Where capitalism has been allowed to thrive it has pulled the world along. We are in the midst of a micro-entrepreneurial revolution facilitated in large part by technology which is cheap and powerful. Please notice how technology is one of the least regulated sectors of the world economy. At least it is right now.
More people think like producers these days than probably ever before. They think more like owners than as employees. This is a very good thing for the economy if we allow the revolution to bloom.
The micro-entrepreneurial shift also has the potential to deeply affect politics in this country. (And the world.) If more people want opportunity, the chance to preform, versus only security, this bodes well for our society generally.
Of course the central planners are doing their best to screw it up, via the central banks and draconian information laws, but I have faith in the collective genius of those tapping away on their laptops and iPads in Austin, Seattle, Ashville, Kuala Lumpur, Luanda, London, Madrid, and Hong Kong.
Viva la revolucion capitalista!
(From The Telegraph)
To the extent that a serious protest vote has emerged, it has benefited parties of the Right, such as Ukip, which, outside immigration and gay marriage, promotes a radically libertarian set of aims. The same is true in the US, where the big beneficiary of the protest vote has been the freedom-loving Tea Party.
To listen to the noise, you’d think American economics were the exclusive preserve of neo-Keynesians such as Paul Krugman and Larry Summers; yet beyond the “madrassas” of Princeton and Harvard, this is far from the case. Among articulate young Americans, you are much more likely to find revivalist free-market thinking than backward-looking belief in interventionist solutions.
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An interview with friend of ACC Peter Schweizer on how crony capitalism infects a society and mutates the economy.
It’s an enormous threat to our country because there are very few advocates for outright socialism anymore. But what you are seeing is that many people on the left are basically looking to use the market system for progressive ends and so they come up with very seductive ideas like public/private partnerships. They talk about the need we have that will be beneficial to our economy and to our country for there to be a growth in, say, green energy. And it’s a very noble sounding ideal. The problem is that when it actually comes to implementation, given human nature and given the nature of politics, the loans and grants go to friends and allies rather than to people who are most deserving based on technological breakthroughs and consumer demand.
So I think it is undermining what creates prosperity in this country, which is free market capitalism.
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Reason to believe the next global economic crisis will start in the East and not the West
Posted on 19 May 2013
Mirror, mirror on the wall where are the biggest bubbles of all? That is the question to ask when looking for where the next global economic crisis is most likely to erupt. It’s been five long years since the last crisis and we are about due for another. The long gap between the Asian financial crisis of the late 90s and the subprime debacle was a bit of an anomaly.
Sure the Fed appears to have saved the US from economic collapse and the death of the eurozone was greatly exaggerated. But what about the bubbles inflating in Asia today and the nationalistic governments unable to call on the moderate federalism of the US or even the eurozone to solve these problems?
Japan’s money printing
Japan is inflating its money supply three times faster than the Fed’s QE program. It is weakening the yen as intended and exporting deflation to its customers, making them less competitive. The sugar-rush effect is reflected in a booming Japanese stock market as profits from abroad will also now be higher in yen.
However, devaluation in a highly indebted economy is fraught with danger. Why hold a currency like the yen that pays almost zero interest rates if it collapsing in value? Besides the increased profits are coming to companies whose product lines are out-dated and at the cost of a ballooning money supply and inflation down the pike.
It’s also very bad news for Japan’s main trading partner China, though the response by nationalistic Chinese politicians has been to whip up public fervor over some disputed and uninhabited islands. That put a dent in Japanese car sales last year.
Of course, the situation is much worse on the Korean peninsula where the lunatics are running the assylum in the North. These guys have their triggers on nuclear weapons and can only stay in power by taking an increasingly aggressive stance.
Chinese banking crisis?
Then again the biggest threat to Asia could well turn out to be the Chinese banking system. Hedge fund manager Carson Block whose Muddy Waters Research has uncovered a series of huge financial scandals in China in recent years is now warning that the risks within China’s banking system are more severe than those in Western financial institutions before the crisis.
