Saturday, March 28, 2015

This Isn’t the Mises Institute!!!


Sorry, I had to get that out of the way.

John Mauldin, from his latest “Thoughts from the Frontline” [PDF], is discussing excessive debt and the risks thereof.  Some interesting tidbits:

The world has been on a debt binge, increasing total global debt more in the last seven years following the financial crisis than in the remarkable global boom of the previous seven years (2000-2007)!

He cites a McKinsey Institute study:

Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points (see chart below). That poses new risks to financial stability and may undermine global economic growth.

He cites a similar report from the Bank of International Settlements (BIS), often referred to as the central bankers’ central bank.

He cites Ambrose Evans-Pritchard, reporting on the BIS report:

Sitting on the desks of central bank governors and regulators across the world is a scholarly report that spells out the vertiginous scale of global debt in US dollars, and gently hints at the horrors in store as the US Federal Reserve turns off the liquidity spigot….

“It shows how the Fed's zero rates and quantitative easing flooded the emerging world with dollar liquidity in the boom years, overwhelming all defences. This abundance enticed Asian and Latin American companies to borrow like never before in dollars – at real rates near 1pc – storing up a reckoning for the day when the US monetary cycle should turn, as it is now doing with a vengeance.”

Mauldin writes himself (emphasis in original):

I believe the fundamental imbalances we are seeing in the world (highlighted in the two papers mentioned above) are the result of the massive increases in global debt and misunderstandings about the use and consequences of debt. Too much of the wrong kind of debt is going to be the central cause of the next investment crisis.

Look, where did all of these geniuses think that central bank money creation by the trillions was going to go?  I don’t recall any of them pounding the tables against pumping, saving the banks, driving down interest rates, massive liquidity, etc.  Sure, here and there occasionally, but more often to say that central banks weren’t doing enough.

But what does this have to do with the title of my post?

Again, citing McKinsey (emphasis in original):

High debt levels, whether in the public or private sector, have historically placed a drag on growth and raised the risk of financial crises that spark deep economic recessions.

Mauldin’s thought from the frontline?

Read that again. This isn’t the Mises Institute. This is #$%%*# McKinsey. As establishment as it gets. And they are clearly echoed by the BIS, the central banker’s central bank. (I added the emphasis this time!)


Sorry, I can’t help it.

Yeah, this isn’t those nutjob Austrians who have been telling us this all along; the ones who say you can’t print and spend your way to prosperity; the ones who say every boom will be followed by a bust; the ones who say a bust is necessary to clear out the mal-investments of the boom; the ones who say central banking is central planning of the single-most important factor in a division of labor economy – the central planning of money and credit.

No, it isn’t those nutty nutjobs.  It is the respectable nutjobs, the ones who got us into this mess in the first place.

Either by choice or by market, all of the Yahoos will eventually learn.  Hopefully, the rest of us survive the trip.


Bloodlands: Europe Between Hitler and Stalin, by Timothy Snyder

Take your choice:

Many Europeans, distressed by the nazification of Germany, looked hopefully to Moscow for an ally.


For some of the Germans and other Europeans who favored Hitler and his enterprise, the cruelty of Soviet policy seemed to be an argument for National Socialism.

This was the world facing those in Central and Eastern Europe in the 1930s.  What a choice…as if anyone living there had much of a choice.

Hitler significantly consolidated power in 1933.  The Reichstag fire, election victories (thanks to the support of the German communists, on orders from Stalin), the first concentration camps, an enabling act allowing Hitler to rule by decree.  All big news throughout the western world, compared to the minor news item of the millions killed by the intentional famines and deportations occurring in the Soviet Union at the same time.

Internationally, Stalin was given a pass: “…with the help of many sympathizers abroad….”  Hitler was confronted with “voices of criticism and outrage.”  This at a time when the deaths attributable to Stalin’s policies were infinitely greater than those attributable to Hitler’s.

Hitler’s terror, at this time, was one of intimidation – he locked up subversive (in his view) elements; he did not eliminate these, at least not in meaningful numbers.  In the meantime, Germany signed a non-aggression declaration with Poland – at the same time that Stalin was killing and otherwise purging Poles within the Soviet Union by the thousands.

Stalin took further advantage of the rise of Nazi Germany; he shifted the focus of the communist struggle from one of class vs. class to one of all of the left against the fascists.  This could explain Roosevelt’s attraction.  Stalin helped birth National Socialism in Germany, and then attempted to consolidate the left (via The Popular Front) to fight it; Stalin saw war as the best means to advance the revolution. 

Despite the overwhelming excesses of Stalin’s regime, propaganda and formed public opinion made Hitler out as the tyrant.  Who didn’t want to be against Nazi’s, after all?  Statements that in any way suggested that Stalin was a far worse criminal than Hitler were met with charges of Nazi sympathizer.  Nothing much has changed in this regard.

