US Military Suicides: The Enemy from Within

Fighting needless wars and playing the role of the global policeman to fulfill the political and financial goals of neocon politics and the military industrial complex has apparently been taking a heavy mental toll on US military personnel

From Yahoo/Reuters

Twenty-six active-duty soldiers are believed to have committed suicide in July, more than double the number reported for June and the most suicides ever recorded in a month since the U.S. Army began tracking detailed statistics on such deaths.

During the first seven months of this year, there were 116 suspected suicides among active-duty soldiers, compared to 165 suicides for all of last year, the Army said. The military branch reported 12 likely suicides during June.

The monthly totals for 2012 include confirmed suicides and cases still under investigation, the Army said.

Twelve reserve soldiers who were not on active duty also appear to have killed themselves in July, bringing the yearly total for that group to 71 suicides.

The Army, which has collected in-depth monthly suicide data since January 2009, confirmed 118 suicides among members of the branch's National Guard and Reserve components in 2011.

"Suicide is the toughest enemy I have faced in my 37 years in the Army," General Lloyd J. Austin III, vice chief of staff of the Army, said in the report released on Thursday.

The above data affirms what seems to be an escalating trend.

As Congressman Ron Paul wrote last May,

Unfortunately, when presidents misuse our military on an unprecedented scale – and Congress lets them get away with it – the resulting stress causes military suicides to increase dramatically, both among active duty and retired service members. In fact, military deaths from suicide far outnumber combat deaths. According to an article in the Air Force Times this month, suicides among airmen are up 40 percent over last year.

This seems even a greater threat than the external enemies the US government has spawned or has been waging war against as the enemy has emerged from within: the loss of moral fiber (strength of character or firmness of purpose-dictionary.com)

This backlash from imperialist US foreign policies has not just been impairing the mental health of the US military but can likewise be observed in the developing “road to serfdom” political economic trends of the US (see links here, here and here).

All these seems ominous to a quote widely attributed to Soviet Union Premier Joseph Stalin but has been disputed by snopes.com

America is like a healthy body and its resistance is threefold: its patriotism, its morality and its spiritual life. If we can undermine these three areas, America will collapse from within.

Quote of the Day: End the Empire

The empire has put in place the pseudo-legal "laws" that it needs to repress dissidents within America. It will use these "laws" and executive orders in order to quell restiveness and resistance among Americans. The reason for the domestic suppression is because the empire cannot expand overseas if its domestic population is not under firm control. The driving force in domestic suppression is the goal of world empire. This is why lovers and supporters of liberty should strongly condemn all of the many U.S. actions to expand empire.

The idea that I've just expressed is not widely known, much less accepted. So I'll repeat it again. The U.S. wants a world empire and is actively trying to achieve that aim. That's its number one priority. In order to achieve that, it needs a cooperative, compliant, and productive population and one that does not resist that aim. That is why the government has been putting measures in place that are repressive and destroy judicial rights.

According to an Iranian analyst who specializes in Russia, the Russians now understand what the U.S. is after. It has taken them a while for this to penetrate. He writes of the Russians

"Russian analysts maintain that the current foreign policy of the United States is based on two theories: 'ultimate realism,' and 'new liberalism.' As a result, the Americans actually believe that world countries are simply divided into the United States’ friends and enemies. Hostile countries, therefore, should be weakened and their presence in global and regional strategic arenas should be limited and even suppressed in political, economic and cultural terms.

"The new liberalism also claims that all wars break out between non-democratic states. Therefore, all countries should go through an American style democratization process and if needed, military means such as preventive war, can be used to achieve that purpose.

"As a result of the above arguments, Russia believes that the current political developments in the Middle East and North Africa are steered by the United States. Moscow firmly believes that a new wave of the world order has been initiated by the United States in order to create a new version of the past unipolar world system. The main targets of this wave, Moscow maintains, include North Africa, the Middle East, Iran, Eurasia, and finally China and Russia."

This is from Michael S. Rozeff at the Lew Rockwell Blog

Corporations Are People

Emotions can make even the best lose their sense of reasoning

My favorite marketing guru, Seth Godin, writing in disgust from an unfortunate experience by a customer with an insurance company, rants,

if someone in your neighborhood used this approach, treating others this way, if a human with a face and a house and a reputation did it, they'd have to move away in shame. If a local businessperson did this, no one in town would ever do business there again.

Corporations (even though it's possible that individuals working there might mean well) play a different game all too often. They bet on short memories and the healing power of marketing dollars, commercials and discounts. Employees are pushed to focus on bureaucratic policies and quarterly numbers, not a realization that individuals, not corporations, are responsible for what they do…

Corporations don't have to act like this. It's people who can make them stop. Corporations aren't people, people are people.

I sympathize with the tragic case presented by Mr. Godin. But personal tragedies should not be mixed up with ethical principles.

It’s is true that there will always be unscrupulous corporations. But CROOKED or IMMORAL behaviors or actions are NOT exclusive to corporations, they apply to PEOPLE—individuals or even communities (e.g. hate groups)—and most especially this applies to GOVERMENTs who wields coercive power over the community.

Corporations are no other than juridical or legal entity comprising sets of individuals.

Yet one unfortunate experience does not justify a sweeping condemnation of the rest. This represents a fallacy of composition.

Otherwise markets become zero-sum games which tilts the balance according to Mr. Godin’s accusations to producers or service providers at the expense of consumers. This is patently false.

In a market economy, corporations essentially do NOT force ‘people’ to buy their products or services. Mr. Godin admits to this, “If a local businessperson did this, no one in town would ever do business there again.”