He told the Sunday Telegraph: ‘Our view is that China is a massive asset bubble. This puts resource-based emerging market economies and Australia, Canada and New Zealand at direct risk. A China unwind will have significant knock-on effects in other developed markets too, likely implicating liquidity and asset prices. The severity of the effects in the rest of the developed world of course partly depend on the timing of the unwind.’
Timing is the tough call, all the same. Hedge fund billionaire Jim Chanos has been shorting China for a couple of years. Still if you want to spot the next global financial crisis perhaps you should be looking East and not West.
Statistics: Posted by yoda — Sun May 19, 2013 12:27 am
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There was a time when Spain was booming. After a successful Barcelona Olympics, which finally hammered the coffin completely closed on Franco, and then full a partnership within the Eurozone things were looking quite bright for Espana. No longer would Africa start at the Pyrenees. Spain seemed, honest to goodness, a real European country. Not like the Netherlands or Germany of course but approaching Italy.
Well the good news is Spain and Italy are still in the same boat. The bad news is the boat is sinking.
Spain is suffering through a 27% unemployment rate. Youth unemployment is much higher than that. A full 1/3 of the workforce is idle. It is a disaster on a massive scale.
Look at it this way Spain, you could be Greece.
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The CBC is in crisis. Canadians deserve to know why
Special to The Globe and Mail
Published Thursday, May. 02 2013, 11:05 AM EDT
Last updated Thursday, May. 02 2013, 3:24 PM EDT
What does Kirstine Stewart know about the future of the CBC that the rest of us don’t?
Why does anyone leave a job as the most powerful and influential media executive in the country to sell ads for Twitter Canada? And why leave immediately, without prior notice?
Ms. Stewart has spent seven years as a senior executive at the CBC, hired by the much-maligned Richard Stursberg to head up CBC television. She wound up replacing her boss as vice-president of all English language services when Mr. Stursberg was fired by the current CBC president, Hubert Lacroix in 2011.
That’s seven years on the public payroll, in charge of the country’s single most important cultural institution.
As usual, the CBC is as forthcoming about the circumstances of her leaving as a mafioso is about a death in the family. All we get is the usual PR blather about how she “really understands the role of the public broadcaster and has been a fierce proponent of its distinctive place,” [Lacroix], and how she’s “proud of what we’ve done together these past seven years,” and how she’ll “miss the CBC family dearly [Stewart].”
When it comes to public communication, the CBC itself is a lost cause, too deeply immersed in the issues of commercial secrecy and proprietary information to offer insight without a federal warrant. But we have a right to expect more of Ms. Stewart herself. She owes us.
The citizens of this country need and deserve a full explanation of current conditions within the CBC, and how management is responding. The corporation is facing an existential financial and cultural crisis – a crisis of leadership and purpose – and the people who fund it need to know exactly what’s going on.
It’s time for the silence and obfuscation to end. The country is in peril of losing its public broadcaster, in any recognizable form, and we need to know how to prevent that from happening. We need a say in the crucial decisions that will be made over the next year or two as to what direction our public service broadcaster ought to be taking in response to overwhelming financial pressures.
Here’s what Mr. Stursberg says about his hiring of Stewart in his recent tell-all CBC memoir Tower of Babble:
“We needed … someone who would manage the television schedule and define what was required from the drama, documentary and reality departments…someone with a deep knowledge of all the different genres, and excellent grasp of audience needs, a keen sense of flow within the schedule and brutal competitive instincts. We needed a programming thug.”
During the hiring interview, Mr. Stursberg says, “we talked about audiences. We never talked about the mandate of public broadcasting or the trade-off between quality and popularity. We focused exclusively on audiences.”
That phrase, “the trade-off between quality and popularity” is a cop-out that occurs repeatedly throughout Mr. Sturberg’s book, and was a mantra of his enormously destructive, six-year stewardship of CBC English-language programming on radio and television.
