Does Voter Fraud Explain 4 More Years of Obamanation?

take Philly out of Pennsylvania, the Big Apple out of New York, the Motor City out of Michigan, the Windy City out of Illinois, Cleveland out of Ohio, Milwaukee out of Wisconsin, St. Louis out of Missouri, etc., and a lot of blue states would instantly be red. What explains this pronounced and hugely significant partisan divide between urban and nonurban areas?

One obvious explanation for the overwhelming Democratic majorities in big cities is the Curley effect with the corresponding concentration of Democratic constituencies like welfare recipients and unions... The Curley effect has turned once-vibrant cities into economic basket cases . . . _Forbes

Election precincts that are controlled by unions and inner city activist groups are not likely to be open to neutral poll observers, and are more likely to generate curious results . . .

Consider the large number of precincts in Cleveland, Philadelphia, Detroit, and other Democratic Party controlled areas including Chicago, which returned vote tallies that are just short of statistically impossible.

Many precincts for Obama returned upward of 99% or greater numbers of votes compared to registered voters. Quite a handy feat. Other districts that had experienced actual population decline showed vote returns that did not reflect this decline in population. Dead voters on the prowl again, voting for Democrats just like in the old corrupt political machine days?

If anybody has been reading the news lately, there has been some gradually disturbing news coming out about voting fraud in the Presidential Election. In critical swing states like Pennsylvania, Ohio, and Illinois there are a lot of precincts in Philadelphia, Cleveland, and Chicago which reported 100% of their votes cast for Obama. These add up to many 10's of thousands of votes for Obama and 0 for Romney. I repeat, 0 for Romney. I have read a number of articles about this and people knowlegable in Political Science and Statistics are starting to take notice of this.Statistically, even if among 10's of thousands of voters all wanted to vote fo Obama, it would not be possible to receive 100% of the vote because at least a few would make a mistake and vote incorrectly for Romney. Not to mention the fact that a least a few of those 10's of thousands might actually disagree with Obama. These types of election returns are only seen in countries run by dictators. I do not understand why this is not getting more attention. _Comment at NBC Chicago

These are the days of the corrupt Chicago Outfit. A combination of violent union thugs, corrupt politicians, radical inner city activist groups, faux environmnetalist greens, far-leftist zombies, and allied bona fide organised crime groups.

The Chicago alliance represents a "win at all costs" ethic which has no concern for the underlying well being of the society or the citizens living in the society.

The most recent US national elections represented a significant solidifying of the Chicago Outfit's grip on US politics. Expect an already massive dysfunction and corruption to expand.

Obama et Hollande: Twin Freaks of Different Mothers?

There is a freakish resemblance between the national leaders of France and the US. Each is an ideologue, first and foremost. Neither are bright enough to understand how their respective nations could grow more prosperous, nor do they particularly care. Thuggish political mobsters at heart, they are only interested in leeching the wealth and accomplishments of others, to the acclaim of the popular media.

Twin Freaks of Doom

In France, Hollande’s class war approach has been disastrous for the French economy. His tax policies have prompted the start of a mass exodus of wealthy individuals, who are taking their money elsewhere in Europe, including to Britain and Switzerland. In the words of Laurence Parisot, head of the French Employers’ Federation: “Our country is, alas, becoming less and less attractive with every passing month whilst our neighbours are trying to become more and more attractive.”

Unsurprisingly, economic growth has taken a hit, with falling consumer spending and plummeting market confidence. France is slipping back into recession in the final quarter of 2012, with Europe’s second largest economy now projected to miss its deficit target and barely grow at all in 2013.

France’s economic failure is a sharp warning to the United States if it goes down the same path. Ominously for Barack Obama, Hollande’s approval rating has fallen to just 36 percent, making him the most unpopular French president in recent history (at the six month mark). _Twin Freaks of Doom

Obama simply doesn't care. In fact, one of his missions in life since childhood, has been to punish the US and Europe for their "oppression of third world peoples over the past few centuries." Obama's mother drilled that lesson into his head, and the only father-figure Obama knew as a child -- Frank -- made sure the lesson stuck.

France is probably doomed. Hollande has no idea how to pull the country out of the hole he continues to dig for France. Obama is, if anything, less intelligent than Hollande, and driven more by revenge than by ideology or simple thuggish greed -- both of which Obama possesses in abundance.

It will be an interesting few years for both unfortunate countries, France and the US. Try not to be too vulnerable to miscreants of this nature. Large scale damages are a certainty. Doom for their respective countries is not out of the realm of possibility. Take care of yourselves.

A Lavish Lifestyle: A Struggling America's Haute Noblesse

The US is a nation struggling with economic uncertainty and cultural decline. While real unemployment is well above 10% and underemployment approaches 25%, America's new political nobility provides itself a lavish lifestyle in which previous president's and their families never thought to indulge.

President Obama has spent far more lavishly on White House state dinners than previous chief executives... current and former government officials said the documents obtained by The Examiner point to an unprecedented upsurge in White House spending on such events.

...A knowledgeable government official who made the documents available to The Examiner said the extravagant spending seemed unfair with so many Americans out of work.

"It just kind of takes your breath away to see the expenditure of money that has occurred since 2009," the official said.

Gary Walters, who ran presidential household operations for 21 years during Democratic and Republican administrations, before retiring in 2007, told The Examiner the costs reflected in the documents were "excessive. They are high." _Examiner

Not surprisingly, the government agency responsible for paying for these extravaganzas of the haute noblesse, is run by a US State Department official who also happens to be a business partner of the man who caters these exorbitantly costly events.

Of course, that is but one side of the story. The very costly vacations taken by the novo haute noblesse would make a billionaire blush -- if his vacations were taken at taxpayer's expense.

But to the novo haute noblesse, such costly pleasures are considered minimal perquisites, for the many duties required of them as official and unofficial figures of state. "If you cannot live well on other people's money, what good is becoming involved in government?" they are likely to ask.

And America drifts backward toward the autocratic rule which the founders of the original republic had tried to hard -- at such a high cost -- to escape. Welcome to the Idiocracy.

California's Big Problems in Higher Ed.

This is a nice summary of California's higher education bubble, in the days prior to its imminent collapse.

If you take a broader look at California, you will learn that things are hard all over.

The entitled classes ensconced within California's universities are matched by entitled classes at every level of California's state and local governments. It is unlikely that the people will stand for this nonsense for much longer -- particularly when dysfunctional government policies of spending, regulation, and taxation, are driving more and more profitable businesses and employers out of the state.

Video H/T Boots and Oil blog

China: Bubbles on Top of Bubbles

...even though the Chinese government has been, for years, telling everyone that they are serious in trying to curb home prices, it is now becoming clear that because rising home prices and inflation are what make Chinese ruling class gain personal profit, they are now giving up on real estate market curbs already. In fact, not only have they been fine-tuning real estate policies mainly at the local governments level, they have started cutting lending rates, as we have all known. Between attempting to maintain high growth and letting the economy to adjust, the government speaks the latter and does the former.

