NZ Herald disgraces itself

As if to prove my long held view that finding proper journalists in New Zealand is quite difficult, Graham Baker of the NZ Herald comes along and spins absolute nonsense about the criminal violence that beset England since Saturday, and which has thankfully largely dissipated. It has dissipated in part because of the enormous increase in Police presence, but also the rain. You see people who “can’t be arsed” turning up for a job interview, or getting out of bed before 11am, or working are incredibly resistant to getting wet and cold. For that reason alone I hope it rains every night through the next few days and especially the weekend.

Baker is the NZ Herald’s news editor and is from the UK. Maybe he left because he couldn’t earn a living writing for the Morning Star, for I suspect the Guardian is not left wing enough for him, nor is Ed Miliband.

A journalist is meant to report on events, investigate and provide insights into the news. Baker didn’t do that, he interviewed his laptop. In this age when anyone can read for free most major UK serious papers such as the Daily Telegraph, Financial Times, the Independent and the Guardian, as well as the numerous tabloids, why would one even bother reading the NZ Herald for news about the UK, when it puts out an article that could have come from the Marxist-Leninist (pro-USSR) Morning Star. The NZ Herald may a well have reprinted this, to help keep the ailing Morning Star from collapsing.

So what did he say? Consider it a rant worthy of Matt McCarten, and indeed it was embraced by my good buddy Russel Norman.

Baker claimed:

British politicians have espoused neo-liberal dogma for the best part of 30 years. A dogma based on consumerism and selfish individualism over shared responsibility.

Really Graham? Find a single speech by the current PM, Deputy PM, or indeed the past four PMs which has exemplified what you have claimed. Did the welfare state get dismantled, because I’ve watched it grow to the point where people on above average incomes get benefits for breeding, where people get up to £400 a week in housing benefit to have a four bedroom home (after the cuts!), and where pregnant teenagers are handed a free flat by councils. Yes, I’ve noticed health spending go through the roof in the world’s most centrally planned health service. I’ve noticed a top marginal tax rate of effectively 42% (now 52%). Most tax collected is on people in the top third of income earnings, but don’t let facts get in the way of your neo-Marxist dogma.

He goes on, expecting that a one year old government might have worked wonders...

Cameron's nebulous ideal of "Big Society" - that communities are stronger than the government in sorting problems out - has yetto prove of worth. (sic)

So government is the solution Graham. No shared responsibility in that, and funnily enough I thought the large numbers of people who turned out to clean up the town centres that had been vandalised might actually prove communities ARE stronger, but you ignored that, doesn’t fit your neo-Marxist love of “government can sort problems out”. 

Then he makes the riots a cause and effect of the recession...

in a time of austerity and a global recession lasting years, when people see their opportunities narrowing, services cut and the disappearance of the things they have for decades been told to expect, this is what happens

Most people have seen opportunities narrow for now, but spending cuts are largely just a reduction in the growth of spending. The government is spending more this year than last year. However, what’s this “things they have for decades been told to expect”? How many decades do teenagers expect things? Yet so what? Shared responsibility which Graham embraces doesn’t mean not having any of your own? This actually isn’t what happens Graham – all of Eastern Europe had its economies turned upside down, with mass layoffs and expectations of free social services and guaranteed jobs abolished when the mass of the population overthrew the dictatorships the Morning Star had lauded as examples. 

He asks plaintively (of a place he left to find a future)...

Where does one find a future? There are 400-odd unemployed people for every job advertised in Tottenham, many of those part-time shop or cleaning work for minimum wage.

Funnily enough Graham, London is bigger than Tottenham and one can catch a bus anywhere for £1.20 each way. How about the tens of thousands of immigrants from far poorer countries who come with next to nothing and set up small businesses, working seven days a week to scratch out a living? Of course they are displaying “selfish individualism” and so are part of the problem, right Graham? Is concern about your future a reason to mow down three young men on a footpath, or beat up a young man till his jaw is broken, or indeed just set fire to a store to watch it burn?

Then comes a mistake or a deliberate misrepresentation...

It now costs about $24,000 a year just to study at university in England.

No Graham. That’s complete nonsense. You have misrepresented it in three ways. First, the figure you quote is false. The MAXIMUM a university can charge is £9,000. That’s NZ$17,900 at today’s exchange rates, but far better to put it over NZ$20k, good for your “story” right? Secondly, it is a maximum. Quite a few charge less than that. Most importantly, nobody has to cough up that amount upfront. Student loans are available to cover the entire tuition fee that do not have to be repaid until the graduate starts earning above the average wage, and then only in increments. Guess the full story doesn’t fit your agenda does it Graham?

He then refers to someone the Guardian talked to who said:

“University fees have gone up, education costs money. And there's no jobs. This is them sending out a message."

One point ably made by Allister Heath of City AM is that a significant number of those rioting probably could never have got into university because they would have performed so badly at school. The three reasons this happens tend to be negligent parents, poor quality schools and the corrosive culture of criminality that pervades many areas. Free university education doesn’t address this issues in Scotland, so why would it in England?

However, then he talks about circumstances as if they are all about luck. 

My generation was lucky. University was affordable, social mobility was a reality, and just over a decade ago I entered an economy that worked. The situation young people find themselves in today is the very antithesis of the word "lucky".

Well actually many young people are “lucky”, many work damned hard to do well at school, go to university, or find employment and make a life for themselves. Most of them don’t vandalise and steal. Graham might have reflected that decades of overspending by governments and promising unaffordable pensions for older generations have proven to be unsustainable, but we don't get anything about solutions from him.

Does he have a solution? No, of course not, in fact almost none of the leftwing commentators do, all they do is blame past politicians. He says:

It is no irony that a country which has pursued consumerism and social nihilism has been blighted by people who - when it all goes wrong - believe in and respect nothing except consumer goods.

Did it suddenly go wrong? No. The social nihilism Graham damns is actually because of the breakdown of families, and the embrace of moral relativism and post-modern theories of power and identity politics that teach and disseminate the view that nothing is ever your fault. They claim everything is stacked against Afro-Caribbean youth because of “racism”, and everything is stacked against those on low incomes because of the view that wealthier people are just “lucky”, and that it has nothing to do with hard work and discipline. In fact the word discipline has been eschewed as “self expression” has been embraced. It is an embrace of a perverse individualism that demands the right to do whatever they like, whatever they consequences, and demand what they want, and to complain if you don’t give it to them. This corrosive culture has been catalysed by a subculture of gangsterism, embracing the “music” and attitudes that celebrate violence, misogyny and expectations that education and hard work are for fools, and that easy money is what matters. This isn’t about capitalism or even individualism, it is parasitism.

What really happened Graham is that a handful of people decided to take on the Police in Tottenham Hale, and the Police were overwhelmed and outnumbered. This was seen by criminal gangsters and the underclass of feral youth (the ones that parents and teachers are scared to discipline for fear the kids will call Social Services, and who will complain about their rights whenever anyone tells them off for breaking laws or being obnoxious) as a weakness, and so they networked loosely and went out on a spree. They were laughing, joking and boasting about what they did. They weren’t on a political demonstration, they weren’t complaining about racism (most of the rioters up North were white), they weren’t looting for food or essentials, indeed many times they didn’t even loot, but just destroyed. Not that far removed from the Sex Pistol’s in “Anarchy in the UK”, which was written in the 1970s, before Graham’s “neo liberal” revolution.

Graham doesn’t have an answer. Maybe because he doesn’t know it, or because if he said he wanted taxes to go up, and more to be spent on welfare, education and state subsidised jobs, his economic illiteracy should show.

