel forces opposed to Libyan leader Moammar Gaddafi, according to U.S. officials.</p><div id="article-side-rail" class="module article-side-rail left padding-right margin-top-7 margin-right"> <p class="tweet flipboard-remove"> </p> <div class="network-news upperpadding-bottomborder-bottommargin-bottom flipboard-remove"> </div><div class="article-video border-top border-bottom padding-top padding-bottom margin-bottom photo-wrapper"> <p class="heading heading3">Graphic</p> <div class="relative "> <a href="http://www.washingtonpost.com/world/map-tracking-events-in-libya/2011/03/07/AFYF8ZqB_graphic.html"><img src="http://www.washingtonpost.com/rf/image_296w/2010-2019/WashingtonPost/2011/03/29/Foreign/Graphics/libya-promo-296.jpg" alt="Follow how events are unfolding in Libya." /></a> </div> <p class="caption"><strong><strong>Graphic: </strong></strong> Follow how events are unfolding in Libya. </p> </div> <div class="article-video border-bottom padding-top padding-bottom margin-bottom photo-wrapper"> <p class="heading heading3">Video</p> <div class="relative "> <a href="http://www.washingtonpost.com/world/cia-sends-operatives-to-libya/2011/03/31/AF42yu8B_video.html"><img src="http://www.washingtonpost.com/rf/image_296w/2010-2019/WashingtonPost/2011/03/31/Foreign/Videos/03312011-13v/03312011-13v.jpg" alt="The CIA has sent small teams of operatives into Libya, and the White House said Wednesday it was assessing "all types of assistance" for rebels battling Moammar Gaddafi's troops. (March 31) " /></a> <a href="http://www.washingtonpost.com/world/cia-sends-operatives-to-libya/2011/03/31/AF42yu8B_video.html"><span class="tool Video-play "></span></a> </div> <p class="caption"><strong><strong>Video: </strong></strong> The CIA has sent small teams of operatives into Libya, and the White House said Wednesday it was assessing "all types of assistance" for rebels battling Moammar Gaddafi's troops. (March 31) </p> </div> <div class="module ads"> </div> </div> <p>The information has become more crucial as the administration and its coalition partners move closer to providing direct military aid or guidance to the disorganized and beleaguered rebel army.</p><p>Although the administration has pledged that <a href="http://www.washingtonpost.com/blogs/the-fix/post/afternoon-fix-obama-says-no-troops-in-libya/2011/03/18/AB5uZPr_blog.html">no U.S. ground troops will be deployed </a>to Libya, officials said Wednesday that <a href="http://www.whorunsgov.com/Profiles/Barack_Obama">President Obama</a> has issued a secret finding that would authorize the CIA to carry out a clandestine effort to provide arms and other support to Libyan opposition groups.</p><p>The officials, who spoke on the condition of anonymity, insisted that no decision has been made.</p><p>In the face of <a href="http://www.washingtonpost.com/wp-srv/special/world/libya-uprising/?tid=grpromo">a new onslaught by government troops</a>, rebel forces fled eastward Wednesday from cities and towns they had captured just days ago. But Gaddafi suffered a political defeat with the defection to Britain of his foreign minister, Musa Kusa, the most senior official to break ranks since the coalition bombing campaign began nearly two weeks ago.</p><p>House and Senate lawmakers briefed in a closed-door session by top administration officials, including Secretary of State <a href="http://www.whorunsgov.com/Profiles/Hillary_Rodham_Clinton">Hillary Rodham Clinton</a> and Defense Secretary<a href="http://www.whorunsgov.com/Profiles/Robert_Gates"> Robert M. Gates</a>, said they received a picture of mixed progress on the ground in Libya.</p><p>The headlong rebel retreat through the oil hubs of Ras Lanuf and Brega, en route to the strategic city of Ajdabiya, demonstrated the limits of their fighting ability against the superior firepower and military organization of Gaddafi loyalists. It also underscored how dependent the anti-Gaddafi forces have become on airstrikes and missile attacks by the Western-led coalition.</p><p>“Our volunteer forces in the front have only got light weapons and are facing a very large military might,” said a rebel spokesman, Col. Ahmad Bani. The largely untrained and poorly organized force lacks anti-tank and other heavy weapons.</p><p>Bani called on NATO forces to intervene more forcefully, although a U.S. military official said coalition airstrikes, including attacks by U.S. AC-130 gunships, had continued apace in combat areas along the Libyan coast, with 32 U.S. and 23 coalition airstrikes in the 12-hour period through midday in Libya.</p><p>Administration officials said U.S. participation in the strikes would subside rapidly once NATO formally takes overall command this week of all aspects of the operation.</p><p>Officials said they saw Libyan government gains during the day as temporary and part of the “fluid” back and forth of the ground combat. But they did not dispute the likelihood that the rebels will need more equipment and training to prevail, increasing the pressure to find out more about the opposition.</p><div id="slug_inline_bb" style="display: block;" class="left margin-right margin-bottom padding-top slug"> </div><p>Several lawmakers briefed by Clinton, Gates and Adm. <a href="http://www.whorunsgov.com/Profiles/Adm._Michael_Mullen">Mike Mullen,</a> chairman of the Joint Chiefs of Staff, said they were told that the United States is still trying to put together a full picture of the Libyan rebellion but believes that it does not contain large numbers of radical Islamic militants.</p><p>“Nobody had detected any significant presence, although they knew there were some people,” said<a href="http://www.whorunsgov.com/Profiles/Gary_Ackerman"> Rep. Gary L. Ackerman</a> (D-N.Y.). But “nobody’s vouching for resumes” at the moment, Ackerman said.</p><p>House Intelligence Committee Chairman <a href="http://www.whorunsgov.com/Profiles/Michael_J._Rogers">Mike Rogers</a> (R-Mich.), said he heard nothing in the briefing that turned him in favor of arming the rebels. Calling it a “horrible idea,” Rogers said: “We know what they’re against. We don’t really know what they’re for.”</p><p>A senior administration official said that “we know well” some of the more prominent members of the Transitional National Council, the group that has been the public face of the rebellion and that includes lawyers, intellectuals and former members of the Gaddafi government.</p><p>But “in terms of participants on the ground, that’s a deeper dive, obviously,” said the official, one of several interviewed who were not authorized to publicly discuss the administration’s efforts. “You have the leadership and the formal structure, and then the ground truth in various parts of the country where you have strong opposition” to Gaddafi, but little is known about who is leading those efforts.</p><p>British Foreign Secretary William Hague said Wednesday that his government has made no decision about arming the rebels and that “we want to know about <a href="http://www.washingtonpost.com/world/libyan-opposition-includes-a-small-number-of-al-qaeda-fighters-us-officials-say/2011/03/29/AFRlXWyB_story.html">any links with al-Qaeda</a>.” But, he said, “given what we have seen” of the opposition political leaders, “I think it would be right to put the emphasis on the positive side.”</p><p>The CIA’s efforts represent a belated attempt to acquire basic information about rebel forces that had barely surfaced on the radar of U.S. spy agencies before the uprisings in North Africa.</p><p>Among the CIA’s tasks is to assess whether rebel leaders could be reliable partners if the administration opts to begin funneling in money or arms.</p><p>Obama took a key step in that direction by issuing a secret authorization known as a presidential “finding,” designed to pave the way for the flow of money or weapons. News of the finding, signed several weeks ago, was first reported Wednesday by Reuters.</p><p>Under law, the CIA requires special permission from the president to carry out activities designed to influence foreign events. A finding establishes a framework of legal authorities for specific covert activities, and in some cases for future actions that can be taken only after specific permission is given.</p><p>Such operations are fraught with risks. The CIA’s history is replete with efforts that backfired against U.S. interests in unexpected ways. In perhaps the most fateful example, the CIA’s backing of Islamic fighters in Afghanistan succeeded in driving out the Soviets in the 1980s, but it also presaged the emergence of militant groups, including al-Qaeda, that the United States is now struggling to contain.</p><p>Giving the CIA an expanded role in Libya would enable the administration to bridge the gap between the restrictions on coalition airstrikes and Obama’s stated goal of bringing Gaddafi’s four-decade rule to an end.</p><p>The CIA’s Special Activities Division includes paramilitary operatives who could help guide rebel operations as well as allied airstrikes.</p><p>Even amid an escalating campaign of coalition airstrikes, opposition forces have repeatedly mounted ill-advised assaults on Gaddafi positions and have been forced to retreat from territory they had gained.</p><p>If CIA paramilitary operatives were linked up with rebel leaders, “we’d be providing the intelligence on the location of the bad guys and saying, ‘Don’t you realize they’re just down the road here, and you’re going to get whacked if you go too far?’ ” said a U.S. official with access to intelligence on the fighting in Libya. “These guys don’t seem to be following any common-sense military advice.”</p><p>White House press secretary <a href="http://www.whorunsgov.com/Profiles/Jay_Carney">Jay Carney </a>refused to comment on “intelligence matters” and reiterated Obama’s public statements that while no decision has been made about arming the rebels, “we’re not ruling it out or ruling it in.”</p><p>Officials emphasized that the U.S. military will have no role on the ground in assisting the rebels. “There is no planning for putting any U.S. boots on the ground” for any purpose, a U.S. military official said. “We have no mandate, no authority, no planning going on to that effect. . . . Nobody’s told us to be prepared to do that.”</p>Anonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0tag:blogger.com,1999:blog-2853046991692894687.post-52359991565408933302011-03-30T09:52:00.001-07:002011-03-30T09:52:10.771-07:00<div class="post-body entry-content"> <h2 class="fly-title"><span style="font-size:180%;">The global economy</span></h2> <div class="headline">Another year of living dangerously</div> <h1 class="rubric">Turmoil in the Middle East and disaster in Japan arouse economic angst. Central banks must not make it worse </h1> <div class="ec-article-content clear"> <div class="content-image-float clearfix" style="width: 229px;"><img src="http://media.economist.com/images/images-magazine/2011/03/26/LD/20110326_LDC414.gif" alt="" /><span class="credit"></span></div> <p>THIS was supposed to be a stress-free year for the global economy. By January the financial crisis had faded and Europe’s sovereign-debt crisis seemed less acute. America’s economy was resurgent. Investors piled into equities and sold some of the government bonds they’d bought for troubled times. If there was a worry, it was that emerging economies would grow too quickly, inflating commodity prices. </p> <p>The year without crisis is not to be. First, Arabian upheaval put oil markets on edge. Then earthquake, tsunami and a nuclear accident clobbered the world’s third-largest economy. How much of a setback to growth do these twin crises represent? And how should economic policymakers react to them?</p> <p>Japan’s share of world output has been shrinking for decades, but at 9% it remains large enough for the hit to the country’s growth to subtract noticeably from global output. Then there are the ripple effects on the rest of the world. Japan is a large—in some cases the sole—supplier of intermediate goods to the world’s electronics and automotive industries, from the hardened glass on Apple’s iPad to gearboxes in Volkswagens. Many makers of such parts have had to slow or halt shipments because of damaged roads, power cuts or the loss of components from their own suppliers. The effects have spread well beyond Japan, causing shutdowns from South Korea to Spain. Still, the history of such disasters is that much of that lost production is eventually recovered and reconstruction delivers a fillip to subsequent growth. </p> <p>Pinpointing the impact of Arab political turmoil is complicated by the fact that oil prices were already rising thanks to a brighter global economic outlook. Nonetheless, a good portion of this year’s 25% increase seems due to worries over supplies. A rule of thumb holds that a 10% increase in the price of oil trims 0.2 percentage points from global growth. At the start of the year, the world looked likely to grow by 4-4.5%. A crude estimate is that the two crises will subtract between a quarter and half a percentage point from that. </p> <p>That may not capture the full effect. Crises by their nature generate clouds of uncertainty (see <a href="http://www.economist.com/node/18440971">article</a>). Businesses postpone capital spending and hiring until the clouds clear. Investors seek the safety of bonds and lose their taste for equities. </p> <p>Economic policymakers can’t make peace between Arab rulers and their people or stabilise Japan’s nuclear reactors, but they can minimise the collateral damage. The greatest burden is on the Bank of Japan. Its efforts to cure deflation over the past 15 years have too often been timid. That could not be said of its rapid response to the tsunami. It poured cash into the banking system in a pre-emptive strike against panic hoarding. And it expanded its purchases of government and corporate debt and equities. Still more “quantitative easing” can keep bond yields from rising as the government borrows for reconstruction, and help the fight against deflation. </p> <p>What should the rest of the world do? In a show of sympathy the G7 joined the Bank of Japan in selling the yen after it spiked dramatically. Such actions should be limited, however. Japan is too dependent on exports and its priority should be stimulating domestic demand and ending deflation, not cheapening the yen. A better way for outsiders to help is to ensure that concerns over radiation in Japanese products do not become an excuse for protectionism. </p> <p><a name="avoidable_aftershocks"></a><strong>Avoidable aftershocks</strong></p> <p>Other central banks face a more complicated task. Even as higher oil prices and hobbled Japanese production reduce growth they add to mounting inflation risks (Britain is now fretting over inflation of 4.4%). But most rich-world economies have ample economic slack, and in several countries fiscal tightening will tug at recovery. Britain’s coalition government has reaffirmed its commitment to austerity with this week’s budget (see <a href="http://www.economist.com/node/18440819">article</a>), and America has begun to cut spending. Both the Bank of England and the Federal Reserve should resist the temptation to tighten soon. </p> <p>The European Central Bank seems intent on raising interest rates next month. That would be a mistake. In the euro zone underlying inflation and wage growth are both subdued and inflation expectations are under control. By raising rates the ECB would strengthen the euro and frustrate the efforts of countries like Greece, Ireland and—the next in line for bailing out—Portugal to grow their way out of their debts.