It is a false dichotomy, a bogeyman. It is of course not the case that public service programming is either popular or of high quality. CBC radio proves the point – it’s both at the same time. And in television one need only look to the BBC and the many public broadcasters in Europe and around the world that produce TV programs that are both of exceptional quality and enormously popular.
The problem that is killing the CBC is the fact that, on television, it is not a true and authentic public broadcaster. It is an unmanageable hybrid. It must serve a poorly-defined public service mandate, but at the same time it is saddled with commercial sponsorship for half its income.
The commercial mandate demands that advertising revenue be maximized. The public service mandate demands excellence in information and entertainment – which means reflecting the country’s values, interests and aspirations in all genres of programming. The job of the public broadcaster is to make popular programming excellent, and excellent programming popular. The job of a commercial broadcaster is to do whatever it takes to maximize advertising revenue.
Sometime within the next two years, the CBC is almost certainly going to lose its single largest source of advertising revenue, NHL hockey. It will be out-bid for the contract by one of the country’s enormously wealthy commercial broadcasters, probably Bell Media. That will mean a loss of 40 per cent of the corporation’s total annual ad revenue, but also a loss of something close to 400 hours of Canadian content programming – a hole that will have to be filled. Already bled white by decades of funding reductions from successive federal governments, the CBC is in no position to survive this blow.
With a decidedly unfriendly sponsor in Ottawa, we can expect what will amount to a privatization of the public broadcaster. This is a process that has been underway now for nearly a decade, under the stewardship of former CBC president Robert Rabinovitch, the current president Hubert Lacroix, and vice-presidents Richard Stursberg and Kirstine Stewart.
By privatization I mean the sidelining of the public service mandate for excellence in favour of the commercial mandate for ratings and profit. As Mr. Stursberg himself puts it in his memoir, under his reign the CBC was re-oriented in a purely commercial, ratings-driven direction, just like the surrounding hoard of commercial broadcasters.
The standards by which programs would be judged at the CBC would be identical: “It would be a brutal standard,” he boasts. “It would no longer allow [programmers] to fudge the meaning of success by talking vaguely about ‘mandates,’ and ‘quality.’ It would be a standard by which shows, producers, stars and executives would be judged.”
And then, of course, there’s the fact that the CBC has applied to the CRTC for permission to introduce advertising on Radio 2. The decision is imminent.
It’s hard to believe that all of this did not play into Stewart’s decision to jump ship. Canadians need to know, and she has a duty to tell.
Wade Rowland is author of the newly-released Saving the CBC: Balancing Profit and Public Service (Linda Leith Publishing).
Statistics: Posted by DIGGER DAN — Fri May 03, 2013 1:23 am
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After the mortgage crisis left many homeowners in foreclosure, the federal government cut a $3.6 billion settlement with banks accused of wrongful evictions and such. But now those settlement checks are being returned for “insufficient funds.”
As the New York Times noted, the government chose Rust Consulting to distribute the checks. But Rust failed to move the money into the account of the bank that issued the checks. That led to delays and now to checks being returned for insufficient funds. The consumer help line of the mighty Federal Reserve told homeowners their checks could not be cashed. Then the Fed issued a statement that Rust had corrected the problems and that the Fed would continue to monitor the payments. That will come as scant consolation to homeowners who have been waiting for assistance. But it is instructive in several ways.
The involvement of the federal government is no guarantee of efficiency or even, apparently, of solvency. The bouncing checks should also remind people that federal efforts to help people can have unintended negative consequences. According to a recent study by the National Bureau of Economic Research, the Community Reinvestment Act, federal legislation dating from the Carter Era, fueled the mortgage crisis with its “flexible” lending standards, low down payments and reduced credit standards. So the federal government is attempting to fix a problem largely of its own making. And even though the federal government takes increasing amounts of money from the people, there are limits to what it can and should attempt to do.
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Britain is a ‘crisis economy’, says Mark Carney
Mark Carney, the incoming Bank of England Governor, has described the UK as a “crisis economy” as he sought to play down hopes that he could ride to the country’s rescue.