So I urge those who think this sort of journalism is not worthy for New Zealand to give up buying or subscribing to the NZ Herald.  If this is what passes as professional journalism in that newspaper, then it's worthless.  A mixture of half truths, complete falsehoods, and agit-prop dressed up as analysis, without any answers.  You'll get more sense from the centre-left Independent.

UPDATE:  Seems the Greens have swallowed it all hook, line and sinker, and continue to be barren in their answers.

Russel Norman shows the mindlessness of the far-left (UPDATED)

I'm not a fan of Russel Norman.  He's a prick.

He might be a co-leader of the Green Party, but he quickly resorts to personal abuse and name calling when debating.  He plays the man, not the ball.  I've engaged with a few Green MPs and most are more dignified than he is.

See we have a history...

I questioned his view on cellphone towers, based on some knowledge about EMR issues, and he aligned me with ACT and called me CaptivityScott and DungeonScott.

Then he says I am "far right" for saying it was offensive on the day that dead bodies were being found in Brisbane after severe floods to say that Queensland is a major contributor to climate change, as if they were reaping what they sowed.   Because you see, Norman can't actually believe people who want less government aren't somehow Nazis.

His latest effort is to copy Ken Livingstone (not copied by UK Leader of the Opposition Ed Miliband) in saying on Twitter:

London riots show costs of inequality and poverty can present with more immediacy than slowly increasing public health bills

Bullshit.  Especially vile since you wont see Russel Norman coming to London to talk to those who wrecked havoc and stole, you especially wont see him talking to the owners of businesses whose lives and families are ruined.  One couple came from Sri Lanka with nothing, and now have their livelihood destroyed.  What's poverty Russel? How can hundreds of thousands of migrants from far poorer backgrounds who come with nothing create livings for themselves, whereas thousands of kids who have been handed education and homes on a plate, who in some cases are given a basic living for doing nothing, be seen as underprivileged?

The gangs who roamed around London used Blackberries, that great symbol of poverty, to organise.  Many had cars to drive around in, which given nearly half of Londoners don't have cars (given the density of public transport) means they are hardly in poverty.  Most weren't seeking food, they went for designer clothes, widescreen TVs, or in many cases just wanted to vandalise.  How else does it explain the breaking in to a baby clothing shop (in Ealing), and just strewing the contents of the shop around?  These aren't mothers desperately needing stuff for their kids, they are thugs who just want to destroy.

However, Russel Norman can't understand that.  He is as out of touch with the underclasses as he is with the laws of physics and economics (think he lives in a housing estate?).  He can't believe people can be evil and destructive for no reason.  He can't believe that people can be given the full blame for their actions, because his "world view" is coloured by Marxist structuralist identity politics that automatically labels people as either empowered or oppressed according to race or class background.  The Sri Lankan couple with a shop are petty bourgeois, the black youth gang are "disadvantaged", the young (Malaysian student) boy robbed while he was injured might have more "power" because of his background. 

It is collectivist groupthink - it categorises people as winners or losers by stereotypes.  It is racism of the left, which is more sophisticated if not less insidious and destructive than racism of the right.

A more sophisticated view has come from the Editor of the Independent, not my favourite newspaper as it tends to be the mouthpiece of the Liberal Democrat left, but still take this:

We know enough about these riots and those perpetrating them to know what they are not. This is not a political protest. The rioters have no agenda. It is not centrally directed. The goal is acquisitive looting or brainless destruction. The original riot in Tottenham on Saturday seems to have been sparked by a community's sense of grievance against the police. But what happened in Woolwich, Toxteth and Bristol on Monday night is clearly not an anti-police protest. Much of it is copycat rioting. Criminal gangs and antisocial youths have seized on an opportunity to run amok, knowing that the police cannot be everywhere at once.

Nor is this a response to public-sector austerity. Reports of the Government's cuts might have added to the air of desperation in many poor communities. But the fact is that most cuts have not been implemented yet. This is not a riot driven by new media either. BlackBerrys and Twitter – neither of which existed during the inner-city civil disturbances of the 1980s – have doubtless played a role in fanning the flames. But new media is hardly a sufficient explanation for this antisocial spasm. This is also not a race riot, in the manner of Brixton, Toxteth, Handsworth or Broadwater Farm in the 1980s, either. The rioters of 2011 are racially mixed. And there is no overwhelming collective grievance against the police for racial harassment as there was three decades ago.

So the mindless claims, parroted by other leftwing bloggers like Tumeke and Kiwipolitico, are just that:

-  It isn't politically driven;

-  It isn't anti-Police per se;

-  It isn't a response to spending cuts;

-  It can't be blamed on social media;

-  It isn't racially driven.

It is "acquisitive looting and brainless destruction", it isn't desperation from poverty, it isn't a desire to "express themselves" (has it ever been less difficult to publish, record or broadcast?).

It is more disturbing:

many of these jobless and under-educated youths simply do not feel that they belong to a community. They have formed parallel groupings instead, defined by a shocking lack of morality and an immunity from shame. It is this criminal, marginalised and sometimes mentally disturbed underclass that Britain has seen in action in recent days.

They are, in part, a result of absent parents, especially fathers, who have been allowed for decades to breed and flee, with little financial consequences, leaving hoards of boys being raised without male role models, until they find the next best thing. The get recruited by tough gangsters who demand obedience, who deal in violence, theft and the black economy, but in the lawless environment of housing estates offer some security, the easy spoils of thieving, status and as a result access to the girls who cling on for their father figures, trading the one currency girls always have in.

It has been the damning failure of a massive social experiment, a belief that only with more money, more "youf centas", council workers, housing benefits, dumbed-down education that treats them as incapable of achieving, a softly softly approach to law and order for those who don't bother and infest these communities with their poisonous embrace of violence, but most of all the constant excuses from the illiberal left that "it isn't your fault" that you did things you shouldn't, that somehow these lost people can be saved.  It would be quasi-Christian, except Christians believe in punishment.  This philosophy, interwoven with the envy-ridden simplicity of Marxist belief that claim people succeed only through "luck" or by inheriting from people who are considered to have "stolen" from society, is now both philosophically and empirically bankrupt.

It is time to break up the housing estates that condemn kids from poor families to live in high density housing (good for public transport and the environment!) surrounded by gang culture.  It is time to cease paying people to breed.  It is time to cease handing out welfare to convicted violent criminals.  It is time to set education free of the state mass production system that claims one size fits all and which condemns kids of poor families to no choice.  It is time to promote a culture of celebrating entrepreneurship, hard work and trading, whilst not state subsidising a culture of violence, attitude laden demands for "respect" and unalloyed misogyny. 

Meanwhile, Russel Norman thinks he is qualified to point finger at a foreign country, score political points that are at the expense of hundreds of victims, and proclaim effectively that if only taxes took more money for these rioters, they wouldn't riot. He ignores the small business owners whose livelihoods are ruined, and those of the people they employed.  People who despite poverty, make a go of their lives, even with the taxes and regulation Russel thinks makes what they do "good for society", for let's not forget that if any such businesses do very well, he will want to smash them down to size or pillage more for the people who would destroy them.  Always second, third, fourth chances to those who demand it all for nothing, always more and more taxes and demands for those who ask for nothing, but build for themselves.

He isn't interested in poverty, he is interested in point scoring, in state control and intervention and in using state power to take from some to give to others.   For if he cared about poverty, he'd worry about the businesses that keep these communities alive, that provide goods and services, and hire people and create wealth for them.  No, he cares about those who if left to their own devices, would turn everyone to dust, and after taking all they could, would starve to death because nobody productive would be left.

In fact, his philosophy of not letting the perpetrator take responsibility for his or her actions and ignoring the victim of their crimes has been a resounding failure.  It is not a time to bribe the uncivilised and destructive with money taken from the civilised and creating.

