The BBC has told its journalists not to call Abu Qatada, the al-Qaeda preacher, an “extremist”. In order to avoid making a “value judgment”, the corporation’s managers have ruled that he can only be described as “radical”…A British court has called Qatada a “truly dangerous individual” and even his defence team has suggested he poses a “grave risk” to national security…Daily Telegraph, journalists were told: “Do not call him an extremist –- we must call him a radical. Extremist implies a value judgment.”

For what it’s worth, nineteen audio cassettes of Abu Qatada’s sermons were found in the apartment of one Mohamed Atta some years back.

Beck Laxton, 46, and partner Kieran Cooper, 44, have spent half the decade concealing the gender of their son, Sasha. “I wanted to avoid all that stereotyping,” Laxton said in an interview with the Cambridge News. “Stereotypes seem fundamentally stupid. Why would you want to slot people into boxes?…Sasha dresses in clothes he likes — be it a hand-me-downs from his sister or his brother. The big no-no’s are hyper-masculine outfits like skull-print shirts and cargo pants.

In one photo, sent to friends and family, Sasha’s dressed in a shiny pink girl’s swimsuit. “Children like sparkly things,” says Beck. “And if someone thought Sasha was a girl because he was wearing a pink swimming costume, then what effect would that have?”…

When Sasha turned five and headed to school, Laxton was forced to make her son’s sex public. That meant Sasha would have to get used to being a boy in the eyes of his peers. Still, his mom is intervening. While the school requires different uniforms for boys and girls, Sasha wears a girl’s blouse with his pants.

Makes us want to play matchmaker. Look, almost anything’s better to comment on than the drip, drip, drip of the primary season, or the appalling situation in Washington.

In 2009, the net worth of households headed by adults ages 65 and older was a record 47 times that of households headed by adults under the age of 35 — a wealth gap that doubled just since 2005. The equalizing effects of redistributive transfer payments are less today than in 1979, when households in the lowest income quintile received 54 percent of such payments. In 2007, they received 36 percent.

It’s as though we have an intergenerational Treaty of Versailles, and the young are stuck with the war reparations. The problem is: there aren’t enough of the young to do so. Trouble ahead.

The drawdown is not occurring in a vacuum, but is the bookend of a loud new ‘reset’ / ‘lead from behind’ strategy that deprecates traditional allies like Britain and Israel while failing miserably in outreach to supposedly new neutrals like Syria and Iran — all in a landscape of bowing, apologizing, and Cairo speechifying. All of these developments serve as force multipliers to the military retrenchment and confirm the impression of our enemies that the world is now entirely negotiable in a way not true four years ago.

The unspoken irony is that the military and our anti-terrorism protocols served Obama well when he arrived: he found a quiet Iraq with almost no monthly American casualties, a decimated al Qaeda (largely destroyed in Iraq), anti-terrorism measures that had foiled over 30 plots against the mainland (and were all demagogued by candidate Obama before President Obama embraced them), major powers like China, Russia, and Iran wary of pressing the U.S., allies like Japan, Taiwan, Germany, and South Korea secure under the U.S. nuclear umbrella, and the most seasoned and experienced U.S. military in generations…

The new $500 billion cuts must be considered against the nearly $5 trillion Obama has borrowed since assuming office, in addition to what he will borrow this next year. A defense budget that was tolerable prior to 2008 becomes apparently unsustainable with expenditures for Obamacare, vast new green projects like Solyndra, expansions in food stamps and unemployment insurance, and vast increases in the size of the non-military federal government. At least with the military our money earns safety and deterrence

The college professor continues his work. It’s as though the country elected not Jimmy Carter, but George McGovern. In any event the choice couldn’t be clearer this year. An America that might choose a McGovern administration is both unfathomable to us and, sadly, possible.

The Guardian’s front-page headline this morning was ‘NHS cuts have affected patient care say four out of five doctors’. So just how severe are these ‘cuts’? Ten per cent of the budget? Five? Here are the official figures from the Department of Health. At a time when other ministries are indeed under pressure, spending on the NHS will continue to grow year on year throughout the parliament – as it has almost uninterruptedly since 1948. Expenditure will rise from £103.8 billion to £114.4 billion in 2015. It’s true that, once inflation is factored in, the increase is slight – around 0.4 per cent. It’s true, too, that there is a reallocation of funds within that budget from administration to the actual provision of healthcare. Still, in no system of mathematics does this represent a ‘cut’. What, then, is the Guardian talking about? Read far enough and you’ll see that the whole story is based an online survey of, er, 664 self-selected respondents

Middle East Forum:

Consider the New York Times’ coverage, as reported by Adam Nossiter, in an article titled “Nigerian Group Escalates Violence With Church Attacks”: The sect, known as Boko Haram, until now mostly targeted the police, government and military in its insurgency effort, but the bombings on Sunday represented a new, religion-tinged front, a tactic that threatens to exploit the already frayed relations between Nigeria’s nearly evenly split populations of Christians and Muslims…

This sentence is fraught with problems. For starters, Boko Haram has been terrorizing Nigerian Christians for years, killing thousands of them, and destroying hundreds of their churches. Considering that just last Christmas Eve, 2010, Boko Haram bombed several churches, killing nearly 40 Christian worshippers, the New York Times’ characterization of these latest attacks as “represent[ing] a new, religion-tinged front” is not only unconscionable, but unprofessional.

Boko Haram — whose full name in Arabic is “People of Sunna for Da’wa [Islamization] and Jihad [Holy War]” — has, for a decade, been representing a very “religion-tinged front,” that is, an Islamic front, one that is hostile to all things non-Muslim, with Christians at the very top. In just the last couple of months, Boko Haram has carried out attacks on dozens of other churches, bombing some, torching others. In one instance, they opened fire on a congregation of mostly women and children, killing dozens; they executed two children of an ex-terrorist because he converted to Christianity

A cut is properly defined as an inadequate increase. A clear religious-political strategy of violence is properly defined an unfortunate religion-tinged tactic that might result in some random man-caused disasters. What about clear writing don’t these whiners understand?

Greece has a spending problem, a revenue problem, something along those lines, right? At a superficial level, yes. But the underlying issue is more primal: It has one of the lowest fertility rates on the planet. In Greece, 100 grandparents have 42 grandchildren – i.e., the family tree is upside down. In a social democratic state where workers in “hazardous” professions (such as, er, hairdressing) retire at 50, there aren’t enough young people around to pay for your three-decade retirement. And there are unlikely ever to be again.

Look at it another way: Banks are a mechanism by which old people with capital lend to young people with energy and ideas. The Western world has now inverted the concept. If 100 geezers run up a bazillion dollars’ worth of debt, is it likely that 42 youngsters will ever be able to pay it off? As Angela Merkel pointed out in 2009, for Germany an Obama-sized stimulus was out of the question simply because its foreign creditors know there are not enough young Germans around ever to repay it. The Continent’s economic “powerhouse” has the highest proportion of childless women in Europe: one in three fräulein have checked out of the motherhood business entirely. “Germany’s working-age population is likely to decrease 30 percent over the next few decades,” says Steffen Kröhnert of the Berlin Institute for Population Development. “Rural areas will see a massive population decline, and some villages will simply disappear.”

If the problem with socialism is, as Mrs. Thatcher says, that eventually you run out of other people’s money, much of the West has advanced to the next stage: it’s run out of other people, period…

In Italy, the home of the Church, the birthrate’s somewhere around 1.2, 1.3 children per couple – or about half “replacement rate.” Japan, Germany and Russia are already in net population decline. Fifty percent of Japanese women born in the Seventies are childless. Between 1990 and 2000, the percentage of Spanish women childless at the age of 30 almost doubled, from just over 30 percent to just shy of 60 percent. In Sweden, Finland, Austria, Switzerland, the Netherlands and the United Kingdom, 20 percent of 40-year old women are childless. In a recent poll, invited to state the “ideal” number of children, 16.6 percent of Germans answered “None.”

In China and India, the birthrate of boys to girls is as high as the unnatural ratio of 1.2-to-1, a formula for mischief up to and including war. So Western Europe is broke and disappearing, and the two largest countries on the planet are overdosing on testosterone. We don’t know what this adds up to, but it doesn’t look too good.

The ECB has drastically lowered its standards for the collateral it accepts for these loans, so banks get to offload some very risky assets. The cash they’ll receive will generate a superficial improvement for banks — cash is considered the least risky asset to hold. But to move beyond a temporary solution banks have to lend the cash out in order to generate earnings. The cash itself would not earn enough interest to repay the 1 percent rate on the loans.

