France Elects Its Own Obama -- Risks Rapid Decline

The French have been long enamoured with US President Barack Obama, and as a result they have elected a French equivalent: Francois Hollande. Monsieur Hollande is already beginning to have the same effect on French private enterprise which Mr. Obama has had on the US private sector.

“The situation is very serious. Some business leaders are in a state of quasi-panic,” said Laurence Parisot, head of employers’ group MEDEF. “The pace of bankruptcies has accelerated over the summer. We are seeing a general loss of confidence by investors. Large foreign investors are shunning France altogether. It’s becoming really dramatic.” _Evans-Pritchard

The biggest problem with political leaders of a socialist bent, is they typically have no real understanding of how economies work. Certainly Mr. Obama never worked outside of politics or academia, and the same appears to be true for Monsieur Hollande.

Modern leftist ideology is best described as a tautological fantasy ideology -- essentially unfalsifiable, and only answerable to anyone when national economies collapse and the fools are thrown out.

The fear is that a fiscal shock in 2013 will tip the economy into a sharp downward slide. “France needs more fiscal austerity right now like a hole in the head,” said sovereign debt strategist Nicholas Spiro.

“They don’t have any chance of meeting their growth target of 0.8pc next year, but that does not in itself put French debt at risk.

“The real danger is contagion if things turn ugly in Spain.” _Evans-Pritchard

Obama entered office just as the US was beginning to emerge from a significant financial crisis and recession. While Mr. Obama's policies made the US economy far more sluggish and depressed than it should have been, he was partially saved by the revolutionary shale oil & gas bonanza -- which occurred despite his policies rather than because of them.

Mr. Hollande has no reason to expect such a providential bailout from anyone or anything. Hollande has rejected shale drilling, and is also proposing drastic and potentially crippling reductions in France's nuclear power industry.

The near to intermediate future does not appear to be very promising for France. Of course, if Obama is re-elected, the future for the US is likely to be similarly dismal.

Hope for the best. Prepare for the worst. And remember: It is never too late for a dangerous childhood.

Flogging Round the World

The economies of the globe are receiving a flogging, one by one. Under Obama, the largest economy, the USA's, cannot even rescue itself, much less help the large numbers of other nations beginning to drown under debt, demographic decline, and green faux environmentally motivated energy suicide.

The United States, by far the world's biggest economy, has long pulled the global economy out of slumps. Now it needs help. Three years after the Great Recession officially ended, the American economy can't maintain momentum. For the third straight year, growth has stalled at mid-year after getting off to a promising start. _Bloomberg

Europe's populations are beginning to show the signs of low birthrates among core populations. The problem of insufficient young people to support the growing numbers of old people is adding to the continent's problems.

Europe's obstacles are even more severe. It's faced with crushing government debts, struggling banks and scant economic growth. Unemployment in the 17 countries that use the euro is 11 percent, the highest since the euro was adopted in 1999.

Greece, Portugal, Italy and Spain are in recessions. Germany and France are faring better, but both are likely to grow more slowly this year than America. _Bloomberg

As for China, we have seen over the past weeks and months that China is not immune from the economic problems of Europe and the US.

Chinese growth has decelerated for eight straight quarters. That's the longest slowdown in records dating to 1992, according to Yu Bin, a government researcher.

China is also feeling Europe's economic squeeze. Chinese exports to Italy dropped 24 percent in June from a year earlier. Exports to France fell 5 percent, those to Germany nearly 4 percent. Europe buys about 17 percent of China's exports. The impact of weak European demand for Chinese-made furniture, shoes, toys and other goods has fallen hardest on export-oriented manufacturers along China's southeastern coast. Some companies have closed. Others are cutting staff. _Bloomberg

From China, the problems flow downhill to Brazil, and to India. Brazil's government and people have been betting that the good times would never end, and the time to pay the piper is approaching.

"The current pace of credit growth in Brazil remains unsustainable — and the longer it continues, the bigger the risk of a messy ending further down the line," Capital Economics warned.

Similarly, the outlook has dimmed for India, the world's fourth-biggest economy. Its growth slowed to a 5.3 percent annual rate in the first three months of 2012, the slowest rate in nine years. _Bloomberg

Russia has its share of problems from rampant corruption and capital flight to widespread drug and alcohol abuse, and suicide. Still, some Russians see the country's source of economic support -- its energy wealth -- as the equivalent of Russia having won the lottery:

Lottery winners find it psychologically hard to accept that their winning is a completely random event. They tend to see it as their "achievement," the result of them being special or chosen by providence. Remarkably, this is also the case with Russia, where the government ascribes the country's relative economic prosperity not to the inflow of petrodollars — and the luck from an extended period of high global oil prices — but to its supposedly wise, prudent economic policies. Ordinary Russians similarly see the wealth that is flowing into their country as somehow the result of their hard work, not circumstances beyond their control.

Winners' greatest victims, however, are their own children. Very rarely are the lottery winnings used to ensure good education for winners' kids. Many end up spoiled, morally corrupt and traumatized by their parents' good fortune. This could be seen as a metaphor for Russia's lack of investment in its future. Russia has done little to wean its economy from oil or revive the education and research infrastructure that existed in the Soviet Union. Most alarmingly, lottery money usually ends up as an easy-come-easy-go fortune. Even enormous jackpots have been squandered completely. It is a cautionary tale for Russia, which could end up back in the indigent 1990s if oil prices fall. _MoscowTimes

The Earth's national economies are being generally flogged round the world, and even the winners too often end up losers.

Spain: A Cautionary Tale from Michael Pettis

Beijing-based economist Michael Pettis has family roots in Spain. Michael's personal experiences with friends and family involved in the Spanish real estate bubble provide object lessons on a much wider scale:

I remember in 2003 my mother had a New Year’s Eve party at our family home in Málaga, in southern Spain, at which over 80 people sat for dinner, including most of my old friends still around from high school days. That night I had one of those epiphanies (as you often do on New Year’s Eve, I guess) about the real estate market when I suddenly realized that nearly every one at the party was involved in one way or the other in real estate. Most of the people there (including my Persian sister-in-law) were real estate developers, real estate agents, real estate lawyers, architects, or owners of building and construction companies. All of them lived off (and had prospered mightily from) the real estate boom in southern Spain.

But this cannot be, I thought in my naiveté. If the only industry around is real estate, then we must be living through a real estate bubble of enormous proportions.

