At least Draghi is being honest, but I have a question...

From today's Open Europe news summary (my highlight in red):

In an interview with Der Spiegel, ECB President Mario Draghi said that he was “fully in favour” of German Finance Minister Wolfgang Schäuble’s proposals for a eurozone currency commissioner. Draghi added, "I am certain, if we want to re-establish trust in the euro zone, countries must pass a part of their sovereignty to the European level."
Reuters


At least Draghi is being honest. But the people should ask themselves what benefit will be gained by passing some of their democratic sovereignty to a non-elected group of bureaucrats. They also should ask themselves how unelected EU bureaucrats would be any different from unelected Nazi or Soviet bureaucrats. I am not being facetious. Is this why we fought WWII and stood guard at the borders of freedom for decades during the Cold War?

My letter to the NY Times re: Why Devaluation Is NOT the Answer to the Euro-Debt Crisis

Re: Euro Survives, But Future Is in Doubt, by Floyd Norris

Dear Sirs:
Mr. Norris makes many good points about the euro-debt crisis; however, like many other pundits he assumes that currency devaluation is a "normal prescription for countries in financial distress...exports surge and imports plunge.". As I explained in more detail in my essay titled "Value in Devaluation?", the benefits to exporters from devaluation are paid entirely by the citizens of the country using the now-devalued currency. Exports increase, but only because foreign importers get a subsidized bargain. The rest of society finds that necessary imports are more expensive, which, pari passu, means that the cost of living increases. Therefore, currency devaluation is an unjust transfer of wealth, engineered by the state. The Irish example of painful labor reform, which Mr. Norris reports as successful but too costly, is the only real, long term solution.
Patrick Barron

My letter to the NY Times re: No, it's NOT a better way

Re: Better Ways to Deal with China

Dear Sirs:
Eduardo Porter's recommendations for "dealing with our trade deficit with China"--a multilateral approach using carrots and sticks--assumes that China's manipulation of its currency causes harm to its trading partners. It does not. The sole harm is to its own citizens, who pay for the manipulation in the form of higher prices. China's trading partners get bargains. Mr. Porter's mercantilist philosophy was disproven first by the classical economists and later by the Austrian school economists. Nevertheless, this upside down thinking--in which a weaker currency is deemed to be "better" than a stronger one--has been embraced by exporters, who lobby politicians to intervene to help them make more sales. Since inflation is a delayed phenomenon and its source is poorly understood, the gullible public buys into the fallacy that getting a bargain from an overseas supplier is bad for them.

Patrick Barron

A Pox on Both Your Houses--my comments in the Daily Iowan

Re: Obama Criticizes Romney Plan

See my comments at the end of the Daily Iowan report. Unfortunately, neither candidate is discussing reality, which is that they have no way to make the economy do their bidding other than by restricting the freedom of others.

My letter to the NY Times re: Free Speech Under Attack Once Again

Re: Amid Barrage of Attack Ads, Considering Tighter Rules

Dear Sirs:
Free speech is constantly under attack by incumbents of all stripes. After all it was John McCain, a Republican, and Russ Feingold, a Democrat, whose names are synonymous with one of the worst pieces of legislation ever to restrict the common citizen's ability to speak his mind--the so-called "Bipartisan Campaign Reform Act of 2002". Now incumbent Republican Dan Lungren of California feels that his now sensitive feelings as a self-important elected official are being abused by so-called negative/attack ads; therefore, he is gathering support for further restrictions on free speech. If he can't stand the heat, get out of the kitchen, as President Harry Truman would admonish.

Patrick Barron

My letter to the NY Times re: the real lesson from the 1987 stock market crash

Re: A Lesson From 1987,Unlearned by Wall St.

Dear Sirs:
Mr. Norris' discussion of the role played by the then novice use of high speed computer trading in the 1987 stock market crash is merely a side show to the real unlearned lesson. The real unlearned lesson of the 1987 crash was the role played by the Greenspan Fed, which pumped massive amounts of liquidity into the market, short circuiting the cleansing process, and reigniting the inflationary bubble. This became the template of central bank policy everywhere--whenever the stock market gets jittery, lower the interest rate by any means possible to prevent stock prices from falling. The result has been ever shorter and more extreme boom/bust cycles, with higher and higher injections of fiat money producing less and less result. The U.S. and most of the world has built an unsustainable capital structure that is completely out of tune with the wishes of those who provide the financing--the savers. It is this mismatch of savings with investment that eventually will cause a collapse that no amount of fiat monetary injections can stop.