</p> <p>There is only so much economic policymakers can do about crises that spring from war or nature. In this case, the priority should be not making matters worse. </p> </div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/global-economy.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:43:00-07:00">9:43 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=887247976985854388">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=887247976985854388" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7585878503453402559"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/marx-mervyn-or-mario.html">Marx, Mervyn or Mario?</a> </h3> <div class="post-body entry-content"> <h2 class="fly-title">Buttonwood</h2> <div style="font-weight: bold;" class="headline"><span style="font-size:180%;">Marx, Mervyn or Mario?</span></div> <h1 class="rubric">What is behind the decline in living standards? </h1> <div class="content-image-full ec_article_large_image"><img src="http://media.economist.com/images/images-magazine/2011/03/26/FN/20110326_FND002.jpg" alt="" /></div> <p>ARE you better off than you were two years ago? Although the economic recovery in the developed world is almost two years old, the average Westerner would probably answer “No”. </p> <p>The authorities have applied shock and awe in the form of fiscal and monetary stimulus. They have prevented the complete collapse of the financial sector—bankers’ pay has certainly held up just fine. The corporate sector is also doing well. Even if banks are excluded, the profits of S&P 500 companies were up by 18.7% last year, says Morgan Stanley.</p> <p>But the benefits of recovery seem to have been distributed almost entirely to the owners of capital rather than workers. In America total real wages have risen by $168 billion since the recovery began, but that has been far outstripped by a $528 billion jump in profits. Dhaval Joshi of BCA Research reckons that this is the first time profits have outperformed wages in absolute terms in 50 years.</p> <p>In Germany profits have increased by €113 billion ($159 billion) since the start of the recovery, and employee pay has risen by just €36 billion. Things look even worse for workers in Britain, where profits have risen by £14 billion ($22.7 billion) but aggregate real wages have fallen by £2 billion. A study by the Institute for Fiscal Studies, a think-tank, found that the median British household had suffered the biggest three-year fall in real living standards since the early 1980s.</p> <p>Are these trends a belated vindication of Karl Marx? The bearded wonder wrote in “Das Kapital” that: “It follows therefore that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse.” But Marx also predicted a decline in profit margins in capitalism’s dying throes, suggesting some confusion in his analysis. </p> <p>A more positive view of this divergence between capital and wages is that developed economies had become too dependent on consumption and had to switch to an export- and investment-led model. That was the view of Mervyn King, the governor of the Bank of England, when he said in January that “the squeeze in living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”</p> <p>That reasoning might work for Britain and America. But it is hard to apply to Germany, where unit labour costs have been held down for a decade and where, if the economy does need to be rebalanced, it is arguably in favour of consumption.</p> <p>There is also a longer-term trend to explain. Wages still account for a much greater slice of income than profits, but labour’s share has been in decline across the OECD since 1980. The gap has been particularly marked in America: productivity rose by 83% between 1973 and 2007, but male median real wages rose by just 5%. </p> <p>The decline in labour’s share has also been accompanied by an increased inequality of incomes, something that economists have struggled for years to explain. Mean wages, which include the earnings of chief executives and sports stars, have risen much faster than the median. This premium for “talent” may reflect globalisation as the elite are able to move to the countries where their skills are most appreciated. Or it may reflect changes in technology, which have generated outsize rewards for those people most able to take advantage of them.</p> <p>An alternative explanation has been to blame the decline in trade-union membership. In the 1960s and 1970s powerful unions in manufacturing industries like cars were able to demand higher wages. But high-paying blue-collar jobs have been in decline since then. John Van Reenen, the director of the Centre for Economic Performance at the London School of Economics, reckons that privatisation has also led to a decline in labour’s share of the cake. Managers of newly privatised industries tend to lay off workers as their focus shifts from empire-building to profit maximisation.</p> <p>One factor that should perhaps get more emphasis is the role of the financial sector. Central banks have repeatedly cut or held down interest rates over the past 25 years in an attempt to boost bank profits and prop up asset prices. With this subsidy in place, is it surprising that earnings in finance have outpaced wages for other technologically skilled jobs?</p> <p>Attempts to remove that subsidy are met by threats from international banks to move elsewhere. This is a little reminiscent of the protection rackets run by the gangsters in Mario Puzo’s “The Godfather”. It is as if the finance sector is saying: “Nice economy you got there. Shame if anything should happen to it.”</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/marx-mervyn-or-mario.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:41:00-07:00">9:41 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7585878503453402559">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7585878503453402559" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1516250532985279707"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/japans-nuclear-crisis_30.html">Japan's nuclear crisis</a> </h3> <div class="post-body entry-content"> <h2 class="ec-blog-fly-title"><span style="font-size:180%;">Japan's nuclear crisis</span></h2> <h1 class="ec-blog-headline"> In hot water </h1> <p class="ec-blog-info"> by H.T. | TOKYO </p> <p><img class="imagecache-original-size" src="http://media.economist.com/sites/default/files/imagecache/original-size/TEPCO%20000_Hkg4738203,%20595.jpg" alt="" /></p><p>FRUSTRATION is mounting once again about the dangers emerging from the stricken Fukushima Dai-ichi nuclear power plant. This is partly due to new evidence: that there may have been a partial melting of nuclear fuel within the reactors’ protective structures and that radiation, including small doses of plutonium, has since leaked into the surrounding area. But fanning this anxiety is a grave new worry: that it may take months, rather than days or weeks, to bring this poisonous situation under control.</p><p>In the simplest terms, the latest bad news is that traces of plutonium have been found in soil samples near the stricken reactors. If fears of radioactive iodine-131, which loses half its potency every eight days, are bad, imagine how people may feel about plutonium-239, which has a “half-life” of 24,000 years. Tokyo Electric Power Company (TEPCO), the private monopoly that owns Fukushima, cannot say where the plutonium comes from: it may be from reactors No. 1 or 2, as a by-product of spent uranium, or from reactor No. 3, which has plutonium in its mixed-oxide fuel. That is the first indication of just how little the authorities know for certain about the situation.</p><p>It is a similar story with the pools of radioactive water that have been found sloshing around turbines near the reactors; it is not clear where these came from either. The worst case, near reactor No. 2, is 100,000 times more radioactive than water at a nuclear power plant is supposed to be. Wherever the excess radiation came from, and that is not clear, it has hampered ongoing efforts to hook up power supplies to the plant. Electricity is needed for cooling and monitoring systems, so that TEPCO can keep the nuclear fuel rods from overheating. By keeping work crews at bay, the radiation also stymies TEPCO’s ability to tell how badly pipes, pressure vessels and fuel rods have been damaged since the earthquake and tsunami on March 11th, which in turn makes it impossible to know how much more radiation can be expected to leak out. Then there are the pools for spent fuel rods, near the reactors. TEPCO cannot see whether these have been the site of any sort of meltdown, because there is too much debris piled on top.</p> <p class="MsoNormal"><span lang="EN-GB">For now, the authorities are partially reassured by the fact that what TEPCO can measure—heat and pressure within the reactors—has, by and large, remained stable, indicating there has been no meltdown of the potentially catastrophic sort. But the temperature in the first reactor rose to 323 degrees centigrade on Tuesday March 29th, which was not a good sign. Workers are having to balance the need to keep water flowing over the fuel rods, to prevent their overheating, against the risk of radioactive spillage into the sub-soil—and potentially the sea beyond. Making their work more complicated still, when a pool of water is suddenly found with potentially lethal doses of radiation, the other measurements are thrown into doubt. </span></p> <p class="MsoNormal"><span lang="EN-GB">To be fair to TEPCO, which has been getting all the bad press lately, it at least appears to be aware of how serious the threats are. When asked when the cooling systems might be brought under control, a spokesman says: “We just don’t know how long it will take.” That sounds like an honest assessment. </span></p> <p class="MsoNormal"><span lang="EN-GB">But candour at this stage will only get TEPCO so far. Its relationship with the government, which is directing disaster efforts from within the utility’s darkened headquarters in Tokyo, is about as tainted as Fukushima’s turbine water. On Tuesday Koichiri Gemba, the minister for national strategy, left open the possibility of nationalising TEPCO (or at least its nuclear arm). Presumably, that is partly to reassure potential claimaints from the vicinity of Fukushima, who may have lost everything as a result of radiation. TEPCO is already now under intense scrutiny to see whether it cut corners on safety prior to the disaster. Its president, Masataka Shimizu, is being lambasted for falling ill (some say going AWOL) during the emergency; the company has yet to explain his absence. And its emergency staff (some of them poorly paid outside contractors) are suffering miserable conditions on-site to carry out some of the most dangerous work on the planet; not only do they have insufficient food, they have to sleep on the floor under a single blanket.</span></p> <p class="MsoNormal"><span lang="EN-GB">With all these problems, it is no wonder TEPCO’s shares fell to a 47-year low on Tuesday. But the problem is not just TEPCO’s; it is Japan’s. The longer this crisis drags on and the more radiation spews out, the more the area around the plant may be irretrievably damaged and the higher the costs will mount—in psychic and physical terms. That bodes ill for the government. According to a Kyodo opinion poll this week, 58.2% of those surveyed do not approve of the government’s handling of the nuclear disaster. Naoto Kan’s administration has taken the reins from TEPCO to assert its authority over the disaster. It may have to raise its crisis response to a new level—probably involving international experts—to get ahead of the relentless cycle of bad news.</span></p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/japans-nuclear-crisis_30.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:39:00-07:00">9:39 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1516250532985279707">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1516250532985279707" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1058504010925309907"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/senator-coburn-plan-to-end-ethanol.html">Senator Coburn Plan to End Ethanol Credit</a> </h3> <div class="post-body entry-content"> <h1>Senator Coburn Plan to End Ethanol Credit Tests Republican Tax Principle</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Richard Rubin and Steven Sloan</span><br /></cite></div><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Proposal to End Ethanol Credit Tests Republicans " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iWZU_oRKIoqg" /> </div> <p class="caption">Senator Tom Coburn's proposal to end a tax credit for ethanol is slated to reach the U.S. Senate floor for a vote this week. Photographer: Somodevilla/Getty Images </p> </div> </div> </div> <p>Senator Tom Coburn is trying to challenge the proposition that all tax breaks are created equal. </p> <p>The effort by the Oklahoma Republican <a href="http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=75dcbb48-5761-40b0-aafc-397a6a1cf8d3" title="Open Web Site" rel="external">to end a tax credit</a> for ethanol places him in conflict with farm-state senators who want to keep the tax incentive. It also puts him at odds with tax-cut advocates in the <a href="http://topics.bloomberg.com/republican-party/">Republican Party</a>, who argue that eliminating the tax break would result in an unacceptable tax increase. The proposal could reach the Senate floor this week. </p> <p>A vote would force many Republicans to choose between their no-tax-increase pledge and their desire to reduce the <a href="http://topics.bloomberg.com/budget-deficit/">budget deficit</a> by cutting what they view as waste. Coburn’s amendment reaches beyond the ethanol debate and draws attention to tax expenditures, which reduce federal revenue by more than $1 trillion a year. They range from the mortgage interest deduction to tax credits for security cameras in fertilizer warehouses. </p> <p>“Continuing to issue blanket defenses of all tax expenditures is a profoundly misguided embrace of progressive, activist government and a strategy for tax complexity, tax deferment, excessive spending and unsustainable deficits,” Coburn <a href="http://coburn.senate.gov/public/index.cfm/rightnow?ContentRecord_id=27f7f183-505e-4928-8732-fa37389e3ece" title="Open Web Site" rel="external">wrote yesterday</a> to <a href="http://topics.bloomberg.com/grover-norquist/">Grover Norquist</a>. He is president of <a href="http://www.atr.org/" title="Open Web Site" rel="external">Americans for Tax Reform</a>, a Washington advocacy group that