Later that night I spoke to one of my old high-school friends, Andy, who was at the time a prosperous real estate agent with houses in Marbella (purchased on borrowed money, naturally), a Mercedes, and all the trappings that accrue to an immensely charming and self-confident real estate agent during a real estate boom. In our conversations, and ones that took place subsequently over the next few years, I warned him that the property market in the south of Spain looked out of control, and it would be a good idea from him to diversify his savings out of real estate.

Same old same old

Of course Andy didn’t. He explained to me that what we were seeing in southern Spain was not a bubble because there were very strong reasons to believe that real estate prices were undervalued and were going to rise a lot more. Europe, he told me, is aging rapidly, and old people, as everyone knows, like nothing better than to retire in some warm and sunny place, preferably on the beach. With an infinite supply of European old people and limited European beachfront property, mostly in Spain, Italy, and Greece, where in addition you had great food, warm-hearted people, and plenty of immigrants to keep the prices of services (and servants) down, it was certain, Andy explained, that real estate prices would not decline. The demand was insatiable at almost any price.

This seemed like a perfectly reasonable argument on the face of it, and it was widely proposed to justify ever-soaring Spanish real estate prices for many years, not just on the Spanish coast but also, perhaps a little bizarrely, in every nook and cranny of the country, including some pretty gray and inaccessible building projects outside cold, northern industrial cities.

The weakness in the argument, of course, was that although there might have been near-infinite demand, this could not justify near-infinite increases in prices, especially since the demand itself was likely to be highly pro-cyclical because the Spanish economy had itself become dependent on real estate development. As long as the economies of the cold northern European countries were booming, in other words, the demand from retirees for beach houses would stay high, but any slowdown in the economy would reduce demand in Spain at the worst possible time.

And as Spanish real estate slowed, the impact would be exacerbated by a much sharper slowdown in the Spanish economy caused by the slowdown in real estate, which had become a major driver of the economy. If a substantial portion of the Spanish workforce depends on a booming real estate market – and not just those directly dependent, but also those indirectly dependent, like bankers, restaurateurs, retailers, travel agents, and so on – then any slowdown in the real estate sector is itself seriously self-reinforcing.

We have now seen how this works in Spain, but in China we are still using a similar argument to explain why real estate prices cannot drop significantly. Our Chinese version of the old-people-love-to-live-on-the-beach argument is the urbanization argument. As long as Chinese workers continue to move from the country to the cities – and urbanization has been one of the most dramatic consequences of Chinese growth in the past three decades – then there is likely to be a near infinite demand for city property, and so prices can only go up. And because prices can only go up, speculative demand for real estate is not speculative, it is precautionary.

This claim seems at least as plausible as the Spanish argument justifying infinite price increases, and was probably true a decade ago, but it runs into the same problem that the Spanish story ran into (and indeed that nearly every previous case in history of a real estate bubble, which has always started with a plausible story). First, no matter how much demand we can project into the future, rising prices can nonetheless outpace rising demand because rising prices can themselves stimulate further demand, in which case rising prices are unsustainable. This should be obvious, but the point is often lost in the giddiness that accompanies rapidly rising prices.

Second, and this is key, the rising demand is itself pro-cyclical. This is the most dangerous part of the process and perhaps the least well understood. Rising demand driven by the urbanization process is itself subject to underlying growth in the economy, since it is growth in turn that drives the urbanization process.

What’s more, when we reach the point as we did in Spain several years ago, and have reached in China too, in which a substantial part of the growth that drives the urbanization process is itself created by real estate development, then any slowdown in underlying growth is likely to be seriously exacerbated by a corresponding slowdown in real estate development. This is because the economy is caught in the reverse side of the feedback loop that helped drive prices on the way up – slowing growth leads to slower demand for urban real estate, which leads to slower real estate development, which itself leads to slower growth. _Michael Pettis

Patrick Chovanec explains why his cautionary language about the Chinese economy is not just empty words

Walter Russell Mead remarks on the falling Chinese growth numbers, and wonders what they portend for the future of the global economy.

Most of the developed world is caught up in the twin destructors of exponentially rising debt, and demographic decline. Up until recently, it was thought that China, India, Brasil, and Russia were exceptions to this widespread decline. But that rosy viewpoint may be wrong.

In fact, it seems that the Anglosphere may be in the best position to weather this lengthening global recession, if the US can rid itself of the parasitic regime that is currently sucking the life's blood out of the US private sector.

Good luck, Yanks, this November.

Global Economic Slowdown May Worsen Significantly

Slowing growth as well as deficit and debt problems in the Eurozone, U.S., China and the emerging nations increases the odds of a deflationary global recession and a renewed down leg in the ongoing secular bear market.

The U.S economy has been slowing in the last two or three months. Either downside surprises or actual declines have been reported in key economic indicators relating to consumer spending, new orders, production and employment. A number of major companies have either revised down their second quarter earnings estimates or reduced their guidance for the second half. As a result, second quarter earnings estimates for the S&P 500 have been declining and full-year estimates probably will drop as well. When we further consider the dysfunction in Congress, the "fiscal cliff", the prospective end of operation twist, the elections and the prospect of renewed fighting over the debt ceiling, the threats to an already fragile recovery are high.

The Chinese economy is slowing, perhaps by more than the official numbers show. The NY Times has reported that many local and provincial officials have been falsifying numbers to hide the true extent of the problems. China’s economic model is heavily dependent on capital investments and exports, while internal consumer spending remains a relatively small part of GDP. Although Chinese officials recognize the need to increase consumer spending as a percentage of GDP, that is a long-term solution. In the meantime, exports to Europe, China’s top customer, are falling now and cannot be offset, except by ordering the building of more plants that will produce goods for which there is no current market. All in all, it seems that it will be difficult to avoid a hard landing.

