Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: IMF

Cheap Abundant Natural Gas is a Game Changer, Says the IMF

Expressing surprise at the enormous increase in US production of oil and natural gas by unconventional means, Thomas Helbling, a division chief in the IMF’s (International Monetary Fund) Research Department, was forced to admit that it was free enterprise that was responsible for it after all. In his March 2013 article he wrote:

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Newsweek’s last Print Issue is December 31st

The Wall Street Journal noted the end of an era with the final print edition of Newsweek magazine coming out on Monday, December 31st. It will transition to an online-only format with plans to charge subscribers for its content after the first of the year.

The end has been coming for some time. On October 18th, Tina Brown, Newsweek’s editor, announced the change on the same day that she

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What the US can learn from Latvia. Latvia?

What makes this report from the International Monetary Fund (IMF) so remarkable is its source. According to the IMF’s own website,

The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The reality is vastly different. The IMF is the agent, along with the World Bank, that drives impoverishment in those 188 countries. Here’s what Anthony Wile says about this tag-team:

The World Bank and the IMF work hand in hand. The World Bank loans money to corrupt governments that loot or squander the funds and then the IMF comes in and insists on an “austerity program” of higher taxes and lower government spending to ensure the loans are paid back.

When a country like Latvia successfully resists the temptation of easy money offered by the IMF and decides instead to the do right, proper and prudent thing, the IMF would be the last place one would find an article praising such a decision, and the natural flow of prosperity that results. Here’s the opening paragraph from the IMF:

Latvia’s economy continues to recover strongly. Following real GDP growth of 5.5 percent in 2011, growth is expected to exceed 5 percent again this year despite recession in the euro area. Labor market conditions are improving. The unemployment rate fell from 16.3 percent at the beginning of the year to 13.5 percent at the end of the third quarter, despite an increase in participation rates. Real wage growth remains restrained. Consumer price inflation has declined sharply, easing to 1.6 percent at end-October after peaking at 4¾ percent in mid-2011. Robust export growth is expected to keep the current account deficit at about 2 percent despite recovering import demand.

Reading between the lines, the IMF is saying that Latvia would be much worse off if they had followed the IMF’s lead in “solving” their financial problems. This is how Anders Aslund, writing for the Peterson Institute for International Economics, put it:

Remember that in 2008–09, Latvia lost 24 percent of its GDP. It was heading toward a budget deficit of 19 percent of GDP in 2009 without a program of radical austerity. But the Latvian government did undertake austerity, and the last two years’ success shows the merits of that policy…

The going does not get much better than this. Latvia will have the highest growth rate and one of the smallest budget deficits in Europe this year, probably 5.3 percent, along with low inflation and wonderful export expansion. The only shortcoming is the still high unemployment rate, but unemployment is a lagging indicator and it is falling sharply.

Here’s how they did it:

The government told people how bad the situation was, and the various social partners responded by signing up to a truly radical austerity program. One-third of the civil servants were laid off; half the state agencies were closed, which prompted deregulation; the average public wage was cut by 26 percent in one year…

Top officials were hit … with 35 percent in wage cuts … [and] public servants were no longer allowed to sit on state corporate boards and earn more than from their salaries, a malpractice that is still common in many European countries. The government exposed high-level corruption.

Is there a lesson here for us?

Senator Harkin Tries to Revive High-Frequency Trading Tax Bill

Senator Harkin Visits Downtown School

Senator Harkin Visits Downtown School (Photo credit: Phil Roeder)

More than a year ago Senator Tom Harkin (D-Iowa) introduced legislation to impose a tax on high-speed trading and it has languished in the Senate ever since. On Thursday he had a chance to breathe some life into the measure in an interview at MarketWatch.com during which he offered the same platitudes from a year ago.

High-frequency trading, he said, generates no benefit to the economy and therefore could be taxed with little negative impact. Such a tax could raise an estimated $350 billion over the next ten years, he added:

 I really don’t see any evidence that these high-speed traders add anything to the economy, but they do also create some aberrations in the market that have led to some disturbances.

On the one hand, my transaction tax doesn’t put them out of business but certainly they would have to pay 3 cents on every $100 in transactions they do. That’s really not very burdensome.

But also we need revenue. We have to get out of this deficit hole we’re in and this transaction tax is estimated to raise about $352 billion over ten years. That’s pretty substantial. And I don’t think it will do anything at all to hurt trading, what I call “real trading.”

