Truth in Labeling

I find something to admire in the political left – the true left, not the version to be found in the United States.  Mostly I admire the clear vision when it comes to the Anglo-empire and its wars.  But I also admire the left that is unafraid of the label socialist or even communist, the left that is unashamed of their truth.  (I hope I don’t need to add that there is much that I do not admire in the political left.)

Say it Loud, Say it Proud

The English-speaking world’s fear of calling communism, ‘communism’, by Ramin Mazaheri.

Despite openly calling for every plank of the communist platform, many in the west are fearful of using the term:

In many ways this fear is justified: communism is a dirty word in the English culture.

Of course, this might also be the strategy – why openly use a “dirty word” when you are able to achieve the same ends by subterfuge?  But I admire those who are direct, open and unafraid, as is the author of this piece:

…many well-meaning, intelligent and prominent Western leftists simply cannot or will not openly call for communism or socialism.

One such western leftist is the former Greek Finance Minister Yanis Varoufakis.  He has written a book, “And the Poor Suffer What They Must?” in which he apparently draws on communist economics in every form absent having a hammer and sickle on the cover.

Varoufakis repeatedly uses the term, “political surplus recycling,” in his book.  According to Mazaheri, this term is nothing other than good old-fashioned communist redistribution and central planning, all dressed in acceptable garb.

Because deficits and surpluses are inevitable between two nations which trade, there must be a multi-national mechanism/parliament/boss which redistributes wealth from surplus nations to deficit nations in order to ensure economic balance and social/regional harmony.

Being that Greece is one of those deficit nations and Mazaheri is an unashamed communist, you will understand precisely the context and intent of the phrase.

Just say it openly, man!

Don’t be ashamed, says Mazaheri; let it all hang out.  Say it loud, say it proud!

Anglophones must accept: They are already communist, they just don’t believe it: “Central planning” does exist in Western capitalist/Anglophone countries: in the United States their economy is guided by the Pentagon, the world’s largest employer; which hands out the fruits of their taxpayer-funded research to private companies…

He nailed that one.

As for the communism already present in the Anglophone world: Do I need to get into social security for the elderly, the 40-hour work week, the living wage, universal health care, rent caps, seniority pay, capital gains taxes, progressive taxes, universal childcare, mass education, free higher education and on and on and on?

He nailed that one as well.

…Westerners and especially Anglophones…appear unable to realize their true communist paternity. And it is a single-parent household….

In this, not so much.  The west has allowed the philosophy of the true left – the true socialist and communist left – to punch holes in the vulnerabilities (and there are many) of traditional liberal and libertarian political philosophies grounded in traditional Christian values. 

Instead of defending and shoring up those vulnerabilities, the west decided to take a walk on the wild side.  The west is not “a single-parent household.”  The west is the product of a beautiful young girl who allowed one too many of those equally-created men to get a little close…eventually, she gave in to temptation.  Unfortunately in this case, the father has yet to run off with another woman.

In Mazaheri’s view, the problem with not being truthful in labeling this dialogue as Marxism is that time is wasted treading the same ground that Marx already opened to the world 150 years ago.  Of course, I think it is a purposefully brilliant strategy to get the camel’s nose back under the tent even after the death of hundreds of millions and the destruction of billions. 

Conclusion

I admire Mazaheri for this and I mean this sincerely: don’t be ashamed for what and who you are.  Of course, it would not play well as a strategy if expanding communism in the west is your goal.

In any case, while the west has taken many steps toward communism (as Mazaheri rightly points out), the road to communism in the west will still pass through cultural, and not economic, gates.  Destroy traditional western civilization and cultural norms and the only thing left will be the state.

Call that communism or whatever you want.  It is the opposite of freedom.  Those who don’t value traditional western culture are leading us down this road.

Postscript

Mazaheri lives in Paris.  While riding in a taxi, he heard something on the radio which prompted a conversation with his taxi driver:

The Black taxi driver and I listening to the radio agreed: the French (the White French) are willfully blind, hypocritical, extremely clannish, their arrogance causes them to waste the talent of so many millions and billions, etc. and etc. White people are not privy to such conversations, I imagine, and that is a shame – but I can guarantee you they are routinely held among the Colored. White Communists probably have such conversations with the Colored, I would certainly expect…. (emphasis added)

Something to think about when it comes to immigration and the future of France (and the west, generally).

