Barrel Strength

This isn’t surprising given the previous behaviour of civil servants in Greece.

Aug. 12 (Bloomberg) — More than 11,000 Greek state-school teachers have asked to retire before changes are made to the pension system, raising the threat of a shortage of educators for the new school year.

A total of 11,466 elementary and high-school instructors applied for retirement, the Athens-based Education and Religious Affairs Ministry said in a statement yesterday. That compares with 4,355 at the same time last year.

The US is bankrupt. Canada is not. Therein lies a remarkable possibility for this country in the next twenty years.

Two books should be part of the reading of Canadians of all political persuasions, especially conservatives. The first was Brian Lee Crowley’s “Fearful Symmetry”, which explained what went wrong in Canada under Trudeau and successive governments until Mulroney introduced North American free trade and then Chretien (yes, Chretien) fixed our public finances. The second is “The Canadian Century”, by the same Brian Lee Crowley, Jason Clemens, and Niels Veldhuis. Both are examinations of the public finances of Canada, and to read these books is to understand, at the highest level, what has gone right and wrong with our society. Crowley never ceases to set out the moral dimension of excessive public expenditure: the electorate drunk on government services, the cost of which is deferred to future generations; the creation of pseudo-jobs; the electoral blocs of state dependents which prevent the correction of the very problem that their existence creates, and so forth.

Crowley and his co-authors make it abundantly clear that:

1) Laurier, not MacDonald, should be attributed the credit for a low-tax, free-trade policy – the classic hallmarks of what we now call “conservatism”, and

2) Bill Clinton waged a successful campaign to get the US fiscal house in order, and that both Bush the elder and the younger, to say nothing of Obama, have run the US into massive debt. In other words, Bush the younger squandered the legacy that Clinton handed to him. (Canadian Century, at pp 116-117) Clinton: bastion of fiscal probity. We conservatives need to absorb that.

Now peace upon all those partizans of conservative government who think that mentioning any merit in any liberal, no matter how long dead, is akin to “deserting the cause, that gave us our freedom, religion and laws.” The points I am making here are twofold.

First, these two books are a rapid and painless education in the essential facts of politics: how we finance government is as much a moral as it is an immediately monetary question, and it gives insight behind the squabbles in Parliament, which are of little account in the history of nations. No wonder the people who really  understand money are not fussed by whether the Liberals take over; they are only concerned with how public finances will affect the value of their investments. Conservatives do not have a better penchant for fixing them than Liberals, in both Canada and the United States, according to these writers.

Second, the Canadian Century establishes the current Conservative government in Canada is not doing a great job in sustaining the gains that Chretien and Martin made in fixing our public finances. Why conservatives should care about this issue is explained in The Canadian Century. It is a must read for the politically literate.

The Obama phenomenon will be recalled as one of the greatest bait-and-switch in the history of US presidential campaigns and this is already leading to some somber reassessment as noted in this article.

The magic of 2008 can’t be recreated, and good riddance to it. Slowly, the nation has recovered its poise. There is a widespread sense of unstated embarrassment that a political majority, if only for a moment, fell for the promise of an untested redeemer—a belief alien to the temperament of this so practical and sober a nation.

On the policy front it continues to be more of the same.

Bill Clinton is on record stating that he got bad advice from Rubin and his handpicked successor, Lawrence Summers, on derivatives regulation: “On derivatives, yeah, I think they were wrong and I think I was wrong to take it,” Clinton told ABC News last April 10…

Rubin and Summers were responsible for forcing Brooksley Born out of the Clinton administration because as chair of the Commodity Futures Trading Commission she had the temerity to suggest regulating the mortgage-backed securities that eventually proved to be so toxic. Instead, Rubin and Summers pushed the Commodity Futures Modernization Act, which Clinton signed into law in his last month in office, categorically exempting those suspect derivatives from any government regulation.

