Charts of the Day: Papal Stock Market Cycle (?), US High Yield Credit, Corporate Bond Spreads and Profit Margins

The Papal Stock Market cycle? [Source Business Insider]

Divergences! US stock markets soar as... 

...high yield credit stress surge! [Source David Stockman's Contra Corner]

...corporate bond spreads widen! [source Gavekal Blog]

...and as corporate profit margins tip towards recessionary levels! [source Barclays/Business Insider]

Quotes of the Day: How Four Popes Viewed Socialism

From AEI’s Mark Perry: (bold and italics original)

Some historical perspective on what four of the last five previous popes had to say about socialism over the last 50 years (emphasis added)……

1. Pope John XXIII (1958-1963)

Pope Pius XI further emphasized the fundamental opposition between Communism and Christianity, and made it clear that no Catholic could subscribe even to moderate Socialism. The reason is that Socialism is founded on a doctrine of human society which is bounded by time and takes no account of any objective other than that of material well-being. Since, therefore, it proposes a form of social organization which aims solely at production; it places too severe a restraint on human liberty, at the same time flouting the true notion of social authority.

~Radio message to the Katholikentag of Vienna, September 14, 1952 in Discorsi e Radiomessaggi, Vol. XIV, p. 314

2. Pope Paul VI (1963-1978)

Too often Christians attracted by socialism tend to idealize it in terms which, apart from anything else, are very general: a will for justice, solidarity and equality. They refuse to recognize the limitations of the historical socialist movements, which remain conditioned by the ideologies from which they originated.

~Apostolic Letter Octogesima Adveniens, May 14, 1971, n. 31

3. Pope John Paul II (1978-2005)

The fundamental error of socialism is anthropological in nature. Socialism considers the individual person simply as an element, a molecule within the social organism, so that the good of the individual is completely subordinated to the functioning of the socio-economic mechanism. Socialism likewise maintains that the good of the individual can be realized without reference to his free choice, to the unique and exclusive responsibility which he exercises in the face of good or evil. Man is thus reduced to a series of social relationships, and the concept of the person as the autonomous subject of moral decision disappears, the very subject whose decisions build the social order. From this mistaken conception of the person there arise both a distortion of law, which defines the sphere of the exercise of freedom, and an opposition to private property. A person who is deprived of something he can call “his own,” and of the possibility of earning a living through his own initiative, comes to depend on the social machine and on those who control it. This makes it much more difficult for him to recognize his dignity as a person, and hinders progress towards the building up of an authentic human community.

Encyclical Centesimus Annus − On the 100^th anniversary of Pope Leo XIII’s Rerum Novarum, May 1, 1991, n. 12

4. Pope Benedict XVI (2005 – 2013)

The State which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person—every person—needs: namely, loving personal concern. We do not need a State which regulates and controls everything, but a State which, in accordance with the principle of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need. The Church is one of those living forces.

~Encyclical Letter of Pope Benedict XVI

Bonus..

Cato Institute’s graph comparing Pope Francis’ Argentina and the US. Writes Cato’s  Ian Vasquez 

It shows that in 1896, income per person in the United States and Argentina, two of the richest countries in the world, was about identical. Argentina subsequently eschewed the free market, replacing it with trade protectionism and other corporatist policies intended to help the poor by redistributing wealth. By 2010, Argentine income was a third of that of the United States.

Judge Andrew Napolitano: Is the Pope a False Prophet?

At the LewRockwell.com. Judge Andrew Napolitano questions the regime of Marxist leaning* and rock star /celebrity Pope Francis: (bold mine)

The papacy is an office created personally by Our Lord. Its occupants are direct descendants of St. Peter. Its role and authorities have evolved over the centuries, but the core of its responsibilities has always been the preservation of traditional teachings about faith and morals and safeguarding the sacraments. While the papacy is a monarchy, the teaching authority in the Church is “the bishops under the pope.” This means that a pope intent on change ought to consult with his fellow bishops.

Before the monumental Church changes of the 1960s and 1970s that trivialized the Mass and blurred the distinctions between the clergy and the laity, Popes John XXIII and Paul VI consulted their fellow bishops at Vatican II. The consultations were fractious and belligerent, but both popes got what they wanted: a watering down of liturgical practices and an easing of rules safeguarding the sacraments, so as to make the Church more appealing and accessible to former and non-adherents.