established the “no-new-taxes” pledge. </p> <p>Norquist’s group, which opposes ending tax breaks that aren’t paired with offsetting tax cuts, responded later in the day. In a <a href="http://www.atr.org/atr-supports-ethanol-repeal-br-opposes-a5996" title="Open Web Site" rel="external">letter</a>, the group stated its opposition to the ethanol tax credit but said Coburn’s amendment would violate the no-tax- increase pledge because it would increase federal revenue. Coburn is among 40 Republican senators who have signed the pledge, according to the group. </p> <h2>Meaningful Distinction </h2> <p>The philosophical debate between Coburn and Norquist turns on the question of whether there is a meaningful distinction between targeted tax breaks and targeted spending. </p> <p>“If the government lets <a href="http://topics.bloomberg.com/tom-coburn/">Tom Coburn</a> keep a dollar of his own money, that is not the same thing as the government stealing a dollar from Ryan Ellis and giving it to Tom Coburn,” wrote Ryan Ellis, the group’s tax policy director. “The differences between tax relief and spending are unambiguous.” </p> <p>Pledges to prevent tax increases are akin to pledges to prevent changes to Social Security, because they create barriers to discussion of the government’s alternatives, said Maya MacGuineas, president of the <a href="http://www.crfb.org/" title="Open Web Site" rel="external">Committee for a Responsible Federal Budget</a>, a Washington group that supports <a href="http://topics.bloomberg.com/deficit-reduction/">deficit reduction</a>. </p> <p>“Ending mistargeted tax breaks should be a conservative’s dream,” she said. “This is exactly what you want to be doing to improve how capital’s allocated in the economy.” </p> <p>In an interview, Ellis said proposals such as Coburn’s amendment weaken Republicans’ negotiating position. </p> <h2>‘Blood in the Water’ </h2> <p>“If Republicans are supporting a net tax increase, that will limit their ability to have a strong hand in any of their future budget dealings,” he said. “Democrats will then smell blood in the water.” </p> <p>Congress last extended the ethanol tax break in December 2010 as part of a package of extensions of expiring tax cuts. The main tax credit, which provides 45 cents a gallon to blenders, is scheduled to expire at the end of the year. Coburn’s proposal would eliminate it upon enactment of the legislation he seeks to amend -- a small-business measure. </p> <p>Coburn maintains that the credit is a giveaway to ethanol refiners. He points to a <a href="http://www.gao.gov/new.items/d11318sp.pdf" title="Open Web Site" rel="external">report issued</a> by the Government Accountability Office, saying that the credit duplicates the government’s biofuels production mandate. </p> <p>Republican Senator John Thune of <a href="http://topics.bloomberg.com/south-dakota/">South Dakota</a> said ending the credit in the middle of the year would hurt businesses’ plans and create uncertainty in the market. </p> <p>“I think we’re better served talking about the types of issues that unite us,” he said. </p> <h2>Tax Pledge </h2> <p>It’s not yet clear if Coburn’s amendment will be voted on or when it will occur. He said yesterday that he would ultimately get a vote. </p> <p>Coburn has an ally in <a href="http://topics.bloomberg.com/arizona/">Arizona</a>’s <a href="http://topics.bloomberg.com/jon-kyl/">Jon Kyl</a>, the Senate’s second-ranking Republican. Kyl, who is listed as a no-new-taxes pledge signer, said in an interview yesterday he would support Coburn’s proposal, though it would mean a tax increase for those affected. </p> <p>“I absolutely support striking the subsidy,” he said. “In fact, I support striking any of the so-called tax expenditures, which are just another way for taxpayers to be writing a check. They are spending by the government, and we shouldn’t have those in the <a href="http://topics.bloomberg.com/tax-code/">tax code</a>.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/senator-coburn-plan-to-end-ethanol.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:35:00-07:00">9:35 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1058504010925309907">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1058504010925309907" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6455260722977847834"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/obama-says-days-are-numbered-for.html">Obama Says ‘Days Are Numbered’ for Qaddafi'</a> </h3> <div class="post-body entry-content"> <h1>Obama Says ‘Days Are Numbered’ for Qaddafi's Regime to Keep Power in Libya</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Nicholas Johnston and Hans Nichols</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="U.S. President Barack Obama " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ifo3ouh8wFuo" /> </div> <p class="caption">U.S. President Barack Obama. Photographer: Dennis Brack/Pool via Bloomberg </p> </div> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Obama Says ‘Days Are Numbered’ for Qaddafi’s Regime in Libya " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iLQYiRhkN.dE" /> </div> <p class="caption">President Barack Obama said Libyan leader Muammar Qaddafi ’s reign is nearing its end under pressure from sanctions and the intervention of an international military force. Photographer: Aris Messinis/AFP/Getty Images </p> </div> </div> </div> <p>President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> said Libyan leader <a href="http://topics.bloomberg.com/muammar-qaddafi/">Muammar Qaddafi</a>’s reign is nearing its end under pressure from sanctions and the intervention of an international military force. </p> <p>The “noose has tightened” around Qaddafi as “people around him are starting to recognize that their options are limited and their days are numbered,” Obama said on the “CBS Evening News,” one of three interviews he gave to broadcast networks yesterday. </p> <p>“We’ve got to ratchet up our diplomatic and our political pressure on him,” Obama said. “So that at some point he makes a decision to leave.” </p> <p>Obama’s network interviews follow a March 28 nationally televised address in which he said the U.S. committed its armed forces to a United Nations-backed mission in <a href="http://topics.bloomberg.com/libya/">Libya</a> to protect civilians from troops loyal to Qaddafi, who has been battling opposition groups for control of the country. </p> <p>In the interviews with the news shows on ABC and NBC, along with CBS, Obama said the criteria he outlined for military involvement in Libya cannot be compared with the situation in <a href="http://topics.bloomberg.com/syria/">Syria</a>, another site of anti-government protests, or elsewhere in a region that has been swept by anti-government protests. </p> <h2>‘Unique Situation’ </h2> <p>“Each country in this region is different,” Obama told NBC. “Libya was a unique situation.” </p> <p>In the interview with ABC, Obama said it is time for Qaddafi to show that he understands he has lost legitimacy in the eyes of the Libyan people, and that it would then be up to the international community to help determine how he should leave power. </p> <p>“I certainly will be supporting him being removed from power, and we’re going to have to examine what our options are after that,” Obama said. “The process of actually getting Qaddafi to step down is not going to happen overnight.” </p> <p>On NBC, Obama said the U.S. and its allies are still assessing the <a href="http://ntclibya.org/english/" title="Open Web Site" rel="external">individuals and groups</a> leading the revolt against Qaddafi. He said he has neither ruled in nor ruled out the option of arming the rebels. </p> <p>“We’re not taking anything off the table at this point,” he said. </p> <p><a href="http://topics.bloomberg.com/london/">London</a> Meeting </p> <p>U.S. Secretary of State <a href="http://topics.bloomberg.com/hillary-clinton/">Hillary Clinton</a> was in London yesterday meeting with representatives from other nations that are trying to forge a postwar blueprint for Libya as troops loyal Qaddafi dug in to block rebels advancing on his hometown of Sirte. </p> <p>Clinton today is to be among the administration officials giving U.S. lawmakers classified briefings in <a href="http://topics.bloomberg.com/washington/">Washington</a> about the military mission in Libya. Republicans and Democrats alike have raised questions about the operation’s costs, goals and time frame. </p> <p>Obama taped all three interviews in <a href="http://topics.bloomberg.com/new-york/">New York</a>, where he was attending a dedication of the U.S. mission to the <a href="http://topics.bloomberg.com/united-nations/">United Nations</a>, named for former Commerce Secretary Ronald H. Brown. </p> <p>In his remarks at the building’s dedication ceremony Obama said that “our conscience and our common interests” compelled the U.S. and allies to act in Libya and uphold the responsibility of all nations to promote peace and protect human rights. </p> <p>“History teaches us that nations are more secure and the world is more peaceful when nations meet these responsibilities,” he said. “That’s what we’re doing in Libya.” </p> <p>While in New York, Obama attended two events for the <a href="http://topics.bloomberg.com/democratic-party/">Democratic Party</a>. He helped raise $1.5 million at a dinner for the <a href="http://topics.bloomberg.com/democratic-national-committee/">Democratic National Committee</a> and then thanked about 250 donors at a separate event. </p> <p>At the first event, Obama told supporters the U.S. was going through “a challenging time,” and that he wouldn’t be able to do his job as president “if I didn’t know that I have a lot people rooting for me.” </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/obama-says-days-are-numbered-for.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:33:00-07:00">9:33 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6455260722977847834">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6455260722977847834" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="575700255061890858"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/only-fed-ensures-inflation-wont-happen.html">Only Fed Ensures Inflation Won't Happen Here</a> </h3> <div class="post-body entry-content"> <h1>Only Fed Ensures Inflation Won't Happen Here: Caroline Baum</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Caroline Baum</span><br /></cite></div><div class="story_inline assets"> <img alt="Baum" class="author_photo" src="http://cdn.gotraffic.net/v/20110329_163921/images/authors/baum.jpg" /> <p class="author_caption">Caroline Baum</p> </div> <p>(Corrects spelling of Schaumburg in 16th paragraph.) </p> <p>Consumers expect inflation of 3.2 percent in the next five-to-10 years. Investors expect 2.8 percent. </p> <p>Who’s right? And why should we care? </p> <p>We don’t know the answer to the first question. I will try to answer the second in 800 words or less. </p> <p>When I listen to academics and Federal Reserve policy makers talk about inflation expectations, seemingly imbuing them with a life of their own, it sounds like something out of a textbook that’s suited for an econometric model. </p> <p>What a surprise to learn that it is! Inflation expectations evolved from something called rational expectations theory, the idea that people make economic decisions based on previous experience and expectations about the future. </p> <p>Rather than a school of economic thought, rational expectations should be viewed as “a ubiquitous modeling technique used widely throughout economics,” economist Tom Sargent explains in an <a href="http://www.econlib.org/library/Enc/RationalExpectations.html" title="Open Web Site" rel="external">essay</a> in the Concise Encyclopedia of Economics. </p> <p>He should know. Sargent, a professor at <a href="http://topics.bloomberg.com/new-york/">New York</a> University, is one of the pioneers of rational expectations theory, on which much of modern macroeconomics is based. It underlies efficient-markets theory, the <a href="http://www.economyprofessor.com/economictheories/permanent-income-hypothesis.php" title="Open Web Site" rel="external">permanent income hypothesis</a> and the <a href="http://www.infocheese.com/expectationsaugmentedphillipscurve.html" title="Open Web Site" rel="external">augmented Phillips curve</a>, which describes the relationship between inflation and unemployment. </p> <p>The theory is a central tenet underlying the debate about government intervention in the economy. Opponents of fiscal stimulus claim that the public’s expectation of higher taxes will offset any temporary benefit from <a href="http://topics.bloomberg.com/government-spending/">government spending</a>. </p> <h2>QED </h2> <p>That’s because human beings behave rationally. Never mind that we just lived through the mother of all housing bubbles, with folks buying homes they couldn’t afford with loans they couldn’t repay. Human beings are rational. Quod erat demonstrandum. </p> <p>If businesses expect raw materials prices to rise, they will buy more today and stockpile them for the future. </p> <p>The notion of inflation expectations affecting behavior has been extended to consumers, erroneously in most cases. If households expect gasoline prices to rise, they don’t go out and purchase a 1,000-gallon storage tank for the front lawn. At best, most of us keep two gallons in a gas can to fill the lawn mower. </p> <p>“Who do I negotiate with when I fill the tank?” says <a href="http://topics.bloomberg.com/jim-glassman/">Jim Glassman</a>, senior economist at JPMorgan Chase & Co. “I’m a price taker. The more we are price takers, the less inflation expectations matter.” </p> <p>Which Prices? </p> <p>Years ago, I was so agitated by the Fed’s fixation on inflation expectations at the expense of policies that affect actual inflation, I decided to test my theory that the public doesn’t know or doesn’t care. </p> <p>I conducted a simple survey on inflation, present and future, that confirmed my suspicions. You can read about it here. </p> <p>For their part, businesses care a lot about prices: the prices of things they buy and sell. </p> <p>“A rise in raw materials is a sign of inflation to the businessman,” says Sandra Westlund-Deenihan, president and design engineer at <a href="http://www.metalfloat.com/index.html" title="Open Web Site" rel="external">Quality Float Works Inc.