As a result of all these subtle changes in languages and actual policies, it seems that the real estate market is heating up again in various cities. Now we are seeing queues in property sales office again in Beijing, Shenzhen and other places as people seem to believe that as the tightening is over, real estate prices will rise again according to Sina. As we said yesterday, that this is rather pathetic as the government seems to be hoping that speculators will come in again to save the economy. _Also Sprach Analyst

What these bubbles on bubbles are covering up is the fact that the Chinese government has no idea what it is doing, as far as China's economy is concerned.

Even worse, the Chinese CCP government may not want to know what is truly going on under all the layers of bubbles they have helped generate through their multiple levels of essentially unworkable and incompatible economic policies.

Chinese state owned enterprises (SOEs) -- including large banks -- are turning out to be the Chinese equivalent of Enron, Bernie Madoff, and Jon Corzine combined. This does not bode well for the time when bills must finally be paid.

[Chinese] Money supply rose markedly in May and recent years' credit growth has surpassed even that of the U.S. in the period leading to the Lehman collapse. Unfortunately, instead of being put to good use, much of that money has ended up in the hands of wasteful state-owned enterprises, or SOEs...

...The SOEs are like the profligate Real Housewives of Beijing. They get tons of money to splurge on fancy, wasteful items, get wined and dined by the country's most powerful figures, yet contribute relatively little to the economy. In many cases, they're profitable solely because they're the only players allowed in strategically important industries...

...Of course, the nation's four largest banks -- themselves majority state-owned -- have a tremendous bias in lending to SOEs. And the government's vested interest in protecting the status quo has led to major restrictions on multinational banks looking to expand within China. ...

...As a result of their intimate connections with China's authorities, SOEs enjoy a number of remarkable advantages that private firms would kill for. They get huge government subsidies in the form of significantly lower tax rates, have access to much cheaper basic inputs like water, land, and energy, and enjoy barriers to entry in key industries.

But despite their edge, SOEs are much less efficient than their private counterparts, and have become increasingly inefficient over the past decade. In fact, many are loss-makers and there's mounting evidence they've misallocated capital on a tremendous scale. But thanks to the "wonders" of state capitalism, they keep getting funded -- accounting for more than 75% of all bank loans -- and continue to expand. _Daily Finance

Those who are interested in the ultimate future of modern China should read the full piece in Daily Finance.

This type of corruption in high places is not likely to turn out well. And yet, an international poll by Pew Research reveals that most westerners see China as the world's dominant economic player.

Welcome to the global Idiocracy.

Make the Bad Lady Shut Up, Mommy! Make Her Shut UP!!!

IN an excellent demonstration of the motto of leftist higher education: "Free speech for me but not for thee," the Chronicle of Higher Education has fired a blogger who was paid to contribute a contrary viewpoint. She was fired, "logically enough," at least in the eyes of a leftist academic, for publishing a contrary viewpoint.

The Chronicle of Higher Education has fired our former editorial-page colleague, Naomi Schaefer Riley, for a blog posting on the Chronicle's website that offended 6,500 professors. Well, they're not all professors yet, but they are members of what calls itself the "higher-education community," for which the Chronicle is its trade paper. As best we can make out, the Chronicle's editor, Liz McMillen, fired Naomi Riley for doing what she was hired to do—provide a conservative point of view about current events in academe alongside the paper's roster of mostly not-conservative academic bloggers. _WSJ

Ms. Schaefer Riley tells the story from her point of view:

Recently, the Chronicle of Higher Education published a cover story called "Black Studies: 'Swaggering Into the Future,'" in which the reporter described how "young black-studies scholars . . . are less consumed than their predecessors with the need to validate the field or explain why they are pursuing doctorates in their discipline." The "5 Up-and-Coming Ph.D. Candidates" described in the piece's sidebar "are rewriting the history of race." While the article suggested some are skeptical of black studies as a discipline, the reporter neglected to quote anyone who is.

Like me. So last week, on the Chronicle's "Brainstorm" blog (where I was paid to be a regular contributor), I suggested that the dissertation topics of the graduate students mentioned were obscure at best and "a collection of left-wing victimization claptrap," at worst.

For instance, the author of a dissertation on the history of black midwifery began her research, she told the Chronicle, because she "noticed that nonwhite women's experiences were largely absent from natural-birth literature." Another graduate student blamed the housing crisis in America on institutional racism. And a third argued that conservatives like Thomas Sowell, Clarence Thomas and John McWhorter have "played one of the most-significant roles in the assault on the civil-rights legacy that benefited them."

The reaction to my blog post ranged from puerile to vitriolic. The graduate students I mentioned and the senior faculty who advise them at Northwestern University accused me (in guest blogs posted by the Chronicle editors) of bigotry and cowardice. The former wrote that "in a bid to not be 'out-niggered' [their word] by her right-wing cohort, Riley found some black women graduate students to beat up on." (I confess I don't actually know what that means.) One fellow blogger (and hundreds of commenters) called my post "racist."

Gina Barreca, a teacher of English and feminist theory at the University of Connecticut, composed a poem mocking me. (It begins "A certain white chick—Schaefer Riley/ decided to do something wily.") MSNBC host Melissa Harris-Perry spewed a four-minute rant about my post, invoking the memory of Trayvon Martin and accusing me of "small-mindedness."

Scores of critics on the site complained that I had not read the dissertations in full before daring to write about them—an absurd standard for a 500-word blog post. A number of the dissertations aren't even available. Which didn't seem to stop the Chronicle reporter, though. And 6,500 academics signed a petition online demanding that I be fired.

At first, the Chronicle stood its ground, suggesting that my post was an "invitation to debate." But that stance lasted for little more than a weekend. In a note that reads like a confession at a re-education camp, the Chronicle's editor, Liz McMillen announced her decision on Monday to fire me: "We've heard you," she tells my critics. "And we have taken to heart what you said. We now agree that Ms. Riley's blog posting did not meet The Chronicle's basic editorial standards for reporting and fairness in opinion articles."

When I asked Ms. McMillen whether the poem by fellow blogger Ms. Barreca, for instance, lived up to such standards, she said they were "reviewing" the other content on the site. So far, however, that blogger has not been fired. Other ad hominem attacks against me seem to have passed editorial muster as well. _Naomi Schaefer Riley_in_WSJ

Occupy Zombies: For Sale to the Highest Bidder?

Protesters at Friday’s “Occupy CPAC” event, organized by AFL-CIO and the Occupy DC movement, told The Daily Caller that they were paid “sixty bucks a head” to protest outside the Conservative Political Action Conference in Washington, D.C.

One protester told TheDC that all the “Occupy” activists were being paid to protest, and that his union, Sheet Metal Workers Local 100, approached him about the money-making opportunity.

“I have nothing nice to say about Local 100. … They just told me ‘you wanna make sixty bucks? So c’mon,’” the protester said.

Other “Occupy CPAC” protesters were unwilling to speak on camera because they were unaware what they were protesting and what the CPAC event was about. _DC

This is not much of a surprise, given that union-backed political activism typically involves the exchange of gratuities, money, beer, cigarettes, etc. in exchange for protests, pickets, and votes.

In the age of Obama, people have to do something to make a living.

Which Comes First? Collapse of Commodities Prices, or the Crumbling of BRICs?

