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Gold and Silver • Gold Crashes Most in 30 Years … What Does It Really Mean?
Gold Crashes Most in 30 Years … What Does It Really Mean?
http://www.zerohedge.com/contributed/20 … d-crashing
Gold has fallen off a cliff. It has fallen faster than at any time in the last 30 years.
Zero Hedge notes:
Adding insult to injury, the Shanghai Gold Exchange overnight announced that following the tumbling precious metal prices and limit down drop in early trading, it may raise trading margins for its gold and silver forward contracts.
(Margin calls tend to trigger further selling.)
Some Say It Is a Good Time to Buy
While most financial advisers are screaming “sell!”, there are some well-known contrarians.
For example, Bill Gross still recommends buying gold.
Marc Faber says:
“I love the fact that gold is finally breaking down because that will offer an excellent buying opportunity” …. “The bull market in gold is not completed.”
John Hathaway of Tocqueville Funds (with $10 billion under management) says that the selloff in gold is “a contrarian’s dream scenario”:
The evidence shows strong macro fundamentals for gold, investor sentiment at a negative extreme and compelling valuations in the mining shares. It seems like a contrarian’s dream scenario to us.
And Zero Hedge notes that – from the perspective of technical analysis – gold is the most oversold it has been in 14 years.
The Bearish Explanation
But why has gold crashed?
Bloomberg blames:
•“Optimism that a U.S. recovery will curb the need for stimulus”; and
•“The prospect that beleaguered members of the euro zone might be forced to sell gold to raise part of the funding, and there are much bigger holders in that category than Cyprus.”
Citigroup opines:
Gold decline may have been related to some break in technical levels and the general improvement in global risk appetite.
Business Insider argues:
[Gold's price collapse] vindicates the economic ideas of the economic elites.
***
To respond to the economic crisis, economists and mainstream policy makers have favored highly unusual policy measures (massive Fed balance sheet expansion, massive stimulus, etc.). These ideas are usually based on years of traditional economic research (Keynesianism, monetarism, etc.).
All of these ideas have been slammed by heterodox types like Austrian economists, who have warned of hyperinflation, and gold going to $10,000.
So the collapse in gold is not about gold, but about vindication for a large corpus of belief and economic research, which has largely panned out. It’s great that our economic elites know what they’re talking about, and have the tools at their disposal to address crises without creating some new catastrophe.
Things aren’t great in the economy, but the collapse/hyperinflation fears haven’t panned out, and the decline in gold is a manifestation of that.
Barry Ritholtz writes:
History shows Gold trades differently than equities. Why? It comes back to those fundamentals.
It has are none.
This is not to say gold is not affected by Macro issues. But that is very different than saying Gld has a fundamental value, an intrinsic worth. It does not. That led to this heretical advice: Gold is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.
I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today.
Gold does trade technically, and is especially driven by the collective belief system of the crowd. When that falter, well, you know what happens . . .
The Gold Bugs View
Gold bugs, on the other hand, see things quite differently.
Andrew Maguire says that the crash is solely in the paper gold market … and that there is actually a shortage of physical gold. Many other sources make the same claim.
Egon von Greyerz – founder and managing partner at Matterhorn Asset Management – argues:
They shouldn’t be concerned about the temporary pressure on gold. This decline has nothing to do with the physical market because enormous demand for gold continues.
The paper market in gold is not a real market, and at some point in the near future paper gold holders will wake up and realize they are holding are worthless pieces of paper. This is when the world will witness one of the greatest short squeezes in history as investors panic in to physical and the price of gold explodes to the upside.”
London bullion dealer Sharps Pixley thinks that the crash was largely initiated by a single entity:
The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level… the line in the sand.
Two hours later the initial selling, rumoured to have been routed through Merrill Lynch’s floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market – it had the hallmarks of a concerted ‘short sale’, which by driving prices sharply lower in a display of ‘shock & awe’ – would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called ‘stopped-out’ in market parlance – probably hidden the unimpeachable (?) $1540 level.
The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production – too much for the market to readily absorb, especially with sentiment weak following gold’s non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data.
***
By forcing the market lower the Fund sought to prompt a cascade or avalanche of additional selling, proving the lie \; predictably some newswires were premature in announcing the death of the gold bull run doing, in effect, the dirty work of the shorters in driving the market lower still.
Gold Core’s Mark O’Byrne agrees.
James Rickards thinks the Fed is manipulating the gold market (and every other market).
Former assistant Treasury Secretary Paul Craig Roberts says:
Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.
***
According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.
***
Bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop.
***
In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions.
***
I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar.
Roberts also says:
This is an orchestration (the smash in gold). It’s been going on now from the beginning of April. Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance. Then, a couple of days ago, Goldman Sachs announced there would be further departures from gold. So what they are trying to do is scare the individual investor out of bullion. Clearly there is something desperate going on….
