Greece Buys Time By…Buying Their Own Debt?

April 8th, 2015

Although Greece was slated to run out of cash on April 9, they seem to have “scraped together enough cash to meet the I.M.F. payment, in part by extracting liquidity from quasi state entities.”

One of the ways they did that was raising 1.1 billion Euros from bonds, all sold to domestic investors. And who would some of those “domestic investors” be? Would you believe Greek banks?

These short-term bonds, which have been issued by the country’s largest banks and carry the guarantee of the Greek government, are not being sold to foreign investors. They are being issued to the only entity that would dare buy them: themselves.

In the last four months, some of Greece’s largest banks, including Piraeus, Alpha and Eurobank — have self-issued more than 13 billion euros’ worth, or $14.3 billion, of these government-guaranteed bonds.

Wounded by vanishing deposits and bad loans, Greek bank bonds are about as toxic an investment as can be found. The banks are on life support via an emergency lending program overseen by the European Central Bank, via which they have access to short-term loans from their own central bank.

But to secure this credit line, about €71 billion (more than half the deposits outstanding in Greece), these banks need to provide collateral to the Greek central bank.

In essence, what Syrizia has done is carried out a similar maneuver to that the EU insiders have been carrying out since the European Debt Crisis broke: Dumping their bad bonds onto taxpayer-funded entities. But the problem for Greece is that their maneuver is like a Ponzi scheme that depends on getting more funds from people already in the Ponzi scheme.

That doesn’t strike me as a sustainable model.

No wonder Greece is drawing up plans to nationalize banks (rather than, of course, stop spending money they don’t have). That’s rather like selling your seed corn to buy heroin. (That piece also notes that “Greece spends a larger portion of its GDP — 17.5 percent — on pensions than any other country in Europe.”)

Hell, even recently bankrupt Cyprus is saying that Greece is screwed unless they implement actual reform. As opposed to Syriza’s current “reform” proposals, which include “no wage or pension cuts.”

Oh, and they’re flogging reparations from Germany yet again. Because it worked so well the last five times they floated the idea.

But Greek Prime Minister Alexis Tsipras seems to have only the faintest grasp of reality as it is:

Consider the case of a household whose members chronically live beyond their means. They have no savings and their bank account is constantly in overdraft. Rather than cutting back, they obtain multiple credit cards by hiding their true financial situation, but those credit cards are soon maxed out. In desperation, they turn to financially responsible cousins to help them through, again hiding the true scale of their spendthrift ways. Finally, the family defaults on its loans, triggering loss of home, car and other possessions. But instead of recognizing that they were the architects of their own misfortune, they consider themselves victims of the mortgage, car loan and credit card companies. And they even vilify their generous relatives for refusing to lend more money.

Greece’s problems have not been caused by austerity, but by decades of irresponsible spending and corrupt behaviour. Expecting that a debt problem will be solved by more debt simply defies common sense and reality. Believing this myth will only make the debt hole that Greeks have dug themselves even deeper, and the challenges of climbing back out ever more unlikely.

Iran To Start Using Faster Uranium Centrifuges As Soon As Deal Is Final

April 8th, 2015

Still analyzing the Iran nuclear deal, but this is hardly encouraging:

Iran will begin using its latest generation IR-8 centrifuges as soon as its nuclear deal with the world powers goes into effect, Iran’s foreign minister and nuclear chief told members of parliament on Tuesday, according to Iran’s semi-official FARS news agency.

If accurate, the report makes a mockery of the world powers’ much-hailed framework agreement with Iran, since such a move clearly breaches the US-published terms of the deal, and would dramatically accelerate Iran’s potential progress to the bomb.

Iran has said that its IR-8 centrifuges enrich uranium 20 times faster than the IR-1 centrifuges it currently uses.

So the end result of Obama’s deal to slow Iran’s nuclear weapons drive will be to accelerate Iran’s nuclear weapon’s drive…

(Hat tip: Jihad Watch.)