Common wisdom assumes that commodity prices, including oil prices, will continue to rise on exponential demand from emerging nations, such as China, India, Brazil, Turkey, Russia, etc. But under the sheen of those rosy projections, exists a growing excremental stench of corruption and decay. If the magical trajectory of the BRICs should falter, how far would commodities prices fall? And what would be the repercussions for already stressed world financial markets, desperate for safe havens and hedged to the hilt?

China's property bubble is set to implode, and when it does, the Chinese economy will cool far more than anyone thinks, taking commodities along for the ride. Commodity producers like Australia and Canada are at extreme risk as well. _Mish

Not just Australia and Canada are at extreme risk. Two BRICs -- notably Russia and Brasil -- are gambling on continued high commodity prices into the indefinite future. Corruption in all of the BRICs is hampering genuine market-based growth, but economic dependence on raw commodities prices is particularly bad in Russia.

When commodity prices dive, Russia may well grow desperate.

Prime Minister Vladimir Putin, the country's uncrowned czar, has linked his legitimacy to the economy's performance by offering the Russian people a grand bargain: submit to his increasingly autocratic rule and the state will compensate with economic goodies like higher incomes and hefty social-welfare spending. Now that the economy is faltering, Putin is under intensifying pressure from a discontented public to restore Russian democracy, potentially destabilizing Russian politics. He has already faced protests in Moscow against his rule amid the economic downturn. There's also a risk that leaders in Moscow will resort to nationalistic appeals to distract the public from problems at home, escalating tension with Russia's neighbors, the rest of Europe and the U.S. _Time

Russia's ongoing demographic collapse, and the threat of losing much of Eastern Siberia to Chinese influence, is not helping the mood in Moscow. But without the clout that comes from high energy prices, Russia becomes an angry dancing toy bear with nuclear weapons.

Venezuela, Iran, the Arab states of MENA, Mexico, and many countries in tribal Africa and Asia, are also pathologically dependent on high commodity prices, due to internal corruption having squeezed natural markets to death. How will their people deal with the many difficulties and hardships they will face when their governments cannot feed, clothe, house, or water them?

Even the US is vulnerable to a fall in commodities prices. The US is the world's third largest oil producer. The recent boom in US shale oil & gas production is one of the few bright lights in an otherwise dim Obama economy. And although the jobs, housing, manufacturing, and other sectors in the US economy continue to sag, Obama has not had enough time to entirely destroy the US private sector.

Few readers of this blog understand the precarious state of China's economic house of cards. That is because almost all of the economic information coming out of China is closely controlled, and coated with a shiny facade. But it is time for readers to begin asking themselves about the global repercussions of a more sustained commodities price slump than they have seen.

Taken from an earlier article at Al Fin

Cycle of Civilisations

First of all, everybody can see that the economist class that owns banks and governments....feel that by virtue of their privileged birth and education they can steal from the public at will. The second is that this whole sovereign debt charade is just a continuation of that mentality in the pockets of every last citizen for the remaining drachmas pesos dollars and pounds that are slowly but surely accruing at the top of that putrid food chain. And the third emerging reality is that the game will continue until governments are toppled by the people from whom they are stealing. _Source

James West, author of the paragraph re-posted above, provides an intriguing snapshot of the world's economic state in the 28 June 2011 edition of his MidasLetter, titled "United States of Denial." He looks at Europe, Asia, the US, and Canada, at this moment in time -- a cross-sectional view that is worth a look.

One cannot see an entire cycle of civilisational rise and fall from one mere cross-section, but if you place enough cross-sectional views together, one can see the essentials.

Financial writers and analysts focus on economic and financial happenings to the exclusion of everything else, but most of the societal repercussions of the rise and fall of a global economy can be inferred with just a little knowledge of human nature.

Wars, famines, pestilences, poverty, and massive hardship all hinge on mundane matters such as interest rates and fiduciary responsibility. When most advanced nations are in a state of massive debt, where fractions of a point in lending rates can mean the difference between a fall in governments or continued good times, western civilisation has come to a precarious point.

When civilisations rise and fall, people's lives are affected by the turbulence in many ways. How well they weather the storminess is largely up to them and their immediate support structures. If government infrastructure is collapsing, one can not count government as one of his immediate support structures.

Ground Zero for the Coming Anarchy

In many parts of the world, corruption is how things get done. In fact that is how the human world has functioned, on average, for many thousands of years. The modern western world of affluence, human rights, and the rule of law, is something of a glaring exception to the general flow of human history. As long as most people have ways to acquire money for bribes, the bad impact of corruption can be somewhat muted, and the good effects (things getting done) can be attributed to something else.

ImageSource

Regions of the world where the people are generally impoverished are hardest hit by corruption -- since impoverished people cannot pay the bribe. 19 out of 20 of the most impoverished nations on Earth are either SubSaharan African nations, or an offshoot of SubSaharan Africa -- Haiti. Instead of their situations improving, as has been assumed by most well-meaning observers, things are actually getting worse.

The sub-Sahara is not simply an epicenter of economic failure; it is also the epicenter of a pervasive failure in what might be called human development. Poorer countries, of course, tend to suffer from poor health and education as well, and sub-Saharan Africa is by far the poorest region of the planet today. But it is not just that Africa’s health and educational profiles are much worse than for any other major region of the world; they are also markedly worse than would be predicted on the basis of the region’s woeful economic performance alone. _Source

ImageSource

Besides widespread poverty, corruption, and poor infrastructure, SubSaharan African nations must also deal with a low average IQ as well as rampant tribalism. The map of African "micro-nations" reveals the problem of lack of cultural and linguistic cohesion -- which is always threatening to erupt into tribal and micro-national warfare.

And so we see the present and future unraveling of SubSaharan Africa -- ground zero for the Coming Anarchy. The reasons for this continuing unraveling are many and deep. It is a genuine "dark ages" in the making, a violent illustration of why politically correct multiculturalism is such a destructive deception, wherever practised.

Facing Africa's central problem of low average population IQ would demonstrate that problem-solvers were serious about helping Africa and its people. But that is unlikely to happen where political correctness holds sway. Those who claim to help end up hurting them the most.

The Joke is On Minnesota -- and the USA

A group of political watchdogs in Minnesota has proven that Al Franken was elected US Senator on the basis of illegal votes. Franken was declared a 312 vote winner of an election recount, when at least 341 convicted felons have been shown to have voted.

...at least 341 convicted felons in largely Democratic Minneapolis-St. Paul voted illegally in the 2008 Senate race between Franken, a Democrat, and his Republican opponent, then-incumbent Sen. Norm Coleman.

The final recount vote in the race, determined six months after Election Day, showed Franken beat Coleman by 312 votes -- fewer votes than the number of felons whose illegal ballots were counted, according to Minnesota Majority's newly released study, which matched publicly available conviction lists with voting records.

Furthermore, the report charges that efforts to get state and federal authorities to act on its findings have been "stonewalled."

"We aren't trying to change the result of the last election. That legally can't be done," said Dan McGrath, Minnesota Majority's executive director. "We are just trying to make sure the integrity of the next election isn't compromised." _FN

It was obvious at the time that Democratic Party officials in charge of the recount were not serious about disqualifying illegal votes for Franken. And the same attitude is found in Democratic Party voting officials around the country. In other words, this time it was Minnesota, tomorrow it may be your state.