Indeed, this may tie into the Federal Reserve leak of insider information. Specifically, Roberts writes:
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
As Congressman Grayson pointed out in a recent letter, right after the Federal Reserve’s Open Market Committee leaked valuable inside information to big banks, Goldman told its clients:
We recommend initiating a short COMEX gold position ….
Statistics: Posted by DIGGER DAN — Mon Apr 15, 2013 6:59 pm
View full post on opinions.caduceusx.com
Does “Pro-Life” Mean Government Control? To Thomas Friedman It Does
By David Boaz
Thomas Friedman of the New York Times has a column today provocatively titled “Why I Am Pro-Life.” Of course he doesn’t mean that he wants the government to protect life in utero. Instead he turns to a standard Democratic theme: How can you say you’re “pro-life” and oppose welfare, environmental regulation, and every other government program? Friedman doesn’t miss a beat: “common-sense gun control…the Environmental Protection Agency, which ensures clean air and clean water, prevents childhood asthma, preserves biodiversity and combats climate change that could disrupt every life on the planet…. programs like Head Start that provide basic education, health and nutrition for the most disadvantaged children….”
But then he takes it a breathtaking step further:
the most “pro-life” politician in America is New York City Mayor Michael Bloomberg. While he supports a woman’s right to choose, he has also used his position to promote a whole set of policies that enhance everyone’s quality of life — from his ban on smoking in bars and city parks to reduce cancer, to his ban on the sale in New York City of giant sugary drinks to combat obesity and diabetes, to his requirement for posting calorie counts on menus in chain restaurants, to his push to reinstate the expired federal ban on assault weapons and other forms of common-sense gun control, to his support for early childhood education, to his support for mitigating disruptive climate change.
Thomas Friedman’s vision of “pro-life” policies is, in every case, a network of bans and mandates forcing us to live our lives in ways that are pleasing to him and Mayor Bloomberg. No “life, liberty, and the pursuit of happiness” for him. No, his pro-life vision is Ira Levin’s dystopia in This Perfect Day, a world in which the state takes care of our every need.
When Hayek, in his essay “Why I Am Not a Conservative,” wrote about “the party of life,” he described it as “the party that favors free growth and spontaneous evolution.” Not Tom Friedman’s party! And certainly also not the party that seeks to ban drugs, gay marriage, and the discussion of evolution in science class. In her book The Future and Its Enemies, Virginia Postrel wrote at length about “the party of life,” and she didn’t have in mind Friedman’s crabbed view of a government that “protects life” by snuffing out liberty.
Some years ago I wrote a column titled “Pro-Life,” and I too had the Hayekian, not the Bloomberg-Friedman, view of life and liberty in mind. But long before that, as usual, Alexis de Tocqueville, in “What Sort of Despotism Democratic Nations Have to Fear,” warned us that one day Thomas Friedman and Michael Bloomberg would come for our liberties:
Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?
Thus it every day renders the exercise of the free agency of man less useful and less frequent; it circumscribes the will within a narrower range and gradually robs a man of all the uses of himself. The principle of equality has prepared men for these things;it has predisposed men to endure them and often to look on them as benefits.
After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.
Does “Pro-Life” Mean Government Control? To Thomas Friedman It Does is a post from Cato @ Liberty – Cato Institute Blog
View full post on Cato @ Liberty
Oil And Gas • WHAT FALLING OIL PRICES REALLY MEAN
Posted on 5th July 2012 by Administrator in Economy |Politics |Social Issues
Gail Tveberg, oil consumption, oil prices
Another excellent article from Gail Tverberg. None of the spin and propaganda about oil supply and oil prices that you get from the corporate media and industry shills. She wrote this article before oil prices surged by $10 on news about Iran sanctions and new threats about Middle East war. She correctly points out that plunging oil consumption in Europe and the U.S. is a sign of new nasty recessions. The drop in prices is not due to increased supply. The storyline about new supply is a lie. Consumption in the U.S. has fallen off the cliff, even as the MSM touts the tremendous car sales. And it has nothing to do with people buying smaller cars. The surge in vehicle sales has been led by pickups and SUVs. Every time oil prices try to fall below $80 per barrel, new projects will be scrapped. This will automatically lead to higher prices. The bumpy plateau of peak oil is a bitch. Welcome to the recession.
Lower Oil Prices – Not a Good Sign!
Posted by Gail the Actuary on July 5, 2012 – 9:58am
Are lower oil prices good news? Not really, if it means the world is sinking into recession.
