Catholic Social Teaching » New Jersey CFO

This self-serving arbitrariness

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Sep 242011

“Yesterday, the textbook was thrown out the window. All asset classes saw sudden and sharp moves far in excess of normal volatility patterns. To an old timer, that points to one conclusion. Liquidation. Wide-spread liquidation across asset classes. Currencies, bonds, commodities and stocks all moved swiftly and sharply in a direction that screamed – Seek safety! Raise cash! Get liquid…

All of that had a quick and discernible negative impact on markets. But, the selling was far more pervasive and dramatic than simply a conscious adjustment of positions based upon new data. Thursday’s action screamed liquidation – and not all of it voluntary.”

Art Cashin, 22 September 2011

Every time the central banks and their affiliates get desperate, some economic essayist trots out an outlandish argument about why gold is a ‘barbarous relic.’ Here is one that tops even the almost petulant argument of Willem Buiter in 2009.

The Price of Gold in 2160 – Statsguy and James Kwak

I had to read this essay twice to make sure it just was not satire. I can summarize my reaction by saying that finding gold in outer space with assumed technologies speaks to supply, but the author does not present any assumptions about population, economics structures, and of course future demand.

The method by which gold is formed in relatively rare supernova events is fairly well known, and its distribution relative to other elements and compounds is not completely eccentric, at least not as random and eccentric as pseudo-scientific economic theories might become these days.

The author’s premise of the discovery of new bullion supplies in outer space is analogous to the discovery of the New World by Europeans, and the remarkable finds of gold and silver on those two vast continents.

And yet here we are today.

Some might say that the author was merely saying in a cute way that commodity based currencies always fail, with an example being salt or Yap stones as Mr. Buiter had argued to greater effect.

And I would say that all currencies do go in and out of favor in their time, since there is an element of relativism in value that can be enforced by ruling authorities, who themselves tend to come and go, even if in their time these authorities might seem invincible, their empires intended to last for a thousand years.

But some stores of value, not based on passing utilitarian criteria or force, do tend to be resilient, and come back again and again, and retain an element of value from generation to generation. Or as some might with a more profound understanding of money might say, they maintain the confidence of their steadfastness that is a pre-requisite of sound money that is difficult to maintain by mere force of will.

As some historians of money have pointed out, the Federal Reserve was initially set up to emulate this type of external immutability of value in what later became a purely fiat currency. As men like Andrew Jackson would have predicted, they failed in exactly the same ways and for the same reasons that every other attempt at this has failed throughout history.

All systems are prone to corruption and decay, but none so much as those that rely exclusively on the goodness and wisdom of small groups of powerful men, especially when acting in secret.

It does seems quite cheeky for a modern economist to criticize a natural store of value with a 5000 year history, while standing on the platform of a purely fiat currency, given the short half life of every fiat currency throughout history. They may be recreated and devalued, but they never retain much of their value and character, with the only remnant their name.

I hear the sounds of printing presses over the horizon. Get ready for Quantitative Easing European style, and massive European bailouts, and increasingly absurd arguments from the econo-sphere as they avoid the subject of justice for the sake of expediency.

I have some limited sympathy for the dilemma facing the increasingly desperate western central banks, and understand their rationalizations. But they are doing something that is the very epitome of moral hazard, and abuse of power, in their attempts to stabilize the unsustainable, without allowing for meaningful change and reform.

The heart of the issue is that the existing monetary and financial system is becoming increasingly arbitrary and corrupt. A relatively small group of interconnected crony capitalists wishes to create a digital money out of nothing, and distribute it increasingly as they will, to whom they will.

And this is the basis of my resentment with this policy abuse, and the irritation with the assault on reason by those in the financial demimonde engaging in what might be politely called perception management.

This self-serving arbitrariness, even if done for ‘good motives,’ is the very reason why all fiat currencies fail. No matter how you want to rationalize it they are going to create money out of nothing, and give it to whom they will, while corrupting the political system in the process.

And the cumulative results of this abuse of power are corrosive to society. Lawless example by a ruthless few brings out the worst in all the people, always. And that is a shame.

“Our government teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”

Louis D. Brandeis

Gold Daily and Silver Weekly Charts – Liquidation Panic – Martian Gold – Comex Hikes Margins

JESSE’S CAFE

The Psychology of Society

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Sep 102011

Europe was so organized socially and economically as to secure the maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life of the mass of the population, Society was so framed as to throw a great part of the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption. In fact, it was precisely the inequality of the distribution of wealth which made possible those vast accumulations of fixed wealth and of capital improvements which distinguished that age from all others. Herein lay, in fact, the main justification of the Capitalist System. If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect.

The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a Society where wealth was divided equitably. The railways of the world, which that age built as a monument to posterity, were, not less than the Pyramids of Egypt, the work of labor which was not free to consume in immediate enjoyment the full equivalent of its efforts.

Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the laboring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority, and the well-established order of Society into accepting, a situation in which they could call their own very little of the cake that they and Nature and the capitalists were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the non-consumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory,—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.

“The Economic Consequences of the Peace.” J M Keynes

Opinion: GOP’s ‘alternate universe’ Matt Stoller, Politico

An intellectually honest conservative faction might be arguing that this is what it seeks — a revolutionary change.

Meanwhile, Republicans assert that unemployment benefits are what’s stopping the nation’s jobless from finding work, though the U.S. lost millions of jobs in the economic crisis and employment is now higher than 9 percent.

So there is little discussion about extending unemployment insurance, even as benefits run out, because the deficit is the GOP’s gravest economic emergency. There’s no debate about ways to address high unemployment — just deny reality and enforce it with the Leninist-style propaganda arm of Fox News, Rush Limbaugh and Glenn Beck.

But there is a big problem. America is simply not set up to handle one political party that bases its political organizing on an alternate reality and the raw power of propaganda. The U.S. government, and our public debates, are organized around the idea that there’s some measure of good faith in both parties, some common basis on which to make decisions.

I do not think most Republicans realize this is how their party operates — but the more cynical high-level operatives certainly do.

When George W. Bush ran for president in 2000, one of his campaign promises was to avoid nation-building. His presidency, of course, shifted America toward endless war and occupation of foreign countries — based on overt deceptions, like implying there was a link between the Sept. 11 terrorists and Saddam Hussein. Bush had his secretary of state, Colin Powell, hold up a vial of powder at the U.N. to show we had allegedly solid intelligence about Hussein’s weapons capabilities.

Back in 2004, a Bush administration official laid out what is now clearly the Republican Party’s guiding philosophy. The official spoke to a journalist as though he were from a foreign land — since he hailed from “what we call the reality-based community.”

“When we act,” the official said, “we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.”

It’s unclear whether the Republicans want to, or even can, leave this alternate universe that they have constructed. Unfortunately, it’s also unclear whether our society can survive it.

Matt Stoller worked on the Dodd-Frank financial reform law and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (D-Fla.). He is now a fellow at the Roosevelt Institute.

During the Depression bankers became so unpopular that bank robbers, such as Bonnie and Clyde, became folk heroes.^[54]

SAVING THE ‘SOCIAL SAFETY NET’

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Apr 102011

I don’t subscribe to it, but there is a theory that Franklin Roosevelt saved capitalism. According to the theory, by co-opting the left, FDR prevented the real radicals and socialists from gaining power at the national level.

It is, to say the least, an ironic theory — which makes me think of the irony currently surrounding House Budget Chairman Paul Ryan’s proposed budget.

Whether for pragmatic political reasons or sincere belief that America must preserve a social safety net (if for no other reason than that Americans have ostensibly paid into the system and have grown to expect it), Ryan’s budget proposals could ultimately do more to preserve a social safety net than anything liberal Democrats could pass.

“We ought to have a social safety net to help people who are down on their luck and people who cannot help themselves,” Ryan said at a Tuesday morning press conference. “The problem is, our social safety net is fraying at the seams.

Paul Ryan and the Irony of Saving the ‘Social Safety Net’
By Matt Lewis, The Daily Caller

“They did it. Yes, there is a ‘they’: the captains of finance, their lobbyists, and allies among leading politicians of both parties, who together destroyed an American regulatory system that had been functioning splendidly. …”

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Apr 092011

The delusion of a classless America in which opportunity is equally distributed is the most effective deception perpetrated by the moneyed elite that controls all the key levers of power in what passes for our democracy. It is a myth blown away by Nobel Prize winner Joseph E. Stiglitz in the current issue of Vanity Fair. In an article titled “Of the 1%, by the 1%, for the 1%” Stiglitz states that the top thin layer of the superwealthy controls 40 percent of all wealth in what is now the most sharply class-divided of all developed nations: “Americans have been watching protests against repressive regimes that concentrate massive wealth in the hands of an elite few. Yet, in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.”

That is the harsh reality obscured by the media’s focus on celebrity gossip, sports rivalries and lotteries, situations in which the average person can pretend that he or she is plugged into the winning side. The illusion of personal power substitutes consumer sovereignty—which smartphone to purchase—for real power over the decisions that affect our lives. Even though most Americans accept that the political game is rigged, we have long assumed that the choices we make in the economic sphere as to career and home are matters that respond to our wisdom and will. But the banking tsunami that wiped out so many jobs and so much homeownership has demonstrated that most Americans have no real control over any of that, and while they suffer, the corporate rich reward themselves in direct proportion to the amount of suffering they have caused.