The result was a disaster. Fewer Catholics went to Mass, confusion about former theological norms reigned, and a general tenor pervaded the faithful that the Church never really meant what it preached. Former Catholics continued to stay away, new Catholics barely showed up, and many traditional faithful became demoralized.

Popes John Paul II and Benedict XVI attempted to roll this back. They succeeded in part by emphasizing traditional orthodoxy and personal piety to youth. Today, Catholic seminaries throughout the world are filled with young men who are more faithful to traditional practices and beliefs than many of their professors are.

Comes now Pope Francis to use moral relativism to take the Church in two dangerous directions. The first is an assault on the family, and the second is an assault on the free market — two favorite political targets of the left.

In the past month, without consulting his fellow bishops, the pope has weakened the sacrament of matrimony by making annulments easier to obtain. The Church cannot grant divorces because Our Lord used his own words to declare valid marriages indissoluble. But it does grant annulments.

An annulment is a judicial finding that a valid marriage never existed. This generally requires a trial, at which the party seeking the annulment must prove the existence of the marital defect from the beginning.

Fair annulment trials are costly and time consuming, often taking years from the initial filing to the final appeal. Until now. Last week, Pope Francis arbitrarily ordered the entire process to be completed in 45 days or fewer. For contested matters, a fair trial in 45 days is impossible. So, to meet his deadline, more annulments will be granted administratively, not on the merits.

It gets worse.

The Church has taught for 400 years that abortion is murder. Because the victim of an abortion is always innocent, helpless and uniquely under the control of the mother, abortion removes the participants from access to the sacraments. Until now. Last week, Pope Francis, without consulting his fellow bishops, ordered that any priest may return those who have killed a baby in a womb to the communion of the faithful. He said he did this because he was moved by the anguished cries of mothers contemplating the murder of their babies.

I doubt he will defend these decisions before Congress. He will, instead, assault the free market, which he blames for poverty, pollution and the mass migrations into Europe away from to worn-torn areas in the Middle East.

Pls read the rest here

* as for Marxism, let me quote Austrian economist Thomas DiLorenzo last January (bold mine, italics original)

Is the old Marxist ideologue (a.k.a. “a Jesuit”) just trying to deceive everyone when he says that “markets and financial speculation” operate “in absolute autonomy” with no government regulation at all?  He said that yesterday in yet another  Nixonian “I am not a crook”-style denial that he is a Marxist.  (Was that a thunder bolt I just heard?)

In reality, markets have long been swamped in regulation from all levels of government.  As George Reisman pointed out, in the U.S., for beginners, we have a government that spends almost 50% of GDP; there are 15 cabinet departments that exert controls over markets; there are more than 100 federal regulatory agencies and more than 75,000 fine-print pages of regulation of markets in The Federal Register.  Then there’s almost as much regulation of markets from all the state an local governments as well.

And there’s the Fed, which in addition to regulating the money supply, regulates all aspects of all financial markets as well.  And the SEC, the FDIC, Office of Thrift Supervision, etc., etc.

The pope ignores all of this reality to once again repeat the main theme of his papacy:  That “world resources” should be allocated according to the dictum of “from each according to his ability, to each according to his need.”  This is the Jesuit version of Catholic doctrine, but of course it is in reality propaganda from The Communist Manifesto.  No wonder Pope John Paul II criticized “liberation theology,” the “bible” of Jesuit political activists, as a danger to the teachings of the church because it is little more than Marxism masquerading as Catholicism.

I have been saying here that the Pope keeps denouncing 'trickle down economics' which he blames to capitalism. This isn't true. Trickle down economics exists nowhere in Laissez-faire capitalism. Instead it is a practice of state capitalism mainly channeled through financial repression (central bank monetary policies) or government spending (PPPs, infrastructure) where the latter breeds cronyism and corruption.

Vatican’s Scapegoating Capitalism

The easiest way of blaming social evils has been to bash capitalism. 

