Author Archives: Lila

China ‘Ware: Border Insecurity in the Far East

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“Nehru’s India was naïve to approach the Mao-Zhou Communists with the attitude of ahimsa and a common Buddhism. But Mao-Zhou Communism is dead, and the Deng capitalist road itself has lost its ethical way. What India and the world need to do now is ask China or help guide China to find her true higher self. China’s Tibet problem and hence border-dispute with India would have been solved peacefully by application of the ways of great men like Confucius, Mencius and Mo Tzu, who are and will remain remembered by mankind long after petty cruel modern dictators like Mao, Zhou and Deng have been long forgotten. Why China’s Communist bosses despise Taiwan may be because Taiwan has sought to preserve that memory of China’s true higher self.”

More at Dr. Subroto Roy’s excellent libertarian blog,

Independent Indian.

Leverett and Mann: The Iran War They’ve Been Planning For Years

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“From inside the White House, Leverett was hearing a scary scenario: The Russians were scheduled to ship fuel rods to the Iranian nuclear reactor in Bushehr, which meant the reactor would become operational by this November, at which point it would be impossible to bomb — the fallout alone would turn the city into an urban Chernobyl. The White House was seriously considering a preemptive attack when the Russians cooled things down by saying Iran hadn’t paid its bills, so they would hold back the Bushehr fuel rods for a while.

That put things into a summer lull. But by August, tensions were rising again. U.S. troops in Baghdad arrested an official delegation of Iranian energy experts, leading them out of a hotel in blindfolds and handcuffs. Then Iran said that it had paid its bills and that the Russians were ready to deliver the Bushehr shipment. In Time magazine, former CIA officer and author Robert Baer quoted a highly placed White House official:

“IEDs are a casus belli for this administration. There will be an attack on Iran.”

Mann steps back out on the deck and starts collecting the scattered toys to prepare the house for a dinner party, the typical modern American mother multitasking her way through a busy day. “The reason I have to be so careful now is that I’m legally on notice and they will prosecute things that I say or do,” she says, picking up a plastic truck.

“Because of that one article?”

“Yeah.”

Outside, it’s getting warmer. There’s a heavy haze and floating bugs and for a moment it feels a bit ominous, a gathering silence, one of those moments when giant pods start to sprout in local basements.

“We’re tired,” Mann says. “Nobody listens.”

It seems inconceivable to her that once again a war could be coming, and once again no one is listening. Another pair of lawn mowers joins the chorus and the spell breaks. A cab pulls in the driveway. The caterer comes to prepare for the dinner guests.”

More at Esquire.

Comment:

Of course, we’ve always known that some hawks have wanted to take control of the Middle East and make a broad sided attack on the Muslim world as such.

It’s been in the works since the 1970s when British intelligence wanted the US and UK to go in and grab the Saudi oil fields. And since the 1950s, when, post WW II, realists like George Kennan famously recognized the need for western governments to stop wearing the mask of nice guy and secure their hold over world resources before the rest of the world demanded more for itself.

But it’s nice to have this insider view of the story…..

Random Rajiva: Is Just War theory Christian?

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On the face of it, this is an absurd question, since just war theory has a healthy Catholic tradition behind it. Obviously, the questioner is a natural Protestant.

“Even so-called “Christian just-war theory” has nothing to do with Christ. How can armed resistance to tyranny be reconciled with His unambiguous commandment to live as the Lamb of God, even in a world of wolves?

I ask this not in judgement but as someone who struggles with this question myself.

If I’m being honest, I think Christ is right. We can not defeat violence (the essence of the state) by employing the same. Case in point: The fruits of the American Revolution have already rotted into a tyranny far worse than the one that was ostensibly overthrown in armed revolt just over 230 years ago.

What to do, then? The great libertarian Frank Chodorov advocated, first, self-improvement, then education of those already predisposed toward freedom (he believed individualists were born that way, as were socialists.) I think he was correct. And this approach is consistent with the teachings of Christ.

Yours truly,
Robert Brazil

More at Will Grigg’s Pro Libertate.

