Is the UK a ‘Nation by Consent’?

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From the Editors:
Today Scotland votes on a referendum concerning political independence from the United Kingdom.
For libertarians, the politics surrounding both sides of the vote are suspicious. The globalist banking class, ever fearful of decentralization of power, warns that Scotland needs Westminster’s economic assistance (read: welfare), Westminster’s military might, and Westminster’s currency. The largely socialist Scots, meanwhile, argue for a more ‘egalitarian’ society administered by Holyrood and a new alliance with their more enlightened fellow travelers in Brussels – leaving one master for another.
As always, libertarians should focus on first principles. Murray Rothbard’s 1993 essay,’Nations by Consent: Decomposing the Nation-State,’ does just that.
Rothbard asks the correct questions: What is a nation? What makes a nation legitimate? Are nation-states needed for collective security? When is secession allowed? Should open borders and open immigration be allowed? How should citizenship and voting rights be conferred? How would a completely private, anarcho-capitalist country operate?
These are the questions we must ask and answer as we argue against the state, against central banks, and against an increasingly global crony political class.
Nations By Consent: Decomposing the Nation-Sate
Libertarians tend to focus on two important units of analysis: the individual and the state. And yet, one of the most dramatic and significant events of our time has been the re-emergence – with a bang – in the last five years of a third and much-neglected aspect of the real world, the ‘nation.’ When the ‘nation’ has been thought of at all, it usually comes attached to the state, as in the common word, ‘the nation-state,’ but this concept takes a particular development of recent centuries and elaborates it into a universal maxim. In the last five years, however, we have seen, as a corollary of the collapse of communism in the Soviet Union and in Eastern Europe, a vivid and startlingly swift decomposition of the centralized State or alleged nation-State into its constituent nationalities. The genuine nation, or nationality, has made a dramatic reappearance on the world stage.

This post was published at Ludwig von Mises Institute on September 18, 2014.

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Which Global Hegemon Is on Shifting Sands?

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Given that all the leading candidates for Global Hegemon are hastening down paths of self-destruction, perhaps there will be no global hegemon dominating the 21st century.
Which nation with aspirations of global dominance (i.e. hegemony) has these attributes? 1. The nation’s recent prosperity is based on a vast expansion of credit.
2. The nation has 100 million obese/diabetic citizens.
3. The citizens have little say over central government policies that favor cronies.
4. The nation faces demographic headwinds as the number of people in the workforce declines and the number of retirees balloons.
5. Large regions of the nation suffer from chronic water shortages.
Hmm, sounds like the U. S. is a match so far…. Let’s add a few more attributes: 6. The nation’s credit expansion has relied on a largely unregulated shadow banking system. 7. The nation is in the midst of an unprecedented housing bubble.
This could still be the U. S., but America’s unprecedented housing bubble popped in 2006–the current bubble is a mere echo bubble. Let’s add a few more attributes:
8. The nation is beset with unprecedented “external” environmental costs as a result of rapid and largely unregulated industrialization.
9. The nation suffers from large-scale desertification.
10. Over half the nation’s monied Elites have either left the nation or plan to leave and transfer their financial wealth overseas.

This post was published at Charles Hugh Smith on WEDNESDAY, SEPTEMBER 17, 2014.

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The Biggest Risk For Investing In Alibaba Is…

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Submitted by George Chen via The South China Morning Post,
What is the biggest risk for investors in China’s e-commerce giant Alibaba? In one word: politics.
Jack Ma Yun, English teacher-turned entrepreneur, is already a legend in China for the incredibly fast growth and remarkable success of the e-commerce firm he founded in 1999. I have no doubt about Ma’s business experience and leadership skills, but there is one thing Ma – and many of his rivals – may be worried about. Politics.
The Alibaba success story is not just about Alibaba itself. It is about the inevitable trend of globalisation, the rise of China as a country on political and economic fronts, and also about how eager Beijing is to support and build up a crop of new national brands that can compete with the likes of Google and Amazon in the United States.
“To have political connections in Beijing … isn’t necessarily bad. Many companies try to do so”
Beijing’s support – directly or indirectly – is a key factor in Alibaba’s success. Without the government’s support, Ma would not have felt confident enough to speak in New York in front of hundreds of Wall Street investors during the recent roadshow for Alibaba’s initial public offering on the New York Stock Exchange.
Ma understands the importance of the government’s backing for Alibaba and most of the time he has been good at lobbying Beijing for policy support.
However, in at least one case he had a setback and was honest enough to tell the public how he felt about that.