One of the most talked-about options for generating profits would be buying more European government bonds. European politicians and other advocates of this plan paint it as a win-win scenario. Banks generate earnings by purchasing higher yielding sovereign debt, such as Spain’s or Italy’s

So the ECB is accepting compromised collateral, possibly at par, and may encourage the banks to buy even more compromised debt. That’ll work! We flash back three years to the dark days of late 2008. The de-leveraging process still has a long way to go, and the can is still being kicked down the road.

banks snapped up €489 billion ($639 billion) in cheap loans from the European Central Bank on Wednesday, a sign of just how hard or expensive it has become to borrow from each other. The huge demand for newly available three-year loans comes as fears rise that heavily indebted European governments could default and force banks and other bond holders to take big losses…

The loans to 523 banks surpassed the €442 billion ($578 billion) in one-year loans extended in June 2009, when the global financial system was reeling from the collapse of the U.S. investment bank Lehman Brothers. It was the biggest ECB infusion of credit into the banking system in the 13-year history of the euro. The ECB wants banks to use the money to help pay off or refinance some €230 billion ($300 billion) in existing loans early in 2012…

it was far higher than the €300 billion ($392 billion) expected…”The good news is, the ECB’s efforts to increase liquidity are working,” said Jennifer Lee, an analyst at BMO Capital Markets. “The bad news is, high demand for the loans creates worries that banks are urgently in need of funds to boost liquidity.”

Let’s do some arithmetic. Much of the €489 billion goes to refinance some €230 billion coming due next month. So there’s €259 billion of net additional liquidity spread among 523 banks. Not that much on a per bank basis, but the largest amounts are no doubt concentrated in the largest institutions.

Still, this is a drop in the bucket, compared to some estimates of the needs of the banking system, and it does nothing at all to deal with the €2.6 trillion sovereign debt problem. Question: what happens when the debts begin to mature and liquidity starts coming out of the system?

The eclipse of Keynesian economics proceeds. When Keynes wrote “The General Theory of Employment, Interest and Money” in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps. Now, huge governments are often saddled with massive debts. Standard Keynesian remedies for downturns — spend more and tax less — presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won’t work.

Countries then lose control over their economies. They default on maturing debts or must be rescued with loans from friendly countries, the International Monetary Fund (IMF), government central banks (the Federal Reserve, the European Central Bank) or someone. There are other reasons why Keynesian policies might fail or be weakened. But they pale by comparison with the potential veto now posed by bond markets. Ironically, the past overuse of deficits compromises their present utility to fight high unemployment.

There is no automatic tipping point beyond which a country’s debt — the sum of past annual deficits — causes bond markets to shut down. But Greece, Portugal and Ireland have already reached that point, with gross debt in 2011 equal to 166 percent, 106 percent and 109 percent of their national incomes (gross domestic product), according to IMF figures. Heavily indebted Italy and Spain could lose access to bond markets…

In 2012, the American budget deficit is projected at 7.9 percent of GDP; Greece’s is 6.9 percent; Italy’s 2.4 percent. In 2012, U.S. government borrowing — the deficit plus renewing maturing debt — is estimated to be 27 percent of GDP; Greece’s is 24 percent; Ireland’s 19 percent. On the plus side, the U.S. debt-to-GDP ratio is smaller than Europe’s worst. Also, a “safe haven” effect — reflecting the size of the U.S. economy and past political stability — contributes to America’s good fortune…

Americans seem to think they’re invulnerable to a bond market backlash. Economist Barry Eichengreen, a leading scholar of the Great Depression, is dubious: “Given low interest rates and the still-weak U.S. economy, it will be tempting for the U.S. government to continue running deficits and issuing additional debt. At some point, however, investors will recognize this behavior for the Ponzi scheme it is…If history is any guide, this scenario will develop not gradually but abruptly.”

We left out the parts where Samuelson tries to add balance to his article by citing the other side. It’s as though he wrote the piece for the edification of his fellow writers at the Washington Post who continue to believe that arithmetic doesn’t matter and that unfinanceable deficits are financeable if only we click our heels together three times. What part of EU can’t they understand? More evidence that even failed religions die hard.

a flim-flam treaty? The deal is not a “lousy compromise”, said Angela Merkel. Well, actually that is exactly what it is for eurozone politicians searching for a breakthrough. It tarts up the old Stability Pact without changing the substance (although there will be prior vetting of budgets). This “fiscal compact” is not going to make to make the slightest impression on global markets, and they are the judges who matter in this trial by fire…

there is more discipline for fiscal sinners, but without any transforming help…There is no shared debt issuance, no fiscal transfers, no move to an EU Treasury, no banking licence for the ESM rescue fund, and no change in the mandate of the European Central Bank…there is no breakthrough of any kind that will convince Asian investors that this monetary union has viable governance or even a future…

the disaster was caused by current account imbalances (Spain’s deficit, and Germany’s surplus), and by capital flows setting off private sector credit booms. The Treaty proposals evade the core issue…

Europe will now have its austerity union, a revamped Stability Pact. Budgets will be vetted “ex ante”. Structural deficits will be capped at 0.5pc of GDP. Sinners will be punished automatically once they break the 3pc limit, and submit to suzerainty. Commissars will tell them how to treat trade unions, what to tax, and what to spend.

It is not remotely a fiscal union. There will be no joint debt issuance, no EU treasury, no shared budgets, and no fiscal transfers to regions in trouble. “The agreement hard-wires pro-cyclical fiscal austerity into the institutional framework of the eurozone, with no quid quo pro to move gradually to debt mutualisation.” said Simon Tilford from the Centre for European Reform.

As they rush from crisis to crisis, the Eurocrats don’t seem to be thinking of second and third order effects of what they are doing. (Let’s leave aside for the moment that the money may not be close to enough, and that the proposals don’t really have much to do with appeasing markets, since they apparently don’t like or care about markets much.)

What do you suppose happens if southern Europe has perennial austerity budgets imposed by Germany and France: (a) riots and civil unrest; (b) large migrations from the Hooverville countries to northern europe and hence unrest in the north; (c) things even worse than (a) and (b)? Final point: all this rushing around and there is no treaty — a first draft won’t be available until next week. What a mess.

the major European economies that are now in trouble have two things in common: membership of the eurozone and staggering public debts. According to IMF figures, Greece’s gross government debt as a percentage of GDP (2011 forecast) stands at 165.6 percent, up from 105.4 percent in 2007. Italy’s government debt now stands at 121.1 percent of GDP, up from 103.6 percent in 2007. Portugal’s debt has risen from 68.3 percent of GDP in 2007 to 106 percent in 2011. Even the EU’s second biggest economy, France, is not immune from the debt crisis. France’s government debt is now at 86.9 percent of GDP, up from 64.2 percent four years ago.

And the United States is in an even worse situation — with gross government debt as a percentage of GDP standing at a towering 100 percent, a dramatic increase from the 2007 level of 62.3 percent.

The long-term impact of this debt, both for America and for Europe, will be devastating unless spending is dramatically slashed, entitlement programs are reformed, and public sector work forces are significantly trimmed. The cradle-to-grave welfare states that dominate the social landscape of most European Union countries will ultimately have to be dismantled. The huge public debts will make economic growth increasingly difficult, have an unsettling effect on the markets, and drive down the confidence of the credit rating agencies. As The Telegraph reports today, all 17 eurozone members now face losing their Standard and Poor’s AAA credit status.

The current EU debt crisis should be a dramatic wake-up call for political elites on both sides of the Atlantic to reverse the tide of big government

Meanwhile, back at the NYT: “Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending.”

It’s funny. On issue after issue, the conventional wisdom of those at the NYT makes no sense at all — and its adherents are so smug. Take the Paul Gregory response to the Bill Keller article of the other day. Change “economic policy” to “global warming” or “cap and trade” and it’s the same dismissive tone to those who disagree with the Grey Lady.

This graph is hard to read but it is worth focusing on. The black line is the ratio of employment to population. The percentage is to the left of the graph. It has stabilized at around 58.5%, though it is way below the peak of 64% in the late 1990′s. During the last decade, construction, technology, finance and service industries added jobs, but the US shed 7-8 million manufacturing jobs. Part of that makes sense, but is it really necessary that we now have 166,000 fewer jobs in the computer industry than we did in 1975, when the first PC shipped?