Instead of Actual Content: Story Pipeline Deadlock Edition

April 7th, 2015

Right now in the Pipeline of Half-Completed Blog Posts, I have:

  • A post on the “Sad Puppies” Hugo Awards controversy
  • Another update on Greece (which supposedly runs out of money on Thursday)
  • Analysis of the Iran Nuclear Weapons Deal
  • Another Texas vs. California update
  • Unfortunately, today is going to be unusually busy, so instead of finishing those and offering up actual content, here are some Golden Retriever videos:

    LinkSwarm for April 6, 2015

    April 6th, 2015

    I might have an analysis of the the Iranian nuclear deal later, or I might now, depending on how my taxes are going…

  • UN Human Rights chief praises Islamic State for “diversity.” No, really, that happened. It’s not a parody from The Onion. (Hat tip: Jihad Watch.)
  • Professor finds that texts of Islam are, in fact, more violent than those of other religions.
  • The Columbia Journalism Review investigation of the Rolling Stone University of Virginia rape hoax story is out, and found massive problems with the reporting…
  • …many of which Ashe Schow highlights.
  • But despite the numerous journalistic problems with the piece, no one is getting fired. Lying to support the victimhood identity politics narrative means never having to lose your job…
  • Speaking of which: Fraternity brothers perpetrate vicious rape. Wait, did I say “perpetrate”? I meant “prevent.” (Hat tip: Instapundit.)
  • Earlier: “Sorry I lead you on when I got drunk.” Later: “What I really meant was you raped me!”
  • The Obama Administration’s reckless engagement with Iran is probably the biggest reason Netanyahu won his surprise victory.
  • The Atlanta Federal Reserve forecast has cut Gross Domestic Product growth estimates in the first quarter from 2.3% to 0.0%. Unexpectedly!
  • Ted Cruz raises $4 million in 8 days. As the New York Times notes, the vast majority is from small donors and can be spent in the primary.
  • Being a liberal means never having to actually weigh evidence.
  • Muslim group kills Red Cross worker.
  • What town wanted: Statue of Lucille Ball. What town got: Statue of zombie lobotomized alcoholic Amelia Earhart.
  • Chicago Is Detroit Is California Is Greece

    April 5th, 2015

    National Journal has a piece up by moderate lefty John B. Judis on all the problems plaguing Chicago.

    Perhaps more than any other major city in America, Chicago is facing a truly grave set of problems—problems that are essentially more extreme versions of the challenges confronting city governments across the country.

    But there’s a vital piece of information omitted from that sentence: “problems that are essentially more extreme versions of the challenges confronting city governments across the country run by the Democratic Party.” Though Republican cities are not immune to such problems, make no mistake that the very worst examples are cities run by the Democratic Party, most for a very long time (Detroit hasn’t had a Republican Mayor since 1962, Chicago since 1931), and most are in states with solid (if not overwhelming) Democratic Party majorities.

    The failure of America’s bankrupt cities is a microcosm of the failure of the Blue model of big government liberalism. And the reason I have spent so much time on covering California and Greece is that they are part of the same story: The failure of American liberalism is a microcosm of the bankruptcy of the welfare state, and the bankruptcy of the welfare state is a subset of the failure of socialism.

    The quandaries begin with Chicago’s dramatic social divide. To an even greater extent than is the case in, say, New York or Philadelphia, Chicago has become two entirely separate cities. One is a bustling metropolis that includes the Loop, Michigan Avenue’s Magnificent Mile, and the Gold Coast, as well as the city’s well-to-do, working-class, and upwardly mobile immigrant neighborhoods. The other Chicago consists of impoverished neighborhoods on the far South and West Sides, primarily populated by African-Americans. These places have remained beyond the reach of the city’s recovery from the Great Recession.

    As we have known since Charles Murray’s Losing Ground in 1984, welfare programs don’t lift the poor out of poverty, but keep them ensnared in it. Indeed, a cynic might observe that welfare programs are designed to create a voting clientele for the welfare state and the liberal party that runs it.

    The problem, as Mark Steyn put it, is that “the 20th century Bismarckian welfare state has run out of people to stick it to. In America, the feckless insatiable boobs in Washington, Sacramento, Albany and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social democratic evolution: There are no kids or grandkids to screw over.”

