Roubini, Marx, Capitalism, Socialism, and Interventionism

Very nice discussion:

Words and language can hold a lot of power. If your task is to destroy the people’s desire for peace and individual liberty, and if you can convince them that the US system over the past century is what free marketers mean when they say ‘capitalism‘, then your job is pretty much done.

But today’s shifts in public opinion seem very clear to me, just from comments I gather here and there: Fewer and fewer people are buying this story. More and more are beginning to try and think for themselves, simply out of plain necessity.

I have been harping on this for about 5 years now: The key concept that public discourse is still missing, the one word that explains all of today’s economic and political troubles is Interventionism.

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Nuclear Power in Japan; Prescient Voices From the Past Catch Up With the Present

I thought I’d reference some older snippets from articles that I found with background and warnings about nuclear reactors and power companies in Japan, some of them eerily prescient …

An LA Times article from 1988 explains how government intervention has incentivized the production of nuclear energy in Japan:

Strong financial resources, combined with government-set rate structures that guarantee a “fair return” of 7.2% on capital investment, largely insulate the nine major power companies from the economic woes that have bogged down nuclear plant construction in the United States.

Furthermore …

Hirose maintains that numerous minor accidents and operational problems over the past several years have gone largely unreported in the mainstream news media. Though shutdowns are rare, he believes these incidents belie the industry’s safety claims and foreshadow an eventual disaster on the scale of Chernobyl or Three Mile Island, in Pennsylvania.

Tamai, the industry federation official, rejects such criticism. Japanese nuclear plants have the best safety record in the world, he contends, with fewer than one-tenth the number of shutdowns of other countries and an enviable 76% average rate of operation.

To correct “distortions” advanced by Hirose and others, the federation has spent more than $5.6 million on newspaper advertising since this year’s Chernobyl anniversary in April, trying to reassure people that Japan’s water-cooled nuclear reactors are far safer than the graphite reactor in Chernobyl.

August 2004, Four workers die in Japanese nuclear plant accident:

Prime Minister Junichiro Koizumi told reporters: “We must put all our effort into determining the cause of the accident and to ensuring safety.” His government would respond “resolutely, after confirming the facts.”

However, a review of the events leading up to the accident and the history of other nuclear industry incidents over more than a decade reveals that far from “ensuring safety”, the government, together with the self-regulated nuclear power companies, is squarely to blame for the horrific deaths and injuries suffered at the KEPCO plant.

KEPCO admitted this week that the burst pipe had not been checked in the 28 years since the nuclear reactor began operating, even after a maintenance sub contractor notified it of the urgent need for inspection in November 2003. Further reports emerged that up to 17 such pipes at up to 10 other nuclear power plants operated by KEPCO throughout Japan have never been inspected.

March 2006, Nuclear reactor ordered shut by Japanese court:

A district court yesterday ordered the first shutdown of a nuclear reactor in Japan, saying the country’s second-largest reactor has a high risk of causing accidents and leaking radiation if an earthquake strikes, media reports said.

July 2007, Japan nuke plant leak bigger than thought:

The malfunctions and a delay in reporting them fueled concerns about the safety of Japan’s 55 nuclear reactors, which have suffered a string of accidents and cover-ups. Nuclear power plants around Japan were ordered to conduct inspections.

The plant in Kashiwazaki-Kariwa, 135 miles northwest of Tokyo, eclipsed a nuclear power station in Ontario as the world’s largest power station when it added its seventh reactor in 1997.

The Japanese plant, which generates 8.2 million kilowatts of electricity, has been plagued with mishaps. In 2001, a radioactive leak was found in the turbine room of one reactor.

The plant’s safety record and its proximity to a fault line prompted residents to file lawsuits claiming the government had failed to conduct sufficient safety reviews when it approved construction of the plant in the 1970s. But in 2005, a Tokyo court threw out a lawsuit filed by 33 residents, saying there was no error in the government safety reviews.

Environmentalists have criticized Japan’s reliance on nuclear energy as irresponsible in a nation with such a vulnerability to powerful quakes.

“This fire and leakage underscores the threat of nuclear accidents in Japan, especially in earthquake zones,” said Jan Beranek, a Greenpeace official in Amsterdam. “In principle, it’s a bad idea to build nuclear plants in earthquake-prone areas.”