Italian bond yields continue to climb to new euro-era records, with bonds sold within the past two days going at 7.89 percent — a level at which Greece, Ireland and Portugal were all forced to seek bailouts. Italy has a stronger financial position and more domestic capital than the eurozone’s three bailout states, but there is still an upper limit to what Rome can afford…

Europeans are searching for a means of containing Italy’s troubles. The threat is clear. An Italian default would rip apart the eurozone even if it did not trigger a financial cascade — and a financial cascade would pretty much be a given. One of the solutions that is supposedly being crafted involves bringing in the IMF to bail out Italy…

Italy isn’t just facing an immediate funding crunch like most IMF wards. It has a preexisting debt stock that’s about 120 percent of GDP — it’s unserviceable, and Italy faces billions in maturing debt that must be refinanced on a monthly, and sometimes even a weekly, basis — 300 billion in refinancing needs in the first half of 2012 alone…

the IMF simply does not have the resources to bail out Italy, much less the eurozone as a whole. The IMF’s entire financial reserves are slightly under $400 billion (about 300 billion euro). Any credible remediation program for Italy would need to be in the range of 800 billion euro, and that’s before taking into account the costs of recapitalizing Italy’s banks.

Stock rallies continued in the wake of the coordinated actions of central banks to provide liquidity to the banking system. But we still don’t see how the numbers add up to a real solution.

central banks led by the Federal Reserve lowered the cost of emergency dollar funding for financial companies in a global effort to ease Europe’s sovereign-debt crisis. The new interest rate is the dollar overnight index swap rate plus 50 basis points, a half percentage-point cut, and the program was extended by six months to Feb. 1, 2013, the Fed said today in a statement in Washington. The Fed coordinated the move with the European Central Bank as well as the Bank of Canada, Bank of England, Bank of Japan, and Swiss National Bank…Two hours before the Fed announcement, China cut the amount of cash that the nation’s banks must set aside as reserves for the first time since 2008. The level for the biggest lenders falls to 21 percent…

The six central banks also agreed to create temporary bilateral swap programs so funding can be provided in any of the currencies “should market conditions so warrant.” Those swap lines were also authorized through Feb. 1, 2013…

While today’s move by the six central banks is likely to ease tensions in money markets, it falls short of some calls for the ECB to step up and act as lender of last resort for the governments of the 17-member euro area and buy unlimited amounts of government bonds. Germany, Europe’s largest economy, has resisted the idea, arguing it isn’t the ECB’s job to do so and would only be a temporary fix…

The cost for European banks to fund in dollars rose to the highest levels in three years today as concerns about a possible breakup of the euro area increased after leaders said they’d failed to boost the region’s bailout fund as much as planned…Jens Sondergaard, senior European economist at Nomura International Plc in London. “But are liquidity injections a game changer when the heart of the problem is in European sovereign debt markets?”

The action by the central banks was meant to address the interbank funding issues discussed the other day by Oliver Sarkozy. Whether it is enough remains to be seen, and of course these actions do nothing to solve the sovereign debt issue, said to require a $3 trillion solution which is less than half funded at this point.

TARP was created in 2008, with its Capital Purchase Program set up for banks hurt in the financial crisis. Through the repayments announced Wednesday, as well as dividends and interest, taxpayers have recovered about $244 billion of the $245 billion in TARP funds disbursed to banks, the Treasury said. The Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of nearly $20 billion to taxpayers

We found the numbers discussed about Euro-TARP to be mind-boggling, and indeed they are. But it is important to keep in mind that the investments in preferred stock of US financial institutions were temporary and were designed to make sure that interbank lending could continue — the sine qua non of a functioning world economy. TARP was not designed for this purpose, but it was a good and necessary idea in the dark days of 2008 after the idiotic Lehman decision by Hank Paulson. Those who predicted that TARP would turn out to be not only necessary but profitable were right after all. We hope things work out as well in Europe.

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible. Diplomats are preparing to help Britons abroad through a banking collapse and even riots…Britain is now planning on the basis that a euro collapse is now just a matter of time. “It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph…

Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash…

The EU treaties that created the euro and set its membership rules contain no provision for members to leave, meaning any break-up would be disorderly and potentially chaotic. If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse. Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit.

When will the musicians begin playing Nearer My God to Thee?

forcing banks to mark their sovereign debt to market. This may only have recognised the reality, but it also destroyed the concept of the “risk free asset”, forcing banks for the first time to apply capital to their sovereign debt exposures. Unsurprisingly, they stopped buying sovereign bonds, again making it harder for governments to fund themselves.

But perhaps the biggest sin of the lot was effectively to render all credit default swaps (a form of insurance against default) on sovereign debt essentially worthless, or void, by making the Greek default “voluntary”. This has made it impossible to hedge against eurozone sovereign debt purchases, and thereby destroyed the market. Worse, it’s made investors believe that the euro cannot be trusted, that it’ll repeatedly find ways of reneging on contract. That’s the point of no return. This is no longer a serious currency.

This last point is one we’ve previously not heard of, but it sounds pretty bad. The WaPo says that “investors will be carefully watching scheduled auctions of Italian bonds on Monday and Tuesday and Spanish bonds on Thursday,” and says good demand could bolster prospects for the euro. If Oliver Sarkozy’s calculations are even remotely in the ballpark, a train wreck looks imminent.

The math i’m working with is very simple. In the US banking sector, we had 3 trillion of wholesale funding that needed to be stabilized, got stabilized by the implementation of TARP which saw the US treasury buy $212 billion worth of preferred in the banking sector to stabilize that $3 trillion, give our banks the time to work through their problem assets.

In Europe, that $3 trillion is $30 trillion. so if you multiply the $212 by 10, you get the $2.12 trillion. In my view, the issues on the European banks are bigger than the issues on the books of the US Banks. So if you want to stabilize that $30 trillion and in my view it’s not that you want to, it’s that you have to, you do not have a choice, you’re going to have to be at least at 2.1 trillion and i suspect it may need to be more.

These numbers are disturbing, indeed, mind-boggling. First, let’s focus on sovereign debt matters. There’s a $1.4 trillion fund that’s been set up to deal with those issues, but it is not fully funded, and advisers to Angela Merkel have said that the real need is more like $3 trillion. But that’s not what Sarkozy is talking about — he’s talking about an additional $3 trillion in a Euro-TARP to bail out the banks. So we’re at $6 trillion and counting.

As for the bank bailout, Sarkozy said “if you want to stabilize that $30 trillion and in my view it’s not that you want to, it’s that you have to, you do not have a choice.” He’s right about that. There is no choice. There is no commerce possible in the world if banks are afraid to lend overnight money to each other — the $30 trillion is apparently interbank lending, guarantees, CDS’s, etc. (Hopefully he’s wrong about the $30 trillion number, but he’s a pretty knowledgeable fellow. If $30 trillion is the number, then major structural changes are needed so that this never happens again.)

We’ve already seen what the alternative to a bailout is, and it is unacceptable. The global flow of funds simply stopped after the US let Lehman Brothers cease operations on September 15, 2008. Having a non-functioning banking system is how a recession turns into a depression, and we’ve seen that play out before as well. So logic says that there will be bailouts of the magnitudes described above. We only have one question: where’s the money going to come from?

Italy paid a record 6.5 percent to borrow money over six months on Friday and its longer-term funding costs soared far above levels seen as sustainable…The auction yield on the six-month paper almost doubled compared to a month earlier…Yields on two-year BTP bonds soared to more than 8 percent in response, a euro lifetime high, despite reported purchases by the European Central Bank.

Italy’s sovereign debt is $2.6 trillion or 119% of GDP, almost as bad as Greece. They’ve been kicking the can down the road but we seem to be near the end of that now.

EU bans claim that water can prevent dehydration…EU officials concluded that, following a three-year investigation, there was no evidence to prove the previously undisputed fact. Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict…

professors Dr Andreas Hahn and Dr Moritz Hagenmeyer…compiled what they assumed was an uncontroversial statement in order to test new laws which allow products to claim they can reduce the risk of disease, subject to EU approval. They applied for the right to state that “regular consumption of significant amounts of water can reduce the risk of development of dehydration” as well as preventing a decrease in performance.

However, last February, the European Food Standards Authority (EFSA) refused to approve the statement. A meeting of 21 scientists in Parma, Italy, concluded that reduced water content in the body was a symptom of dehydration and not something that drinking water could subsequently control.

Just how many millions of euros were spent on conferences in Parma and other things for a “three-year investigation” of whether water is wet? Niall Ferguson may well be right.