We know from recent past experience and from common sense that higher oil prices are a drag on oil importing economies, because if more $$$ are spent on the same amount of oil, there is less to spend on discretionary goods and services. In addition, oil money sent to oil exporting countries is likely to be spent within those economies, rather than being reinvested in the oil importing country that the funds came from. commentPosted on 5th July 2012 by Administrator in Economy |Politics |Social Issues
Gail Tveberg, oil consumption, oil prices
Another excellent article from Gail Tverberg. None of the spin and propaganda about oil supply and oil prices that you get from the corporate media and industry shills. She wrote this article before oil prices surged by $10 on news about Iran sanctions and new threats about Middle East war. She correctly points out that plunging oil consumption in Europe and the U.S. is a sign of new nasty recessions. The drop in prices is not due to increased supply. The storyline about new supply is a lie. Consumption in the U.S. has fallen off the cliff, even as the MSM touts the tremendous car sales. And it has nothing to do with people buying smaller cars. The surge in vehicle sales has been led by pickups and SUVs. Every time oil prices try to fall below $80 per barrel, new projects will be scrapped. This will automatically lead to higher prices. The bumpy plateau of peak oil is a bitch. Welcome to the recession.
Lower Oil Prices – Not a Good Sign!
Posted by Gail the Actuary on July 5, 2012 – 9:58am
Are lower oil prices good news? Not really, if it means the world is sinking into recession.
We know from recent past experience and from common sense that higher oil prices are a drag on oil importing economies, because if more $$$ are spent on the same amount of oil, there is less to spend on discretionary goods and services. In addition, oil money sent to oil exporting countries is likely to be spent within those economies, rather than being reinvested in the oil importing country that the funds came from.
Figure 1. A rough calculation of expenditure (in 2011$) associated with oil imports or exports, based on 2012 BP Statistical Review data, for three areas of the world: the Former Soviet Union (FSU), the sum of EU-27, United States, and Japan, and the Remainder of the World. (Negative values are revenue from exports.)
A rough calculation based on 2012 BP Statistical Review data indicates that the combination of the EU-27, the United States, and Japan spent a little over $1 trillion dollars in oil imports in 2011–roughly the same amount as in 2008. Governments have been running up huge deficits and have been keeping interest rates very low to cover up this damage, but it is hard to make this strategy work. The deficit soon becomes unmanageable, as the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) countries in Europe have recently been recently been discovering. The US government is facing automatic spending cuts, as of January 2, 2013, because of its continuing deficits.
Furthermore, lower interest rates aren’t entirely beneficial. With low interest rates, pension funds need much larger employer contributions, if they are to make good on their promises. Retirees who depend on interest income to supplement their Social Security checks find themselves with less income. The lower interest rates don’t necessarily have a huge stimulatory impact on the economy, either, if buyers don’t have sufficient discretionary income to buy the additional services that new investment might provide.
Below the fold, we will discuss what is really happening with oil prices, and consider reasons why lower oil prices may be a signal that the world is again headed for deep recession.
Oil Supply is Not Rising Enough
The big issue is that oil supply is not rising enough–and hasn’t been for a long time.
When oil supply doesn’t rise fast enough, there are two opposite effects that can take place:
(1) The most common effect is that prices will go higher. This can be seen in the upward trend in prices in the last eight years.
(2) The other effect is that prices can drop quite sharply, as they did in late 2008. This happens when parts of the world are entering recession, and their demand is decreasing.
It seems to me that this second effect may be happening this time around, as well. The down-leg we are seeing in the prices may have farther to go, as the recession plays out.
One Problem Area: PIIGS Oil Consumption is Declining
If we look at three-year average growth rates for the PIIGS, we find that there is a close correlation between oil growth, energy growth, and GDP growth. Furthermore, in recent years, a growth (or drop) in energy use seems to proceed a growth (or drop) in GDP. Not all of this energy is oil, but for the PIIGS countries, even natural gas is a relatively high-priced import. Recently, oil consumption has been declining sharply, which could imply further economic contraction.
Furthermore, data from the Joint Organizations Data Initiative (JODI) shows that recent PIIGS oil demand is down even more. Comparing oil demand for February-April 2012 with February-April 2011, demand is down by 10% for the five PIIGS countries combined. This would suggest that these countries are sliding more deeply into recession.
US Oil Consumption Is Also Shrinking
US oil consumption shrank by 3.2%, comparing the first four months of 2012 with a similar period of 2011. This is concerning, because based on Figure 5, it looks much like a repeat of the pattern that took place in the 2005 to 2009 time period. Oil consumption was stable during the period 2005 through 2007, then dropped in early 2008 by an amount not too different from the decrease in oil consumption from 2011 to 2012. The bigger step-down in oil consumption came in 2009, after oil prices dropped, and the follow-on effects (reduced credit availability, layoffs) had started. Now oil consumption has been relatively stable in 2009 to 2011, but there has been a step down in consumption in 2012, similar to the step-down in early 2008.
If Oil Prices Stay Down, or Drop Further, Not All Oil is Economic
Oil prices make a difference in a company’s willingness to drill new wells. For example, oil sands production in Canada is quoted as being not economic below $80 barrel, and the West Texas Intermediate price is below that level today. In most instances, existing production will be continued, but new production will be stopped. There are quite a few other types of oil extraction elsewhere (for example, arctic extraction, new very small fields, very deep oil wells, steam extraction outside Canada) that may not be economic at lower prices.
