Category Archives: Israel

Hydra-Headed Commie Talking Heads

Business, Capitalism, Communism, Debt, Economy, Federal Reserve Bank, Inflation, Israel, Journalism, Media, Republicans

Last night I watched one of the many performances Stephen Moore and John Fund give on Glenn Beck’s show, talking up the bailout while making the obligatory noises about their free market credentials.

I wonder why Glenn Beck, whose instincts are generally good, and who disagreed with them, tolerates such obfuscation. Has Glenn done no research? Stephen Moore authored a book paradoxically titled Bullish on Bush: How the Ownership Society Is Making America Richer.

Here’s my truism, excerpted from “Bush & The Bailout Bandits”: “Bush’s ownership society, built as it was on quicksand, has metamorphosed into the bailout society.”

Is America ever going to fire its failed philosopher kings when they fail to predict anything?

Here is an excellent antidote (via LRC.Com) to the hydra-headed talking heads, exposing them for the philosophical commies they are. It’s written by the Canadian Austro-libertarian Martin Masse:

KARL’S COMEBACK

Martin Masse
Financial Post, September 30, 2008, FP13

In his Communist Manifesto published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes over power, with the aim of centralizing all instruments of production in the hands of the state. Proposal #5 was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.

Indeed, analysts at the Heritage Foundation and Cato Institute, and commentators in the Wall Street Journal and in this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled $700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dotcom bubble in 2001.

“Whatever happened to the modern followers of my free-market opponents?” Marx would likely wonder.

At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.

So why throw this sound free-market analysis overboard as soon as there is some downturn in the markets?

The rationale for intervening always seems to centre on the fear of reliving the Great Depression. If we let too many institutions fail because of insolvency, we are being told, there is a risk of a general collapse of financial markets, with the subsequent drying out of credit and the catastrophic effects this would have on all sectors of production. This opinion, shared by Ben Bernanke, Henry Paulson and most of the right-wing political and financial establishments, is based on Milton Friedman’s thesis that the Fed aggravated the Depression by not pumping enough money into the financial system following the market crash of 1929.

It sounds libertarian enough. The misguided policies of the Fed, a government creature, and bad government regulation are held responsible for the crisis. The need to respond to this emergency and keep markets running overrides concerns about taxing and inflating the money supply. This is supposed to contrast with the left-wing Keynesian approach, whose solutions are strangely very similar despite a different view of the causes.

But there is another approach that doesn’t compromise with free-market principles and coherently explains why we constantly get into these bubble situations followed by a crash. It is centered on Marx’s Proposal # 5: government control of capital.

For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated. In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles.

Not only is the central bank constantly creating money out of thin air, but the fractional reserve system allows financial institutions to increase credit many times over. When money creation is sustained, a financial bubble begins to feed on itself, higher prices allowing the owners of inflated titles to spend and borrow more, leading to more credit creation and to even higher prices.

As prices get distorted, malinvestments, or investments that should not have been made under normal market conditions, accumulate. Despite this, financial institutions have an incentive to join this frenzy of irresponsible lending, or else they will lose market shares to competitors. With “liquidities” in overabundance, more and more risky decisions are made to increase yields and leveraging reaches dangerous levels.

During that mania phase, everybody seems to believe that the boom will go on. Only the Austrians warn that it cannot last forever, as Friedrich Hayek and Ludwig von Mises did before the 1929 crash, and as their followers have done for the past several years.

Now, what should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It’s obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.

Friedmanites, who have no conception of malinvestments and never raise any issue with the boom, also cannot understand why it inevitably leads to a crash. They only see the drying up of credit and blame the Fed for not injecting massive enough amounts of liquidities to prevent it.

But central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse. Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.

Friedman – who, contrary to popular perception, was not a foe of monetary inflation, but simply wanted to keep it under better control in normal circumstances – was wrong about the Fed not intervening during the Depression. It tried repeatedly to inflate but credit still went down for various reasons. This is a key difference in interpretation between the Austrian and Chicago schools.

As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. … To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about…”

The confusion of Chicago school economics on monetary issues is so profound as to lead its adherents today to support the largest government grab of private capital in world history. By adding their voices to those on the left, these confused free-marketeers are not helping to “save capitalism”, but contributing to its destruction.

*Martin Masse is publisher of the libertarian webzine Le Québécois Libre and a former advisor to Industry minister Maxime Bernier

[Further recommended reading is here, scroll down, please.]

