Plundering the Nation's Heritage

From today's Open Europe news summary:

Le Monde reports that the Spanish government is planning on putting “one quarter of the national heritage” up for sale in order to tackle their budget deficit.
Euractiv Le Monde

The Spanish people have plundered their nation's heritage over a few decades' of socialism.  It Is no different than if thieves broke into the Prado, stole all the El Greco's, and sold them in order to live a life of leisure for a few years.  Now the money is gone and everyone must go back to work...or steal something else.

Another economic fallacy revealed

From today's Open Europe news summary:

The FT reports that motorways in Portugal are deserted due to the recession, the introduction of tolls and the overinvestment in roads funded by the EU, which has left Portugal with four times more motorway per inhabitant than the UK.
FT Open Europe research: Structural funds

So much for the idea that infrastructure investment by government spurs economic growth.  I saw the same phenomenon last summer in Spain; i.e., brand new but empty motorways.  Infrastructure investment MUST follow economic growth, because no one can predict where growth will arise or in what form.  In the nineteenth century Bethlehem Steel built its own railroads to transport its products to market.  Oil pipelines and other infrastructure must be built where the oil is discovered.  I think it is safe to say that most of the new motorways in Europe would never have been built, if private capital funded them.  This is not an indictment of the shortsightedness of private capital, but an indictment of the irresponsibility of government.  Does anyone really doubt that government contracts and union labor jobs were not influential in all this useless infrastructure investment?  How long will it be before these now beautiful roads fall into disrepair due to lack of adequate toll receipts?

Here's what it means to default on sovereign debt

Re:  Argentina Loses Debt Appeal

I have read many otherwise reputable economists state that defaulting on one's sovereign debt is not such a bad thing, often citing Argentina as an example.  Well, read what sovereign debt default really means.  Your assets, even your military assets, are seized.  Your president doesn't fly in a private jet, for fear that it will be seized.  And...you wind up paying anyway!

Another Greek Bailout? Sure...we'll simply print the money

UK may have to help third Greek bail-out  COMMENT: Godfrey Bloom, UKIP MEP

http://www.express.co.uk/news/uk/423861/UK-may-have-to-help-third-Greek-bail-out

Central bankers and politicians speak of never-ending bailouts only because they can print money in unlimited amounts.  The Greeks know it; the Spaniards know it; the Irish know it; the Portuguese know it; every profligate politician buying votes with funny money knows it.  No country will ever get its finances in order as long as this fact remains.  Return to sound money and all nations MUST get their finances in order; they will have no choice.  They will be forced to behave like we great unwashed, spending only what we earn or what borrowings the credit markets deem we can repay.

Burn the Japanese debt? Think again, Ambrose!

Re: Just set fire to Japan's quadrillion debt, by Ambrose Evans-Pritchard

Well, Ambrose, I am one of those who has "Austro-outrage" over your inane proposal to just burn or bury in a locked drawer Japan's mounting debt.  Your unconcern over the consequences of confiscating the accumulated wealth of an entire generation is breathtaking.  That debt represents the sacrifice of real people to sustain them in their old age.  Furthermore, it is the only source of future Japanese prosperity, the capital accumulation that results from such savings sacrifice.  Now you want Japanese politicians, some of the most ignorant people on the face of the earth, to force the Japanese people to eat their seed corn, because you want these politicians to confiscate the entire crop.  Get real!  Get real economics, Austrian economics, that is not blinded by the smoke and mirrors of fiat money manipulation by gangsters in high office!

 

Think of it this way...rather than authorize the government of Japan to issue debt that is purchased by the Bank of Japan, let ME sign debt obligations that are purchased by the Bank of Japan.  Put MY debt instruments in a locked drawer or, better yet, burn them!  I'm sure that I can spend the money just as fast as the Japanese government, and isn't it the spending part that you believe is all important?  So, why does it matter who spends the money?  Now then, where do I sign?

My interview re: Declare Detroit a Free City

Below are links to audio files of my recent half hour interview on "The Exceptional Conservative Show", originating in Washington, DC.  I discuss my recent essay "Declare Detroit a Free City".