    As Steyn further noted:

    A government big enough to give you everything you want isn’t big enough to get you to give any of it back. That’s the point Greece is at. Its socialist government has been forced into supporting a package of austerity measures. The Greek people’s response is: Nuts to that. Public sector workers have succeeded in redefining time itself: Every year, they receive 14 monthly payments. You do the math. And for about seven months’ work – for many of them the workday ends at 2:30 p.m. When they retire, they get 14 monthly pension payments. In other words: Economic reality is not my problem. I want my benefits. And, if it bankrupts the entire state a generation from now, who cares as long as they keep the checks coming until I croak?

    The story of Detroit’s current bankruptcy is the story of Chicago’s coming bankruptcy, and the similar problems of California. All are dealing with bloated public sector pensions that are making their cities insolvent. All promised and spent money they didn’t have against their decedents, not realizing (or not caring) that the debt burden will ruin the worlds of those decedents before they could ever pay it off.

    The theme with all is that deficit spending destroys, and the only cure is to force governments to pare back the welfare state and stop spending money they don’t have. As the example of Greece shows, there reaches a point in welfare state dependency at which actually curtailing welfare state spending, even at the point of financial ruin, is politically impossible. The looting of the public treasury cannot be stopped because that looting is the only thing that holds left-wing coalitions in power anymore.

    One of the many reasons the Tea Party exists is to hold American politician’s collective feet to the fire to make sure the terminal phase of the welfare state Greece is now enjoying never gets that bad in America. (To this end, they’ve had the tiniest little glimmer of success.)

    Chicago is Detroit is California is Greece is, eventually, America. It’s all part of the same story, and one any voting public ignores at its peril.

    (Hat tip: Instapundit.)

    Privilege Theory and Progressive Antisemitism

    April 4th, 2015

    Once upon a time, American anti-antisemitism was seen as a bastion of the poorly-educated nativist right. (This was never entirely true, as quotas limiting Jewish admissions were imposed at many Ivy league universities in the 1920s, and Father Coughlin, perhaps the most prominent American anti-Semite of the 20th century, founded the National Union for Social Justice.) But William F. Buckley was fairly diligent in excluding anti-Semites from the modern conservative movement, a vigilance that continued well into the 1990s, as Joseph Sobran and Patrick Buchanan (cast out for tiptoeing up to the line) can attest.

    Conversely, antisemitism has been rising on the left, both here and in Europe, as John-Paul Pagano details:

    Israel’s stunning victory against combined Arab armies in 1967 set in motion streams of hostility—some anti-Israel, some “anti-Zionist,” some anti-Jewish—which would pool, roil, and gather strength until the turn of the millennium, when the Second Intifada unleashed them in a cataract of anti-Semitism. Two groups were swept along most forcefully by the current: Arabs and Muslims; and Left-wing radicals, who took their cues on Israel and Zionism from Moscow, where “anti-Zionism” assumed a central place in the Soviet anti-colonial catechism.

    That’s the first strand. Pagano then offers a section on the rise in the unassimilated Muslim immigrant population in Europe, and the increasingly open antisemitism and attacks against Jews by those populations over the last decade. Then he gets to the meat of his argument:

    I think there are three main drivers guiding progressives like [Freddie deBoer] who have similar responses to the very real injuries suffered by Jews who are targeted, excluded, abused, and sometimes murdered for reasons that are clearly the result of hatred: an excess of rationalism, the way anti-Semitism short-circuits the “privilege” analysis of racism, and a prioritization of some victims of racism over others.

    But it’s the “privilege” theory so beloved of Social Justice Warriors that really ties it all together:

    Paul Berman made the point in Terror and Liberalism—a book the mere mention of which sends deBoer types running for the bathroom—that we in the West are inheritors of Enlightenment rationalism, and as such we find it difficult to understand and constructively respond to irrational political movements. In this respect “we are all Noam Chomsky,” Berman wrote in reference to the man who has done the most to advance this reductive Weltanschauung. In politics Chomsky proposed two warring innate ideas—an instinct for greed (embodied by the corporatized West) and an instinct for freedom (embodied by those opposing the West)—and honed this analysis by applying it to the abattoir in Cambodia during the 1970s. There have been few enormities that more clearly exhibit irrationalism than the Khmer Rouge auto-genocide; but in Chomsky’s hyper-rationalist view, no such movement of self-cannibalizing lunacy could exist (at least not among victims of American imperialism). So, he wrote that there was no genocide to speak of in Cambodia, and if there was violence, it was because greedy U.S. war-making had driven the Cambodians to it.