A good example has been the recent New Year homily by the Catholic Pope Benedict XVI who condemned “unregulated capitalism” for sowing “hotbeds of tension and conflict caused by growing instances of inequality between rich and poor” due to "the prevalence of a selfish and individualistic mindset which also finds expression in an unregulated financial capitalism” (BBC)

In the eyes of the Pope, the world operates on unregulated or unfettered individualism. 

In reality, the world is being suffocated by mounting regulations that has essentially been shifting the balance of social power from the markets to politicians.

Proof?

In 2012, in the US 29,000 laws came into existence in the state laws with more coming.

From CNBC.com

In 2013 in Illinois, motorcyclists will be able to "proceed through a red light if the light fails to change." In Kentucky, releasing feral or wild hogs into the wild will be prohibited. And in Florida, swamp buggies will not legally be considered motor vehicles.

On Jan. 1, as crowds of people toast to a new year, more than 400 news laws across the country will take effect — and possibly improve life for some.

"The laws that state governments deal with are really the laws that impact people on a daily basis," said Jon Kuhl, a spokesmanfor the National Conference of State Legislatures, which tracks the bills. "Whether amending or updating laws or enacting brand new legislation, it was an active year."

In addition to the new laws of 2013, more than 29,000 laws were passed by state legislatures this year, Kuhl said. Many dealt with healthcare, education, gay rights, child safety and the Internet.

And that’s aside from Federal laws. (MSNBC estimates the above at 40,000 laws including federal)

Another fact is that US tax code has ballooned from 400 to 72,000 words.

As Voxxi notes (chart theirs)

We have more professional tax preparers in the United States than law enforcement officers (765,000) and professional firefighters (310,400) combined.

But we need them. Consider this: in  1913, we had 400 pages of federal tax code in law. Today, its more than 72,000 pages.

Fear of being audited has led to this boost in tax preparers.

In short lobbying, tax avoidance, corruption and other means to influence political institutions to acquire favorable treatment becomes the commonplace operations.

 

And the above is just a segment of the overall political picture.

In other words, the Pope got his perverted idea of social malfeasance backward. Either the Pope has been misinformed or has not been forthright.

The Pope only needs to see how government debt levels in developed countries has been skyrocketing and how central banks have been bailing out the the privileged bankers. This has hardly been a function of individual-market based greed but of greed by those in power and their cohorts.

What the Pope and the Vatican seem to really rebuke hasn't been unregulated capitalism but state capitalism, corporatism or cronyism.

Yet in truth, individuals are not innately evil. It is mainly political power that debauches morality.

As the great John Emerich Edward Dalberg-Acton, 1st Baron Acton, popularly known as Lord Acton [Online Library of Liberty] pointed out

I cannot accept your canon that we are to judge Pope and King unlike other men, with a favourable presumption that they did no wrong. If there is any presumption it is the other way, against the holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority, still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it.

I am inclined to think that institutions like the Catholic church have used capitalism as convenient scapegoats when they are underfire, i.e. to deflect on the raging controversies, such as charges of institutional corruption and sexual abuse  which like the Australian Catholic Church admits and apologized.

Is it not that the Bible warned that “He that is without sin among you, let him first cast a stone”? (John 8:7)

Does this not apply to the Vatican too?

MVP-Ateneo Rift: The Politicization of Education

In reaction to Mogul and PNoy favorite Manny Pangilinan’s severance of ties with his alma mater due to political differences somewhere I read a paraphrased comment that out of MVP's actions

Children should be spared of politics

Putting the blame on MVP alone is an example of misreading effects as the cause. The reason for the sensational split in the relationship is because the heated political divergences hasn’t just been between MVP and Ateneo, but instead this involves Ateneo official’s moral and political stand to inculcate into their professors and students.

I am NOT here to defend any political position by both camps, but to underscore the point of the vicious politicization of education, which in this case, has been through the imposition of political preferences by school authorities and church leaders on members of the academe and students. 

Essentially this controversial schism validates my views on why elite schools have been inclined towards statism.

To highlight the point of the dictatorial tendencies of the church-school cabal is the recent threat to purge by excommunication 159 Ateneo professors who sided with Philippine government’s RH Bill.