While I agree with Mr. Grigg – in his response – that taking one part of the Bible (and of the words of Christ) out of context and elevating it over the rest of the material is incorrect, I think his own answer – that the only possible appeal against the power of the state is to the power of God (as evidenced in the Church) — strikes me as inherently problematic.

God as Church will only end up substituting the tyranny of a Pope or priesthood for the current one of the state.

Is this an impasse? I think not, if we dwell a bit more on what it is we mean by that ambiguous signifier, God.

God must surely operate through reason, since he is by definition (supposing one could define such a concept) the reasonableness of reason. Just as he is the lovingness of love, and the essence of every other superlative.

And surely he or she must be the sort of God that is envisioned by the most powerful reasons that have existed, since they would most likely approach his reasonableness the closest.

Check out the beliefs of those possessing the most powerful reasons that have existed (in so far as what they thought is available to us), and we find that they vary. In the past, religious orthodoxy probably prevailed. Then, some form of religious heterodoxy or deism. Often, especially today, and in certain periods of history, atheism or agnosticism.

Can all these viewpoints be right? No – say militant atheists, who use this to “prove” that religion is nonsense.

I say yes, relying on the hoary tale of the nine blind men and the elephant. Each thought he saw the whole creature in the leg, trunk, or tusk. But in fact, they were all wrong in the global sense, and all right in another, more limited, local sense.

All major forms of belief and disbelief (note that I did not say the irrational crazes of deranged minds, which have not had lasting adherents) must therefore have an element of truth in them, but in a limited way.

It follows that whatever laws the state prescribes must be the ones calculated to leave the utmost freedom for the individual that is compatible with upholding the practices that don’t violate the reasonableness of the most reasonable of its citizens.

I would think that that reasonableness is a good enough barrier against state encroachment as long as men remain organized in relatively small, transparent groups. But bigger groups (unless acted upon indirectly through small groups) tend to need more direct and overt coercion to change. Thus, propaganda, war and all the other evils of the state system…

Where does that leave Just War?

(Here, I am not talking about defense of your native country against aggressing invaders — although it’s always possible to stretch what any of those terms mean by the way we define them)

Just War, I think, is still possible for smaller groups and in limited situations that are close enough for us to fully understand. In our current state system where our interests lie everywhere and are interlocked with allies and enemies, where our weapons fall on the innocent and the guilty, not just in this generation but in generations to come, where common practices of chivalrous war have long been lost — in this sort of global imperial system I don’t think that even a just war can be undertaken easily.

So while possible in theory, in practice, I think even a just war is self-destructive. And unnecessary. We now have enough scientific knowledge at our disposal to begin to cast the wisdom traditions (I mean the esoteric teaching of the major religions) into new and effective practices that can dismantle the state system, so that we could end all large-scale wars, at least….if we only chose to.
It is up to us.

Just my random thoughts.

Romancing the Bomb: Hanky Panky and Kooky Nukey in India…

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“Paulson is visiting India from Oct. 27 to 31, with stops in Calcutta, Mumbai and New Delhi. He has said he will encourage India to step up economic reforms and search for a solution to long-stalled global trade talks.

The deal would reverse three decades of American anti-proliferation policy by allowing the U.S. to send nuclear fuel and technology to India, which has been cut off from the global atomic trade by its refusal to sign nonproliferation treaties and its testing of nuclear weapons.

The Indian government has not taken the next steps in closing the deal — negotiating separate agreements with the International Atomic Energy Agency and Nuclear Suppliers Group, a group of nations that export nuclear material.

The deal faces opposition in America, too. Critics there, including some in Congress, say providing U.S. fuel to India would free up India’s limited domestic supplies of nuclear material for use in atomic weapons, which they argue could spark a nuclear arms race in Asia.

U.S. President George W. Bush and Indian Prime Minister Manmohan Singh have sold the deal, first conceived in 2005, as a way to bring India — a nuclear weapons state — into the international atomic mainstream. They’ve also touted its benefits for India’s booming but energy-hungry economy, which would gain access to much-needed atomic fuel and technologies.

“It would help India to meet its energy needs,” Paulson said Sunday.