While the international chess pieces were coming in place, Stalin could not afford to ignore the internal situation.  Having few if any political enemies remaining within the Soviet Union only seemed to convince him that the opposition was only becoming skillful at political invisibility.  On 7 November 1937, Stalin raised a toast (emphasis added):

“We will mercilessly destroy anyone who, by his deeds or his thoughts – yes, his thoughts! – threatens the unity of the socialist state.  To the complete destruction of all enemies, themselves and their kin.”

Stalin knew what today’s advocates of the war on terror know but will not state openly: when you want to destroy thoughts (ideological enemies), every family member and acquaintance of those you kill are newly created potential enemies.  They must also be destroyed…mercilessly.  Perhaps bombing wedding parties is, therefore, intentional?

Stalin had the state police – the NKVD – to affect such a policy, his terror.  Using the political assassination of his close comrade, Sergei Kirov, to his advantage, Stalin blamed terrorists for the murder – not satisfied merely with the arrest and conviction of the assassin.

He forced through a special law allowing for the swift execution of “terrorists.”  Emphasizing the threat of terrorism, he declared that his former politburo opponents on the left plotted the murder of the Soviet leadership and overthrow of Soviet power.

The “threat of terrorism.”  I guess Stalin had his own war on terror.

Beginning in August 1936, show trials began; more than a dozen former political opponents (and Trotsky allies) were tried, sentenced to death, and executed.  A narrative of a grand conspiracy, a “Center of Centers,” was developed by Stalin’s henchman Nikolai Yezhov – for whom opposition equaled terrorism.

Guantanamo, secret tribunals, kill lists, national security letters, a nebulous enemy allowing for complete leeway regarding who is targeted, a grand conspiracy of “they hate us for our freedom” – all modeled after a previously successful program.

Purges within the party and the NKVD followed.  High commanders of the armed forces were tried; about half of the generals of the Red Army would be executed in the months to come.  Of 139 members of the central committee who took part in the party congress of 1934, 98 were shot.

Friday, March 27, 2015

A Tale of Three Catastrophes

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

Three tragedies, but only two stories.

Malaysia Airlines Flight 370 (MH370/MAS370) was a scheduled international passenger flight that disappeared on 8 March 2014, while flying from Kuala Lumpur International Airport near Kuala Lumpur, Malaysia, to Beijing Capital International Airport in Beijing, China. Flight 370 last made voice contact with air traffic control at 01:19 MYT (17:19 UTC, 7 March) when it was over the South China Sea, less than an hour after takeoff. The aircraft disappeared from air traffic controllers' radar screens at 01:21.

More than one year later, the investigation is still not resolved – no answer.  No settled, plausible theory.

Malaysia Airlines Flight 17 (MH17/MAS17) was a scheduled international passenger flight from Amsterdam to Kuala Lumpur that crashed on 17 July 2014 after being shot down, killing all 283 passengers and 15 crew on board. The Boeing 777-200ER airliner lost contact about 50 km (31 mi) from the Ukraine–Russia border and crashed near Torez in Donetsk Oblast, Ukraine, 40 km (25 mi) from the border.[3] The crash occurred during the Battle in Shakhtarsk Raion, part of the ongoing war in Donbass, in an area controlled by the Donbass People's Militia.

Over eight months later, the investigation is still not resolved – no answer.  No settled, plausible theory.

Germanwings Flight 9525 (4U9525/GWI18G) was a scheduled international passenger flight from Barcelona–El Prat Airport in Spain to Düsseldorf Airport in Germany, operated by Germanwings, a low-cost airline owned by Lufthansa.

On 24 March 2015 the aircraft, an Airbus A320-200, crashed 100 kilometres (62 mi) northwest of Nice, in the French Alps, after a constant descent that began one minute after the last routine contact with air traffic control and shortly after the plane had reached its assigned cruise altitude. All 144 passengers and six crew members were killed.

Three days later, while not certain, a plausible theory is presented:

The French prosecutor, the French and German aviation authorities, and a spokesperson for Germanwings have said the crash was intentionally caused by the co-pilot, 27-year-old Andreas Lubitz, who was earlier deemed unfit for piloting duty by his doctor for mental health reasons.

One year, no answer; eight months, no answer; three days, a plausible theory.

I guess when authorities want to answer the questions they are able to move pretty quickly.

Miscellaneous Debris

I have always wanted to find a way to use the title of this album as the title of a title of a post; well, here it is.  None of the following topics is significant enough to merit an individual post – but I want to clear my mental inbox.

When Life Really Stinks

Perhaps more than any other post, my recent post on the forced famine in Ukraine has really remained with me.  When thinking about people living in impossible situations (picture Iraq or Syria), I try to put myself in the position of a father sending his children off to school, not knowing if they will return safely; of a husband seeing his wife off to market, carrying the same burden of possible finality; of the breadwinner living in a place in which the economy has been destroyed.