Instead of taxing the superrich on the bonuses dispensed by top corporations such as Exxon, Bank of America, General Electric, Chevron and Boeing, all of which managed to avoid paying any federal corporate taxes last year, the politicians of both parties in Congress are about to accede to the Republican demand that programs that help ordinary folks be cut to pay for the programs that bailed out the banks.

It is a reality further obscured by the academic elite, led by economists who receive enormous payoffs from Wall Street in speaking and consulting fees, and their less privileged university colleagues who are so often dependent upon wealthy sponsors for their research funding. Then there are the media, which are indistinguishable parts of the corporate-owned culture and which with rare exception pretend that we are all in the same lifeboat while they fawn in their coverage of those who bilk us and also dispense fat fees to top pundits. Complementing all that is the dark distraction of the faux populists, led by tea party demagogues, who blame unions and immigrants for the crimes of Wall Street hustlers.

The Delusion Of a Classless United States – Robert Scheer, The Nation

America Appears To Be Trapped in a Massive Coverup of Control Fraud and Corruption

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Jan 272011

ONE OF THE MOST IMPORTANT POSTS TO READ IN ORDER TO FULLY UNDERSTAND THE DIRE STRAITS THIS COUNTRY IS IN!

AT JESSE’S:

I think most readers with an economics background would be familiar with a liquidity trap, which is a situation where monetary policy is unable to stimulate an economy suffering a non-cyclical credit contraction, either through lowering interest rates or increasing the money supply because expectations of adverse events (e.g., exogenous deflationary factors, insufficient aggregate demand, or civil or international war) make persons with liquid assets unwilling to invest.

America is caught in a confidence or credibility trap, in which the changes, investigations, and reforms necessary to restore trust to an economy or market are rendered unlikely because doing so would expose a pervasive corruption that the principals fear would destroy any remaining trust. It could also endanger the careers of politicians and business people who may have permitted and even appeared to facilitate the control fraud that caused the financial crisis in the first place. Personal risk trumps public stewardship.

The fraudulent activity is covered up and therefore continues or at the very least appears to continue, crowding out most productive business investment and activity which cannot possibly hope to compete with the highly profitable fraudulent activity ad asset bubbles under such opaque and uncertain circumstances. Informed market participants are unwilling to invest their liquid assets in a system which they suspect is riddled with accounting fraud, insider trading, and regulatory weaknesses, except of course in a few situations and somewhat ironically in some existing frauds, such as a bubble in equity valuations for example, which they think they understand.

The American government is indeed acting as if it is involved in a massive coverup of a control fraud and corruption that could perhaps be the worst in its history. I think many people who are looking at this know in their hearts that all is not well, that there is something not quite right in the current situation. How else can we explain such massive and widespread financial fraud, with so few meaningful indictments, or even ongoing investigations with credible disclosures? And the worst perpetrators appear to be dictating the remedies and reforms to the system for this government sponsored recovery.

Hank, Tim, and Ben alluded to the consequences of the discovery and uncontrolled disclosure of this fraud, and it frightened the Congress so badly that they immediately gave up and signed over 700 billion dollars, and many billions more, to facilitate the coverup of this under the guise of recovery and stabilization. I would like to imagine that those in charge are attempting to prevent a panic while they put out the fires, but I see little serious remedies designed to save the public, much less than to perpetuate the firetrap. And so the corruption continues to smolder and fester, and thereby debilitate the nation.

More than an American scandal, this fraud reaches deep into the halls of power in Europe, some of whose national governments are already failing. What had been the Keating Five is now the Global Finance 500.

People say they understand this, but they really do not understand the implications of it. They intellectualize and theorize around it, try to deal with it by smashing it down into something they can get their mind around and accept. They may even try to turn it to their short term personal financial advantage. But they are not dealing with it and certainly not facing up to it.

The US banking system controls the issue of the reserve currency of the world, which impacts the price of virtually everything that is bought and sold.

And as you might expect there are many whose vested interest is to distract and to change the subject away from it. There is a great deal of money to be made by serving the desire to turn people’s attention away from the problem to find someone else to blame, some other problem to focus upon, and some new victim class to absorb the public anger. It is an old story, often repeated in tragedy.

Thirteen Ways to Hide the Truth

But unfortunately, confronting the truth and fixing the situation is key to any sort of sustainable recovery. And this is the trap of crony capitalism and control fraud, when it has nearly exhausted its victims, and is having difficulty finding new ones to maintain its growth and facade.

Until that time there will be a procession of scapegoats, defaults, bailouts, and property seizures, both implicit and explicit, and a growing toll of innocent victims and systemic destruction, ending finally in the collapse of the US national currency and international trade.

If it had not been that the US is so large, and for the time being controls the bulk of the world’s reserve currency, it is likely this would have already come to some conclusion before spreading so widely and pervasively. But the situation remains highly unstable and threatening, despite assurances to the contrary.

William K. Black is telling us something very important, as Harry Markopolos had been trying to tell some simple but important things to the investors in Bernie Madoff’s investment scheme. The Madoff investors preferred to vilify and ignore him. It appears that the same thing is happening to William Black. And the final outcomes may be similar.

What can one person do besides to spread the word, and demand the truth in their own place and their own way? Support those who stand and tell the truth, sometimes at great cost. Insulate and remove yourself from the fraud as best you can to preserve your wealth and your integrity.

Above all resist the disinformation, propaganda, and distractions, and all the insidious rationalization and convenient skepticism to complicit apathy, making it clear that you will be neither a willing victim nor a silent bystander to the intoxicant of blame and hatred, and the victimization of others designed to turn the people on one another, be they Gypsy, Muslim, Jew or Christian, black, white, Asian, Hispanic, disabled, old, poor, ill or weak, or any other variety of outsider and convenient target.

For once the madness starts, it can never be controlled, and will eventually come for all, and consume all.

The Great American Bank Robbery
Video – Lecture
By William K. Black

1. Why do we have repeated, intensifying economic crises?
2. What can white collar criminology add to our understanding of what’s going wrong?

Note: The William K. Black video was first served at this Cafe in August of 2009 in a post titled The Great American Bank Robbery.

America Appears To Be Trapped in a Massive Coverup of Control Fraud and Corruption

Behold War, not Peace

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Dec 192010

Again war. Again sufferings, necessary to nobody, utterly uncalled for. Again fraud, again the universal stupefaction and brutalization of men.

Men who are separated from each other by thousands of miles … are seeking out one another, in order to kill, torture, and mutilate each other in the cruelest way possible. What can this be? Is it a dream or a reality? Something is taking place which should not, cannot be; one longs to believe that it is a dream and to wake from it.

But no, it is not a dream, it is a dreadful reality!

…How can so-called enlightened men preach war, support it, participate in it, and worst of all, without suffering the dangers of war themselves, incite others to it, sending their unfortunate defrauded brothers to fight? These so-called enlightened men cannot possibly ignore … all that has and is being written about the cruelty, futility and senselessness of war. They are regarded as enlightened men precisely because they know all this. The majority of them have themselves written and spoken about it. … No enlightened man can help knowing that the universal competition in the armament of states must inevitably lead them to endless wars or to a general bankruptcy, or else to both the one and the other. …

Everyone knows and cannot help but knowing that, above all, war, calling forth the lowest animal passions, deprave and brutalize men. … All so-called enlightened men know this. Then suddenly war begins and all this is instantly forgotten, and the same men who but yesterday were proving the cruelty, futility, the senselessness of wars, now think, speak and write only about killing as many men as possible, about ruining and destroying the greatest possible amounts of human labor, and about exciting as much as possible the passion of hatred in those peaceful, harmless, industrious men who by their labour feed, clothe, maintain these same pseudo-enlightened men who compel them to commit those dreadful deeds contrary to their conscience, welfare or faith.

Something is taking place incomprehensible and impossible in its cruelty, falsehood and stupidity …. Stupefied by prayers, sermons, exhortations, by processions, pictures and newspapers, the cannon-fodder — hundreds of thousands of men, uniformly dressed, carrying divers deadly weapons, leaving their parents, wives, children, with hearts of agony but with artificial bravado — go where they, risking their own lives, will commit the most dreadful act of killing men whom they do not know and who have done them no harm. And they are followed by doctors and nurses who somehow imagine that at home they cannot serve simple peaceful suffering people but can only serve those who are engaged in slaughtering each other. Those who remain at home are gladdened by news of the murder of men, and when they learn that many [enemies] have been killed, they thank someone whom they call God.

All this is not only regarded as the manifestation of elevated feeling, but those who refrain from such manifestations, if they endeavour to disabuse men, are deemed traitors and betrayers, and are in danger of being abused and beaten by a brutalized crowd, which in defense of its insanity and cruelty can possess no other weapon than brute force.

Lev Nikolayevich Tolstoy, 1904 (trans. by Evgeny Lampert, in Essays From Tula, Sheppard Press 1948)

The financial sector is trying to get politicians to siphon off money from labor and industry to pay bankers. This will impede capital formation and living standards.