Comment:

Having been for a while an admirer of our Hank’s financial legerdemain (as evidenced by such fawning essays as, “Hanky Panky in the Counting House”)

I can only marvel at what a prankster the Hankster is. Not content with just playing he-loves-me-he-loves-me-not with the pining greenback (a full-time job, you would think, just there), he shows us what Gold-men are really made of by romancing da bomb.

(Please do not write in and tell me that the line above is anti-semitic. I can’t resist word play and if you were the former head of a bank called Goldman Sachs, you will have to expect that I will make hay..er..gold dust.. out of that.)

Ron Paul Revolution: Taking on Malcolm Gladwell at Forbes

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Irrational People
William Bonner and Lila Rajiva 10.25.07, 6:00 PM ET

Bill Bonner and Lila Rajiva
 
 
 


 

No prejudices are more dangerous than those you didn’t know you had. And no one is more likely to crash into them than one who believes he is impartially examining the facts. That is the trouble with theories about man that assume he is a rational decision maker. All the evidence we have points to the contrary.

What rational commuter, for instance, would buy a Hummer? People buy them not to get somewhere but to tell others that they have already arrived. And what reasonable man would waste his time going to the polls? The rate of return is so uncertain and so remote, he would do better buying a lottery ticket.

But even otherwise insightful writers make the mistake of assuming that when people make choices, they either make rational choices or honest mistakes. Malcolm Gladwell’s best-selling book, Blink, for example, observes that rapid cognition–instinctive reaction without prolonged deliberation behind it–is often the best way to make decisions. He cites approvingly a group of art experts who were able to tell at a glance that a Greek statue was a forgery.

But there are other instances when the results of rapid cognition don’t meet his approval. While only 3.9% of adult men in America are over 6’2″, almost a third of all American CEOs are 6’2″ or taller.

There must be some mistake, says Gladwell. People ought not to pick tall men to lead companies simply because they are tall. In response, we ask, why shouldn’t they? People who choose tall mediocre CEOs over short extraordinary ones may actually be expressing a real preference, even if they explain it away later as a bias. The preference may be rooted in genetic drives that find tall males inherently more likely to dominate and succeed in the reproductive game. Or people might have an aesthetic preference for an imposing appearance. Or they might intuitively feel tall leaders might be better at gathering followers. This might be what people really want, and not a CEO who can increase company profits.

Gladwell himself recognizes this when he notes that in speed-dating the kind of men women actually pick is very different from the kind they say they want. Yet, then he goes on to find decisions based on such hidden emotions and preferences unacceptable in certain cases–say picking a CEO or a member of a symphony orchestra–because they don’t accord with his idea of how these decisions should be made.

The same bias afflicts research into economic decision-making.

In 2005, Princeton Professor Daniel Kahneman conducted an experiment comparing the performance of people with a kind of brain damage that inhibited their emotions to the performance of “normal” people at guessing the results of coin flips. Those with “normal” brain function lost their shirts. Their emotions made them make mistakes, said the researchers.

This August, researchers at the university of Maryland studied stock traders and came to the opposite conclusion. Hot heads who experienced greater emotional intensity when faced with their decisions turned in better performances. Emotions helped them maximize returns. Score one for Jim Cramer.

What is more telling than the contrary results of the experiments is that, in both cases, researchers assumed that the participants were simply trying to maximize their returns. It is true that many may have thought they were doing so. But their actions betrayed other motives, such as, a desire to play it safe, or to have fun.

If human beings only did things out of economic self-interest, then buying stocks when prices are high or investing in subprime mortgages would be mistakes. But if investors, like everyone else, are expressing other, more complex and subtle motives, then their bad economic decisions might be bringing them other rewards. They might want the security of being part of a crowd. They might want to feel smart, or cool. They might invest to make money. Or not to lose it. To make a point. Or to make a better world.

Yes, “good leaders” probably do come in any size. But it may not be a “good leader” (whatever that is) that people are looking for when they pick CEOs or Presidents.

As it is not necessarily economic self-interest that men are pursuing when they enter the investment markets.

William Bonner and Lila Rajiva are the authors of Mobs, Messiahs and Markets .