To Wish Impossible Things

it was the sweetness of your skin

it was the hope of all we might have been

that fills me with the hope to wish

impossible things

-        The Cure

Fix the Fed.  This is the wish of John Mauldin, advocating the advice to be found in the book authored by Danielle DiMartino Booth, Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America.

Booth worked for several years for Dallas Federal Reserve President Richard Fisher; she left the Fed when he resigned.  With this experience she offers her advice for reform.  And Mauldin offers that her advice should be heeded.  According to Booth, the Fed should be reorganized; according to Mauldin:

This is a powerful to-do list that I hope every Congressman and Senator will read.

Mauldin offers the final chapter of the book – in this chapter will be found the key takeaways and advice about reorganization.  Let’s take a peek:

First things first. Congress should release the Fed from the bondage of its dual mandate.

Per Booth, the Fed should focus only on price stability (whatever that means).  Resolving unemployment should be the business of congress. 

The benefit of this?

The added bonus: shedding the dual mandate will discourage future forays into unconventional monetary policy.

Wait a minute.  Let’s ignore the unemployment picture of the last ten years and focus on the situation of “price stability.”  “Price stability” (aka price inflation as measured by the CPI) has been unacceptably low to those at the Fed since 2009.  It is only now moving into something approaching acceptable territory.

So…again…ignoring the whole unemployment part of the mandate and let’s just say the Fed was only focused on price stability for the last ten years…explain to me when and how the Fed would have stopped implementing its “forays into unconventional monetary policy” given that they have only now reached something approaching (their definition of) price stability?

Ok, what’s next?

The floor on overnight rates must be permanently raised to at least 2 percent and Fed officials should pledge to never again breach that floor.

Pledge?  To whom?

Perhaps those congressmen and senators who read this book could pass a law to this effect.  I am quite certain that they will not rescind it when the next Paulson and Bernanke come whining to them about how the world is coming to an end.

Anyway, who says 2 percent is a floor that should never be breached?  Why not 1 percent or 4 percent?  Is there a law of economics on this matter of which I am not aware, or is this just Booth’s version of central planning?

Moving on:

Limit the number of academic PhDs at the Fed, not just among the leadership but on the staffs of the Board and District Banks.

I can agree with this, as long as the limit is zero.  Otherwise, you tell me: will the thinking of 100 academic PhDs result in better central planning than the thinking of 1000?

Bring in more actual practitioners – businesspeople who have been on the receiving end of Fed policy, CEOs and CFOs, people who have been on the hot seat…

Oh, please no.  Is this advice offered because the CEO and CFO of General Motors, JPMorgan Bank, General Electric, and Boeing have no vested interest in artificially abundant and inexpensive credit?  To ask the question is to answer it.

Then we have term limits for the governors; all district presidents with a permanent vote on the FOMC; redraw the districts to reflect today’s economy; better focus on regulation.  You know, deck-chairs-on-the-Titanic kind of stuff.

And then this whopper:

Send most of the PhD economists back to academia where they belong.

…who will then be lavished with grants from the Fed to produce research that supports evermore intervention.

Booth ends with a statement that makes me wonder why she believes reorganizing the Fed is even an objective worth considering (emphasis added):

Finally, let nature take its course. Reengage creative destruction. Markets by their nature are supposed to be volatile. Zero interest rates prevent the natural failures of weak companies, weighing down the economy with overcapacity for generations.

Recessions might have been more frequent, the financial losses greater for some, but if the Fed had let the economy heal on its own, America would have been stronger in the end and the bedrock of our nation, capitalism, would not have been corrupted.

“…let nature take its course.”

If this is the mandate for the Fed, why have a Fed?  Why have a lender of last resort? 

Letting “nature taking its course” in the economy means that price discovery happens without influence by anyone other than market actors trading in their own property; letting “nature take its course” in the economy means profit and loss – and with enough loss for an individual firm, bankruptcy.

I agree: let nature take its course.  And there is only one way to do this in an economy if you do not want to corrupt “the bedrock of our nation,” capitalism:

End the Fed.

