Industrial Policy

There is a deplorable tendency for industrial policy and assistnce to favour the status quo rather than to encourage the new and original.  The result is that governemt industrail plolicy has a built in tendency to respond to the powerful lobbiers and interests in place rather than assist the as yet weak and struggling newcomers and original innovators who are inevitably unpopular and/or constitute a threat to those already dominating the markets with their (perhaps dated or inappropriate) products and viewis.

The irony is that those who might best benifit a dynamic and developing society probably have little time to induldge in complicated, bureaucratic, proceedures, lobbying, and form filling to obtain the few crumbs remaining after the table has been  pillaged by long established business, labour, regional, and sectorial lobbies.

Consequently, an intelligent government abstains from enthusiatically implementing industrial policies as they inevitably reflect the present distribution of economic and political power steming from the application of yesterday's and today's technologies and industrail practices rather than those that disrupt the present interests and tha the future needs to adopt.  Government industrial policies, freed from the reality of market forces, tend to react to the views of established ieconomic, political, and ndustrial actors. In so doing they continue to perpetuate the misapplicatin of economic resources to outmoded but powierful lobbies and influential producers of products and services.  The innovator and the creator of new products and services generally has little influence and say in their elaboration and implementation.  And, too often governments favor large burecratic suppliers in their procurement and payment practices.

Governments , at best can try to remove obstacles and unnecessary hurdles to innovation and the introduction of new prducts and services. Government industrial policies must permit declining industriest to decline gracefully rather than desperately attempt to surpport their continued activity.  A declining industry can usefully permit resources to be liberated and applied to more efficient and productive economic activity, perhaps in another region. Unfortunately, all too often govenment induatrial policies respond to political pressures rather than the underlying economic facts that have ultiately to be faced if progress is to be made.  Fighting the inevitable is too often the halmark of government industrial actions, it is seldom that of enlightened leader and innovator.

Obscene US Double Taxation

Much taxation is a disquised form of theft. US double taxation of its 'citizens is a particularly obscene example.


Link:
http://online.wsj.com/article/SB10001424052748704002104575290451594973266.html#articleTabs%3Darticle

USA Surporting Israeli Investigation fo Gaza flotilla Incident

In view of the volume of misinformation disseminated by Israel's spokesmen and women, an investigation by Israel, by definition, will lack the objectivity and credibility required to placate those offended by Israel's failure to abide by the norms of civilized or rational behavior.  Therefore, any attempt by the USA to suggest or imply that such an investigation could be fruitful risks appearing at best stupidly naive, at worst two-faced.

Read more: http://www.time.com/time/nation/article/0,8599,1994131,00.html?xid=newsletter-daily#ixzz0puSVnstM


http://www.time.com/time/nation/article/0,8599,1994131,00.html?xid=newsletter-daily

Euro Viability and the Quality of Decision-Making

Many of the present difficulties experienced by the euro are the direct result of the European Central Bank's reprehensible attempt to assume responsibility for proping up junk Greek and PIIGS bonds. Until clear-cut, debt restructuring is undertaken, allowing foolish lenders seeking high interest returns, and profligate spenders to suffer the consequences of their own irresponsibility, we can expect the crisis to continue to spiral out of contrlol. Eurozone financial 'leaders ' have raised the stakes unncecessarily high,, in effect betting the viability and solvency of European financial institutions on the behavior and perfomance of economies and governments with a poor track record. All tihs in the absence of adquate contrls, regualtion and penalties for thsoe who transgress the rules.

Unfortunately, European 'leaders' have led by example, and their track record since the founding of the Eurozpne has been deplorable, including the behavior of Germany and France. Is there any wonder that financial markets and lenders have little confidence that Euopean policicians mean what they so piously say. Would you trust a persistent liar, or someone who makes pious promises in writing only to break them the moment such promises prove inconveient? Can you trust an ECB that has obviously acted to protect foolish over-extended bank lenders, including French and German banks that have made doubtful loans to Greece and the PIIGS, rather than protect the long-term stability and value of the euro and the long-term integrety of the Eurozone 's political and financila institutions?

The problem is not the performance of European economies, the problem is the performance of Euroean decision-makers, (even when they don't obfusticate, and avoid decisions). Expect the Euro to survive, despite European 'leaders ... and expect the relative value of the US dollar to ultimately reflect the poorer fundamentals of the US economy the moment the Eurozone appears to be getting its act together.


Link:
http://online.wsj.com/community/groups/market-view-845/topics/do-you-expect-euro-further?mod=djemcomnewtopicingroup&mg=com-wsj

Euro Viability and the Quality of Decision-Making

Many of the present difficulties experienced by the euro are the direct result of the European Central Bank's irressponsible attempt to assume responsibility for proping up junk Greed gonds and PIIGS bonds. Until clear-cut, debt restructuring is undertaken, allowing foolish lenders seeking high interest returns, and profligate spenders to suffer the consequences of their own irresponsibility, we can expect the crisis to continue to spiral out of contrlol. Eurozone financial 'leaders ' have raised the stakes unncecessarily high,, in effect betting the viability and solvency of European financial institutions on the behavior and perfomance of economies and governments with a poor track record. All tihs in the absence of adquate contrls, regualtion and penalties for thsoe who transgress the rules.