July 2007, Japanese nuclear reactor under-designed for earthquake?

An earthquake off the western coast of Japan yesterday hit a nuclear plant with more than twice the jolt that the plant was expected to have to handle. The shock seems to have done little immediate damage, but has raised concerns about whether Japan’s nuclear plants are designed to withstand the kind of shaking they are likely to experience.

May 2009, Delays at Japan’s ill-fated nuclear plant:

“The failure to produce vitrified waste with domestic technology shows that Japan’s reprocessing technology is 10 to 20 years behind Europe and the United States,” Koide said.

The source at the Rokkasho plant agrees with Koide. “We have to accept that we were too optimistic from the beginning,” he said. He also said that JNFL should change its policy, whatever it takes, to solve the difficulties with the current furnace at Rokkasho.

One possible solution would be to use French technology, but the Japanese government is bent on developing its own technology and unlikely to choose that option. If the plant suspends operations for more than three years, as the source at Rokkasho suggests, then the situation will be more serious as Japan’s nuclear power policy is premised on reprocessing spent nuclear fuel at the plant.

May 2010, Japan reactivates repaired nuclear reactor:

The BBC said the accident that forced the shutdown resulted in no injuries and no release of radiation, but coming just two years after starting operation raised concerns about the safety of the plant. The plant’s operators were criticized for concealing the extent of damage to the reactor, the BBC said.

May 2010, Japan restarts controversial nuclear reactor

The proportion of the country’s energy generated from nuclear plants is to increase to 50 per cent from the current one third, and the utilization of the power plants is to increase from 60 per cent to 90 per cent of their generating capacity.

Monju is already decades behind its original schedule, and the government has so far poured some 900 billion yen (9.7 billion dollars) into the project.

The Japan Atomic Energy Agency expects to spend another 23 billion yen a year on the fast-breeder programme in the coming years. The government wants to complete the development of a commercial fast-breeder reactor by around 2050.

As always, the best thing we can do to ensure a safer future for ourselves and our offspring is listen to those who saw things coming before everyone else suddenly became an expert on the causes of such earthshaking events.

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US Plans to “Aid Democracy” in Egypt

With all the turmoil in the Middle East, it’s good to see that the US Government has learned a lesson not to repeat the same mistakes of meddling in other countries’ affairs … oh wait

Now that Hosni Mubarak is getting accustomed to life as an ex-dictator, Barack Obama and his foreign-policy aides have a new task. Washington has publicly called for an Egyptian transition to democracy, which Egypt has never known.

To avoid a continuation of dictatorial rule under a new strongman — or a dangerous power vacuum as weaker players try to seize control — Egypt will need to see the lightning-fast development of long-suppressed political parties.

So the U.S. is preparing a new package of assistance to Egyptian opposition groups, designed to help with constitutional reform, democratic development and election organizing, State Department officials tell TIME. The package is still being formulated, and the officials decline to say how much it would be worth or to which groups it would be directed.


The Obama Administration cut democracy-and-governance aid to Egyptian opposition groups in its first two years in office, from $45 million in George W. Bush’s last budget to $25 million for the 2010 and 2011 fiscal years. The Obama Administration also stopped providing aid to groups that had not registered with the Egyptian government, drawing criticism from human-rights organizations.

How someone can read/write this stuff and keep a straight face simply amazes me.

So the US government finally begins to wind down its meddling, a peaceful revolution ensues, and the first thing they want to do is step up their meddling again.

Guys, it’s fine. Just once keep your sleazy fingers out this one time. Is it really that hard to just let people live their lives and decide their own destiny?

Just look at Iraq. What has the maximum level of meddling accomplished for the people? Ongoing civil unrests, water and foot shortages and 5-20 Iraqis A DAY dying in battle.

Don’t get me wrong. I have no illusions. I’m merely attacking the abstract moral justifications for this endeavor. I am perfectly aware that foreign aid is in actuality nothing but another way to rip off US taxpayers at minimal to no oversight in order to shovel money into the pockets of lobbyists and contractors.