Leading Europe Into War*

Spiegel interviewed the presidents of the European Parliament and the European Commission, Martin Schulz and Jean-Claude Juncker in the wake of the Brexit vote.  In all cases, emphasis added is mine.

Regarding their phone call on the morning after the vote:

SPIEGEL: What did you say on the phone?

Schulz: I said: "Jean-Claude, I think this isn't going well." Then I advocated for a quick response from the EU. The last thing we need right now is uncertainty.

Juncker: I shared his opinion. It was important for the Brits to trigger Article 50 as quickly as possible in order to avoid any uncertainties.

They dictate to European countries when they are in the union, and they dictate to European countries when they say they want out of the union – despite, to my understanding, it being up to the British government to decide if and/or when to trigger Article 50.

SPIEGEL: Just like on that Friday, you often present yourselves as extremely tight political partners. Can you appreciate that some in Europe see your relationship as cronyism?

Juncker: Nonsense. Martin and I lead the two important community institutions, whose tasks include working together in confidence. After 30 years in Brussels, I can tell you: The relationship between the Commission and the Parliament has probably never been as good as it is now.

SPIEGEL: That's precisely what many people find problematic. Parliaments are ultimately responsible for keeping governments in check -- not acting as their reinforcements.

Schulz and Juncker went on to further deride this view of cronyism.  What else would they say?

Spiegel then asked about the plans announced immediately after the Brexit vote for an even tighter EU, with even more control from Brussels over the member states (talk about being oblivious to reality).

Juncker: The proposal in and of itself is convincing, but it doesn't suit the times. To implement it, the European treaties would have to be amended. Martin's plan is a long-term project that cannot currently be implemented due to the mood on the continent. But where the community can achieve more on the basis of existing treaties, we should do so.

They know they cannot get new treaties passed or current ones amended, but this does not concern them.  Politicians will always find loopholes in existing treaties and laws that they can use to expand power.  They have thousands of lawyers and judges working on this every single day.

Schulz: I completely agree with Jean-Claude. I'm fully aware that my vision of a European bicameral parliament can't be implemented tomorrow. I'm also not an integration fanatic. We agree: Brussels can't regulate everything. I'm driven by something else: There are forces in Europe that want to generally give national policy priority over a common European approach. We have to prevent this.

This last statement gives me the chills.

SPIEGEL: Nevertheless, many in Europe see you as being symbolic of the backroom technocratic politics that is associated with the European Union and the euro. Some have even accused you of being responsible for Brexit. Do you plead guilty?

Juncker: No, why should I? In the end, the British didn't vote to leave because of the euro. They're not even members of the currency union. Even the refugee crisis hardly affected the country. I have another explanation: In its 43 years of EU membership, Britain has never been able to decide whether it wants to fully or only partially belong to the EU.

Spiegel did not only mention the euro; the issue is the European Union itself.  And the question was about the backroom political dealings – which most certainly affected Britain.  In any case, Juncker sees the fault entirely with the British parliament and British people; nothing done by the EU was is the cause behind these very visible divisions.

Schulz: Primary responsibility for Brexit lies with British conservatives, who took an entire continent hostage. First, David Cameron initiated the referendum in order to secure his post. Now, fellow conservatives want to delay the start of exit negotiations until they've held a party conference. And regarding detractors: I'm proud of the fact that Ms. Le Pen in France insults me and Mr. Wilders in the Netherlands calls me his opponent. The way I see it is, if these people weren't attacking me, I would be doing something wrong.

The EU bears no responsibility in the troubles and divisions of Europe.  The trouble is in Britain, not the EU.  Schulz sees only Le Pen and Wilders, and not the millions of people behind these two; he does not see anything of the underlying anger and frustration throughout the continent.

Western Blowback

NB: this post is regarding the elections in Austria, which occurred this past Sunday.  I wrote it prospectively, last week, with the intention to publish it before the elections, but did not have the chance to return to it to finish the post.  I became tied up on the issue of open borders.

In any case, the right-wing populist did not win the Austrian presidency, although the vote appears to have been about as close to 50/50 as possible.  This does not change the general observations and thoughts below (in fact, only reinforces these), so I have decided to leave it as is.

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

Austria's mainstream parties long believed they could keep the far right under control. On Sunday, though, a right-wing populist could become the country's president. What went wrong? The answer has implications for all of Europe.