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Dec 192010

10.

1. A recent article of yours, “Schemes of the Rich and Greedy,” cites the bailouts in Europe among such schemes. What are the main faults with bailouts, and for whom are they designed?

The financial sector is trying to get politicians to siphon off money from labor and industry to pay bankers. This will impede capital formation and living standards.

The banks misrepresented the real value of balance sheet and hence what they really were owed under actual market conditions. Now that they have taken the money and run, the «real» economy is being told to pay the off their bad loans. The arrogance of this demand prompted Angela Merkel to ask why governments – meaning «taxpayers» – should pay for bad bank loans and corrupt financial dealing.

Nice try if bankers can get away with it! But I’m glad to see Germany opposing the EU proposal to double its bailout fund.

Financial Interests Dictate Sovereign Policy Michael Hudson

A lot of people forget that having debt you can’t pay back really sucks. Debt is not just a credit instrument, it is an instrument of political and economic control.

It’s actually baked into our culture. The phrase ‘the man’, as in ‘fight the man’, referred originally to creditors. ‘The man’ in the 19th century stood for ‘furnishing man’, the merchant that sold 19th century sharecroppers and Southern farmers their supplies for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they were entering, were charged interest rates of 80-100 percent a year, with a lien places on their crops. When approaching a furnishing agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.

They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it ’shocking’. These were the fruits of usury, a society built on unsustainable debt peonage.

Power farming displaces tenants from the land in the western dry cotton area. Childress County, Texas, 1938.

Stoller: A Debtcropper Society

By Matt Stoller, a blogger-turned Congressional staffer. He was a policy advisor to Rep. Alan Grayson on financial policy issues. Cross posted from New Deal 2.0.

Today, we are in the midst of creating a second sharecropper society. I first heard the term “slaves to the bank” from a constituent fighting a fraudulent foreclosure. The details aren’t so important — this couple had been illegally placed in a predatory loan — but at one point, the wife explained that she and her husband were so scared they would have “given their first born to the bank to keep their home”. That was fear speaking, total unadulterated panic. And as we watch debt-holders use the ornaments of fear, such a loan sharking company that set up fake courts to convince debtors they were losing cases, we should recognize that what the creditor class wants is what they’ve always wanted: total dominance of our culture.

Today, the debts do not involve liens against crops. People in modern America carry student loans, credit card debt, and mortgages. All of these are hard to pay back, often bringing with them impenetrable contracts and illegal fees. Credit card debt is difficult to discharge in bankruptcy and a default on a home loan can leave you homeless. A student loan debt is literally a claim against a life — you cannot discharge it in bankruptcy, and if you die, your parents are obligated to pay it. If the banks have their way, mortgages and deficiency judgments will follow you around forever, as they do in Spain.

Young people and what only cynics might call ‘homeowners’ have no choice but to jump on the treadmill of debt, as debtcroppers. The goal is not to have them pay off their debts, but to owe forever. Whatever a debtcropper owes, a wealthy creditor owns. And as a bonus, the heavier the debt burden of American citizenry, the less able we are able to organize and claim our democratic rights as citizens. Debtcroppers don’t start companies and innovate, they don’t take chances, and they don’t claim their political rights. Think about this when you hear the calls from ex-Morgan Stanley banker and current World Bank President Robert Zoellick and his nebulous mutterings pining for the gold standard. Or when you hear Warren Buffett partner Charlie Munger talk about how the bailouts of the wealthy were patriotic, but we mustn’t bail out homeowners for fear of ‘moral hazard’. Or when you hear Pete Peterson Foundation President and former Comptroller General David Walker yearn nostalgically for debtor’s prisons.

Unclogging our constipated economy is not a complex problem — we must simply wipe out the bad debt that cannot be paid back. The complexity of the problem lies in the politics. Debtcroppers have no power, except to stop paying their debts. The constituents I worked with on a fraudulent foreclosure eventually did just that. She and her husband, unshackled by panic, began rebuilding their lives, throwing away their indentured servitude to the bank that abused them. They found their dignity, and used the court system to claim their rights as citizens. They fought the man, successfully, and wiped out their debt. And that is a very scary threat to the creditor class, perhaps the only thing they are really scared of.

Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory.

****************************************************************************

European Council

President of the European Council, Herman Van Rompuy.

The European Council gives direction to the EU, and convenes at least four times a year. It comprises the President of the European Council, the President of the European Commission and one representative per member state; either its head of state or head of government. The European Council has been described by some as the Union’s “supreme political authority”.^[58] It is actively involved in the negotiation of the treaty changes and defines the EU’s policy agenda and strategies.

The European Council uses its leadership role to sort out disputes between member states and the institutions, and to resolve political crises and disagreements over controversial issues and policies. It acts externally as a “collective Head of State” and ratifies important documents (e.g. international agreements and treaties).^[59]

On 19 November 2009, Herman Van Rompuy was chosen as the first permanent President of the European Council. On 1 December 2009, the Treaty of Lisbon entered into force and he assumed office. Ensuring the external representation of the EU,^[60] driving consensus and settling divergences among members are tasks for the President both during the convocations of the European Council and in the time periods between them.

***************************************************************************

The EU became illegitimate when it refused to accept the rejection of theEuropean Constitution by French and Dutch voters in 2005. There can be no justification for reviving the text as the Lisbon Treaty and ramming it through by parliamentary procedure without referenda, in what amounted to an authoritarian Putsch. (Yes, the national parliaments were themselves elected – so don’t write indignant comments pointing this out – but what was their motive for denying their own peoples a vote in this specific instance? Elected leaders can violate democracy as well. There was a corporal from Austria … but let’s not get into that).

Ireland was the one country forced to hold a vote by its constitutional court. When this lonely electorate also voted no, the EU again disregarded the result and intimidated Ireland into voting a second time to get it “right”.

This is the behaviour of a proto-Fascist organization, so if Ireland now – by historic irony, and in condign retribution – sets off the chain-reaction that destroys the eurozone and the European Union, it will be hard to resist the temptation of opening a bottle of Connemara whisky and enjoying the moment. But resist one must. The cataclysm will not be pretty.

The horrible truth starts to dawn on Europe’s leaders Ambrose Evans-Pritchard, Telegraph

The QE Failure

A Changing Europe, A Growing List Of One Term Presidents, A Moral Question - Not A Political One, A Shareholder-Not Just a "Stakeholder", A State of Distress, A Time To Repent, Catholic Social Teaching, Collateral Damage, Coming Social Unrest, Commercial Real Estate Bust, Consumption Ran the Old Economy, Creditors Caveat, Death of the Dollar, Deficit Death Spiral, Deflation-Inflation-Stagflation, Deleveraging, Small Business-Bedrock of America, Smaller Can Be Better, Subsidiarity, TARP fruit loops, The American Financial Oligarchy, The Consequences of Greed, The Currency Wars Officially Begin, The Economics of Schumpeter, The End of American Capitalism As We Know It? - Discuss, The excellent adventures of Ben Bernanke, The Financial Elite, The Importance of Strategic Planning, The Inherent Disorder of Empires, The Intrusion of UNLAWFUL Authority, The Judeo-Christian Political Coalition, The New American Socialism, The Obama OMG magic factory, The Suffering Poor, Unintended Consequences, USA Is the New Japan, Wage Deflation, We Are All Cooked, We Have Become Beggars To The World, Who Guarantees the Guarantor?-You Do!, Who owns Congress-Still! No Responses »

Oct 242010

The world seems full of smoke ahead of a world currency war. The weapon of choice is quantitative easing, a.k.a. QE. If you print a trillion, I’ll print a trillion. Of course, he and she will too. No change in exchange rates after a trillion? Let’s do it again, QE2. If you listen to people like Geithner, the end of the world is quite near. Rich people everywhere are buying gold for a little peace of mind, not just the Chinese. They are literally trucking it by the ton or two home. When currency values vanish in a QE melee, at least the rich have the gold to stay rich.

If you listen to American pundits, politicians or government officials, it’s all China’s fault. China is far from perfect. Its currency policy certainly isn’t. But it is not the cause for the world’s ills. The U.S. is by far the biggest source of uncertainty and the initiator of the QE war. Its elite created the biggest financial bubble since 1929, even removing regulations designed to prevent it, and left the U.S. economy in shambles after its burst. The same people want to find a quick cure to hold onto their power. Unfortunately, there is no quick cure.

The U.S. has cut interest rates to zero and run up the budget deficit to 10 percent of GDP. It’s a shock-and-awe Keneysian policy. But, after a few quarters of strong growth, the economy is turning down again, and the unemployment remains close to 10 percent. And this figure would be much higher, close to 20 percent like Spain’s, if it included the underemployed and those who have stopped looking for work.

The stimulus has failed.

QE: The Numberless Oblivion Andy Xie, Caixin.