By then, Rubin had moved on to a $15-million-a-year job at Citigroup, which became a prime exploiter of the subprime housing market. As a result of its massive involvement with toxic securities, Citigroup, with Rubin in a leading role until early 2009, had to be bailed out by the federal government with a $45 billion direct investment and a guaranteed Fed protection for $306 billion in potentially toxic assets…

There is much more, and I haven’t even touched on Rubin’s shameful role in Enron’s shenanigans. Enough said, though, to question not only Zakaria’s journalism but, far more important, Barack Obama’s leadership in first turning to Rubin as a key campaign adviser and then putting his disciples in charge of the U.S. economy.

Daniel Suarez’ “Daemon” marks a cunning sci-fi police procedural which turns into, simultaneously, a thrilling page-turner and a profound critique of capitalist society in its current computer-dependent state. What if I could get across an important techno-political treatise in the guise of a thriller? What if I could get across a chapter in Philip Bobbitt’s The Shield of Achilles, or Machiavelli’s The Prince, both of which are brilliant essays on of western warfare and political evolution, as a high-tech police procedural? What if Hobbes wrote Leviathan not as learned discourse on the nature of the state in Renaissance Europe, but as a high-tech science fiction thriller?

Several important writers have tried to tell us that the modern state is finished. But what do we mean by the word “state”? Bobbitt told us that the nation-state was passing into the market-state, which is where we are now. Basically this transition from nation-state to market-state signifies the withdrawal of the state from attempting to equalize outcomes, to one which tries to maximize your opportunities. Bobitt writes brilliantly. I recommend him. Neal Stephenson’s Diamond Age also dealt with the nature of the world where nanotechnology has destroyed the basis of the nation-state, and I recommend him, too.

But Suarez is at an entirely more effective level of discourse because you are going to find him in the front of the airport book store before you get on your plane. You are going to be absorbed by the detective story that constitutes the beginning of the novel, and you are going to be increasingly impressed by how good it gets: how much more complex the implications, and how very cleverly he conveys his ideas about the obsolescence of our current governmental-economic structures. Why are they obsolescent? Because the uniformity of the machine-level at which all data is stored, configured, and manipulated has left us essentially as vulnerable as a wheat monoculture to rust, or a potato monoculture to blight.

The blight in question is the “daemon”. The genius inventor of multi-player immersive computer games, Mathew Sobol, has died, and his death causes a number of events to spring forth.  Essentially the daemon, a sophisticated program, takes over the IT departments of many large corporations as a parasite, and threatens the total evaporation of their records unless they comply with Mathew Sobol’s requirements. Sobol speaks through videos recorded before his death. He (in the form of computer-generated videos) asserts that he is the first man fully to realize the implications of computer insecurity and to exploit them in a comprehensive way. His daemon has become a parasite upon computer-dependent civilization, just as it was designed to be.

Don’t be put off by my praise: this is a fascinating book. Daniel Suarez has written something worth your attention.

How many big stupid ideas have marched through our institutions in our lifetimes, wrecking as they go?

Let us define what we mean. A Big Stupid Idea is any idea which, though it may once have been true, or is partly true, is pushed to such an extreme that it lasts beynd its time, or worse, is pushed to the exclusion of its necessary qualifications. a truth can become an untruth when it is claimed to be the Whole Truth.

I invite anyone to add their own Big Stupid Ideas to the list.

And pardon the offence to my market-oriented friends, but the latest big stupid idea is:

1) The market is the solution.

Uh, no. The market is a restricted sand-box whose rules and dimensions are determined by non-market institutions such as courts and parliaments, the rule of law, and the guardian forces of the state which protect the sandbox, and the tolerance of the public for its outcomes.

When those who play in this sandbox load the ordinary joes of this life, including you and me, with their failures, but privatize the winnings, society reacts negatively. The social contract between those who play in the sandbox and the rest of us is a real fact, which the Ayn Randists ignore at their peril.

2) Genetics has no (legitimate) role to play in the determination of social outcomes.