    So too with some interpretations of crises relating to radical Islam and the Middle East. Irrationalism is the wrong explanation, because it simply can’t be right; or if violence and hatred do exist, they assume the discrete and contingent form of being a rational (i.e., predictable and understandable) response by the victims of the United States and Israel. For deBoer and the segment of the Left he represents, anti-Semitism is not a coherent and meaningful force among Muslims—that is to say, a movement; or if it is, it is not a self-sustaining irrational movement, one founded on conspiracist racism against Jews and drunk on salvationist violence. Rather it is tightly correlated to the wrongdoing of Americans and Jews themselves, and thus acute in onset and understandable.

    Hyper-rationalism pairs well with the dogmatic underdog-ism of the Left, which assumes that weakness is a source or at least a marker of virtue. Yet just as the poverty of Chomsky’s political analysis became clear after the United States withdrew from Indochina, the silliness and toxicity of New Left ideas about race have become plainer as Jim Crow recedes.

    Perhaps the worst of these is the formula that racism equals prejudice plus power. People of color can’t be racist, according to this definition, because they are structurally disempowered by our racist-capitalist “system.” Whites are racist, wittingly or not, because they are existentially driven to oppress non-whites in order to preserve their “privilege.” Analyses of “structural racism” and “privilege” assert a kind of Wizard of Oz sociology that exhibits some elements of conspiracy theory—false consciousness, social determinism, and peoples of good and evil locked in Manichean struggle.

    In the mental shorthand of many, Muslims are people of color and Jews are white. That demarcation has fateful consequences. We in the West have a horrendous history of racism; in the United States the oppression of African Americans for hundreds of years is an enduring betrayal of liberal values. Responses throughout the educated West to the Arab-Israeli conflict have been warped by fear that Zionism is a form of racism—as the Soviet architects of that libel surely intended. We are prone to seeing Israeli violence as illegitimate per se, and to regarding violence, hatred, and illiberalism among Arabs and Muslims as a rational—predictable and understandable—response to Western and Israeli imperialism. We miss the part that is a will to power, aspirational imperialism in its own right.

    The “prejudice plus power” idea erases real anti-Semitism—a construct with its own history of horrific effects, which is often lumped in with racism, but is actually something else. To borrow from comedy parlance, most racism “punches down”—an incumbent group constructs and subordinates an underclass. The stereotypes that make up such racism diminish their victims. For example blacks, to the white racist, are inferior, criminal, stupid, lazy, and lusty. Anti-Semitism is often the opposite, envisioning the Jew as a preternatural creature—as evil, brilliant, controlling, connected, rich, and powerful beyond measure. Anti-Semitism is a conspiracy theory. As such, Anti-Semitism often “punches up.”

    When deBoer implies that anti-Semitism is not increasing in Europe and that the real problem is Islamophobia, he ties all of these threads together. Muslims, people of color, can’t be racist, at least not in any coherent and self-sustaining way; they are an oppressed people reacting to the depredations of Jews and other whites. Irrationalist movements that are powered by Jew-hatred don’t exist anymore; that sort of thing was the preserve of white people 70 years ago. Anti-Semitism today is embraced most frequently and fervently by people of color—but to note that is “the basic logic of bigotry,” blaming the victim while aggrandizing the powerful. As Chomsky put it himself, “Anti-Semitism is no longer a problem, fortunately. It’s raised, but it’s raised because privileged people want to make sure they have total control, not just 98 percent control.”

    Most people on the Left today prioritize the well-being of Arabs and Muslims over Jews.

    Read the whole thing.

    Austin City Council Punts on Anti-BBQ Ordinance

    April 3rd, 2015

    After a huge outcry over a proposed ordinance to limit BBQ smoke in residential areas, the Austin City Council has decided to punt:

    A proposed resolution that could have forced barbecue restaurants in the city of Austin to install smoke scrubbers on their smoke stacks will come before the full city council this summer. That’s what council members approved during Friday’s meeting, after hearing from restaurant owners and neighbors who say the smoke is ruining their quality of life.

