Free Markets, Free People

Germany

Let’s make the US like Germany … er, Mississippi?

The “social democracy” or “democratic socialism” model that many of the left want so badly is showing it isn’t all it’s cracked up to be.  For instance:

Since Sweden is held up as a sort of promised land by American socialists, let’s compare it first. We find that, if it were to join the US as a state, Sweden would be poorer than all but 12 states, with a median income of $27,167.
Median residents in states like Colorado ($35,830), Massachusetts ($37,626), Virginia ($39,291), Washington ($36,343), and Utah ($36,036) have considerably higher incomes than Sweden.
With the exception of Luxembourg ($38,502), Norway ($35,528), and Switzerland ($35,083), all countries shown would fail to rank as high-income states were they to become part of the United States. In fact, most would fare worse than Mississippi, the poorest state.
Oh, my!  Say it ain’t so, Bernie!
Germany, Europe’s economic powerhouse, has a median income ($25,528) level below all but 9 US states. Finland ranks with Germany in this regard ($25,730), and France’s median income ($24,233) is lower than both Germany and Finland. Denmark fares better and has a median income ($27,304) below all but  13 US states.
And Mississippi? Well, when adjusted for purchasing power, we find a funny thing (heh … I couldn’t help myself):
Now that we’ve accounted for the low cost of living in Mississippi, we find that Mississippi ($26,517) is no longer the state with the lowest median income in real terms. New York ($26,152) is now the state with the lowest median income due to its very high cost of living.
More importantly, when the European countries are adjusted for purchasing power, they fare even worse:
Once purchasing power among the US states is taken into account, we find that Sweden’s median income ($27,167) is higher than only six states: Arkansas ($26,804), Louisiana ($25,643), Mississippi ($26,517), New Mexico ($26,762), New York ($26,152) and North Carolina ($26,819).
We find something similar when we look at Germany, but in Germany’s case, every single US state shows a higher median income than Germany. Germany’s median income is $25,528. Things look even worse for the United Kingdom which has a median income of $21,033, compared to $26,517 in Mississippi.
So? So, myth busted.  If you want everyone to be the equal of  … well, now, New York … just listen to the siren song of social democracy. High taxes, marginal benefits and low purchasing power.  When you can’t even point to them being better than Mississippi in terms of median income, maybe it would be better not to hold up European social democracies as something to “strive” to be like.
~McQ

The West’s voluntary crisis

I’m more than a little bemused by the current self-inflicted problem Europe is experiencing and the US seems more the willing to allow to happen here, given that the current administration pretty much shares the ideals under which Europe is foundering.  I certainly understand the wish to aid people displaced by wars.  But since when did that mean committing to the mass immigration of a religious culture that has, demonstrably, refused to assimilate into the dominant culture of the countries into which they’re being imported (this isn’t a new phenomenon for Europe … it’s been going on for decades).  How does Europe, which has existent large populations of unassimilated migrants of the same religious culture assume this will somehow be different?

Of course, we’re talking about Islam.  Well, we’re talking about it.  As Andrew McCarthy points out, those in favor of welcoming this mass importation are talking about “fantasy Islam”.  This New Year’s Eve, reality slapped fantasy Islam and its adherents in the chops:

Nearly 200 women have filed criminal complaints in Cologne, the vast majority charging all manner of sexual assault. There have been few arrests, though, and nearly none involving sex crimes. The Muslim men used a tactic that has escaped the notice of fantasy Islam devotees but is well known to those of us who’ve followed the scant reports on the rape jihad as it has proceeded from Tahrir Square to Malmö to Rotherham: A group of men encircles the targeted woman or girl, trapping her while walling off police and other would-be rescuers. Knowing they are a protected class, the Muslim men have no fear of the cops — “You can’t do anything to me,” and “Mrs. Merkel invited me here,” are just some of the reported taunts. By the time “help” reaches one victim, the assailants have moved on to the next.

But, but … that’s not supposed to happen. Not in fantasy Islam which is all about peace and coexistence.  In fact, those that believe that nonsense are all about naiveté and willful ignorance.  And there is a building backlash to this absurd policy:

A poll published by the Sunday edition of the influential tabloid Bild showed 49% of Germans feared a repeat of the Cologne events in their hometowns. Similar New Year’s Eve assaults were reported on a smaller scale in the cities of Hamburg and Stuttgart.