In this post I will examine the comments from this Spiegel article regarding the right-wing movement in Austria.  Through this lens, one will find common threads through many countries in Europe and also in the United States.  In many ways the causes are the same. 

What went wrong?  One need only consider the frustrations of many people throughout the west regarding the favoritism of the government toward policies that favor the elite.  Instead of looking to the roots of the blowback for answers, which would require introspection and self-examination, they view the entire movement (in almost every western country at the same time) as “wrong.”

To summarize the situation in Austria, the right-wing populist Freedom Party of Austria (FPÖ) is on the verge of taking the presidency for the first time; their candidate is Norbert Hofer.

If he wins, and his chances are good, Austria would have a president who is "decisively opposed to forced multiculturalism, globalization and mass immigration."

One might attempt to examine why the people are voting for a candidate who is against such things, instead of asking “what went wrong?”  Maybe it is because such things are being rammed down the throats of the people.

Hofer says he doesn't understand all the agitation surrounding his candidacy and all the talk of a "presidential putsch" from editorialists and experts on the constitution.

Similar concerns are raised everywhere that a supposedly right-wing, nationalistic politician gains support.  Such concerns of a “putsch” are not raised regarding mainstream candidates who have been leading the west for decades – despite the usurpation of authority from both the people and the parliaments.

All of Europe is looking this week to Austria, this small country in its midst where an eventuality considered by many to be outrageous may soon become reality.

What is outrageous to those who are accustomed to controlling the narrative is that the narrative is no longer controlled; what is interesting is that it is happening at the same time in many places.  Perhaps for this we have the internet to thanks, as the tool has afforded a global opportunity to compare grievances and share notes.

Hofer is receiving calls from right-wing parties throughout Europe, including France, Italy, the Netherlands, and Germany.

The right wing in Europe is becoming organized and developing contacts across the Continent. The election on Sunday is far more than just a purely Austrian affair.

Across Europe, large, mainstream parties are losing power and influence. It has happened in Spain, France and Germany, but nowhere has the phenomenon been as dramatically visible as during the first round of the presidential elections in Austria.

It is happening in the US as well, given the agitation Donald Trump is causing the Republican Party and the establishment.

A Rotting Pile of Damp Wood

Ambrose Evans-Pritchard is upset.  He is upset with the IMF.  He is upset with the US Treasury Department.  He is upset with Barack Obama.  You might say he was gutted.  What has caused him to be so cheesed off?

If the International Monetary Fund and its co-conspirators in the Treasury wish to deter undecided voters from flirting with Brexit, they have certainly failed in my case.

They have each told the Brits what to do about Brexit.

Having listened to their irritating lectures, I am more inclined to opt for defiance, for their mask of objectivity has fallen.

Ambrose is joining the club – seen most overtly in the reaction to Trump’s campaign: every time some supposed authoritarian speaks, telling us what to do, many decide that the opposite – no matter how crazy sounding – is probably the right choice.

There can no longer be any doubt that they are playing politics with the democratic self-determination of this country.

Ambrose, there never was any doubt.  Not just for your country – for any country.  When politicians are involved, they are always playing politics.  You can’t be so daft.

He finds that figures don’t lie, but liars figure.  The IMF reports that the price of credit default swaps on UK sovereign debt has increased a good amount since all this nonsense about Brexit began.  What the IMF doesn’t point out – but Ambrose does – is that the cost of credit default swaps has increased for the sovereign debt of several major economies around the world during this same time.

He then goes down to tear the IMF a new arsehole:

Perhaps it is churlish to point out that the IMF completely missed the onset of the global financial crisis, and was blindsided when the US fell into recession in November 2007. The Fund’s staff were still predicting sunlit uplands as far as the eye could see, even when the blackest of black storms was upon them.

They missed only the biggest global economic event since at least the end of World War II.

Its forecasts for Greece were wrong every single year following the rescue of the euro and the North European banking system in 2010, otherwise known by some cruel twist of language as the Greek bail-out.

They originally said the Greek economy would contract by 2.6pc in 2010 and then recover briskly. What actually happened – as predicted at the time by the Indian member of the IMF board – was the most spectacular collapse of a developed economy in the post-war era.