Media files

the-exceptional-conservative-show.mp3 (MPEG Layer 3 Audio, 20.6 MB)

the-exceptional-conservative-show.wma (Windows Media Audio file, 20.6 MB)

EU "backdoor" support of Portugal

From today's Open Europe news summary:

ECB lending to banks in Portugal reached €50.2bn in July, its highest level for seven months.Bloomberg WSJ Reuters Irish Independent

As explained by Professor Philip Bagus in this essay, the European Central Bank supports profligate countries via its START2 program, whereby deficit banks never really do settle accounts.  Whereas EU treaties prohibit the ECB from buying sovereign debt, the ECB bypasses this restriction by "lending" euros to still extant national central banks, taking sovereign debt as collateral.   Thus, treaties mean nothing...put your faith in gold.

Dig Deeper, BIS!

Re: BIS blames Europe's creditors for eternal euro crisis

AS usual, the same, tired, myopic monetary bureaucrats fail to dig deeper into the cause of the euro debt crisis, blaming banks for accommodating subprime debtors.  But why would they do that en masse?  The real cause is the monetary regime of fiat money controlled in various ways by governments.  Central bankers create all the fiat money that politicians desire for their short term, feel good, bubble programs.  The money thus created is legal tender, meaning that it is ubiquitous with previously create money and can be used to finance government borrowing and pie-in-the-sky investments that will never turn a profit and must be liquidated eventually due to lack of real resources in the real economy.

We need monetary freedom, not more searches for monetary criminals.  Get governments out of money production via central banks, and return money to the free market, where good money will drive out bad and boom/bust cycles will end.

My letter to the Financial Times, London re: The Myth of Public Sector Innovation

Dear Sirs:
Ms. Mariana Mazzucato's book The Entrepreneurial State: Debunking Public vs Private Sector Myths is hardly the "brilliant exploration of new ideas in business" and that "government is behind the boldest risks and biggest breakthroughs", as Martin Wolf writes in his patronizing review on August 5th.  Ms. Mazzucato makes at least four logical errors.  Number one, the most egregious, is that she picks successful projects, finds that the public invested at some point, and then draws her supposedly brilliant conclusion of public sector innovation.  But what about all the failures?  Let me name just a few--the fast breeder reactor, the supersonic transport, the all-electric car, wind power, and solar power.  Number two, there is hardly any research anymore that one cannot find some investment by the government.  Gosh, we should expect a success or two along the way, shouldn't we?  Number three, she assumes that some innovations would never have emerged absent government investment.  This is simply a statement with no possibility of proof.  And perhaps we would have been better off without some of government's supposedly successful investments.  For example, what did we really gain from our massive investment in landing a man on the moon?  (And please do not attempt to tell me of all the wonderful spinoffs from that exciting boondoggle.  I've looked them up and they are very pedestrian indeed.)  Number four, she ignores what Frederic Bastiat explained over a century and half ago in his great essay That Which Is Seen, and That Which Is Not Seen, .  Since resources are limited and all spending involves a choice, government spending preempts some other choice.  We do not "see" all the things that never were, due to the fact that government spent our money for us on something else.  We do not see all those things that individuals would have chosen to increase their well-being, such as better housing, schooling, clothing, and health care for their families.  Instead we see billions upon billions wasted on government boondoggles too numerous to list.  As a parting shot, if those government bureaucrats are such great entrepreneurs, what are they doing pulling down a salary in public service when they could be fabulously wealthy bringing us the next big breakthrough?

Taxing sunlight in Spain and rainwater in Australia

About ten years ago my wife, son, and I stayed for one night with acquaintances in a small town in Queensland, Australia. They lived on a small property and kept a donkey. They had built a small earthen dam to trap rainwater for the donkey and watering their garden. Periodically a tax inspector would drop by, measure the potential volume of water that could be stored behind the small dam, and then send a tax bill for the potential water that they captured. They were not allowed to bore a well on their property to access the water table below. A neighbor did get permission for such a well, so my friend was going to run a pipe quite a long way to his neighbor's well and buy water. At the time there was even talk that the government would tax rainwater that fell on the metal roofs and was captured in large metal tanks that are seen everywhere in Australia.

This madness that even the rainwater that falls on your land must be taxed is little different, in my view, from the madness of the Spanish taxing sunlight.

Here is a report that I found discussing the earthen dam tax.