This is a rehash of statements he made on his website back in November, 2009 when he, along with Representative Peter DeFazio (D-Ore.), introduced his bill. He explained then that it would be

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Bond Fund Manager Says Only Gold Will Survive the Coming Disaster

 

Bill Gross

Bill Gross (Photo credit: jdlasica)

In his October newsletter to clients of Pacific Investment Management Company (PIMCO), founder Bill Gross summarized the coming disaster that faces the country, and noted that “only gold and real assets would thrive…” Noting that America is considered the “cleanest dirty shirt” among the major economies, he says that the country’s debt-to-GDP ratio, its excellent credit ratings, and its currency being the world’s reserve currency appear to stand it in good stead:

We have world-class universities, a still relatively mobile labor force and apparently remain the beacon of technology — just witness the never-ending saga of Microsoft, Google and now Apple.

Obviously there are concerns, especially during election years, but are we still not sitting in the global economy’s catbird seat?

As far as America’s imminent demise is concerned, he comments:

Armageddon is not around the corner. I don’t believe in the imminent demise of the U.S. economy and its financial markets. But I’m afraid for them.

Gross manages the world’s largest bond fund along with CEO Mohamed El-Erian, with nearly $2 trillion of assets under management. His clients include individual retirees, pension plans, educational institutions, foundations, and endowments, each seeking safety of principal along with reasonable returns. Accordingly he must temper his words not to frighten away the very people he serves. But he’s courageous enough to tell the truth.

After reviewing reports from the International Monetary Fund (IMF), the Congressional Budget Office (CBO), and the Bank of International Settlements (BIS) on the state of the American economy, he says that the United States is no “clean dirty shirt” after all. It is, instead, 

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Ron Paul Has the Final Say

WASHINGTON, DC - FEBRUARY 29:  Republican pres...

In his last public opportunity to quiz Federal Reserve Chairman Ben Bernanke, who appeared before the House Financial Services Committee on July 18, Texas Congressman and Republican presidential candidate Ron Paul took the time to put things into perspective:

For the past few years the Federal Reserve System has received criticism from all sides of the political spectrum, and rightly so, for its unprecedented intervention into the economy and its bailouts of large Wall Street banks and foreign central banks.

This has been Paul’s theme ever since he entered Congress following a special election in April 1976. In a position paper that his staff prepared in June of 1976, Paul attacked a pending bill in Congress to fund the International Monetary Fund following the breakdown of the Bretton Woods agreement when President Nixon took the dollar off the gold standard in 1971.

The staffer primarily responsible for that paper, Gary North, remembers starting work on Friday, June 11, 1976, and being given the task of preparing the paper in time for the Monday deadline. He worked all weekend on it, and when it was published, it made such an impression on Senator William Proxmire, then chairman of the Senate Banking Committee, that he invited Paul to testify before his committee. Says North: “At the time, I had never heard of a House member testifying to a Senate Committee. I have never heard of it since.”

But that testimony launched a three-decades-long campaign by that lone congressman to question the existing monetary system, especially the centerpiece of that system, the Federal Reserve.

In his July 18 testimony, Paul recalled his primary problem with the IMF—the same problem he has with the Fed—is that it is a central bank that was deliberately designed to

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Latest ADP Jobs Report Confirms Slowing Economy

Christine Lagarde

On Thursday, accounting firm ADP issued its National Employment Report noting that jobs in the non-farm private business sector increased by 176,000 in June. ADP’s CEO, Carlos Rodriguez, said, “It is encouraging to see companies creating jobs, particularly in the goods-producing sector where we see positive growth following two months of job loss.” Reuters jumped on the alleged positive news, calling it a “hopeful sign.”

Unfortunately, one month does not make a trend. When June’s numbers are compared to January’s, ADP’s total nonfarm private jobs growth has increased from 110 million to 110.9 million, a gain of 77-100ths of one percent, or about 142,000 new jobs each month. A closer look reveals that most of those jobs were in the highly volatile service sector, in small businesses, usually fast-food or similar businesses, known for their high turnover. In fact, the goods-producing sector gained just one half of one percent employment since January, translating into less than 16,000 job gains each month. These numbers are hardly a “hopeful sign,” but more reflective of an economy that has flat-lined.