This post was published at Zero Hedge on 09/14/2014.

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Robert Fisk on Isis campaign: Bingo! Here’s another force of evil to be ‘vanquished’

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Resurrection, reinvention and linguistics. Barack Obama did the lot. And now he’s taking America to war in Syria as well as Iraq. Oh yes, and he’s going to defeat Isis, its “barbarism”, “genocide”, its “warped ideology” – until the bad guys are “vanquished from the earth”. What happened to George W. Bush?
But let’s go through this with a linguistic comb. First, Obama is going to resurrect the Sunni “Awakening Council” militias – a creature invented by a certain General David Petraeus – who were paid to fight al-Qaeda by the Americans during the U.S. occupation of Iraq, but who then got blasted by al-Qaeda and betrayed by the Shia-dominated Iraqi government. Obama has even invented a new name for these militias: he called them “National Guard Units” who will “help Sunni communities secure their own freedom from Isil”. National Guard indeed!
Then there’s the reinvention of the “moderate” Syrian opposition which was once called the Free Syrian Army – a force of deserters corrupted and betrayed by both the West and its Islamic allies – and which no longer exists. This ghost army is now going to be called the “Syrian National Coalition” and be trained – of all places – in Saudi Arabia, whose citizens have given zillions of dollars to al-Qaeda in Iraq, Isis, Isil, IS (you decide on the acronym), Jabhat al-Nusra and sundry other bad guys whom Obama now wants to “vanquish from the earth”.

This post was published at The Independent

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President Obama Announces Operation Enduring Burden.

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On the evening of September 10, President Obama delivered a speech on ISIL, as he calls it, which everyone else calls ISIS.
Here is his problem. ISIS stands for Islamic State of Iraq and Syria. ISIL stands for Islamic State of Iraq and the Levant. Hardly any American knows what the Levant is. It’s the entire region.
If President Obama were to stick with the acronym ISIS, this would create a huge PR problem. If he calls it the Islamic State of Iraq and Syria, this makes it clear that two countries are involved. Therefore, he must commit American forces — but not troops, meaning “boots on the ground” — to war in two nations. One of them is Syria. Until a few months ago, ISIS was regarded by American foreign policy experts as being part of the opposition in Syria — opposition to the government of Syria, which is run by Bashar “Hitler” Assad.
ISIS four months ago was a freedom-fighting organization. Now it is officially a fighting-freedom organization. Keep this in mind as you read the highlights of the President’s speech.
My fellow Americans, tonight I want to speak to you about what the United States will do with our friends and allies to degrade and ultimately destroy the terrorist group known as ISIL.
He calls it ISIL Over the last year, the President has overseen the transfer of money and weapons to ISIS, a freedom-fighting organization in Syria. Now he is going to transfer more money and more weapons to the freedom fighters in Syria, who will use it to fight the ISIL organization, which is fighting-freedom organization.
I hope you understand the difference. You have an obligation to understand the difference. Without this understanding, American foreign policy would look like decision-making by lunatics.
Furthermore, he assured us that the leaders of ISIL are confused. They call the organization “Islamic” — the first I in ISIS. The President is not confused. ISIS is not Islamic at all. Not one little bit.

This post was published at Gary North on September 11, 2014.

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The thriving cronyism of the stock market: 81 percent of stock market wealth held in the hands by 10 percent of the population. Housing also being snatched from middle class families.