</a>, a 96-year-old family run business in Schaumburg, <a href="http://topics.bloomberg.com/illinois/">Illinois</a>, that makes liquid level-control devices. </p> <p>The company adjusted to soaring input costs by ordering in bulk, shopping around, even asking customers to send customized boxes “so we aren’t bearing the shipping costs,” she says. </p> <h2>Different Strokes </h2> <p>Right now any manufacturer that purchases crude materials - - everything from cotton to steel scrap -- is bound to have an inflated set of inflation expectations. So will consumers whose major purchases are food and energy. </p> <p>“I can’t believe the news there’s no inflation,” Westlund-Deenihan says. “They’re not touching it. We have a bottom line.” </p> <p>Lastly, financial markets telegraph investors’ inflation expectations via the spread between nominal and inflation- indexed Treasuries. This measure is imperfect as well, influenced as it is by preferences for the most liquid (nominal) Treasuries when safety concerns are paramount. </p> <p>Inflation expectations, then, mean different things to different people. </p> <p>I did find two academics to walk me through the Fed’s inflation expectations fog. Former Fed governor Randall Kroszner, now a professor at the University of Chicago’s Booth School of Business, and Michael Bordo, an economics professor at <a href="http://topics.bloomberg.com/rutgers-university/">Rutgers University</a> in <a href="http://topics.bloomberg.com/new-brunswick/">New Brunswick</a>, <a href="http://topics.bloomberg.com/new-jersey/">New Jersey</a>, patiently explained a situation where the public’s inflation expectations, if unaligned with the Fed’s goal, could have an undesirable effect on the economy. </p> <h2>Doubting Thomases </h2> <p>Three decades ago, when <a href="http://topics.bloomberg.com/paul-volcker/">Paul Volcker</a> arrived at the Fed determined to wring inflation out of the system, businessmen didn’t believe him. They’d heard that story before. They offered employees wage increases in line with past inflation, not with what Volcker promised for the future. </p> <p>When inflation fell, companies found themselves caught between higher costs and lower prices. The cost structure forced many out of business. Others had to fire workers. The recession was deeper than it would have been if the public had been convinced of Volcker’s intent. </p> <p>Point taken, although I’m still not sure inflation expectations are as important as they’re cracked up to be. </p> <p>What is important is Fed credibility. And actions speak louder than words. Policy makers may be comfortable that inflation expectations are well anchored and the output gap, or degree of economic slack, is large enough to drive a semi through. But overnight <a href="http://topics.bloomberg.com/interest-rates/">interest rates</a> at zero are creating speculative demand for real and financial assets. The Fed ignores these expectations at its own risk. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/only-fed-ensures-inflation-wont-happen.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:31:00-07:00">9:31 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=575700255061890858">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=575700255061890858" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1184571960199500668"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/history-backs-bernanke-betting.html">History Backs Bernanke Betting Volatility Variable Won’t Hurt</a> </h3> <div class="post-body entry-content"> <h1>History Backs Bernanke Betting Volatility Variable Won’t Hurt</h1> <div id="story_meta"> <cite class="byline"> By <span class="author">Joshua Zumbrun</span> -</cite></div><br /><div class="story_inline assets"> <div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Federal Reserve Chairman Ben S. Bernanke " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=ibEjYv1B4BXQ" /> </div> <p class="caption">Ben S. Bernanke, chairman of the U.S. Federal Reserve. Photographer: Andrew Harrer/Bloomberg </p> </div> <div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Bernanke's Own Words on Inflation, Fed Policy, Deficit " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=itngcNu4Fop8" /> <div class="overlay"> </div> <div class="play_video_link"><a href="http://www.bloomberg.com/video/67190794/">Play Video</a></div> </div> <p class="caption"> March 1 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke speaks about the surge in oil and other commodity prices and the potential impact of the rising prices on the U.S. economy. Bernanke, in his semi-annual testimony before the Senate Banking Committee, says the rise probably won't cause a permanent increase in broader inflation and repeated borrowing costs are likely to stay low. (Excerpts. Source: Bloomberg) </p> </div> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="U.S. Federal Reserve Chairman Ben S. Bernanke " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iLFtt6h00res" /> </div> <p class="caption">Ben S. Bernanke, chairman of the U.S. Federal Reserve. Photographer: David Maung/Bloomberg </p> </div> </div> </div> <p>Federal Reserve Chairman <a href="http://topics.bloomberg.com/ben-s.-bernanke/">Ben S. Bernanke</a> is betting that surging prices for food and fuel won’t wind up breaking the cost of living for Americans. The historical record shows the odds are in his favor. </p> <p>The Fed watches two key measures of inflation, known to economists as headline and core. The first is based on a basket of goods and services bought by the average American consumer. The second strips out volatile food and energy prices, providing a better picture of long-term trends. </p> <p>While both have averaged about 2 percent a year since 1996, based on the personal-consumption expenditures index, headline inflation has jumped as high as 4.5 percent and fallen to minus 1 percent. In the same period, changes in core prices ranged from increases of 0.7 percent to 2.6 percent. </p> <p>“From an economist’s perspective, it’s right to focus on the core,” said <a href="http://topics.bloomberg.com/vincent-reinhart/">Vincent Reinhart</a>, a former Fed official who is now a resident scholar at the <a href="http://topics.bloomberg.com/american-enterprise-institute/">American Enterprise Institute</a> in Washington. “Appropriately, the Fed’s goal is headline inflation, but it’s headline inflation in the future, and therefore core is the good predictor.” </p> <p>The rate of “pass-through from commodity-price increases to broad indexes of U.S. consumer prices has been quite low in recent decades,” Bernanke, a 57-year-old former Princeton University professor, said March 1 in his semiannual monetary- policy testimony to Congress. That points to a “temporary and relatively modest increase in U.S. consumer-price inflation,” he said. </p> <h2>Testing an Assumption </h2> <p>Surging prices of oil, corn and other commodities are testing that assumption. Crude oil has jumped 35 percent in the past six months, corn is up 38 percent and cotton is up 89 percent. </p> <p>“If you talk to an average family in <a href="http://topics.bloomberg.com/new-jersey/">New Jersey</a> and you say, ‘What is your food bill? What is your gas price? What is your tuition?’” they are “not going to tell you there’s deflation,” said Senator <a href="http://topics.bloomberg.com/robert-menendez/">Robert Menendez</a>, a New Jersey Democrat, when he questioned Bernanke after his testimony. “In a real context, I’m wondering how this macroeconomic policy is going to get to the average person in a way that changes their lives in a more positive way.” </p> <p>A gallon of gasoline averaged $3.587 on March 28, the highest since October 2008, according to Heathrow, Florida-based AAA, the nation’s largest motoring organization. The increase helped push <a href="http://topics.bloomberg.com/consumer-confidence/">consumer confidence</a> to the lowest level since August, as the Bloomberg Consumer Comfort Index dropped to minus 48.9 in the week to March 20. </p> <h2>Rise and Fall </h2> <p><a href="http://topics.bloomberg.com/david-resler/">David Resler</a>, chief U.S. economist at Nomura Securities International Inc. in New York, says prices of commodities can fall just as quickly as they rise. Corn jumped 21 percent from the start of the year to March 3 before dropping 8 percent. Oil fell 8 percent between Jan. 1 and Feb. 15, then rose 25 percent by March 7. Since then, it has declined about 1 percent. </p> <p>Bernanke is “saying the rate of change is temporary or transitory, and he’s almost certainly right,” said Resler, the second most-accurate forecaster of the inflation rate in the past two years, according to Bloomberg News calculations. Oil may “move sharply lower” once the crisis in the Middle East passes, he said. “It’s hard to envision prices continuing to rise at these rates.” </p> <p>Rapid moves in oil were even more pronounced in 2008, when the price of a barrel reached $145 in July because of possible supply constraints from Middle East conflicts and production disputes in <a href="http://topics.bloomberg.com/russia/">Russia</a>. The price dropped to $34 a barrel in December as tensions eased. </p> <h2>Extremely Rapidly </h2> <p>If the Fed had focused strictly on headline inflation, which rose to 4.5 percent in July 2008, it likely would have raised rates in the midst of the recession that began December 2007 and then had to drop them extremely rapidly as overall prices turned negative, according to <a href="http://topics.bloomberg.com/paul-ashworth/">Paul Ashworth</a>, chief U.S. economist at Capital Economics Ltd. in Toronto. Instead it continued cuts it began in September 2007, when the federal funds target rate was 5.25 percent, eventually slashing its benchmark to near zero by December 2008. </p> <p>“You can make errors,” Ashworth said. “In 2008 if you’d followed strictly headline, then you’d look like idiots when headline inflation was actually below zero in 2009.” </p> <p>The <a href="http://topics.bloomberg.com/bond-market/">bond market</a> agrees with Bernanke’s assessment. Investors anticipate inflation of 2.7 percent in the next 12 months, as measured by the difference between yields on nominal bonds and Treasury Inflation Protected Securities. That reflects their expectation that the current surge in commodities is temporary and modest; in the next five years, investors estimate inflation will average 2.3 percent annually. </p> <p>Even though the <a href="http://topics.bloomberg.com/budget-deficit/">budget deficit</a> has grown, the cost of financing it is now lower than it was before the credit crisis began in August 2007. </p> <h2>Slack in Economy </h2> <p>Bernanke has said the level of slack in the economy makes it difficult for companies to raise prices, as 14.5 million workers remain unemployed. The manufacturing, mining and electric-and-gas-utilities industries also are using only 77 percent of their capacity, according to Fed data. While core prices rose 0.9 percent in February from a year earlier, the most since October, they remain near record lows. </p> <p>Bernanke and the Federal Open Market Committee said March 15 they will continue to keep <a href="http://topics.bloomberg.com/interest-rates/">interest rates</a> near zero and maintain record monetary stimulus with purchases of $600 billion in Treasury securities through June. Rising commodity prices will prove “transitory” and “measures of underlying inflation have been subdued,” the FOMC said. </p> <h2>Trichet Surprise </h2> <p>The Fed’s approach sets it apart from the <a href="http://topics.bloomberg.com/european-central-bank/">European Central Bank</a> and <a href="http://topics.bloomberg.com/bank-of-england/">Bank of England</a>. ECB President <a href="http://topics.bloomberg.com/jean--claude-trichet/">Jean-Claude Trichet</a> surprised investors earlier this month when he announced the central bank may raise its benchmark rate in April from a record low 1 percent. In the United Kingdom, a 4.4 percent consumer- price increase in February from a year earlier is pressuring policy makers to consider raising <a href="http://topics.bloomberg.com/england/">England</a>’s target rate above its record low of 0.5 percent. </p> <p>“The implication is that, unless U.S. underlying inflation begins to rise, the Fed will continue to lag behind the ECB and the BOE, both of which are much more sensitive to the impact from commodities-driven headline CPI rates on inflation expectations,” said Lena Komileva, the global head of G-10 strategy in London for Brown Brothers Harriman & Co. </p> <p><a href="http://topics.bloomberg.com/maury-harris/">Maury Harris</a>, chief U.S. economist in <a href="http://topics.bloomberg.com/new-york/">New York</a> at UBS Securities LLC, says Bernanke may be falling behind the curve. </p> <p>“There ought to be some questions about whether the Fed is on the right track when they say <a href="http://topics.bloomberg.com/core-inflation/">core inflation</a> will be contained,” he said. His team at UBS Securities, the best inflation forecasters for the past two years according to Bloomberg calculations, see prices excluding food and energy rising 1.4 percent this year, compared with the median forecast of 1.1 percent in a Bloomberg survey. </p> <h2>‘Totally Implausible’ </h2> <p>The Fed’s credibility also is at risk, Harris said. Ordinary people “find it totally implausible that somebody from the Fed would play down inflation,” he said. </p> <p>Inflation expectations among U.S. consumers for the year ahead jumped to 4.6 percent this month from 3.4 percent in February, according to a Thomson Reuters/University of Michigan survey. Expectations for five years from now rose to 3.2 percent from 2.9 percent. </p> <p>Reinhart agrees that concepts like core inflation have little meaning for consumers watching the price of gasoline and groceries rise from one week to the next. </p> <p>“When you talk about core, you disconnect yourself from the public who think ‘What, you don’t drive or eat?’” he said. Even so, Bernanke is right when he says “the pass-through has been essentially non-existent” for the last several decades, Reinhart said. </p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/history-backs-bernanke-betting.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:29:00-07:00">9:29 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1184571960199500668">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1184571960199500668" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="1587675921884013691"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/shut-government-down.html">Shut the government down</a> </h3> <div class="post-body entry-content"> <h1 class="mb min entry-title"><span style="font-size:130%;">Shut the government down</span></h1><h2 class="grey mb min">GOP’s timid strategy of incremental cuts betrays conservative values</h2><div class="full left byline mb mt"><p class="left author vcard ">By <span class="fn"><a href="http://www.washingtontimes.com/staff/jeffrey-t-kuhner/">Jeffrey T. Kuhner</a></span></p></div><p>It’s time Republicans play political hardball. If they do not, they will soon dangerously alienate large chunks of their conservative base. Negotiations have stalled. A fiscal showdown is looming. Congressional Republicans and Democrats are trying to pass a budget to fund the government for the current fiscal year. Two short-term appropriation extensions have been enacted. The latest one is set to expire April 8. Both sides are beginning to dig in their heels. If a budgetary agreement is not reached, the government will shut down.</p><p>The <a href="http://www.washingtontimes.com/topics/republican-party/">GOP</a> leadership fears that the public will blame them - as it did in 1995, when the Gingrich Republicans forced a shutdown, helping to revive then-President <a href="http://www.washingtontimes.com/topics/clinton/">Clinton</a>’s sagging electoral fortunes. Republicans are rightly worried history may repeat itself.