 

Ron Paul Revolution: Taking on Ben Bernanke’s Rate Cut at the Washington Post

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MONEY FOR NOTHING

Is Bailing Out Reckless Investors Wise? Don’t Bank on It.

By William R. Bonner and Lila Rajiva

Sunday, October 28, 2007; Page B04

Last summer, the bill started to come due on our debt-fueled economy. We should have let it — and let reckless speculators, subprime lenders and banks finally get what they had coming. But instead, the financial authorities let them off the hook. Rather than simply letting markets be markets, they bailed out both the fools and the knaves. We’ll all live to regret it.

At the moment of truth, the Federal Reserve cut the overnight cost of money in the United States (known as the Fed funds rate) by 0.5 percent. Meanwhile, the governor of the Bank of England also succumbed to temptation, infusing ¿10 billion into the British banking system. Next, the Fed let Citigroup and Bank of America increase the quantity of funds that federally insured banks could lend to their affiliates, many of which held risky mortgage debts. When investors, spooked by the subprime lending crisis, stampeded out, the affiliates ran short of cash. Then, just this month, Treasury Secretary Henry M. Paulson Jr. announced the creation of yet another fund, guaranteed by three major banks — a piece of folly that was no more than a bailout of the cash-strapped affiliates.

But bad investments do not become good ones just because a central bank lends more money to the investors who made the rash choices. Problems caused by too much credit do not disappear when you hand out even more credit. And the syndrome that such moves create only makes our economic woes worse.

Mervyn King, the head of the Bank of England, told Parliament that he had been initially reluctant to intervene in Britain‘s credit market because he feared the ” moral hazard” that might ensue. Moral hazard is the idea that eliminating all potential risks from an action encourages people to take excessive risks. King worried that when speculators think that they’ll be bailed out, they tend to take bigger chances. After all, why not go for broke when you’ve got the central bank behind you?

The same thought should have troubled Fed chief Ben S. Bernanke, but somehow America’s central bankers didn’t seem to share even the nascent qualms of the governor of the British bank. Instead, they blithely reversed four years of policy by lowering the Fed funds rate to 4.75 percent. Just a few weeks earlier, Bernanke had called inflation Public Enemy No. 1. Now, by cutting the cost of money (something he looks set to do again next week), he was inviting it to dinner. And by encouraging risky behavior, he was asking for trouble — and he’ll probably get it.

If people always behaved sensibly, they would borrow only what they could pay back. The economy would boom only when it was producing jobs, and not because it was awash in easy money. Industries would not glut their markets, and investors would not make daft decisions out of greed.

But people do make bad calls. They foul up. When the price of money rises and the economy contracts, their errors get corrected. That’s the good news. The bad news is that there are always enough people to argue that it’s the Fed’s job to ease the pain of such contractions. Those arguments have usually carried the day. Since World War II, the practice has been to use monetary policy to smooth the downside of the business cycle — lowering interest rates to make money easier to borrow.

What the economy faces now, however, is a far cry from what it has faced in the past. In the first 25 years after World War II, the average ratio in the U.S. economy of periods of growth to periods of recession was only about 5 to 1. Over the next 25 years, the downturns got softer and even less frequent. And now, we seem to have rollicked our way through an expansion longer than any in the preceding era. Either we are suddenly moving toward the perfection of mankind, or there’s a large batch of errors we’ve yet to clean up.

And the batch grows by the day. Never before have so many people owed so much money in so many different ways.

When you make a mistake with your own money, you may go broke, you may despair, you may even kill yourself. Not to sound callous, but the damage rarely goes much further than that. Make a mistake with borrowed money, on the other hand, and it sets off a chain reaction of losses. You lose money, the lender loses money, savers lose money and the investors who bought shaky financial instruments tied up with the original debt lose money.

This is where central banks are supposed to come in. At first, Mervyn King judged that adding a few more straws might break the British economy’s back. Then, under pressure, he decided to load on a whole other bale. He had called it right the first time.

In theory, a central bank is set up to keep economic order. But in practice, when central bankers intervene in the economy, it is a bit like intervening in a street brawl: Results can vary. Central banking is a pretty imprecise science. At best, it is marginally and occasionally effective; at worst, it is a disastrous fraud.