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Most Americans are confronting a system where the deck is stacked against their interests. Most Americans saw the true colors of the system during the Great Recession panic when government joined forces with Wall Street to essentially fire the middle class with explicit and hidden bailouts. There is unfortunately a large amount of cronyism embedded in the current system. Most Americans have very little in stock market wealth. Over 81 percent of stock wealth is held by the top 10 percent of the population. This is why for most, retirement is largely one pipe dream. Yet the problem of the bailouts was the split of corporate welfare for connected institutions and austerity measures for the rest of the country. Wall Street is driven by profits and companies were able to slash their way into profitability while boosting earnings and using large safety nets and golden parachutes for those at the top. Banks that should have failed survived thanks to the too big to fail mantra. This is why, after a record stock market run since 2009 many Americans still view the economy as performing poorly. For them it is. You also have Wall Street invading the one asset where Americans used as a forced savings account, housing. Even in this one asset class Americans are being pushed out.
Not buying the stock market rally
The data is clear in that very few Americans own any substantial amount in stock wealth. 81 percent of stock wealth is held with 10 percent of the population. The recent rally was driven by slashing wages, cutting benefits, leveraging bailout funds, and ultimately using the recession as proof that labor was fully disposable. The days of corporatism are gone and now the reality of company loyalty is long gone. The government and lobbyists will assist those at the top but for most middle class Americans, the game is over.
This is how you can have a stock market peak with such poor sentiment:

This post was published at MyBudget360 on September 10, 2014.

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Why Has Classical Capitalism Devolved to Crony-Capitalism?

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The money-shot: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.”
Here is the quote that perfectly captures our era: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” (John Kenneth Galbraith) The trick, of course, is to mask the unspoken second half of of that statement: everybody else gets destroyed along with the Elites when the system implodes. Union pension funds: toast. Government employees’ pension funds: toast. 401Ks: toast. IRAs: toast. The echo-bubble in housing: toast. The Fed’s favorite PR cover to cloak the enrichment of their financier cronies, the wealth effect:toast.
The primary tool the Elites use to mask the risk of complete destruction is magical thinking–specifically, that “given enough time, the system will heal itself.”
That’s rich, considering that the Elites’ primary tool of avoiding destruction is crippling the market’s self-healing immune system: price discovery. Thanks to ceaseless interventions by central banks, the price discovery mechanism has been shattered: want to know the price of risk? It’s near-zero. Yield on sovereign bonds? Near-zero. And so on.

This post was published at Charles Hugh Smith on WEDNESDAY, SEPTEMBER 10, 2014.

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Government Health Care Inc : The Chart Which Explains The Whole Medical Mess

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Our crony-capitalist driven health care system is devouring the American economy, and the data which proves that baleful trend could not be more dispositive. In 1960, national health expenditures amounted to $150 per capita and hardly 5% of GDP. By the year 2000, these figures had grown to $5,000 per capita and 13.8% of GDP. Today health care devours nearly $9,000 per capita and more than 18% of GDP.
Needless to say, America did not turn into a giant sick bay during the last 55 years. Instead, the health care delivery system was virtually stripped of any semblance of market prices, consumer choice and economic discipline and efficiency. As a practical matter, out-of-pocket payments for health care – unlike almost all other consumption goods – -virtually disappeared from the system.
As a consequence, health care has been essentially transformed into a free good at the point of use. In turn, this has spawned massive over-utilization, gross inefficiency and economic rent extraction by the cartels which dominate the system – – hospital chains, insurance companies, HMOs, Big Pharma, medical equipment and prosthetic vendors, etc.
The chart below explains how this breakdown happened. In a word, the massive expansion of government financed health care after 1965 in the form of Medicaid, Medicare and related programs induced a huge expansion of price-insensitive demand that drove medical prices skyward. In response, both government recipients and employer plan beneficiaries demanded to be shielded from rampant medical cost inflation via more comprehensive coverages and a relentless reduction of out-of-pocket costs for deductibles and co-pays at the point of service.

This post was published at David Stockmans Contra Corner on September 10, 2014.