Let Them Eat Credit

A Growing List Of One Term Presidents, A Moral Question - Not A Political One, A State of Distress, AIG and all that....., Audit the auditors?, “the Greenspan doctrine”, Bilderbergers 1 USA 0, Catholic Social Teaching, China and the Treasuries - A Dependency Relationship, Collateral Damage, Coming Social Unrest, Constitutional Questions, Consumption Ran the Old Economy, Coup d'etat in America, Death of the Dollar, Deficit Death Spiral, Deflation-Inflation-Stagflation, Derivatives Reform, Did they ever hear of GAAP?, Dismal Science-Ignorant Scientists?, Economic Analysis Isn't Science, Federal Reserve-Discussion, Greenspan is kind of stupid, It Is Nice To Be Part of the Elite!, It Is Supposed to be a Republic!, Let's Call What It Is - DEPRESSION, Monetary Policy - Discussion, Moral Hazard, No Bank Is Indispensable, Obama Bingo, Obama's Hypocrisy, Our phony middle class, Patience is a virtue...Delusion is a vice, Political Chaos, Political Implications, Regulatory Failures, Subsidiarity, TARP fruit loops, The American Financial Oligarchy, The Consequences of Greed, The End of American Capitalism As We Know It? - Discuss, The excellent adventures of Ben Bernanke, The Financial Elite, The Importance of Strategic Planning, The Inherent Disorder of Empires, The Intrusion of UNLAWFUL Authority, The Judeo-Christian Political Coalition, The New American Socialism, The Obama OMG magic factory, The Sorry State Of American Manufacturing, The Suffering Poor, Unemployment Catastrophe, Unintended Consequences, We Have Become Beggars To The World No Responses »

Aug 292010

By most counts, the U.S. economy started growing in the middle of last year. For many Americans, though, it does not feel as if the Great Recession has ended—unemployment and underemployment are still alarmingly high, and job growth is weak. Many causes have been suggested for both the economic collapse and mediocre recovery, but one that is hardly ever mentioned is income inequality. This is a mistake. Growing income inequality in the United States and the policy responses it has spawned have done tremendous damage to our economy. And because we continue to ignore this underlying problem, the risks of our policies leading to another calamity will not go away, no matter what we do to reform the financial sector.

Since 1968, income inequality has been steadily increasing in the United States. I am not referring to the Croesus-like income of a John Paulsen, the hedge fund manager who in 2008 netted over $3 billion, about 75,000 times the average household income. I refer to a more worrying everyday phenomenon that confronts most Americans, the disparity in income growth rates between a manager at the local supermarket and the typical factory worker or office assistant. Since the 1970s, the wages of the former, typically workers at the 90th percentile of the wage distribution in the United States, have grown much faster than the wages of the latter, the typical median worker. Or consider the table below, which shows that the wages of occupation groups that are paid more than the national average in 2002 have grown much faster since then than the wages of occupation groups below the average:

The Inequality Gap Is Ruining the American Economy—and Bernanke Is Just Making it Worse Raghuram G. Rajan

“All work, whether building, increasing food production, running credit unions, working in factories which produce for true human needs, working the smallest of industries, the handicrafts – all these things come under the heading of the Works of Mercy, which are the opposite of the works of war.”

Catholic Social Teaching No Responses »

Jul 042010

A great spiritual teacher gave this advice to one of her students: “Confess your hidden faults. Approach what you find repulsive. Help those you think you cannot help. Anything you are attached to, let it go. Go to places that scare you.” That should be enough to scare the wits out of anyone – and a very good thing too! There is nothing so repulsive as the ‘missionary’ who has developed the style of a persuasive salesman. It is a good thing to go out trembling. Among other things, it shows humility and respect.

Every follower of Christ is called to proclaim the Kingdom of God. Even reluctant followers. To the man who was making excuses for not following, Jesus said, “Go and proclaim the Kingdom of God” (Lk 9:60). A little earlier Luke had described the sending out of the Twelve. But the instructions Jesus gave to the Twelve (in chapter 9) and to the Seventy-Two (in chapter 10) are practically the same. From this we are to understand that every Christian is an apostle – a word that means ‘sent’. If you feel like a lamb among wolves, that’s the way you should expect to feel: it is written in the gospels.

You could say that in our time the parable of the lost sheep is reversed: there is one lone sheep in the sheepfold and the ninety-nine are lost. Moreover, most of the shepherds spend their time looking after the one sheep. There is a feeling of security about this, but it is fed by fear, not by faith. Not many of the shepherds are going to places that scare them. The last betrayal is when they attack anyone who does.

What sort of qualifications do you need for going out to others? Do you need a diploma in catechetics? No. Not one of the Seventy-Two had a diploma of any kind – nor any of the Twelve. Jesus himself had no diplomas or degrees. But what you have to have is love. If you love genuinely, you are a missionary: you are going out of yourself. If you go out to even one stranger you are, in a way, going out “to the whole world.” And if you go out to an enemy, you are standing on the highest peak of the Christian life.

But what do I say, what do I do? Here is a word of advice from Dorothy Day, who co-founded the Catholic Worker movement: “We do what we can, and the whole field of all the Works of Mercy is open to us. There is a saying, ‘Do what you are doing.’ If you are a student, study, prepare, in order to give to others, and keep alive in yourself the vision of a new social order. All work, whether building, increasing food production, running credit unions, working in factories which produce for true human needs, working the smallest of industries, the handicrafts – all these things come under the heading of the Works of Mercy, which are the opposite of the works of war.”

On Prudence and the Tyranny of Tolerance

Catholic Social Teaching No Responses »

Mar 132010

by Dr. Jeff Mirus, March 11, 2010

Our coverage of the decision of a Catholic school not to enroll a student being raised by lesbians has stimulated a vigorous exchange of ideas (see Denver Catholic school: Lesbian couple’s child may not re-enroll, and Archbishop Chaput defends school’s decision not to re-enroll lesbian’s children and my commentary, Teaching with Blood). Many readers offered opinions on the question of whether the school was right or wrong to exclude the child, with some holding that the school was wrong. These argued that the school should have admitted the child despite the deeply immoral structure of his “family”.

Alternative Approaches

Those who disagreed with the school’s decision can be divided into four groups. The first group proposed that it would have been strategically more effective to tell the self-professed lesbian guardians that the child could remain in school, but the school would continue to teach that lesbian relationships are seriously disordered. They argued that this would be the best tactical decision because it would enable the school to avoid a public relations problem, allowing the chips to fall where they may without any violation of Catholic principles. Let’s call this “Solution 1”.

A second group argued that it is impossible for the Church to fairly judge the Catholicity of the parents as a basis for enrolling their children. After all, even Catholic schools with very high Catholic doctrinal standards and policies of Catholic family commitment must inevitably enroll students from families suffering from our culture’s endemic problems, such as divorce, the use of contraception and the support of pro-abortion politicians or even of abortion itself. Therefore, this group suggested that it was unwise to try to draw a line in this case. Here we have “Solution 2”.

A third group argued that, first, we must hate the sin and love the sinner and, second, the sins of the “parents” should not be visited on the children. Therefore, since the admission of the child does not directly bear on the sin of the guardians, the school should have re-enrolled the student. We’ll call this “Solution 3”.

A final group argued that tolerance must trump other considerations, not only for its own sake, but because being perceived as intolerant causes grave problems for the Church. The presumption here is that Jesus would have welcomed everybody with open arms. Therefore, surely the child should be enrolled. Hence “Solution 4”. Note that all the alternative solutions have the same result—a decision to re-enroll the student in question—but they are worth examining separately because each presents a different argument.

A Prudential Decision

This is a fascinating case of prudential judgment at work. Indeed, perhaps the most important point is that each correspondent—even those with the strongest views—seemed to recognize that this is a prudential question. In fact it is necessary to recognize that we are in the realm of prudence here. In a problematic situation the Catholic Faith does not demand that we admit or not admit any particular student. The right decision depends on many circumstances. But precisely because this is a prudential issue, it is worth examining the various lines of argument as a sort of case study of how good Catholics ought to reason things through. So let’s look at each solution more carefully.

The reasoning behind solutions 1 and 2 is quite similar, and would seem to have much to recommend it. A decision reached for tactical reasons (Solution 1)—that is, to minimize damage in a potentially hostile cultural situation—gathers strength from the very difficulty of drawing accurate lines of exclusion as noted in Solution 2. And a decision reached because of an inability to apply just rules of exclusion (Solution 2) gathers strength from the tactical advantages proposed in Solution 1. Both solutions also envision that, despite the unfortunate pressure readmission would place on the child, it might well do some good in the long run to expose the child to Catholic teaching.

In a diocese which positions its schools to serve all comers, whether Catholic or not, presumably the thinking involved in solutions 1 and 2 would carry the day. But the problem is complicated in the Denver situation because of the diocese’s specific determination to promote not only faithful Catholic teaching but the creation of a supportive Catholic community among the families involved in the schools. Most parents who care deeply about the Catholic formation of their children consider more than just the orthodoxy of the curriculum; they also examine the student environment and the nature of parental involvement. These are perfectly legitimate concerns; indeed, for good parents one would think they are mandatory. Surely parents—and the diocese as a whole—should have the right to set up their school system to actively secure this preferred environment.