Saudi Arabia makes frequent statements about offering its production to keep prices down, but if a person looks at production patterns in the past few years, they have been highest when oil prices have been highest. Production has dropped as oil prices drop. So a rational person might conclude that oil wells which cannot be operated continuously (of which there are some in Saudi Arabia) tend to be operated when prices are highest, and turned off when prices are lower, thus maximizing profits. As oil prices drop this time around, we can expect Saudi Arabia and others to find excuses to save production until prices are higher.
Countries exporting oil depend on the revenue from the sale of oil, plus taxes on this revenue, to help support country budgets. As oil prices drop, governments find themselves with less money to fund promised public welfare programs. This dynamic can cause lower oil prices to lead to political instability in some oil exporting nations.
Thus, any drop in oil prices tends to be self-correcting, but not until oil production drops, prices of other commodities drop, and many workers have been laid off from work. We saw in 2008-2009 that this kind of recession can be very disruptive.
What’s Ahead?
We can’t know for certain, but the big issue is chain reactions, as one problem causes other problems around the globe. We are dealing with an interconnected international economy. If countries are in financial difficulty, their banks are likely to be downgraded as well. Other banks hold debt of the bank, or of the country in difficulty, or derivates relating to a possible default of the country or bank. If default occurs, these other banks may be affected as well. Thus one default may start a chain of defaults.
Banks that are facing difficulty (inadequate capital, poor ratings), are likely to become more selective in their lending. This makes it even more difficult for small businesses to obtain loans, and may lead to layoffs.
A country which appears to be near default is likely to face higher interest rates, making its cost of borrowing higher. The higher interest costs, by themselves, push the country closer to default.
One of the issues with high oil prices is that the higher prices, especially among oil importers, give rise to a kind of systemic risk that affects many kinds of businesses simultaneously. High oil prices tend to do several things at once: lower the real growth rate, make it more difficult to repay loans, and increase the unemployment rate. All of these issues make it more difficult for governments to function, because governments play a back up role. If workers are laid off from work, governments are expected to compensate laid-off workers at the same time they are collecting less in taxes and bailing out distressed banks. This type of systemic risk leads to the possibility of multiple government failures.
Promises of Future Oil Capacity Growth Aren’t Very Helpful
We keep reading articles claiming that world oil production will grow by some large amount by some future date. One of the latest of these is by Harvard Kennedy School researcher (and former oil company executive) Leonardo Maugeri, called Oil: The Next Revolution. According to the report, “Oil production capacity is surging in the United States and several other countries at such a fast pace that global oil output capacity is likely to grow by nearly 20 percent by 2020, which could prompt a plunge or even a collapse in oil prices”.
Even if the forecast were true (which I am doubtful), the problem is that this is simply too late. We have been having oil supply problems for quite some time–since the 1970s. The rate of oil supply growth keeps ratcheting downward, and the world keeps trying to adapt, with recessions to show for its efforts. (James Hamilton has shown that 10 out of 11 recent recessions were associated with oil price spikes.)
We don’t have time to wait until 2020 to see whether the supposed additional capacity (and production) will actually materialize. We have a problem right now. The downturn in oil prices and the reduction in demand in the US and PIIGS is looking more and more like the current oil price spike (of 2011 and early 2012) may give rise to yet another recession. Based on our experience in 2008-2009, and our difficulties since then, this recession may be severe.
This post originally appeared on Our Finite World.
http://www.theburningplatform.com/?p=36875
Statistics: Posted by yoda — Thu Jul 05, 2012 3:30 pm
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Why Having a “Debt to America” Doesn’t Necessarily Mean Having a Moral Duty to Pay Taxes
Sixty-seven million dollars. That’s the tax bill Eduardo Saverin’s avoiding by renouncing his U.S. citizenship just as he’s expected to earn billions from Facebook’s IPO.
By not paying that $67 million, Saverin’s being greedy, ungrateful–even traitorous. Or at least that seems to be the consensus view among the tech press and the political talking heads. And it’s a view I strongly rejected in a post here a couple days back.
Noah Kristula-Green over at the Daily Beast thought so little of that post, he labeled it “The Weakest Defense of Eduardo Saverin.” Kristula-Green argues that Saverin gained much–if not everything he has–from America’s system of laws. Thus he owes the state for much–if not all–of his riches, and so ought to pay up. (Or, rather, he ought to pay more than he already will, because he’s not escaping the U.S. tax free.)
“If you think that Saverin should be convinced to maintain his U.S. citizenship,” Kristula-Green writes, “this is an incredibly important argument to get right.”
That’s true. But Kristula-Green doesn’t succeed.
Let’s start with a major assumption being made–one that must be argued for, but isn’t. This is the question of whether paying taxes is the only (or even the best) way of discharging debts you have to America for benefits you received from being a citizen. I wrote a rebuttal of the “only taxes will do” position last year.