</p><p>The Democrats own a bad economy and several failing wars. The political wind is at the <a href="http://www.washingtontimes.com/topics/republican-party/">GOP</a>’s back heading into 2012. Many Republicans are asking a simple question: Why risk everything over a budget fight when the Democrats are poised to be crushed in next year’s elections?</p><p>They argue that such a strategy is reckless and could pave the way for <a href="http://www.washingtontimes.com/topics/barack-obama/">Mr. Obama</a>’s re-election. Democrats are hoping to paint the <a href="http://www.washingtontimes.com/topics/republican-party/">GOP</a> as a party of right-wing extremists who cannot be trusted with the reins of power. Hence, the likes of House Speaker <a href="http://www.washingtontimes.com/topics/john-boehner/">John A. Boehner</a>, Ohio Republican, are saying that forcing a shutdown will play into the liberals’ hands.</p><p>Instead, he is pursuing a strategy of incrementalism - push small spending cuts, hoping to make Democrats defend some of their unpopular pet projects, such as when Senate Majority Leader <a href="http://www.washingtontimes.com/topics/harry-reid/">Harry Reid</a> recently warned that Nevada’s cowboy poetry festival risked being defunded. Establishment Republicans think they have found the winning formula: Force the <a href="http://www.washingtontimes.com/topics/white-house/">White House</a> and Democrats to accept minor spending reductions while keeping the government operating. Some recent polls seem to bear them out.</p><p>Yet good politics can also be bad morality. So far, the <a href="http://www.washingtontimes.com/topics/republican-party/">GOP</a> has managed to get the administration to accept $10 billion in spending reductions. Republicans are now seeking to wring another $20 billion in cuts from congressional Democrats. This is what both sides are now quibbling over. It is fantasy masquerading as high drama; they are simply rearranging the deck chairs on the Titanic. For there is one dominant fact of American life, a fact that subsumes all others: We are going broke. And unless we address it immediately and decisively, the U.S. ship of state is going to sink under the weight of massive debt. No political strategizing - no matter how cunning or clever - can change this.</p><p>This year’s federal deficit alone is projected to be a record-breaking $1.65 trillion. The national debt has just passed $14 trillion and is approaching 100 percent of gross domestic product (GDP) - the point where economists say the debt level is so high and burdensome in proportion to GDP there is no return to fiscal solvency. In short, America is on the ruinous path of Greece, Ireland and Portugal.</p><p>The <a href="http://www.washingtontimes.com/topics/republican-party/">GOP</a> was elected in 2010 to stop <a href="http://www.washingtontimes.com/topics/barack-obama/">Mr. Obama</a>’s fiscal carnage. They were not given a second chance to play amateur Machiavellians, positioning themselves politically while nibbling around the edges of an unsustainable nanny state. If the <a href="http://www.washingtontimes.com/topics/republican-party/">GOP</a> cannot stand for deep spending cuts and real entitlement reform - in other words, pulling the nation back from the abyss - then what good are they?</p><p>America is at a watershed. It desperately needs bold, principled leadership - a fiscal Winston Churchill, someone who is willing to tell the country that real sacrifices must be made if the American experiment in self-government and liberty is to survive.</p><p>The difference between now and 1995 is simple and stark. We live in a different age. Amid a decade of peace and prosperity, a government shutdown struck voters as juvenile and senseless.</p><p><span style="font-size:180%;"><a href="http://www.washingtontimes.com/news/2011/mar/29/shut-the-government-down/?page=2"><em>Story Continues →</em></a></span></p><div class="pagination mb"><div class="pagination full pt"><span style="font-size:180%;"><span class="grey prev">‹‹ previous</span><span class="current pag">1</span><a href="http://www.washingtontimes.com/news/2011/mar/29/shut-the-government-down/?page=2" class="pag">2</a><a href="http://www.washingtontimes.com/news/2011/mar/29/shut-the-government-down/?page=2" class="next">next ››</a></span></div></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/shut-government-down.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:27:00-07:00">9:27 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=1587675921884013691">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=1587675921884013691" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6880132422789639207"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/freelance-jihadists-join-libyan-rebels.html">‘Freelance jihadists’ join Libyan rebels</a> </h3> <div class="post-body entry-content"> <h1 class="mb min entry-title"><span style="font-size:180%;">‘Freelance jihadists’ join Libyan rebels</span></h1><h2 class="grey mb min">Ex-al Qaeda member speaks out</h2><img src="http://media.washtimes.com/media/image/2011/03/29/20110329-210705-pic-997982154_s640x433.jpg?5bb4e468b23a5201bbf492f7db3ad817f4ac6036" alt="A Libyan rebel waves a " class="storyimg mt min" width="640" height="433" /><span class="small caption">A Libyan rebel waves a “magic box” bracelet thought to have been captured from a foreigner fighting with <a href="http://www.washingtontimes.com/topics/muammar-al-gaddafi/">Col. Moammar Gadhafi</a>’s troops, on the frontline outside of Bin Jawaad on Tuesday. The wearers believe the bracelets will protect them from injury. (Associated Press)</span><div class="column c160 left mb max"><p class="left author vcard ">By <span class="fn"><a href="http://www.washingtontimes.com/staff/eli-lake_/">Eli Lake</a></span> <img src="http://ad.doubleclick.net/activity;dc_pixel_url=resn.bfppixel;dc_seg=111918;ord=18621648?" alt="" width="1" border="0" height="1" /> <img src="http://ad.doubleclick.net/activity;dc_pixel_url=resn.bfppixel;dc_seg=115686;ord=18621648?" alt="" width="1" border="0" height="1" /> <img src="http://api.dimestore.com/viapi?action=pixel&id=641051568" width="1" height="1" /> <a href="http://ad.doubleclick.net/jump/test.resonate/;alias=geotest1;sz=1x1;ord=4370920?" target="_blank"> <img src="http://ad.doubleclick.net/ad/test.resonate/;alias=geotest1;sz=1x1;ord=4370920?" alt="" width="1" border="0" height="1" /></a></p><div class="ad160x600 left mt mb"> </div></div><p>A former leader of <a href="http://www.washingtontimes.com/topics/libya/">Libya</a>’s <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a> affiliate says he thinks “freelance jihadists” have joined the rebel forces, as <a href="http://www.washingtontimes.com/topics/north-atlantic-treaty-organization-nato/">NATO</a>’s commander told <a href="http://www.washingtontimes.com/topics/congress/">Congress</a> on Tuesday that intelligence indicates some <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a> and <a href="http://www.washingtontimes.com/topics/hezbollah/">Hezbollah</a> terrorists are fighting <a href="http://www.washingtontimes.com/topics/muammar-al-gaddafi/">Col. Moammar Gadhafi</a>’s forces.</p><p>Former jihadist <a href="http://www.washingtontimes.com/topics/noman-benotman/">Noman Benotman</a>, who renounced his <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a> affiliation in 2000, said in an interview that he estimates 1,000 jihadists are in <a href="http://www.washingtontimes.com/topics/libya/">Libya</a>.</p><p>On Capitol Hill, <a href="http://www.washingtontimes.com/topics/james-g-stavridis/">Adm. James Stavridis</a>, the <a href="http://www.washingtontimes.com/topics/north-atlantic-treaty-organization-nato/">NATO</a> commander, when asked about the presence of <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a> terrorists among the rebels, said the leadership of the opposition is made up of “responsible men and women.”</p><p>“We have seen flickers in the intelligence of potential <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a>, <a href="http://www.washingtontimes.com/topics/hezbollah/">Hezbollah</a>,” the four-star admiral said. “We’ve seen different things. But at this point, I don’t have detail sufficient to say that there’s a significant <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a> presence, or any other terrorist presence, in and among these folks.”</p><p>The military is continuing to “look at that very closely,” he said, because “it’s part of doing due diligence as we move forward on any kind of relationship” with the opposition.</p><p>Outside observers generally estimate the number of trained Libyan fighters to be about 1,000.</p><p>Concern over the makeup of opposition forces surfaced Tuesday as representatives from 40 governments and international organizations met in London and stepped up efforts to oust the Gadhafi regime and prepared for a hoped-for transition to a democratic state.</p><p>Col. Gadhafis forces, meanwhile, launched counterattacks Tuesday against rebels advancing westward toward the capital, Tripoli.</p><p><a href="http://www.washingtontimes.com/topics/noman-benotman/">Mr. Benotman</a> told The Washington Times that <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a>’s North African affiliate, <a href="http://www.washingtontimes.com/topics/al-qaeda/">Al Qaeda</a> in the Islamic Mahgreb, has tried without success to co-opt the leadership of <a href="http://www.washingtontimes.com/topics/muammar-al-gaddafi/">Col. Gadhafi</a>’s opposition. But <a href="http://www.washingtontimes.com/topics/noman-benotman/">Mr. Benotman</a> said the interim council leading <a href="http://www.washingtontimes.com/topics/libya/">Libya</a>’s opposition is seeking democratic elections, not an Islamic republic.</p><p>“We have freelance jihadists,” he said. “But everything is still under control of the <a href="http://www.washingtontimes.com/topics/interim-national-council/">interim national council</a>. There is no other organization that says, ‘We are leaders of the revolution with this emir,’ like <a href="http://www.washingtontimes.com/topics/al-qaeda/">al Qaeda</a> would. Everyone is afraid to do this; they would be labeled as undermining the people.”</p><p><span style="font-size:180%;"><a href="http://www.washingtontimes.com/news/2011/mar/29/1000-freelance-jihadists-join-libyan-rebels/?page=2"><em>Story Continues →</em></a></span></p><div class="pagination mb"><div class="pagination full pt"><span style="font-size:180%;"><span class="grey prev">‹‹ previous</span><span class="current pag">1</span><a href="http://www.washingtontimes.com/news/2011/mar/29/1000-freelance-jihadists-join-libyan-rebels/?page=2" class="pag">2</a><a href="http://www.washingtontimes.com/news/2011/mar/29/1000-freelance-jihadists-join-libyan-rebels/?page=3" class="pag">3</a><a href="http://www.washingtontimes.com/news/2011/mar/29/1000-freelance-jihadists-join-libyan-rebels/?page=2" class="next">next ››</a></span></div></div> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/freelance-jihadists-join-libyan-rebels.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:24:00-07:00">9:24 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6880132422789639207">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6880132422789639207" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="6716615049359623017"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/washington-in-fierce-debate-on-arming.html">Washington in Fierce Debate on Arming Libyan Rebels</a> </h3> <div class="post-body entry-content"> <h1 class="articleHeadline"><span style="font-size:130%;">Washington in Fierce Debate on Arming Libyan Rebels</span></h1> <div class="articleSpanImage"><img src="http://graphics8.nytimes.com/images/2011/03/30/world/DIPLO/DIPLO-articleLarge.jpg" alt="" width="600" border="0" height="355" /> <div class="credit">Anja Niedringhaus/Associated Press</div> <p class="caption">A Libyan rebel urged people to leave as government forces shelled an area near Bin Jawad in northern Libya on Tuesday. </p> </div> <h6 class="byline">By <a href="http://topics.nytimes.com/top/reference/timestopics/people/l/mark_landler/index.html?inline=nyt-per" title="More Articles by Mark Landler" class="meta-per">MARK LANDLER</a>, <a href="http://topics.nytimes.com/top/reference/timestopics/people/b/elisabeth_bumiller/index.html?inline=nyt-per" title="More Articles by Elisabeth Bumiller" class="meta-per">ELISABETH BUMILLER</a> and <a href="http://topics.nytimes.com/top/reference/timestopics/people/m/steven_lee_myers/index.html?inline=nyt-per" title="More Articles by Steven Lee Myers" class="meta-per">STEVEN LEE MYERS</a></h6> <div class="articleBody"> <p> WASHINGTON — The Obama administration is engaged in a fierce debate over whether to supply weapons to the rebels in Libya, senior officials said on Tuesday, with some fearful that providing arms would deepen American involvement in a civil war and that some fighters may have links to <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/a/al_qaeda/index.html?inline=nyt-org" title="More articles about Al Qaeda." class="meta-org">Al Qaeda</a>. </p> </div> <div class="articleInline runaroundLeft"> <div class="columnGroup doubleRule"> </div></div> <div class="articleInline runaroundLeft" style="margin-top: -11px"> <h6 class="sectionHeader flushBottom">Multimedia</h6> </div> <div class="articleInline runaroundLeft firstArticleInline"> <div class="inlinePlayer box"><div class="refer"><img src="http://graphics8.nytimes.com/images/multimedia/icons/audio_icon.gif" width="13" height="10" /> Mark Landler on The Takeaway Radio Program</div> </div> </div> <div class="articleInline runaroundLeft "> <div class="story expandAssetContainer" style="z-index: 1; background: transparent;"> <div class="story"> <div class="wideThumb"> <img src="http://graphics8.nytimes.com/images/2011/03/29/multimedia/video-tc-032911-leemeyers/video-tc-032911-leemeyers-thumbWide.jpg" alt="" width="190" border="0" height="126" /> </div><h6 class="byline"> </h6> <p class="summary"> Did the president articulate a new blueprint for American involvement in foreign wars?