This goal raises the vexing question of how to ensure a strong Catholic school community. Typically such schools will have “purity policies” not because they can or will be enforced with complete uniformity, but to serve as a publicly-stated rule, embedded in the institution’s purpose, to be applied in “flashpoint” cases which, in the judgment of the school administration, would otherwise significantly weaken the school community’s ability to achieve its purpose. The abandonment of this line of defense is seldom taken lightly by concerned parents, and should never be taken lightly by any school. The point is not at all to ensure that every parent is a perfect Catholic. Instead, the purpose is twofold: First, to serve notice to all who seek admission that a commitment to Catholic principles is expected by the school; second, to provide a basis for rejection in extreme cases.

Is the case in question an extreme case? Is it more extreme than divorce and remarriage, the use of contraception, or the failure of some parents to accept all that the Church teaches? This is again a prudential judgment, but there are certainly good grounds for answering in the affirmative. Homosexual “rights” and same-sex “marriage” are at the forefront of the culture wars at present. They are critical issues affecting the very existence of Catholic services, and they are the most likely occasion for the persecution of Catholics for hate speech and other “crimes”. Moreover, these issues are so sensitive in the present culture that it is difficult to conceive of a lesbian “couple” wishing to enroll a child in a Catholic school without in some way wanting that enrollment to serve as a direct challenge to the values of the Catholic Church.

For all these reasons, solutions 1 and 2 can be judged prudentially optimal only if two conditions can be met: First, it must be reasonable to foresee that more good than harm will be done to the child by permitting him to be placed in this moral and cultural crossfire. Second, it must be reasonable to foresee that, all things considered, the admission of this “family” to the school community would not generally weaken the community’s understanding of and commitment to the Church’s teaching on marriage. Of course solutions 1 and 2 could also be preferred, with their logic intact, if all available alternatives could be reasonably argued to be significantly worse.

Faulty Principles

Solutions 3 and 4 are more problematic, not in their result (which is the same as for solutions 1 and 2) but in their reasoning. First, both solutions come too close for comfort to attempting to solve this admissions question on the basis of absolute principle. I have already said that all correspondents seemed to recognize the fundamentally prudential aspect of the case, but there was at least a hint in some opinions that either the principle of love or the principle of tolerance should somehow override other considerations, rather than simply add to the required list of considerations.

Turning to Solution 3, which emphasized loving the sinner and the children of sinners, the problem I find is that the principles it invokes are not adequate to resolve the issue. Questions concerning the admission of a student into a school do not revolve solely around our love or hate for the guardians or the student, or even our fairness or unfairness to the student (who clearly is not responsible for the sins of his guardians). Rather such decisions must be taken in the context of the common good of the entire school community. Worse, it is not at all clear that greater love is shown to the parents or the student by admitting or not admitting the student. “Love” and “protecting people from the consequences of their actions” are not the same thing. And despite the obvious benefits of a Catholic education, it is not clear in this case that the greater love is shown by offering that education to this student under these circumstances. Thus the aphorisms cited in Solution 3 invite us to think further about the question of fairness to both the guardians and the student, but they are simply inadequate in themselves for the purpose of generating a wise decision.

We come, then, to Solution 4, which invokes the overarching and uniquely modern principle of tolerance. The idea of tolerance is often invoked, and in many different situations, as the guiding principle which trumps all others. In fact, tolerance is typically introduced as the only possible answer to the question of how Jesus would have acted in any given situation. It is the classic rhetorical WWJD response. But it seems to me that this notion must be discredited before it does any further damage to authentic human culture, and so I feel compelled to raise two critical points.

The first point is that Jesus was not tolerant. He was quick to forgive whenever forgiveness was sought, which is a very different thing. But he was formidably intolerant of unrepentant sinners, of those who refused to change in response to the proclamation of the Kingdom. The New Testament repeatedly reinforces this intolerance of the unrepentant, in both the gospels and the epistles. Indeed, if a public sinner will not change at the behest of the Church, he is to be avoided and excluded as a “heathen or a publican”.

The second point, as may be easily imagined from the fact that Jesus did not practice tolerance, is that tolerance is not a virtue. Patience is a virtue. Courage is a virtue. Faith, hope and love are preeminent, supernatural virtues. But tolerance is merely a good or bad prudential decision, based on circumstances. There can be no appeal to tolerance as to a general principle of right order. The only possible question is whether, with respect to any particular difference, tolerance or intolerance is the course most conducive to the common good, that is, to the well-being of the whole community. In other words, it may or may not be the best course to admit the student despite his irregular “family situation”, but the solution must be determined by an examination of all the goods at stake in the context of the specific range of available options. It cannot be determined by proclaiming tolerance a virtue in and of itself.

Where tolerance is deemed a virtue rather than a prudential decision, it is not only impossible to build a virtuous society, it is impossible to build any kind of cohesive society whatsoever. This is so because universal tolerance means the acceptance (and therefore tacit approval) of all behaviors, irrespective of their impact on the common good and on human flourishing. To put the matter simply, tolerance perceived as a virtue always rewards vice. Thus, while I began this discussion with the the purpose of elucidating the way complex prudential questions should be resolved, along with the perfectly legitimate differences of opinion which can result, I close it almost gratefully with the proclamation of an inflexible principle: The invocation of tolerance as a virtue will always undermine prudence, the real and necessary virtue that enables us to match proper solutions to particular problems.

Caring

Catholic Social Teaching No Responses »

Feb 072010

Among the many books written by Henri Nouwen (1932-1996), one stands out as an enduring little classic, The Wounded Healer. For those who knew him, this book is especially powerful because, without expressly intending to, it describes so well the man himself. It was because of his own wounds that he was able to touch the lives of so many people. “By his wounds we have been healed,” St Peter wrote of Jesus (1 Peter 2:24). However, there was a different reaction to Nouwen’s book from a fundamentalist Christian who reviewed it and announced that a Christian minister should not come before people as a wounded healer but as “a prophet of God and as a helper in their afflictions.” These different reactions show a gulf between Christians that is probably deeper than most of the issues that divide Christians Churches.

Are you helped by someone who defines himself as a helper? Can you feel cared for by someone who defines himself as a prophet? If the Christian life were only a matter of external prescriptions, then probably yes: in the way that you can get help from an accountant or a lawyer. But since it touches the innermost places in us – the very springs of our thoughts and actions – this approach is less than helpful. Hear Nouwen again (in Out of Solitude): “When we honestly ask ourselves which persons in our lives mean the most to us, we often find that it is those who, instead of giving much advice, solutions, or cures, have chosen rather to share our pain and touch our wounds with a gentle and tender hand. The friend who can be silent with us in a moment of despair or confusion, who can stay with us in an hour of grief and bereavement, who can tolerate not-knowing, not-curing, not-healing and face with us the reality of our powerlessness, that is the friend who cares…. By the honest recognition and confession of our human sameness we can participate in the care of God who came, not to the powerful but powerless, not to be different but the same, not to take our pain away but to share it. Through this participation we can open our hearts to each other and form a new community.”

In the first reading at today’s Mass, God’s call made Isaiah aware of his own weakness and unworthiness, exactly as Jesus’ call to Peter made Peter blurt out, “Go away from me, Lord, for I am a sinful man!” If Christians do not carry the precious knowledge of their own weakness and sinfulness, then all their attempts to help you are nothing but an ego-trip: by ‘helping’ you they are feeding on your strength and making you weak; by ‘loving’ you they are seeking ways to snare you and make you dependent on them; by ‘caring’ for you they are preening their own image.

Back to Henri Nouwen: “We tend to look at caring as an attitude of the strong toward the weak, of the powerful toward the powerless, of the have’s toward the have-not’s….[But] the word ‘care’ finds its roots in the Gothic ‘Kara’ which means lament. The basic meaning of care is: to grieve, to experience sorrow, to cry out with.”

Obama’s “Catholic Plan”

A Growing List Of One Term Presidents, Catholic Social Teaching, Obama's Hypocrisy, Our phony middle class, Socialism, Subsidiarity No Responses »

Feb 062010

Catholic . . . or not – must see! If you are Catholic, watch it. If not, watch it anyway. I’m sending this video out quickly with the hopes that it will get as far as it can before it is pulled by the “Powers that be.” Please watch this video as soon as you receive it, then forward it, please. It tells all. Turn on the speakers

http://www.youtube.com/watch?v=vVN2MMuiedI&feature=sdig

The word subsidiarity is derived from the Latin word subsidiarius and has its origins in Catholic social teaching (see Subsidiarity (Catholicism)).^[1] The concept or principle is found in several constitutions around the world (for example, the Tenth Amendment to the United States Constitution which asserts States rights).

It is presently best known as a fundamental principle of European Union law. According to this principle, the EU may only act (i.e. make laws) where action of individual countries is insufficient. The principle was established in the 1992 Treaty of Maastricht^[2]. However, at the local level it was already a key element of the European Charter of Local Self-Government, an instrument of the Council of Europe promulgated in 1985 (see Article 4, Paragraph 3 of the Charter) (which states that the exercise of public responsibilities should be decentralised). Subsidiarity is similar in concept to, but should not be confused with Margin of appreciation

Our Corrosive Society

Catholic Social Teaching No Responses »

Jan 302010

Modern man seems to live in a perpetual tug of war between the struggle to make money and the demand to redistribute it. In the United States, this tug of war is more or less accurately represented by two opposing political parties, the Republicans who are more focused on creating wealth, and the Democrats who are more focused on reallocating the wealth we already have. There are many other differences, of course, some more important than money, but I suspect this general dichotomy is similar elsewhere. The tug of war has become a way of life, and we seem to continually shift our weight from one side to the other to tweak the existing system.