Eurocrats…fear that a country could leave the European Union itself. This is by no means an irrational anxiety. Under E.U. law, it would be much easier for Britain to leave the European Union than for Greece to leave the euro zone. Thus the process of European integration has reached a richly ironic point: The breakdown of the European Union is now more likely than the collapse of the single currency that was supposed to bind it together…

we…struggled to see how, once assembled, the euro zone could be dismantled. The costs of exit would be prohibitive for a small peripheral country such as Greece, which would overnight lose access to any source of external credit. And a Greek departure would raise the probability of others leaving, causing contagion throughout Southern Europe. Finally, if all the weaker brethren were to leave the monetary union except Germany, Austria, the Netherlands and Finland, the strengthening of the euro would cause significant pain to the exporters of those countries. In short, almost nobody would gain from a breakup of the euro zone…

The creation of the single currency — obeying the law of unintended consequences — set in motion a powerful process of European disintegration. The fact that not all 27 E.U. members joined the monetary union was its first manifestation. Today we have a two-tier system, with 17 member-states sharing the euro, but 10 other states — notably Britain — retaining their own currencies. The result is that key decisions today — particularly those about the scale of transfers from core nations to the periphery — are being made by the 17, not the 27. But the 10 non-euro members may still find themselves on the hook to help fund whatever combination of bailout, haircut and bank recapitalization the 17 decide on…

the logic of continued British membership in the E.U. looks less and less persuasive. British public opinion has long been deeply Euro-skeptic. If it came to a referendum, as many Conservatives would like, Britons might well vote to leave the E.U…the thing that could cause the European Union to topple, or at least shrink in size, would be the outright withdrawal of Britain. And that has started to look quite possible.

It was becoming plain four years ago that the structural imbalances in the world economy needed to be addressed, but we never imagined that so much could change so quickly, and that the end of the EU might be one potential consequence.

It is odd that there remain those on the right who think that the last three years have been some sort of failure or series of mistakes. It’s too bad the economy isn’t doing better, but that’s not the priority of these folks. The priority is making things fairer, according to their enlightened vision.

The most remarkable thing about this administration is not incompetence; it is discipline. (As the man said: “We are five days from fundamentally transforming the United States of America.”) They stay relentlessly on their message of the moment, positioning themselves as the reasonable ones in the center, amidst those on the left and right who take irresponsible positions — and all the while they are quietly executing their agenda, moistly through the federal agencies and cabinet departments. Clever, profoundly anti-democratic.

But the playbook is badly out of date. OWS isn’t random; it’s straight from the playbook. No doubt it will metastasize over the next year and show up at Tea Party events and so forth to cause no end of trouble. The most peculiar thing about this exercise is that it is happening at almost precisely the wrong historical moment. The USSR fell almost a generation ago, and the welfare states of Europe are crumbling under the weight of their entitlement burdens. What a bizarre moment to emulate them.

The second most peculiar thing, at least to us, is our discovery of the extent of the corruption. Many years ago we wrote about the temptation to corruption in declining industries such as the legacy media. We had no idea how bad it really is. Congressmen can legally trade on insider information; major media outlets ignore huge scandals when they are politically inconvenient. And on and on.

We don’t think this is going to end well for the left. We think that they total about a third of the electorate. though the media megaphone makes them seem much more populous. It’s not really a 50/50 country when very basic issues are in play. As evidence we point to Independents flipping by 33 points last November after they figured out they had been sold a bill of goods in 2008. However, we do not underestimate the lengths to which those in power will go to remain in power. Frankly, we’re not looking forward to what the next political year is likely to bring.

Italy’s debt totals $2.6 trillion, which is 119 percent of its gross domestic product. Only Greece has a worse position in the European Union. The rule of thumb for most economists is that a debt-to-GDP ratio of 90 percent is the danger zone where economic growth falters. This is reflected in Italy’s lackluster growth numbers. After seeing 1.3 percent growth last year, the figure crawled at a pathetic 0.8 percent in the second quarter of this year.

The market sees the possibility of default on the horizon, so the Italian government’s cost of borrowing is escalating rapidly to reflect the risk. Italian bond yields hit 6.73 percent earlier this week, perilously close to the 7 percent mark where Greece, Ireland and Portugal were forced into the line asking for IMF handouts. On Wednesday, they climbed to 7.35 percent, suggesting the markets know the problem isn’t solved by finding a new prime minister. Investors also realize Italy, with an economy larger than Russia or India, cannot be bailed out.

The NYT reports that a fund of $3 trillion might be necessary to stem the crisis, but notes: “Europe has set up a special bailout fund…promises to leverage the fund even up to $1.4 trillion have not been fulfilled. Efforts to get other nations to invest in it or in a proposed parallel fund were flatly rejected.” Looks bad. Better check your euros. Dump the ones whose serial numbers begin with “S” if you still can.

“We cannot accept the explosion of the euro, which would mean the explosion of Europe,” Sarkozy told a news conference before the G20 leaders went into a working dinner Thursday evening. “If the euro exploded, Europe would explode. And in fact it’s the guarantee of peace on the continent where there were terrible wars — fiercer than anywhere else in the world — not in the 15th century but in the 20th century.”

Guarantee of peace? Huh? The euro is about a decade old. Maybe he meant the Common Market, which dates back to the 50′s, though Britain and others didn’t join until decades later.

In any event, the strange hyperbole is interesting. We seem to see nonsensical talk all the time among politicians these days. What’s French for “Pass This Bill Now”? HT: BC

The scientific finding that settles the climate-change debate…For the clueless or cynical diehards who deny global warming, it’s getting awfully cold out there.

The latest icy blast of reality comes from an eminent scientist whom the climate-change skeptics once lauded as one of their own. Richard Muller, a respected physicist at the University of California, Berkeley, used to dismiss alarmist climate research as being “polluted by political and activist frenzy.” Frustrated at what he considered shoddy science, Muller launched his own comprehensive study to set the record straight. Instead, the record set him straight.

“Global warming is real,” Muller wrote last week in The Wall Street Journal. Rick Perry, Herman Cain, Michele Bachmann and the rest of the neo-Luddites who are turning the GOP into the anti-science party should pay attention…

Muller’s plain-spoken admonition that “you should not be a skeptic, at least not any longer” has reduced many deniers to incoherent grumbling or stunned silence. Not so, I predict, with the blowhards such as Perry, Cain and Bachmann, who, out of ignorance or perceived self-interest, are willing to play politics with the Earth’s future…

The Berkeley group’s research even confirms the infamous “hockey stick” graph — showing a sharp recent temperature rise

There’s only one little problem with all this. Here’s the actual data from Best’s archives, without the ten-year “smoothing” and other features created to produce the graph above. As you can see, it shows cooling over the last decade:

However, Mr. Muller was already on the record: “Richard Muller, leader of the initiative, said that the global temperature standstill of the past decade was not present in their data.” Oops!

James Delingpole of the Telegraph is in high dudgeon: “I had my doubts about Muller’s findings from the start. I thought it was at best disingenuous of him to pose as a ‘sceptic’ when there is little evidence of him ever having been one….I really didn’t want my first blog post in a week to be yet another one about global bloody warming. Problem is, if those lying, cheating climate scientists will insist on going on lying and cheating what else can I do other than expose their lying and cheating?”

Of course, much of this is becoming irrelevant, since the US and the West can’t afford the expensive fantasies like cap-and-trade and so forth. But it’s nice for candidates for cutting government spending to stand up and draw attention to themselves as Muller has done.

Flight 447 from Rio de Janeiro to Paris crashed on June 1, 2009, after ice-blocked speed sensors shut down the autopilot and the crew reacted incorrectly by pulling the jet into a steep climb until it slowed to an aerodynamic stall, France’s BEA accident investigation bureau said in May. The interim report from the criminal probe broadly endorses those findings. “The aircraft’s stall went completely unnoticed by the crew, who made no reference to it,” according to the report, which was presented to victims’ families yesterday. Faced with unusual readings, the two co-pilots, alone at the controls while the captain was on a rest break, “rejected them en masse”…

The document identifies no fault with the Airbus SAS A330, beyond the failure of Thales SA (HO) airspeed sensors which caused the autopilot shutdown…

Air France Flight 447’s crew reacted badly to an autopilot shutdown and misread instruments showing the plane’s rapid descent before it plunged into the Atlantic, killing all 228 people aboard, a report shows. “I’ve lost VSI,” the junior co-pilot said of the Airbus’s vertical-speed indicator, according to a recording detailed in the report from court-appointed experts. In fact, the instrument was functioning normally, its analog needle immobilized at the lower limit because the plane was hurtling toward the ocean at 15,000 feet a minute,

Aircraft are designed to minimize the number of situations where a single failure can cascade into a catastrophe. It’s pretty disturbing that the pitot tubes’ getting fouled can lead to a disaster like this on an airplane that sophisticated.