UPDATE: You'll do worse than read Allister Heath's editorial today..read it all but for part of what he says:

The cause of the riots is the looters; opportunistic, greedy, arrogant and amoral young criminals who believe that they have the right to steal, burn and destroy other people’s property. There were no extenuating circumstances, no excuses. The context was two-fold: first, decades of failed social, educational, family and microeconomic policies, which means that a large chunk of the UK has become alienated from mainstream society, culturally impoverished, bereft of role models, permanently workless and trapped and dependent on welfare or the shadow economy. For this the establishment and the dominant politically correct ideology are to blame: they deemed it acceptable to permanently chuck welfare money at sink estates, claiming victory over material poverty, regardless of the wider consequences, in return for acquiring a clean conscience. The second was a failure of policing and criminal justice, exacerbated by an ultra-soft reaction to riots over the past year involving attacks on banks, shops, the Tory party HQ and so on, as well as an official policy to shut prisons and reduce sentences. Criminals need to fear the possibility and consequence of arrest; if they do not, they suddenly realise that the emperor has no clothes.

he disposes of the arguments around it being political

the state will spend 50.1 per cent of GDP this year; state spending has still been rising by 2 per cent year on year in cash terms. It has never been as high as it is today – in fact, it is squeezing out private sector growth and hence reducing opportunities and jobs. Many of the vandals were school children not yet in the labour market; unemployment is a tragedy that must be fought but 9, 10 or 14 year olds can’t be pillaging because of it. Equally tragically, most of the older rioters would never have any hope of going to university, regardless of cost, such is their educational poverty.

London's Day of Reckoning, or who is in charge?

After three nights of looting, arson, vandalism, home invasions and assaults, one must start to wonder as the "thin blue line" between law and order, and anarchical violence and destruction, has been broken.

If I hadn’t been watching TV or being online, I would have noticed no difference in London, except that the two men who hand out the free papers at the entrance to my local underground station were absent – the papers still in plastic wrapped piles unopened. A sign that perhaps they had something more important to do, like protect their families. I can afford to live in a part of London where the local population has few who are feral, but even then middle class areas like Ealing have been ransacked. Indeed, there are now dozens upon dozens of people who are now homeless and jobless, because of those who celebrated destruction. Those that if they were let loose would send us all back into the stone age, for they take and destroy, but produce and create absolutely nothing.

Only the wilfully blind, or geographically remote, will think these riots have anything to do with the death of a man in the weekend. They have nothing to do with so-called “spending cuts” or being “disenfranchised”.

The enormous live TV coverage seen here in the UK has shown pretty much what has been going on:

- Criminal gangs have been organising themselves to steal electrical goods, clothes, shoes, watches and the like. They have been using the net and mobile phones to identify where there are no police and going around in groups by car, to ransack;

- Teenagers (and younger) are roaming their local streets, and some are deciding to copycat the criminal gangs. Either to throw items at Police, break windows, start fires, steal or generally cause mayhem. It’s the school holidays, so many see it as a lot fun;

- A significant number (if not proportion) of the young people involved in this are largely amoral about the property of others, so much coverage has shown boys and girls laughing, giggling, saying “let’s get us some watches man” or the like. Shamelessly taking off with the property of others;

- The extensive and ubiquitous nature of modern communications means that it is easy for groups to identify where they can go and get away with it all. The TV coverage of looting, rioting and arson, without any police in sight tells many that they can get away with whatever they like.

In short, law and order is not being kept on the streets of London. The London Metropolitan (and City of London) Police forces are more than overstretched, having called upon forces from outside London to try to control, but they have largely failed.

The core function of the state is to protect citizens from the violence of criminals, but this Conservative led coalition government has preferred to increase its foreign aid budget and keep Labour’s NHS profligacy intact, to keep giving free bus passes and cheap energy to wealthy pensioners, and then cut police spending. It wont be a surprise that morale in the police is not high.

So if the state can’t protect citizens and their businesses, the responses from citizens are going to be mixed, such as Turkish and Kurdish shop owners and their formidable sons wielding baseball bats to chase feral youths away. Far too many online forums are now full of nasty racist remarks about the fact that many of the youths seen as black. These events are perfect recruiting occasions for the BNP and National Front. Muslim business owners in the East End are being protected by their own families wielding weapons. In short, it becomes vigilante justice.

However, why should anyone be surprised? If law abiding citizens had the right to bear arms it might make for a very different scene, because property owners could fight back. Of course there would be the risk that more of the thugs would also have weapons, given that firearms have only been implicated in one incident the last few nights.

Today both the PM and Mayor of London have returned from their summer vacations, to rescue their respective political careers. If a Conservative PM and a Conservative Mayor cannot be tough on law and order, then they are finished. The PM must ensure the Police have all the necessary resources to lock down the looted areas tonight, and the option of a curfew must be considered. For if London is NOT brought under some order tonight, it will get much much worse. If this is blamed on spending cuts in the Police (which is unfair as there has been virtually no impact from that as of yet), then the government will have handed Labour an issue on a plate. Ed Milliband will be chasing the ambulances with glee at this news, even though his political philosophy has contributed to this problem.

There must be an organised effort to establish order on the streets by the Police. A curfew for young people between certain hours should be considered, with the simple point that anyone on the streets at those times under a certain age face being arrested and spending a night in a cell. Shopkeepers and others who are protecting themselves should be supported by the Police, not treated like criminals.

Yet what we have witnessed overnight, the past three nights, has been the result of what happens when solipsistic whim worshippers discover there is anarchy and they can get away with taking what they like and destroying, like the culture they embrace celebrates. That is the vacuum that has been created by cultural relativism, the empty void of amorality presented by so-called liberals who threw away the religious based morality of past generations, and instead of replacing it with a humanist secular commitment to individual rights and property rights, embraced “group rights”, “victimology” and structural theories of power and rights.

The young people who have rioted have been told that if they don’t have what they want, it isn’t “their fault”. That if they haven’t got a job they want and like, then it is someone else’s responsibility to fix that. That if someone has something they want, then they have a “right” to that as well. That the reason their parent or family do not have the wealth of others is because of racism, or because they aren’t part of some special inner circle, not because they didn’t pay attention at school, didn’t read books and preferred the parasitical culture of gangsters and crime.

The failed social engineers, like chardonnay socialist Polly Toynbee of the Guardian are still claiming the riots are because of “benefit cuts” (see removing child benefit from people earning over £38,000 a year will do that). However, their time is past. They have celebrated pouring money into ghettoised state housing schemes that have hothoused criminal gangs and the poverty of aspiration that does promote this. Most of all, they have embraced the philosophy of cultural and moral relativism that says “anything is ok as long as you express yourself”, the idea that “everyone is the same” regardless of whether you actually work hard, achieve and become a success, or if you laze about, barely articulate yourself and resist any advice or attempts to help you change. They will call for more money to be taken from the law abiding and productive, to bribe the feckless, breeding, whim worshipping thugs into being submissive. They will say they aren’t excusing it “but”, which of course means they are explaining the crimes as not the actions of people wishing to do evil, but as reactions to government policies.  They would be the first to complain about business owners taking justice into their own hands, after paying their taxes and finding it subsidises those who steal from them.

Today the state has to focus on the single thing it must do and do well – re-establish law and order in London. If it fails, then David Cameron’s much touted promotion of volunteering, called (appallingly) the “Big Society” will come to pass, in the form of vigilantes and localised justice. People will enforce the law as they see fit, because if the state wont protect them, what else can they do?