Another report from the Department of Labor showed that new claims for unemployment insurance dropped by 14,000 last week to 374,000, the lowest level in six weeks. But that was offset by an upward revision from

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Bailout of Spain Just a “Credit Line,” Says New Prime Minister

Mariano Rajoy

Following another last-minute late-weekend meeting of European Finance Ministers, Spain’s new Prime Minister Mariano Rajoy happily announced that not only was his country going to get more bailout funds than it needs, it’s coming without any strings attached. This is because, according to Rajoy, the new measures instituted since the victory of his People’s Party last November have been so effective in bringing common sense and prudent behavior back to the country’s financial markets. Those “radical” fiscal, labor-market, and financial-sector reforms that were instituted were the key, he said, adding,

If we hadn’t done this in these past five months, what was put forward [on Sunday] would have been a bailout of the Kingdom of Spain. Because we had been doing our homework for five months, what did happen…what was agreed, was the opening of a line of credit for our financial system.

There is no conditionality of any kind.

According to a report by the International Monetary Fund (IMF), Spain needed at least $50 billion to rescue and recapitalize its banks. But the Finance Ministers decided to up the ante significantly, to $125 billion, just to be safe. Said Olli Rehn, the European Union’s top economist, “This is a very clear signal to the markets, to the public, that the Eurozone is ready to take determined action.” He added, “We deliberately wanted to ensure there is some additional safety margin…. This is preemptive action.”

What Rajoy failed to mention is that there are most certainly strings attached, and when

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Iceland Says “No” to Bank Bailouts, Enjoys Economic Growth

THE GRAND KREMLIN PALACE, MOSCOW. President Pu...

To look at the streets of Reykjavik, Iceland, an alien would be hard-pressed to see any aftereffects of the banking crisis that nearly bankrupted the country in 2008. The capitol of the 40,000-square-mile island just below the Arctic Circle between Greenland and the United Kingdom is the country’s largest city where nearly two-thirds of the island’s 320,000 inhabitants reside. Unemployment is down, economic growth is positive, and its streets are calm.

But it was the center of the financial crisis precipitated in 2008 when one of its three largest banks had a big loan payment coming due and couldn’t come up with enough krona to make it.

As Iceland’s President, Olafur Ragnar Grimsson, said in an interview with Business Insider International:

If a collapse in the financial sector can bring one of the most stable and secure democracies and political structures to [its] knees as happened [here] in Iceland, then what could it do in [other] countries?

When Iceland’s legislature decided to take over the country’s three largest banks—Glitner, Landsbanki, and Kaupthing—it was discovered that, despite all four credit rating agencies giving them A or better credit ratings, the banks owed an amount that approached six times Iceland’s gross domestic product (GDP). Grimsson, who has been President of this parliamentary republic since 1996, had a decision to make: pump government (taxpayer) funds into them to keep them afloat, or

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Jim Yong Kim: Obama’s Surprise Nominee to World Bank

a photo of Dr. Jim Yong Kim

Friday’s announcement by President Obama that his nominee for president of the World Bank would be Dartmouth College’s President Jim Yong Kim was a surprise, for a number of reasons.

First, Kim has little experience in or obvious connections with the usual coterie of bankers, insiders and political cronies that have served at the World Bank in the past. His expertise instead is in running Partners In Health (PIH), a highly regarded and effective enterprise in providing medical care to the poor around the world, including treatment for AIDS and tuberculosis.

Second, he has a successful track record in fundraising for PIH and for Dartmouth. Third, he is bright, unassuming and winsome. Finally, he solves a number of problems faced by the president in making his selection.

Kim was one of 12 names offered to the President including his Secretary of State Hillary Clinton, who expressed her interest in the position immediately after Robert Zoellick announced he would retire from the position in June. Also on the list were well-known politicos with lots of baggage, including Senator John Kerry, current UN ambassador Susan Rice, and Lawrence Summers, former head of the President’s National Economic Council. And Jeffrey Sachs, director of Columbia University’s Earth Institute, was also lobbying for the position.

The President also faced growing resistance from other World Bank members over the rule that only an American could head up the bank, established in 1944 at Bretton Woods.

And so Kim appeared to be clean and pure. The reality is different. Born in South Korea, he moved with his family to Iowa when he was five and rapidly began impressing with his intelligence and energy. Kim served as director of the UN’s World Health Organization, dedicating himself, according to his bio, “to

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New Book, White House Burning, Reprises Old Keynesian Canards

U.S. Total Deficits vs. National Debt Increase...

On April 3 the book White House Burning, authored by two hard-core Keynesian economists and internationalists, will be released, and the noisy propaganda surrounding its publication has already begun in earnest.