Authorities, who have described the violence in Cologne as unprecedented in the country, have also said that most potential suspects had applied for asylum in Germany or were in the country illegally. Cologne’s police chief was forced out Friday amid criticism over the police’s failure to prevent the attacks and its apparent hesitation to acknowledge that the attackers may have been asylum applicants. The police chief, Wolfgang Albers, denied trying to cover up the backgrounds of suspected attackers.

The attacks have also provoked an emotional debate in Germany on how to deal with sexual violence. Cologne Mayor Henriette Reker drew heavy criticism after saying that women should keep an arm’s length distance from men in situations that could escalate. She later apologized, saying she didn’t mean to set a code of conduct for women and that the attackers were the ones responsible in cases of sexual violence.

Since the New Year’s eve attacks in numerous cities in Europe, the narrative that has been spun by the backers of this mass immigration has been reduced to tatters.  There’s even evidence other incidents have been essentially covered up.  In Sweden, for example, a major newspaper stands accused of no failing to report such problems, but essentially refusing to do so.

And the media in the US seems just as complicit in trying to deny what happened on NYE was anything to do with refugees or, by inference, Islam:

“It was not clear,” the New York Times opaquely explains, “that any of the men involved were among those who arrived in Germany over the past year from conflicts in Syria, Iraq, Afghanistan and elsewhere.”

While the NYT tacitly agrees that the incidents happened, in this land of #allwomenshouldbebelieved, it apparently has difficulty believing the descriptions of the men those 200 assaulted women identified because of what that would mean in terms of identifying their religion.  One thing that seems to be clear, however … it wasn’t a mob of German (or other) European males.

So the fellow travelers invested in fantasy Islam continue to refuse reality and are reduced to shouting “Islamaphobia” at anyone who disagrees.

The situation here isn’t much different.  I understand Obama will have a Syrian refugee sitting in the balcony for his (thankfully) last State of the Union speech.  It is obviously a symbolic presence meant to assure us that there’s nothing to fear by importing fighting age men from an Islamic country into this nation.  Because, you know, government is on the job and has this rigorous vetting process before any refugees are allowed in the country.  You have nothing to fear.

Oh, wait:

Two men born in Iraq who came to the U.S. as refugees had court dates in California and Texas Friday on terror-related charges, as investigators say one of the men wrote that he wanted to travel to Syria because he was “eager to see blood.”

How did that happen?  One assumes those two were also a product of that “rigorous vetting process”.  How many more like them are still at large?

As for those who might come here from Syria, guess who is handling their screening?

The recent terrorism-related arrests of two refugees from the Middle East again showed the national security risks associated with the present refugee screening process. A new report by the Center for Immigration Studies analyzes this refugee resettlement screening process and the large role played by the United Nations High Commissioner for Refugees (UNHCR), the entity entrusted with the entire pre-screening process for Syrian refugees being considered for resettlement in the United States.

The UNHCR screens refugees and then presents the U.S. with potential resettlement cases; 22,427 Syrian refugee cases have been submitted. The selecting, pre-screening, and referring refugees for resettlement, as well as the humanitarian care of the well over four million Syrian refugees, has been accomplished with what amounts to one staff member for 2, 862 refugees. The selection process uses the following guidelines: “The mere absence of information, or one’s inability to find information that supports an applicant’s claim, should not in itself justify a negative eligibility decision.” The only requirement for applicants’ statements is that they “must be coherent and plausible, and must not run counter to generally known facts.”

Yes, friends, that same entity whose “peacekeeping” troops are so well known for rape.  I’m sure that gives you a warm and fuzzy feeling, no?

So why is it that Europe’s leadership and media continue to invest themselves in fantasy Islam?  Here’s one explanation.  Remember when the Catholic church’s sex scandal broke?  Remember how abysmally the church handled it?  Remember how badly it all went for the Church?

Instead like the church for political, economic or cultural reasons the countries of Europe hung back and the communities became isolated and unassimilated.  And when the cultural effect went beyond the results have been devastating, In Rotherham, in Birmingham, in Cologne, in Oslo in Paris and in literally thousands of other places the authorities have decided to go all in with a comfortable lie.  They have chosen to pretend that millions of unassimilated muslims in the west are not a problem, they have chosen to ignore the no go zones, the violence, the murder of their citizen and even the rape of their women and children for the sake of proclaiming that none of these things have anything to do with Islam, its practice or its culture.