The short version is simply that my debt from benefits received is ultimately owed not to the state, which may have been the immediate supplier of the benefits, but to the citizens who sacrificed to pay for them. Because of this, the debtor can discharge his debt in any way that helps those citizens. That may mean paying taxes, but it needn’t mean that exclusively. Rather, if Saverin benefited from all of us, his obligation (if he has one) is to in turn benefit us back. I argue he’s done that enough by being partly responsible for Facebook. But even if that’s not enough, I don’t quite see why he must “benefit” us by way of a check to the IRS instead of, say, funding private scholarships or launching a new business to put even more Americans back to work.
Further, while it’s true that Saverin benefited from America’s judicial system, that would seem to imply only a duty to give back to the judicial system. It’s unclear why it means he’s morally obligated to pay into a pot from which the judicial system will get something, true, but which will also be used to bail out banks, drop bombs on people in Afghanistan, subsidize rich sugar growers, and outfit SWAT teams perpetuating the shockingly immoral war on drugs.
Kristula-Green goes on to ding me for “express[ing] skepticism with the idea of a state at all.” To support that claim, he links to a post of mine on fair play theory, part of a series I’m writing on the philosophy of political obligation.
The question of political obligation–even if it makes us skeptics–matters. It’s not an easy question, but it’s one we need to address if we’re to have meaningful discussions within political philosophy. It’s a exploration that may lead to anarchism, but it needn’t necessarily take us that far. As I wrote in an earlier post,
Recognizing just how hard the question of political obligation is does carry some normative weight outside anarchist circles. The modern state, with its high taxes, voluminous legislation, and robust regulatory regime, acts as if we have a significant number–a huge number–of obligations to it. The modern state exercises a great deal of authority over us.
But if justifying that authority and grounding those obligations proves morally difficult, then at the very least we ought to be more skeptical the next time the state adds another obligation to its list. And the state adds obligations all the time.
What’s more, none of this is particularly controversial among philosophers. In fact, most of the arguments I’ve discussed in my series, raising problems with fair play and gratitude and so on, also appear in the Stanford Encyclopedia of Philosophy article on the topic, which itself pulls from A. John Simmons’s groundbreaking book, Moral Principles and Political Obligations, as well as the work of Simmons and others in the 30 years since its publication. Simmons’s position, what he calls “philosophical anarchism,” may actually be the dominant view among academic philosophers (surely not a reactionary, right-wing bunch) who’ve made a study of political obligation. And if it’s not dominant, it’s certainly the most influential.
In short, explaining why we have political obligations proves awfully hard. Assuming it’s easy won’t make the question go away.
What’s more, we all have a theory of political obligation and authority, even if we’ve never examined it. We all have a point at which we say what the state asks of us is too much. We can all imagine some situation where we’d feel the state has no right to spend our tax dollars on that.
In closing, do I, as Kristula-Green claims, “express skepticism with the idea of a state at all?” Yes and no. Throughout my series, I’ve generally avoided attacking premises such as “the state benefits us” or “we are better off with government than without” precisely because, even if those premises are true, it’s not clear that genuine political obligations of the kind expected of us by large, modern democracies necessarily follow. In fact, I believe they don’t. I believe that while it’s possible for political obligations to arise, they can only occur in very narrow circumstances (i.e., through some form of legitimate consent) and with very narrow scope. I also believe that no currently existing state meets those requirements. Thus none of us actually bear political obligations.
(Please note this is not the same thing as claiming we are without moral obligations and so are free to murder, steal, oppress, and so on. I explain the difference between moral and political obligations here.)
But denying political obligations doesn’t mean I therefore reject the idea of the state and embrace anarchism. Rather, while I think the state has no moral authority over us, we still have good reasons to want live within it and support (some of) its activities. Thus we should act as if political obligations do in fact exist, while recognizing that enforcing them may, because they are a fiction, be immoral. We may even have very good reasons for adopting this tactic. Perhaps having a state that enforces its (illegitimate) authority is just so much better in its consequences that we’re willing to put up with the moral violations it entails.
So this makes me skeptical of the state, yes, but not of the idea of the state at all.
There are many things Eduardo Saverin probably ought to feel morally bound to do with his $67 million. Paying what amounts to voluntary taxes, by choosing to stay in the United States, isn’t one of them.
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International News • Why A Greek Exit From The Euro Would Mean The End Of The Eu
Why A Greek Exit From The Euro Would Mean The End Of The Eurozone
What was considered unthinkable a few months ago has now become probable. All over the globe there are headlines proclaiming that a Greek exit from the euro is now a real possibility. In fact, some of those headlines make it sound like it is practically inevitable. For example, Der Spiegel ran a front page story the other day with the following startling headline: "Acropolis, Adieu! Why Greece must leave the euro". Many are saying that the euro will be stronger without Greece. They are saying things such as "a chain is only as strong as its weakest link" and they are claiming that financial markets are now far more prepared for a "Grexit" than they would have been two years ago. But the truth is that it really is naive to think that a Greek exit from the euro can be "managed" and that business will go on as usual afterwards. If Greece leaves the euro it will set a very dangerous precedent. The moment Greece exits the euro, investors all over the globe will be asking the following question: "Who is next?" Portugal, Italy and Spain would all see bond yields soar and they would all likely experience runs on their banks. It would only be a matter of time before more eurozone members would leave. In the end, the whole monetary union experiment would crumble.