I can never figure out whether this is an “is” argument or an “ought” argument, but in either case it is wrong. The abundant new evidence accruing daily about the role of the genetic in every social outcome (viz. The Bell Curve, Before the Dawn, The Ten Thousand Year Explosion) and in the fundamental composition and success rate of various humans is so overwhelming that only an ideologist could be blind to it. As to the “ought” portion of the argument, I rely on the immortal words of Eric Voegelin:

“All men are equal, and all men are unequal. And the ways in which they are equal are as interesting and important as the ways in which they are unequal. Any society which forgets the truth of either fo these two propositions will end in violence.”

Thus, recent findings include the facts that: race is not a social construction, but a real biological fact; intelligence is distributed differently among ethnic and and racial groups; evolution has not stopped, but is in fact accelerating; a great deal of the different outcomes among nations and peoples is not therefore the result only of unfair exploitation, but of genetic factors. How to make outcomes fair in such as situation is not a trivial exercize in forced redistribution.

From the failure to provide for the genetic factors of life proceeds many further errors and false ideas.

On a smaller scale, here are few more:

3) Isreal is an apartheid state: the Palestinians are the blacks; the Israelis, the Afrikaners.

From this narrative, everything flows. ThePalestinians are the virtuous underdog, the Israelis the white supremacist masters. The role of Islam in making this inter-ethnic and religious issue intractable is ignored. Apparently intelligent people believe this. It has the effect of letting them know they are on the right side, which is its main function. No further thought required.

4) Islam

God has commanded you to obey God’s ravings, accurately recorded verbatim in the Koran, to tyrannize and subdue every other person in the universe, and the female sex especially. Jews are to be exterminated on the Day of Judgment. And so forth.

Need I say more?

5) Man is causing irreversible damage to the environment through burning fossil fuels, and only a concerted, coordinated global campaign to reduce carbon emissions can save the planet.

This is the latest emanation of leftist control fantasies, after the failure of Marxism. It is just the zombie of state socialism with an another compelling pseudo-scientific justification, rising from the grave of Communism.

The fact that we can and should take better care of resources (fish, forests, air, soils) than we do has nothing to do with the spiritual impulse to control every living thing which lies at the core of ecologism. Making the production of carbon dioxide as sin is about as sensible as making lust a sin. If it worked for the Christians, then why not for the Greens?

What are your candidates for Big Stupid Ideas? At best they should not be restricted to Canada or North America. They should be working through the culture more or less around the world, or the english-speaking portion of it that we are familiar with.

Given the state of the Euro, it is instructive to recall this.

The world’s richest model has reportedly reacted in her own way to the sliding value of the US dollar – by refusing to be paid in the currency.

Gisele Bündchen is said to be keen to avoid the US currency because of uncertainty over its strength.

The Brazilian, thought to have earned about $30m in the year to June, prefers to be paid in euros, her sister and manager told the Bloomberg news agency….

“Contracts starting now are more attractive in euros because we don’t know what will happen to the dollar,” Patricia Bündchen told Bloomberg in September.

Yes, “we don’t know what will happen to the dollar”, but it is unlikely that it will go bust before the Euro.

This would be humorous if it wasn’t so serious.

Liam Byrne, the former Chief Secretary to the Treasury, last week wrote a letter for his successor – the Liberal Democrat David Laws – stating: “I’m afraid to tell you there’s no money left.”

Speaking at a press conference yesterday, Mr Laws said: “When I arrived at my desk on the very first day as Chief Secretary, I found a letter from the previous chief secretary to give me some advice, I assumed, on how I conduct myself over the months ahead.

“Unfortunately, when I opened it, it was a one-sentence letter which simply said ’Dear Chief Secretary, I’m afraid to tell you there’s no money left’, which was honest but slightly less helpful advice than I had been expecting.”

The letter – which Mr Byrne claims was meant to be humorous – represents a sign of the stark challenges facing the new Coalition Government to reduce Britain’s record £163 billion budget deficit.

Central planning at its finest!