More Pundits Are Thinking About Gold

Re: A Golden Solution for Europe's Sovereign-Debt Crisis

The author, Stephen Fidler, is off the mark, but the significance of his article is that he advises using gold as a solution. The over-indebted countries do not need to find ways to continue to borrow. They need to stop borrowing...period. A nation that put its gold as collateral in a well-respected third party depository might be able to borrow more and at lower cost...but that tactic would only get that country further into debt...and it could mean losing its gold reserves entirely. This solves nothing long term. The over-indebted countries need to slash their budgets, slash their onerous regulations on business and labor, and somehow institute sound money, even if it means leaving the eurozone and instituting their own gold-backed currency. Now THAT would be a good use for all that gold.

My letter to the NY Times re: The Fallacy that Income Inequality is Harmful

Re: Income Inequality May Take Toll on Growth

Dear Sirs:
The fallacy that equality of incomes and wealth are just and beneficial goals of society to be advanced by "an aggressive series of changes to tax and spending programs" cannot be supported by empirical research or deductive logic. In his magnum opus Human Action Ludwig von Mises explained that the "inequality of individuals with regard to wealth and income is an essential feature of the market economy." (page 285 of the Scholars' Edition) Furthermore he stated that "Its elimination would entirely destroy the market economy." (page 836) In a society without government enforced privileges each man produces according to his own abilities for the benefit of his fellow man. The only way to create a society of equal outcomes would be to hobble the natural abilities of the more able, because it is impossible to transfer those innate abilities to others. Of course, this would result in a less productive society in which even those at the lowest income tier would be worse off.

The Battle Line Is Drawn in Europe

From today's Open Europe news summary:

German Finance Minister: “In one way or another, we’ll change the EU Treaties”;
UK criticises for calling for swift euro crisis resolution while threatening to veto further integration
DPA reports that German Finance Minister Wolfgang Schäuble has said he wants quick EU Treaty changes to establish a specific eurozone Commissioner – potentially as “powerful” as the Commissioner in charge of competition – with the mandate to send national budgets back to national parliaments, if not within the eurozone’s fiscal rules. He also wants a specific Eurozone parliament, an off-shoot of the European Parliament. Handelsblatt reports that Angela Merkel will demand an EU treaty change as quid pro quo for bailing out Greece, with proposals floated as early as at this week’s EU summit. Schäuble is quoted saying that "in one way or another, we’ll change the European Treaties.”

Schäuble also said of the UK that "one can't, on the one hand, demand a quick resolution to the eurozone crisis and on the other, torpedo each step which aligns fiscal policies within the eurozone." The article adds that Germany may seek an intergovernmental Treaty, however it reports that this may be problematic following the latest German Constitutional Court judgement.

Separately Der Spiegel reports that German Chancellor Angela Merkel, allegedly frustrated by the UK government’s unwillingness to compromise, has come to terms with the fact that there “will no longer be a path back to the centre of the [EU] for the British."
Handelsblatt FAZ Spiegel Mail Express

This explains in very clear terms the two differing sides. The Euro-elite, represented here by Merkel and Schauble, believe that the EU can and should have veto power over national budgets. This is the same as loss of sovereignty, which I doubt the Greeks or anyone else would ever accept and which is unenforceable in any event. What will the EU do when Greece fails to pass a budget acceptable to the EU or fails to implement it? Will the EU invade Greece? Perhaps it will throw Greece out of the EU. Just listen to Schauble himself, who says in the above report that "one way or another, we'll change the European Treaties." Coercion is the Euro-federalists' last option, which illustrates the inherent contradiction of what the EU has become. It started as a supposedly voluntary organization of sovereign members who cooperate on matters of mutual interest. But, since the very beginning of what is now the EU and which started as the European Coal and Steel Community in 1950, the Euro-federalists have dreamed and schemed to establish a new sovereign organization to supplant the nation-state. They thought they had succeeded with the launching of the euro, which would be the tool for running the continent according to their wishes. But the euro has merely exposed the unresolvable problems with the Euro-federalists' dreams. The euro has been plundered by its members, as was predicted by Austrian economists and which is explained by Professor Philipp Bagus in Tragedy of the Euro. Rather than admit that the euro was misconstructed, the Euro-federalists insist on changing the European Treaties "by any means". This is ominous.