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Big Banks Headed Straight for Another Bailout

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The 2010 Dodd-Frank Act, which included the orderly liquidation living wills requirement, was meant to prevent future rescues of systemically important financial institutions. But the idea that current regulations are capable of solving the too-big-to-fail problem was challenged by the recent regulatory rejection of 11 banks' living wills. Some argue that living wills are a work-in-progress that will improve over time. However, the truth is that living wills are a myth meant to calm the populace. It is impossible to neatly unwind a failed SIFI, since the failure of such a large institution will necessarily cause unacceptable collateral damage.
The most likely course of action is that regulators will maintain the status quo and change nothing of substance, relying on cosmetic fixes to give voters a false sense of security. Some free market enthusiasts might argue that the status quo isn't so bad, so long as customers and not regulators decide how big banks should be. But the SIFI market is anything but free. The big bank model failed in late 2008; in a free market, these banks would have ceased to exist. They survived because they are the creations of the government, not the free market. Exempt from market discipline, they represent crony capitalism at its worst.

This post was published at American Banker

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One Way Wall Street Is Fleecing Investors

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No Country for Old Men We are sitting in the lobby of the China World Hotel in Beijing. It is a very large space and very unlike most hotels. Monday, we stopped into the lobby of the Marriott Opera Ambassador Hotel on Boulevard Haussmann in Paris. Like most lobbies, it was quiet, with just a few people having coffee.
Here, there are hundreds of people – almost all young. I am the oldest person, a fossil from another continent and another time. The young people are dressed casually but well. They sit in groups talking… as though planning their next marketing campaign.
There is scarcely anyone over the age of 40. We have started a small publishing business in China. It, too, is staffed by people in their twenties. What happened to the old people? Maybe they have not been able to keep up with the breathtaking changes in China. This is no country for old men…
‘Everyone has great confidence in the future,’ says a Chinese colleague. ‘Things have gotten so much better over the last 20 years. And we expect that to continue.
‘Our new president, Xi Jinping, is serious about trying to get rid of corruption, even at the highest levels. He is trying to deregulate whole industries. Regulations and licenses were just a way for officials to demand bribes and payoffs. So, Xi wants to get rid of a lot of this so we can do business more freely.’
Whether he will succeed or not, we can’t say. But at least it sounds promising.

Charlie Chaplin stands on Douglas Fairbanks’ shoulders during a rally at Wall Street in 1918.
(Photo author unknown)

This post was published at Acting-Man on September 5, 2014.

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Minsky Moment for Markets Driven by ‘Relentless Bids’

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During the past decade, US equity markets have experienced structural changes with major macroeconomic implications, as policies of both companies and investors have evolved.
An unprecedented change in corporate financial policy.
Many corporate executives now not only channel their companies’ cash flow to shareholders, but leverage up to do so – often at the expense of capex, R&D, and employee compensation and training. This price-insensitive buying of stocks, mirroring the similarly price-insensitive buying by central banks, amounts to a ‘relentless bid.’
We’re now seeing the result in slowing growth of, or even falling, productivity and corporate revenue.
Andrew Lapthorne of SocGen has documented this in detail. Andrew Smithers has also written about this in his column at the FT website. Now the mainstream news media have noticed.
‘In corporations, it’s owner-take-all,’ by Harold Meyerson, op-ed in the Washington Post, 26 August 2014 ‘Why have U. S. companies become such skinflints?’ Paul Roberts, op-ed in the LA Times, 27 August 2014 Soon the investment banks will begin writing about it.

This post was published at Wolf Street on Sept 3, 2014.

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Mexican Judge Departs From Script, Turns Monsanto’s Mexican Dream Into Legal Nightmare

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The U. S. agribusiness giant Monsanto is long accustomed to getting its own way. Through a combination of back-channel lobbying, opaque political funding and revolving-door politics, the multinational agrochemical and biotechnology corporation has subverted, corrupted and infiltrated the elected governments of countries around the world, from the smallest and poorest to the biggest and richest.
However, if recent events in Europe and Latin America are any indication, the tide may well be subtly turning against the interests of Monsanto and its fellow GMO oligopolies and in the favor of independent food growers and consumers. Despite their tireless lobbying efforts in Brussels, the ‘Big Six’ (Monsanto, Du Pont Pioneer, Syngenta, Vilmorin, Winfield and KWS) continue to hit a brick wall of resistance in many of Europe’s biggest markets, including Germany and France. As I reported in April this year, popular resistance is on the rise across Latin America, as indigenous and peasant communities rise up against government legislation that would apply brutally rigid intellectual copyright laws to the crop seeds they are able to grow.