[As a side note, I am against any coercive imposition of “values” on the family: This means I am against the RH Bill and am equally against church strictures aimed at the interdiction of their moral stand on their constituents.]

Church influence on politics has had nasty social outcomes, as the great Professor Murray Rothbard wrote, (bold emphasis mine)

Historically, the union of church and state has been in many instances a mutually reinforcing coalition for tyranny. The state used the church to sanctify and preach obedience to its supposedly divinely sanctioned rule; the church used the state to gain income and privilege.

The Anabaptists collectivized and tyrannized Münster in the name of the Christian religion.

And, closer to our century, Christian socialism and the social gospel have played a major role in the drive toward statism, and the apologetic role of the Orthodox Church in Soviet Russia has been all too clear. Some Catholic bishops in Latin America have even proclaimed that the only route to the kingdom of heaven is through Marxism, and if I wished to be nasty, I could point out that the Reverend Jim Jones, in addition to being a Leninist, also proclaimed himself the reincarnation of Jesus.

Moreover, now that socialism has manifestly failed, politically and economically, socialists have fallen back on the "moral" and the "spiritual" as the final argument for their cause.

For the mainstream, coercion, as along as it is committed by the state, is seen as moral. Thus, the desperate attempts by competing interests (represented by diverse power blocs, church, schools, environmentalists, and others) to influence policymaking which thereby results to the attendant social frictions.

Yet education must be free of politics and of government interventions, as Professor Tibor Machan argues (bold emphasis mine)

When a country tries to combine freedom of thought and speech with government-administered education, there will be irresolvable conflict. In a system of private education competition among schools would take care of philosophical correctness. In some schools certain books will be featured in the library, in others they will not, and students and their parents will be able to select which they want to be exposed to. Biology will be taught as creationists wish or as Darwinians do.  No official doctrine will be imposed, period.

But when government delivers a coercive system of "education"--actually mostly indoctrination, since no alternative is available to the bulk of us who have to pay for and use such a system--any selection of books, magazines, films shown in classes and so forth will amount to censorship of the materials not chosen. They will be deemed as having been banned--whereas in a private system selection by the administrators of some schools, library officials, or teachers will not preclude exclusion by others. It is government's nearly one-size-fits-all approach to education that stands in the way of free inquiry.

Unfortunately, in many societies people want to mix elements of liberty with elements of coercion, as if that were something trouble free—health food with some poison! It isn't--the courts will struggle forever with trying to square that circle and politicians will engage in varieties of demagoguery to gain the power over the “educational” turf.

Only by getting government out of education can that matter be made consistent with the principles of a free society and fit for human beings whose minds must forever be free to think.

The MVP-Ateneo rift only confirms the symptoms of irresolvable social conflict brought upon by the politicization of education and of government interventions.

Updated to add: Because I was in a hurry and had something things to do, I was unable to edit this post at the time of the publication. Thus I made belated grammatical changes on the first three sentences about 4 hours after.
  

Usury Prohibition: Medieval Crony Capitalism

During medieval Europe, the Roman Catholic Church via Pope Benedict XIV promulgated usury prohibition or Vix Pervenit: On Usury and Other Dishonest Profit—where charging interest rates on loans were condemned as a sin.

Guess who profited from the prohibition throughout those years?

From Mark Koyama* (hat tip: Café Hayek) [bold emphasis mine]

The usury prohibition created monopoly rents which made it possible for the Church, the state and international merchant–bankers to benefit from the suppression of usury. It was this shared interest that made the usury prohibition a self enforcing institution. It cemented a partnership between the leading merchant–bankers, secular rulers, and the Church, and because it shaped the beliefs and expectations of medieval society as a whole, it generated behavior that reinforced and perpetuated its own existence.

So the church integrated the role of the ‘baptist and the bootlegger’ which essentially converted her moral positions into laws that generated economic windfall for them. Of course, this was not restricted to the church , who acted as a political patron, but had to be backed by a vested economic client seen in “international merchant bankers”-manifestations of patron client relations.

In short, the usury prohibition laws engendered crony capitalism-the medieval ‘church’ edition.

Then and today, the nature of economic rent hardly makes any difference. Only the participants has changed.

*Evading the ‘Taint of Usury’: The usury prohibition as a barrier to entry