According to the book store Barnes and Noble, which is discounting the $26.95 hardcover book to $17.96, though the national debt amounts to $30,000 for every individual in the country, the solution is easy: Stop treating debt as a moral issue and raise taxes. Says B and N, the authors “account for the debasement of our political system in the 1980’s and 1990’s (read: Reaganomics and the Laffer Curve), which produced today’s dysfunctional and impotent Congress.” But if something isn’t done soon,

The national debt will harm ordinary Americans by reducing the number of jobs, lowering living standards, increasing inequality, and forcing a sudden and drastic reduction in the government services we now take for granted….

They debunk the myth that such crucial programs as Social Security and Medicare must be slashed to the bone. White House Burning looks squarely at the burgeoning national debt and proposes to defuse the threat to our well-being without forcing struggling middle-class families and the elderly into poverty.

The authors, Simon Johnson (formerly the chief economist for the International Monetary Fund and now a professor at MIT) and James Kwak (associate law professor at the University of Connecticut and a fellow at Harvard Law), have based their book on a set of statist foundational principles about the role of government in a free society: More is better.

They explained in their introduction that when Alexander Hamilton, as Treasury Secretary, urged Congress to declare war on Great Britain in 1812, he put the responsibility for paying for it onto a reluctant Congress. Congress refused to raise taxes and the Treasury had to go begging to a private individual, Philadelphia banker Stephen Girard, to loan the money to pay for the war. This set the stage for the end of Hamilton’s Federalists (according to the authors) and the rise of Jefferson and Madison’s Democratic-Republican party. The authors then drew the parallels to today’s “dysfunctional” government, which is engaged in the same discussion: how to pay for

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Group of 20 Balks, Stalls and Dithers

Español: Foto de familia de líderes del G20 en...

The Group of 20 meeting in Mexico City over the weekend decided that the best course of action was inaction, putting off making any decisions on how to “rescue” the European Union from its financial and economic difficulties until next month at the earliest. The statement justifying kicking the can down the road for another month or so was breathtaking in its obfuscation: putting off any decisions, it said, “will provide an essential input in our ongoing consideration to mobilize resources…” This is how finance ministers and world economic experts explain that, after two days of meetings, the best thing to do was nothing at all.

There were great expectations before the meeting ended that something of substance would come out of it. The plan was not only to pave the way for the second bailout of Greece but for each of the G-20 members (including the U.S. and most of the other industrialized nations on the planet) to pony up additional taxpayer funds to the International Monetary Fund (IMF) which would then be used, at its discretion, to bail out over-indebted countries like Greece, Portugal, Spain, and others as they need them. Expectations were that commitments totaling $1 trillion would be made before the end of the meeting on Sunday.

Plans went awry when Germany’s Chancellor Angela Merkel, responding to pressure from more sensible voices, said Germany would be unable to participate in any further assistance. This reluctance no doubt stems from the fact that the German parliament, the Bundestag, still hasn’t

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The Greek Deal Saves the Banks

Map of Greece with EU flag

Following a 13-hour marathon session on Monday, eurozone ministers announced an agreement to loan Greece another $170 billion, which saves the banks while punishing private investors and damaging Greek national sovereignty.

The bailout brings the total spent or committed to save the eurozone countries of Greece, Ireland, and Portugal to $500 billion with little assurance that more won’t be needed very soon. Details of the agreement require that 90 percent of private bondholders agree to take a 53-percent haircut on their investments by exchanging old bonds for new. It requires acquiescence by Austria, Finland, Germany, the Netherlands, and Slovenia to allow the European Central Bank and the International Monetary Fund to part with the funds. And it forces Greece to accept permanent and rigid enforcement of debt service payments by outsiders monitoring government revenues and expenditures and forcing debt service payments to be made ahead of any other government commitments.

The parties who come out whole on the deal are, naturally, the European Central Bank and other banks that hold Greek debt. Their holdings will be paid off at par.

Observers with chips in the game were decidedly guarded in their enthusiasm. Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt, said, “Greece will find it difficult to shoulder even the

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Plans Revealed for Greek Default on March 23

March 25 - Greece Independence Day

Writer Bruno Waterfield’s claim that Germany has drawn up plans to deal with the inevitable Greek default was published in the British newspaper The Telegraph a little after 8 p.m. Saturday night. Within hours his claim was confirmed separately by blogger John Ward with times, dates, and consequences all spelled out by those drawing up the plans.