The following – taken from the author of the book Bloodlands – has struck me and is what has stuck with me:

First weeks of 1933: with starvation raging through Ukraine, Stalin closed the borders of the republic such that the starving couldn’t flee, and closed the cities such that the starving couldn’t beg.  As of 14 January, citizens were required to carry internal passports.  The sale of long distance tickets to peasants was banned.

No food left to requisition, so none left to eat.  No way to flee.  Nothing left to do but place.

In Soviet Ukraine in early 1933, the communist party activists who collected the grain left a deathly quiet behind them…Ukraine had gone mute.

The stillness: bodies barely able and eventually unable to move…yet alive…for a while longer; the body automatically consuming first its fat, then its muscle; fathers unable to do anything to provide or protect.

The lifelessness: there are no cats or dogs – all have been eaten; the birds have been scared away because to remain meant to be eaten; the livestock and chickens gone long before.

The silence: not a creature was stirring because there were no creatures left to stir; not a human was stirring because there was no energy to move – all energy was diverted to the body automatically consuming itself. 

Or consumed:

People in Ukraine never considered cannibalism to be acceptable.  Even at the height of the famine, villagers were outraged to find cannibals in their midst, so much so that they were spontaneously beaten or even burned to death.

The author wrote of the cannibalization by permission – the mother telling her children to make a meal of her remains after she dies.  He also wrote of the pre-meditated cannibalization – killing the infant in order to eat.

I think about people stuck in such impossible situations.  I always try to put myself into the frame of mind that says I must not make ethical judgments when impossible choices are the only ones offered.  This doesn’t mean condoning, it doesn’t mean to suggest what I might do in their place; it means accepting the impossibility of the situation.

But sometimes getting into this frame of mind is harder than at other times.  I can mentally get there with the first type mentioned; not the second.

Enough of that.

Why do they Hate Customers?

One-hundred percent of the people on earth are customers.  Well, except for those who live totally and completely off the grid and grow or kill everything they eat and make everything they wear from materials they find in nature, etc.  In other words I doubt there are more than three exceptions on the entire planet.  So, just say 100% for rounding.

I recently had some feedback, bashing Wal-Mart – the typical stuff: they aren’t fair to suppliers, they aren’t fair to employees, they are cut-throat with competitors. 

I will caveat my comment: Wal-Mart, like every major corporation, probably gains much more from corporatocracy (the relationship between large companies and the government) than it loses.  But this rambling isn’t about that.

It also isn’t about the employees, suppliers or competitors.  The employees and suppliers are not forced to work at Wal-Mart.  Full stop.  As to the competitors, they have no property right in customers.

Which gets to my point.  Add up all of Wal-Mart’s employees, suppliers and competitors – they have 1.3 million employees in the US, I have no idea how many employees of suppliers or competitors but let’s say all of it adds to 10 million people.  Out of a population of over 300 million customers.  Yes, I know, not all 300 million of them shop at Wal-Mart; however Wal-Mart directly has impacted the competitive nature of every other retailer.

Virtually every individual in the United States benefits from Wal-Mart.  Even if one grants that 10 million people suffer because of Wal-Mart (I do not), why are so many people desirous to take it out of the hide of the three hundred million who benefit?

There is no better democracy than the vote of the customers’ dollar.  There is no better freedom than the vote of the customers’ dollar.

So, I wonder: why do they hate customers?  I think it must be because they hate freedom.

Thursday, March 26, 2015

The US Role in Iraq

I think the New York Times has made a mistake: 3 Shiite Militias Quit Iraqi Siege of ISIS Over U.S. Air Role. 

Why would Shiite militias, fighting against ISIS alongside the Americans, quit because the Americans are helping in the fight?  Either The New York Times is wrong (typical) or the editors at The New York Times accidently let some truth get out (implausible, but has occasionally been known to happen).

Either way, it is a mistake.

Anyway, I have rambled enough; here is a sampling (emphasis added):

We don’t trust the American-led coalition in combating ISIS,” said Naeem al-Uboudi, the spokesman for Asaib Ahl al-Haq, one of the three groups which said they would withdraw from the front line around Tikrit. “In the past they have targeted our security forces and dropped aid to ISIS by mistake,” he said.

Hakim al-Zamily, one of the leaders of the Sadr group, said his group had warned it would pull out of the Tikrit fight if the Americans were brought in. “We don’t trust the Americans, they have targeted our forces many times in so-called mistakes,” he said.

Mr. Sadr, whose troops fought bitter battles against the Americans during much of the Iraq war, said his group was pulling out because, in his words, “the participation of the so-called international alliance is to protect ISIS, on the one hand, and to confiscate the achievements of the Iraqis, on the other hand.”