The US Democratic Party is joined at the hip and the head to the US labour movement. But the US labour movement is joined at the lips and the anus to organised crime in the US and elsewhere. In other words, it is not just an embarrassing coincidence that Democratic Party officials and elected representatives in Illinois, New Jersey, New York, Detroit, and elsewhere have proven ties to organised crime. It is simply how things are done when you are a Democrat.

Not that Al Fin has any fondness for Republicans or the Republican Party. The GOP has its own faults and crooked kinks. Just not the type that is likely to get you beaten up and sent to sleep with the fishes.

ACORN, the New Black Panther Party, violent elements of the Nation of Islam, various hispanic separatist movements and pro-illegal immigration movements, pro-jihad Islamic organisations, etc. may as well be thrown into the mix -- at least for this particular administration. If it has a violent history, it is probably in bed with the One, and his buddy Sen. Franken.

Society's "Intellectuals" Circle the Wagons Against the Wild and Unruly Truths that Howl in the Night

There is always a tension, as [an investigator], between asking open-ended questions that allow an interview subject to explain something and pressing or challenging them on accuracy or details. But if you think you already know the subject, or already have a story angle half-formed in your head, it's easy to overlook the first part. _Atlantic

Pundits, journalists, and investigators and researchers of all types most frequently go wrong when they begin their investigation with a pre-conceived opinion, a pre-fabricated conclusion. This bias is most clear in mainstream climate science, but it is also abundantly clear in just about any mainstream media investigation of a politically charged topic. If the journalist assumes a person is stupid, their stories will display abundant evidence of the person's stupidity. If journalists consider a person brilliant, the story will be built around the "evident" brilliance of the subject. Bias, bigotry, inflexible prejudice. And these people are the gatekeepers of "the truth."

In his new book, How We Decide, Jonah Lehrer cites a research study done by U.C. Berkeley professor Philip Tetlock. Tetlock questioned 284 people who made their living "commenting or offering advice on political and economic trends," asking them to make predictions about future events. Over the course of the study, Tetlock collected quantitative data on over 82,000 predictions, as well as information from follow-up interviews with the subjects about the thought processes they'd used to come to those predictions.

His findings were surprising. Most of Tetlock's questions about the future events were put in the form of specific, multiple choice questions, with three possible answers. But for all their expertise, the pundits' predictions turned out to be correct less than 33% of the time. Which meant, as Lehrer puts it, that a "dart-throwing chimp" would have had a higher rate of success. Tetlock also found that the least accurate predictions were made by the most famous experts in the group.

Why was that? According to Lehrer,

"The central error diagnosed by Tetlock was the sin of certainty, which led the 'experts' to impose a top-down solution on their decision-making processes ... When pundits were convinced that they were right, they ignored any brain areas that implied they might be wrong."

Tetlock himself, Lehrer says, concluded that "The dominant danger [for pundits] remains hubris, the vice of closed-mindedness, of dismissing dissonant possibilities too quickly." _Atlantic

In part, this is the phenomenon of the True Believer.  Humans are social animals and like reassurance that they are considered a valued part of the group.  It is also a manifestation of mental laziness.  It takes effort to change one's mind.  A person's entire life and lifestyle may be overturned by a justified and seemingly simple change of opinion.  In addition, as individuals age, they sink more deeply into the mental architecture they have constructed.

Personal opinions are fortified to protect the individual from the wildness and unpredictable threat "outside."  Stray too far from the safe, warm confines of personal prejudice and cognitive dissonance will swiftly set in.  Most modern humans are unequipped to deal with high levels of cognitive dissonance.  They quickly retreat back to the familiar. (PDF) They circle the bandwagons against the wild and unruly truths that howl in the night.(PDF)

This is our world, a world where college professors indoctrinate rather than educate, where journalists roam as a pack and savage anyone who threatens the dominant social and political memes, where scientists latch onto a theme which is popular with grant agencies and publishers -- and run with it despite all objective reality.

What would you like to do about it?

H/T Chicago Boyz

First published at Al Fin

The Financial Bubble: 10 Causes

The following 10 thoughts on the causes of the ongoing US financial bubble-burst are re-printed from The American Spectator:

1. "When it comes to the home mortgage boom and bust, who was to blame? The borrowers? The lenders? The government? The financial markets? The answer is yes. All were responsible." (Thomas Sowell, The Housing Boom and Bust, 2009.) This seems fair.

2. Not explanatory of the problems are "greed" and "no regulation." Greed is a constant, always with us as part of human nature. As for "no regulation," the highly regulated commercial banks and the highly regulated thrifts are deeply enmired in the swamp of the bust, just as they have been many times in the past, constant regulation notwithstanding.

3. Economic and financial cycles are natural and cannot be avoided. The bubble was an exaggerated cycle. Various government actions contributed to making it worse:

• Fannie Mae and Freddie Mac, a government-sponsored duopoly, were made into huge points of concentrated vulnerability to failure, which then indeed failed. They significantly inflated the housing bubble though their huge entry into high risk mortgages right at the top of the market -- financed, of course, with government-guaranteed debt, so that the buyers of their debt did not have to ask about the soundness of their asset expansion. (See paragraph on trade deficit and China below.) This risky strategy was encouraged by politicians and by HUD's "affordable housing goals."

• The "Greenspan Gamble," which was intentionally to ignite and feed a housing boom to offset the deflationary effects of the tech stock crash, succeeded too well. Instead of a mere housing and mortgage boom, we got the bubble.

• The dominant rating agencies, a government-sponsored duopoly, were made by regulation into concentrated points of vulnerability to failure, which then failed, when their high credit ratings of MBS built from risky mortgages did not include anything resembling the downside case which became reality.

• Politicians all cheered rising home ownership rates and "creative" mortgage financing, which simply meant riskier financing.

4. There was a "logical" very widespread belief that house prices could not fall on a national basis. "Average U.S. house prices rarely fall from one year to the next. Bankers, brokers, appraisers, loan servicers, mortgage investors, homeowners and the designers and promoters of collateralized debt obligations all attest to the truth of this assertion… 'History is definitive,' pronounced the American Banker, 'the national average price of a home may remain flat for a number of years, but it doesn't fall.'" (James Grant, Mr. Market Miscalculates, 2008.)

Mortgage professionals were well aware of many instances of regional housing and mortgage busts, with falling house prices and high defaults and losses. But it was thought that this would not, and perhaps could not, happen on a national average basis. This firm belief by almost all parties made it possible for the belief to be false, in the paradoxical way of financial markets.

5. The market and the regulators became enamored with statistical treatments of risk. But: "The model works until it doesn't." (Moore's Law of Finance)

Human sources of risk are old-fashioned: short memories, the inclination to convince ourselves that we are experiencing "innovation" when what is happening is lowering credit standards, optimism, speculation which is successful in the early bubble stages, gullibility, group psychology.

6. "The good times of too high price almost always engender much fraud. All people are most credulous when they are most happy." (Walter Bagehot, Lombard Street, 1873.) True then, true now, unfortunately.