But why should this be different elsewhere?

Only governments forces people to avail of their services. On many occasions these may come along with political arrangements with privileged private or semi-private owned corporations (e.g. public private partnerships, monopolies, subsidies and etc).

Corporations under such politically directed setting then would focus “on bureaucratic policies” or meeting political goals rather than servicing the consumers. The incentives guiding profit based private enterprises and public institutions are different.

In a market environment if corporations do not fulfill on their promises, then consumers can vote with their wallets and or file legal suits or countersuits against them.

Markets basically do not reward greed or “the power of marketing dollars” as the consumers are kings—unless inhibited by politics

Apparently, social media pressure (yes the free markets) seems to have forced the alleged corporate non-people antagonist to a settlement with the aggrieved. So the supposed villain has some people aspects too.

The idea of corporations as not representing the individual or the people looks like a Janus faced populist self-contradicting argument riding on people’s emotions in order to get “likes”.

Yet assuming Mr. Godin’s censure is true, this implies that since he possibly owns corporations (e.g. Seth Godin Productions Inc and Squidoo) then his denouncement could also mean that he must be similarly liable for “Corporations aren't people, people are people”

Ever heard of the proverbial pot calling the kettle black?

Failure of Alcohol Bans in the Muslim World

I have been saying here that prohibition statutes are noble sounding “feel good” political actions that fails to accomplish their goals (in fact they make them worst). Said differently, politics will never eviscerate the natural laws of economics.

The Economist has a terse commentary on the status of alcohol ban on Muslim countries which seem to validate such premises (bold added)

NOBODY knows exactly when Islamic scholars decided that booze was sinful. In the 1970s political Islam led some countries such as Iran and Pakistan to ban alcohol, although many do not and exceptions are made for non-Muslims. In some countries the punishment for Muslims caught quaffing are severe: 80 lashes in the case of Iran. Things may get more arid yet as Islamist parties from Indonesia to Tunisia moot restrictions on alcohol. The number of drinkers varies by country, but some put the total at 5% of those identifying themselves as Muslim. Drinking may even be on the rise. Between 2001 and 2011 sales of alcohol in the Middle East, where Muslims dominate, grew by 72%, against a global average of 30%. That rise is unlikely to be accounted for by non-Muslims and foreigners alone. The black market for spirits flourishes in Libya, while Iranians are adept at producing home brew. Could Islam become more tolerant of drinking? A handful of scholars permit alcohol as long as it is not made from grapes and dates, because these are specifically mentioned in the Koran.

Black markets (and bootleggers) naturally emerge where prohibition laws occur. Yet the article has been reticent about the criminality and corruption related aspects which usually account for as the other forms of unintended consequences inherent to such bans.

I may add that the above data may have severely underestimated the state of alcohol production and usage given that these “illegal” acts are done underground or in the shadow economy.

The more interesting part is that given the apparent failure of the alcohol ban, political authorities appear to be rationalizing (e.g. not made from grapes and dates) the prospective easing of such bans as expressed through opinion of experts.

Prohibition laws fail because, as Professor Mark Thornton argues, (bold mine)

History also supports the finding that prohibition is impossible to achieve in the economic sense. Legislatures do enact prohibitions and establish penalties and enforcement bureaus. The actions of these bureaus to enforce prohibition decrees have an effect, and when a prohibition survives long enough to be enforced it is successful in a political sense. I argue, however, that prohibitions have no socially desirable effect.

Of course prohibition should not be evaluated against a higher standard than other laws. Murder is against the law, but not all murderers are apprehended, convicted, and punished. Likewise, to expect complete or perfect prohibition is unrealistic. Rather, prohibition will be measured against its public-spirited intentions, that is, to reduce consumption of a good in order indirectly to reduce social ills (such as crime, destruction of free will, drug-related deaths) and to promote social goals (family life, democracy, health, and economic development).

To the extent that prohibitions result in increased prices, they produce increased crime and political corruption. Higher prices for a prohibited product also result in the substitution of related products and the innovation of more dangerous substitutes. Prohibited products tend to be more dangerous than legal substitutes in many respects, the result of prohibition, not the product itself.

Therefore, to assume that more severe penalties or increased enforcement will result in the substitution of legal for prohibited products is to make an invalid conclusion.

People dream about a moral society, yet the best way to do this is through free markets.

Quote of the Day: The Free Market is in Full Harmony with the Principles of Christianity

I am a very staunch believer that free-market principles are in full harmony with Christian principles and that the free market is the only economic system that is consistent with Christian or Judeo-Christian principles. I must say that in recent years the organized churches, both the Protestant and the Roman Catholic, have not been in harmony with free-market teachings, nor have they been in harmony with what I must hold are the principles taught in the Bible. The organized churches have largely accepted the welfare state ideology so popular today. This ideology has changed the original meaning of the Ten Commandments. I could give you quite a speech on that. However, I want to make just this one point. There is the Commandment which in English is only four words: "Thou shalt not steal." Today, most of our people think that it has been expanded to eight words. They think it is: "Thou shalt not steal except by majority vote." They seem to think that any stealing done by majority vote is all right.

Except when necessary for defense, neither capitalism nor Christianity approves of the use of force or coercion. The fundamental principle of the free market, voluntary social cooperation for mutual advantage, is in full conformity with Judeo-Christian teachings.

This is from an article or transcript from a talk given by the late free-market economist Percy L. Greaves, Jr. (1906–1984).

Soros, Paulson and Emerging Market Central Banks Ramp Up Gold Purchases: Calm Before the Storm?