Like the church scandal the driving force here is fear and a desire to put off a confrontation that this big lie is making more a more likely.  And like the church scandal the longer the west remains in denial the greater the cost of solving the problem

So again, the questions – reasonable questions – arise concerning these refugees.  Why must they come here (why can’t they be resettled in cultures in the area they come from which are compatible with theirs?)?  And if they come here, shouldn’t they assimilate instead of segregate and demand their own culture be both tolerated and implemented?  How does one implement cultural demands that require their own brand of law be superior to ours?  Or that women essentially be treated as chattel?  How many stonings, rapes, honor killings and acid attacks would we be willing to endure in the name of tolerance?

Victor Davis Hanson gives us 4 points necessary for successful immigration, the model for the past in the US.  They are a key to why, unlike Europe, America has been successful with its immigration over the centuries.  While the left scoffs at the idea of a “melting pot” and even warns that using the term is a “micro aggression”, Europe’s “salad bowl” proves their alternative to be … another fantasy.  Here’s Hanson:

“REFLECTIONS ON WISE AND SUICIDAL IMMIGRATION,”

One, immigrants came legally. Breaking the law was a lousy way to start American residency. How can an immigrant continue to respect and follow his adopted country’s legal system when his first act as an American resident is to mock federal law?

Two, immigration was blind and diverse. It did not favor one particular group over another. The more diverse the immigrant blocs, the less likely they were to form lasting separate communities. There were, of course, mass influxes of immigrants in the past, but they were quite diverse: gobs of Germans, hordes of Irish, masses of Italians and Sicilians, huge influxes of Poles and Jews, lots of Japanese and Chinese, large arrivals of Mexicans. But note how diverse and varied were the immigrants’ places of origin and how destined they were to bump into each other upon arrival. Each group was wary of the other trying to use immigration as a crass tool to boost their own political fortunes by bringing in more kin than their rivals.

Three, immigrants usually arrived in manageable numbers; mass arrivals were usually periodic and episodic, not continuous and institutionalized. Only that way could the melting pot absorb newcomers and avoid the tribalism and factionalism that had always plagued so many prior failed multi-ethnic national experiments abroad. To avoid the fate of Austria-Hungary or Yugoslavia, immigrants—geographically, politically, culturally—by needs were soon intermixed and intermingled.

Four, both hosts and immigrants insisted on rapid Americanization. Immigrants learned English, followed all the laws of their host, and assumed America was good without having to be perfect. Otherwise they would have stayed home.

Fantasy, willful ignorance and an abject refusal to confront evil lead to the mess Europe now finds itself facing.  Reality, as usual, doesn’t deal nicely with those who refuse to recognize it.  The threat to our country comes from those who believe in a culture and religion that, as they would have it implemented, is incompatible with Western ideals.  They have no business here.

Hopefully we won’t duplicate the stupidity with which Europe has so naively committed itself.  There is nothing wrong with slowing things down and ensuring we aren’t allowing those who don’t want to or won’t assimilate into our country.  We don’t need or want those who are like the two just arrested in California and Texas.  And, if that is “Islamaphobia”, then so be it.  I’ll live with the tag.

~McQ

Europe discovers its gas problem

German Chancellor Angela Merkel has declared the G8 to be dead, thanks to Russia’s take over of the Crimea:

German Chancellor Angela Merkel declared the Group of Eight leading nations defunct given the current crisis in Ukraine, in a clear message to Russia that the world’s seven other major industrialized countries consider its actions in Ukraine unacceptable. “As long as there is no political environment for such an important political format as the G-8, the G-8 doesn’t exist anymore, not the summit nor the format,” said Ms. Merkel, in Germany’s parliament, the Bundestag. “Russia is widely isolated in all international organizations,” the chancellor said.

Ah, yes, the old “isolated in all international organizations” gambit.  And what have all the “international organizations” done in reaction to Russia’s Crimean takeover?  About what they did when Russia pushed into Georgia.  A whole lot of nothing. It is one thing to have international organizations that have teeth and are willing to do something in reaction to such a blatant act.  But when they mostly issue statements condeming the action and void the Netflix accounts of certain Russian officals, being isolated from those organizations isn’t such a big deal.  All it does is make further diplomatic efforts more difficult, not that it is clear that Russia is open to diplomatic overtures.

Another thing that is happening is Europe is discovering it has managed to put itself in an energy situation that isn’t at all to its advantage.  30% of Europe’s natural gas flows through Russian pipelines (Germany gets 40% of its natural gas supplies from Russia).