</p> </div></div></div><div class="articleInline runaroundLeft"><div class="columnGroup doubleRule"> </div> </div> <p> The debate has drawn in the White House, the State Department and the Pentagon, these officials said, and has prompted an urgent call for intelligence about a ragtag band of rebels who are waging a town-by-town battle against Col. <a href="http://topics.nytimes.com/top/reference/timestopics/people/q/muammar_el_qaddafi/index.html?inline=nyt-per" title="More articles about Muammar el-Qaddafi." class="meta-per">Muammar el-Qaddafi</a>, from a base in eastern Libya long suspected of supplying terrorist recruits. </p><p> “Al Qaeda in that part of the country is obviously an issue,” a senior official said. </p><p> On a day when Libyan forces counterattacked, fears about the rebels surfaced publicly on Capitol Hill on Tuesday when the military commander of <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/n/north_atlantic_treaty_organization/index.html?inline=nyt-org" title="More articles about the North Atlantic Treaty Organization." class="meta-org">NATO</a>, Adm. <a href="http://topics.nytimes.com/top/reference/timestopics/people/s/james_g_stavridis/index.html?inline=nyt-per" title="More articles about James G. Stavridis." class="meta-per">James G. Stavridis</a>, told a Senate hearing that there were “flickers” in intelligence reports about the presence of Qaeda and <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/h/hezbollah/index.html?inline=nyt-org" title="More articles about Hezbollah" class="meta-org">Hezbollah</a> members among the anti-Qaddafi forces. No full picture of the opposition has emerged, Admiral Stavridis said. While eastern Libya was the center of Islamist protests in the late 1990s, it is unclear how many groups retain ties to Al Qaeda. </p><p> The French government, which has led the international charge against Colonel Qaddafi, has placed mounting pressure on the United States to provide greater assistance to the rebels. The question of how best to support the opposition dominated an international conference about Libya on Tuesday in London. </p><p> While Secretary of State <a href="http://topics.nytimes.com/top/reference/timestopics/people/c/hillary_rodham_clinton/index.html?inline=nyt-per" title="More articles about Hillary Rodham Clinton." class="meta-per">Hillary Rodham Clinton</a> said the administration had not yet decided whether to actually transfer arms, she reiterated that the United States had a right to do so, despite an arms embargo on Libya, because of the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/s/security_council/index.html?inline=nyt-org" title="More articles about Security Council, U.N." class="meta-org">United Nations Security Council</a>’s broad resolution authorizing military action to protect civilians. </p><p> In a reflection of the seriousness of the administration’s debate, Mr. Obama said Tuesday that he was keeping his options open on arming the rebels. “I’m not ruling it out, but I’m also not ruling it in,” Mr. Obama told NBC News. “We’re still making an assessment partly about what Qaddafi’s forces are going to be doing. Keep in mind, we’ve been at this now for nine days.” </p><p> But some administration officials argue that supplying arms would further entangle the United States in a drawn-out civil war because the rebels would need to be trained to use any weapons, even relatively simple rifles and shoulder-fired anti-armor weapons. This could mean sending trainers. One official said the United States might simply let others supply the weapons. </p><p> The question of whether to arm the rebels underscores the difficult choices the United States faces as it tries to move from being the leader of the military operation to a member of a NATO-led coalition, with no clear political endgame. It also carries echoes of previous American efforts to arm rebels, in Angola, Nicaragua, Afghanistan and elsewhere, many of which backfired. The United States has a deep, often unsuccessful, history of arming insurgencies. </p><p> Mr. Obama pledged on Monday that he would not commit American ground troops to Libya and said that the job of transforming the country into a democracy was primarily for the Libyan people and the international community. But he promised that the United States would help the rebels in this struggle. </p><p> In London, Mrs. Clinton and other Western leaders made it clear that the NATO-led operation would end only with the removal of Colonel Qaddafi, even if that was not the stated goal of the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/u/united_nations/index.html?inline=nyt-org" title="More articles about the United Nations." class="meta-org">United Nations</a> resolution. </p><p> Mrs. Clinton — who met for a second time with a senior opposition leader, Mahmoud Jibril — acknowledged that as a group, the rebels were largely a mystery. “We don’t know as much as we would like to know and as much as we expect we will know,” she said at a news conference. </p><p> In his testimony, Admiral Stavridis said, “We are examining very closely the content, composition, the personalities, who are the leaders of these opposition forces.” </p><p> The coalition members discussed other ways to help the rebels, like humanitarian aid and money, Mrs. Clinton said. Some of the more than $30 billion in frozen Libyan funds may be channeled to the opposition. </p><p> But a spokesman for the rebels, Mahmoud Shammam, said they would welcome arms, contending that with weaponry they would already have defeated Colonel Qaddafi’s forces. “We ask for political support more than arms,” Mr. Shammam said, “but if we have both, that would be good.” </p><p> So far, the rebels have obtained arms from defecting Qaddafi loyalists, as well as from abandoned ammunitions depots. </p><p> A European diplomat said France was adamant that the rebels be more heavily armed and was in discussions with the Obama administration about how France would bring this about. “We strongly believe that it should happen,” said the diplomat, who spoke on the condition of anonymity to discuss internal deliberations. </p><p> Senator <a href="http://topics.nytimes.com/top/reference/timestopics/people/l/carl_levin/index.html?inline=nyt-per" title="More articles about Carl Levin." class="meta-per">Carl Levin</a>, a Michigan Democrat and chairman of the Armed Services Committee, said he had had conversations with two senior administration officials about this issue. Mr. Levin said he was most concerned about how the rebels would use the weapons after a cease-fire. “Would they stop fighting if they had momentum, or would they be continuing to use those weapons?” he asked. </p><p> Gene A. Cretz, the American ambassador to Libya, said last week that he was impressed by the democratic instincts of the opposition leaders and that he did not believe that they were dominated by extremists. But he acknowledged that there was no way to know if they were “100 percent kosher, so to speak.” </p><p> Bruce O. Riedel, a former <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/c/central_intelligence_agency/index.html?inline=nyt-org" title="More articles about the Central Intelligence Agency." class="meta-org">C.I.A.</a> analyst and a senior fellow at the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/b/brookings_institution/index.html?inline=nyt-org" title="More articles about Brookings Institution" class="meta-org">Brookings Institution</a>, said some who had fought as insurgents in Iraq and Afghanistan were bound to have returned home to Libya. “The question we can’t answer is, Are they 2 percent of the opposition? Are they 20 percent? Or are they 80 percent?” he said. </p><p> Even if the administration resolves these concerns, military officials said it was unclear to them how an effort to arm the rebels would be carried out. </p><p> They said the arms most likely to be of use were relatively light and simple shoulder-fired anti-armor weapons for defense against tanks, as well as rifles like Soviet AK-47s and communications equipment. Although these weapons are not especially sophisticated, months, if not years, of on-the-ground training would still be necessary. </p><p> Even with training, anti-armor weapons and rifles would allow the rebels only to consolidate their gains and hold the territory they have, said Nathan Freier, a senior fellow at the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/c/center_for_strategic_and_international_studies/index.html?inline=nyt-org" title="More articles about the Center for Strategic and International Studies." class="meta-org">Center for Strategic and International Studies</a>. </p><p> One crucial voice, Defense Secretary <a href="http://topics.nytimes.com/top/reference/timestopics/people/g/robert_m_gates/index.html?inline=nyt-per" title="More articles about Robert M. Gates." class="meta-per">Robert M. Gates</a> has experience in the unintended consequences of arming rebels: As a C.I.A. official in the late 1980s, he funneled weapons to the Islamic fundamentalists who ousted the Soviets from Kabul. Some later became the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/t/taliban/index.html?inline=nyt-org" title="More articles about the Taliban." class="meta-org">Taliban</a> fighting the United States in Afghanistan. </p> Mark Landler and Elisabeth Bumiller reported from Washington, and Steven Lee Myers from London. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/washington-in-fierce-debate-on-arming.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:21:00-07:00">9:21 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=6716615049359623017">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=6716615049359623017" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="4583722585830988939"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/pro-qaddafi-forces-push-rebels-into.html">Pro-Qaddafi Forces Push Rebels Into Chaotic Retreat</a> </h3> <div class="post-body entry-content"> <h1 class="articleHeadline">Pro-Qaddafi Forces Push Rebels Into Chaotic Retreat</h1> <h6 class="byline">By C.J. CHIVERS and <a href="http://topics.nytimes.com/top/reference/timestopics/people/k/david_d_kirkpatrick/index.html?inline=nyt-per" title="More Articles by David D. Kirkpatrick" class="meta-per">DAVID D. KIRKPATRICK</a></h6> <div class="articleBody"> <p> BREGA, Libya — Forces loyal to Col. <a href="http://topics.nytimes.com/top/reference/timestopics/people/q/muammar_el_qaddafi/index.html?inline=nyt-per" title="More articles about Muammar el-Qaddafi." class="meta-per">Muammar el-Qaddafi</a> advanced rapidly on Wednesday, seizing towns they ceded just days ago after intense allied airstrikes and hounding rebel fighters into a chaotic retreat. </p> </div> <div class="articleInline runaroundLeft"> <div class="columnGroup doubleRule"> </div></div> <div class="articleInline runaroundLeft" style="margin-top: -11px"> <h6 class="sectionHeader flushBottom">Multimedia</h6> </div> <div class="articleInline runaroundLeft firstArticleInline"> <div class="story"> <div class="wideThumb"> <a href="http://www.nytimes.com/interactive/2011/02/25/world/middleeast/map-of-how-the-protests-unfolded-in-libya.html?ref=africa"> <img src="http://graphics8.nytimes.com//images/2011/02/25/world/middleeast/libyaupdatepromo190x126.png" alt="" width="190" border="0" height="126" /> <span class="mediaOverlay interactive">Interactive Map</span> </a> </div> <h6><a href="http://www.nytimes.com/interactive/2011/02/25/world/middleeast/map-of-how-the-protests-unfolded-in-libya.html?ref=africa"> Map of the Rebellion in Libya, Day by Day</a></h6> <h6 class="byline"> </h6> </div> </div> <p> Having abandoned Bin Jawwad on Tuesday and the oil town of Ras Lanuf on Wednesday, the rebels continued their eastward retreat, fleeing before the loyalists’ shelling and missile attacks from another oil town, Brega, and falling back on the strategic city of Ajdabiya. On Wednesday afternoon, residents of Ajdabiya were seen fleeing along the road north to Benghazi, the rebel capital and stronghold that Colonel Qaddafi’s forces reached before the allied air campaign got underway nearly two weeks ago. </p><p> There were few signs of the punishing airstrikes that reversed the loyalists’ first push. But military experts said they expected the counterattack to expose Colonel Qaddafi’s forces to renewed attacks, and an American military spokesman said that coalition warplanes resumed bombing the pro-Qaddafi units on Wednesday, without specifying the timing or locations. </p><p> “The operation is continuing and will continue throughout the transition” to <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/n/north_atlantic_treaty_organization/index.html?inline=nyt-org" title="More articles about the North Atlantic Treaty Organization." class="meta-org">NATO</a> command, said Capt. Clint Gebke. There were 102 airstrikes over a 24-hour period ending at 12 a.m. Eastern time, according to the United States Africa Command. </p><p> But the airstrikes, such as they were, did little to reverse the momentum of the battle. On the approaches to Brega, hundreds of cars and small trucks heading east clogged the highway as rebel forces pulled back toward Ajdabiya, recaptured from loyalist troops only days ago. Some rebels said Colonel Qaddafi’s forces, pushing eastward from Ras Lanuf, were within 10 miles of Brega. </p><p> The retreating force seemed rudderless, a sea of vehicles and fighters armed with rudimentary weapons that have proved no match for Colonel Qaddafi’s better trained and better armed forces, that have intimidated the rebels with long-range shelling. </p><p> As rebels clustered at a gas station and small mosque between Brega and Ajdabiya, a single artillery shell or rocket exploded several hundred yards away, causing the rebels, who were chanting “God is great” and waving assault rifles, to jump into their vehicles and speed eastward. </p><p> Last week along the same highway, allied airstrikes pounded loyalist forces, enabling the rebels to undertake a lightning advance that carried them toward the Libyan leader’s hometown of Surt — a symbolic and strategically important objective on the long, coastal highway leading to Tripoli. But the advance stalled when pro-Qaddafi forces counterattacked, apparently, seemingly in response to <a href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per" title="More articles about Barack Obama." class="meta-per">President Obama</a>’s speech Monday night. </p><p> The allies began the air campaign after the <a title="Times article" href="http://www.nytimes.com/2011/03/18/world/africa/18nations.html">United Nations Security Council authorized military intervention</a> on March 16 to protect civilians — a decision that Western leaders say spared the rebels looming defeat as pro-Qaddafi forces closed on Benghazi. Military analysts said that even after days of airstrikes, loyalist forces have enough resources to defend Colonel Qaddafi’s urban strongholds, like the coastal city of Surt where the dense civilian population precludes air attacks. </p><p> Henry Boyd, an analyst at the <a title="Web site." href="http://www.iiss.org/">International Institute for Strategic Studies</a> in London, said that the Qaddafi forces consist of only two trusted militias led by two of his sons, and numbering about 10,000 men, many of them drawn from the Warfalla, Margaha and Qaddafa tribes that form the backbone of Colonel Qaddafi’s support. </p><p> Mr. Boyd said that while Colonel Qaddafi’s equipment advantage had been “significantly degraded” by the allied airstrikes, his troops still had hundreds of tanks and armored personnel carriers, as well as scores of heavy weapons like mortars, long-range artillery and missile launchers. </p><p> That compares with a rebel force variously estimated at 1,000 and armed with rifles and some antiaircraft guns and light missile launchers mounted in the beds of pickup trucks. </p><p> But