Unfortunately, European 'leaders' have led by example, and their track record since the founding of the Eurozpne has been deplorable, including the behavior of Germany and France. Is there any wonder that financial markets and lenders have little confidence that Euopean policicians mean what they so piously say. Would you trust a persistent liar, or someone who makes pious promises in writing only to break them the moment such promises prove inconveient? Can you trust an ECB that has obviously acted to protect foolish over-extended bank lenders, including French and German banks that have made doubtful loans to Greece and the PIIGS, rather than protect the long-term stability and value of the euro and the long-term integrety of the Eurozone 's political and financila institutions?

The problem is not the performance of European economies, the problem is the performance of Euroean decision-makers, (even when they don't obfusticate, and avoid decisions). Expect the Euro to survive, despite European 'leaders ... and expect the relative value of the US dollar to ultimately reflect the poorer fundamentals of the US economy the moment the Eurozone appears to be getting its act together.


Link:
http://online.wsj.com/community/groups/market-view-845/topics/do-you-expect-euro-further?mod=djemcomnewtopicingroup&mg=com-wsj

Greek Crisis and the Eurozone

There is the need to distinguish between restructuring Greek debt and the viability of the Eurozone. Unfortunately the financial markets and European political 'leaders' have continued to obfusticate and confuse this distiction.

Let there be no ambiguity: Properly organised the Euroone can permit Greece to go basnkrupt or restructure its loans without placing at risk the Eurozone or European poitical and financial institutions.  There would be inconvenience and some foolish lenders who sought high risk premiums on their investments in Greek bonds would have to take a hair cut.  But the bankruptcy of a small government that, like any Ponzi scheme fraudster lied, deliberately used debts to spend more than its means, and represents only three percent of the Eurozone GNP hardly represents an overwhelming disaster.  Indeed a Greek default would most probably in the long run strengthen the Euro and its Institutions, and teach foolish bankers and lenders, profligate Greeks and PIIGS, and irresponsible politicial 'leaders' lessons they need to learn.

The greatest mistake would be to risk all by extending open-ended support to those who manifestly are unable, or unwilling, to abide by rules and keep their spending inder control.

Link:
http://www.europeanvoice.com/article/2010/05/are-the-barbarians-at-the-eu's-gates-/68044.aspx

Trichet Disembles, ECB Errors of Judgement Provoke Euro Crisis

Either Mr Jean-Claude Trichet is more stupid than I am prepared to admit or he is deliberately avoiding discussion of the most important consequence of the ECB and its Governing Council decision to buy junk bonds issued by profligate and irresponsible Eurozone governments.

Mr Trichet continually attempts to distract the uninformed observer by insisting that the ECB has taken steps to neutralise the increased liquidity and inflationalry pressures created by such short-sighted purchases. Evidently, such a maneuver is technically interesting but it hardly addresses a significant or urgent problem. The current level of ECB's purchases of Greek junk bonds is not going to provoke immediate or significant inflation in the Eurozone.

The significant and most important effect of the ECB decison to purchase junk bonds issued by the PIIGS must, however, be addressed. Symbolically and in fact, the ECB's actions and new policy gave official encouragement and support to profligate and irresponsible deficit expenditures by the PIIGS. Expeditures over which the ECB had no effective means of control. Not only that, the ECB decision converted the Greek deficit problem, into a Eurozone crisis, by deliberately and unnecessarily placing the credibility of Eurozone institutions at risk. The ECB action also raised the suspicion of a gratuitous bail out for foolish German and French banks that lent rather too generously to the Greek government.

Little wonder that the financial markets reacted badly and magnified the Greek difficulties, and a possible restructuring of Greek debt, into a crisis threatening the stability of the whole Eurozone. Reasonably, markets started to seriously question the judgement, the rationality, and decision-making abilities of European 'leaders', and inevitably lost confidence in the euro and European financial institutions.

Ironically, the underlying economic realities should be supporting an appreciation of the euro in comparision with the dollar. The ECB and Euopean leaders are playing with fire when they lurch from indecision to panic regulation and largess. The secondary and unforeseen consequences of ECB and Council actions require steadier hands, more patience, and greater wisdom.

Most of all, Europe requires appropriate institutions, procedures, and effective penalties for financial irresponsibility. Their absence is the direct result of the deliberate decisions made by those who too often protected their own narrow interests despite styling themselves 'European leaders'.

Links:

http://www.economist.com/business-finance/displaystory.cfm?story_id=16167998

http://www.economist.com/node/16167998/comments#comment-552806