Speaking of demonstrated preference or actual choice revealed through actions taken, billionaire fund managers-investors George Soros and John Paulson have reportedly been escalating on their gold positions.

From the Bloomberg,

Billionaire investors George Soros and John Paulson increased their stakes in the biggest exchange- traded fund backed by gold as prices posted the largest quarterly drop since 2008.

Soros Fund Management more than doubled its investment in the SPDR Gold Trust to 884,400 shares as of June 30, compared with three months earlier, a U.S. Securities and Exchange Commission filing for second-quarter holdings showed yesterday. Paulson & Co. increased its holdings by 26 percent to 21.8 million shares…

Paulson, 56, who became a billionaire in 2007 by betting against the U.S. subprime mortgage market, lost 23 percent in his Gold Fund through July as lower bullion prices and slumping mining stocks contributed to declines.

Holdings in the SPDR Gold Trust are Paulson’s largest position. He also bought shares of NovaGold Resources Inc. (NG) last quarter and sold other stocks, leaving his $21 billion hedge fund with more than 44 percent of its U.S. traded equities tied to bullion.

Paulson’s U.S.-listed holdings peaked at $34.3 billion at the end of March 2011, with about $7.7 billion of that amount, or 23 percent, invested in gold related stocks. He had 33 percent of his U.S. stock holdings in gold-related securities at the end of the first quarter and 25 percent a year ago.

What has piqued my interests me has not just been Mr. Paulson or Mr. Soros’ gold buying spree, but of the apparent shifting made by Mr. Soros, who seem to be emptying his stock market exposure, particularly on the financials, and repositioning them all into gold ETFs.

Analyst Mac Slavo at the Shtfplan.com notes,

Soros, who manages funds through various accounts in the US and the Cayman Islands, has reportedly unloaded over one million shares of stock in financial companies and banks that include Citigroup (420,000 shares), JP Morgan (701,400 shares) and Goldman Sachs (120,000 shares). The total value of the stock sales amounts to nearly $50 million.

What’s equally as interesting as his sale of major financials is where Soros has shifted his money. At the same time he was selling bank stocks, he was acquiring some 884,000 shares (approx. $130 million) of Gold via the SPDR Gold Trust.

When a major global player with direct ties to the White House, Wall Street, and the banking system starts off-loading stocks and starts stacking gold, it suggests a very serious market move is set to happen.

And this hasn’t been just about Messrs. Soros and Paulson; emerging market central banks, including the Philippines, the ultimate insiders, seem to be joining the ranks of gold hoarders.

The Mineweb reports,

perhaps one of the most interesting findings of this latest analysis is that gold buying by the world's Central Banks hit a new record of 157.5 tonnes , more than double the level of Q2 2011 and accounting for 16% of overall global demand. This, by our reckoning is also around 22.5% of total gold supply over the period extrapolating from the WGC's own annual figures for 2011. Central banks that significantly bolstered their holdings during the quarter included the National Bank of Kazakhstan, and the central banks of the Philippines, Russia and Ukraine.

The irony of this is that all these insider buying comes amidst dampened demand for gold in terms of investment and jewelry.

Chart from Forexpros.com

Yet part of the current slowdown in the conventional demand for gold can be traced to the ongoing weakness in the global economy.

A sign of this can be seen in Lisbon Portugal where residents may have already depleted their jewelries for cash.

From Bloomberg,

In Portugal, the historical home of some of Europe’s biggest gold reserves, the number of jewelry stores, which include cash-for-gold shops, increased 29 percent in 2011 from a year earlier, a study commissioned by parliament found. In the first quarter, an average of two new stores opened every day, the report said. Now some of them are closing.

“Business has gone from great to terrible in a matter of months,” Luis Almeida, whose family has owned a gold store near Lisbon’s Rossio Square for more than 40 years, said in an interview. “The sad truth is that most of my clients have already sold all of their gold rings.”

Selling gold for cash exhibits that gold barely functions as hedges against deflation.

Technically speaking, gold prices has been in a two year consolidation phase.

A seeming trend-continuing pennant or wedge-neutral formation could suggest that a breakout of the 1,650 resistance level could incite a test on the previous highs at the 1900 level.

Nonetheless, could (White house insider) Mr. Soros, Mr. Paulson and emerging market central bankers (ultimate insiders), such as Bangko Sentral ng Pilipinas’ Amando Tetangco, Jr. be anticipating something big soon?

Does the current environment represent proverbial calm before the storm?

Chart of the Day: Applying Demonstrated Preference in US Elections

The following chart presents the US voter turnout during Presidential elections since 1964

chart from Stanford Institute for Economic Policy Research/Timothy Taylor’s Blog

Writes economist Timothy Taylor,

The youngest group of voters from age 18-24 have seen a rise in turnout recently, especially from 2000 to 2004, and there is a more modest rise in turnout for some other age groups. But all elections since 1988 have had lower turnout than that year; in turn, 1988 had lower turnout that the presidential elections from 1964-1972.

I see the chart as a reminder of a basic truth: Elections aren't decided by what people say to pollsters. They are determined by who actually casts a vote.

Lesson: Watch what people do as they represent choices from their values and preferences rather than what they say. This applies to everything, not limited to politics.

Quote of the Day: The Benefit of Not Voting

we do have the freedom not to vote. No one has yet drafted us into the voting booth. I suggest that we exercise this right not to participate. It is one of the few rights we have left. Nonparticipation sends a message that we no longer believe in the racket they have cooked up for us, and we want no part of it.