Sen. Dick Durbin of Illinois, the second-ranking Democrat in the Senate and an Obama ally, told a radio interviewer this past week that there were not 60 votes in the Senate now for Obama’s bill.

That’s not what he said; he said he couldn’t get to 50 Democrats. Then there’s Arianna Huffington:

voters, including those mythical swing-vote independents, want the same thing everyone does: jobs and a strong economy.

The mythical swing-vote independents aren’t so “mythical”: they flipped by 33 points in November 2010. And of course there’s the good ole NYT:

The devastation extends worldwide. The great euphorbia trees of southern Africa are succumbing to heat and water stress. So are the Atlas cedars of northern Algeria. Fires fed by hot, dry weather are killing enormous stretches of Siberian forest. Eucalyptus trees are succumbing on a large scale to a heat blast in Australia, and the Amazon recently suffered two “once a century” droughts just five years apart, killing many large trees. Experts are scrambling to understand the situation, and to predict how serious it may become. Scientists say the future habitability of the Earth might well depend on the answer…forests have been absorbing more than a quarter of the carbon dioxide that people are putting into the air by burning fossil fuels

Go out and buy a fishbowl and 10,000 blue marbles. Put the marbles in the fishbowl. Take out one blue marble and put in a green marble. You’ve just demonstrated how much CO2 has increased in the air in the last 300 years. If that’s a catastrophe, we’re all dead no matter what we do. So much rubbish, so little time.

Obama looks ridiculous as he lectures Europe while wrecking the US economy…Germany’s finance minister Wolfang Schauble has launched a stinging rebuke to the Obama administration after Washington pushed for the European Union to boost its EFSF bail out fund. After Obama declared that the European financial crisis is “scaring the world”, Schauble shot back at the US president by warning: “It’s always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government.”

He also made it clear what he thought of the idea of increasing the 440 billion euro lending limit, a position supported by US Treasury Chief Tim Geithner: “I don’t understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense.”

It is rather ironic that Barack Obama, who has probably done more damage to the American economy that any president in modern US history, is now lecturing European leaders on their financial problems as well. The Obama administration’s track record of out-of-control government spending and borrowing, a $1.3 trillion budget deficit (the largest since World War Two), combined with mammoth bailouts, has been nothing short of disastrous. 14 million Americans are out of work…

The administration’s entire approach to the European Union is fundamentally flawed, and is based on the underlying premise that the EU needs more integration, not less, with a greater pooling of national sovereignty. As I noted in an earlier piece, while Euroscepticism is on the rise across the EU, Eurofederalism remains deeply entrenched among America’s liberal elites, from the offices of The New York Times to the State Department and the White House…

as Lady Thatcher noted in Statecraft, the European project is “perhaps the greatest folly of the modern era”, and the unprecedented experiment in economic and political integration within the EU is beginning to fall to pieces. Even the German public, probably the biggest traditional supporters of a federal Europe, have begun to turn overwhelmingly against the euro

Unsurprisingly, Gardiner’s prescription for what should be done resembles our own views. The dismissive tone of this piece is a little surprising, however. We know we’re a broken record on this, but we can’t imagine how things can continue on this ridiculous and destructive path until November 2012. What will they be writing in the Telegraph a year from now? HT: GP

The speed of light is the Universe’s ultimate speed limit, and much of modern physics — as laid out in part by Albert Einstein in his special theory of relativity — depends on the idea that nothing can exceed it. Thousands of experiments have been undertaken to measure it ever more precisely, and no result has ever spotted a particle breaking the limit.

But Dr Ereditato and his colleagues have been carrying out an experiment for the last three years that seems to suggest neutrinos have done just that.

Neutrinos come in a number of types, and have recently been seen to switch spontaneously from one type to another. The team prepares a beam of just one type, muon neutrinos, sending them from Cern to an underground laboratory at Gran Sasso in Italy to see how many show up as a different type, tau neutrinos.

In the course of doing the experiments, the researchers noticed that the particles showed up a few billionths of a second sooner than light would over the same distance. The team measured the travel times of neutrino bunches some 15,000 times, and have reached a level of statistical significance

Lots of theories in the comments section here; we blame global warming for the anomaly. Time for the another look at the amusing LHC video again.

Regulators encouraged European banks to hold huge amounts of European government debt by letting them account for these investments as if they posed zero risk. That meant the banks didn’t need to set aside a single euro in capital against those holdings. Now, according to an analysis by Autonomous Research, 43 large European banks hold debt in troubled sovereigns that is equal to 63 percent of those institutions’ book values.

Adding to the peril is that these banks are funded primarily by short-term investors, like buyers of commercial paper, rather than by depositors, as is more often the case with American banks. This was the same problem faced by Bear Stearns and Lehman Brothers…

Billions of dollars in swaps have been written on sovereign debt, guaranteeing that those who bought the insurance will be paid if Greece or other countries default. As of Sept. 9, some $32 billion in net credit insurance exposure was outstanding on debt of Greece, Portugal, Ireland and Spain, according to Markit, a financial data provider. An additional $23.6 billion has been written on Italy’s debt. Billions more in credit insurance have also been written on European banks, many of which hold huge positions in troubled sovereign obligations.

But since these instruments trade in secret, investors don’t know who would be on the hook — as A.I.G. was in its ill-fated mortgage insurance — should a government default or a bank fail.

Are we going through 2007-2008 all over again? The Bear Stearns conference call, the toxic CDS’s, the cascade after Lehman. Maybe we’re about to get an answer to the question we asked three years ago: what if the deleveraging process has much further to go? Say it ain’t so!

the choice is between abandoning the democratic principle which holds that the legitimacy of government derives from the consent of the governed, or backing down on the commitment to the euro and all the strictures that go with it. We know which side of this argument our Government has chosen. Mr Osborne reiterated last Friday his insistence that the EU needs “fast-track” fiscal integration -– and never mind the democratic scruples…

Angela Merkel cannot do what her critics are insisting that she must do –- as George Osborne put it, show that she recognises “the gravity of the situation” and is “dealing with it” -– because her electorate will not wear it. She cannot commit herself to endless bail-outs and the under-writing of infinite Mediterranean debt, just as the Greek government cannot deliver the EU’s austerity measures –- because the people of both these countries do not wish it. The irresistible force has met the immovable object.

Even religions that few believe in anymore die hard. We seem to have a bit of that in this country too.

“Euro Break Up — The Consequences.” UBS conveniently sets up the straw man as follows: “Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.” So far so good. Yet where it gets scary is when UBS quantifies the actual opportunity cost to one or more countries leaving the Euro. Notably Germany.

“Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. ”

It also would mean the end of UBS, but we digress. Where it gets even more scary is when UBS, like many other banks to come, succumbs to the Mutual Assured Destruction trope made so popular by ole’ Hank Paulson: “The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.”

So you see: save the euro for the children, so we can avoid all out war (and UBS can continue to exist).

In the middle of the last decade, the dream was for the Euro to be a new reserve currency, and now this. How times have changed.

Societe Generale shares slumped as much as 23 percent and were down 16 percent at 21.89 euros at 4:27 p.m. in Paris. Credit-default swaps on the bank rose 29 basis points to a record 299 basis points. Societe Generale “categorically denies all market rumors,” Emmanuelle Renaudat, a spokeswoman for the French bank said in an interview.

That’s precisely how it all began four years ago. The rumors, the shorts, the CDS’s. The banks are structurally the easiest institutions to start a panic with, because of their high leverage.

Such a display! Instead of getting the nation’s balance sheet in order, the government added trillions upon trillions of new and unnecessary debt. Instead of respecting the will of the majority, the government pushed through vast and controversial new entitlements on a party-line basis, an unprecedented approach to such major legislation in recent times. Instead of creating an atmosphere fostering job creation, the government added new healthcare costs, new regulations, and manifold new uncertainties for business. Instead of pointing out the ridiculousness of these foolhardy decisions, most of the media establishment cheered wildly — precisely the opposite of their function in a free society. The cheering that began in 2008 seems pretty much over. (Indeed, the establishment media sound rather pathetic now with all their humbug and invective.)