This post was published at Wolf Street on September 1, 2014.

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Monsanto Trickbag 101

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Use a GMO contaminated bag of conventional seed, get sued for patent infringement. By the way, expect contamination.
It’s a setup, the game is rigged, the fix is in. Monsanto sues if its agents find the company’s patented gene in your crop, even if you never bought its genetically engineered (GMO) seeds. But does that mean diddley squat to Monsanto?
No. Here is a bit of logic, Monsanto style:
If the plant is found in your possession, then that means you have used the seed. If you have used the seed, then you have agreed to the technology use agreement, and owe Monsanto your crop, your seed and your profits. It doesn’t matter how the seed actually arrived in your possession.
Just ask Percy…


This post was published at FarmWars on August 31st, 2014.

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It’s Not Just Politics That’s Broken–The Status Quo’s Model of “How the World Works” Is Broken

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The Status Quo is dysfunctional because its model of how the world works is broken.
Much has been written about the dysfunction in Washington D. C. Pundits have been wringing their hands for years over the rise of bitter partisan politics and the resulting gridlock. The impact of this–what I have termed profound political disunity–extends beyond the narrow confines of domestic politics, a reality reflected in Foreign Affairs new survey of our winter of political discontent, Dysfunction Junction.
But all these discussions of our dysfunctional politics ignore the larger truth, which is the entire model of the Status Quo is broken. Even if reformers succeeded in ridding the political system of cronyism and favors-for-campaign-contributions–two essentially impossible reforms, given the legalistic cover provided for cronyism and bought and paid for representatives, the basic model of “how the world works” that dominates the world-view of leaders across the political spectrum would remain broken. There are only three alternatives: 1. The current gridlock continues, and the policies in place grind on with minor tweaks.
2. The Democrats win a sweeping victory and are able to unilaterally impose their reforms.
3. The Republicans win a sweeping victory and are able to unilaterally impose their reforms.

This post was published at Charles Hugh Smith on MONDAY, AUGUST 25, 2014.

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Obamacare: Cronies are Raking in the Money

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Feds spent $5 billion to get state Obamacare exchanges operational.
Maryland, Massachusetts, Oregon and Nevada have gone through nearly a half billion dollars building inoperable Obamacare websites for vastly overpriced state exchanges. For government, though, nothing succeeds like failure, especially if it rewards selected partners in crime, so the feds will continue with little resistance to pour millions of dollars more down these rat holes.
In total, as of February, 14 states have received federal money to get Obamacare exchanges up. California alone received a whopping $1 billion to set-up its exchange.

Read more …

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Crony Congress

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Did you know 47% of Congress members are millionaires?  And while in office they have all kinds of advantages to make them even richer while they’re in office:

  • Access to private information prior to key activities that make them money in the stock market
  • Earmarks placed in law codes to support their personal projects
  • Support for lobbies ensures they have cushy jobs after their “public service” is finished


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How We’ve Devolved into the Current System of Crony Capitalism

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In this interview with Bill Moyers, David Stockman, who first coined the term Crony Capitalism, explains what’s happened in the political-economic realm since his post as Budget Director under Reagan. The evidence that we’ve embarked on a “new system” has become more obvious with time. Beginning with the $20 billion bailout of the Mexican peso in 1994, progressing with the bailout of Long Term Capital Management in 1998 and the recent bailout in 2008 with the $700 billion Wall Street package, Stockman explains that the benefactors are not limited to those being bailed out. The investors who financed those failures are the ones who’ve really benefited.  These are the so-called cronies, who have ties to those in high positions, capable of bending laws to ensure the majority of profits go to themselves, while losses are always taken by the tax payers.


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