Mr Carney said: “The US is breaking out of the pack of crisis economies that include the eurozone, the UK and Japan.” Photo: Reuters
By Philip Aldrick, Economics editor6:25PM BST 18 Apr 2013291 Comments
Speaking on the fringes of the International Monetary Fund’s spring meetings in Washington, he said: “The US is breaking out of the pack of crisis economies that include the eurozone, the UK and Japan.”
His words came just days after the IMF slashed its forecasts for UK growth this year and next, and urged the Chancellor to scale back his £130bn austerity programme to aid the recovery.
Christine Lagarde, the IMF managing director, signalled that the Fund will demand the UK ease off at its annual Article IV update on the economy next month.
Asked whether she agreed with IMF chief economist Olivier Blanchard that the Chancellor was “playing with fire” with his economic plans, she said: “We have said that should growth abate then there should be consideration to adjusting by slowing the pace.
“The growth numbers are certainly not particularly good. So, in a sense, this is a continuation of the position. What has changed is clearly the quality of the numbers.”
Ms Lagarde’s comments dealt a damaging blow to the Chancellor, whose policies she has previously championed. Her support has been critical to shoring up George Osborne’s credibility in the face of Labour’s attacks.
Asked specifically about his opinion on the UK reovery, Mr Carney said he would reserve his opinion until he starts at the Bank in July. However, he added that “the flip side [of the UK’s problems] is the tremendous opportunity that is there”.
In comments that will further disappoint Mr Osborne, Mr Carney stressed that governments should not be looking to central banks to return countries to prosperity.
“Can central banks provide sustainable growth? No. They can help with the transition, but they can’t deliver long term growth. That needs to come through true fiscal adjustments and necessary structural reforms… Sustainable growth comes from the private sector.”
Mr Osborne is counting on Mr Carney being more radical than Sir Mervyn King, who has refused to consider aggressive measures such as giving the market firm guidance on future policy movements and using quantitative easing to buy assets other than gilts.
The contrasting positions of Mr Carney and Sir Mervyn, whose second five year term ends in June, were exposed by one exchange over the US Federal Reserve’s decision to set an unemployment target alongside inflation. Mr Carney defended the US stance and rejected Sir Mervyn’s argument that it could hold policymakers hostage to unachievable goals.
A separate Treasury Select Committee report on Mr Carney’s appointment said his commitment to end Sir Mervyn’s allegedly autocratic management style was welcome.
Andrew Tyrie, TSC chairman, said: “In evidence to the Committee, Mr Carney set out his preference for a consensus-based approach to leadership; this will be significant if it leads to a meaningful change of culture within the Bank.”
At the Reuters Newsmaker event in Washington, Mr Carney stressed that his influence over policy at the Bank could be overstated. “It’s an honour and responsibility [to be Governor] but it’s a responsibility that can be overplayed as these powers are vested in committees. I’m a member of these committees. Policy is not mine.”
Mr Carney also launched a withering attack on tax avoiders, acknowledging the public outcry against multinationals in the UK. He said tax policy needed global co-ordination, but added: “On a personal or corporate level, if there is a persistent ability to avoid tax that means the burden of fiscal adjustment falls on those who are paying their fair share – and they have to pay more than their fair share.”
Statistics: Posted by DIGGER DAN — Sun Apr 21, 2013 3:21 pm
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“During The Last Crisis, We Had China,” Now We Have No One
THURSDAY, APRIL 11, 2013
There could not possibly be any clouds on the horizon with the Dow and the S&P 500 setting all-time highs, while the German DAX is marching relentlessly towards 8,000 and the Japanese Nikkei is soaring. But just then, a deeply connected representative of the world’s real economy spoils the rosy scenario.
“The world is lacking an economic locomotive,” said Peter Löscher, CEO of Siemens, one of Germany’s crown jewels, a self-described “global powerhouse in electronics and electrical engineering” with 370,000 employees spread over 190 countries, and €78.3 billion ($101 billion) in revenues. A gauge of the world economy. So the company had had some issues.