Tonight either London is secured, or it is anarchy – in either case, most Londoners will be at home, concerned, some frightened. My concern is that I’ve seen little evidence that this government has any real idea of how important this really is. 

Want some free stuff?

That's what's driving the hoards of youths rioting in various parts of London the last few nights (and today as I write).  

It is not because of the protest of the shooting of Mark Duggan, in a case that is now under investigation.   One can't remotely claim that those rioting in Tottenham, Hackney, Wood Green, Enfield and now Lewisham are some response to the Police.  Petrol bombing shops, flats and buses, is not about some sort of protest.  There was a peaceful protest on Saturday about it, and Duggan's family long called for an end to any violence.

Even less credible is the opportunistic claim by Marxist dictatorship-felching ex. Mayor (and Labour candidate for Mayor) Ken Livingstone that it is a response to the coalition government's spending cuts (which despite the Labour propaganda, have seen a net increase in state spending).  It is a stark contrast from local Labour MP, David Lammy who said:

This is an attack on Tottenham, on people, ordinary people, shopkeepers, women, children who are now standing on the streets homeless as a consequence..

These are looters, they are amoral, impulsive young men and women who have no conception of the rights of others, who have no respect for the property of others, who couldn't care less if people lose their livelihoods, businesses or homes.   They are the output of a culture of entitlement that says if you want something you should have it, you don't need to work or save for it, for either the state will pay for it, or someone will give it to you - or you just take it when you can.  A culture of hedonistic whim worshipping, that says if it feels good it's ok and it doesn't matter who or what you destroy or harm in the process - might is right.

They are, of course, engaging in socialism - without the middle man of the state.   The likes of Ken Livingstone,  residing in pleasantly middle class Cricklewood, would steal from the businesses and the residents and the employees, just with the gloved fist of the state doing it in a far more ordered and determined way, to give a living, homes, food, clothes, TVs, mobile phones, transport and healthcare to those who steal.  Indeed, the state has been doing that for decades, and the moral vacuousness is obvious.

Note that the Metropolitan Police cannot use tear gas to deal to these thugs, it cannot even contemplate rubber bullets, because you see to protect people with more force would be against the rights of the criminals.  Neither could those whose businesses and homes were attacked could ever have a firearm to respond.

However, just wait to see who politically around the word spreads the empty nonsense that the riots are about the death of Mark Duggan (who did not exactly appear to be unfamiliar with the gang culture that infests Tottenham), or about the cruel Tory government that has cut government spending to a heartless 51% of GDP, or that its about racism (given the majority of rioters have appeared to be Afro-Caribbean), and how the way to fix it is to borrow more money we don't have to spend money on more regeneration, state housing ghettos, welfare and pseudo "jobs" with local authorities.

Whilst, of course, the people whose businesses are wrecked, who are unemployed as a result of their employers' businesses being wrecked, who are now without homes, are ignored - for they are the "collateral damage" of "disenchantment", rather than a victim of decades of failed welfarism and state housing ghettoisation, producing hot houses of feckless dependency and criminal cultures of violence, misogyny, gangster worship and aspiration less traps for the children raised in that culture.

UPDATE:  Oh and remember more than a few of the parents and relatives of these thugs DO want better.  Read Katherine Birbalsingh's column about how SHE talked to an event about young black men in London, she's an inner city teacher, who has riled more than a few because she spoke at a Conservative Party conference.

End of cloud cuckoo land economics

So says City AM editor, Allister Heath.  In an extended editorial this morning he wrote an elegant piece that summarises where we all are at:

The post-Bretton Woods era is coming to an end. Asia and the emerging nations are on the rise – and the world’s increasingly vocal creditors. As economic power shifts, so will geopolitical and cultural influence. The US, which for decades enjoyed massive inflows of cheap financing, and huge benefits from owning the world’s reserve currency, needs to start to live within its means. The same is true of Europe, which faces two additional challenges: the Eurozone, which cannot survive in its present form and which has become the most urgent threat to global prosperity; and (even more than America) bloated welfare states and a generalised failure to grasp that weak education systems, high taxes and crippling regulations are a no-no in a globalised world.

He has no time for the endless budget deficits and the abuse of fiat currencies as ways to evade reason...

“stimulus” packages of the fiscal or monetary variety have become counter-productive, with every extra pound in economic output created coming at a much greater cost. Ultimately, one needs real, sustainable growth – and that must mean deferring consumption to allow the savings required to finance productive investment; a sound, non-manipulated currency; interest rates that reflect reality; and lots of hard work, creativity, skill and innovation, suitably incentivised. The pseudo-Keynesian micro-management that dominates policy-making is not only intellectually bankrupt but has been proved to fail in practice. Politics and wishful thinking has been defeated by economic reality. In a world of scarce resources, we need to produce before we can consume – all the borrowing and money-printing in the world cannot refute this simple truth. 

His big predictions are that the US can prevaricate for some time, and be in long term relative decline as it does, but the European Union has an immediate crisis, that now threatens to spread beyond the CPIIGS (Cyprus, Portugal, Ireland, Italy, Greece and Spain) into Belgium and France.  

But while the US’s decline could run for decades, and will involve further downgrades, the Eurozone’s crisis is urgent. The only question is how much debt the authorities will want or be able to federalise – how many toxic government bonds will the European Central Bank and the European Financial Stability Facility buy, in exchange for creating money or issuing Eurobonds backed by all Eurozone countries. Prudent taxpayers in Germany and elsewhere will pick up the bill left by profligate nations; but given its huge, multi-trillion euro size, this could destroy yet more credit ratings. France could be next for a downgrade. Even more importantly, a sovereign bailout will destroy any remaining popular support for the euro project, especially in Germany, understandably so given that the population was lied to when it was told that countries would retain their fiscal independence despite giving up monetary sovereignty.

 

The implications of this for Europe, could be positive if it unshackled itself from the socialist part of the EU project, and helped set its economies free, but it is unlikely that will happen.

 

The more serious concern ought to be about the decline of the United States, what is means not so much for the global economy, but for the international order.  For decades many in the West have rallied against Pax Americana, more than a few will cheer a New World Order that does not resemble what George Bush (Sr.) declared at the end of the Cold War.   

However, bear in mind what it represents.  It means Asia being dominated militarily as well as economically by China, and India, both nuclear powers.  It means the Middle East being dominated by Saudi Arabia and Israel, it means Europe being dominated by NATO and Russia, and it means the United States doing what Obama has royally done, opting out of the world by withdrawing.

The so-called "peace movement" will proclaim the world is a safer place as a result, although if it is a place where the United States no longer carries a banner, and sword, for freedom, one wonders how true that will be (not that the "peace movement" ever believed in freedom).   Some US libertarians welcome this, not wanting the US to be "World Police" (not that it ever really was), but what it leaves is a philosophical vacuum - one that is increasingly filled with "make money wherever you can regardless of individual or property rights" as the Russia and Middle Eastern kleptocracies move forward and China seeks a 21st century imperialism over African natural resources to replicate the 19th century Western equivalent.   Islam may fill part of it, corporatist state capitalism will fill some more, as will knuckle-dragging nationalism based on ethnicity. 

However, consider this.  If you were in Poland, with a relatively chilly authoritarian neighbour to the east, and you saw the US withdraw its presence in Europe - given the past 70 years of history - would you be feeler safer as a result?

What spending cuts? (UPDATED)

Given some of the news coverage you might think the US houses of Congress have reached agreement to cut spending in the US Federal Government.

The Daily Telegraph says there are US$1 trillion in spending cuts over 10 years.

The Washington Post called them "severe cuts".

Spendaholic Paul Krugman in the New York Times says it is "slashing government spending" and even says it calls the whole system of government into question!