The slowdown in Europe, the U.S. and China is also impacting the economies of the emerging nations, which are heavily dependent on exports. Declining growth is also driving down commodity prices. Despite all of the talk of decoupling, it seems apparent that the economies of all nations are linked and that there is little prospect of an oasis of prosperity in an increasingly dependent world. _Global Slowdown Will Accelerate

US Q2 Earnings Outlook Down

It is interesting to note that Friday’s EURUSD rally (1.8 percent) was the largest since exactly October 27. For reference, that previous rally was sparked by the Greek debt deal which arguably extinguished an immediate crisis fire; and yet the market still pulled an immediate about-face and tumbled 1500 pips in less than three months. That doesn’t mean that the euro is destined for the same fate this go around, but the fundamental comparisons between the current situation and October are remarkable. And, if anything, they are worse now. _Professionals are Skeptical of Euro Bandaid Bailouts

The so-called SOEs boast close family and financial ties to China's ruling party clique. Power and wealth have become one in the same—a kleptocracy of insiders skimming off part of the prodigious money flows sluicing through the Chinese economy through relatives strategically placed in state companies, consulting firms, and various financial institutions. Unless this blatant favoritism is curbed by the incoming administration of Xi Jinping, says Overholt, China faces the prospect of long-term stagnation—a prospect potentially far worse than that of Japan some 20 years ago. _China Corruption Casts Shadow on Future Prospects

The world is going through a number of simultaneous crises, just as the US has chosen to abdicate its global leadership role under President Obama.

It is unlikely that the US will be in a good position to help stabilise the global situation, at least in the near future. US President Obama's war against the private sector economy of his own country guarantees that the US economic juggernaut will take time to rebuild, before it can take on many challenges outside its own immediate realms of influence.

Global Economy at the Crossroads

China may be on the brink of instability and large scale capital flight

If this dire prediction should come to pass, the repercussions across global markets -- both emerging and developed -- would be severe.

The global drop in oil prices is having a depressing effect on Russian markets and the ruble

Putin's inability to sell high priced Russian natural gas to China is likely to further hurt the wounded bear

Things are bad all over, with people beginning to remark on an exodus of cash from China

A growing problem of capital flight from Russia etc.

Even Europe is beginning to feel the sting of capital flight -- and not just Greece and Spain

Unless the US can get rid of Obama and his ruinous administration of economic saboteurs, and unless the UK and Australia can get rid of their energy starvationist politicians and bureaucrats, even the Anglosphere may be in for some very hard times.

Mainland Europe needs to reverse its demographic decline and enact some crucial pro-energy policies, before it suffers a terminal green dieoff.

It is possible for entire societies to commit suicide. Try not to let it happen to yours.

East Asian Prosperity Slipping on Eurozone Difficulties

The eurozone’s worsening problems are affecting the export-dominated economies of East Asia hard. The 17-nation zone contracted in Q4, and it will probably shrink this quarter as well. “We expect a fall in GDP of about 1.0 per cent this year and an even sharper decline in 2013,” said Jennifer McKeown at Capital Economics. Unemployment is at a record high, retail sales are falling, and consumer and business confidence is headed in the wrong direction.

The zone’s performance will continue to fail to meet consensus estimates because there is an unreal quality to expert predictions about Europe. The eurozone’s problems, despite the serial announcements of interim solutions, remain intractable. European leaders need growth, and they are not going to get it until they either fundamentally restructure their currency or implement some sort of fiscal union. And on top of that, they need to eliminate growth-destroying regulation. _Forbes

Europe is not only suffering from growth-destroying regulation and cascading banking difficulties. On the energy front, many of Europe's governments are literally committing suicide.

And there is always the problem of Europe's demographic collapse, which is magnifying Europe's debt crisis to intractable levels.

Put simply, Europe is no longer capable of holding up its end of the tacit global trade bargain.

There’s no mystery why Singapore’s economy, a regional bellwether, is in trouble. The country’s trade is about three times its gross domestic product, and the external outlook is not favorable. Prime Minster Lee, not surprisingly, blamed the deteriorating global environment in general and Europe in particular. “As a small, open country,” he noted in his message, “Singapore will inevitably be affected.”

And so will tiny Hong Kong’s trading economy. Analysts are talking about 2% growth this year, down from a forecasted 5% for 2011. The slowdown has already started. Growth estimates for last quarter range from a relatively optimistic 3.3%, from HSBC, to a gloomy 1.5%, issued by JP Morgan.

It’s not only the small open economies that are having problems. India, which is certainly large and not considered especially trade-dependent, is also seeing the economy stumble. There, the retreat from reform is having a negative effect. Growth could drop below 6%, from 6.9% last quarter.

Japan may have actually contracted in Q4. The Tokyo-based Japan Center for Economic Research estimates that the economy shrank in both October and November, in large measure due to weak exports with Europe as the primary culprit. The weak fourth quarter is especially disheartening as it ends the recovery evident in Q3, when the economy soared 5.6% due to rebuilding from the March 11 earthquake-tsunami.

South Korea, a pillar of strength in East Asia, is also experiencing difficulties. The Bank of Korea, the central bank, is lowering forecasts for both this year and last. Nomura International sees South Korean growth slowing to 3% in 2012, due to softness in exports, off from an estimated 3.5% for 2011. If there is a risk to the Nomura estimates, it is to the downside.

The story is much the same in flood-ravaged Thailand, where there was a contraction in Q4 due to export problems; the steady Philippines, hurt by export prospects for the electronics sector; and impressive Vietnam, where analysts think that growth last year was off the 2010 pace. If you’re looking for exceptions to the downward trend, try Indonesia, where growth remained steady at 6.5% last quarter, and Malaysia, which was helped because exports held up last year. In Kuala Lumpur, however, the government is now worried about Europe. _Forbes

Europe's problems are largely of Europe's own making. But her problems do not stop at her own borders. They propagate outward, adversely impacting all the nations which depend upon trade with Europe. Long-term prospects for Europa -- given the twin curses of debt and demographic decline -- are not good, unless a miracle happens.

Wanna Save the Euro? That'll Cost You €2.3 Trillion

...the joint liability would amount to €2.3 trillion. But it would technically be temporary. For all these safeguards, Germany’s government has so far poured cold water on the idea. But time is running out. And the scale of the impending catastrophe demands radical answers. _Economist

There is no guarantee that €2.3 trillion would be enough to save the Eurozone or its currency. Recent equity markets have been behaving as if eurosalvation were a foregone conclusion. But that is far from true.

The crisis in the euro area is turning into a panic and dragging the zone into recession. The risk that the currency disintegrates within weeks is alarmingly high.

...there are signs that the euro zone’s economy is heading for recession, if it is not there already. Industrial orders in the euro zone fell by 6.4% in September, the steepest decline since the dark days of December 2008. A closely watched index of euro-zone sentiment, based on surveys of purchasing managers in manufacturing and services, is also signalling contraction, with a reading of 47.2: anything below 50 suggests activity is shrinking. The European Commission’s index of consumer confidence fell in November for the fifth month in a row.

