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Global stock markets rallied last week on news that central banks – led by our own hapless Bernanke Fed – would provide cheap, emergency dollar loans to banks in Europe and elsewhere short on cash. Much as markets were buoyed in 2008 following central bank action – only to suffer a much worse hangover later – the same is occurring three years hence.
In 1979 historian Clarence Carson of the University of Alabama published a book with an arresting title on the history and consequences of socialism: The World in the Grip of an Idea. It was at the time one of the more complete studies of the “Idea” which had by then pervaded political economy throughout the world, whether of the revolutionary (Soviet-style) variety, or that of evolutionary socialism as per Fabian England and FDR’s New Deal. Still worth reading today, Professor Carson’s thesis was that socialist ideology as developed in the 19th century was so alluring because it promised — in all its variants — nothing less than the achievement of human felicity on earth, and succor and protection from life’s harsh blows and risks.
As Congress looks for ways to cut its $1.3 trillion deficit, the federal government is paying its employees $137 million a year not to work for Uncle Sam. Not working. That’s right. The Office of Personnel Management reports that taxpayers paid Federal workers over $137 million in 2010 to work as representatives for government unions, up from $129 million in 2009.
The world has been captured by the unending and unfolding drama in the European theatre of dysfunction. Just a little over a month ago the Grand Bargain of European salvation, the European Financial Stability Fund (EFSF), had been proposed to cheering stock markets and commentators. It was breathlessly proclaimed that a comprehensive solution had been found, planned and was ready for implementation. The aligning lights of undemocratic integration would once again triumph over the messy, unseemly free market. Because the economies of the earth had been saved by the mathematical genius of the current financial elite, markets should have been so much less curious about things like details and fine print. Now the fund can barely raise 3 billion euros (out of an expected 440 billion) and is threatened with downgrades, and the bailout needs a bailout.