German Finance Minister Wolfgang Schauble has increasingly voiced his opinion that the economic implosion taking place in Greece would result in its bankruptcy despite official protestations to the contrary from German Chancellor Angela Merkel. One official close to Schauble said, “He just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he…[is] convinced it will not pull Greece out of the hole.”

Schauble’s opinion gained increasing credence by a report issued last week by the European Commission, the European Central Bank, and the International Monetary Fund (EC, ECB, and IMF—the “troika”). According to their report, even if Greece were successful in accomplishing all that it has promised in order to secure the next round of financing, it will still fall far short of bringing down its debt load to manageable levels. Waterfield went on to say that Schauble, behind the scenes, is pushing Greece to declare itself bankrupt and demand a 70 percent “haircut” from the banks holding the bulk of its debt.

The timetable is pushing events inexorably forward: Greece must receive the next round of financing in order to pay debt service of $20 billion on March 20. Without it the debt will default and government checks will start bouncing. But it will take at least four weeks to get a formal agreement on

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Eurozone Recession Accelerates; Moody’s Piles On

Board of Governors - International Monetary Fu...

Economists polled by Reuters predicted that the recession in Europe that began late last year would continue into the new year and they weren’t disappointed. Reuters announced that economic output in the 17-member eurozone declined by 0.3 percent in the last quarter of 2011, the sharpest since the second quarter of 2009 at the start of the recession. Those same economists are now predicting that European GDP growth will stay negative at least for the rest of the year with only modest chances of improvement in 2013.

The International Monetary Fund (IMF) has the same negative expectations, predicting at least a 0.5-percent contraction of the eurozone countries next year. Even Germany, long the anchor to windward and the engine of growth for the European community, went negative in the last quarter compared to its modest growth rate of 0.6 percent in the third quarter.

Investment banking firm ING admitted that the decline caught their forecasters by surprise. Carsten Brzeski said the economic contraction “turned out to be weaker than expected.”

The Netherlands declined into recession (defined as two quarters of declines in GDP, or “negative growth” in economic parlance) with its third quarter contraction of 0.4 percent followed by another 0.7 percent decline in the fourth. Italy’s economy dropped by 0.7 percent in the last quarter with little improvement expected for at least a year. This puts Italy into the same recessionary camp as Belgium, Portugal, and Greece.

Portugal may be looking for another bailout as its economy suffered at 1.3 percent decline in the fourth quarter, more than double the 0.6 percent decline from the third quarter.

But Greece is the basket-case poster child for economic performance, with a stunning

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World Economic Forum in Switzerland: Global Elites Celebrating Hypocrisy

Davos, Switzelrand, Klaus Schwab, Founder and ...

Global elites—many of the 2,500 of them billionaires—are spending a few days in Davos, Switzerland, attending the World Economic Forum (WEF), a group founded in 1971 “committed to improving the state of the world.”

The state of the world doesn’t appear too rosy. The recent downgrades of major economies, the clamor over perceived income inequality, the crisis in the Eurozone, and other concerns are weighing heavily on the participants. Vikas Oberoi, chairman of India’s second-largest real estate developer, observed, “Many who will be in Davos are the people being blamed for economic inequalities. I hope it’s not just about glamour and people having a big party.” Azim Premji, chairman of India’s third-largest software company, was equally somber: “We have seen in 2011 what ignoring this aspect can result in. If we don’t take cognizance of it and try to solve this problem, it can create a chaotic upheaval globally.”

Not just the movers and shakers were expressing concern, either. Mainstream economists were of one mind about the world economy, agreeing with the downbeat report from the International Monetary Fund on January 24 which reduced its economic growth outlook for 2012 significantly, predicting at least a “mild recession” in Europe and the rest of the world to slow further from its current tepid pace.

Carmen Reinhart of the Peterson Institute for International Economics agreed that there will be a “serious economic crunch [with] another sub-par year of stubbornly high unemployment, weak growth and delayed recovery in general in all the advanced economies.” Professor Joseph Stiglitz of Columbia University, also on the roster of attendees, said that the IMF might be underestimating the projected difficulties and that the crisis will be “all the worse because of the weakness of appropriate government response.”

Manpower CEO Jeff Joerres admitted, “Twelve months ago we were all looking forward to a pretty good 2011. Twelve months later, here we are in a completely different world.” That was the tone set by the founder of the WEF, Klaus Schwab, in his opening remarks. The problem is that capitalism, according to Schwab, is failing and that

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Keynesian Economists Finally Catch Up and Agree: China to Have Hard Landing

Paul Krugman, Laureate of the Sveriges Riksban...