Now an even bigger calamity is looking likelier. The intensifying financial pressure raises the chances of a disorderly default by a government, a run of retail deposits on banks short of cash, or a revolt against austerity that would mark the start of the break-up of the euro zone. _Economist

There is much more at the article excerpted above. Follow the link.

The ongoing demographic collapse of several nations of Europe is not helping their economic prospects at all. Greece, Italy, Spain, and Portugal are losing core populations particularly quickly. Without people, there is no economy worth speaking of. And yet the topic of demographic collapse across Europe is studiously ignored, in favour of virtually any other conceivable topic of conversation -- no matter how trivial.

The Great Green Energy Suicide and the turning away from new clean reliable nuclear energy, should just about put the finishing touches to the failed Euro experiment.

No one can say that the Europe of the past 30 years has not been full of the best of intentions. Good intentions mean very little after one is dead, however.

Finding Nazis in Norway's Closet?

The only conclusion that makes sense to me is that human beings are stuck in a condition of radical uncertainty. Something big and earth shaking is going on around us, but the information we have does not allow us to predict where it all goes. _WRM

Walter Russell Mead takes a look at the Norwegian tragedy and finds Nazis in Norway's closet. Even more profoundly, Mead finds that human nature has always retained the capacity for committing vile and unspeakable deeds, and suggests that the concept of "social progress" is a myth.

When a whole society is stressed by more change than it knows what to do with, the Dark Side gets crowded. People flip out in sects and groups rather than one by one. We see that in many Muslim countries today where the appeal of terrorists is strengthened by a pervasive sense of social frustration. Sometimes whole countries and whole nationalities flip. We saw it in the Bolshevik madness in Russia, the Fascist epidemic that swept Europe in the 1920s and 1930s; we saw it in Iran in 1979. The Serbs and the Hutus went over the edge in the 1990s. _AmericanInterest

Unfortunately, much of the stress that Norway has been feeling, was designed stress inserted by its own governing leaders and cultural overseers. In fact, the social engineers of Norway were trying to accomplish far too many disparate and conflicting goals at the same time, never understanding the underlying stresses that their policies were causing to build.

But Mead looks even more deeply to try to find meaning in the tragedy:

The same technological progress that helps create violent alienation and rage also empowers individuals and groups. 200 years ago a Breivik could not have done so much damage. 100 years ago Al-Qaeda could not have hijacked a plane. Modern society is more vulnerable than ever before to acts of terror, and developments in weaponry place ever greater power in the hands of ever smaller numbers of people.

This is still in early stages. Fortunately Breivik was a traditionalist and relatively low tech mass murderer; he did not hack vital computer systems to wreak murderous havoc with a rail or air traffic control system. He did not poison the reservoirs with weaponized biologicals. He did not even pump poison gas into a subway system.

We can be reasonably confident that an increasingly chaotic and stressful 21st century will generate more bitter nutjobs and place more destructive power in their hands. Democracy and affluence won’t cure it; the same forces that raise those golden arches build bombs to knock them down. _WRM

Europe is at the center of this chaotic cauldron of change, with a shrinking core population deeply in debt and hounded by increasing numbers of violence-prone immigrants being forced upon them by their own governments. Norway's government and culture is in the advance guard of the politically correct leftist multicultural drive to displace western culture and populations with more dysfunctional cultures and populations of the third world. Norway's cultural and political leaders had thought it was safe to move ahead quickly with that agenda, given the relative sedateness of 21st century Norwegian society generally.

But human nature does not change as quickly as political whim would like it to do. Within Norway's core population are many reactive personalities, who will reach a breaking point and strike out against the perceived oppressors. If such a person is reasonably intelligent and competent in the use of weapons, a significant number of this person's perceived enemies may die. But if the person happens to be a world class scientist or technologist who is competent in the ways of profound actuation, far worse things can happen.

The "masters of the universe" -- the clowns in control of western governments -- are intent on pushing their blind ambition of social engineering agenda to the bitter end, no matter what. They are underwritten by special interests with similarly amoral ambition and intent, including the legions of Green dieoff.orgiasts, faux environmentalists, energy starvationists, and other "well-meaning" persons whose agendas could easily and inadvertently result in mass starvation and other forms of mass death.

Individuals who strike out in the manner of the perpetrator of the Norwegian tragedy only make things worse for everyone, just as the well-intended faux environmentalists and leftist multiculturalists are bound to do. There are abundant ways to make things worse, and our leaders intend to explore as many of those ways as possible.


Walter Russell Mead does not think that these forces of chaos -- combined with the technological empowering of individuals to do large-scale harm -- will lead to an apocalypse or doom. But we need to accept that something of the sort may occur, at some level of probability.

Hope for the best, but prepare for the worst.

Living in the Age of Pre-Revolutionary China, Amazing Times

China today is in a pre-revolutionary state. The political system, try as the central authorities may (and many of them are extremely good at their jobs), simply cannot forever keep juggling the growing number of balls on its hands. As China industrializes and develops, the interests and aspirations of its people become more complex and conflicted. _WalterRussellMead

The ongoing unrest in Syria, Egypt, Libya, Iran, Iraq, Yemen, etc. may presage a wider age of unrest across Africa, Asia, and extending into Europe. New powers are rising and old powers are in preparation for a great fall. The turbulence is likely to grow severe before the storm settles into another uncertain period of relative peace and neo-hegemony.

The Arab Spring, which has shaken regimes the establishment once assumed were eternal and which took our intelligence analysts as much as our pundits by surprise, is the kind of event we are going to see more of. History is shifting into hyperdrive and things are going to get weird.

...Not since the 1930s has the incompetence, incapacity and selfish shortsightedness of Europe’s governing class been so shockingly on display...While their fecklessness endangers the global economy, the Europeans are simultaneously knocking down what little is left of their defense establishments...None of this stops European leaders from erecting one fantasy on top of another in a bewildering series of cloud-palaces: global carbon treaties, anti-death penalty campaigns, regional associations across the Mediterranean. Every species of quackery and flapdoodle finds a home and a subsidy in Brussels. _WRM

But back to China...Should we truly expect the subdued and docile Chinese people to revolt against their CCP masters of the iron hand?