I’ve been thinking a good deal about this lately, and whenever I do, I keep hearing a voice in my head, as if from the Son of Man, saying: “The exclusively binary model of market-plus-State is corrosive of society.” Perhaps that doesn’t sound like Jesus Christ’s speaking style, but in a very real sense it is, because Benedict XVI said it in his recent great social encyclical, Caritas in Veritate (#39). And if the Son of Man speaking through Benedict is right, as we know He is, then all of us need to radically rethink the social order.

Benedict made this particular remark is the context of solidarity. He argued in Caritas in Veritate that if we construe the social order as controlled by impersonal forces—economic laws and government regulations—we inevitably produce a corrosive culture in which the inequities created by involuntary market dynamics depend for their resolution on involuntary government controls after the fact. This rarely works very well, and it is both impersonal and coercive to boot. But when we view the social order as shaped primarily by personal moral decisions, then we have a chance to shape it according to the principle of solidarity—the concern of all for all.

Solidarity Demands Subsidiarity

This leads us once again to the forgotten principle of subsidiarity, because solidarity and subsidiarity are really opposite signs of the same coin. I have said in earlier writings that those in our culture who seem most concerned about social inequities appear to be committed to solidarity without paying the least attention to subsidiarity. On deeper reflection, I would argue a stronger case. The very fact that many people can express deep concern about unfortunate social situations without thinking in terms of subsidiarity is clear evidence that they really don’t understand solidarity at all. Their solutions to social problems almost always involve the expansion of state power to do things for (or perhaps to) those of us, rich and poor, who are not living according to their prescribed vision. To be sure, the careful application of the force of law in such matters is sometime both necessary and salutary, but more often the resort to government power actually represents a failure or even a deliberate bypassing of solidarity, an unwillingness to work shoulder to shoulder with those people who ought to be actively incorporated into proposed solutions to their problems.

When we’re really concerned about persons, and not just about “situations”, we always want to get them involved in the process of making their lives better. We want to explore their concerns, weaknesses and strengths, and find ways for them to participate in the solutions. We want to stimulate effective and voluntary action on the part of all concerned so as to create as many stakeholders as possible in the process of improvement. This simply isn’t possible without subsidiarity, without attempting to create effective mechanisms at the most appropriate levels to address core issues. If we are really moved by the principle of solidarity to be significantly concerned about others, we will always look for ways to build productive, multi-level relationships among the real people who must collaborate to make things better.

Intermediary Institutions

Subsidiarity is closely connected to the role of what we call intermediary institutions. In a medieval monarchy, for example, there was generally far more personal and group freedom with respect to central government than we experience in today’s democracies. This statement may be incomprehensible to the modern mind, but its truth is proved by the existence and operation of the intermediary institutions through which so many divergent aspects of the social order were organized. The most important of these intermediary institutions was the Church, of course, though the Church is only incidentally an intermediary institution between the citizen and the State. In her own sphere the Church is not intermediary but sovereign. But in addition to the Church, the nobility had their traditional rights, privileges and deliberative bodies, as did the free towns, as did the guilds which represented skilled laborers of every kind.

Intermediary institutions contribute greatly to the vibrancy of human culture because they involve human persons in the activities and decisions which affect their destinies precisely at the level at which each solution ought to be decided and implemented. Strong intermediary institutions also serve as a necessary hedge against the tendency of those higher up to grab increasing amounts of power so that they might order the world to suit themselves.

Another and even more remarkable instance of the role of intermediary institutions was evident in the difference between slavery in the United States and in the New World colonies of Spain. While it is obvious that slavery should never have gotten started among Christians in the first place, it was difficult to root out in a New World dominated by large landowners with a strong sense of commercial self-interest. But the Catholic Church was a very strong intermediary institution in both Spain and her colonies. Slaves were recognized as persons and protected from many forms of abuse. They had time off, they could earn money, and they were permitted to purchase their freedom. In addition, the laws of the Spanish Crown, formed over the centuries under the influence of the Church, mitigated slavery in the colonies, and in the end the practice was abandoned under the combined pressures of institutions operating from within the social order.

In the United States, however, the Catholic Church was weak, and the voice of religion was divided among hundreds of differing sects, which were often quite willing to serve the moral convenience of their congregations; nor had the laws of the United States been shaped under the influence of the Church. Therefore, in the United States slavery became what historians can only describe as a Peculiar Institution. Slaves were treated not just as slaves in a traditional sense—human persons in servitude—but as animals, as non-persons. No intermediary institution of any significance was capable of mitigating the horrors of American slavery, still less of converting or pressuring the wealthy landowners who kept the Peculiar Institution in place. In the United States, slavery was a problem that would ultimately be solved through the cataclysm of civil war.

Where We Are Today

Over the past several hundred years, with the rise of the modern nation state, intermediary institutions have become largely non-existent or weak, and the living reality of subsidiarity (with or without formal instruction in the principle) has declined along with them. This goes a long way toward explaining how totalitarianism has become possible. It is true that Western commentators have frequently noticed a far stronger tradition of voluntarism in the United States than in Europe; we do have here a strong tradition of ad hoc organizations, typically non-profits, formed to address a wide variety of social problems and also to influence government policy. The United States also has a stronger tradition of State government than do the provinces of most other Western nations. But even in America, there can be no question both that non-governmental organizations have relatively shallow roots in the social order, and that intermediate levels of government, which theoretically represent a significant level of subsidiarity, have gradually lost more and more of their power and authority. In the West generally, it seems, there is little between the isolated individual and the highest level of government.

Yet it is precisely to the principle of subsidiarity that the West will have to look if it hopes to once again stimulate a strong and creative social order—a social order in which people actively cooperate in solving their own problems, rather than passively looking to take care of everything by funding monstrous top-level bureaucracies through monstrous bottom-level taxes. As I said at the outset, we seem to rely on the market to create wealth and the State to come along later and redistribute it, and the one great political fear on the part of the State is that it might act so aggressively in the redistribution as to kill the market’s Golden Goose. Meanwhile, regardless of how much money is earned and spent, large numbers of social problems continue to worsen.

Perhaps this is because “the exclusively binary model of market-plus-State is corrosive of society.”

“Articulation” in Business and Government

We unwittingly permit this social corrosion to occur because of our unfortuanate cultural blinders. As Benedict puts it, “The continuing hegemony of the binary model of market-plus-State has accustomed us to think only in terms of the private business leader of a capitalistic bent on the one hand, and the State director on the other” (#41)—leaving nearly everyone else out of the picture. In attempting to address this corrosion, the Pope frequently refers to the need for articulation or stratification in the way in which social problems are addressed. Here is a representative passage on the business side of the divide:

In reality, business has to be understood in an articulated way…. It is in response to the needs and the dignity of the worker, as well as the needs of society, that there exist various types of business enterprise, over and above the simple distinction between “private” and “public”. Each of them requires and expresses a specific business capacity. In order to construct an economy that will soon be in a position to serve the national and global common good, it is appropriate to take account of this broader significance of business activity. It favors cross-fertilization between different types of business activity, with shifting of competences from the “non-profit” world to the “profit” world and vice versa, from the public world to that of civil society, from advanced economies to developing countries. (#41)

A little later he uses the same terminology in his discussion of the need for world-wide regulation of international trade and finance:

In order not to produce a dangerous universal power of a tyrannical nature, the governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together. Globalization certainly requires authority, insofar as it poses the problem of a global common good that needs to be pursued. This authority, however, must be organized in a subsidiary and stratified way, if it is not to infringe upon freedom and if it is to yield effective results in practice. (#57)

In this passage, it becomes clear that the terms “articulated” and “stratified” refer to a sensible, targeted and effective organization, in different ways and at different levels, of all the roles, purposes, persons and authority necessary to address social problems—in a word, the implementation of subsidiarity through intermediary institutions. In the following passage, Benedict leaves no doubt as to his meaning:

Subsidiarity is first and foremost a form of assistance to the human person via the autonomy of intermediate bodies. Such assistance is offered when individuals or groups are unable to accomplish something on their own, and it is always designed to achieve their emancipation, because it fosters freedom and participation through assumption of responsibility. Subsidiarity respects personal dignity by recognizing in the person a subject who is always capable of giving something to others. By considering reciprocity as the heart of what it is to be a human being, subsidiarity is the most effective antidote against any form of all-encompassing welfare state. It is able to take account both of the manifold articulation of plans — and therefore of the plurality of subjects — as well as the coordination of those plans. Hence the principle of subsidiarity is particularly well-suited to managing globalization and directing it towards authentic human development. (#57)

The Problem Implies a Solution

It is probably an oversimplification, but not by much, to say of the two main political parties in the United States that the Republicans talk subsidiarity without solidarity and the Democrats talk solidarity without subsidiarity. I suspect the dichotomy holds true for conservatives and liberals in much of the Western world. In the conservative mind, which is usually market-oriented, the human person is too often reduced to the status of a commodity to be used by those who allegedly understand how to manage market forces. In the liberal mind, which is usually State-oriented, the human person becomes an object of social engineering by those who allegedly understand how to properly regulate all of life.