The New York Times editorial calls it "nearly complete capitulation to the hostage-taking demands of Republican extremists"

You'd think I'd support it, but really it isn't what it seems.  Chris Edwards at the Cato Institute points this out in the following graph.   The US$917 billion "cut" over 10 years is not a cut in real or nominal terms, but a cut from a baseline of even faster increases.

So what does it actually mean? Well Edwards says:

"The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent."

That's what is provoking a hysterical reaction among the left in the Democrat Party.  Spending isn't being cut in real terms, spending is being cut by part of the amount they wanted it to grow.

As I've mentioned before, a relatively unambitious plan from the Cato Institute would cut spending by US$1 trillion annually through to 2021, it would balance the budget by that year.  It would cut government spending as a proportion of GDP from a projected 24% to 18% (the same it was in 2000).  It would look like the graph below.   You can figure out the current plan is closer to Obama's plan than to the Cato plan.

However, because it plays with so much pork (everything from agricultural subsidies to Amtrak to public broadcasting to the Department of Education (don't worry the states do most of that anyway) to Medicaid, it would be difficult for many Republicans (who are frankly half responsible for the current mess) and virtually all Democrats to accept.

Yet it should be the bare minimum to get the USA back on track to growth, by pulling back from the crowding out of the private sector, by keeping taxes at their current level and eliminating vast amounts of distorting and damaging subsidies and government programmes.

Oh, by the way, Obama once opposed raising the debt ceiling as well:


"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

That is Senator Obama, 20 March 2006.

Thanks to Allister Heath at City AM for tweeting this and National Review for publishing it.

Just another politician isn't he?

Watch Syria, for that's the future

It shouldn't surprise anyone that Bashar el-Assad has turned the army on protestors and has shown little hesitation to create rivers of blood among his subjects.  Tanks firing on civilians, sniper taking out protestors, blocking hospitals to stop protestors entering according to a report from The Independent.   With reports of heavy machine gun fire, tanks shelling buildings and electricity and water being cut off from the city of Hama (where Assad's bloodthirsty father had massacred reportedly over 10,000 in 1982), it appears the regime will stop at nothing to remain in power.  Another report talks of tanks running over people.   Some claim over 1,600 have been killed by the regime since protests started in March, whilst this is likely to be somewhat exagerrated there can be little doubt the regime has been engaging on a spree of oppression.

It did try in recent years to put on a more moderate face.  Some thought that as Bashar Assad had been trained as an opthamologist and had not originally been seen as the successor to his father (his far more ruthless and "Uday Hussein" like brother Basil had been, before he died in a car crash), he would be more moderate, and there had been signs of a loosening of the totalitarian state his father Hafez had instituted, but it would be more like moving from Stalin to Khrushchev.   It didn't stop Vogue writing a gushing piece about Bashar's wife late last year (which it wisely has removed from its website). 

However, the truth is out.  Bashar wants to retain absolute authority and power, like his father.  He has the support of the armed forces, and the brutal Ba'athist socialist legacy of the ruling party continues.

President Obama has rightly condemned what has been going on, as have other Western leaders.  The regime's response has been to sponsor attacks against the US and French embassies.   Meanwhile you'll notice two major differences between the foreign reaction to Syria and the reactions to Libya, Serbia and other examples of what is typically referred to as "humanitarian intervention".

Firstly, the Western world is financially and politically exhausted as regards "saving the world" from the brutality of dictatorships.  Barack Obama has no appetite or inclination to do anything to intervene in Syria, not least because of the cost, but also because he firmly believes that it is for the UN Security Council to authorise any such action.  Is he pushing for this?  Well no, because he knows it wont be politically popular, he knows he'd struggle to pay for it and as he didn't support the overthrow of Saddam Hussein (and was subdued on Libya) he doesn't believe the US should project itself militarily, in order to save the lives of others.  Meanwhile, as the UK and France effectively lead the continued presence over Libya, they are not so inclined to go into Syria either, because of money.  Germany opposed intervention in Libya at all.   Of course neither Russia nor China are in any way inclined to support intervention against a government that turns on its own people, given that both are quite adept murderers of their own domestic populations.

So the post-Cold War age of humanitarian intervention, which has had mixed results including the former Yugoslavia, Somalia, Liberia and Libya (I count Afghanistan as being action against those that harboured an aggressor and Iraq as action against a proven threat to international peace and security), is now over.

You'll have to get used to watching TV coverage or hearing/reading reports of governments massacring their own people.  For the US and European powers are no longer willing to save them.  That is, in part, because they have nearly bankrupted their own economies through many years of overspending on bribing voters and interest groups with future taxpayers' money. It is also because the cost in lives and money of such interventions (and the organised forces against them from the left) have made it politically more difficult to support.   The UK was embarrassed about its previous sycophancy for the proven mass murderer Muammar Gaddafi, so could not stand by as he used helicopters to take out civilian protestors.  However, Syria has never been a friend of the West, so the guilt isn't there.

All of this should please the so-called peace movement and human rights advocates from the left who opposed the Allied invasion of Iraq and overthrow of that Ba'athist dictatorship, as well as the smaller group who thought the Taliban should have been left alone in Afghanistan, to keep harbouring Al Qaeda and enforce a dark ages Islamist year zero ultra-patriarchy.   The same people have been relatively quiet over Libya, except the usual tiresome claim that its only about oil.  

You see, the so-called peace movement have long held up Afghanistan, Iraq and even Libya as of late as being "the fault of the West".  This is a line whereby all NATO members and Western allies of military intervention in all these cases, must carry the blame for the actions of previous western governments in the Cold War.  Never ever is the finger pointed at Russia or the governments of the former Warsaw Pact countries and the like.

Afghanistan was the fault of the West supporting the Mujahideen against the brutal Soviet backed Najibullah regime.  The Soviet invasion of Afghanistan was, after all, supported by Keith Locke of all people.   It takes a peculiar contortion of one's belief in human rights, womens' rights and freedom of speech to oppose the overthrow of the Taliban, but that is what the far left did (it would have been ok had the Afghan people done it on their own efforts though - like how it would have been good if the Jews had overthrown the Nazis in Germany).  Support for the Islamists in Afghanistan was a mistake, but it doesn't mean one cannot rectify it when they not only have proven to be brutally sadistic, but harbouring those who attack you.

Iraq was also the fault of the West, for the support Saddam Hussein got against the Iranian Islamists.  That piece of realpolitik (your enemy's enemy is your friend) was an appalling miscalculation, which was eventually figured out in the late 1980s when the West stopped arming and supporting Hussein (though one shouldn't forget the French help for Hussein's first attempt at building a nuclear reactor, which Israel swiftly dealt to).   Of course, the USSR and Warsaw Pact countries also extensively armed and assisted Saddam, but Russia and its former allies are forgiven, somehow.  However, that doesn't matter now, for notwithstanding Saddam's use of chemical weapons against his own people, his invasion and occupation of a neighbouring state (for oil) and his extended oppression and brutality against anyone who opposed him, he was deemed protected by international law by the so-called peace movement.  Invasion against this dictatorship was "illegal" and "unjustified" as the borders of a dictatorship are considered inviolable.  The left considered Saddam's regime as having at least enough moral authority for the actions to overthrow him to be considered less justifiable than letting him be.  

This Ba'athist hereditory dictatorship in Syria has so many hallmarks of being abominable it should be more surprising that it didn't long ago raise anger and activism among the legions of self-styled human rights protestors in Western countries.  You know, the ones who will raise a flotilla for the Gaza Strip, or rally against apartheid, or protest against the Chinese one-party state.