The pressure on China’s fragile environment grows exponentially. The balance between regional autonomy (often corrupt) and central power (often rigid and unaware of local realities) has been a source of trouble for thousands of years in China; today that balance is more urgently needed and more difficult to find than ever. The Chinese financial system, partly controlled by the center, partly controlled by wildly optimistic and often profoundly corrupt local governments, and partly private, becomes more complex, more unbalanced and more unsustainable with every passing day.
I wish the Chinese well with their juggling, and I hope that any revolutions will be peaceful and slow, but if history teaches us anything at all, big changes are headed China’s way. A billion people are undergoing wrenching and rapid transformations of everything they have known. _WRM

What about India? Will the subcontinent enjoy a peaceful transition to superpowerdom? Not likely, says Mead.

The inevitable stresses of accelerating economic development and the accompanying social change are going to test India and its neighbors as they have never been tested before. With a decaying, strategically addled but nuclear armed neighbor in Pakistan, and a dangerously explosive rivalry with China that is likely to escalate over time, India’s external environment is as challenging as its internal issues. On the other hand, geography and demography seem to be conspiring to make India a major force in East Africa, Southeast Asia and the Middle East. Nobody knows where this is going, but the emergence of India on the world stage could be even more challenging and transformative than the rise of China. _WRM

Is this the coming anarchy that Robert D. Kaplan foresaw, or something even more violent and catastrophic?

It is as if a small portion of humanity is working hard to achieve a higher level, while most everyone else is helplessly, zombie-like, waddling deeper downward toward the Idiocracy, with the two disparate groups passing each other on opposite sides of the highway.

The US election of a sado-masochistic Congress in 2006 and 2008, and a narcissistic sociopathic executive in 2008, was apparently the ceremonial rolling out of the red carpet for the coming global weirding, if not something even worse.

European Austerity Measures: But a Knee-Jerk Reaction?

There is no doubt that several European governments are attempting to back-pedal on their overly-generous -- but ultimately ruinous -- welfare states. From Greece to Ireland to France to the UK, European governments are attempting to stave off disaster by down-sizing government benefits and workforces, through a variety of means.

...across Europe, where the threat of a double-dip recession remains palpable, what is most surprising is not simply that governments from Germany to Greece are slashing public outlays but that the debate hinges more on how fast to do so rather than whether such substantial cuts are the right thing to do under the current circumstances. _Mish

What you don't hear from the American left these days is much acknowledgment that the Europeans are backpedaling as fast as they can. There is a reason that transportation and oil-refinery unions have been striking in France and government workers are rioting again in Greece. When Greece nearly defaulted on its national debt last year, governments got a glimpse of what would happen when the money ran out, and they began enacting some of the toughest austerity measures of the post-World War II era.

While France and Greece have grabbed the headlines - protesters setting things on fire makes a visual the media can't resist - the most important case study in austerity economics may be the United Kingdom. Taking out the carving knife, the newly elected Conservative Party government is dissecting government with a vigor not seen since Margaret Thatcher's heyday. _WaTimes

Leftism always fails, sooner or later. Any political economy that presses citizens into dependency on government for basic needs will fail, since such economies clash with basic human nature. Leftist economies are all about redistribution and government spending, but they have no clues how to generate wealth to begin with.

A look back at the perilous -- and ultimately failed -- economic transition in Russia may be helpful. Many courageous Russians attempted to create a thriving market economy out of the remains of the USSR command economy. But they were thwarted by the corrupt power-mongers who seized control of Russia's wealth. These corrupt thugs killed Russia's nascent renaissance in its nursery crib.

Once a nation's people surrenders to a thugocracy -- of whatever stripe -- it becomes very difficult to throw off the chains in order to create a market economy which creates sustainable wealth.

As for Europe, it is not clear that her leaders have learned the true lessons behind the ongoing collapse of nanny-state economies. The deep truths of human nature as they relate to economics are quite unpalatable to most politicians and would be dictators.

Unrest In Europe as Pampered Pets Demand Treats

The people of Europe -- particularly public employees -- are accustomed to being kept by the state -- rather like pampered pets. But times are changing. The population of European taxpayers is shrinking. Crime is rising as third world immigrants with no love for Europe are filling the schools, the birthing wards, and the prisons. For Europeans to riot in response the government austerity measures -- at a time like this -- is like a pampered poodle pooping on the furniture to get its way. Very bad form.

In 35 countries for which data exists, nearly 40 per cent of jobseekers have been without work for more than one year, running risks of demoralisation and mental health problems, and young people were disproportionately hit by unemployment.

It noted that social unrest related to the crisis has been reported in at least 25 countries, including some recovering emerging economies.

This week riot police were on the streets as protesters in Spain, Belgium, Italy and Greece demonstrated against tough austerity measures. _Telegraph

Just wait until half or more of Europe's cities are populated by third world immigrants and their progeny. Europeans will then learn what rioting is all about.

Is Everything You See, Hear, and Read in the Media Wrong?

It often seems as if the news media is just one giant distraction from the things that people should be paying attention to. The "media as smokescreen" meme is a fairly accurate way to look at the mainstream.

America's demographic makeup is changing, but the US may be the only advanced industrial nation to have a healthy supply of young workers in the year 2050. For the future of African American communities, the greatest threats come from within themselves.

If the US can only survive its greatest threat since slavery -- The Obama Syndrome -- it may revive itself in the post-Obama age. With the threat of a worsening Obama Depression looming, America's approach to economics could certainly stand a hard reboot. The beginnings of the modern industrial age of capitalism were rough and rowdy. For capitalistic wealth creation to succeed, there must be areas of "open frontier", wild ranges of economic, technological, and real space to be explored and settled.

Europe is attempting to pull back from the abyss of financial collapse, but is Europe too deeply into the welfare state mentality to succeed? The emotional appeal of socialism may prove too strong for European intellectuals, despite its fatal flaws.

Suicide of Europe

Across Europe, once-mighty and ambitious nations are singing a siren song of death and oblivion. Once great empires that spanned the globe are now dedicated to passing from the world stage without leaving a trace. A sad benediction to societies and cultures that once looked forward to an unending ascent of the human spirit.