As I have written about previously, New York Times economist Paul Krugman is wrong about a whole lot of things, but in a blog post the other day he absolutely nailed what is likely to soon unfold in Greece….
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
By itself, Greece cannot crash the eurozone. But the precedent that Greece is about to set could set forth a chain of events that may very well bring about the end of the eurozone.
If one country is allowed to leave the euro, that means that other countries will be allowed to leave the euro as well. This is the kind of uncertainty that drives financial markets crazy.
When the euro was initially created, monetary union was intended to be irreversible. There are no provisions for what happens if a member nation wants to leave the euro. It simply was not even conceived of at the time.
So we are really moving into uncharted territory. A recent Bloomberg article attempted to set forth some of the things that might happen if a Greek exit from the euro becomes a reality….
A Greek departure from the euro could trigger a default-inducing surge in bond yields, capital flight that might spread to other indebted states and a resultant series of bank runs. Although Greece accounts for 2 percent of the euro-area’s economic output, its exit would fragment a system of monetary union designed to be irreversible and might cause investors to raise the threat of withdrawal by other states.
In fact, yields on Spanish debt and Italian debt are already rising rapidly thanks to the bad news out of Greece in recent days.
What makes things worse is that a new government has still not formed in Greece. It looks like new elections may have to be held in June.
Meanwhile, the Greek government is rapidly running out of money. The following is from a Bank of America report that was released a few days ago….
"If no government is in place before June when the next installment (of loan money) from the European Union and International Monetary Fund is due, we estimate that Greece will run out of money sometime between the end of June and beginning of July, at which point a return to the drachma would seem inevitable"
In the recent Greek elections, parties that opposed the bailout agreements picked up huge gains. And opinion polls suggest that they will make even larger gains if another round of elections is held.
The Coalition of the Radical Left, also known as Syriza, surprised everyone by coming in second in the recent elections. Current polling shows that Syriza is likely to come in first if new elections are held.
The leader of Syriza, Alexis Tsipras, is passionately against the bailout agreements. He says that Greece can reject austerity because the rest of Europe will never kick Greece out of the eurozone. Tsipras believes that the rest of Europe must bail out Greece because the consequences of allowing Greece to go bankrupt and fall out of the eurozone would be far too high for the rest of Europe.
A spokesman for Syriza, Yiannis Bournos, recently told the Telegraph the following….
"Mr Schaeuble [Germany's finance minister] is pretending to be the fearless cowboy on the radio, saying the euro is secure [against a Greek exit]. But there’s no way they will kick us out"
So Greece and Germany are playing a game of chicken.
Who will blink first?
Will either of them blink first?
Syriza is trying to convince the Greek people that they can reject austerity and stay in the euro. Syriza insists that the rest of Europe will provide the money that they need to pay their bills.
And most Greeks do actually want to stay in the euro. One recent poll found that 78.1 percent of all Greeks want Greece to remain in the eurozone.
But a majority of Greeks also do not want anymore austerity.
Unfortunately, it is not realistic for them to assume that they can have their cake and eat it too. If Greece does not continue to move toward a balanced budget, they will lose their aid money.
And if Greece loses that aid money, the consequences will be dramatic.
Outgoing deputy prime minister of Greece Theodoros Pangalos recently had the following to say about what would happen if Greece doesn’t get the bailout money that it needs….
"We will be in wild bankruptcy, out-of-control bankruptcy. The state will not be able to pay salaries and pensions. This is not recognised by the citizens. We have got until June before we run out of money."
If Greece gets cut off and runs out of money, it will almost certainly be forced to go back to using the drachma. If that happens there will likely be a "bank holiday", the borders will be secured to limit capital flight and new currency will be rapidly printed up. It would be a giant mess.
In fact, there are rumblings that the European financial system is already making preparations for all this. For example, a recent Reuters article had the following shock headline: "Banks prepare for the return of the drachma"
But a new drachma would almost certainly crash in value almost immediately as a recent article in the Telegraph described….
Most economists think that a new, free-floating drachma would immediately crash by up to 50 percent against the euro and other currencies, effectively halving the value of everyone’s savings and spelling catastrophe for those on fixed incomes, like pensioners.
A Greek economy that is already experiencing a depression would get even worse. The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent. It is hard to imagine what Greece is going to look like if things continue to fall apart.