There are many reasons why it is difficult for significant numbers from both sides to come together through an understanding of the true reciprocity of solidarity and subsidiarity. The most important of these reasons is almost certainly the great division over critical issues involving human life, and I do not for a moment mean to put that in second place. But the need to get solidarity and subsidiarity working together is extremely grave, because neither can exist without the other. Anyone who embraces subsidiarity without solidarity necessarily commits himself to selfishness, while anyone who embraces solidarity without subsidiarity necessarily lies to himself. But at least now we can begin to understand why our social order has so many severe deficiencies; that is, we can begin to understand what is wrong. And what is wrong, at least in this context, is that “the exclusively binary model of market-plus-State is corrosive of society.”

Jeffrey Mirus – President of CatholicCulture.org

Ron Paul: The American Cicero

A Moral Question - Not A Political One, Catholic Social Teaching, Collateral Damage, Coming Social Unrest, Coup d'etat in America, Integrity and Responsibility, It starts with a foundation, Political Chaos, Small Business-Bedrock of America 1 Response »

Jan 182010

Let’s hope he doesn’t end up the same way:

“Could it all be a bad dream, or a nightmare? Is it my imagination, or have we lost our minds? It’s surreal; it’s just not believable. A grand absurdity; a great deception, a delusion of momentous proportions; based on preposterous notions; and on ideas whose time should never have come; simplicity grossly distorted and complicated; insanity passed off as logic; grandiose schemes built on falsehoods with the morality of Ponzi and Madoff; evil described as virtue; ignorance pawned off as wisdom; destruction and impoverishment in the name of humanitarianism; violence, the tool of change; preventive wars used as the road to peace; tolerance delivered by government guns; reactionary views in the guise of progress; an empire replacing the Republic; slavery sold as liberty; excellence and virtue traded for mediocracy; socialism to save capitalism; a government out of control, unrestrained by the Constitution, the rule of law, or morality; bickering over petty politics as we collapse into chaos; the philosophy that destroys us is not even defined.

We have broken from reality–a psychotic Nation. Ignorance with a pretense of knowledge replacing wisdom. Money does not grow on trees, nor does prosperity come from a government printing press or escalating deficits.

We’re now in the midst of unlimited spending of the people’s money, exorbitant taxation, deficits of trillions of dollars–spent on a failed welfare/warfare state; an epidemic of cronyism; unlimited supplies of paper money equated with wealth.

A central bank that deliberately destroys the value of the currency in secrecy, without restraint, without nary a whimper. Yet, cheered on by the pseudo-capitalists of Wall Street, the military industrial complex, and Detroit.

We police our world empire with troops on 700 bases and in 130 countries around the world. A dangerous war now spreads throughout the Middle East and Central Asia. Thousands of innocent people being killed, as we become known as the torturers of the 21st century.

We assume that by keeping the already-known torture pictures from the public’s eye, we will be remembered only as a generous and good people. If our enemies want to attack us only because we are free and rich, proof of torture would be irrelevant.

The sad part of all this is that we have forgotten what made America great, good, and prosperous. We need to quickly refresh our memories and once again reinvigorate our love, understanding, and confidence in liberty. The status quo cannot be maintained, considering the current conditions. Violence and lost liberty will result without some revolutionary thinking.

We must escape from the madness of crowds now gathering. The good news is the reversal is achievable through peaceful and intellectual means and, fortunately, the number of those who care are growing exponentially.

Of course, it could all be a bad dream, a nightmare, and that I’m seriously mistaken, overreacting, and that my worries are unfounded. I hope so. But just in case, we ought to prepare ourselves for revolutionary changes in the not-too-distant future.”

Hollywood gets religion

Back to the basics, Cash Is King!, Catholic Social Teaching No Responses »

Jan 102010

It’s everywhere at the multiplex these days: religion. Or if that word makes you uncomfortable, you can go with the more general “spirituality.”

In movies as varied as the dead serious “The Road,” the uplifting family picture “The Blind Side,” the biting comedy “The Invention of Lying” and even James Cameron’s sci-fi opus “Avatar,” issues of faith and morality and mankind’s place in the universe are all the rage.

Not all of these movies embrace religion. Some question human gullibility. Some ask for evidence of a higher purpose in what often seems a random universe. But whether they encourage prayer or doubt, they’re all part of the zeitgeist.

But why now?

“There are two schools of thought about that,” said Greg Wright, an editor at HollywoodJesus.com, which examines popular culture from a religious perspective.

“The more paranoid elements of our culture tend to think Hollywood has a proactive agenda, that producers have a grand scheme to use movies to shape the thinking of audiences. I don’t subscribe to that school.

“I believe that Hollywood gives audiences what audiences want to see. If people don’t want to see movies with certain messages, they won’t buy tickets.

“So if there’s a trend out there, it’s one reflecting what people are already thinking and feeling,” Wright said.

No coincidence

And what are we thinking?

Sister Rose Pacatte, who reviews movies for the Pauline Center for Media Studies in Los Angeles, said it isn’t mere coincidence that a new animated version of Dickens’s “A Christmas Carol” came along in 2009. The film was released in the wake of an economic crisis fueled by greedy self-interest on an unprecedented scale, she said.

“Being a good man of business will not save your soul. That’s an essential message of ‘A Christmas Carol’ and one emphasized by this version,” she said.

Dickens’s tale may have little to say about God and Jesus, but it stresses charity and the dangers of poverty and ignorance, she said.

Other current films, while not overtly religious, stress the idea of human beings as dependent on one another and responsible for one another’s well-being.

Pacatte pointed to “Up in the Air,” in which George Clooney plays a loner whose job is to fire downsized employees and who has attempted to insulate himself from all human commitment.

“In some ways it’s a modern ‘Christmas Carol,’ with Clooney’s character becoming a bit more human, becoming more aware of himself and others,” Pacatte said.

“Avatar” depicts humanity as a rapacious race represented by a soulless corporation and largely incapable of appreciating the simple ecological spiritualism of an alien race.

A runaway hit, too

Of course, some films put religion front and center.

“Of these films, ‘Blind Side’ has the most evangelical world view,” said Mark Moring, senior associate editor at Christianity Today. “It’s a movie based on real people who are devout Christians and whose faith clearly played a big part in their reaching out to this young homeless man and turning his world around.” That “The Blind Side” has become a runaway hit should further encourage Hollywood to deal with religious themes, Moring said.

“When ‘The Passion of the Christ’ came out in ’04, it showed Hollywood they could make lots of money with in-your-face spiritual themes. It taught them they don’t have to be afraid of going with religious if not specifically Christian ideas. ‘Blind Side’ reinforces that,” Moring said.

Wright at HollywoodJesus.com said, “The market dynamics of film are just beginning to sort out what happened in the wake of ‘The Passion of the Christ.’ Given that film production cycles can take several years, I expect to see more religious-themed films in coming months.”

Not all of these will be big-budget Hollywood productions. Wright noted the box-office success of the low-budget “Facing the Giants” and “Fireproof,” two unabashedly religious dramas made by Sherwood Pictures, which is affiliated with a church in Georgia.

“We’re finally getting some decently crafted movies aimed at the faith audience,” Wright said. “In the wake of ‘Passion,’ lots of titles were rushed to market to take advantage of the religious audience, and they just weren’t very well written or produced. It’s taken a while to get the quality.”

Most likely the big studios quickly will lose interest in faith-themed subject matter, Wright said.

“Hollywood is all about cycles. This one will pass,” he said. “The films that really matter, that actually have something to say, are the indie titles that sneak into the Hollywood distribution system or make their way to home video or the film festivals.

“That’s where the real future of spiritual movies is — with niche independent filmmakers who are finding distribution channels that work for them. Hollywood will always have a huge appetite for big tent-pole films. But that leaves an opportunity for others to make more modest movies about things that matter,” Wright said.

Big-screen offerings

Recent or upcoming releases with religious themes:

“The Road”: Earth is dying. In the wake of an undisclosed disaster, a man (Viggo Mortensen) and his son (Kodi Smit-McPhee) wander a barren land, searching for sustenance and avoiding roaming bands of cannibals. Unrelentingly bleak, this cinematic version of Cormac McCarthy’s novel is about one man’s attempt to preserve what’s left of humanity’s goodness and innocence in his child. Though the film is never openly religious, many see it as a spiritual quest; McCarthy has spoken of his book as a sort of Christian allegory.

“The Lovely Bones”: Life after death? It’s a given in Peter Jackson’s adaptation of Alice Sebold’s novel about a murdered teen (Saoirse Ronan) who, from the afterlife, continues to watch over both her family and her killer (Stanley Tucci).