You might say that this is ineffective. But what effect does voting have? It gives them what they need most: a mandate. Nonparticipation helps deny that to them. It makes them, just on the margin, a bit more fearful that they are ruling us without our consent. This is all to the good. The government should fear the people. Not voting is a good beginning toward instilling that fear

This is from Llewellyn H. Rockwell, Jr. founder and chairman of the Mises Institute, at the LewRockwell.com

Brazil’s Government Unveils $66 Billion Stimulus

Brazil, one of the key emerging markets, has finally taken official action. Brazil’s government has launched a $66 billion economic stimulus.

From Globe and Mail,

Brazil is getting back in the stimulus business, underscoring the limits of emerging markets to drive growth in the global economy.

Facing a deteriorating economy, President Dilma Rousseff Wednesday announced an infrastructure investment strategy valued at about $66-billion (U.S.), the first of several programs that local media reports say could be coming in the weeks ahead.

The massive program, which includes private construction of toll roads and investment in rail lines, comes amid slowing growth in other emerging powerhouse economies such as India and China, which along, with Brazil and Russia form the BRIC group of nations.

Not so long ago, Brazil was an economic high flyer, turning its back on a history of financial crises and emerging as one of the world’s most dynamic economies.

But more recently, the country has been grounded, dashing hopes that Latin America’s largest economy would help offset weak recoveries in the United States and Europe…

Ms. Rousseff’s plan should accelerate construction. Loosening the government’s grip on public goods, she pledged to sell concessions that will clear the way for private contractors to build 7,500 kilometres of roads, and then collect the tolls.

The government also will hire private companies to build 10,000 kilometres of railroads and allow them to share in the profits.

Brazil’s state-run development bank will finance all the projects at subsidized rates.

In today’s world of fiat money based central banking system, boom bust cycles have become the main feature. Brazil has been no different.

Charts from tradingeconomics.com

Brazil’s interest rates fell in 2009 as her economy plunged into a recession having been contaminated by the US property-mortgage bust in 2008.

However Brazil’s version of (zero bound rates) or negative real rates fueled the recovery of Brazil’s stock market.

The ensuing stock market boom has also been reflected on the economy, as well as, in the inflation rates.

Signs of credit powered “overheating” prompted for a series of interest rate increases which drained liquidity from the system. This has prompted for the recent economic slowdown which has also been ventilated on a sluggish stock market.

So in order to avoid from having to endure the required market adjustments from previous malinvestments, Brazil’s government today resorted to policy maneuverings that focuses on a short term fix.

Of course, the major beneficiaries here would be the cronies of Brazil’s incumbent government who will likely be assigned contractors for such state directed spending binge.

Nonetheless short term fixes will accrue to even more misdirected investments that would mean the amplification of Brazil’s homegrown bubble cycles.

Yet it would be interesting to see if Brazil’s stimulus program would be enough to shield her economy from increasing evidences of a deepening downturn in the global economy.

China’s Weakening Property Markets and FDI flows Spurs More Promises of Policy Steroids

Day in day out, flows of negative news from China seems to be worsening.

China’s property ownership restrictions may partly have influenced the unfolding weaknesses in China’s real estate markets.

From Bloomberg,

Shanghai last year started limiting locals to owning two homes, while families among the city’s 9 million non-local residents were capped at one. Unmarried non-locals, who had been able to buy as long as they proved a year or more of tax payments, are now being frozen out altogether after the city toughened implementation of the curbs following Chinese Premier Wen Jiabao’s vow in July to “unswervingly” contain prices.

Chinese males are expected to own a home before they approach their would-be wife’s family for approval to wed. In rural parts of the country, parents extract most of the family’s wealth to build houses for their sons ahead of the marriage; in cities, securing an apartment is the equivalent.

New-home prices in China fell for nine straight months through May as government restrictions achieved the goal of cooling the market, according to SouFun Holdings Ltd. (SFUN), the country’s largest real estate website owner. In July, values bucked the trend, posting the biggest gain in more than a year, SouFun said Aug. 1.

“China’s property policies will definitely focus on those first-tier landmark cities,” said Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “If all the current curbs are not working, the government may have to be more hawkish in the second half. Their bottom line is to stop prices from rebounding.”

After stricter implementation of its curbs, Shanghai’s new home sales fell 16 percent in July from a month earlier to 7,025 units, according to data from Century 21 China Real Estate, the country’s second-biggest property brokerage. Sales had surged 24 percent to 8,365 units in June, the highest in 17 months.

“The policies did have some impact on the market,” said Huang Hetao, Shanghai-based researcher at Century 21.

China’s second-largest city by population, Shanghai had about 23 million residents at the end of 2010, about 9 million of whom were non-locals, according to the nation’s statistics bureau. An influx of construction, information technology, and other workers almost tripled the cost of homes in Shanghai in the past 10 years, according to government data.

Foreign investors has also exhibited signs of apprehensions over China’s economy as reflected by the recently released figures on Foreign Direct Investments (FDI)

From another Bloomberg article,

Foreign direct investment in China fell to the lowest level in two years in July, fueling concern that waning confidence in the nation’s growth prospects may restrain any economic rebound

Investment declined 8.7 percent from a year earlier to $7.58 billion, the eighth drop in nine months and the smallest inflow since July 2010. The Ministry of Commerce released the data at a briefing in Beijing today.

Chinese financial institutions sold a net 3.8 billion yuan ($600 million) of foreign currency last month, indicating capital is flowing out as property curbs and weakness in exports slow growth and the yuan weakens.