In Britain, a government commission has drawn up plans for a "steady state economy" that forgoes future economic growth in the name of sustainability by cutting work hours and banning TV commercials (to reduce consumerism). In Germany, new bestseller called Exit: Prosperity Without Growth is just the latest in a growing body of literature pleading for Germans to learn to live with less. In France, President Nicolas Sarkozy—who once came to power exhorting the French to work harder and earn more—has thrown his weight behind an expert report that declares the pursuit of GDP growth a "fetish" and strives to replace the GDP statistic with a broader measure of national contentment.

...today's no-growthers seem to make the same mistakes as their many predecessors, from Thomas Malthus—who predicted in 1798 that rising populations would inevitably starve—to the Club of Rome, a group of scientists who warned in 1972 that the world would start running out of key resources in the 1980s. Such movements extrapolate growth rates for resource use and pollution but don't take enough account of technical innovation, environmental regulation, greater efficiency, and behavioral change. Take Exit author Meinhard Miegel's claim that the world is running out of food. It largely ignores, among other things, the barely tapped potential of genetic engineering and other plant-breeding technologies.

Such faults are often overlooked because the no-growthers resonate in Europe today for intellectual and political reasons, not economic or technological ones. Critiques of growth have always been, at their core, about uneasiness with capitalism itself. That this critique becomes mainstream when capitalism seems to be failing us is no surprise. After all, the Club of Rome made its first splash in the 1970s, during a long slowdown when people were also becoming newly aware of environmental degradation.

...the no-growthers are unrealistic about how painful a no-growth reality would be. As the Harvard scholar Benjamin Friedman argues eloquently in The Moral Consequences of Economic Growth, a society that gives up on growth invites nasty fights over the distribution of limited resources and paves the way for intolerance and populism. That economic growth isn't everything—it doesn't measure the value of our relationships, our communities, our culture—is obvious. But so is the correlation between prosperity and quality of life, including health, longevity, and the freedom to pursue happiness. _Newsweek

Indigenous Europeans are failing to replace their own numbers through rudimentary childbirth, and are steadily being replaced -- at least in their cities -- by Muslim immigrants who may be on welfare, but can reproduce all the same.

The failure of Europeans to reproduce is part and parcel of the dying Euro spirit, the culture of the human dieoff. It is the essence of the modern green left, which is strongest and most suicidal in Europe. But it is almost as strong in Toronto, Seattle, and Sydney. The Obama - Pelosi reich is fanning the flames of the dieoff with every legislative drive and push -- in the quest to catch up with Europe.

But do Americans really want to be like Europe in that regard? Perhaps of those who voted for Obama, half do. But of those who did not vote and those who voted for other candidates, it is likely that over 80% oppose the dieoff mentality.

Certainly China, India, Brazil, and other third world nations trying to emerge into a more modern era have no wish to share the Luddite dreams of death with Euro-greens. The billions of the third world, in all of their wasteful polluting splendour, will hardly miss Europe when it is gone. They will simply move in and call it something else, something more populated and polluted, to be sure.

Cross posted at Al Fin

From Geert Wilders' Recent Speech in New York

Netherlands legislator Geert Wilders was recently deported from the UK without being allowed to give his scheduled presentation at the House of Lords. Unlike the UK, the US allowed Wilders free access to the country. The following is excerpted from his 23 Feb 2009 speech in NYC.

Thank you very much for inviting me. And – to the immigration authorities – thank you for letting me into this country. It is always a pleasure to cross a border without being sent back on the first plane.

Today, the dearest of our many freedoms is under attack all throughout Europe. Free speech is no longer a given. What we once considered a natural element of our existence, our birth right, is now something we once again have to battle for.

As you might know, I will be prosecuted, because of my film Fitna, my remarks regarding Islam, and my view concerning what some call a ‘religion of peace’. A few years from now, I might be a criminal.

...Today, I come before you to warn of a great threat. It is called Islam. It poses as a religion, but its goals are very worldly: world domination, holy war, sharia law, the end of the separation of church and state, slavery of women, the end of democracy. It is NOT a religion, it is an political ideology. It demands your respect, but has no respect for you.

There might be moderate Muslims, but there is no moderate Islam. Islam will never change, because it is built on two rocks that are forever, two fundamental beliefs that will never change, and will never alter.

...Their disdain of the West is so much greater than the appreciation of our many liberties. And therefore, they are willing to sacrifice everything. The left once stood for women rights, gay rights, equality, democracy. Now, they favour immigration policies that will end all this. Many even lost their decency. Elite politicians have no problem to participate in or finance demonstrations where settlers shout “Death to the Jews”. Seventy years after Auschwitz they know of no shame.

Two weeks ago, I tried to get into Britain, a fellow EU country. I was invited to give a speech in Parliament. However, upon arrival at London airport, I was refused entry into the UK, and sent back on the first plane to Holland. I would have loved to have reminded the audience of a great man who once spoke in the House of Commons. In 1982 President Reagan gave a speech there very few people liked. Reagan called upon the West to reject communism and defend freedom.

...Our enemies should know: we will never apologize for being free men, we will never bow for the combined forces of Mecca and the left. And we will never surrender. We stand on the shoulders of giants. There is no stronger power than the force of free men fighting for the great cause of liberty. Because freedom is the birthright of all man. _AtlasShrugs

Wilders is under 24 hour a day armed guard, particularly when in his home country, The Netherlands. That is the price of free speech for one who wishes to stay alive in Europe today. Pim Fortuyn and Theo van Gogh paid the price for their free speech in Europe. Wilders and Ayaan Hirsi Ali are living under constant threat of Islamic violence, as is the entire continent of Europe.

Suddenly, Half of Europe Disappears--Poof, Gone!

Image Source

In 50 years, half the population of many European countries will simply disappear--puff! gone. Why have Europeans stopped having babies, and why does everyone in Europe seem to be avoiding the issue?

For the first time on record, birthrates in southern and Eastern Europe had dropped below 1.3. For the demographers, this number had a special mathematical portent. At that rate, a country’s population would be cut in half in 45 years, creating a falling-off-a-cliff effect from which it would be nearly impossible to recover.

...In Germany, where the births-to-deaths ratio now results in an annual population loss of roughly 100,000, Ursula von der Leyen, Chancellor Angela Merkel’s family minister (and a mother of seven), declared two years ago that if her country didn’t reverse its plummeting birthrate, “We will have to turn out the light.”