“The Invention of Lying”: Ricky Gervais’s comedy unfolds in an alternate universe where everybody compulsively tells the truth. But one man learns how to fib, and before long he’s telling whoppers. In an effort to placate his unhappy fellow men, he declares that the world is run by a big man in the sky. He codifies rules of behavior and writes them down on the lids of pizza boxes. (What . . . no stone tablets?) And, having no defense against prevarication, everyone believes him. This comic parable on the origins of religion is biting, but Gervais’s beaming delivery softens the blow. (No longer in theaters; due on DVD this month.)

“The Book of Eli”: Denzel Washington plays a lone man fighting his way across post-apocalyptic America to protect a sacred book that allegedly holds the secrets to saving humankind.

“Legion”: God has lost all hope in humankind and sends his legion of angels to Earth to bring on the Apocalypse in this supernatural action thriller. In a remote truck stop diner named Paradise Falls, the archangel Michael (Paul Bettany) joins a group of strangers to defend the diner’s waitress, who may be pregnant with the Messiah.

“The Last Station”: The eternal battle between spirituality and materialism is waged in the soul of acclaimed Russian author Leo Tolstoy (Christopher Plummer), who is torn between his own need for transformation and the demands of his wife (Helen Mirren) and disciples.

“A Serious Man”: The Coen brothers retell the biblical story of Job, relocating it to the late ’60s Minneapolis suburbs of their adolescence. A Jewish college professor (Michael Stuhlbarg) finds everything in his life — from his marriage to his car — going down the tubes. In the original, God and Satan strike a deal to see how much grief one man can absorb before renouncing righteousness. This being a Coen brothers effort, God is nowhere in sight. Misery is just a universal fact of life; you’ll survive only if you can laugh at it. (No longer in theaters; due on DVD in February.)

“A Christmas Carol”: Charles Dickens wasn’t particularly religious, but he sure knew how to punch our spiritual buttons. This computer-animated retelling from director Robert Zemeckis (with Jim Carrey as a superlative Scrooge) doesn’t diminish Dickens’s message: Devote your life to the almighty dollar (or pound sterling) and you’ll spend eternity in the chains of your own making.

“Avatar”: James Cameron’s futuristic epic is about the efforts of humans to exploit the mineral wealth of a distant moon. Problem is, it’s already occupied by blue-skinned primitives who believe that everything on their world — animals, plants, the very dirt they walk on — is imbued with spiritual power that must not be disturbed. Human greed vs. spiritual enlightenment: a timely theme.

“The Blind Side”: In the holiday season’s unexpected sleeper hit, a homeless boy (Quinton Aaron) is adopted by a wealthy Memphis family (Sandra Bullock is the force-of-nature mom), and with the family’s love, dedication and disposable income, the kid raises his grades and becomes a terror on the football field. It’s the true story of Baltimore Ravens lineman Michael Oher, and writer-director John Lee Hancock lets us know that the family’s charity is rooted in their Christianity. Hollywood movies rarely know how to handle persons of faith; this one does.

– McClatchy Newspapers

Income inequality can rise and fall for all sorts of reasons

Analysis & Commentary, Catholic Social Teaching, Coming Social Unrest, Credit Card Debt, Integrity and Responsibility, Obama's Hypocrisy, Our phony middle class, Political Chaos, The Suffering Poor No Responses »

Jul 312009

Income inequality can rise and fall for all sorts of reasons. Twenty-somethings just starting out and retired seventy-somethings both earn a lot less on average than peak-earning fifty-somethings. As the age profile of the population shifts, income inequality figures shift, too. So what? Consider another example. A generous immigration policy can widen the income gap in this country while at the same time reducing world poverty. That’s good, if you ask me.

Income inequality can also rise as a side-effect of injustice in our socio-economic system. But injustice should be rooted out because it is wrong, not because it widens the income gap as a side effect. If, just to take a wildly hypothetical example, the government has unjustly dumped loads of taxpayer money on Goldman Sachs, such a narrow allocation of public funds for private use should concern us for its own sake – not because Goldman’s bountiful bonuses are likely to exacerbate income inequality.

A good hard jog and an oncoming heart attack may produce the same racing heartbeat. But the distinction matters. A mathematical abstraction like national income inequality is a similarly ambiguous symptom. We can slash the level of income inequality in an instant by slapping even higher taxes on big earners. Or we can slash the level of income inequality by falling into recession. But neither remedy addresses the real problem, which is persisting poverty, not income inequality.

The corruption of a political system in which crises are used to pay off the governing party’s allies is also a real problem. The current silence about inequality – from news editors, pundits and politicians alike – would be golden if only it were based on a grasp of the limited utility of income statistics in guiding us toward more effective and humane public policy. But that is not the case. Instead, it appears that the commentators who fretted over income inequality so publicly for so long have simply stopped worrying about it. Inequality, it seems, only matters when a Republican is in the White House.

Does Income Inequality Really Still Matter? – Will Wilkinson, The Week

The Economics and Politics of Race

A Shareholder-Not Just a "Stakeholder", A Time To Repent, Biography, Book Reviews, Catholic Social Teaching, Coming Social Unrest No Responses »

Jul 252009

Sowell and Benedict XVI on Economics and Culture

Back in 1983, economist Thomas Sowell wrote The Economics and Politics of Race, an in-depth look at how different ethnic and immigrant groups fared in different countries throughout human history. He noted that some groups, like the overseas Chinese, Japanese, and Jews, tended to thrive economically no matter where they went, bringing new skills to the countries that they arrived in and often achieving social acceptance even after facing considerable hatred and violence. Other groups, like the Irish and the Africans, tended to lag economically and found it difficult to become prosperous…

Consumer woes mean US not free of peril yet

Catholic Social Teaching, Coming Social Unrest, The Arrogance of Power, The Democrats Blew It Again, The End of American Capitalism As We Know It? - Discuss, The excellent adventures of Ben Bernanke, The Financial Elite, The Geithner Resignation Watch, The Importance of Strategic Planning, The New American Socialism, Time For A New Third Party No Responses »

Jul 212009

The reason that the savings gauge has leapt is not that Americans are saving more, but only that they are paying off their past, huge borrowings because of financial distress. Americans actually cut savings in the form of financial assets held by 0.5 per cent of their incomes in the first quarter, while cutting borrowing even more aggressively, by 5 per cent of income. This telling data leads to two important conclusions.

First, it suggests that immediate US recovery prospects may be even more frail than supposed, and than Mr Bernanke is liable to admit. With Americans now battling to pay down debt against a backdrop of still-plunging house prices and soaring unemployment, while shoring up spending power with cuts in their savings, the resurgence of consumer demand on which recovery hopes are pinned may well prove elusive. The position could grow worse still once the boost to US personal incomes from the Obama Administration’s fiscal giveaway also fades, as it soon will.

Second, and critically, it is clear that America has yet to begin to address the real roots of this crisis and embark on the long road to a more sustainable economic future. Until it does so, the future will remain a hostage to fortune.

The U.S. Is Not Yet Free of Economic Peril – Gary Duncan, Times of London

Prima Donnas of the Banking World

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Jul 112009

William White predicted the approaching financial crisis years before 2007′s subprime meltdown. But central bankers preferred to listen to his great rival Alan Greenspan instead, with devastating consequences for the global economy.

William White had a pretty clear idea of what he wanted to do with his life after shedding his pinstriped suit and entering retirement.

White, a Canadian, worked for various central banks for 39 years, most recently serving as chief economist for the central bank for all central bankers, the Bank for International Settlements (BIS), headquartered in Basel, Switzerland.

Then, after 15 years in the world’s most secretive gentlemen’s club, White decided it was time to step down. The 66-year-old approached retirement in his adopted country the way a true Swiss national would. He took his money to the local bank, bought a piece of property in the Bernese Highlands and began building a chalet. There, in the mountains between cow pastures and ski resorts, he and his wife planned to relax and enjoy their retirement, and to live a peaceful existence punctuated only by the occasional vacation trip. That was the plan in June 2008.

And now this.

White is wearing his pinstriped suits again. He has just returned from California, where he gave a talk at a large mutual fund company. Then he packed his bags again and jetted to London, where he consulted with the Treasury. After that, he returned to Switzerland to speak at the University of Basel, and then went on to Frankfurt to present a paper at the Center for Financial Studies. From there, White traveled to Paris to attend a meeting at the Organization for Economic Cooperation and Development (OECD). Finally, he flew back across the Atlantic to Canada. White is clearly in demand, including in North America.

Since the economy went up in flames, the wiry retiree has been jetting around the globe like a paramedic for the world of high finance. He shows no signs of exhaustion, despite his rigorous schedule. In fact, White, with his gray head of hair, is literally beaming with energy, so much so that he seems to glow.

Perhaps it is because someone, finally, is listening to him.

Listening to him, that is, and not to his rival of many years, the once-powerful former chairman of the US Federal Reserve Bank, Alan Greenspan. Greenspan, who was reverentially known as “The Maestro,” was celebrated as the greatest central banker of all time — until the US real estate bubble burst and the crash began.

Before then, no one in the world of central banks would have dared to openly criticize Greenspan’s successful policy of cheap money. No one except White, that is.

The Economist Who Predicted the Crisis – Balzli & Schiessl, Der Spiegel