    Snip.

    The resolution now goes through a stakeholder process, meaning the city will hear from people who have a direct stake in the issue. Then it will go to the economic development and health and human services committees before coming before the full council again. That’s scheduled to happen after July 31.

    So they could still kill the golden goose and fulfill Dwight’s longing to see an entire city council tarred, feathered, and run out of town on a rail. But the delay also gives them time to quietly kill the proposal after realizing how many orders of magnitude more BBQ-eating voters there are than people supporting the ordinance…

    Texas vs. California Update for April 2, 2105

    April 2nd, 2015

    Time for another Texas vs. California roundup. The Texas House passed a budget, but I haven’t had a chance to look at it in any detail yet…

  • Unemployment rates in February: National average is 5.5%, Texas at 4.3%, California at 6.7%.
  • Even though hiring slowed to 7,100 new jobs in Texas in February, it was still the 53rd straight month of positive job creation, and Texas added 357,300 new jobs over the preceding 12 months.
  • A report from the Dallas Fed goes into more details.
  • California institutes mandatory water restrictions due to drought. California is indeed suffering a horrific drought, but it’s imposition of or acquiescence to idiotic environmental restrictions (see also: Delta Smelt) have made things much worse.
  • Some have proposed free market solutions to California’s water problems.
  • Workers comp abuse at LAPD/LAFD. (Hat tip: Pension Tsunami.)
  • Add Richmond, California to the list of cities that have radically underfunded their public employee retirement plans. “The shortfall of $446 million works out to about $4,150 for every city resident.” (Ditto.)
  • San Bernardino reveals its bankruptcy deal with CalPERS. (Hat tip: Pension Tsunami.)
  • Volokh the Younger examines the legal framework around the California rule (“not only that public employees are entitled to the pension they’ve accrued by their work so far, but also that they’re entitled to keep earning a pension (as long they continue in their job) according to rules that are at least as generous”), as well as its practical effects:

    The California rule distorts what the salary/pension mix would otherwise be, given employer and employee preferences, and given the tax code as it is. Because underfunded pensions are a popular form of deficit spending, public employee compensation may already be too pension-heavy, and the rule makes it more so by freezing pensions in times of retrenchment. The incentive effects of the rule, given the political economy of government employment, may well exacerbate this tendency. And the possible theoretical reasons for preferring a pension-heavy mix don’t go very far in justifying this particular distortion.

  • California runs out of room on death row. Maybe they could subcontract to Texas…
  • Fresno’s deputy police chief busted on drug charges.
  • George P. Bush Bans Comic Sans

    April 1st, 2015

    This is one of those rare April Fools jokes that works as both a joke as sound policy:

    In tandem with his plan to foster technological innovation at the Texas General Land Office, Commissioner George P. Bush today announced an agencywide ban on the use of the font Comic Sans in all agency documents and correspondence:

    “As land commissioner, I am committed to making the GLO a technological leader in state government. While this unrefined font is appropriate for early childhood instruction in our Texas schools, the use of Comic Sans is not befitting when conducting business on key matters concerning the state of Texas. Comic Sans has no place at an agency positioning itself as a technological pioneer.”

    And the tell a bit further down:

    “Current agencywide substitute font recommendations are Helvetica, Times New Roman, or even Arial,” Elam said. “Any of the standard ones really. Except Papyrus. It’s terribad.”

    Comic Sans+

    Wallace Hall Fires Back at Straus

    April 1st, 2015

    After the grand jury failed to indict him, Wallace Hall fired back at Texas House Speaker Joe Straus:

    “The campaign by Speaker (Joe) Straus, Representative (Dan) Flynn and Senator (Kel) Seliger to criminalize my service as a Regent constitutes abuse of office,” Hall said in a statement. “Their use of the levers of political power to cover up wrongdoing by legislators should now be investigated, and those exposed for their abuses should be driven from office.”

    The piece also points out the numerous vested interests of people who have weighed in against Hall.