...“But you can’t go on forever with a total fertility rate of 1.2. If you compare the size of the 0-to-4 and 29-to-34 age groups in Spain and Italy right now, you see the younger is almost half the size of the older. You can’t keep going with a completely upside-down age distribution, with the pyramid standing on its point. You can’t have a country where everybody lives in a nursing home.” Read the rest at the __NYT

A Europe without children? Europe dispensed with its military infrastructure decades ago, in favour of allowing the US to carry the weight. Other once-vital parts of its infrastructure are going by the wayside one by one.

Welfare states need workers to pay into the system, to provide for all the trusting retirees who assume the system will always be there for them. The challenge for Europe--in the face of both low fertility rates and rising emigration of its brightest and most talented--is to keep the top-heavy bureaucracies running, the infrastructure maintained, and the productive sector producing. Unfortunately, it is the productive sector that seems to be shrinking the most quickly.

Recommended reading:

The Global Baby Bust
Europe's Baby Bust
A Return to Pastoral Europe?
Birth of an Empire
Fiscal Policy and Fertility in the US

Previously published at Al Fin

Europe to America: You Am Evil!

In a cross-Atlantic low blow, Europeans tell America via polling data that America is a greater force for evil than for good. It is likely that the poll well reflects current European thinking toward the US, as well as European opinions of the US over the recent past.

In Britain, France, Germany and Russia, more people thought that the United States was a force for evil than for good.

The wildcard in the poll was Italy, where 49 per cent (compared to 27 per cent) thought that the US was a force for good. _
Telegraph

The poll also found a striking level of anti-American feeling in every country. A clear majority of Russians - 56 per cent - believe the US is a "force for evil" in the world. In Britain, only 33 per cent see America as a "force for good".

Opinion towards America has become steadily more hostile throughout the presidency of George W Bush, with the Iraq war probably being the single most important factor. _Telegraph

It is fortunate for Americans that Europeans cannot decide their next president. There is no question that the Euros would be essentially single-issue voters this year.

Such opinions can almost certainly be laid at the feet of a strongly biased European media, which essentially reflects the strong anti-Bush, anti-war sentiment of the vast majority of North American journalists and media personalities as well. What we see, essentially, is a continent of people who allow their media to do their thinking for them. Quelle surprise!

Intelligent people can be led by the nose to most any conclusion, if they trust the persons leading them. One can see that in China, Vietnam, North Korea, in Nazi Germany, Stalinist Russia, and increasingly in today's Europe, although still at a nascent stage compared to the other examples. But every total government had to start somewhere. Europe has made a good start of it.

Is Europe to be the New Lebanon or Armenia?

Europe's population is being increasingly replaced by poorly educated outsiders from the third world who do not wish to become Europeans--rather they wish to transform Europe into more affluent versions of their own countries. But since they bring their old prejudices, feuds, religious fanaticisms, and tendencies to violence along with them, it is more likely that they will be dragging Europe down. Starting with London, or perhaps Amsterdam, or maybe Malmo?

London is now the most ethnically diverse city in the world—more so, according to United Nations reports, even than New York...Walk down certain streets in London and one encounters a Babel of languages...A third of London’s residents were born outside Britain, a higher percentage of newcomers than in any other city in the world except Miami, and the percentage continues to rise. Likewise, migration figures for the country as a whole—emigration and immigration—suggest that its population is undergoing swift replacement. Many of the newcomers are from Pakistan, India, and Africa; others are from Eastern Europe and China. If present trends continue, experts predict, in 20 years’ time, between a quarter and a third of the British population will have been born outside it, and at least a fifth of the native population will have emigrated.

... the unprecedented influx of immigrants, often poorly educated, have little interest in, or appreciation of, the society to which they have come. Many are not learning to speak English, or speak it poorly, and forced marriages and other practices foreign to British law and custom remain common among them. A government report several years ago found that Britain’s whites and ethnic minorities led radically separate lives, with no sense of shared nationality. And as is now well-known, a disturbing number of British Muslims have proved susceptible to the ideology of Islamism. [A] poll found that a fifth of all British Muslims had sympathy with the “feelings and motives” of the London suicide bombers. Only a third of British Muslims, a Guardian survey found, want more integration into British culture.

...in Britain, multiculturalism became a career opportunity and a source of political patronage. So-called experts on cultural sensitivity and equal opportunity—generally people whose ambitions far exceeded their talent, except for bureaucratic intrigue—built little empires, whose continued existence depended on the permanence of racial and other divisions in society.

...increased contact between people does not necessarily result in increased sympathy among them. A large proportion of the indigenous Muslim terrorists caught in Britain are children of prosperous small businessmen, who have been to university and whose individual prospects for the future were good, if they had chosen to follow a normal career path. Cultural dislocation, the readiness to hand of an ideology of hatred that seems to answer their personal need for a fixed identity and an end to cultural confusion, and a disposable income—these, not poverty, account for their terrorism.

... ___CityJournal

This is the legacy that young Europeans are waking up to. It is becoming more likely that their own children or grandchildren--if they ever choose to have them--will find themselves outsiders in the country that their grandparents had believed they would own in perpetuity.

Will Europeans become the new Armenians? Europe the new Lebanon?

A Fascinating Anti-Americanism in London

European media has bred a trendy anti-Americanism among all classes on the old side of the Atlantic. The curious thing about this fashion is that the practitioners appear to believe that it is a cost-free habit. As if reviling the only force on the planet capable of saving them from their own suicidal tendencies has any kind of future. Fascinating.

I make a point, as my friends will attest, of wearing a pair of stars and srtripes cufflinks. It might be slightly pathetic, but I want to demonstrate my solidarity with the nation leading the fight against barbarism.

Understandably, when strangers see but don't hear me, some jump to the conclusion that I am American. And it's instructive to see how some people behave when they see the cuffs.

On countless occasions I have been sneered at, sworn at and, twice, spat at. I would say - my memory is impressionistic on this - that by far the most common insult is a muttered "F*c*ing American". And I cannot recall such behaviour from anyone who looked older than 40ish.

Not being American, for me this is simply useful in seeing how common such prejudice is. Of course, just because it is only the under 40s who are vocal, it does not follow that others do not share their views.

It's not that usual to hear people give voice to their anti-semitic or anti-black bigotry. But in my experience, there is one prejudice which is now entirely acceptable: anti-Americanism. __SpectatorUK

Of course every place--even the most politically correct place--has to have its lawful prejudices and bigotries. In North America, it is the straight white male who is lawfully discriminated against. In Europe, it is the American.