With the caveat that uncertainties can sometimes spiral out of control, we are firmly not in the Department of Doom. Indeed, rather the opposite. There’s plenty of work to be done to get the financial house of the US in order, and to foster job creation at home. But as we have said many times over, this is not that hard either to conceptualize or to execute. Of course those who want to get these things done will continue to face intense opposition from forces in government, the media, and even big business. But so many of the opposition’s rockets have already been fired, and for the moment at least, they have little of consequence to offer as an alternative.

can we avoid another severe recession? It might simply be mission impossible. The best bet is for those countries that have not lost market access -– the US, UK, Japan, and Germany –- to introduce new short-term fiscal stimulus…

Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery. Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions -– all have been tried. But now we have run out of rabbits to reveal.

The misguided decision by Standard & Poor’s to downgrade the US at a time of such severe market turmoil and economic weakness only increases the chances of a double dip and even larger fiscal deficits. Paradoxically, however, US Treasuries will probably remain the world’s least ugly safe asset: risk aversion, equity declines and a looming slump could even see treasury yields fall…

since this is a crisis of solvency as well as liquidity, orderly debt restructuring must begin. This means across the board reduction on the mortgage debt for the roughly half of America’s households that are underwater, and bail-ins for creditors of banks in distress. Greek-style coercive maturity extensions, at risk free rates, must also come for Portugal and Ireland, with Italy and Spain to follow if they lose market access. Another recession may not be preventable.

And from the Not Doom department, Burton Malkiel in the WSJ:

The sharp decline in stock prices last week has renewed fears that the economy is headed for a double-dip recession. Economic growth has been reduced to stall speed, with gross domestic product rising at less than a 1% annual rate during the first half of 2011. Real consumer spending has been negative over the past two quarters. Just as a rider risks falling over when his bicycle slows sharply, so the economy is dangerously close to slipping into recession even before a real recovery has taken hold. And now Standard & Poor’s has downgraded the U.S. credit rating, citing inadequate progress in Washington on long-run budgetary problems…

stocks today are cheap. Price/earnings multiples are just over 14 and forward P/E multiples, which use forecasted earnings, have shrunk to less than 12. These multiples are low relative to historical precedent and are especially low when considered in comparison to a 10-year Treasury yield of 2.5%. Dividend yields of 2.5% also compare favorably with 10-year Treasurys…

we have problems, but the current situation bears no resemblance to 2008. And for those who believe that the decline in the stock market reliably predicts a new recession, remember the famous dictum of the late economist Paul Samuelson: “The stock market has predicted nine of the last five recessions.” A strong dose of modesty is clearly in order…stay the course. No one has ever become rich by being a long-term bear on the fortunes of the United States, and I doubt that anyone will do so in the future. This is still the most flexible and innovative economy in the world.

Let’s be clear about one thing at least: this is not 2008.

Last week the euro hit crisis point. Silvio Berlusconi was forced into a shame-faced climbdown over his handling of Italy’s economy. A €48bn austerity programme will be front-loaded, asset sales accelerated and the country’s outdated labour practices liberalised. The measures will mean the public feels the pain of austerity before Italy’s elections in 2013…Berlusconi has also committed to a balanced budget by 2013 -– compared to a current forecast deficit of 3.4pc of GDP, according to the IMF…

as panic spread and Italy’s bonds hit 6.189pc it became clear that the markets had shut the country out…With €370bn (£322bn) of funding needed for 2011, much of which was scheduled for the second half of the year, Italy was suddenly facing the prospect of running out of cash before the end of September…

A funding crisis may have been of Italian making, but it would not be isolated to Italy. The eurozone would have to come to its aid. But Italy is not Greece. Italy’s funding requirement this year is larger than the entire stock of Greek debt. It is the third largest sovereign debt market in the world, with €1.8 trillion of outstanding bonds. Rescuing Italy could stretch the eurozone to breaking point

AE-P: “unless the ECB is willing to step in –- I mean really step in, not piss in the wind –- until such a time as the revamped EFSF bail-out is ratified by all parliaments and is ready to take the baton (say November), and unless the EFSF itself is quadrupled in size and given a €2 trillion mandate without all the German-imposed ifs and buts, then the game is up.” This seems to be playing out somewhat faster than many predicted.

Remember the Libyan war?…At the start of NATO’s desultory bombing campaign, the French and the British were demanding that Gadhafi be removed from power, leave Libya and be put on trial at the Hague. Last week, they subtly modified their position: He can remain in Libya, but he definitely has to step down from power…

the Lockerbie bomber has been appearing at delirious pro-Gadhafi rallies. Remember the Lockerbie bomber? He was returned to Libya because he was terminally ill and only had three months to live. That was two years ago…

The Libyan war never caught the imagination of the American public, even though you’re paying for most of it. But in Tehran and Moscow and Beijing they’re following it. And they regard it as a useful preview of the post-American world. Absent American will, even a tin-pot desert drag queen can stand up to the great powers and survive.

Days, not weeks. It’s not good to be seen as this feckless.

Australia’s population of wild camels, the Financial Times reveals, may soon be shot in order to earn carbon credits under the country’s forthcoming emissions trading scheme. Each one of the creatures is estimated to produce a tonne of carbon dioxide a year –- about the same as a 7,000km flight

Question: if the camel was also the pilot of the plane, what would the emissions be? And what about the methane? What a ridiculous world we have.

if Britain is to spend £100 billion on building thousands of wind turbines, it will require the building of 17 new gas-fired power stations simply to provide back-up for all those times when the wind drops and the windmills produce even less power than usual.

We will thus be landed in the ludicrous position of having to spend an additional £10 billion on those 17 dedicated power stations, which will be kept running on “spinning reserve”, 24 hours a day…

it will be amazingly costly and wildly uneconomical, since the dedicated power plants will often have to run at a low rate of efficiency, burning gas but not producing electricity. This will add billions more to our fuel bills for no practical purpose.

The other absurdity, as recent detailed studies have confirmed, is that gas-fired power stations running on “spinning reserve” chuck out much more CO2 than when they are running at full efficiency -– thus negating any savings in CO2 emissions supposedly achieved by the windmills themselves.

But on the plus side, wind farms kill fewer birds than cats do.

Why are the Greeks protesting? Against whom? They obtained long ago the promised bloated sector and high taxes that all schemed to avoid. Their alma mater EU is hardly a demonic capitalist-run plutocracy, but a kindred socialist state. Is Greece an oil producer, industrial powerhouse, high-tech innovator — anything that might explain the sort of upscale life, modern infrastructure, legions of Mercedeses, and plush second homes that one began to see in Greece after 1985?

In truth, socialist Greeks are furious that they have impoverished themselves and demand that private money and far harder-working Germans bail them out — but why so, when socialism should not need outside capitalist-generated dollars? Could not the Greeks, Soviet style, set up a Cuban collective, and adjust their lifestyles (there goes Kolonaki culture) to their means, living in an opportunity of result utopia with a huge public sector, more siestas, high but ignored taxes — with a collective good riddance to those awful intrusive German bankers?…

Who are socialists? There are none. Only technocratic overseers who wish to give someone else’s money to others as a means of winning capitalist-style lifestyles and power for themselves — in a penultimate cycle of unsustainable spending.

It’s quite a shell game when you’ve spent so much that taxing people at 100% won’t cure the problem. People, perhaps particularly the young, are going to wake up one of these days and figure out what has been done to them. When that happens, watch out.

Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country. We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force…when major firms move South, it is usually a harbinger of quality decline…

we cannot afford to let another company like Boeing self-destruct. Boeing is not a product of the free market — it’s an extension of the U.S. government

South Carolina and the south generally are home to quite a few large companies from around the world. Perhaps the gentleman from Chicago would like to extend his insults to the German and Japanese people as well.

“After a year, every indicator has unfortunately worsened, despite the incredible quantity of financial assistance,” Mohammed El-Erian told Italy’s Corriere della Sera daily. “All of this has terrible human consequences and it’s associated with a transfer of liabilities from private creditors to European taxpayers. Why? Very little is being done to deal with the excess of public debt, and the conditions for higher growth are not being put in place,” he said. “Further on, if this approach is kept up, more money will be wasted to save private creditors and the risk of a disorderly restructuring of the debt will be greater.”