Like I said, either way The New York Times has made a mistake.

Monday, March 23, 2015

A Strategy for Liberty (Redux)

Kevin Vallier attempts to deal with the problem of “Libertarian Strategy in a Non-Ideal World.”  As if no one ever contemplated such a question before….

I’ve recently finished an early ms of Gerald Gaus’s next book, The Tyranny of the Ideal, which argues, among other things, that we need to know the shape of the “terrain” of feasibility spaces before we can make productive progress towards realizing a just society.

Feasible = start with a compromise and negotiate down from there.

As he writes regularly for the bleeding-heart libertarians, I have a suspicion about what he means when writing about “the ideal.”

[Assume] The path from here, our present social state, to Mt. Justice (some libertarians name it Mt. Market Anarchy), contains no peaks or valleys.

I label it anarcho-capitalism, but feel free to make up a new name to throw others off the scent.  In any case, my suspicion has been confirmed.  At least he has honed in on a “just society” – none of that left-libertarian stuff.

Also assume that we know what the path looks like.

Assume all you want; I am not aware of any well-considered anarcho-capitalist that has made a definitive statement regarding certainty of the path.  But go ahead and build your strawman, as knocking these down is relatively easy.

Vallier then suggests that the path from here to there may not be smooth sailing (duh), but instead contains hills and valleys, none of which are known, knowable, or visible (also duh).  Like no one ever thought of this before.

But wait, shouts Vallier – Mt. Minarchy can be seen, and the path from here to there is sure – no tricks!  Really, he said this:

However, you can see a path to Mt. Minarchy. It is not an easy path, but it is a sure one.

He doesn’t define Mt. Minarchy, of course, as it cannot be defined in any meaningful way; even worse, when tried in the most ideal circumstance, it failed miserably moments before (not after) birth.  But rest assured: the path from here to there is sure!

Just in case you believe Kevin has fallen as far off the rails as one can, please reserve judgment:

In this case, we can see that the cost of transition to Mt. Market Anarchy is unknown. So even if we think that market anarchy is the correct account of justice, we may have strong reason not to seek it, if for no other reason than the risk of walking off a cliff. (Emphasis in original)

Don’t seek the correct amount of justice?  Interesting.  Ok, no need to reserve judgment any longer.

The market anarchy arguments largely claim that Mt. Market Anarchy is very tall, the highest peak in all the Land of Justice. But libertarians have a very poor theory of the terrain, not to mention the theory of illuminating it.

I think Kevin has not read much anarcho-libertarian food for thought on this matter.  Of course, this is understandable, as the author of one such valuable work on this topic is virtually unknown even in the most hard-core anarchic circles.  I will bet none of my readers even know of him.

His name?  I’ll bet you can’t guess it.  Go on, try.

Give up?  OK, I’ll tell you: Murray Rothbard. 

I told you that you never heard of him.  His work is hidden – hardly visible anywhere on the internet.  Almost no one who has studied libertarian theory has even heard his name.  I don’t blame Kevin for never having heard of Rothbard, let alone read anything he ever wrote.  Actually, Rothbard never even wrote very much.

But he did write one or two paragraphs on strategy – how to get from here to there.  I don’t think he ever wrote anything else on any topic even tangentially related to libertarian theory (I might be wrong about this), but he hit this one out of the park.  Here, take a look:

If, then, the libertarian must advocate the immediate attainment of liberty and abolition of statism, and if gradualism in theory is contradictory to this overriding end, what further strategic stance may a libertarian take in today’s world?  Must he necessarily confine himself to advocating immediate abolition?  Are “transitional demands,” steps toward liberty in practice, necessarily illegitimate? No…

How, then, can we know whether any halfway measure or transitional demand should be hailed as a step forward or condemned as an opportunistic betrayal?  There are two vitally important criteria for answering this crucial question: (1) that, whatever the transitional demands, the ultimate end of liberty be always held aloft as the desired goal; and (2) that no steps or means ever explicitly or implicitly contradict the ultimate goal.

There you have it – keep in your sights the ultimate objective, and any interim step that moves toward that objective is acceptable – even desirable.  Any beginning firearms student knows that in order to hit a target, one must actually be aiming for it.

Vallier, however, wants to avoid even seeking the ultimate objective – like shooting randomly and hoping for the best.

Believe it or not, some obscure website has all of Rothbard’s stuff available online – and FREE!  I don’t think anyone besides me and one or two other bugs have ever visited the site – so I can understand why Vallier never found it.  Well, here it is. 

And here is the book that Rothbard wrote on the topic – free of charge!

No need to thank me, Kevin; glad I could help.  I can’t wait to read your write-up on this strategy to achieve actual liberty.

Note: modified to be somewhat less confrontational.  Somewhat.