China’s slowdown may extend into a seventh quarter after export growth collapsed in July and industrial production and lending missed economists’ forecasts. The nation reported a $71.4 billion capital account deficit in April-through-June, the biggest quarterly shortfall in data going back to 1998…

“In the second half, China’s foreign trade and export situation will be more grim, there will be more difficulties, harder tasks, and the pressure of achieving the full-year target will be bigger,” Shen Danyang, spokesman for the commerce ministry, said at today’s briefing. The country aims for 10 percent growth in trade this year.

Contrary to the traditional reactions where negative news would equate to negative sentiments as reflected on deteriorating markets, the constant flow of seemingly adverse developments have instead bolstered expectations of a soon to be implemented grand bailout from the Chinese government and or her central bank.

Such expectations are being fed by politicians, media and steroid starved asset markets participants.

From another Bloomberg article,

Chinese Premier Wen Jiabao said easing inflation allows more room to adjust monetary policy and positive signs are emerging in the economy, expressing confidence after July data showed a further slowdown in growth.

“We have the conditions and capabilities, and will be sure to fulfill this year’s economic and social development targets,” Wen said during a two-day inspection tour to the eastern province of Zhejiang, the official Xinhua News Agency reported yesterday. He said downward pressure on the economy remained “relatively large,” according to state radio, and state television reported him as saying there’s “growing room for monetary policy operation.”

The comments may bolster speculation China will cut banks’ reserve requirements or benchmark interest rates again after inflation slowed to a 30-month low in July, export growth collapsed and new yuan loans trailed estimates. Zhejiang, an export base, is among the hardest-hit regions by the economic slowdown.

China’s politicians have increasingly resorted to the talk therapy in attempting to manage the sentiments or the ‘animal spirits’ of the markets. Yet this, for me, are signs of the ongoing political deadlock as China’s election seasons nears and a highly fragile environment.

Promises have been meant to be broken is the convention when it applies to politics.

Thus relying on promises from politicians can be dangerous and costly to the health of one’s portfolio.

Be careful out there.

Myth of the Greater Good: Philippine Government to ‘Blast’ Illegal Settlers for Flood Project

Recently I quoted Wendy McElroy’s the Myth of the Greater Good.

Yesterday’s headline news would seem like a great example

From Yahoo.com

The government is prepared to "blast" houses and other illegal structures along riverbanks and waterways if inhabitants refuse to transfer to safer areas, Public Works and Highways Secretary Rogelio Singson said yesterday.

Singson said President Benigno S. Aquino III has authorized the use of force to remove obstructions in the tributaries in Metro Manila and nearby provinces, citing the government's "political will" to implement its P352-billion flood control and mitigation program.

He said the government plans to relocate around 190,000 illegal settlers in the water channels as part of its efforts to reduce floods and minimize casualty during stormy weather.

"I just received instructions from the President that if push comes to shove, we will have to blast the houses if they don't leave within a certain period," Singson said in a Palace press briefing after presenting the flood control master plan to the President.

Political priorities that cater to the alleged “greater good” as shown in the above are reactive, presumptive, short term oriented and populist. Such also demonstrates the innate nature of the state.

The usual stereotyped responses by the government to fleeting immediate popular concerns are short term oriented, where the typical solution centers on throwing of more money at the problem, more regulations or prohibitions and or more taxes.

Never mind that the past centrally planned flood projects have been ineffective. Nobody questions if such fiascos have mainly been consequences of the knowledge problem and of the fragility of central planning operating on a highly complex environment. Everybody has been made to superficially think or believe that such blemishes have been mainly about the lack of money and or mismanagement and of the supposed necessity of government action.

So to address these, for politicians and the bureaucracy, such failures require even grander and more lavish projects. Of course these will be accompanied by the presumptions of expertise.

And anything that obstructs on their visions has to be met by force. Since environmentalism has been today’s politically correct theme, thus illegal settlers or squatters have become targets for coerced actions.

The so-called poor, whom were frequently used as convenient rationalizations for raising taxes, have been transformed into objects of political wrath.

Political priorities are dynamic. The shifting nature of government’s attention greatly depends on popular circumstances which dominate the headlines or which reflect on the public’s opinion.

A few months back, the public has been mesmerized with territorial claims dispute. And with calls for populist nationalism, the government’s response has been to increase their budget with implicit popular approval. According to globalsecurity.org, the Armed Forces modernization bill that would add 75 billion pesos ($1.8 billion) for defense spending over the following five years to acquire more weapons, personnel carriers, frigates and aircraft. Yet all such increases in military spending will hardly bolster the nation’s defense or do anything substantial to address the so-called controversial regional dispute.

Instead what these does is to pressure taxpayers into supporting non productive activities which will be used against them.

In the future, should there arise other popular immediate concerns such as natural calamities, e.g. earthquakes or tsunamis or others, expect the response to be the same—throw money at the problem, and wish or hope for their success.

Current political obsession over the environment comes in response to the monsoon rain flooding where popular opinion has been shaped by flawed ideas of environmental experts. One of whom has even blamed economic growth and urbanization as responsible for the current disasters.

Never mind if the citizens of the metropolis have shown increased wellbeing from economic development (table from NSO).

For the environmentalist religion, the argumentative framing has been to put up a strawman and beat them down.

The thrust of the environmental nirvana fallacy extrapolates that we should remain poor so as to allegedly “save the environment”. Yes, use one event (fallacy of composition) to highlight the need for socialist interventionist misanthropic (anti-people) policies by ignoring all other important factors.

High approval ratings thus becomes a license for political boondoggles premised on the supposed omniscience of “experts” whose reasoning can’t even pass the logical rigors of economics.