It’s been a year since the first Greek bailout and almost two years since they fessed up to cooking their books. It’s hard to see how this ends well. Super bonus fun: Pimco’s Bill Gross says that the US is in worse shape than Greece. HT: BC

The meltdown of the blue social model is the great and inescapable fact of our time. In what many voters will feel as a sign of financial apocalypse, the AARP has dropped its opposition to cuts in Social Security benefits. At home, Democrats like Andrew Cuomo and Jerry Brown are slashing budgets and attacking the perks of public sector labor unions almost as industriously as Republicans like Scott Walker and Mitch Daniels. Abroad, Socialists like Greek Premier George Papandreou is cutting as hard as the Conservative David Cameron. Germany has passed a balanced budget amendment; France is debating its own version. Economic turmoil is shaking the political foundations; rising food prices helped set off the Arab Spring, the price of gold has gone through the roof, and China and other foreign creditors are increasingly skeptical about the long term value of their dollar-backed assets.

Gosh, the way Mead writes you’d think it was 1931 or something.

It was supposed to be the White House’s latest make-nice session with corporate America — a visit by Chief of Staff William M. Daley to a meeting with hundreds of manufacturing executives in town to press lawmakers for looser regulations. But the outreach soon turned into a rare public dressing down of the president’s policies with his highest-ranking aide. One by one, exasperated executives stood to air their grievances…

When a paper company executive said Environmental Protection Agency regulations might cost her $10 million to $15 million to upgrade a mill, Daley said the number of rules and regulations “that come out of agencies is overwhelming.”…

the room erupted in applause when Massachusetts manufacturing executive Doug Starrett, his voice shaking with emotion, accused the administration of blocking construction on one of his facilities to protect fish, saying government “throws sand into the gears of progress.” Daley said he did not have many good answers, appearing to throw up his hands in frustration at what he called “bureaucratic stuff that’s hard to defend.” “Sometimes you can’t defend the indefensible,” he said

Theater has apparently stopped working. Get involved. Here are a couple of suggestions.

Hoover was the child of a broken home with an unconventional background. He was far more widely traveled than most Americans in his day, and his time overseas made him a globalist in his thinking in many ways. His wife (Lou Henry Hoover) was unusually well educated and assertive — at a time when few women went to college, she graduated from coeducational Stanford with a degree in geology.

Hoover was an unconventional candidate who came into office on a tidal wave of support…Hoover was the great progressive hope of his day — he had supported Teddy Roosevelt’s 1912 Bull Moose campaign and was seen as much more forward looking and progressive than the party machine…

Hoover’s running mate, Kaw nation member Charles Curtis, was the first Native American and the first American with significant non-European ancestry to serve as Vice President of the United States. Hoover continued to burnish his diversity credentials in the White House; he was the first president since Theodore Roosevelt to invite an African American to a White House dinner and he wanted progress on Native American issues to be a hallmark of his administration…

Hoover…was a strong supporter of disarmament, focusing on naval buildups as the greatest danger of the day. He began the withdrawal of US forces his predecessors had committed in Haiti and Nicaragua, hoping to push the reset button on US relations with Latin America. He sought to avoid confrontational US statements and to downplay possible grounds for conflict. His strong humanitarian instincts (he had led efforts to relieve starving Europeans during and after World War One) made him reluctant to use force but also left him concerned about the well being of people in other countries…

despite his long record of progressive politics, his personal appeal and his sympathy for the downtrodden, President Hoover is best remembered for failing to master the Great Depression. Six months into his term, the stock market crashed; for the next three and a half years the economy continued to deteriorate. By the time of the 1932 presidential election, Hoover was so widely discredited in the minds of shell shocked voters that Franklin D. Roosevelt swept into office…

The problem was not that Hoover didn’t try…The economy was suffering from a combination of domestic and international maladies that were not well understood at the time — at least not by the President and his closest advisers…As the political situation worsened and the panic grew, bad ideas…became harder to resist. Misguided monetary policy at the Fed made things worse, and as the opposition party gained strength, Hoover gradually lost the authority to lead.

Despite, or probably because of, the catastrophe of letting Lehman Brothers fail, Democrats and Republicans woke up in time in 2008 to avoid allowing the total collapse of the banking system — the folly that turned a bad recession into the Great Depression.  

Regrettably, the last three years have been pretty much a total waste. Once again, “the economy is suffering from a combination of domestic and international maladies that are not well understood — at least not by the President and his closest advisers.” The solutions to the problem are straightforward, and anyone who has relevant experience can see many of them clearly. Alas, relevant experience is sorely lacking among those currently running the show.

Half of all American workers are employed at a small business and they have generated two out of three new jobs over the last 15 years. We can’t have a serious conversation about reducing unemployment without listening to the companies that aren’t on the Fortune 500 list. Overregulation, unfair taxes, and new mandates, like the controversial healthcare bill, are choking these job-creating businesses before they can get off the ground…

From the EPA to the FDA, from the IRS to Sarbanes Oxley, regulations disproportionally affect the smallest firms, drowning America’s entrepreneurs in red tape. According to a study published last year by the Small Business Administration, firms with fewer than 20 employees spend 36 percent more per employee than large firms.

Regulations, on average, cost small firms $10,585 per employee each year: $4,120 to comply with economic regulations, $4,101 to comply with environmental regulations, $1,585 to comply with complex tax rules, and $781 to comply with OSHA and homeland security regulations. In fact, more than 144,000 pages of regulations strangle small and large businesses alike.

At the end of a rather long piece on banking the other day, we paused to note the horror stories from directors of small companies about Sarbanes Oxley. The deck is stacked against the core strengths of American business; meanwhile, the government class continues to feed at the trough. No way to run a country.

Goolsbee, chairman of the Council of Economic Advisers, comes from the empirical school of economic thought: He rejects ideology and hifalutin theories in favor of cold, hard data. He believes in what works…I’ve known Goolsbee since we went to college together nearly a quarter-century ago. Though he has been discreet with me about his role in the administration, my other reporting suggests that his moderating influence on Obama should not be underestimated….

Obama’s middle-of-the-road economic policy may be the right one, but it is difficult to defend against pressure to do more to reduce stubborn unemployment. Goolsbee has been better than the rest at defending Obama’s package of relatively small items, such as worker training and R&D incentives alternately (and unsuccessfully) labeled the “New Foundation” agenda and “Winning the Future.”…

The most efficient way to produce jobs…is to give the private sector incentives to spend its big pile of cash on new hires…this isn’t as clean as the opposition’s simple prescription — huge tax and spending cuts — or the calls from economists on the left for another massive stimulus. Goolsbee doesn’t object to either idea as a matter of ideology; he looks at the data and finds that neither would boost employment as much as what Obama is doing.

This is a frightening piece in its way. Goolsbee is obviously an extremely intelligent man, but he is also a man who apparently has never worked a day in his life in the private sector. And he’s only 42 years old or so. No wonder the country is in so much trouble. They don’t have a clue, and the clues they do have are wrong. We’ve seen the tragic costs of inexperience before in other realms.

The frightening part is that these guys in Washington don’t know what they don’t know. It is a straightforward enough task to diagnose the economy, and some of the cures are the same as they were three decades ago. But there are new problems too, and they won’t be cured by the bromides of yesteryear. We could fix things, but then again, nobody’s asking us to.

China is running an explicitly mercantilist set of policies that are assisting in the killing of US job creation. And it’s not just China — the oil exporters and others also have created a problem that we’ve ignored too long. The structural imbalances between the borrowers/consumers and the producers have finally gone too far, as we first warned in this space years ago. In order to grow the domestic economy again as we should, we need to go one step further than Reaganomics did 30 years ago. We need to take explicit and detailed steps to stop making offshoring US jobs the default best strategy for US businesses. (We’d start with the energy industry, which is a no-brainer, but that’s a topic for another day.)

We’re in a jobs crisis more serious than most think. Middle class, “breadwinner” jobs number currently about 54 million of the 130 million total jobs in the economy — 41.4% of total employment. These are particularly important since they are the industrial and service backbone of the US economy and average about $50,000 in pay. According to David Stockman’s analysis of the BLS numbers on CNBC, these jobs are in a crisis now, and have been very troubled for a decade.

Since the onset of the Great Recession over the last two years, the US has lost about seven million jobs — one in nine middle class breadwinner jobs. This is bad enough in itself, and something we have been raising the alarm about for at least the past year. But that’s not the whole story, nor in some ways the worst part of the story.

The chart below shows that even in the period of economic expansion during much of the decade, peak-to-peak the economy shed about a million jobs. Stockman says that while construction, technology, finance and service industries added jobs during this period, the economy shed 7-8 million manufacturing jobs. Many of these jobs were “offshored” to small and large enterprises in China, etc.