So the scramble is purportedly on to change that situation.

European leaders will seek ways to cut their multi-billion-dollar dependence on Russian gas at talks in Brussels on Thursday and Friday, while stopping short of severing energy ties with Moscow for now. EU officials said the current Ukraine crisis had convinced many in Europe that Russia was no longer reliable and the political will to end its supply dominance had never been greater. “Everyone recognises a major change of pace is needed on the part of the European Union,” one EU official said on condition of anonymity. As alternatives to imported gas, the Brussels talks will debate the European Union’s “indigenous supplies”, which include renewable energy and shale gas.

Now, one would think that such a situation would call for drastic and speedy action.  Anyone want to bet how long they dither and, should they decide to exploit their “indigenous supplies”, how onerous the rules and regulations will be?

When leaders of the European Union’s member states meet today and tomorrow (20-21 March) in Brussels, they hope to reach consensus on the EU’s long-term climate goals. But agreement appears unlikely because of deep divisions between east and west. Ahead of the summit, ministers from 13 member states signed a declaration supporting a European Commission proposal for an EU commitment to reduce carbon dioxide emissions by 40% from 1990 levels by 2030 – up from a 20% target set for 2020. This ‘green growth group’ includes France, Germany, Italy and the UK. But Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia are wary of the target and the timeline, and are resisting any such commitment.

The latter group will most likely be all for moving ahead as speedily as possible to exploit “indigenous supplies”.  They’ll meet some pretty stiff headwinds, apparently, from the Western EU nations. You can almost see this train wreck coming.

Meanwhile in the pursuit of “green energy”, Europe is apparently ready to toss in the towel:

Governments across Europe, regretting the over-generous deals doled out to the renewable energy sector, have begun reneging on them. To slow ruinous power bills hikes, governments are unilaterally rewriting contracts and clawing back unseemly profits.

You have to laugh.  “Unseemly profits”?  They’re subsidies, sir.  Not profit.

It’ll be interesting to see if the EU has the will to sort this all out in the next couple of days.  If one is a betting person, you’d have to guess that the odds for success are long, given the EU’s recent history.

~McQ

Sometimes you just have to shake your head and laugh ruefully

Mostly because you get tired of saying “I told you so”.  Focus – Germany:

With Greenpeace successfully forcing the shutdown of nuclear power, and keeping out fracking for gas, what’s left? A boom in coal. In fact, over the next two years Germany will build 10 new power plants for hard coal.  Europe is in a coal frenzy, building power plants and opening up new mines, practically every month. It might sound odd that a boom in German coal is the result of Greenpeace’s political success.

Yes, this is the sort of thing that happens when governments try to set priorities in a market for political reasons and it blows up in their face:

Europe’s appetite for cheaper electricity is reviving mines that produce the dirtiest Across the continent’s mining belt, from Germany to Poland and the Czech Republic, utilities are expanding open-pit mines that produce lignite. The projects go against the grain of European Union rules limiting emissions and pushing cleaner energy. Alarmed at power prices about double U.S. levels, policy makers are allowing the expansion of coal mines that were scaled back in the past two decades. Lignite demand worldwide is forecast to rise as much as 5.4 percent by 2020, according to the International Energy Agency.

And the preferred energy sources just don’t deliver:

Germany’s wind and solar power production came to an almost complete standstill in early December. More than 23,000 wind turbines stood still. One million photovoltaic systems stopped work nearly completely. For a whole week coal, nuclear and gas power plants had to generate an estimated 95 percent of Germany’s electricity supply.

But if you ask them, these same folks will tell you how much smarter they are than you, how their priorities make more sense than yours and why they should be able to use force to make you live with their choices.

The irony is simply hilarious:

Coal remains the biggest source of fuel for generating electricity in the U.S. and coal exports are growing fast. Demand is being stoked by the rise of power-hungry middle classes in emerging economies, led by China and India. By the end of this decade, coal is expected to surpass oil as the world’s dominant fuel source, according to a recent study by consultant Wood Mackenzie.

And that brings us to the paradox created by government:

Germany’s energy transition has also been a transition to coal: Despite multi-billion subsidies for renewable energy sources, power generation from brown coal (lignite) has climbed to its highest level in Germany since 1990. It is especially coal-fired power plants that are replacing the eight nuclear power plants that were shut down, while less CO2-intensive, but more expensive gas-fired power plants are currently barely competitive. Energy expert Patrick Graichen speaks of Germany’s “energy transition paradox”: the development of solar and wind farms, yet rising carbon dioxide-emissions.