It’s easier to yield to temptation than to resist it. Paul Volcker, the Fed chief from 1979 to 1987, was the last one who could stomach a recession. Determined to correct the macroeconomic blunders of the 1970s, he jacked nominal interest rates up to 20 percent. Politicians were outraged, and the public was horrified. Volcker’s effigy was burned on the steps of the Capitol. But his forced correction worked: Inflation fell from 12 percent to 4 percent. After the smoke cleared, the U.S. economy was ready for its biggest boom ever.

But since Volcker left the Fed, interest rates have generally gone down, and American consumers have taken advantage of it to borrow and spend. In the process, they have become addicted to cheap money. Now total credit has grown from 150 percent of gross domestic product to 340 percent. In fact, Americans carry so much debt that if Bernanke were to raise interest rates even to 10 percent, as he clearly should, they’d probably scorch him for real.

There was a time not so long ago when it looked as though central planning might actually work. The figures coming out of the Soviet Union showed remarkable — almost unbelievable — progress. Later, it became clear that the numbers were rigged.

Looking at how cheap money is these days, one wonders: Are we following in the Russians’ footsteps? For although almost all economists now admit that markets do better than government bureaucrats at setting prices and allocating resources, central banks continue to rig the most important price of all: the price of money.

In the real world, you can’t create something out of nothing, and debts must always be paid — although not necessarily by the people who incurred them.

When the Bernankes of the world set the price of money too low, they set off an explosion of error. People build houses for buyers who can’t afford them, they add capacity for customers who don’t exist, they speculate on trends that are sure to end.

Don’t take our word for it; just open your eyes. What we see in the U.S. economy today is largely the consequence of the Fed’s wimpy decision to keep rates low after the micro-correction of 2000-01. The economy had walked backward for only a single quarter — not even enough to qualify as an official recession. Still, the Fed panicked, yanking rates down to an emergency low of 1 percent for more than a year. The result? The biggest housing boom in U.S. history, accompanied by more bad decisions than a joint session of Congress. Lenders over-lent. Consumers over-borrowed. Builders over-built. And the dollar crashed to its lowest level ever.

Instead of wiping out bad decisions, the Fed’s rate cuts keep the cheap money flowing, letting errors compound and spread. Instead of sticking the losses to the people who deserve them, it redistributes even bigger losses to bystanders: innocent savers, hapless householders and dollar-holding, dollar-earning chumps everywhere. That’s the problem with meddling in markets: Once you get started, it’s hard to stop.

William Bonner and Lila Rajiva are the co-authors of

“Mobs, Messiahs, and Markets.”

 

Speak Up, Speak Up….for peace

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“Bush and Cheney are steering the U.S. into a collapse. Only strong public voices by influential people can prevent the coming disaster. We desperately need for men and women who are known to the public and have credibility to speak up in the critical period ahead to avoid catastrophe,”

says Michael Rozoff, former professor of finance at Amherst.

“Why may an unprovoked attack on Iran lead to WWIII and why may it lead to the collapse of the U.S.?

Imagine this scenario. The U.S. encourages Israel to bomb the Natanz nuclear facility in Iran. Russia attempts to restrain an Iranian response but fails. Iran responds in any of many ways, such as launching missiles on Israel, firing on shipping in the Straits of Hormuz, mining the Straits of Hormuz, sending troops into Iraq, or allying its military with Hezbollah and attacking Israel from Lebanon.

The U.S., citing Iran’s aggressions (that will be the story), launches a full-scale attack on Iran designed to devastate the country. This attack has actually been planned by the U.S. for years. Syria is unable to maintain neutrality and quickly becomes a battleground between Iran and Israel.

The price of oil by this point has already soared to $200 a barrel. The U.S. begins to use its strategic reserve and to divert Iraqi production. Russia responds by taking steps to prevent its oil production from reaching the U.S. China responds by cutting off its support of the U.S. Treasury market. Venezuela halts oil shipments to the U.S. The first stages of WWIII are economic warfare designed to cripple the U.S. and halt its war-making capacity.