as they extend their lines east along the coast toward the rebel redoubts, Colonel Qaddafi’s forces risk opening themselves to renewed allied strikes from above. Indeed, military experts said, Western planners may be hoping that loyalist forces will find themselves caught in a vice, with Colonel Qaddafi pushing them forward and the airstrikes forcing them back, until they abandon him. </p><p> In Beijing, the Chinese president, <a href="http://topics.nytimes.com/top/reference/timestopics/people/h/hu_jintao/index.html?inline=nyt-per" title="More articles about Hu Jintao." class="meta-per">Hu Jintao</a>, criticized France’s president, <a href="http://topics.nytimes.com/top/reference/timestopics/people/s/nicolas_sarkozy/index.html?inline=nyt-per" title="More articles about Nicolas Sarkozy" class="meta-per">Nicolas Sarkozy</a>, in China for a meeting of finance officials, saying the Western air campaign he championed risked killing even more civilians than the attacks it was meant to stop. </p><p> “If the military action brings disaster to innocent civilians, resulting in an even greater humanitarian crisis, then that is contrary to the original intention of the Security Council resolution,” Mr. Hu is said to have told Mr. Sarkozy, state news media reported. </p><p> A new element also entered the military campaign on Wednesday when a prominent human rights watchdog urged Colonel Qaddafi’s forces to abandon the alleged use of landmines, outlawed in many parts of the world. </p><p> In a statement from Benghazi on Wednesday, <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/h/human_rights_watch/index.html?inline=nyt-org" title="More articles about Human Rights Watch" class="meta-org">Human Rights Watch</a>, based in New York, said Colonel Qaddafi’s forces have laid both antipersonnel and antivehicle mines. </p><p> “<a href="http://topics.nytimes.com/top/news/international/countriesandterritories/libya/index.html?inline=nyt-geo" title="More news and information about Libya." class="meta-loc">Libya</a> should immediately stop using antipersonnel mines, which most of the world banned years ago,” said Peter Bouckaert, the emergencies director at Human Rights Watch. “Qaddafi’s forces should ensure that mines of every type that already have been laid are cleared as soon as possible to avoid civilian casualties.” </p><p> The statement said two dozen antivehicle mines and three dozen antipersonnel mines had been found in the coastal town of Ajdabiya, now in rebel hands, after government forces held it from March 17 to March 27. Authorities in Tripoli had no immediate comment on the statement. </p> C.J. Chivers reported from Brega, Libya, and David D. Kirkpatrick from Tripoli. Alan Cowell contributed reporting from Paris, Ed Wong from Beijing and J. David Goodman from New York. </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/pro-qaddafi-forces-push-rebels-into.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:18:00-07:00">9:18 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=4583722585830988939">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=4583722585830988939" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="7225237135858702952"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/ivory-coast-rebels-loyal-to-alassane.html">Ivory Coast rebels loyal to Alassane Ouattara advance on capital from 2 directions</a> </h3> <div class="post-body entry-content"> <h1>Official: Ivory Coast rebels loyal to Alassane Ouattara advance on capital from 2 directions</h1> <div class="module byline"> <h3>By Associated Press<span class="updated"><span class="special"></span></span></h3></div> <p>ABIDJAN, Ivory Coast — Rebel forces backing the internationally recognized winner of Ivory Coast’s disputed election advanced toward the capital from two different directions Wednesday as residents bracing for fighting took refuge in their homes.</p><div id="article-side-rail" class="module article-side-rail left padding-right margin-top-7 margin-right"> <p class="tweet flipboard-remove"> </p> <div class="network-news upperpadding-bottomborder-bottommargin-bottom flipboard-remove"> </div><div id="yui_3_3_0_27_1301500879128154" class="flipper-wrap relative mini border-top border-bottom padding-top padding-bottom photo-wrapper"> <div id="yui_3_3_0_27_1301500879128178" style="display: block;" class="flipper-main relative"> <div class="flipper-inner relative"> </div> <img style="opacity: 0; position: absolute;" /><img style="opacity: 0; position: absolute;" /><img style="opacity: 0; position: absolute;" /></div> <div class="flipper"> <ul class="inline-list thumbs"><li><a id="yui_3_3_0_27_1301500879128183" href="http://www.washingtonpost.com/rf/image_296w/2010-2019/Wires/Online/2011-03-30/AP/Images/Ivory%20Coast%20.JPEG-033eb.jpg"><img class="on" alt="In this photo taken on Tuesday, March 29, 2010, people of different nationalities gather at a station as they leave Abidjan, Ivory Coast. Rebel forces backing Ivory Coast’s internationally recognized president were advancing toward the capital Wednesday after seizing two more towns in the center of the country. (AP Photo/Emanuel Ekra) ( The Associated Press )" src="http://www.washingtonpost.com/rf/image_90x60/2010-2019/Wires/Online/2011-03-30/AP/Images/Ivory%20Coast%20.JPEG-033eb.jpg" /></a></li><li><a id="yui_3_3_0_27_1301500879128194" href="http://www.washingtonpost.com/rf/image_296w/2010-2019/Wires/Online/2011-03-30/AP/Images/Ivory%20Coast%20.JPEG-0b68f.jpg"><img class="" alt="In this photo taken on Tuesday, March 29, 2010, people walk with their belongings towards a railway station as they leave Abidjan, Ivory Coast. Rebel forces backing Ivory Coast’s internationally recognized president were advancing toward the capital Wednesday after seizing two more towns in the center of the country. (AP Photo/Emanuel Ekra) ( The Associated Press )" src="http://www.washingtonpost.com/rf/image_90x60/2010-2019/Wires/Online/2011-03-30/AP/Images/Ivory%20Coast%20.JPEG-0b68f.jpg" /></a></li></ul> <div class="flipper-controls"> <ul class="inline-list"><li><br /></li><li><br /></li></ul> </div> </div> <div id="yui_3_3_0_27_1301500879128175" class="flipper-caption"> <p><span class="photo-credit"> / The Associated Press - </span> In this photo taken on Tuesday, March 29, 2010, people walk with their belongings towards a railway station as they leave Abidjan, Ivory Coast. Rebel forces backing Ivory Coast’s internationally recognized president were advancing toward the capital Wednesday after seizing two more towns in the center of the country. (AP Photo/Emanuel Ekra) </p></div> </div> <div class="module ads"> </div> </div> <p>Two witnesses separately confirmed seeing security forces fleeing the capital of Yamoussoukro, which resembled a ghost town as news of the rebels’ advance spread.</p><p>If the fighters take the capital, it would be a largely symbolic trophy as the real seat of power is in the biggest city, Abidjan. But if Yamoussoukro falls, it would open up the main highway to the commercial capital, only 143 miles (230 kilometers) away.</p><p>Supporters of internationally recognized leader Alassane Ouattara hope that would prompt incumbent Laurent Gbagbo to finally accept an offer of exile four months after the disputed presidential election unleashed political chaos in this West African nation. At least 462 people have been killed and up to 1 million have fled their homes since the vote.</p><p> “Blitzkrieg seems to be the strategy, rather than fighting to clear every inch and hamlet,” said Christian Bock, senior security analyst at Avascent International.</p><p> “It will take an enormous amount of restraint to hold these forces back from moving onto Abidjan,” he said of the rebels’ momentum.</p><p>Residents in Yamoussoukro braced for conflict, shutting down shops throughout downtown.</p><p> “Since last night we haven’t seen any FDS (pro-Gbagbo security forces) in town,” said one resident, who requested anonymity for fear of reprisals.</p><p>Capt. Leon Alla, a defense spokesman for Ouattara, said pro-Ouattara forces already had taken control of two towns just west of the capital — Bouafle and Sinfra. Another front, coming down from the north, was also advancing toward the capital and had taken the town of Tiebissou Wednesday morning.</p><p>A priest in Tiebissou, who spoke on condition of anonymity for fear of reprisals, said Gbagbo’s forces tried to fight off the rebels for 3½ hours before fleeing.</p><div id="slug_inline_bb" style="display: block;" class="left margin-right margin-bottom padding-top slug"> </div><p>Another priest said he saw the bodies of three dead soldiers in the town, which is 21 miles (35 kilometers) from the capital. Many wounded fighters were being taken to a nearby hospital. People were looting public buildings in Tiebissou, including the police station, witnesses said.</p><p>A third front from the east of the country was advancing south, with combat taking place in Akoupe on Wednesday. The rebels secured Bondoukou and Abengourou along the Ghana border on Tuesday, and seemed poised to strike directly at Gbagbo on this front as Akoupe is only 70 miles (113 kilometers) from the country’s biggest city of Abidjan.</p><p>As the rebels advanced from three directions, a Gbagbo spokesman called for a cease-fire and mediation. Spokesman Don Mello told Radio France Internationale the army has adopted a strategy of tactical withdrawal. He warned, however, that Gbagbo’s forces could use their “legitimate right of defense.”</p><p>A statement read on state television Tuesday night declared that the thousands of youth who enlisted in Gbagbo’s army last week would be called up for service starting Wednesday morning.</p><p>Asked about the cease-fire offer, a Ouattara ally said it was necessary to resort to legitimate force.</p><p> “President Alassane Ouattara was patient and gave Mr. Laurent Gbagbo every possibility to leave power peacefully. He refused every offer made to him,” Ivory Coast’s ambassador to France, Ali Coulibaly, said on French radio France Inter Wednesday.</p><p>A statement put out by Ouattara’s RHDP party late Tuesday said “all peaceful avenues to convince Laurent Gbagbo of his defeat have been exhausted.”</p><p>The Vatican announced that it was sending a representative to Ivory Coast Wednesday to encourage a peaceful reconciliation to the conflict.</p><p>Ouattara, who is from northern Ivory Coast, had long tried to distance himself from the rebels based there who fought in a brief civil war almost a decade ago that left the country split in two. However, rebels have been stepping up their offensive to install him in power in recent weeks.</p><p>Many believe a bloody final battle for the presidency will take place in the commercial capital of Abidjan, which is split into pro-Gbagbo and pro-Ouattara neighborhoods.</p><p>Fighting in these areas has been almost daily, with mortars and machine guns being used against civilians. In the past several weeks, fighters loyal to Ouattara have taken effective control of several northern districts in the city.</p><p>At least one body lay bloated in the sun in the downtown Plateau business district Wednesday morning, witnesses said. Armed youth who guard nightly barricades around town have started to keep them running during the day.</p><p> “These boys are armed. They aren’t the police. They stop everyone and demand money,” said a taxi driver who asked not to be identified for fear of reprisals. “This morning I saw them pull a man out of his car and beat him with the butts of their guns.”</p><p>___</p><p>Associated Press writers Michelle Faul in Johannesburg; Rukmini Callimachi in Bamako, Mali; and Greg Keller in Paris contributed to this report.</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/ivory-coast-rebels-loyal-to-alassane.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T09:01:00-07:00">9:01 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=7225237135858702952">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=7225237135858702952" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <div class="post-outer"> <div class="post hentry"> <a name="3190260971386513494"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/syrias-assad-offers-nothing.html">Syria’s Assad offers nothing</a> </h3> <div class="post-body entry-content"> <h1>Syria’s Assad offers nothing, blames protests on ‘big conspiracy’</h1> <div class="relative primary-slot border-top padding-top img-border photo-wrapper photo-wrapper"> <img src="http://www.washingtonpost.com/rf/image_404h/2010-2019/WashingtonPost/2011/03/30/Foreign/Images/2011-03-30T124721Z_01_LON104_RTRIDSP_3_SYRIA-ASSAD.jpg" alt="" /> <div class="captionWrap caption"> <p><span class="photo-credit credit">REUTERS TV/ REUTERS - </span> Syrian President Bashar Al-Assad addresses the parliament in Damascus. Al-Assad said on Wednesday that Syria is the target of a "conspiracy" to sow sectarian strife. </p></div> </div> <div class="module byline"> <h3>By <a href="http://projects.washingtonpost.com/staff/articles/Edward+J.+Cody/">Edward Cody</a><span class="updated"><span class="special"></span></span></h3></div> <p> CAIRO — Syrian President Bashar al-Assad declared Wednesday that the wave of angry protests unfurling across his country resulted from a “big conspiracy” by unidentified enemies seeking to destabilize Syria and push it into sectarian strife.<br /></p><div id="article-side-rail" class="module article-side-rail left padding-right margin-top-7 margin-right"><div class="article-video border-top border-bottom padding-top padding-bottom margin-bottom photo-wrapper"><div class="relative gallery-container"> <a href="http://www.washingtonpost.com/world/egypt--and-tunisia-inspired-protests-spread-through-middle-east-north-africa/2011/03/01/ABZ3jYKB_gallery.html"><img class="gallery-pic" src="http://www.washingtonpost.com/rf/image_296w/2010-2019/WashingtonPost/2011/03/18/Web-Resampled/2011-03-18/2011-03-18T123309Z_01_SJS01_RTRIDSP_3_LIBYA--296x193.jpg" alt="Egypt- and Tunisia-inspired protests spread through Middle East, North Africa: Motivated by recent shows of political strength by neighbors in Egypt, demonstrators in the Middle East and North Africa are taking to the streets of many cities to rally for change." /></a> </div> <p class="caption"><strong><strong>Gallery: </strong></strong> Egypt- and Tunisia-inspired protests spread through Middle East, North Africa: Motivated by recent shows of political strength by neighbors in Egypt, demonstrators in the Middle East and North Africa are taking to the streets of many cities to rally for change. </p> </div> <div class="article-video border-bottom padding-top padding-bottom margin-bottom photo-wrapper"> <p class="heading heading3">Graphic</p> <div class="relative "> <a href="http://www.washingtonpost.com/world/middle-east-and-north-africa-in-turmoil/2011/03/14/AF38KGcB_graphic.html"><img src="http://www.washingtonpost.com/rf/image_296w/2010-2019/WashingtonPost/2011/03/07/Foreign/Graphics/middle-east-protests-296.jpg" alt="Middle East and North Africa in turmoil" /></a> </div> <p class="caption"><strong><strong>Graphic: </strong></strong> Middle East and North Africa in turmoil </p> </div> <div class="module ads"> </div> </div> <p>Assad, in a nationally televised speech, did not offer any of the concessions hoped for by protesters, such as abolishing a 48-year-old emergency law that suffocates civil liberties and allows the political system to be monopolized by the ruling Baath Party. </p><p>Instead, he portrayed himself as a modernizer who has long been engaged in economic and political reforms — and who eventually will get around to altering the hated emergency rules as well.