Output ultimately fell by 26pc from peak to trough. To its credit, the IMF later admitted that it had horribly misjudged the fiscal multiplier. Indeed.

Wow!  He’s really full of beans!

He then tears apart about a dozen IMF strawmen regarding what will happen to British trade, etc.  He does so smashingly.

Instead of compelling economic analysis, the IMF is offering up pavement pizza according to Ambrose:

There may be compelling reasons for Britain to remain in the EU, but they have nothing to do with the bogus claims advanced today by the IMF. So take your rotting pile of damp wood elsewhere Madame Lagarde.

So, has he given up on this monstrosity?

I don’t wish [to] denigrate the Fund. It remains a superb institution.

Conclusion

Oh.  OK.

The European Project

I learned of the Charlemagne prize when Pope Francis recently received this honor.  Having recently commented on this occasion and the prize, I only offer here a brief refresher:

The Charlemagne Prize is one of the most prestigious European prizes. It has been awarded annually since 1950 by the German city of Aachen to people who contributed to the ideals upon which it has been founded.

The sponsors…quote Kurt Pfeiffer: "the Charlemagne Prize reaches into the future, and at the same time it embodies an obligation - an obligation of the highest ethical value. It is directed at a voluntary union of the European peoples without constraint….

A “voluntary union of the European peoples without constraint.”  Kind of the opposite of how the prize’s namesake went about the consolidation.  I suspect the sponsors (and many of the recipients) hold Charlemagne’s views just slightly under the skin.

I considered an examination of the recipients of this prize; it is a who’s who of internationalists, integrationists, cultural Marxists, warmongers and so on.  After looking at the background of the first few names, I concluded that it was pointless to write such a post.  Who did I think would be awarded?  Ron Paul?  Murray Rothbard?

Instead, what I found interesting by examining this background of the recipients was a world of organizations and institutions previously unknown (or barely known) to me.  This examination will offer some idea of the efforts behind integrating Europe.  You would think that if the union was truly voluntary they wouldn’t have to work so hard to jam it down everyone’s throats.  So, here goes….

The Bad News

The College of Europe

The College of Europe is an independent university institute of postgraduate European studies with the main campus in Bruges, Belgium. It was founded in 1949 by such leading European figures and founding fathers of the European Union as Salvador de Madariaga, Winston Churchill, Paul-Henri Spaak and Alcide De Gasperi in the wake of the Hague Congress of 1948 to promote "a spirit of solidarity and mutual understanding between all the nations of Western Europe and to provide elite training to individuals who will uphold these values" and "to train an elite of young executives for Europe."

Students are selected in cooperation with the government of the student’s home country. For several decades, enrollment was limited to about 100 students per year, but since the 1990s has increased to over 400.

As you read the following, keep in mind: over 400 of the best and brightest that Europe and the world has to offer graduate every year from this institution.  Thereafter, they work every single day either directly toward this project or indirectly supportive of it.

According to The Times, the "College of Europe, in the medieval Belgian city of Bruges, is to the European political elite what the Harvard Business School is to American corporate life. It is a hothouse where the ambitious and talented go to make contacts".

The Economist describes it as "an elite finishing school for aspiring Eurocrats."

The Financial Times writes that "the elite College of Europe in Bruges" is "an institution geared to producing crop after crop of graduates with a lifelong enthusiasm for EU integration."

The college has also been described as "the leading place to study European affairs" and as "the elite training center for the European Union's political class".

RFE/RL has referred to the college as "a Euro-federalist hot-spot."

The Global Mail has described its students as "Europe's leaders-in-waiting."

The Council of Europe

The Council of Europe is an international organization focused on promoting democracy, rule of law, human rights, economic development and integration of certain regulatory functions in Europe. Founded in 1949, it has 47 member states, covers approximately 820 million people and operates with an annual budget of approximately half a billion Euros.

This is not the European Union (EU).  However, all EU member states were first members of the Council of Europe.

Unlike the EU, the Council of Europe cannot make binding laws, but it does have the power to enforce select international agreements reached by European states on various topics.

Being an employee of this organization has its privileges:

Emptying the Inbox

I have several recent items rolling around in my head.  I don’t believe any of these is worthy of a post on its own, yet they are clogging my mind from focusing on much else.  As I have done in the past when I have come to such a situation, they all come to you as one.

