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December 12, 2011

DOOM: Money (That's What I Want)


If the payroll tax cut keeps getting extended, it may finally do the job of killing off Social Security. I tend to doubt it personally: I think this is simply a ploy by the Democrats to drive the program into crisis, and then use this manufactured crisis as an excuse to jack up taxes. (This is after all their modus operandi during the reign of His Majesty Barack Obama.) To the extent that the Democrat Party is "about" anything, it is "about" government and the welfare state, and it will fight to the bitter end to keep the welfare-state plates spinning.

Will public-sector pension plans run out of money? Yes, in many -- perhaps even most -- cases. Investments in a slow-growth economy will not solve the problem, and taxpayers will not stand for the kind of tax hikes that would be necessary to make these programs solvent. Money that can't be paid out, won't be.

You know what the real problem with the “too big to fail” philosophy is? It’s not true. (In fact, more often than not it turns into "too big to succeed". See: our own federal government.) We’ve convinced ourselves that this fallacy is true, though, and in the process we’ve basically only managed to enlarge the issue to such an extent that we’ve turned a “problem” into a “catastrophe”.

The Stability and Growth Pact (SGP)...without stability or growth.

Reforms slowing in China and India? Well, the truth is that a lot of the “reforms” were never real to begin with: the West has a habit of seeing the East the way it wants to see it rather than the way it really is. The western-exceptionalist argument has never been a racist argument (never mind the nattering of the Left) but rather a cultural one -- if an economy is just people doing what people do, then it matters how and why people do those things. Rule of law, civic involvement, respect for authority, and the primacy of the individual over the collective: these are the strengths of the West, not weaknesses.

You want some depressing chart-fu? Here’s some depressing chart-fu.

One more reason among the multitudes as to why Chicago (and Illinois) is boned. You think Chicago can't look like Detroit? Just give it time.

Teh Krugman, agonistes. It's kind of hilarious that in a crisis caused in large part by the leftist, statist dreams of the European elite, Krugman bewails the rise of the European right. He sees the Boogeyman everywhere but under his own bed. You'd also never think to read this piece that Teh Krugman was an ardent defender of the Euro back in the day; it's only lately that he's become a critic.

Jon Corzine, blackguard and poltroon.

My newest theory on Tom Friedman of the New York Times? I think he suffers from some weird form of op-ed columinists' Tourette's syndrome. These days he just strings together random paragraphs upon a thin scaffolding of namby-pamby liberalism and hands it in. (Though this may be over-thinking things -- he's probably just not that bright.)

Britain tells the Eurozone to sod off. This latest “solution” to the Eurozone meltdown is yet another grab-bag of incompetence, magical thinking, and economic illiteracy. It’ll all come to tears.

No one in the world writes better than a Brit in high dudgeon, and Ambrose Evans-Pritchard’s dudgeon is off the scale.

Given what a pro-Euro rag “The Economist” is, this had to be a real shit-burger for them to eat.

European banking system on the edge of collapse. It's faintly surprising to me that they can stay on the "verge" for as long as they have.

More on why the latest Eurozone deal is doomed to failure. Signatories may say they’re willing to give up national sovereignty over their budgets; they may even mean it...now. But in the end, as Walter Russell Mead says, they are who they are and they do what they do.

How can Uncle Sugar best help our erstwhile allies across the pond? By tucking our wallet back in our pants and telling them that no more money is forthcoming. We have bills of our own to pay.

Here’s a handy definition of “crisis”: when all of your alternatives suck, you’re in a crisis.

There has to be acknowledgment that austerity -- draconian budget cuts and tax increases -- to bring budget deficits and public debt under control cannot deal with the problem: the deflation of the debt-fueled bubble. There also has to be acknowledgment that Europe doesn’t have a "liquidity" problem which can be alleviated by substituting fleeing private sector lenders with official lenders such as the European Union ("EU"), ECB or the International Monetary Fund ("IMF").

European countries have a "solvency" problem – they have debt that they can never seriously expect to pay back. Stronger nations cannot save the peripheral nations without ultimately destroying their own credit and ability to raise funds.

Europe’s disastrous summit. I’d make a joke about this being Europe’s worst political class ever, but let’s be honest: they’ve always had a pretty sucky political class. Instead of going from hereditary monarchies to constitutional republics, they instead mostly went to bureaucracies full of unelected bureaucrats. Oh, they make a pretense of having elections and suchlike, but no one takes it very seriously.

What happens if the Euro collapses? Depression. War. Forty years of darkness! A rain of fire! Rivers and seas boiling! Earthquakes! Volcanoes! The dead rising from the grave! Human sacrifice! Dogs and cats living together! Mass hysteria!

There is a lot of money to be made if you can solve some of the biggest problems in the world.

The “man”-cession of 2008 may be turning into a chronic jobs drought for women as public-sector hiring stalls.

This shouldn’t come as a shock: most of our public healthcare dollars are spent on people with chronic health conditions. Diseases like diabetes, cancer, Alzheimer’s, Parkinson’s, and so on cost more and more to treat as a person ages. Before the advent of modern medicine, people who suffered from these illnesses generally died much younger than they do now -- but now that treatments are available, people want them regardless of how much they cost. The best solution is to allow Americans to ration their own medical care: if they want more care, they can decide how much that care is worth to them. This is why the Medicare/Medicaid model is fundamentally broken: it socializes the costs of all that “free” healthcare while at the same time driving an incredible demand on it (because, hey, it’s “free”, right?).

When you’re in a hole...keep digging? Maybe you’ll dig through to the other side! Or something. Europe has decided that magical thinking is preferable to actually solving the problem, but this is entirely in character. This habit has been ingrained in European politics for a long, long time.

Here's the thing about trying to accrue wealth in a country that has no respect for the rule of law: you'd be stupid to leave your money in that country. There are lessons we need to learn in this Brave New World of Obamanomics.

Medical patents must die! In general I’m very supportive of IP laws, but our copyright and patent systems are just completely broken and out-of-date. They cause far too much harm for any good they do to be worthwhile.

Ben sends word of a bank run in Latvia. The hits just keep on coming in the Eurozone.

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posted by Monty at 08:55 AM

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