</p><p>“Some people will come up this afternoon and say, ‘This is not enough,’ ” Assad said, chuckling into his microphone as he anticipated what satellite television commentators would opine. “But I want to tell them, we are not going to destroy our nation.”</p><p>The long-awaited speech, coming after <a href="http://www.washingtonpost.com/world/protesters-shot-as-demonstrations-expand-across-syria/2011/03/25/AFTnewWB_story.html">12 days of anti-government riots</a>, was a major disappointment for the mostly youthful demonstrators who have added Syria to a <a href="http://www.washingtonpost.com/wp-srv/special/world/middle-east-protests/">growing list of Arab countries</a> facing unprecedented demands for democracy, civil rights and clean government. </p><p>“What he said today, it will not stop the movement,” said Haitham al-Maleh, a veteran human rights activist contacted by telephone. “There is a tsunami going across the Arab world, and it will cover Syria, too.”</p><p>Malath Aumran, an exiled cyber-activist, said Assad’s response fell far short of the protesters’ demands, which included an end to the emergency laws and secret police tactics that long have instilled fear among Syrians. “I’m really disappointed by what I heard,” Aumran said. “He is totally ignoring our demands in the streets, like any other arrogant dictator.”</p><p>The Syrian protests have resulted in about 60 deaths, according to human rights groups, and raised the most serious threat to the 45-year-old Assad since he took over from his deceased father 11 years ago. He heads a one-party government based on Arab nationalism, confrontation with Israel and invasive controls by a half-dozen furtive security agencies.</p><p>Assad’s speech, at the ornate parliament building in Damascus, was frequently interrupted by legislators who stood to shout their support. One female member, wearing a scarf over her hair, rose with a coy smile to recite a short poem to Assad and the glory of Syria. Outside, pro-government demonstrators waved their fists for television cameras.</p><div id="slug_inline_bb" style="display: block;" class="left margin-right margin-bottom padding-top slug"> </div><p>“With our souls, with our blood, we are supporting you, oh, Assad,” they cried in unison.</p><p>Assad, acknowledging the tributes, said he took heart from the noisy expressions of support in pro-government demonstrations that took place Tuesday in Damascus, the capital, and several other cities. But people should understand, he added, that it is the president himself who with his soul and his blood supports the Syrian nation.</p><p>The internationally televised proceedings, which lasted a little more than an hour, thus gave the impression of a show of support for the Syrian leadership at a time of crisis rather than the moment of serious concessions that many people — Syrian and others — had been led to expect.</p><p>Assad said reforms announced last week — wage increases and a promise that the emergency laws and political party legislation would be altered at an unspecified date — were already significant advances but were poorly communicated by his government, wrongly giving an impression that things were standing still. </p><p>Actually, he said, the reforms have already been drafted and would have been passed by parliament long ago, except that the government was too busy dealing with economic and foreign policy problems.</p><p>But Assad’s overall explanation for the violent protests was that the unnamed plotters were misleading the people. The demands for reform were legitimate, he said, but the protests were the work of enemies trying to foment discord between Syria’s Sunni Muslim majority and the Shiite-connected Alawite minority from which the Assad family springs and on which it has based four decades of iron-fisted rule.</p><p>This was particularly true, he said, in Daraa, a dusty border crossing on the road between Damascus and Amman. Known historically as the site where Lawrence of Arabia said he was sexually assaulted by a Turkish army officer, Daraa gained a new fame last week when <a href="http://www.washingtonpost.com/blogs/blogpost/post/syria-protests-erupt-dozens-killed-according-to-reports/2011/03/24/ABnLKKPB_blog.html">security forces opened fire on protesters </a>in a violent encounter transmitted around the world by cellphone cameras and the Internet.</p><p>“The people of Daraa are the people of patriotism and the people of pan-Arab nationalism,” Assad declared, adding that they would never have risen up had they not been tricked.</p><p>He said the government had given orders to security forces not to open fire in Daraa. But the confrontation escalated, Assad said, because of “chaos in the streets” fomented by the plotters seeking to bring down Syria and sabotage its role as a leader in the Arab confrontation with Israel.</p><p> “We are for supporting people’s demands, but we cannot support chaos,” the Syrian leader added. “We are all reformists. Some demands of the people have not been met. But people were duped into taking to the streets.”</p> </div> <div class="post-footer"> <div class="post-footer-line post-footer-line-1"><span class="post-author vcard"> Posted by <span class="fn">Ricardo Valenzuela</span> </span> <span class="post-timestamp"> at <a class="timestamp-link" href="http://intermexfreemarket.blogspot.com/2011/03/syrias-assad-offers-nothing.html" rel="bookmark" title="permanent link"><abbr class="published" title="2011-03-30T08:59:00-07:00">8:59 AM</abbr></a> </span> <span class="post-comment-link"> <a class="comment-link" href="https://www.blogger.com/comment.g?blogID=4981636788804851613&postID=3190260971386513494">0 comments</a> </span> <span class="post-icons"> <span class="item-control blog-admin pid-1082159742"> <a href="post-edit.g?blogID=4981636788804851613&postID=3190260971386513494" title="Edit Post"> <img alt="" class="icon-action" src="http://img2.blogblog.com/img/icon18_edit_allbkg.gif" width="18" height="18" /> </a> </span> </span> <span class="post-labels"> </span> </div> </div> </div> </div> <a name="9100601871436828845"></a> <h3 class="post-title entry-title"> <a href="http://intermexfreemarket.blogspot.com/2011/03/house-republican-leaders-turn-to.html">House Republican leaders turn to moderate Democrats</a> </h3> <h1>House Republican leaders turn to moderate Democrats for budget deal</h1> <div class="module byline"> <h3>By Paul Kane<span class="updated"><span class="special"></span></span></h3></div> <p>Having difficulty finding consensus within their own ranks, House Republican leaders have begun courting moderate Democrats on several key fiscal issues, including a deal to avoid a government shutdown at the end of next week.<br /></p><div id="article-side-rail" class="module article-side-rail left padding-right margin-top-7 margin-right"><div class="article-video border-top border-bottom padding-top padding-bottom margin-bottom photo-wrapper"><div class="relative "> <a href="http://www.washingtonpost.com/politics/2011/03/29/AFEVSkyB_graphic.html"><img src="http://www.washingtonpost.com/rf/image_296w/2010-2019/WashingtonPost/2011/03/30/Web-Resampled/2011-03-29/296budgetPROMO--296x195.jpg" alt="" /></a> </div> <p class="caption"><strong><strong>Graphic: </strong></strong> </p> </div> <div class="article-video border-bottom padding-top padding-bottom margin-bottom flipboard-remove"> <div class="module e2 e2-1 border-top padding-top padding-bottom flipboard-remove"> <h3 class="question">For Federal Workers</h3> <div class="curved padding-1 quote"> <div class="curved-no-border bkgd-lite-grey-gradient-reverse relative zoom"> <h3 class="relative zoom">"What's life been like on the ground for federal workers these days? How are your agencies functioning day to day with uncertainty?"</h3> </div> </div> <div class="padding-bottom-20 border-bottom"> <p class="padding-top-15 padding-left-15"><strong>The Federal Eye Blog</strong></p></div></div></div><div class="module ads"> </div> </div> <p>The basic outline would involve more than $30 billion in cuts for the 2011 spending package, well short of the $61 billion initially demanded by freshman Republicans and other conservatives, according to senior aides in both parties. Such a deal probably would be acceptable to Senate leaders and President Obama as long as the House didn’t impose funding restrictions on certain social and regulatory programs supported by Democrats, Senate and administration aides said.</p><p>The fact that Republican leaders have initiated talks with some Democrats shows some division within House Republicans just two months after taking over the House. Speaker <a href="http://www.whorunsgov.com/Profiles/John_A._Boehner">John A. Boehner</a>’s leadership team recognizes that legislation that meets with approval from his most conservative flank — what Democrats call the “perfectionist caucus” — would be dead on arrival in the Democratic-controlled Senate. </p><p>At the same time, conservatives have become increasingly unhappy with recent spending proposals, saying they wouldn’t cut deep enough. Fifty-four of them voted against a stopgap budget measure two weeks ago that passed with significant Democratic support. After that vote House Majority Whip <a href="http://www.whorunsgov.com/Profiles/Kevin_McCarthy">Kevin McCarthy </a>(R-Calif.) met with a conservative bloc of Democrats to discuss potential common ground on the budget and other pressing fiscal issues. </p><p>Rep. <a href="http://www.whorunsgov.com/Profiles/Heath_Shuler">Heath Shuler </a>(N.C.), a centrist Democratic leader, said McCarthy did not specifically ask for their votes on any legislation, saying that the conversation was taking place at “10,000 feet” and that the Republican was “feeling us out.”</p><p>The Democrats left the meeting knowing that they could provide the decisive votes, Shuler said, a role they are willing to play. “We’re looking for ways to help,” he said. “We’re for real. We’re not here for the politics.”</p><p>Although a deal with Democrats could avoid a government shutdown and point the way for future compromises, it also could come at a steep price for Republican leaders who risk the ire of some conservatives, including some attending a tea party rally Thursday on Capitol Hill demanding the deepest spending cuts possible. </p><p>What many leaders in Washington may consider a sensible compromise to ensure that the government keeps running is just the sort of dealmaking that many Republican voters view as unprincipled capitulation. Some tea party groups have promised to target any Republicans they think are not conservative enough on fiscal issues.</p><div id="slug_inline_bb" style="display: block;" class="left margin-right margin-bottom padding-top slug"> </div><p>However, if such a bipartisan coalition emerged, the House could have a path for not only approving a spending plan for the remaining six months of the fiscal year, but for a vote later this spring on whether to increase the federal debt limit. That normally routine action is in peril this year because some Republicans have said they are unwilling to raise the ceiling without significant concessions from Democrats on spending.</p><p><strong>Tug of war</strong></p><p>Nonetheless, the two sides continued sparring on Tuesday over the parameters of a budget deal. Republicans blamed Senate Democrats for not passing a bill to be matched against the $61 billion in cuts approved in the House. Democrats again rejected the House legislation as a starting point for negotiations, noting that it was turned down in the Senate and arguing that they should build up from $10 billion in savings that were already agreed upon.</p><p>The rhetoric was heated enough that Boehner and Senate Majority Leader <a href="http://www.whorunsgov.com/Profiles/Harry_M._Reid">Harry M. Reid </a>(D-Nev.) issued the same threat, refusing to “negotiate with ourselves” while in fact neither side would negotiate at all. No new face-to-face talks have been scheduled, and the two sides have until April 8 to approve a spending plan or face a government shutdown.</p><p>On top of the $10 billion in savings, Democrats are willing to offer an additional $20 billion in spending cuts. But they said they will not do so until they are assured that it would get them close to an agreement.</p><p>House Republicans want to use their bill as a starting point because it also includes provisions that limit funding for some social and regulatory issues.</p><p>“It’s just not cutting spending. There are a number of limitations that passed on the floor of the House” that must be addressed, Boehner said.</p><p>Those provisions have created a large hurdle for securing a final deal. Republican aides have said the provisions and the overall cost cutting are linked: The fewer that are attached to the bill, the bigger the cuts Republicans will seek.</p><p>Even so, if the provisions remain and spending cuts are on the lower side, Boehner could lose support from freshman lawmakers in his party. But without the provisions, some socially conservative longtime lawmakers may balk at the deal.</p><p><strong>The Blue Dogs’ role</strong></p><p>With 241 Republicans, GOP leaders can afford to lose 23 GOP votes before needing Democratic help. That’s why McCarthy reached out to leaders of the Blue Dog Coalition, a group of centrist Democrats — such as Shuler — from conservative-leaning districts.</p><p>The blueprint for this potential coalition was a March 15 vote to extend government funding for three weeks. The vote easily passed with 271 votes, but only because 186 Republicans were joined by 85 Democrats.</p><p>House Minority Whip <a href="http://www.whorunsgov.com/Profiles/Steny_H._Hoyer">Steny H. Hoyer </a>(D-Md.) said it is too soon to tell whether that vote “was a pattern or an anomaly.” Viewed as an ally of the Blue Dogs and other moderate Democrats, Hoyer read quotes to reporters from some of the most conservative House Republicans suggesting that a government shutdown would be preferable to a compromise.</p><p>He dismissed any chance of Republicans reaching a final deal that did not include Democratic support. “John Boehner can’t get something done without us,” Hoyer said Tuesday.</p><p>As tenuous as the potential coalition is, Shuler said his group of Democrats hopes that a bipartisan deal can be reached on this year’s spending bill so that it can serve as a framework for larger issues, including next year’s budget and other reforms.</p>“The real debate has to begin,” he said. “I think we can be a bridge-builder between the two partiesAnonymoushttp://www.blogger.com/profile/05395381545218020265noreply@blogger.com0