Us or Them

According to Ambrose Evans-Pritchard, This is a global stock market rout worth celebrating: Cheap oil is a tax cut for consumers, a healthy haircut for sovereign wealth funds, and a shot in the arm for the world economy.

He suggests that the real economy is doing reasonably well:

World growth has been drearily stable for years, shuffling along at 3.4pc in 2012, 3.3pc in 2013, and 3.4pc in 2014, and 3.1pc in 2015. The International Monetary Fund expects 3.4pc this year.

The latest "GDPNow" tracker from the Atlanta Federal Reserve suggests that US growth is running at 2.5pc in the first quarter, smack in line with a typical late-cycle expansion in a mature economy.

I will take him at his word, and not interject personal opinion in this.  After all, if the Fed didn’t think the economy was doing reasonably well, why all the jabber-jabber regarding a rate hike over the last year or more, ultimately culminating with a 0.25% increase?

The Fed’s actions have only done damage to the markets:

The MSCI index of world equities has fallen almost 20pc since its all-time high in May of 2015, implying a $14 trillion loss of paper wealth.

Saudi Arabia's net holdings of overseas securities fell by $23bn in the single month of December. Fitch Ratings expects Abu Dhabi to drain its fund (ADIA) by $27bn this year. The Norwegians began dipping into their $820bn fund in October.

A clutch of distressed sellers are having to liquidate stocks, bonds, and property for month after month on a grand scale.

So, us it us or them?  Will the Fed continue to (attempt to) slowly move rates toward something approaching normal, or will they go back and provide liquidity to the markets?

Shave and a Haircut…

Working through my Ambrose to-do list...German 'bail-in' plan for government bonds risks blowing up the euro:

A new German plan to impose "haircuts" on holders of eurozone sovereign debt risks igniting an unstoppable European bond crisis and could force Italy and Spain to restore their own currencies, a top adviser to the German government has warned.

“It is the fastest way to break up the eurozone,” said Professor Peter Bofinger, one of the five "Wise Men" on the German Council of Economic Advisers.

Under the scheme, bondholders would suffer losses in any future sovereign debt crisis before there can be any rescue by the eurozone bail-out fund (ESM).

"A speculative attack could come very fast.”

As bondholders know that many governments are bankrupt except for central bank backing, I suspect a speculative attack would come immediately.

…the new plan empowers private investors to act as judge and jury on the solvency of states. "We can't allow a regime where markets are masters of governments,” [Bofinger] said.

Markets will win.  They have been winning the war from time immemorial.  This has been especially visible in the last eight years.  It is obvious to all – even the most die-hard Keynesian central planner – that central planning of money, like central planning everywhere, is a failure.

And if the Euro isn’t Enough Reason to Tear Europe Apart

Turkey apparently isn’t playing nice when it comes to dealing with the refugee crisis:

One thing, though, that [António Rocha of the Portuguese coast guard] and his shipmates haven't yet seen is a boat being turned back by the Turkish coast guard. "Sometimes they motor around the refugee rafts and tell them they should turn around," says the Greek liaison officer onboard the Tejo. "But when nothing happens, the Turkish boats just leave."

Merkel is not finding a willing partner in Turkey:

Since October, she has negotiated with the Turkish government six times, most recently on Monday. But there is little indicating that success is imminent.

"Forget it," Turkish EU Ambassador Selim Yenel told the Guardian this week when asked about Merkel's refugee plan. "It's unacceptable and it's not feasible."

She doesn’t even have support through much of Europe (to say nothing of within Germany):

Macedonia is not a member of the EU, but Hungary and other countries have already sent 80 officials to the country to assist with closing the border. At a meeting of the Visegrád Group -- which includes Eastern European EU members -- planned for next Monday, Poland, the Czech Republic, Hungary and Slovakia are to discuss ways in which the Balkan route can be closed off for good.

This doesn’t sound “open.”

That Didn’t Take Long

This post was original published two days ago, February 15 (HT LRC).  The title says enough: “Turkey is about to launch a false flag operation so they can invade Syria.”

Then what do I read today?

A car bomb went off in the Turkish capital Wednesday near vehicles carrying military personnel, killing at least 28 people and wounding 61 others, officials said.

Things are likely to get worse before they get better.