High approval ratings also mean that current policies have been designed based on the outcome most preferred by the median voter—Median Voter theory or populist politics.

Yet politics has always been a zero sum or even a negative sum activity.

So the Philippine government has turned the heat against the illegal settlers or squatters whom incidentally are mostly creatures of the state through the decriminalization of squatting or the Lina Law. The immoral statute has encouraged rampant squatting which has mostly been used by local politicians for election purposes.

Never mind too that despite the immorality of the actions of the illegal settlers who were mostly incentivized by law and became instruments of politicians, these people still have natural rights enshrined by Article 3 of the Philippine 1987 constitution (hat tip my beloved daughter) which holds that

No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

“The government is prepared to "blast" houses and other illegal structures” signifies that the privileges of the natural rights of life, liberty, or property only belong to the political class and to those designated by them. All the rest are standing vassals of the state and whose lives are seen merely as statistics.

This also shows that the nature of the state is institutional violence, such that violence and the threat of violence can be used indiscriminately, especially targeted against their own citizens, depending on the caprices of those that wield them.

As the great Professor Ludwig von Mises explained,

State and government are the social apparatus of violent coercion and repression. Such an apparatus, the police power, is indispensable in order to prevent antisocial individuals and bands from destroying social cooperation. Violent prevention and suppression of antisocial activities benefit the whole of society and each of its members. But violence and oppression are none the less evils and corrupt those in charge of their application. It is necessary to restrict the power of those in office lest they become absolute despots. Society cannot exist without an apparatus of violent coercion. But neither can it exist if the office holders are irresponsible tyrants free to inflict harm on those they dislike.

In reality, both illegal settlers and the threat of violence against them, to justify the administration’s new pet flood project, signify ethically as two wrongs which do not make right.

Yet for the current crop of politicians, high approval ratings translates to political superciliousness and the license to conduct political repression which elevates the risks of a tyrannical rule.

History shows us of the myth of the rational voter where people junk rationality in terms of politics to support “systematically biased ideas concerning economics” or widespread social ideas grounded on economic ignorance.

Populist politics have been premised on what people want to hear rather than what they need to hear.

Nazi chief Adolf Hitler’s popular rise to power should be a magnificent example. Chart from Spiegel Online

At the end of the day, the “greater good” is in essence the bamboozling of the gullible public using feel good political themes, for them to support the self-interests and the priorities of the political class coursed through institutionalized violence.

Quote of the Day: The Importance of Economic Education

The phenomenon of economic ignorance is so widespread, and its consequences so frightening, that the objective of reducing that ignorance becomes a goal invested with independent moral worth. But the economic education needed to reduce such ignorance must be based on austere, objective, scientific content—with no ideological or moral content of its own. Precisely because it is necessary to “persuade” (that is, to educate) the lay public, it is necessary that this public be convinced of the objectivity and ideological impartiality of the insights being transmitted.

If public policies seeking to increase the scale and scope of government intervention in the economy are to be successfully fought at the legislative and executive levels, the economic understanding of the public must certainly and urgently be enhanced. For this to be achieved, the delicate interface between moral passion and scientific detachment must be recognized and respected.

This is from Professor Israel M. Kirzner from a 1998 Freeman online article.

From the perspective of populist politics, economics barely exists.

President Obama’s Small Beer Brewery at the White House

Proof of President Obama’s reported alcoholism?

From the USA Today,

The Obama administration confirmed today it has added a new facility to the White House: A small beer brewery.

Officials discussed the brewery after President Obama told some Iowa residents that he had some of its product stocked aboard the bus he's using for a three-day tour of the Hawkeye State.

"There is a home brew, if you will, at the White House," said White House spokesman Jay Carney.

It’s one thing to get enamored with beer. But it’s another thing to get addicted with the foisting of free lunch beer social policies on the public.

More Proof of China’s Political Dawdling

More proof of China’s political impasse and a dithering central bank.

From Bloomberg,

China’s slower-than-forecast cuts in banks’ reserve requirements show authorities are reluctant to shake their concern inflation will quicken, three months after Premier Wen Jiabao shifted priorities to boosting growth.

China has left the reserve ratio for the biggest banks at 20 percent since mid-May while lowering interest rates in June and July, bucking forecasts from HSBC Holdings Plc and Societe Generale SA that the government would build on three ratio reductions since Nov. 30. Industrial-production and loan data for July that missed estimates last week fueled further speculation the People’s Bank of China would cut the ratio as soon as Aug. 10.

The hesitation risks increasing the odds that growth will decelerate for a seventh quarter just as Communist Party leaders gather for a once-a-decade power handover. The PBOC said this month that price gains may rebound after August and a newspaper published by the institution said more reserve-ratio cuts would backfire by increasing inflation expectations.

China’s central bank’s partial or reluctant interventions have not been enough to provide the opiate for the steroid starved markets.

More from the same article,

The PBOC has stepped up the use of another tool to pump temporary funds into the financial system. The central bank has injected 826 billion yuan ($130 billion) since late June by offering seven- and 14-day reverse-repo contracts, according to data compiled by Bloomberg. The previous reserve-ratio cut of 50 basis points probably released 450 billion yuan into the financial system, according to Goldman Sachs Group Inc.

The actions have failed to produce a sustained increase in credit. New local-currency loans tumbled 41 percent last month to 540.1 billion yuan, the lowest since September, missing all 30 estimates in a Bloomberg News survey…

Separately today, Chinese banks’ bad loans increased for a third straight quarter for the first time in eight years, a report from the China Banking Regulatory Commission showed. Bad loans surged at all types of banking institutions, including the largest state-owned lenders, rural banks and foreign banks, the regulator said.