I was interviewed on Al Jazeera TV yesterday, for a report titled “China’s Empty City.”  It centered on Ordos, Inner Mongolia, where a whole new city, constructed along central planning lines by the Chinese government, has been completed but stands entirely empty.  The reporters at Al Jazeera originally approached me because of my recent blog post on “China’s Quality of GDP.”  It’s one thing to write about massive state-sponsored construction projects that achieve GDP growth targets without necessarily creating any real value, but a couple of TV images can be worth a thousand words in illustrating the point.

You can view the report by clicking here.

It’s worth noting, as the report says, that despite the fact nobody lives there, virtually all of Ordos’ new apartment complexes are sold out — precisely what I was talking about in “China’s Real Estate Riddle.”

This will be one department that might prove difficult to cut for the Greece government, especially if they can’t find the employees.

He also discusses an administrative office called Kopais, named after the lake of the same name near Thebes, which was established in 1957. The purpose of the office was to prepare for the draining of the lake so that roads could then be built in the lakebed.

In that same year — which is now over half a century ago — the lake disappeared forever. But there are still 30 employees working at Kopais today. When employees retire or are let go, their positions are filled with new employees, who are paid monthly salaries of up to €2,500 ($3,175). They supposedly work on drainage issues, but no one knows exactly what those issues are or who benefits from their work.

There was a time not too long ago when “sane, smart people like Sullivan” were fond of opining as follows.

For the last 21 years, we have been following a similar social experiment between different styles of capitalism: more regulated and less regulated. Several western countries including Ireland and Iceland, as well as some of the Baltic countries, got rid of many regulations, particularly regulations regarding finance. For a while, their economies were shining stars, but now they are a mess. The US and Britain, the least regulated large economies, are now suffering greatly as well from the financial bubble. While Old Europe (to steal a phrase from Don Rumsfeld) is not nearly as affected by the recent debacle.

Are we beginning to learn another one of history’s lessons?

How is that European experiment today?  Let us see the headlines in the last 24-hours.

Romanian retirees protest against pension cuts

Panic Buying Of Physical Gold In Europe Threatens Depletion Of Austrian Mint

Europe’s fiscal Fascism brings British withdrawal ever closer

Nicolas Sarkozy threatened to pull France out of the euro

Euro Breaks 14-Month Low Set Before Bailout Plan Was Unveiled

German Cabinet considers funds for Greek bailout; ECB suspends its ratings on Greek debt

Spain PM gets serious on debt… finally

Europe enters era of belt-tightening

Sully, how about going back to investigating the Palin pregnancy?

Update

Merkel says situation in Europe is serious

Volcker Sees Euro ‘Disintegration’ Risk From Greece

What do women CEO and women porn stars have in common?  They are both paid more than their male counterparts.  A report in Bloomberg notes the following.

Sixteen women heading companies in the Standard & Poor’s 500 Index averaged earnings of $14.2 million in their latest fiscal years, 43 percent more than the male average, according to data compiled by Bloomberg News from proxy filings. The women who were also CEOs in 2008 got a 19 percent raise in 2009 — while the men took a 5 percent cut.

“When you see numbers like this, one can truly say that the glass ceiling in corporate America has been shattered,” said Frank Glassner, CEO of San Francisco-based Veritas Executive Compensation Consultants LLC. “I don’t remember seeing women ever getting paid more than men.”

As for female porn stars, the facts are as follows.

Most male performers in straight porn are paid less than their female costars. Ron Jeremy has commented on the pay scale of women and men of the sex film industry: “The average guy gets $300 to $400 a scene, or $100 to $200 if he’s new. A woman makes $100,000 to $250,000 at the end of the year.  “Girls can easily make 100K-250K per year, plus stuff on the side like strip shows and appearances. The average guy makes $40,000 a year.”

A guy who has never run a business in his life is now giving financial advice.  What is this world coming to?