7. Highly leveraged financial systems are bound to have panics and busts from time to time. Increasing leverage of households was promoted by lenders and the government to create "affordable loans," with both higher LTV ratios and higher debt to income ratios. Financial firms were highly leveraged. Financial engineering produced highly leveraged structures, including CDOs, SPVs, CDOs-squared. Banks are able to be highly leveraged because of government deposit insurance, and have created balance sheets heavily concentrated in real estate risk. The entire macro economy became more highly leveraged, with record debt to GDP ratios, the "Big Balance Sheet Economy." Leverage always feels good when things are going up.

The "Great Moderation," of which the world's central bankers were so proud, created the conditions in which increased leverage seemed successful, thereby also creating the conditions for the bubble and bust. "Stability creates instability." (Epigram of Hyman P. Minsky's "financial fragility" theory.)

On the way down, needless to say, the leverage is more than painful.

8. The large and persistent U.S. trade deficit was financed by a build-up of debt, notably with China, but also with other countries. An important part of the debt was held in obligations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, because these were viewed as U.S. government risk (as indeed they were, as proved by events). But it meant that the trade deficit was thus directing credit expansion to housing. Chinese savings became high U.S. house prices.

There seems to be an interesting analogy of the oil boom of the 1970s with consequent LDC ("less developed countries") credit collapse of the 1980s, to the Chinese export boom and consequent housing collapse of the 2000s. People were very proud in the first instance of "petro-dollar recycling," and in the second of "record home ownership." Consider:

• Oil went from OPEC, which put the proceeds into U.S. banks, which made loans to LDCs, which later defaulted.

• Goods went from China, which put the proceeds into U.S. debt securities, which financed mortgage loans, which later defaulted.

9. So-called "fair value" accounting, pushed by the SEC and its helper, the FASB, made the panic and the bust worse. So did pressure from both these bodies to constrain the build-up of the necessary loan loss reserves in good times.

10. "The most common beginning of disaster was a sense of security." (Velleius Paterculus, History of Rome, c. 30 AD)

In summary, overconfident investors, bankers, and government budgeters overspent and overleveraged their way into far more risk than they were prepared to acknowledge, or deal with.

The unexpected collapse of this hyper-leveraged bubble paved the way for the emplacement of a government of wastrels that is preparing to amplify the economic destruction by at least an order of magnitude.

Talk of economic recovery other than on a local or regional scale, is highly premature and misleading. Brocko Bomba, clown of clowns, is in the driver's seat. The train is on the downslope, accelerating rapidly. Either jump, pull the emergency brake, or prepare for a wild ride with an unhappy ending.

If Western Civilisation is to Survive, We Need More Leaders Like This

From Brussels Journal:

Just a few days ago, not many Americans knew about Daniel Hannan, a Conservative member of the European Parliament. However, after a three minute speech on March 24 in which he confronted British Prime Minister Gordon Brown, Hannan has become an international sensation. His YouTube video “The devalued Prime Minister of a devalued government” is already an internet success. It has become the most viewed political speech faster than any other in internet history, with almost two million views in its first week, and it has been the number one viewed video for several straight days. As a principled politician, Hannan has been widely praised by conservatives in the United States and was recently featured on Fox News, the Drudge Report and various important conservative radio talk shows, including the Rush Limbaugh Show.

Hannan has been writing in Britain's best-selling quality newspapers for 14 years. When first elected to the European Parliament in 1999, Hannan was its youngest member. Then in April 2008, he was pushed to the top of the Conservative candidate list for the 2009 European elections, making it almost certain that he will be re-elected to the European Parliament next June.

American interest in Hannan´s short video and speech rests on a simple premise: what Hannan said in the video to Gordon Brown could have easily been said to Barack Obama by any of the true conservative members of the Republican Party in the U.S. Congress. After all, our new American president is pursuing the same or even larger massive spending policies which will lead the United States down the path to unprecedented debt and financial ruin. In his video, Hannan tells Brown: “I have long accepted that you’re pathologically incapable of accepting responsibility for these things. It’s that you’re carrying on, willfully worsening our situation, wantonly spending what little we have left.” American Conservatives feel exactly the same way about Obama, and Hannan is a reminder of that. Daniel Hannan’s brilliant oration –reminiscent of William F. Buckley´s accent– has produced a new European conservative star. Conservatives should take note of the need to develop a true transatlantic alliance with their European conservative brethren.

Conservative principles are as true today as they were at the founding of our country in 1776; they were laid out by political philosophers and thinkers throughout the nation´s history such as Edmund Burke, Lord Acton, Russell Kirk and upheld by notable politicians such as Barry Goldwater, Margaret Thatcher and Ronald Reagan. Just as Mark Levin outlined in his recent conservative manifesto, conservatism is rooted in the ideas of the framers of our founding documents. Both in the United States and in Europe, all that is really needed is a group of politicians willing to articulate those principles. Hannan is an example of how it is indeed possible to do so. He represents a clear example of how bridges between American and European conservatives can be built. It could also create a platform for rising conservative political figures such as Bobby Jindal, Sarah Palin, Mark Sanford, Eric Cantor and others.

Before Hannan´s video shocked the viewers in the United States, he had already made some waves within European politics. Armed with his knowledge of the French and Spanish languages, he has closely followed the political atmosphere in Europe and, particularly, in Spain, a country where several hundreds of thousands of British citizens live and also vote. Hannan specifically asked those British living in Spain to get out and vote conservative in the next European elections this coming June. Hannan´s point was that as Brits in Spain are one of the least represented communities in Western Europe (most of whom are conservative), the importance of voting is particularly relevant. The interesting aspect in Hannan´s position -- as well as in the position taken by the Tories in the Conservative Party in England -- is the clear attempt to form a new conservative bloc of parties within the European Parliament. David Cameron has already given formal notice of his intention to leave the “European People´s Party” grouping to set up a conservative bloc: the “European Conservatives,” a political group in the European Parliament that will attract members from the Czech governing party -- Prime Minister Mirek Topolanek’s Civic Democrats (ODS). Topolanek, who commands particular influence because his country holds the EU presidency, recently asserted that extra spending was “the way to hell”. Others likely to join Cameron´s organization include the Polish Law and Justice party (PiS), Spain´s Alternativa Española (AES), led by Rafael López Diéguez, and several other political parties from Romania, Bulgaria, and other Baltic states that have become uncomfortable with their existing affiliations.

Undoubtedly, this is good news for American conservatives. Further, it is a blow to several European leaders who are part of the “European People´s Party” but who, unfortunately, seem to be more interested in keeping their place in politics rather than implementing true conservative values: Angela Merkel in Germany, Nicolas Sarkozy in France, Silvio Berlusconi in Italy or Mariano Rajoy in Spain. Those who want to stop the creation of the new Conservative bloc in the European Parliament are already carrying out a dishonest campaign of propaganda against these European parties, calling it a “far-right” or a “fascist” coalition of parties: the same old insults that we see in the United States against conservatives.