Brilliant!

Oh … and we told you so.

~McQ

Another country from which to “learn”

The question, as posed earlier concerning Britain and France, is will we?

Electricity prices are rising in Germany – and citizen with a low-income are suffering particularly. They are at risk of fuel poverty. 10 to 15 percent of Germans are now struggling to pay their energy bills. 600,000 households have the electricity turned off every year.

Remember, Germany ran scared after the Fukushima disaster and dumped nuclear power (because, you know, German has so many earthquakes and tsunamis).  They then went “green”.  Result?  See above?

Other result?

The CEOs of manufacturing industries are warning that production in Germany is at risk because of low energy prices in the United States. The energy prices there are now only a third of those in Germany. “Many industrial companies are planning to build new factories in the U.S. and not in Europe because of low energy prices there,” said Gisbert Rühl, chief of steel trader Kloeckner. “We are now reacting to this development and plan new business units in the United States.” To move production to the U.S. is especially attractive for companies in energy-intensive industries such as steel and aluminium or chemistry.

That would seem to be good news for us, no?

Well, it should be … except for the Democrats plan to raise taxes on the oil companies.  And Obama’s new wave of regulations.  Oh, and the Obama desire to see fuel prices “skyrocket”, ably aided by his Secretaries of Energy and the Interior.  And the EPA.

Etc.

~McQ

Observations: The QandO Podcast for 20 May 12

This week, Bruce, Michael and Dale talk about Greece, and the folly of governments.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

Crony Capitalism is phony Capitalism–example 6,981: solar subsidies

Via Hot Air is an article by Bjorn Lomborg in Slate.  It reviews the subsides of German toward “green energy” and how that has worked out for them.

Lomborg points out that when the global warming scare was at its height, Germany bought in, hook, line and sinker.  And, as is their way, decided they’d become the “photovoltaic world champion” as it switched to solar power.

How much did the German government commit to this pursuit of clean and green?  $130 billion dollars.

What happened when this tax payer funded gravy train left the station?

Germans installed 7.5 gigawatts of photovoltaic capacity last year, more than double what the government had deemed “acceptable.” It is estimated that this increase alone will lead to a $260 hike in the average consumer’s annual power bill.

Because, you see, solar power is more expensive than that nasty fossil fuel generated energy.  Details, details.

Anyway the government handed out $130 billion in subsides, German’s responded and the net result was a huge drop in greenhouse gasses, namely CO2, right?  Yeah, not so much:

Moreover, this sizeable investment does remarkably little to counter global warming. Even with unrealistically generous assumptions, the unimpressive net effect is that solar power reduces Germany’s CO2 emissions by roughly 8 million metric tons—or about 1 percent – for the next 20 years. To put it another way: By the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.

Reality … what a slap in the face that must have been.  Suddenly, the German government gets “religion”:

According to Der Spiegel, even members of Chancellor Angela Merkel’s staff are now describing the policy as a massive money pit. Philipp Rösler, Germany’s minister of economics and technology, has called the spiraling solar subsidies a “threat to the economy.”

But, as usual, the German government had to learn this the hard way. Markets, we don’t need no stinkin’ markets.  For a $130 billion dollar “investment”, Germany now gets 0.3% of its total power from solar.  Any guess why governments should steer clear of picking winners and losers?

The German government has burned $130 billion to raise the average power bill by $260 a year and delay the dreaded temperature increases by … 23 hours.

Brilliant!

~McQ

Twitter: @McQandO

Stunning

I’m stunned every now and then when I see a story like this.  By the way this isn’t an indictment of Germany, necessarily, its not the only country in which you’ll find such knowledge gaps.  Japan has hidden its atrocities during WWII as well.  In fact, most countries would prefer not to discuss such behavior.  

But it sure makes it hard to say “Never again” and have it mean anything if part of the population doesn’t know what it refers too.

One in five young Germans has no idea that Auschwitz was a Nazi death camp, a poll released Wednesday showed, two days ahead of Holocaust memorial day.

Although 90 percent of those asked did know it was a concentration camp, the poll for Thursday’s edition of Stern news magazine revealed that Auschwitz meant nothing to 21 percent of 18-29 year olds.