But the consequences for the rest of Europe (and for the rest of the globe) would be dramatic as well. A Greek exit from the euro could be the next "Lehman Brothers moment" and could plunge the entire global financial system into another major crisis.
Unfortunately, at this point it is hard to imagine a scenario in which the eventual break up of the euro can be avoided.
Germany would have to become willing to bail out the rest of the eurozone indefinitely, and that simply is not going to happen.
So there is a lot of pessimism in the financial world right now. Nobody is quite sure what is going to happen next and the number of short positions is steadily rising as a recent CNN article detailed….
After staying quiet at the start of the year, the bears have come roaring back with a vengeance.
Short interest — a bet on stocks turning lower — topped 13 billion shares on the New York Stock Exchange at the end of last month. That’s up 4% from March and marks the highest level of the year.
If the eurozone is going to survive, Greece must stay a part of it.
Instead of removing the weakest link from the chain, the reality is that a Greek exit from the euro would end up shattering the chain.
Confidence is a funny thing. It can take decades to build but it can be lost in a single moment.
If Greece leaves the euro, investor confidence in the eurozone will be permanently damaged. And when investors get spooked they don’t behave rationally.
A common currency in Europe is not dead by any means, but this current manifestation is now operating on borrowed time.
As the eurozone crumbles, it is likely that Germany will simply pull the plug at some point and decide to start over.
http://theeconomiccollapseblog.com/arch … e-eurozone
Statistics: Posted by yoda — Mon May 14, 2012 9:24 pm
View full post on opinions.caduceusx.com
Why A Greek Exit From The Euro Would Mean The End Of The Eurozone
What was considered unthinkable a few months ago has now become probable. All over the globe there are headlines proclaiming that a Greek exit from the euro is now a real possibility. In fact, some of those headlines make it sound like it is practically inevitable. For example, Der Spiegel ran a front page story the other day with the following startling headline: “Acropolis, Adieu! Why Greece must leave the euro”. Many are saying that the euro will be stronger without Greece. They are saying things such as “a chain is only as strong as its weakest link” and they are claiming that financial markets are now far more prepared for a “Grexit” than they would have been two years ago. But the truth is that it really is naive to think that a Greek exit from the euro can be “managed” and that business will go on as usual afterwards. If Greece leaves the euro it will set a very dangerous precedent. The moment Greece exits the euro, investors all over the globe will be asking the following question: “Who is next?” Portugal, Italy and Spain would all see bond yields soar and they would all likely experience runs on their banks. It would only be a matter of time before more eurozone members would leave. In the end, the whole monetary union experiment would crumble.
As I have written about previously, New York Times economist Paul Krugman is wrong about a whole lot of things, but in a blog post the other day he absolutely nailed what is likely to soon unfold in Greece….
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
By itself, Greece cannot crash the eurozone. But the precedent that Greece is about to set could set forth a chain of events that may very well bring about the end of the eurozone.
If one country is allowed to leave the euro, that means that other countries will be allowed to leave the euro as well. This is the kind of uncertainty that drives financial markets crazy.
When the euro was initially created, monetary union was intended to be irreversible. There are no provisions for what happens if a member nation wants to leave the euro. It simply was not even conceived of at the time.
So we are really moving into uncharted territory. A recent Bloomberg article attempted to set forth some of the things that might happen if a Greek exit from the euro becomes a reality….
A Greek departure from the euro could trigger a default-inducing surge in bond yields, capital flight that might spread to other indebted states and a resultant series of bank runs. Although Greece accounts for 2 percent of the euro-area’s economic output, its exit would fragment a system of monetary union designed to be irreversible and might cause investors to raise the threat of withdrawal by other states.
In fact, yields on Spanish debt and Italian debt are already rising rapidly thanks to the bad news out of Greece in recent days.
What makes things worse is that a new government has still not formed in Greece. It looks like new elections may have to be held in June.
Meanwhile, the Greek government is rapidly running out of money. The following is from a Bank of America report that was released a few days ago….
“If no government is in place before June when the next installment (of loan money) from the European Union and International Monetary Fund is due, we estimate that Greece will run out of money sometime between the end of June and beginning of July, at which point a return to the drachma would seem inevitable”
In the recent Greek elections, parties that opposed the bailout agreements picked up huge gains. And opinion polls suggest that they will make even larger gains if another round of elections is held.
The Coalition of the Radical Left, also known as Syriza, surprised everyone by coming in second in the recent elections. Current polling shows that Syriza is likely to come in first if new elections are held.
The leader of Syriza, Alexis Tsipras, is passionately against the bailout agreements. He says that Greece can reject austerity because the rest of Europe will never kick Greece out of the eurozone. Tsipras believes that the rest of Europe must bail out Greece because the consequences of allowing Greece to go bankrupt and fall out of the eurozone would be far too high for the rest of Europe.
A spokesman for Syriza, Yiannis Bournos, recently told the Telegraph the following….