However, Syria's past can't be easily blamed on the West.  It gained independence in 1946, but between then and 1956 was marked by multiple military coups.  In 1956 it became explicitly allied with the USSR, and merged with Egypt in the ill-fated "United Arab Republic" of Nasser in 1958, before withdrawing in 1961.  A 1963 coup led by the socialist Ba'ath Party set the stage for the future of the country.  With Hafez Assad staging his own coup within the regime in 1970, he held power for 30 years, with an iron fist and a personality cult to match, with Bashar taking on the legacy in 2000.  Throughout the entire period since 1956, Syria has been allied with the USSR, and subsequently maintained warm relationships with Russia, Iran, North Korea and other regimes with an overtly anti-Western stance.

So for now, you can watch Syria's regime massacring its own people.  In the knowledge that the Western advocates of peace and human rights are rather quiet on it all, expressing concern, but not at all supporting intervention (how could they).  They will be quiet about a regime they have ignored for decades, because it never had Western support and was always antagonistic towards Israel (although Israel has for some years sought a peace treaty based on progressively handing back the Golan Heights, but Syria wont make peace until the Palestinian situation has been resolved).  

Meanwhile, with Obama in the White House, and largely uninterested in international affairs.  With Western leadership dependent on a fairly wet British Prime Minister who is in coalition with anti-interventionists, it may be up the the French (given Syria was a French colony) to seek action.   Yet, as China and Russia have no inclination to support it (and since few dare to ignore the UN Security Council nowadays), expect to see more blood flowing in Syria with no intervention.

It is, after all, the consequence of a policy of non-intervention and what the so-called peace movement and human rights movements want as a response.

The "radical" plan Obama is rejecting

The Cato Institute has reviewed the latest Republican plan to stop the US overspending slow down the growth in US government spending, it isn't impressed:

The plan is to cap discretionary spending over 10 years to achieve $1.2 trillion in savings; have (another) bipartisan group of policymakers come up with $1.8 trillion in “deficit reductions” over ten years; and get a vote on a balanced budget amendment. In exchange, the president would get to increase the deficit by $900 billion this year and by another $1.6 trillion next year.

That means:

• Under the Congressional Budget Office’s optimistic spending baseline, the federal government will spend $46 trillion over the next ten years. Obviously, reducing spending by $1.2 trillion oven ten years is relatively small.

• The same dysfunctional congress that treats entitlement programs like lit sticks of dynamite is supposed to come up with $1.6 trillion in “deficit reduction.” Note that we’re not even talking specifically about spending cuts here, so that figure would likely include tax increases assuming they’re able to even come up with something.

• Under the Boehner plan, spending and debt will continue to rise. At the most, the plan would produce an average of $300 billion a year in cuts in exchange for increasing the debt ceiling by $2.5 trillion over the next two years.

• Boehner’s bill includes language that tightens up the definition of what constitutes “emergency” spending. Congress regularly slaps the “emergency” designation on all sort of non-emergency spending bills.

• Where are the immediate spending cuts? Once again, we have the promise of cuts but no specifics. Even if the discretionary caps hold the line on that portion of spending, total federal spending (and debt) will continue its unsustainable upward climb. Entitlement spending is the biggest driver of our long-term budgetary problems but entitlement spending isn’t capped under the Boehner plan.

Obama is rejecting this, because he wants more taxes and wants the issue resolved so it looks like he managed to chaperone a compromise that will outlast his Presidential term.  Of course, some Democrats want tax increases to be a major component of the deficit reduction strategy, because they want to entrench the growth in government that has been the legacy of Obama and Bush before him.   Tea Party aligned Republicans want deficit reduction to be entirely about spending cuts, and I agree.

Even the Cato Institute's own rather meek plan, by Chris Edwards, to cut spending would be a vast improvement, because a balanced budget would still be a decade away, but so much wasteful spending would be addressed.  It would cut the Federal budget to 18% of GDP, down from Obama's projected 24%.

It is about competing visions for the USA.  Some Democrats (and likely Obama himself) want the US to be more like Europe, and to have an activist state involved in health, education, welfare and economic development more than now.  Tea Party Republicans want to keep a sizeable gap between the European size of the state and the US, and want to balance the books by getting spending down, and then address the debt bubble.   However, I suspect most congressmen and women from both parties just want to get elected, be loved and popular, and to convince people that they are just the right ones to solve their problems.  The deficit being something most have spent little time thinking about.

For now, it is a game of chicken.  Obama does not want a deal that needs to be replicated next year during the election season, he wants to look like the honest broker who saved the country from bankruptcy (or at least convinces his core voters that he is in charge and competent).  The recently elected Republicans don't want a deal that includes any tax rises, because they campaigned against that, and they want a balanced budget constitutional amendment so that there is a legal requirement to eliminate the deficit over time (and avoid the risk of this ever happening again).   Both Obama and the Republicans fear being blamed for a default.  Obama bears the bigger risk, because he is President and more people think he is in charge than Congress.  All the Republicans can say is they reject any tax increases, and want to cut waste.  Yet, they also don't want to be seen as being incapable of compromise.

Two visions of the USA - will one win, or will a lily livered half arsed middle ground be found that does barely enough to get past this hurdle.

100% result in DPRK election

North Korea held its local, municipal and provincial elections.

It had 99.97% turnout (disgraceful yes, but it was noted that some were working on oceans or abroad - haven't they heard of absentee ballots?)

and 100% of those who turned out voted for the single candidate.

Even the ephebophile, megalomaniacal, pathological liar.

Meanwhile, there are still tens of thousands in gulags, including hundreds of children, and Amnesty International still has no campaign on the place, oh and Reverend Don Borrie of Porirua still remains Kim Jong Il's useful idiot in New Zealand.

Debunking the "building roads causes congestion" myth

For some time now transport policy has been influenced (and in some countries dominated) by an ideological branch of the sector which could best be called "planning environmentalists".  This group has the following set of views, which are based more on philosophy and politics, and rather less on evidence:

- The problem with transport is people driving;

- Helping cars move is a negative because cars kill, cars pollute and cars take up a lot of space;

- Building new roads magically induces more car trips, so roads shouldn't be built, in fact in some cases they should be closed (the busiest ones);

- People are "dependent" on their cars, rather like drugs, but they would rather not be, they would rather use public transport if only the choice was there;

- Travel by public transport is good, the more the better;

- Travel by rail is almost nirvana, it is the safest, least pollution, can carry the most number of people, can be easily powered by electricity.  The more of this, the better we will be;

- Where railways can't even start to remotely seem sensible, light rail (trams) are the next best thing.  Cheap trains at street level.  People love them, the more the better;

- When even light rail is insanely expensive, buses are ok, but they are only ever a stopgap (after all they have diesel motors, use rubber tyres and um roads);

- Cyclists are important too, except when they disagree with light rail;

- Walking is important, but please don't talk about people who walk or bike who might be attracted to highly subsidised public transport - because that can't ever be a bad thing;

- Freight movement in cities is largely ignored because despite the best will in the world, it can't be moved by rail in any great volume.  Freight benefits from public transport though;

- Public transport relieves congestion, except it doesn't, but actually what we mean is it doesn't actually matter.  Congestion is a good thing, it is a tool to encourage people to use public transport (A Green Party policy advisor told me this himself);

- Road pricing is fabulous, but only to penalise cars.  All the money collected should go to subsidise public transport;

- Road users should pay the full costs of their infrastructure and externalities and pay for public transport subsidies, public transport users should pay a small fraction of the operating costs of their services, or even nothing at all, for they do us good by riding around on those trains;

- Public transport would be more viable if cities were higher density, like Prague, Moscow, Zurich, Barcelona, London.  People should live in high density housing more, less in suburbs.  Planning rules should enforce this, then people could live in tighter communities, travelling by rail, which of course, is what they really want, if only they knew better.