Last week’s rally seen inn China’s Shanghai index appears to be faltering anew. Today the major bellwether lost over 1%.

The uncertainty from the China’s political directions and economic slowdown should not be discounted.

Be careful out there.

Technology Breakthrough: A Coming Cure for Blindness?

Will blindness from retinal disorders find a lasting cure? A recent experiment which shows of the amazing pace of technological breakthroughs seems to give us that hope.

From Bloomberg, (hat tip Professor Mark Perry) [bold emphasis added]

Blind mice had their vision restored with a device that helped diseased retinas send signals to the brain, according to a study that may lead to new prosthetic technology for millions of sight-impaired people.

Current devices are limited in the aid they provide to people with degenerative diseases of the retina, the part of the eye that converts light into electrical impulses to the brain. In research described today in the Proceedings of the National Academy of Sciences, scientists cracked the code the retina uses to communicate with the brain.

The technology moves prosthetics beyond bright light and high-contrast recognition and may be adopted for human use within a year or two, said Sheila Nirenberg, a neuroscientist at Weill Cornell Medical College in New York and the study’s lead author…

About 20 million people worldwide are blind or facing blindness due to retinal degenerative diseases, such as macular degeneration and retinitis pigmentosa. The disorders cause a progressive loss of the retina’s input cells, or photoreceptors.

Nirenberg and co-author Chethan Pandarinath first monitored healthy eyes to determine the set of equations that translate light received by the retina into something the brain can understand. Then, they used special glasses to create a similar code and deliver it to the eye, which had been engineered to contain light-sensitive proteins. The cells received the code through the light sensitive proteins and fired electric impulses, which the brain could interpret as images.

Nirenberg’s research “is basically giving vision back to a system that doesn’t work,” said Aude Oliva, a principal investigator at the Massachusetts Institute of Technology’s Computer Science and Artificial Intelligence Laboratory in Cambridge, Massachusetts, who wasn’t involved in the research. “I’ve never seen, and other people have never seen, this quality.”

No foreseeable barriers should stop the movement into humans now that the technology has been created, Oliva said. Nirenberg said that if researchers can come up with adequate cash to fund clinical trials, she hopes to soon adapt the technology.

Macular degeneration is the leading cause of blindness in people older than 55 in the western world and may triple in incidence by 2025 according to a 2009 report by the American Optometric Society. Retinal diseases could find a “reasonable solution” in the technology, said Jonathan Victor, a professor in the department of neurology and neuroscience at Weill who was familiar with, but not involved in the research.

Yet it is one thing to be physically blind and another to be mentally blind, especially from politics. The above shows that there is hope for the former while the latter seems incorrigible.

Olympics and the Egalitarian Bunk

Politicians and their mainstream sycophants frequently lectures, directly and indirectly (through media), the public about the supposed necessity of having a society based on ‘equality’ or egalitarianism.

Unfortunately they hardly practice what they preach.

Professor Tibor Machan exposes the egalitarian balderdash.

The Olympic Games come in very handy for those of us who find egalitarianism morally and politically intolerable. The Games show how little appeal there is to forcing everyone into the same mold, how much violence and coercion it would--and where attempted does--take to even toy with bringing about an egalitarian society.

The only place where equality has a decisive role in human social affairs is when it comes to protecting everyone’s basic rights. This is the way the Declaration of Independence finds room for equality. Once everyone’s basic rights are secure, from that point on no room exists for equalization in a just human community.

Sure, there can be special areas where equality can be of value, for example in the application of standards and rules, as shown in athletics. But even there equality will apply in highly diverse ways--one way in the classroom, another in the legal system, and yet another at a beauty contest. General equality belongs only in the protection of individual rights, period.

Elsewhere it is just as it’s illustrated by the Olympic Games, with variety and differences breaking out all over. As long as these are peacefully obtained, as long as ranking comes about without corruption, there is nothing objectionable about inequalities in human affairs. Furthermore, attempting to make things equal achieves the exact opposite since those doing the attempting will enjoy the worst kind of inequality, namely, power over their fellows as they try to manipulate everyone to be equal.

Just as elsewhere in most of nature, in human affairs, too, inequality is the norm. But since human beings are free to establish various rules in their societies, they have the option, which they ought to exercise, to preclude all coercion from human interactions. Beyond that, it is futile to try to exclude inequalities in human affairs.

It is not inequality that needs to be abolished but coercive force. With that achieved, at least substantially, let diversity and difference be the norm. As that old saying goes, “Vive la difference.” Any serious examination of the prospects of an egalitarians polity should reveal just how insidious the idea is. Just consider requiring that all outcomes of the Olympic Games be equal!

The simple point is that Olympics is all about the inequality of human affairs. The fact that governments promote Olympics has been an implicit recognition of such diversity.

Yet in reality, the politics of egalitarianism represents nothing more than convenient excuses to implement social policies of redistribution or interventionism and the rule of philosopher kings.

Quote of the Day: Freedom and Wealth

To say that freedom creates prosperity is convenient shorthand.

To be more precise, freedom provides a conducive environment in which prosperity, the dynamic of wealth creation, can function.

What is this dynamic? Where does wealth come from? We ourselves are its creators. It is the nature of man to provide himself food and shelter, to improve his circumstances, to discover, to invent, to refine, and to expand.

When free to do so, he creates wealth, creates it again, and creates it anew.