On, and in case it’s of interest, the US government owes the Egyptians over $34 billion. Go figure …

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The Laws of Obamanomics a.k.a Interventionism

The Examiner writes in a book review Obamanomics defined: Big Government in service of Big Business:

The Laws of Obamanomics

Underlying Obamanomics are some basic economic facts and political realities. These are the Four Laws of Obamanomics, paired below with some of the lobbying strategies that exploit these laws.

1) During a legislative debate, whichever business has the best lobbyists is most likely to win the most favorable small print. Similarly, once a bill has passed, the business with the best lawyers and lobbyists will best be able to craft the regulations and learn how to game them. A big business, counting on this fact while lobbying for more government spending or control, is employing The Inside Game.

2) Regulation adds to overhead, and higher overhead crowds out smaller competitors and prevents startups from entering the industry. When corporations, knowing this, lobby for more regulation of their industry, I call this the Overhead Smash.

3) Bigger companies are often saddled by inertia, meaning robust competition is a threat. Adopting regulations that stultify the economy is the equivalent of raising the basketball hoop to twenty feet at half-time: it protects the lead of whichever team is ahead. When Big Business seeks to stultify the economy to hold back smaller competitors, I call it Gumming the Works.

4) Government regulation grants an air of legitimacy to businesses, boosting consumer confidence, often beyond what is warranted. This is The Confidence Game.

While I agree that all these laws do accurately describe the current US economic policy under the current president, I ask: How did those laws differ under Bush, or under Clinton for that matter, or under Bush Sr., or under Reagan??

People have to realize: What is outlined above does not outline some new phenomenon. These are, simply put, the laws of interventionism, the system that has dominated the entire past century. All the problems we are facing today can be traced back to it, all the cures prescribed to fix our problems are just more of very things that caused our problems.

It is a system under which, during all the bogus back and forth, all the talk in the media from left or from right, all the discussions about tax hikes by 4% or by 5%, about whether or not we should send 30,000 or 40,000 hitmen into a foreign country, about whether we should spend $5 billion or $7 billion in yet another foreign aid bill, about whether this or that government institution should oversee banks, or whether centrally decreed interest rates should be .25 or .5 percent, one thing has remained consistent and uncontested by the blind public for decades: the growth of government.

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Geithner’s Desperate Power Grab

People have to understand that government-made crises always precipitate a grab for more power by the very institution who causes them. Thus, in a predictable and mindless effort … U.S. Seeks Expanded Power to Seize Firms:

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president’s Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.

The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury’s role, are still in flux.

Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.

The administration’s proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed’s other responsibilities, particularly its control over monetary policy.

The government also would assume the authority to seize such firms if they totter toward failure.

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG’s most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

Geithner plans to lay out the administration’s broader strategy for overhauling financial regulation at another hearing on Thursday.

The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.

“We’re very late in doing this, but we’ve got to move quickly to try and do this because, again, it’s a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they’re systemic,” Geithner said last night at a forum held by the Wall Street Journal.

The powers would parallel the government’s existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government’s plans.

Tim Geithner’s lack of understanding is truly astonishing. I haven’t heard him say a single thing that made sense. He is as lost as Ben Bernanke when it comes to understanding the workings behing credit expansion, and its inevitable result, the credit crunch.

His actions are nothing new. Ayn Rand wrote in Atlas Shrugged in 1957:

“Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.”

Ludwig von Mises wrote in his analysis Interventionism in 1940:

The various measures, by which interventionism tries to direct business, cannot achieve the aims its honest advocates are seeking by their application. Interventionist measures lead to conditions which, from the standpoint of those who recommend them, are actually less desirable than those they are designed to alleviate. They create unemployment, depression, monopoly, dis­tress. They may make a few people richer, but they make all others poorer and less satisfied. If governments do not give them up and return to the unhampered market economy, if they stubbornly persist in the attempt to compensate by further interventions for the short­comings of earlier interventions, they will find eventually that they have adopted socialism.

The Obama administration is doing everything it can to continue the interventionist path that the U.S. has been on since the beginning of the 20th century. There is absolutely no change coming in this matter. The outcome of these policies is pre-ordained. Ayn Rand and von Mises are just a few among many who predicted long ago what would happen.

Our leaders would be well advised to pick up some of their books, book a trip to the Bahamas, and just read for a couple of months. That would be the best possible stimulus plan I could think of.

Price for Will Tim Geithner depart as Secretary of the Treasury? at

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