A key part of the dogma behind this, which is wholly embraced by the Green Party, is the notion that if a new road is built, it will become congested within a few years, making the whole construction futile.  It is the only sector where a claim is made that when something is popular, it is a bad thing.  It always ignores whether the road has been priced properly of course.

The Washington Examiner has an excellent article summarising the history behind the claim that building road causes congestion, and the countervailing evidence.  A good example is Phoenix, Arizona:

in the real world, adding highway capacity can prove quite helpful. The Texas Transportation Institute’s annual Mobility Report, for instance, demonstrates an uncanny correlation between capacity and traffic congestion: Areas that add capacity tend to have lower levels of congestion. And induced demand doesn’t always -materialize. Take, for example, the city of Phoenix, a town built with almost no freeway system.

As a result, the Phoenix metro area historically had some of the worst congestion in the nation. Between 1982 and 2007, Phoenix decided to build the highways it should have had in the first place.

They added so much asphalt that, according to the research firm Demographia, the city’s highway-lane-miles per capita grew by 205 percent. During that period, highway-vehicle-miles-traveled per capita increased by only 12 percent. And, like magic, traffic congestion plummeted.

Now what is true for Phoenix may not be true for Philadelphia. And building highways almost certainly induces some demand.

In New Zealand you can see the same, with plenty of examples to prove that building roads need not lead to congestion.  In Auckland, Te Irirangi Drive was built some years ago and has yet to be even close to capacity.  The south eastern highway from the Southern Motorway to the Pakuranga Motorway likewise (despite being built on the cheap).  In Tauranga, toll road Route K is now locally infamous for losing money because of lack of demand, and the related route J north isn't remotely congested.   Wellington's motorway bypassed Tawa  in the 1950s, and neither the motorway nor Tawa are congested.  Upper Hutt has also been bypassed with a sustained reduction in congestion through that city (and on the highway).  Lambton Quay used to be gridlocked at peak times with cars in the 1970s, until the motorway provided a bypass to south of the city.  Nelson's Stoke Bypass has not resulted in congestion in Stoke or on the highway.  

Now when a new road opens up a previously inaccessible, but desirable location, then it will have rapidly increased demand.  New crossings can do this, like the Auckland Harbour Bridge which needed a duplication of capacity within a couple of years of opening.  Tauranga Harbour Bridge was similar, but only when the toll was removed (which moderated demand).   In addition, piecemeal upgrades to a road that eliminates one bottleneck, but doesn't deal with one further along the route can exacerbate congestion at the further bottlenecks (but doesn't destroy the case for relieving congestion for those who do not go that far).

Modern cities throughout the world have used road building as part of their strategy to meet transport demand.  Where they have failed is in unfettered construction that means a subsidy from those who don't use the road for those who do.  In short, without using the market tool of pricing, building new roads can simply be just another subsidy.  

In New Zealand at the moment there isn't any appreciable use of pricing to manage demand to meet supply, but there is a major road building programme - one that does involve a considerable subsidy to road users in particular parts of the country (Auckland and Wellington mainly).    A more commercial approach may not build so much, and certainly not so fast.   Sadly, the main choices in policy offered to voters are to embark on grand Think Big road projects (e.g. Transmission Gully and the Puhoi-Wellsford motorway), or to embark on grand Think Big rail projects (e.g. Auckland underground rail loop and Auckland airport railway).   Actually letting users decide with their dollars seems something neither the Nats or the Greens can get to grips with.

Don't believe the EU agitprop - the Euro crisis is not over

For all of the hype yesterday from the politically (not democratically) appointed European Council President, and the cheers and handshakes from Presidents Merkel and Sarkozy, you might think there is reason to breathe a sigh of relief.  The use of the term "Marshall Plan" to describe what has been done is so wildly far from the mark that it continues to confirm my view of how malignant the European Union, Commission and Council actually are.  It is an institution as addicted to lies as any politician could be.    The big driver for Merkel and Sarkozy can be seen on this graph on the BBC news website.  Both French and German banks and governments are by far Greece's biggest creditors.

The immediate reaction to the announcements was the usual lemming like attitude of the currency and sharemarkets as many suddenly had confidence where there was no confidence before.  Some of that will be the attempt to make some short term returns from the bubble of optimism, for that is all it would be.  All the Eurozone leaders have done is buy some time, by pilfering the bank accounts, wallets and purses of their children and grandchildren - fiscal child abusers like so many politicians.  

As I predicted yesterday, a bailout solution will involve a form of fiscal union.  It was confirmed that details of how Eurozone countries will integrate tax and spending policies will be forthcoming.  Nothing has been said as to whether taxpayers in Eurozone countries will be asked whether such a fundamental constitutional shift will be put to referenda, for that is not in the style of the European Union.  It wont let democracy or public opinion get in the way of "the project".  Even the Guardian admits it is the "democratic deficit".  

Yet that isn't my biggest concern, for whilst it is easy to assert that if asked, it is unlikely European voters would see sovereignty transferred wholesale to Brussels, it is more fundamental that it is quite simply immoral for people in one country to be forced to bail out the fiscal profligacy of those in another. 

The plan is as follows:

- A tranch of Greek public debt will be transferred to the European Financial Stability Facility, effectively "EUising" the debt, with the maturity extended to about double the current average period.  The interest rate will also be cut to 3.5%.  In short, Greek debt is being transferred to primarily German, but also Austrian, Dutch and French taxpayers.

- Greece will "temporarily default" as private lenders will be effectively blackmailed into accepting a 20% writedown on the loans.  In effect the loans will be transferred to the European Financial Stability Facility (EFSF), with extended maturity periods and lower levels of interest.  Greece will effectively be unable to borrow from private lenders in the foreseeable future.  Private lenders will take a hit of around 13.5 billion Euro as a result, but will contribute up to nearly 50 billion overall.

- New EU bonds (debt) will be issued with a AAA rating.  In effect, Germany will be borrowing on behalf of Greece.  German taxpayers will be forced to use their hard work and savings to prop up the profligate and spendthrift Greeks.

- The EFSF will have new powers allowing it to buy sovereign debt from countries held by private creditors and cutting the interest rates on that debt.  In short, German taxpayers subsidising lenders to profligate countries. 

Greek public debt will be cut by 12% of GDP, albeit from the current level of 140%.   This should make it easier to service.  The overall value is 159 billion Euro.  However, it doesn't deal with the fundamental problem.

Greece is still overspending, on a rampant scale.

If Greece cannot cut its state sector back and radically reform its economy, it wont meet the deficit reduction targets that have been conditional for this and the previous bailout.  All this is doing is buying time.   It was made clear that Greece is a "special case".  There is no capacity to do the same for any other of the countries known as the PIIGS (Italy being added to Ireland recently).  Although it was noted that Spain and Italy have both committed to major austerity programmes to cut their deficits, which may just save them from a similar crisis.

Moreover, the Eurozone countries have agreed to "legally binding national fiscal frameworks" by the end of 2012.  That means surrendering sovereignty over tax and spending policy to the EU.

What's next?

If Greece's announced austerity measures are actually implemented, it may well be the end, but it has failed to do enough to date.  Greece needs to drastically cut and eliminate its budget deficit in the next two to three years so that it need not borrow anymore - for it is about to default, and will be unable to do more than is provided for.  This really is the last chance, unless other Eurozone governments are willing to rob from their children and grandchildren some more.

If Greece fails to cut its deficit there may well be another bailout, but with the French Presidential elections in April 2012, and German Federal Parliamentary elections in September 2013, Sarkozy and Merkel will be keen to avoid being seen to sell their people out to the Greeks.