Mainstream economist Robert Samuelson admitted last week that the case for the ending of the economic boom in China has some substance. Keynesian economist Paul Krugman also confirmed that China is in trouble and questioned its ability to avoid a hard landing.

Samuelson raised rhetorical questions about China’s economic future, all with the same answer: “Could the world’s economic juggernaut, having grown an average of 10 percent annually for three decades, face a slowdown…or a recession?” Yes, it could. “Does it have a real estate ‘bubble’ about to ‘pop?’ ” Yes, it does. Could that have “global consequences?” Yes, it will.

Noting that Nomura Securities is predicting a one-in-three possibility of a hard landing—defined as a drop in China’s GDP to five percent or less—Samuelson said that such a sharp slowdown “would raise unemployment and social discontent” with consequences similar to the start of the Great Recession between 2007 and 2009 in the United States. Samuelson admitted that the Chinese government has created

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Could Hungary Break the Back of the EU?

Pál Schmitt: "We should unite not fight i...

The European Commission on Tuesday threatened to take legal action against Hungary unless it revised its brand new constitution to allow the country’s central bank to operate without interference from the Hungarian government. The EC’s threat requires a response within 30 days.

Hungary’s new constitution was a long time coming. Following the collapse of the Soviet Union in 1989, Hungary’s constitution was amended numerous times, allowing more and more freedom for a free market economy to grow and making other provisions that limited government power. In 2010 the process of developing a new constitution began in earnest which included questionnaires mailed out to all Hungarians for their input and opinion. Nearly one million questionnaires were returned and provisions in the new constitution were either added or deleted based largely on that input. In April the Hungarian parliament approved it overwhelmingly and it was signed into law by President Pál Schmitt, to take effect on January 1, 2012.

Noteworthy are the limits on spending until the public debt drops below 50 percent of the country’s gross domestic product (it is now about 80 percent) as well as the president’s power to dissolve parliament if acceptable budgets aren’t approved. The life of a fetus is protected from the moment of conception while marriage is defined as being between one man and one woman. It reduces mandatory retirement for judges from the current age of 70 to 62, and limits the powers of the head of the country’s central bank. In addition, its preamble contains references to

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Latest Numbers from Germany Confirm Recession

English: Night view of the euro monument (euro...

The announcement from the German Economy Ministry over the weekend confirmed that the long-awaited European recession has officially begun: German factory orders dropped to the lowest level in three years, down nearly five percent in the past month. The ministry also revealed that orders from outside the EU dropped by 10.3 percent.

Said Jennifer McKeown, an economist at Capital Economics Ltd. in London, “It’s quite clear that we’re heading into a pretty sharp downturn in Germany, which has been one of the strongest of the eurozone’s economies. Orders are very clearly on a downward trend, as is industrial production itself.”

The German economy is the fourth largest in the world, generating nearly $3.5 trillion in goods and services annually. Most of its trade is inside the eurozone, resulting in its position as the second-largest exporter in the world. Despite its strong economy relative to its neighbors, its debt-to-GDP ratio is 142 percent, and it is running an annual deficit of almost nine percent of GDP. It nevertheless retains its AAA rating from the three major credit rating agencies, which is strong enough compared to its eurozone partners to have caused a strange anomaly in the markets: yields on its six-month bonds have gone negative.

Translation: Banks are so nervous that they would rather

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Government Dependency Reaches Pandemic Levels

English: Scanned image of author's US Social S...

Conservative economist Robert Higgs‘ warnings about the Heritage Foundation’s Index of Dependence on Government were already outdated when they were published on Thursday. The updated statistics from Heritage for 2011, published the next day, showed the situation in the United States to be even worse than Higgs warned.

Higgs noted that the so-called “ruling class” (taken from Angelo Codevilla’s book of the same name) is a tiny percentage of the total population in the country, and has in the past only been able to maintain its legitimacy through vote-buying and mainstream media credibility. The fear of the ruling class has always been that dissatisfaction and distrust would result in their expulsion from the seats of power. But Higgs notes that now there are so many Americans dependent upon the government for their very subsistence that resistance to the tyranny of the ruling class is being increasingly neutralized.

The more dependent the citizens become on their government, the less influence they are likely to have in any substantial downsizing of that government: 

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann