In Africa, Ending a Despot Doesn’t End Despotism

In the tradition of dimming debate, the chattering class has reduced systemic corruption in South Africa and the near collapse in Zimbabwe, respectively, to the shenanigans of two men: Jacob Zuma and Robert Mugabe.
Zuma, the President of South Africa, currently faces possible impeachment for corruption, while Robert Mugabe has now been forcibly ‘retired’ after 30 years as President.
Surely by now, though, it should be common knowledge that in Africa, if you replace a despot, but not despotism, you only oust a tyrant, and not tyranny.
How Kleptocracy Works Emblematic of this is a thematically confused article in The Economist, offering a description of the dynamics set in motion by the Zuma dynasty’s capture of the state.
At first, the magazine explains the concept of ‘state capture’ as “private actors [having] subverted the state to steal public money.”
Later, the concept is more candidly refined: ‘The nub of the state capture argument is that Mr. Zuma and his friends are putting state-owned enterprises and other governmental institutions in the hands of people who are allowing them to loot public funds.”
Indeed. Corruption invariably flows from state to society.

This post was published at Ludwig von Mises Institute on Dec 31, 2017.

The Greatest Bubble Ever: Why You Better Believe It, Part 2

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different—-it’s a new age of technology miracles that will change the laws of finance.
It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those a heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion—-a wipeout from which millions of baby boom households have never recovered.
Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse. During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry—-rising from 340 to 850 or by 2.5X.
And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy—-meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices.
Wrong again!

This post was published at David Stockmans Contra Corner on December 29th, 2017.

Rare Anti-Government Protests Grow In Iran, Reports Of Jammed Satellite TV Networks

Rare protests in multiple cities across Iran, especially in the country’s second largest city of Mashhad, gained momentum on Thursday and Western media and pundits are beginning to take note. Though it appears the main protest locations have been consistently described as being in the hundreds and not yet reaching mass numbers, observers say they are likely to grow in size and in intensity as economic grievances over high prices, corruption, and mismanagement have reached a boiling point.
Notably, dozens of videos were uploaded to social media channels Thursday showing demonstrators primarily in Mashhad in northwest Iran chanting ‘death to [President] Rouhani’ and ‘death to the dictator’. Mashhad is considered one of the holiest and most conservative places in Shia Islam, causing some pundits to conclude that if such aggressive anti-government demonstrations can take place there, they could take place anywhere throughout Iran. Other places named by the semi-official ILNA news agency and social media reports where demonstrations have occurred are in Razavi Khorasan Province, including Neyshabour and Kashmar.
And there are some indications that authorities in Tehran are preparing for a broader crackdown to prevent protests from spreading.

This post was published at Zero Hedge on Fri, 12/29/2017 –.