And nearly a third of the 1,002 people questioned last Thursday and Friday for the poll were unaware that Auschwitz was in today’s Poland.

Maybe it’s not significant that 21% didn’t recognize a name that is so identified with concentration camps that it could be a synonym.  Perhaps it is good enough that 90% of the total knew it was a concentration camp.  Or does it signal that the shame and the knowledge of the shame brought to Germany by the Nazis is beginning to fade (of course my guess is if you asked the question of the same demographic here in the US, the percentage to which the name would mean nothing would probably be higher)? 

Or, does it perhaps point to a demographic in which a portion is so self-absorbed that history like that represented by Auschwitz simply doesn’t register?

I wonder at times, as I watch the WWII era dim as veterans die off, whether things like D-Day and its import or Pearl Harbor will even get a mention in a few years.  

But back to the poll.  If ever there is something every German school kid should know about it is the Nazi era.  If ever there was a subject to which they should be exposed, to include all of the atrocities by that regime, it is the subject of Germany and Nazism. 

I can’t help but believe, and I don’t know it for sure, that the subject gets taught but it isn’t something that is lingered over by schools.  And I wonder how sanitized it has become now days. 

The fact that a fifth of the young demographic said the name “Auschwitz” had no meaning for them has thinking it is both short and sanitized when presented.  

Wonder if they knew the name “Dachau” (10 mines northwest of Munich).

~McQ

Twitter: @McQandO

Ezra Klein: A larger welfare state might mean a smaller deficit

Honestly, that’s his premise.  You can read it here.  He bases his argument mostly in health care costs.  Obviously where he tries to go with it is toward a single payer system.  But he uses Germany as the model.  Anyone, does Germany have a single payer system?  No, it has a public health insurance program that covers 88% of the population.

Take Germany. They have a pretty big welfare state: pensions, health care, paid vacations, unemployment benefits equal to two-thirds of one’s income.

So that’s great and per Klein, who, like I said, wants you to believe by his vague general description, that Germany has a system like … Canada.

Don’t believe it?  Well it takes that sort of implication to make a statement like this:

To bring this across the Atlantic, you could argue that the United States’s debt burden is the product of an insufficiently large welfare state — at least with regard to health care. To see a stark illustration of that thesis, head to the Web site of the Organization of Economic Cooperation and Development and download their health-care statistics for Canada and the United States [emphasis mine].

Notice how apparently we transitioned seamlessly from a country with health insurance to a country with a single payer system without that being obvious?  In reality we’ve looked at the apple, now he plans on comparing it to the orange:

As recently as 1965, the cost of those two systems competed neck-and-neck. That year, Canada spent 5.9 percent of its GDP on health care. The United States spent 5.7 percent. But around that time, Canada was transitioning to its current single-payer system. Over the next four decades, the growth of health-care costs slowed in Canada while it accelerated in the United States. By 2009, Canada was spending 11 percent of its GDP on health care — and covering everyone. The United States was spending 17.4 percent of its GDP and leaving 45 million uninsured. In dollar terms, we’re spending $3,600 more per person, per year, than Canada.

Emphasis mine.  It’s a pretty ballsy attempt, I’ve got to say.  Here’s another question for those paying attention.  Can anyone tell me what began in 1965?  Anyone?  That’s right … Medicare.  Per Klein, we were actually spending less than Canada until the same year that Medicare and government intrusion into the health care market was made law.

Based on that extraordinarily flawed bit of reasoning which managed to factor out or ignore a major reason for the increase in US health care costs, Klein concludes:

If the United States had Canada’s health-care system, and Canada’s per capita health-care costs, we would have a much “larger” welfare state, but we wouldn’t have a deficit problem.

Really?  Seriously?  You really want to run with that one, Mr. Klein?

Perhaps a less rosy look at Canada might help temper that nonsense a bit. Here’s a Canadian economic analyst speaking about the Canadian healthcare system:

"There’s got to be some change to the status quo whether it happens in three years or 10 years," said Derek Burleton, senior economist at Toronto-Dominion Bank.

"We can’t continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.

"At some stage we’re going to hit a breaking point."

It means crowding out other government services or what? 

That’s right, deficits.

Well, except in Ezra Klein’s magic welfare state where one can happily spend whatever they want and there are no apparent consequences or … deficits.

~McQ

Twitter: @McQandO

Half Solutions Will Not Work

Brett Arends is skeptical about Europe’s current direction:

Their proposal is preposterous. Anything can happen in this life, but it would be remarkable indeed if this idea got off the ground. Anyone pinning their hopes that this will solve the crisis needs to think it through.