The presence of petroleum was a nuisance to Pennsylvania farmers until in 1849 someone discovered how to refine kerosene. John D. Rockefeller’s fortune was begun in refining kerosene, although before long a man named Thomas Edison had invented a way to light homes that was superior, and Rockefeller’s business had to adjust.

The distribution of alternating current discovered by Nikola Tesla was commercially superior to the direct current Edison built his company on and Edison Electric was forced to adapt to the new improvement.

Wealth is created by the greatest resource of all: human beings. It is people who continually discover lesser resources and put them to use in new ways.

Look about at all the wealth people have created. Buildings and homes, schools and churches, stores and places of entertainment; leisure and literacy and libraries; heating and cooling systems; bright lives of bright lights, bright colors, and stunning clothing; marvels of electronics, digital magic, and the miracle of global communications; new medical techniques, devices, and medicines; high-speed travel and stores stocked full of food, much of it fresh from around the world.

A return to the path of prosperity does not lie in legislative prescriptions, new programs or new plans for what the state must do.

Our prosperity will not be restored by some new tax-cut proposal or new spending initiative; no laws will do it; no charming candidate.

Our problem transcends any mechanical solutions or reform package. We are beyond the ability to fix our problems with process tinkering.

As congressman Ron Paul has noted, “It’s not a budgetary problem. The budget is a symptom of this disease. Americans have to inquire into the nature of government itself.”

(italics original)

This is from Charles Goyette’s Red and Blue and Broke All Over as quoted by Dr. Martin Weiss at the moneyandmarkets.com

Swiss National Bank’s Currency Interventions Spawns Property Bubble

The unintended consequences from massive currency interventions conducted by the Swiss National bank, designed to curb huge inflows from a capital diaspora in the Eurozone by putting a ceiling on the euro, has apparently spawned a monster property bubble.

From Bloomberg,

Thomas Jordan’s fight to protect the Swiss economy is set to widen beyond currency markets and too- big-to fail risks as the central bank chairman considers how to curb the biggest real-estate boom in two decades.

The Swiss National Bank may act to stem what it called risks from “excessive credit growth,” economists from Bank Sarasin to UniCredit Group said. An option available to the central bank would be to force lenders to hold additional capital of as much as 2.5 percent of their domestic risk- weighted assets to help buffer against losses.

The SNB has already put a cap on the franc to counter the currency’s ascent and protect the economy. After leading efforts to boost capital requirements for UBS AG (UBSN) and Credit Suisse Group AG (CSGN), the country’s two largest banks, Jordan is now turning his focus to smaller lenders as the risk of a significant drop in property prices increases.

“The SNB has been warning for quite a while of a real- estate bubble and it wants to see a cooling,” said Andreas Venditti, a senior analyst at Zuercher Kantonalbank in Zurich. “It’s very possible that the buffer will be implemented before the end of the year.”

In the SNB’s June Financial Stability Report, which also called on Credit Suisse, Switzerland’s second-largest bank, to boost its capital, the central bank said the mortgage market poses a significant risk to Swiss lenders. Home loans have increased by almost 300 billion francs ($307 billion) in a decade and gained 5.2 percent last year to 797.8 billion francs. That’s about 140 percent of Swiss gross domestic product.

Surging Prices

The cost of owner-occupied apartments with as many as five rooms has risen the most over the past 10 years, with prices jumping 40 percent, SNB data shows. Prices of rental apartments have increased 29 percent.

UBS and Credit Suisse had combined outstanding mortgages of 240.6 billion francs at the end of 2011, up 2.8 percent from the previous year. Cantonal banks, which are largely owned by the regions, had a 6 percent increase, while the cooperative-based Raiffeisen banks saw mortgages surge 7.4 percent.

UBS said on July 31 that if property values fell by 20 percent, 99.7 percent of its exposure to Swiss real estate would remain covered by collateral. While prices are still climbing in some regions, “at this time, we don’t believe this could destabilize the Swiss economy or cause major losses for UBS,” Chief Financial Officer Tom Naratil said.

Chart courtesy of La Chronique de Crottaz Finance

To what extent has the SNB expanded their balance sheet?

Here’s the Financial Times,

Foreign exchange reserves rose to SFr406bn ($419.7bn) last month, up from SFr365bn in June, marking the third consecutive month that the Swiss National Bank has been forced to add tens of billions to its balance sheet in its efforts to weaken the Swiss currency.

The SNB has had a policy of keeping the franc at a ceiling against the euro of SFr1.20 since September and has vowed to buy as many euros as necessary to prevent the franc from strengthening beyond that level.

Recent interventions in the forex market have seen the SNB’s balance sheet expand to record levels. Forex reserves have risen 71 per cent since April, the latest figures show.

The credit boom seems to have percolated into the stock market too.

As of yesterday the Swiss Market Index has returned 9% and about 29% from the trough last August or about a year ago.

And considering that the growth of SNB’s balance sheet has vastly outpaced the the US Federal Reserve and other major central banks, the Swiss franc has even weakened substantially against the US dollar.

Taking cue from the Great Depression, the distinguished dean of Austrian economics Murray N. Rothbard wrote,

The trouble did not lie with particular credit on particular markets (such as stock or real estate); the boom in the stock and real estate markets reflected Mises's trade cycle: a disproportionate boom in the prices of titles to capital goods, caused by the increase in money supply attendant upon bank credit expansion

Yet if the SNB succeeds to restrain the banking system’s unsustainable credit expansion then a bust should be expected.

The boom-bust (Austrian Business) cycle as explained by the great Professor Ludwig von Mises,

But the boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances.

In a fiat money central banking standard, boom bust cycles have been the dominant landscape.