Ireland, Portugal, Spain and Italy are also on the horizon.  All have announced austerity plans, but of those Portugal looks the weakest.  The thing to watch is whether in the next tranch of borrowing (which all of these countries must do), is whether there is enough confidence in the markets to allow it, and at what interest rate.  This bailout will raise confidence somewhat, but for the likes of Spain and Italy, few will be convinced that the Eurozone countries could afford to duplicate the Greek deal.  Their budget deficits will need to be dramatically slashed in the next two years to avoid risk of default.

However, watch blood to be spilt in forthcoming months over fiscal policy.   Central to Ireland's economic fundamentals has been a low corporate tax policy, which has encouraged many firms to locate there in preference to the UK and other Eurozone countries.  If the forthcoming "fiscal framework" does away with this, then Ireland will face a choice of abandoning this tax policy - in order to remain in the Eurozone, or doing away with the Euro.  Ireland's debts are due to it foolishly promising to provide 100% guarantees for bank deposits and then bailing out banks that lent into its overheated property sector.  It is NOT due to rampant domestic overspending.  

Further out, Belgium and France face big fiscal bubbles.  France's public debt as a proportion of GDP is 84%, Belgium's is around 100%.  Governments all over the world are having to face up to reality that they can't overspend forever.

However, for now attention will shift to the United States, where the most limp wristed efforts at addressing rampant overspending are now being presented as a "solution".   As the Cato Institute says, the so called "Gang of Six" plan is lousy.  A detailed assessment is here, and while it does see some tax reform, it also increases taxes by US$1 trillion, does nothing to address the looming Medicare/Medicaid overspending and "cuts" by reducing the rate of increased spending to below the rate of estimated economic growth and doesn't see a balanced budget in the foreseeable future.   Obama likes it, which speaks volumes.  Cato has a far more ambitious, but still quite cautious plan here, which would balance the budget by 2021, without any tax increases.   It reduces government spending from 24% to 18% of GDP, to match tax revenues which will be at that level.  Don't expect Republicans to spend much time supporting that, for they are almost as bad as Democrats in their addiction to fiscal child abuse.

And in real news today

The Greek government continues to try to borrow, yesterday its two year government bond rates were priced an at annual interest rate of just over 39%.

Great investment? No. It's the swansong before the funeral march.  Anyone lending the Greek government demanding such rates sees it as having a high risk of default.  A default that will reverberate loudest in Dublin, Lisbon, Madrid and Rome, but will buffet Brussels, Paris, Amsterdam, Vienna, Helsinki, Luxembourg, Nicosia, Valetta, Bratislava, Tallinn, Ljubljana and of course, Berlin directly.  However, the echos will go throughout Europe and be heard globally, for it will be the beginning of the end of the Euro as we know it. 

If journalism wasn't full of solipsistic onanists obsessed with News International, then there would be more than a smattering of well written articles hidden in papers about all of this. 

EU politicians are caught between two unpleasant facts:

1.  Politicians in the "south" of the EU have spent the past generation largely bribing voters with other people's money lent to them at preferential rates.  The other people have started giving up lending it, and the politicians haven't the courage or moral fibre to admit that the state largesse of recent years must end or that taxpayers will have to pay a lot more to get it.  The people in those countries are unwilling to accept either, and blame the lenders for the largesse, not the people they elected who borrowed it on their behalf.

2. Politicians in the "north" of the EU are concerned that if governments in the "south" default, it will be their lenders that lose out.  The banks, insurance companies, pension funds, private investors and businesses who saw lending to profligate socialist politicians in the south as being a "secure investment", risk losing billions.   However, voters and taxpayers in the "north" don't care.  They haven't elected politicians who have been quite so profligate in spending money that they had to borrow, and haven't had lifestyles and living standards substantively propped up by such blatant socialism as retirement ages in the 50.  They don't want to bail out the "south" nor do they care that investors in their countries will swallow the cost of it, as long as it doesn't affect their savings (it shouldn't) or their pensions (it might).

Politicians of the "south" have nothing left to offer, they are almost universally a disgrace, and their philosophy and attitude (and that of their predecessors) has produced a false golden age for their countries.

Politicians of the "north" want to bailout the governments of the south, to avoid bailing out the banks and investors who lent to them, but know that voters in their countries are not amused.   What they want is to control the spending and tax policies of the countries of the "south" in exchange for bailing them out - for otherwise, how can they be brought under control to behave better?

So Germany and France will seek to bring all Eurozone countries under central fiscal policy control, in other words, it wont be up to the Parliaments in Athens, Lisbon, Madrid, Rome, etc. as to levels of tax, or levels of spending, it will be up to either the one in Brussels/Strasbourg, or something new.   

Call it the Commonwealth of Eurozone States, or the United States of Europe, or the European Soviet Socialist Republics, or the Union of Eurozone States, but it will be a wholesale surrender of state sovereignty to a super-state.

Will the people of the countries of the "south" tolerate this?  They will be told they have no choice, it is either that or they are expelled from the Eurozone (which does not mean they cannot use Euros, but does mean they would have no role in formulating monetary policy). Ireland, in particular, will baulk at surrendering its highly competitive low company tax rate, which politicians in Paris and Vienna have been keen to attack, among others.

The bigger issue is not only will the countries of the "south" baulk at this, but also will others not in crisis.  Estonia, Slovakia and Slovenia may all wonder why they left the yoke of centrally planned economies to have joined a new ones.  Estonians and Slovaks will not want to have swapped control from Moscow (and for Slovenes, from Belgrade) for control from Brussels.  I suspect the Dutch too will be fed up.  France and Germany, and their virtual satellites Belgium and Austria, will happily go along with it as they will have the power in any central fiscal union.

Ultimately, it can only go one of three ways:

- A Eurozone bailout that creates a new fiscal union among Eurozone members, extracating sovereignty from national capitals to the EU and having to implement tax and spending policies in line with France and Germany;

- A Eurozone default, resulting in countries exiting the Eurozone, with dire consequences for their national banking systems, their creditors and needing to implement austerity policies on a grand scale because of the complete inability to borrow;

- Agreement to a massive austerity programme by the Greek government that cuts the budget deficit suddenly and dramatically, reducing the pressure on creditors.

All in all, the countries of the "south" face severe spending cuts and probable tax increases no matter how it goes.  

For countries outside the Eurozone, the biggest concern is managing the fallout from whatever happens, for it is likely to hurt.  As Allister Heath in City AM today says:

Osborne and his advisers ought to be working day and night on contingency plans in case the Eurozone collapses or the US defaults, not worrying about ex-tabloid journalists.

The British government should be ensuring it has no part in any bailout of the Eurozone, that it may be willing to re-accommodate Ireland seeking to abandon the Euro, in favour of the currency of its largest trading partner (if it so chooses) and to lead an effort to restructure and reform the European Union into a looser customs union, with a smaller central role, without grand vanity projects, without grandiose corporate welfare systems, without interference in national economic or social policies beyond basic rules on non-discrimination and freedom of trade and movement of citizens.  If some EU Member States want more control, let them have it, keep Britain out of it.  If the EU project is about to splinter, then let the UK lead efforts to recraft it into something worth salvaging, a basic treaty that keeps borders down and markets open, but does not demand that countries embark on grand unifying projects of statism.

In the meantime, can people simply remember that the Liberal Democrats, Tony Blair, the BBC and the Independent were all wrong on all of this?  (and yes, Gordon Brown was right, along with William Hague, Margaret Thatcher, Nigel Farage, the Daily Telegraph and the Daily Mail were right).