Why would the Portuguese accept the right of Germany to impose budget cuts on their country? Why would the Greeks?

Would we accept that role for the Chinese and the Japanese, the biggest holders of Treasury debt? How would you feel if you opened the paper to be told that the new Sino-Japanese “Fiscal Stability Commission” in Washington had just slashed your grandma’s Social Security checks by one-third, scaled back federal highway repairs, and that it would impose a 10% national sales tax?

That is, after all, effectively what is being offered to the people of Greece, Italy, Spain, Portugal and Ireland.

It’s absurd. There is no reason why these countries should have to surrender sovereignty. They can simply, where necessary, default. A default by, say, Louisiana would not destroy the dollar. Neither did the bankruptcy of Enron or Lehman.

What happens when after signing the new treaty (if it ever actually comes to be) the Greeks or Italians decide to thumb their noses at the EU and default anyway? Kick them out? Isn’t that right where we are now? Isn’t the fear that countries are kicked out or leave leading to financial chaos and defaults? Will these countries truly continue to pay their bills and accept austerity in the face of a severe recession/depression?

If that is the concern, just as I have been pointing out for some time, anything short of true fiscal and political union will fail. The right of existing states to refuse to honor the treaty (remember the last one was treated as inconsequential by violators, including Germany and France) cannot exist which means the right of states to secede or be expelled from the union cannot exist. If that option is not off the table then Eurozone bonds cannot be treated as risk free. If they are not seen as risk free then they will be rated accordingly and the Eurozone will be unstable as Louis-Vincent Gave points out:

Basically, we have to remember that the average sovereign debt buyer is not a hazardous investor. The guy who buys a government bond is looking for a very specific outcome: he gives the government 100 only so he can get back 102.5 a year later. That’s all the typical sovereign debt investor is looking for. Nothing more, nothing less.

But now, the problem for all EMU debt is that the range of possible outcomes is growing daily: possible restructurings, possible changes in currencies, possible assumption of other people’s debt, possible mass monetization by the central bank etc. Given this wider range of possible outcomes, and the consequent surge of uncertainty, the natural buyer of EMU debt disappears. Again, the typical sovereign investor is not in the game of handicapping possible outcomes; he is in the game of getting capital back!

This is very problematic because once uncertainty creeps in, bonds will tend to gradually drift towards what I have come to call the bonds “no-man’s-land”. Basically, once sovereign bonds reach 90c to par, they tend to have a much higher volatility and much greater uncertainty. As a result, they are no longer attractive to the typical bond manager or asset allocator looking to buy bonds to diversify equity risk (think how Italian bond yields are now correlated to European equities. If you want to be bullish Italian bonds, you may now just as well spend a fifth of the money and buy European banks for the same portfolio impact…). And once a bond enters into no-man’s-land, it has to fall a lot before attracting the attention of distressed debt and vulture investors (usually yields of 15%+). So the first obvious problem is that more and more European debt markets are entering this “no man’s land” bereft of “normal” investors.

Do these countries need the Euro over the long term to be prosperous? More Brett:

The British look smarter and smarter for staying out of the euro area in the first place. Prime Minister John Major, and then, later, Chancellor of the Exchequer Gordon Brown, each took the decision to keep the British pound free. At the time fashionable opinion predicted disaster for the Brits. So much for that.

(Predictably, fashionable opinion now says the Brits look “isolated” for staying out. Really, you couldn’t make it up).

My guess is Brett is correct that we are no where close to a real resolution, which is a path to political unification or breakup.

It has long been clear the Franco-German duo wanted to use their shared currency to bludgeon the continent into something closer to a federal system.

Any investor pinning their hopes on this bird flying needs to be aware it looks a lot more like a turkey than an eagle.

This week’s meeting of European leaders already marks the fifth “summit” to solve the region’s debt crisis since early 2009.

My favorite comment this time: “After a series of ‘final’ summits, it would be nice this time to have a real ‘final’ summit.” That was from Standard & Poor’s chief European economist, appropriately-enough named Jean-Michel Six. What’s the betting Mr. Six will be attending Summit No. Six in the new year?

Which is not to say that the ECB or some other entity couldn’t stem the immediate crisis and kick the can further down the road. Maybe, but if so the question is how far? A week, a year, five years? That I cannot answer now.