Cameron, Hannan and most of the British Tories disagree with the European People´s Party views, which include advocating for closer integration in Europe in matters of economy, immigration, defense, big government and foreign policies. As it stands now, the European Parliament lacks official opposition. Cameron will lead this much needed conservative crusade for real reform in Europe. It is within this context that Hannan´s recommendations for British expatriates living in Spain should be considered. His suggestion as a conservative was not to vote for the usual Spanish “Partido Popular” (PP) or the “Partido Socialista Obrero Español” (PSOE), but rather to vote for a new, vibrant and pro-life Spanish conservative party, “Alternativa Española” (AES), which openly defends its Western Christian roots. Hannan defines this Spanish party as a Euro-sceptic anti-corruption party that has broken away finally from both the socialist PSOE and the centrist PP (which has lost the credibility, principles and stature it once had under José María Aznar´s leadership). Hannan argues that without dodgy mayors to defend, AES is keen to address the concerns that Spanish as well as expatriate British residents have about land security and other important issues for conservatives.

Furthermore, as Hannan points out, AES was the only party to campaign for a real “No” vote on the European Constitution and an active party that encouraged Ireland to stand up to the Euro-bullies. Hannan´s pick of AES makes sense if one considers that for Spain it takes only 300,000 votes to return a Member of the European Parliament.

Some conservatives in the United States are already paying close attention to the activities within the conservative movement in Europe and alerting the Republican Party to the need to consider the suggestions made by Hannan and look at parties in Europe with which alliances and partnerships can be created. Hannan arrives into the political scenario at a time when the Republican Party can lay no legitimate claim to being for limited government after eight years of being just the opposite, ending with bailouts of banks and car companies. This is precisely why the Republican Party should take a close look at the vibrant Spanish conservative party “Alternativa Española” as a first step to creating a true Transatlantic Alliance of Conservatives. While the other two major parties in Spain were and continue to be mesmerized by Obama and openly supported his campaign, “Alternativa Española” stands on principles and defends conservative values: individual freedom, limited government, free markets, individual responsibility, an unequivocal pro-life stance, lower taxes and the implementation of a practical flat tax, school vouchers and, very importantly, the defense of the Judeo-Christian roots of the Western civilization.

Cameron and the European conservatives seem to be decided on firm principles (with the exception of some mistakes on Cameron´s part regarding his positions about the dangers of the so-called man-made “global warming”). In the final analysis, the alliance could be a stepping stone to subsequent conservative realignments and alliances at the transatlantic level. British Conservatives have been in opposition to the ruling party since 1997 but, according to opinion polls, they are very well placed to defeat Brown´s Labour Party at the next election in mid-2010. In the middle of the outrageous financial interventions by the governments of Spain, England and the United States, European voters who believe in limited government will have a say. If we consider that in November of 2010 the United States has its midterm elections, we may be witnessing a reemergence of conservatism in Europe and the United States. Cameron and Hannan's strategy may work in Europe and it is even possible that, contrary to what many believe, we may also be making history as part of a new conservative revolution on both sides of the Atlantic.

Alberto Acereda is a Professor at Arizona State University and a Member of the “North American Academy of the Spanish Language.” He is also a columnist for several newspapers in Europe and the United States.

The present leadership of the US, Australia, Norway, Sweden, Spain, and several other western countries is shot through with corruption and an unwillingness to confront the real threats to the survival of the west. If the most enlightened civilisation ever to face the challenges of survival is to survive yet again, it will need better leaders.

MIT / Johns Hopkins / Lancet Corruption Scandal Update: George Soros Moneybags

The most recent news concerning the corruption scandal involving Johns Hopkins University and The Lancet, a UK medical journal, leads us directly to George Soros.

Soros, 77, provided almost half the £50,000 cost of the research, which appeared in The Lancet, the medical journal. Its claim was 10 times higher than consensus estimates of the number of war dead.

The study, published in 2006, was hailed by antiwar campaigners as evidence of the scale of the disaster caused by the invasion, but Downing Street and President George Bush challenged its methodology.

New research published by The New England Journal of Medicine estimates that 151,000 people - less than a quarter of The Lancet estimate - have died since the invasion in 2003.

“The authors should have disclosed the [Soros] donation and for many people that would have been a disqualifying factor in terms of publishing the research,” said Michael Spagat, economics professor at Royal Holloway, University of London.

Timesonline

So this is how much MIT, Johns Hopkins, and The Lancet can be bought for--to influence a US election? Pathetic.

Can George Soros buy your vote? No, a better way to put it: could George Soros have already bought your vote--and you did not even know it?

Politics and the Corruption of a Formerly Prestigious Medical Journal

As a trained epidemiologist, I regret being forced by the Lancet to reveal the underlying sleaziness of a sub-layer of the epidemiologic profession, as well as medical journalism. When the Lancet published its reports on Iraqi civilian casualties[pdf]--immediately before the US 2006 mid-term elections--it was clear to me that the authors had taken some unwarranted shortcuts in methodology. What was even clearer, was that the Lancet editorial staff was willing to overlook the methodologic deficiencies of the report, and publish anyway--just in time to influence the US elections. Since then, I have had no respect for the Lancet.

How to explain the enormous discrepancy between The Lancet's estimation of Iraqi war deaths and those from studies that used other methodologies? For starters, the authors of the Lancet study followed a model that ensured that even minor components of the data, when extrapolated over the whole population, would yield huge differences in the death toll. Skeptical commentators have highlighted questionable assumptions, implausible data, and ideological leanings among the authors, Gilbert Burnham, Riyadh Lafta, and Les Roberts.

...Lafta had been a child-health official in Saddam Hussein's ministry of health when the ministry was trying to end the international sanctions against Iraq by asserting that many Iraqis were dying from hunger, disease, or cancer caused by spent U.S. depleted-uranium shells remaining from the 1991 Persian Gulf War. In 2000, Lafta authored at least two brief articles contending that U.N. sanctions had caused many deaths by starvation among Iraqi children.

...Little is known about Lafta's decision-making in amassing the data for the Lancet surveys....Even though the second study was even further out of line with other sources' estimates than the first, it got tremendous attention -- probably because its findings fit an emerging narrative: Iraq was a horrific mess....Democrats who had opposed Bush's Iraq campaign embraced the report. Sen. Edward Kennedy, D-Mass., for example, issued a statement saying that the "new study is a chilling and somber reminder of the unacceptably high human cost of this war.... We must not stay on the same failed course any longer." Such remarks, amplified by myriad articles, broadcasts, and blogs, helped to cement Americans' increasingly negative perceptions of the war. "For those who wanted to believe it, it gave them a new number to circulate, [and] it was a defining moment" in attitudes toward the war, said pollster John Zogby, who commended the report in a CNN interview.

...In the Middle East, both Sunni and Shiite Islamist groups have used the study to bolster their claims that the West is waging a war against Islam. In an October 30, 2007, debate on Al Jazeera, for example, an Egyptian cleric, Sheik Ibrahim al-Khouli, slammed a Syrian author's criticism of fundamentalist Islam. The United States and Europe had "fought in Iraq and destroyed it," he said. They "killed one and a half million people ... [and] killed a million Iraqi children during the [1990s sanctions] siege; left traces of enriched uranium from the weapons that were used [in 1991]; and destroyed the environment for the next 35 billion years, according to American estimates."