The U.S., unable to finance its deficits and fund its sovereign debt, is forced into raising interest rates drastically in order to borrow. The Fed is forced to print money. An inflationary spiral occurs. Meanwhile the high interest rates and high oil prices, not to mention the shock of a spreading conflict, drive the U.S. economy into severe decline. The U.S. attempts to raise taxes in order to fund itself, further crippling the economy. Gold soars to $1,500–$2,000 an ounce….”

Going literally wrong: Bible banging away

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“Such is the agenda of A. J. Jacobs’ achingly funny memoir The Year of Living Biblically. Jacobs, the author of The Know-It All, begins by describing himself as a secular Jew. (“I’m Jewish in the same way the Olive Garden is an Italian restaurant. Which is to say: Not very.”) In spite of his own detachment from religion, he is increasingly curious about the ways it influences 21st-century American life. Rather than standing on the sidelines or casting himself as an aloof pundit, he dives in head first and decides to spend a year living all the commandments of the Bible—that’s right, all of them. A sampling:

He hires an earnest New York shatnez tester to ensure that his garments don’t mix wool and linen (Deut. 22:11).

He can’t utter the names of false gods (Exodus 23:13), which means that “I’ll have lunch with you on Thursday” or “let’s get the kids together for a play date on Wednesday” are flat out, since Thursday and Wednesday honor Thor and Woden, respectively.

He won’t touch his wife during and just after her period—or any woman, for that matter (Lev. 15:19). He can’t even sit on a chair a menstruating woman has occupied, which makes navigating the Manhattan subway a bit tricky.

He allows the sides of his hair to grow uncut (Lev. 19:27), and by the end of the year the fashion-challenged combination of his long earlocks and all-white garments (Eccl. 9:8) causes people to cross to the other side of the street rather than encounter him….”

More here.

Ron Paul Revolution – web of influence

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Another reason to support Ron Paul – the one candidate thoroughly committed to freedom on the net.

Think the net is always free? Think again. Even apart from politics, what goes on the web is slanted.

I am thinking this as I note that after TWO AND A HALF MONTHS of requests to Amazon to place the great blurbs from financial and libertarian luminaries like Marc Faber, Nassim Taleb, Steve Sjuggerud, Lew Rockwell and Ron Paul, not ONE of them is up on the editorial reviews page.

Actually, we called in mid August and sometime in early September, I thought I saw the reviews up. Then they mysteriously disappeared and have never reappeared despite repeated calls. Just a mistake? Most likely. Or anything to do with a book which is getting a lot of attention from Ron Paul types? I wonder. It’s bound to make you think. This evening I called twice and was told someone would call back or I would get an email. No response.

Update: Since then I have received a response. There may still be a problem, but I spoke to someone courteous and alive. So I am hopeful. (Since I wrote this, the mystery has been solved. The reviews apparently “fell” off the web, along with those of other authors. Why they couldn’t inform their clients of it asap is another question.

Update 2

My further dealings with Amazon, convince me it is not to do with Amazon, but a little further upstream, let’s say, nearer the source. “Nuff said. Sincere apologies to Amazon.

In the same vein, I note that I am being cited properly as co-author after my persistent complaints on the web to various promoters and publicists. Tip to all authors –  if you are in the right, don’t take things lying down. When they are corrected, take a screen shot of the before and after so that  when someone  corrects something post complaint, they can’t tell you that it was always right, pre-complaint and pin the blame on you.

Still – here is what it all proves: if you take things lying down, nothing gets done. Exchange your nice guy demeanor for the Leona Helmsley act, and, voila, things start getting done.

Sad but true. Very few people these days work at their jobs with any integrity and devotion to it. When you come across them, treat them like gems. They are.

Anyway, Amazon numbers are massaged (authors buy back their own books in bulk to push up sales); editors reviews are heavily slanted, even customer reviews on the web are orchestrated…..

Meanwhile, in happier news, I recently presented the book to Ron Paul himself and several representatives at an informal session. It was great and they liked the ideas and approach. I was honored to be invited to get more involved with some of their activities. Paul himself is just as I thought – unassuming, highly intelligent, good humored. Like everyone’s favorite brilliant uncle .