This simply cannot continue without gutting the middle class, and without gutting the US as a producer as well as consumer of goods and services. We have no hope of getting to reasonably full employment again without solving this problem. So-called “stimulus spending” won’t solve the problem, and neither will tax cuts by themselves. It is certain that ill-informed and defeatist attitudes by politicians that the “jobs won’t be coming back” is the exact opposite of what is needed.

We are not naive. We know that the buggy whip industry is dead, and so are a lot of other businesses. But as a CEO and business owner, we know that there are a lot of businesses that could be operated in the US, but are not — often because it’s so much easier and cheaper to do things elsewhere. We have observed some of the US’s largest companies moving certain operations to Singapore and China, first because of labor cost issues, but later because labor, regulatory and tax regimes incentivized the companies to locate higher value-added activities in those locales (versus punitive treatment back home).

This should not be a partisan issue, though it has partisan overtones, because taxes, regulations and litigation are all important issues. The CEO’s of diversified US multinationals are not going to lead the charge on this — they now have too many fish to fry in the BRIC countries and elsewhere to propose even a sub-rosa mercantilism of any sort. We see useful comments and contributions by Andy Grove and other Intel executives, but such statements are too rare. Mostly we see a gloomy outlook for the US when the question of where to expand capacity is raised.

Fixing the economy is not rocket science, as we’ve often said. But to do so requires a clear vision of what needs to be done, and a commitment and agreement at the highest levels of government to take a scythe to unnecessary and counterproductive accounting, legal, regulatory and other impediments to American businesses’ creating jobs at home. This isn’t just a set of policies, it’s a mindset — and it’s a mindset that mostly doesn’t exist either in the government or our large corporations.

Greece & Co. are in trouble because of excessive borrowing. Between 1999 and 2010, the structural deficit of the Greek government rose from 2 percent of gross domestic product to nearly 18 percent. Ireland went from surplus to minus 11 percent. Portugal was little better. The result was a debt explosion. The net government debt of Greece, the worst offender, soared from 76 percent of GDP to 142 percent last year…bond investors started to fear defaults. They dumped the debt, driving up the yield on Greek 10-year bonds — and hence the interest rate on new borrowing — to 17 percent.

Robert Samuelson:

What’s called a “debt crisis” is increasingly a political and social crisis. Looming over the financial complexities is the broader question of the ability — or willingness — of weak debtor nations to endure growing hardship to service their massive government debts. Already, unemployment is 14.1 percent in Greece, 14.7 percent in Ireland, 11.1 percent in Portugal and 20.7 percent in Spain…

The euro helped create the crisis and has made its resolution harder, as a new report from the International Monetary Fund shows. For starters, the euro fostered a credit bubble…Money poured into the periphery countries. There was a huge compression of interest rates. In 1997, rates on 10-year Greek government bonds averaged 9.8 percent compared to 5.7 percent for similar German bonds. By 2003, Greek bonds fetched 4.3 percent, just above the 4.1 percent of German bonds.

So there are Ferguson and Samuelson on one hand, and on the other hand there are Paul Krugman and others. Feel free to decide who makes more sense.

BTW, it’s been over a year now since we’ve been watching the Greek crisis unfold. It has proceeded in fits and starts, but it hasn’t gone away or been solved. And time marches on in the US as well.

France’s BEA crash investigation agency said in a detailed chronology of the crash that commands from the controls of the 32-year-old junior pilot on board had pulled the nose up as the aircraft became unstable and generated an audible stall warning. Aviation industry sources told Reuters that this action went against the normal procedures which call for the nose to be lowered…

Air France and its main pilots union insisted faulty speed probes were the root cause. In a passage likely to attract particular scrutiny, the BEA said the pilot “maintained” the nose-up command despite fresh stall warnings 46 seconds into the four-minute emergency. “The inputs made by the pilot flying were mainly nose-up,” the report added.

The Airbus jet climbed 3,000 feet to 38,000 feet despite the crew having decided earlier against a climb, and then began a dramatic descent, with the youngest pilot handing control to the second most senior pilot a minute before impact. The captain returned after “several attempts” to call him back to the cockpit but was not at the controls in the final moments

It looks like there was a stall that was not handled correctly. The pitot tubes have not yet been found, so it may be a while before there is a definitive finding in the investigation.

Ah Bejaysus and Begorrah! Oi’ll be swearin’ boi the auld shrine to the Vorgin with the shamrocks growin’ round it next to the hill where Cuchullain slew the Great Leprechaun of Kildare on St Patrick’s Day that Barack Seamus O’Toole Flaherty Joyce O’Bama is the most Irish US president that ever set foot on the Emerald Oisle, so he is, so he is. Except, when he’s in Africa, of course, when he disappears into the dry ice and re-emerges with a grass skirt and a bone through his nose and declares himself to be Mandingo, Prince of the Bloodline of the Bonga People, Drinker of Cattle Urine, Father of A Thousand Warrior Sons, Keeper of King Solomon’s Mines, Barehanded Slayer of Lions, Undaunted Victim of the Evil Colonial British Empire. And in the Middle East, where he is Al-Barak Hussein Obama, Protector of the Holy Shrine, Smiter of the Kuffar, Lion of the Desert, Tent-Loving-Aficionado-of-the-Oversweetened-Coffee, Chomper of Sheeps’ Eyeballs, Restorer of the Caliphate. Etc…

Obama can’t stand Britain (his wife likes us even less): he made that clear enough when he sent back Winston Churchill’s bust and dissed our Prime Minister with those dodgy DVDs. He blames us for what happened to his grandfather during Mau Mau. He doesn’t believe in the Special Relationship. Are we honestly supposed to believe in that during the subsequent year in office, Obama has since acquired such wisdom and insight that he suddenly realises how special we are? Of course he hasn’t. Obama is just doing now what all bullies and losers start doing when they realise how unpopular they are and that everyone is abandoning them. They suck up to anybody and everybody. They whore themselves piteously before enemies they once considered beneath their contempt. Fain will they fill their bellies with husks that swine eat -– but which no man will give them: and serve them jolly well right, too! By all means let us enjoy watching Obama smarm and grovel and ingratiate himself like some presidential Uriah Heep.

You wonder how many in the worshipful American media secretly agree with Delingpole. It’s probably more than a few, judging by their recent over-the-top attempts to recast their man’s image.

in March, the president of the New York Federal Reserve, William Dudley, was trying to explain to the citizens of Queens, N.Y., why they had no cause to worry about inflation. Dudley, a former chief economist at Goldman Sachs, put it this way: “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.” Quick as a flash came a voice from the audience: “I can’t eat an iPad.”…

the Fed…points to the all-urban consumer price index (CPI-U) and notes that it was up only 2.7 percent in March relative to the same month a year earlier. Strip out the costs of food and energy, and “core CPI” — the Fed’s preferred measure — is just 1.2 percent…

the reason the CPI is losing credibility is that, as economist John Williams tirelessly points out, it’s a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been “improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent.

The correlation between QE2 and commodity inflation has been as unsurprising as it has been powerful. The end of QE2 should mean higher interest rates on Treasury and other US debt, slower domestic growth or perhaps a double-dip, and an easing of inflationary pressures in the BRIC countries and elsewhere. Not so bad for them but it’s hard to see how any of this is going to be good for the US.

terms such as wildlife are dismissed as insulting to the animals concerned -– who should instead be known as “free-living”, the academics including an Oxford professor suggest. The call comes from the editors of then Journal of Animal Ethics…the journal –- jointly published by Prof Linzey’s centre and the University of Illinois in the US –- condemns the use of terms such as ”critters” and “beasts”…

“We invite authors to use the words ‘free-living’, ‘free-ranging’ or ‘free-roaming’ rather than ‘wild animals’. For most, ‘wildness’ is synonymous with uncivilised, unrestrained, barbarous existence. There is an obvious prejudgment here that should be avoided.”…Phrases such as “sly as a fox, “eat like a pig” or “drunk as a skunk” are all unfair

Since cows and sheep represent “the greatest threat to the planet,” why shouldn’t people insult them?

It is only by setting our aims high, even amid the hazards of our present economic situation, that the idealism and high intelligence, especially of our young people, can be enlisted. It is indeed our intention to bring about a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families

Ah, yes, England in the 1970′s. Economic stagnation, strikes, violence, social upheaval. Remind you of anyplace you know?

The graph above is logarithmic, so it understates the gap between top and bottom. Nonetheless, the presentation is effective. We said some of the same things ourselves. We can’t take the trend as given and inevitable, however; there have been some notable discontinuities of course. And the west could conceivably commit suicide before those societies that desperately need to enter the modern world do so. HT: Ace