...the authors have declined to provide the surveyors' reports and forms that might bolster confidence in their findings. Customary scientific practice holds that an experiment must be transparent -- and repeatable -- to win credence. Submitting to that scientific method, the authors would make the unvarnished data available for inspection by other researchers. Because they did not do this, citing concerns about the security of the questioners and respondents, critics have raised the most basic question about this research: Was it verifiably undertaken as described in the two Lancet articles?

"The authors refuse to provide anyone with the underlying data," said David Kane, a statistician and a fellow at the Institute for Quantitative Social Statistics at Harvard University. Some critics have wondered whether the Iraqi researchers engaged in a practice known as "curb-stoning," sitting on a curb and filling out the forms to reach a desired result. Another possibility is that the teams went primarily into neighborhoods controlled by anti-American militias and were steered to homes that would provide information about the "crimes" committed by the Americans.

National Journal

This Lance/Johns Hopkins article has become a cluster fuck--damning politically interested medical journalism, the Lancet, epidemiology, Johns Hopkins, and specifically damning the authors of the study.

It seems likely that Lafta--a former Saddam Hussein official--has been faking his research ever since the first Gulf War in 1991. Lafta's co-authors allowed their political leanings to influence their judgment. The Lancet's editors allowed their anti-Americanism to bring them to the precipice of journalistic integrity--and they stepped over the brink.

It is a sad story of corruption, sleaze, failed ethics, and lost journalistic integrity and reputation. It will be instructive to see how the mainstream media covers the aftermath of a journalistic catastrophe that they themselves elevated to monumental proportions when they believed the story to be true.

Iraq's Struggle: Who You Gonna Believe? The Media or Your Lyin' Eyes?

The list of those who have invested deeply in a US defeat in Iraq (actually a defeat for the Iraqi people) is long, and includes most western media, most leftist politicians, most leftist bloggers, and most academics in the social sciences. Iraq indeed has relatively few westerners who believe in its future. How long would that take to change?

The major problem in Iraq is back in the United States. There, many politicians either don't bother, or don't want to believe, what is actually happening, and has happened, in Iraq. In a way, that makes sense. Because what is going on in Iraq is so totally alien to the experience of American politicians. Moreover, many Americans take a purely partisan, party line, attitude towards Iraq. So logic and fact has nothing to do with their assessments of the situation.

...When Saddam was deposed in 2003, most (well, many) Sunni Arabs believed they would only be out of power temporarily. This sort of thing you can pick up on the Internet (OK, mostly on Arab language message boards, but it's out there). Saddam's followers (the Baath Party) and al Qaeda believed a few years of terror would subdue the Shia, scare away the Americans, and the Sunni Arabs would return to their natural state as the rulers of Iraq. U.S. troops quickly picked up on this Sunni mindset. Because Sunni Arabs were the best educated group, most of the local translators the troops used were Sunni Arabs, and even these guys took it for granted that, eventually, the Sunni Arabs would have to be in charge if the country were to function. The Sunni Arabs believed the Shia were a bunch of ignorant, excitable, inept (and so on) scum who could never run a government. Four years later, the Shia have sort-of proved the Sunni Arabs wrong. Now many Sunni Arabs want to make peace, not suicide bombs.

Which brings up another major issue in Iraq. Many Iraqis believe only a dictator can run the country, and force all the factions to behave. However, a majority of Iraqis recognize that dictatorships tend to be poor and repressive, while democracies are prosperous and pleasant. The problem is that the traditions of tribalism and corruption (everything, and everyone, has their price) do not mesh well with democracy. This doesn't mean democracy can't work under these conditions, many do. It does mean that it takes more effort, and the results are not neat and clean, as Americans expect their democracies to be.

The basic problem is that the United States is divided into two groups; those who have worked (or fought) in Iraq, or otherwise paid close attention to what's happening on the ground, and those who create their own picture of what's happening, one that fits other needs (personal, political, religious). No amount of wishing will change what is going on over there. The majority of the population hates the Sunni Arabs, who now have four years of terrorist attacks added to their list of sins. The Kurds, although beset by corruption and factionalism, have shown that you can still have peace, security and prosperity if everyone works together. The Arabs to the south see that, but have not been able to work together well enough to make it happen. Will the Arabs be able to overcome their factionalism and hatreds? THAT is the big question. What is lost in all the rhetoric about Iraq is that Iraq is the only real Arab democracy in the Middle East. Egypt is a one party state, a dictatorship masquerading as a dictatorship. Every other Arab state is either a dictatorship or a monarchy.

Iraqis know they are in a position to show the way, to an era of better government, and the freedoms and prosperity that flows from that. Iraqis know they have problems with religion, tribalism and corruption. Iraqis know what they are up against. Do you?

Strategy Page

Once a blogger, a journalist, a politician, an academic, an intellectual invests so deeply in defeat that he cannot possibly extricate himself without serious explanation, such a person--unless scrupulously honest--will feel forced to present defeat as the reality, well beyond the point when a reasonable person begins to have doubts. Since a widespread belief in defeat often becomes a self-fulfilling prophecy, such persons may feel that their best course is to bluff the situation to the end. They feel, if they are lucky, that defeat will surely happen, if they can convince everyone of its inevitability.

This pretense of theirs, which seems the most important thing in the world to maintain, is actually quite a small thing in reality. But will they ever understand?

To them, it is important that a particular politician, or a particular political party, or a particular ideological grouping, or a particular nation, lose. But it is the people who want a better life who will lose, thanks in no small way to these small time investors, who invested so deeply in the defeat of those they hated, which was actually the defeat of the hopes of many millions for a better life.

What is Wrong with Arabs?

Arabs are lagging in education, economy, democracy and freedom of expression, and computers. 2003—In Arab countries, with a combined population of 284 million, a “best seller” may have a print run of just 5,000 copies, due to censorship and other constraints on independent publishers. Translations of foreign works into Arabic lag far behind figures in the rest of the world: five times more books are translated yearly into Greek, a language spoken by just 11 million people, than into Arabic. Just 53 newspapers per 1,000 citizens are published daily in the region, compared to 285 papers per 1,000 people in the developed nations, and there are only 18 computers per 1,000 people in the Arab world, as compared to the global average of 78 per 1,000.

The first Arab Human Development Report in 2002 was a bombshell dropped onto the entire arab world. The report notes that while oil income has transformed the landscapes of some Arab countries, the region remains "richer than it is developed." Per capita income growth has shrunk in the last 20 years to a level just above that of sub-Saharan Africa. Productivity is declining. Research and development are weak or nonexistent. Science and technology are dormant.

Intellectuals flee a stultifying -- if not repressive -- political and social environment, it says.

Arab women, the report found, are almost universally denied advancement. Half of them still cannot read or write. The maternal mortality rate is double that of Latin America and four times that of East Asia.

The followup report in 2003 showed the situation to be no better. A group of Arab intellectuals issued a report yesterday that found the Arab world lacking in three areas they deemed fundamental to development: freedom of expression, access to knowledge and women's rights.
The group, criticized by Arab officials for a similar report last year, said the challenges caused by the deficiencies "may have become even graver" since 2002.
After dismal reports in 2002, 2003, and 2004, the UN HDR appears to have given up on the arab world. Who can blame them? Since World War II, the Arab world has lagged the rest of the planet in economic growth. For example, 300 million Arabs, and all that oil, generate less economic activity than Spain, and its population of 40 million. The main problem has been bad government. Too many dictators, and too much government restrictions on the economy. Too much corruption and waste. Even higher oil prices don't help, as it simply provides more money to be wasted on consumption, rather than business investment.