Olmert’s Dignified Departure

Government, Israel

Israelis are always kicking bums out of the Knesset and calling elections. This is what’s on the cards now that Ehud Olmert has indicated he would resign.

Olmert made a dignified statement in which he said “he had satisfactory answers to the numerous corruption accusations that have been leveled against him, but nonetheless bowed to the inevitable and signaled the end of his hold on power.”

The following was quite poignant:

“I want to make this clear: I am proud to be a citizen in a nation in which a prime minister can be investigated like any citizen. The prime minister is not above the law, but he is in no way below it.”

So why are our Top Dogs never “investigated”—or, better, impeached? How do we institute some of that Israeli magic?

Not possible. As an ex-Israeli I can tell you that Israelis are anti-authoritarian. Left, right: it doesn’t matter; they all seek to unseat their overlords every now and then. Americans are more inclined to genuflect to government.

Who will be next? Likud, like the GOP, has been destroyed, so I don’t know how Bibi Netanyahu will get in again.

So will it be Ehud Barak? Barak is a sort of Israeli Jim Webb, affiliated with Labor, but a highly decorated, tough military man. I like him.

Updated: Poor Baby: CNN Bleats About the Bulldozer Terrorist

Israel, Israeli-Palestinian Conflict, Palestinian Authority, Psychology & Pop-Psychology, Terrorism

CNN’s Jack Cafferty was not happy with the label Israelis aptly applied to the man who barreled down a busy avenue in Jerusalem in a bulldozer, crushing and killing innocent bystanders: “Palestinian terrorist.” I guess that excessively demonizes this demon.

Cafferty, who features on Blitzer’s “Situation Room” with one of those Magic Daily Questions that must wow viewers, registered his displeasure. He wanted to hear more about what would possibly drive an otherwise good man to be so mean. Hey, ever hear of unadulterated evil? Cafferty then reached for that instant exculpatory construct: the so-called “mental disease.”

The of diseasing of behavior is now so thoroughly ingrained it has usurped right and wrong.

Accordingly, when people perpetrate evil, those who’ve habituated to these false categories toss free will to the wind. Since the Palestinian terrorist did a monstrous thing, liberals attribute his actions to causes. To perpetrate evil, one surely must be “mentally ill.” When a person does good things, those of this lax, irrational mindset attribute his actions to choice. They acknowledge free will and human agency if — and only if — adaptive actions are involved.

Read “Evil, Not Ill”.

Update: The contagion is spreading. MSNBC has placed the word “terrorist” in scare quotes, either “to distance the writer from the material being reported,” or “to indicate that it is someone else’s terminology.” Among MSM twits, “terrorist” is clearly a controversial term for a terrorist. It works for me.

Updated: Israel: Role Model For America

America, IMMIGRATION, Israel

This excerpt is from my new WND.com column, “Israel: Role Model For America”:

[T]he majority that dare not speak its name is on the wane.

“A couple of election cycles down the road and [Anglo-Americans] will comprise less than half the population. If mass immigration continues at current levels, predicts the U.S. Census Bureau, by 2050, approximately 130 million people will have been added to the United States, mostly from the Third World. Embittered Americans may still cling to guns and God, as their founding fathers did, but they will no longer decide elections.

Ironically, Bill Clinton has spoken glowingly about the prospects of the demise of the very historical majority upon which his wife’s candidacy now depends. Likewise, Barack Obama would hardly be inconsolable. If his immigration policies are any indication, McCain, to whom Bush has passed the baton, has also embraced this end-of-days scenario.

Israel hasn’t. The plucky Jewish state can teach the US a thing or two about cultural and creedal survival. Israel has endured to celebrate its sixtieth birthday in so small part because it has rejected American style immolation by immigration…”

Comments are welcome.

Update (May 17): To the extent the discrimination accusations come from elements on the American Right, we must take it to mean that this faction denies Israel the selective immigration policy it advocates for the U.S.—one that favors the founding people.

American Jewry is another faction that contradicts itself on Israel. Jews, who generally defend Israel, like to insist that it is a pluralistic, multicultural society. They ought to practice some honesty. If Jews are prepared to acknowledge Israel has a right to retain its Jewish character and choose who will be admitted to the polity, they must concede the same right to the Europeans and to the English-speaking peoples.