Americans have always felt that Europe--at least England--was a friendly zone. Given the close alliances with England in WWI, WWII, and the cold war, Americans naturally assumed that merry olde Englynde would always be merry toward them. That is why Americans have always assumed maintaining a defensive perimeter around England and Europe was just part of the price of having allies. As Americans watched Europeans abandon any pretense of defending themselves, diverting those monies to social welfare programs etc., they just assumed that Europeans would feel the binding ties of history and the shared shedding of blood--and the promise of similar future sacrifice if necessary.

Instead, what Americans receive is a monolithic blame for all that is perceived as wrong with the world. Demonisation, accusation, scapegoating, along with a minimisation of any worthwhile contribution to the world, past or present. Americans had been largely oblivious to this bloated, self-satisfied trans-Atlantic phenomenon. No longer.

Europe is being infiltrated by something far more vile than anything that can be laid at the doorstep of the hated Americans. This vile thing has promised to subjugate Europe under the desert sandals of a new Caliphate. It is a vile and growing thing that Europe refuses to see, and in order not to see the vile thing, Europe expends all its excess energy in hating the thing that is peripheral to Europe's problems at most.

It is an inexplicable societal imbecility which can only be explained by a total lack of insight on the part of Europe's leadership, media, and academe. Of course, North America suffers from a similar imbecility, although much less advanced, and far less suicidal.

The ball is in Europe's court. Too much more of this cross-Atlantic bile, and Europe will find itself in an unmarked wasteland of rapidly diminishing options. Most Europeans that I know will not like that.

America: Revolutionary Nation

Great revolutions accompany the uncovering of great frontiers. The USA was founded on the Eastern frontier of a large continent, and has been moving to expand its frontiers outward over most of the 232 years since. That expansionary revolution continues, but it is taking some interesting forms:

The great new American frontiers proved to be those of business, science and technology. In the course of the 20th century, Americans invented more milestone technologies and inventions, created more wealth and leisure time, and reorganized their institutions more times than any country had ever done before – despite a massive economic depression and two world wars. It all reached a crescendo in the magical year of 1969, with the creation of the Internet, the invention of the microprocessor and, most of all, a man walking on the moon.

Along with genetic engineering, we are still busily spinning out the implications of these marvels. Yet it is becoming increasingly apparent that the cultural underpinnings of these activities have changed in some fundamental way.

We still have schools, but a growing number of our children are studying at home or attending private schools – and those in public schools are doing ever more amounts of their class work on the Internet [ed: virtual charter schools].

We still have companies and corporations, but now they are virtualized, with online work teams handing off assignments to each other 24/7 around the world. Men and women go to work, but the office is increasingly likely to be in the den. In 2005, an Intel survey of its employees found that nearly 20% of its professionals had never met their boss face-to-face. Half of them never expected to. Last summer, when the Media X institute at Stanford extended that survey to IBM, Sun, HP, Microsoft and Cisco, the percentages turned out to be even greater.

Newspapers are dying, networks are dying, and if teenage boys playing GTA 4 and World of Warcraft have any say about it, so is television...The most compelling statistic of all? Half of all new college graduates now believe that self-employment is more secure than a full-time job. __WSJ

So where is it all heading? Into a very wild and Future Shock sort of a world.

The economy will be much more volatile and much more competitive. In the continuous fervor to create new institutions, it will become increasingly difficult to sustain old ones. New political parties, new social groupings, thousands of new manias and movements and millions of new companies will pop up over the next few decades. Large corporations that don't figure out how to combine permanence with perpetual change will be swept away.

This higher level of anarchy will be exciting, but it will also sometimes be very painful. Entire industries will die almost overnight, laying off thousands, while others will just as suddenly appear, hungry for employees. Continuity and predictability will become the rarest of commodities. And if the entrepreneurial personality honors smart failures, by the same token it has little pity for weakness. That fraction of Americans – 10%, 20% – who still dream of the gold watch or the 30-year pin will suffer the most . . . and unless their needs are somehow met as well, they will remain a perpetually open wound in our society.

The "gold watch and 30-year pin" segment of Americans may be only 10%, but in Europe that fraction is closer to 50% or larger. How will Europe adapt to this brave new frontier revolution that is unfolding in America, only to spread globally in the next few decades?

Given the enormous influx of new uneducated welfare recipients from the third world, Europe will be severely challenged to find the type of economic growth at home in which its capital savings can invest. It will have to look overseas to areas that are still growing. In the mid 2000s, that would be Brazil, India, and parts of the Anglosphere including the US.

Making the US More Like Europe? No, Thanks

Europe is undergoing a traumatic transformation, due entirely to its over-regulation and over-dependency on central government bureaus. Naturally, it is the middle class in Europe that is feeling the greatest squeeze. When governments grow out of control, it is the middle class that pays the greatest price, and this is the case in modern Europe.

The European dream is under assault, as the wave of inflation sweeping the globe mixes with this continent’s long-stagnant wages. Families that once enjoyed Europe’s vaunted quality of life are pinching pennies to buy necessities, and cutting back on extras like movies and vacations abroad.

Potentially more disturbing — especially to the political and social order — are the millions across the continent grappling with the realization that they may have lives worse, not better, than their parents.

“I have this feeling that there is a wall in front of us,” said Axel Marceau, a 41-year-old schoolteacher living outside of Frankfurt. “We’re just not going to get any further.”

His concerns are well-founded. A study by the German Institute for Economic Research in Berlin found that the broad middle of the German work force, defined as workers making from 70 to 150 percent of the median income, shrunk to 54 percent of the population last year, from 62 percent in 2000. __NYT__via__OTB

Senator Obama wants to make the US more like Europe. He thinks that Americans want this too. But only uninformed and unintelligent Americans want that, which may categorize Obama's supporters a bit too well for Obama's comfort.

Europe has bigger problems than the middle-class squeeze, however. A demographic collapse of indigenous Europeans (from failure to breed) combined with an out-of-control influx of uneducated and unassimilable third world immigrants, leaves the top-heavy over-bureaucratic state welfare systems of Europe with a shortage of tax paying citizens. Even worse, the resentful and increasingly alienated European third-world underclass is swelling the criminal ranks of an old Europe that had grown accustomed to low crime rates.

For those who examine critical underlying trends in a society, Europe is suffering from some of the worst possible trends a society can experience. Obama would do well to look in another direction for societies to model his brave new world after.