An Economist article, titled "Self-Doomed to Failure," captures the pathetic state of the arab world. The barrier to better Arab performance is not a lack of resources, concludes the report, but the lamentable shortage of three essentials: freedom, knowledge and womanpower. Not having enough of these amounts to what the authors call the region's three “deficits”. It is these deficits, they argue, that hold the frustrated Arabs back from reaching their potential—and allow the rest of the world both to despise and to fear a deadly combination of wealth and backwardness.

•Freedom. This deficit, in the UNDP's interpretation, explains many of the fundamental things that are wrong with the Arab world: the survival of absolute autocracies; the holding of bogus elections; confusion between the executive and the judiciary (the report points out the close linguistic link between the two in Arabic); constraints on the media and on civil society; and a patriarchal, intolerant, sometimes suffocating social environment.

The area is rich in all the outward trappings of democracy. Elections are held and human-rights conventions are signed. But the great wave of democratisation that has opened up so much of the world over the past 15 years seems to have left the Arabs untouched. Democracy is occasionally offered, but as a concession, not as a right.


....•Knowledge. “If God were to humiliate a human being,” wrote Imam Ali bin abi Taleb in the sixth century, “He would deny him knowledge.” Although the Arabs spend a higher percentage of GDP on education than any other developing region, it is not, it seems, well spent. The quality of education has deteriorated pitifully, and there is a severe mismatch between the labour market and the education system. Adult illiteracy rates have declined but are still very high: 65m adults are illiterate, almost two-thirds of them women. Some 10m children still have no schooling at all.

One of the gravest results of their poor education is that the Arabs, who once led the world in science, are dropping ever further behind in scientific research and in information technology. Investment in research and development is less than one-seventh of the world average. Only 0.6% of the population uses the Internet, and 1.2% have personal computers.

....•Women's status. The one thing that every outsider knows about the Arab world is that it does not treat its women as full citizens. The report sees this as an awful waste: how can a society prosper when it stifles half its productive potential? After all, even though women's literacy rates have trebled in the past 30 years, one in every two Arab women still can neither read nor write. Their participation in their countries' political and economic life is the lowest in the world.

Governments and societies (and sometimes, as in Kuwait, societies and parliamentarians are more backward than their governments) vary in the degrees of bad treatment they mete out to women. But in nearly all Arab countries, women suffer from unequal citizenship and legal entitlements. The UNDP has a “gender-empowerment measure” which shows the Arabs near the bottom (according to this measure, sub-Saharan Africa ranks even worse). But the UN was able to measure only 14 of the 22 Arab states, since the necessary data were not available in the others. This, as the report says, speaks for itself, reflecting the general lack of concern in the region for women's desire to be allowed to get on.

...With so many paths closed to them, some are now turning their dangerous anger on the western world.

Meanwhile in an ethnically divided Iraq with sectarian divisions, the first tentative steps have been taken toward democracy, as the rest of the arab world looks on with a wary curiousity. A few cautious voices believe that, in time, the Iraqi elections will put pressure on neighboring countries to democratize.

In Cairo, Hisham Qassem, chairman of a human rights organization and chief executive officer of a new Arab daily newspaper, believes that both the Iraqi and Palestinian elections have given impetus to democratic reform.
"Once people feel there are positive effects from the democratic process, they will want the same. Especially countries like Egypt who felt they were ahead of Iraq but are now lagging behind,” he said. Many arabs must be wondering if it takes an emasculating invasion from abroad and low level civil war to bring democracy to an arab country.

It takes more than democracy to bring the arab world out of the stone age. It will take economic reform. Since Saddam was tossed out in 2003, the economy has been governed by Western rules. As a result, GDP per capita doubled by the end of 2005, and the GDP is expected to grow another 49 percent by 2008. All this despite continued attacks by Sunni Arab rebels on oil facilities and other economic targets. It's much easier to start a business in Iraq now, even though there's still a lot of corruption. The big change is that now the corruption is illegal, and there is even progress in prosecuting the government officials who take bribes or try to shake down businessmen. Lebanon is the only other Arab state to run its economy in a Western fashion, and they have thrived.

It takes education reform and freedom of expression and the press. It will take implementation of full freedoms for women. Finally, it will take religious reform. Stone aged customs, traditions, and religious restrictions virtually guarantee that arabs will remain backward, laggards of the world.

Update: Here is more from a recent World Bank report. Arabs living in the middle east and north africa are oddly resistant to modernisation and transitioning out of the stone age. Very strange, when you see how successful arabs can be when they migrate to a free environment. I suppose blaming the US and Israel will gain them at least another half century of stone age existence.

Arabs--Laggards of the Modern World?

Since the 1960s, arab countries have lagged badly behind most other nations, except african nations. The Strategy Page recently offered a few comments on this issue:

Since World War II, the Arab world has lagged the rest of the planet in economic growth. For example, 300 million Arabs, and all that oil, generate less economic activity than Spain, and its population of 40 million. The main problem has been bad government. Too many dictators, and too much government restrictions on the economy. Too much corruption and waste. Even higher oil prices don't help, as it simply provides more money to be wasted on consumption, rather than business investment.

One of the things that has been changed in Iraq is the way the economy is regulated. Since Saddam was tossed out in 2003, the economy has been governed by Western rules. As a result, GDP per capita doubled by the end of 2005, and the GDP is expected to grow another 49 percent by 2008. All this despite continued attacks by Sunni Arab rebels on oil facilities and other economic targets. It's much easier to start a business in Iraq now, even though there's still a lot of corruption. The big change is that now the corruption is illegal, and there is even progress in prosecuting the government officials who take bribes or try to shake down businessmen. Lebanon is the only other Arab state to run its economy in a Western fashion, and they have thrived. However, Lebanon also interrupted their success story with a fifteen year (1975-90) civil war. Iraqis are well aware of that, and have no illusions about what happens if everyone does not get along. Another thing haunting Iraqis is the most successful economy in the region; Israel. This is also the country most like the economically successful Western states. Iraqis can't really talk about it openly, but the "Israeli Model" is discussed.

In spite of all that oil, something is holding arabs down, making them the laggards of the modern world. Humble little Spain is more an economic powerhouse than all the arabs. What is wrong with all of them?
Arabs are not adding value to their children--there is no added "human capital" in arab societies. Arabs have to import their professionals, engineers, and technicians. Measures of years of schooling in arab countries are pathetic, but do not accurately reflect the huge tragedy, since much of the schooling that does exist is counter-productive schooling in arab supremacy, religious fanaticism, and ethnic hatred. If arabs did not have dreams of bloody conquest of infidel lands, they would have only dreams of stolen glory.

When the oil does run out, the western infidel world will use other fuels besides arab oil. What do the arabs propose to do for economic output then? It seems that their oil only postponed the day of reckoning.