“I came to Siemens when the company was in its greatest crisis,” Löscher told the Handelsblatt in an interview. In 2007, he’d become the first CEO in the 165-year history of the company to be hired from the outside. At the time, Siemens was at the center of the largest corruption and bribery scandal ever in Germany. Its offices had been raided in 2006. In 2007, it was fined by the European Commission for being part of a bid-rigging and price-fixing cartel of international power systems suppliers. Two former executives were convicted in a German court on bribery charges. Other settlements followed. By the end of 2008, the cost of those fines and settlements was approaching €3 billion.
Löscher got the company through it and invested in politically correct green technologies to scrub the smudges off its image. It worked, and he was seen as sort of a hero. But now Siemens is under pressure. It missed its earnings forecast for fiscal 2012 by almost a billion euros. While revenues rose about 7%, expenses jumped, and net profits dropped 26% to €4.5 billion. And those were the good times.
Löscher wants to shave off €6 billion in costs. The company might cut 7,000 jobs in Germany. “Program Siemens 2014,” it’s called ingeniously. Arch-competitor GE also announced a corporate weight-loss program. “In economically difficult times, you have to work on productivity,” Löscher said.
Economically difficult times? You wouldn’t know it from the stock markets in the US, Germany, and Japan that have been soaring in their omniscient manner. And that American locomotive? Isn’t it pulling hard, based on what the Dow and the S&P 500 are doing? Nope. It’s “at best lumbering along,” he said.
At best! He should know. Siemens USA employs about 60,000 people spread over every state. But that American locomotive that the world had become so dependent on is sputtering. Then he moved on the next locomotive.
“During the last crisis, we had China,” Löscher said nostalgically, “and most of the other developing countries also had high growth rates.” But those hopes have dimmed. “Short term, you cannot expect a stimulus from China,” he said. So there’ll be no one to pull the world out of the next slump.
And he worried about the euro crisis. “It remains difficult. The Eurozone is in a recession. With Cyprus it has become clear that the uncertainties in the markets are not over yet. Medium term, progress will be slower in Europe.”
Companies like Siemens, unlike megabanks, have to survive in the real economy, but…. “Business has not become easier,” Löscher said. “The short-cycle businesses are lacking momentum as well. We don’t expect any tailwind from the global economy and markets.” And then he even took away that last glimmer of hope: “Many experts expect an upswing in the second half. We have yet to see any signs of that.”
So how to prepare for this scenario? “Full concentration on what we can influence,” he said, referring to his famous Program Siemens 2014, “thus cost efficiency and productivity,” namely laying off people and shedding troubled subsidiaries. When enough companies cut back, it exacerbates downward pressure. Four investment banks are already hawking all sorts of Siemens units. Including those in solar energy, now that Siemens’ image has been burnished; things have changed, he said, “the markets fell off, Spain cut the subsidies, and the US discovered shale gas.”
Hopefully, revenue would be flat in 2013, and in 2014, maybe there’d be some “moderate growth,” he said. But wait, wasn’t the goal to reach €100 billion in revenues? “That was a secondary goal,” he said. But it’s now out the window. “Currently, the world economy is at a flatter stage.”
That sums up the real economy around the world. The trillions that central banks have printed and handed to their cronies went chasing after assets and have created all kinds of bubbles and immense wealth at the top. They obscured risks, distorted credit markets, and inflated stock markets that have now become drunk with this money and blind to the real economy. It makes sense: central bank manipulations were never designed to, and can’t, cure underlying economic problems—but they do get in the way of resolving them.
Eurozone countries are falling like dominos. But bailouts — by taxpayers in other countries — keep banks from collapsing, governments from defaulting, and investors from incurring well-deserved losses. In the US, President Obama’s budget, with its new taxes, is causing heart palpitations left and right. But how do countries really stack up?
Statistics: Posted by yoda — Fri Apr 12, 2013 12:13 am
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