“Mr Schaeuble [Germany's finance minister] is pretending to be the fearless cowboy on the radio, saying the euro is secure [against a Greek exit]. But there’s no way they will kick us out”
So Greece and Germany are playing a game of chicken.
Who will blink first?
Will either of them blink first?
Syriza is trying to convince the Greek people that they can reject austerity and stay in the euro. Syriza insists that the rest of Europe will provide the money that they need to pay their bills.
And most Greeks do actually want to stay in the euro. One recent poll found that 78.1 percent of all Greeks want Greece to remain in the eurozone.
But a majority of Greeks also do not want anymore austerity.
Unfortunately, it is not realistic for them to assume that they can have their cake and eat it too. If Greece does not continue to move toward a balanced budget, they will lose their aid money.
And if Greece loses that aid money, the consequences will be dramatic.
Outgoing deputy prime minister of Greece Theodoros Pangalos recently had the following to say about what would happen if Greece doesn’t get the bailout money that it needs….
“We will be in wild bankruptcy, out-of-control bankruptcy. The state will not be able to pay salaries and pensions. This is not recognised by the citizens. We have got until June before we run out of money.”
If Greece gets cut off and runs out of money, it will almost certainly be forced to go back to using the drachma. If that happens there will likely be a “bank holiday”, the borders will be secured to limit capital flight and new currency will be rapidly printed up. It would be a giant mess.
In fact, there are rumblings that the European financial system is already making preparations for all this. For example, a recent Reuters article had the following shock headline: “Banks prepare for the return of the drachma“
But a new drachma would almost certainly crash in value almost immediately as a recent article in the Telegraph described….
Most economists think that a new, free-floating drachma would immediately crash by up to 50 percent against the euro and other currencies, effectively halving the value of everyone’s savings and spelling catastrophe for those on fixed incomes, like pensioners.
A Greek economy that is already experiencing a depression would get even worse. The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent. It is hard to imagine what Greece is going to look like if things continue to fall apart.
But the consequences for the rest of Europe (and for the rest of the globe) would be dramatic as well. A Greek exit from the euro could be the next “Lehman Brothers moment” and could plunge the entire global financial system into another major crisis.
Unfortunately, at this point it is hard to imagine a scenario in which the eventual break up of the euro can be avoided.
Germany would have to become willing to bail out the rest of the eurozone indefinitely, and that simply is not going to happen.
So there is a lot of pessimism in the financial world right now. Nobody is quite sure what is going to happen next and the number of short positions is steadily rising as a recent CNN article detailed….
After staying quiet at the start of the year, the bears have come roaring back with a vengeance.
Short interest — a bet on stocks turning lower — topped 13 billion shares on the New York Stock Exchange at the end of last month. That’s up 4% from March and marks the highest level of the year.
If the eurozone is going to survive, Greece must stay a part of it.
Instead of removing the weakest link from the chain, the reality is that a Greek exit from the euro would end up shattering the chain.
Confidence is a funny thing. It can take decades to build but it can be lost in a single moment.
If Greece leaves the euro, investor confidence in the eurozone will be permanently damaged. And when investors get spooked they don’t behave rationally.
A common currency in Europe is not dead by any means, but this current manifestation is now operating on borrowed time.
As the eurozone crumbles, it is likely that Germany will simply pull the plug at some point and decide to start over.
So what do you think?
Do you think that I am right or do you think that I am wrong?
Please feel free to post a comment with your thoughts below….
View full post on The Economic Collapse
Business • 7-11 Store Owners: Online Lottery Sales Could Mean Massive
CHICAGO (CBS) — Owners of 7-Eleven stores are warning of massive layoffs to come, unless the Illinois Lottery protects them from competition from the online sales that are expected to start this year.
As WBBM Newsradio’s John Cody reports, the franchise owners say they online lottery sales could force them to lay off 7,000 employees statewide.
Joe Rossi, the head of the Chicago franchise owners’ association, estimates lottery sales bring in 30 percent of the business at 7-Elevens, because lottery buyers buy an average of $5 in goods on top of their tickets.
Rossi says he is not trying to block internet lottery sales, just suggesting the lottery find a way to protect 7-Eleven lottery business and jobs.
Rossi is recommending that the state Lottery require players to fill up a Lottery credit card at 7-Elevens – leaving the store owners with their present 5 percent cut of the business – rather than allowing players to gamble without limit on their credit cards on line at home.
The move to online Lottery play is set to begin in April. The U.S. Department of Justice in December issued a legal opinion on the matter that paved the way for online sales to begin.
Lottery officials estimate the state will take in $150 million more annually once sales go online, and will attract hundreds of thousands of new players.
Officials have promised that the site for online sales will be secure and limited to Illinois adults.
http://chicago.cbslocal.com/2012/02/17/ … e-layoffs/
Statistics: Posted by yoda — Sun Feb 19, 2012 10:42 am
View full post on opinions.caduceusx.com