UKP's Nigel Farage on the EU winning the Nobel Peace Prize--a MUST Watch!

This is a “MUST SEE” interview with Nigel Farage, leader of the euroskeptic UKIP party, about the ridiculous notion that the EU deserves the Nobel Peace Prize. The reality is the opposite, as Farage explains. Here in a five minute interview is a great lesson in history, politics, and real democracy.

 

PLEASE, PLEASE WATCH IT!

 

http://youtu.be/hfvK2wqaf7E

Ridiculous Nobel Peace Prize for the EU

EU Wins Nobel Peace Prize

What could be more ridiculous?  The Nobel committee grants its "Peace Prize" to the European Union, as riots break out all over Europe in protest to austerity measures that are a direct result of unsustainable government spending made possible only by the EU's flagship monetary tool, the inflationary and misconstructed euro.  Here's just one example among many.  Earlier this week Greeks rioted over the visit to Athens by German Chancellor Angela Merkel, who is seen by the Greek citizenry as the cause of their financial plight.  You see, the Germans are reluctant to hand over even more euros to sustain the Greek's overblown welfare state.  In Greek eyes that makes Germany responsible.  There is even talk of demanding German reparations payments for the misery perpetrated on Greece by the German army almost three-quarters of a century ago.  Oh, what a blessing has been the European Union!  It has created probably the worst continent-wide financial crisis since the 1930s and has rekindled animosities for which no living person is responsible.  But this is par for the course for the Nobel committee's Peace Prize recipients, who have included terrorists (Yasser Arafat) and communist dictators (Mikhail Gorbachev).

Failure Always Demands More Coercive Power

The vice president of the European Parliament, Senor Alejo Vidal-Quadras, has called for the Spanish military to put down Catalonia's attempt to place a separation referendum on the upcoming election ballot.  Catalonia is a province of Spain, whose GNP is larger than either Portugal or Ireland.  It was a sovereign country itself for two short years in the 1930's.

Just as individual nations are chaffing at what seems to be unstoppable plans to force a centralized government on currently sovereign countries in a futile attempt to save the overly ambitious "European Project", provinces within currently sovereign countries are chaffing at their own national government's fiscal mismanagement.  The Basque province of Spain has been most boisterous for independence for many years, but now Catalonia, a much more important industrial province, has taken the lead.

It is typical of those whose current policies have failed to seek ever more coercive power over larger geographic areas as the solution.  Napoleon sought to unite Europe with his army after the French Revolution deteriorated into the socialist nightmare of the guillotine.  Hitler and Stalin tried to conquer Europe after the failures of their two forms of socialism, national socialism and international socialism.  Now, as Europe deteriorates economically, the European Union pleas for greater powers over banking and demands direct taxing power over the people of sovereign countries via an open-ended financial transaction tax.  None of these measures will solve the crisis, because they do not address the underlying causes of the crisis--the increasingly socialistic tendency toward monetary and capital destruction that is the hallmark of the regulatory welfare state.

The Wages of Socialism--Padlocked Trash Bins

Re: Spain Recoils as Its Hungry Forage Trash Bins for a Next Meal

The European Union's labor laws are the most stringent in the world. Its economic regulations are the most stringent in the world. Its taxes are some of the highest in the world (and increasing...Spain recently raised the value added tax to twenty-one percent!). Now its protection of trash bins is the most stringent in the world. As EU labor and business regulations destroy jobs and industry and as the European Central Bank destroys the common currency, Europe's destitute turn to bankrupt governments for the promised handouts in times of need...only to find the helping hand withdrawn. Now even trash bins are being padlocked by government decree. Ludwig von Mises explained long ago that socialism is not sustainable, because it is a system of redistribution and not one of production. Eventually there are no resources to plunder.