President Obama had just flown into Hampton, Va., Sunday morning to deliver a commencement address. But before he donned his silky academic robes, he was on the phone with Chancellor Angela Merkel of Germany, offering urgent advice — and some not so subtle prodding — that Europe needed to try something big.

Weeks of hesitant half-steps to address Greece’s debt problems had only worsened market worries about the euro, and were threatening the still-fragile economic recoveries in the United States and Asia. Now, Mr. Obama told Mrs. Merkel that the Europeans needed an overwhelming financial rescue to end speculation that the euro — and European unity — could crumble.

“He was trying to convey that he knew these were politically difficult steps that the leaders there had to take, that he had gone through them as well,” said one senior administration official familiar with the conversation. “And that, from his experience, trying to get out ahead as much as possible was the right way to go.”

While on the topic of stimulus, how did that US stimulus turn out?

The recovery is picking up steam as employers boost payrolls, but economists think the government’s stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years — but a majority of respondents felt the fiscal stimulus had no impact.

Thank you O!

Robert Samuelson has some sage observations in Real Clear Politics today about why Greece may be the first but not the last to implode.

“But the central cause is not the euro, even if it has meant Greece can’t depreciate its own currency to ease the economic pain. Budget deficits and debt are the real problems; and these stem from all the welfare benefits (unemployment insurance, old-age assistance, health insurance) provided by modern governments.”

A financially-oriented blog at Recovery Partners, a firm which specializes in dealing with sovereign countries that have gone off the rails, discusses this further.

Samuelson notes the following in his article, “The Welfare State’s Death Spiral“.

What we’re seeing in Greece is the death spiral of the welfare state. This isn’t Greece’s problem alone, and that’s why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven’t fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies.

But you wouldn’t know this by examining Obama’s policies.  He continue to happily pile up the debt.  Is it possible that he is practising Homeopathic medicine on US?  One of the basic tenets of Homeopathy is “the principle of ‘like cures like’ – that is, a substance that would cause symptoms in a healthy person is used to cure those same symptoms in illness. For example, one remedy which might be used in a person suffering from insomnia is coffee, a remedy made from coffee.”  So the cure for a high debt is even higher debt.

Lost in the public pension and government debt debacle are the seeds of intergenerational warfare.  Those under 40 are slowly starting to realize that they are being saddled with debt that they will have difficulty paying off.

Some young Greeks prefer to blame their elders for the mountain of debt that has resulted in Greece, like a wayward child, being placed under the tutelage of the men from the IMF.

“I cannot help but blame my parents a little for what’s happened,” said Achilles Zacharoulis, a 36-year-old cardiologist. “They were here all that time,” he added, referring to the past three decades of mismanagement and fiscal insanity. “But what did they do to stop it?”

Vaggelis Gettos, 24, is just as alarmed at the burden being heaped on the young by austerity measures expected to be announced today, and has pledged to resist them in more protests this week against what he sees as a plot to impoverish Greece.

“We will live much worse than our parents,” he said. “Why should we be made to pay for their mistakes?”

Those who think that they can contently collect gold-plated pension for the foreseeable future might want to consider this development.

In the first ruling of its kind, a bankruptcy judge held that the city of Vallejo, Calif., has the authority to void its existing union contracts in its effort to reorganize, holding that public workers do not enjoy the same protections Congress gave union workers at private companies.

With PIGS (Portugal, Italy, Greece and Spain) on the ropes and UK being warned by IMF of similar consequences, it should be interesting.

There were fears that Britain could follow Greece into a financial crisis after a global finance chief warned of economic “contagion” spreading across Europe.

The head of the International Monetary Fund urged politicians to finalise a bail-out for the debt-laden Mediterranean country, saying that every day lost in resolving the problems risked spreading the impact “far away”.

Of course, this is not the first time that Britain will go cap in hand to IMF.  It did exactly that in 1976 and with the perennial shark (aka George Soros) already circling the country it might be only a matter of time.  The next question is, who will help the IMF?

Obama, you are our only hope.