Davos Polka Dance

[Editor’s note: Parts of today’s Economic Prism appeared nearly a year ago under the title Davos Hootenanny and Salvation Call.  Herein we’ve merely updated it for this year’s Davos Polka Dance.]

Pockets of Liberty

Despite the reformers endless efforts to encircle mankind, some persist beyond the broad extent of their casted net.  In the backwaters of the Republic, for instance, the distant rumble and flicker of Saturday night hootenannies still befall yonder the mighty oak groves.  In defiance of all things good and proper, the unconsecrated gather under the pale moonlight and jig step to zydeco washboard rhythms while downing tipples of corn syrup and fermented grain.

These knees-ups certify that, even in this era of big government, there remain places in the lower forty-eight where freedom reigns.  Across the planet, no doubt, there are pockets of liberty where individuals can use whatever light bulb they want without fear of the pokey.

These places are uniquely exceptional with their own distinct rhyme.  But, in common, they’re all places where the air smells sweet, the water flows clean, and the people can hold their chin up. Continue reading

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The End of Coercive Transfer Payments

“To the wise, life is a problem; to the fool, a solution.” – Marcus Aurelius

Harry Reid is a Deadbeat

“We are not a deadbeat nation,” said President Obama on Monday.  When you consider the many fine individuals that comprise the nation, President Obama is right.  Nonetheless, the nation is governed by deadbeats.

How else can one explain Senate Majority Leader Harry Reid’s letter to President Obama urging him to circumvent Congressional approval to raise the debt limit?

Sidestepping one’s responsibilities and obligations is archetypical deadbeat behavior.  No doubt, Harry Reid is a deadbeat.  If you have any reservations, just look at the man’s face…it has deadbeat written all over it.

You see, Harry Reid can’t help himself.  He has the ill-fated occasion of presiding over the Senate at the very moment the government’s breaking down.  Reid, like most Senators, has no clue what’s going on. Continue reading

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The Recession of 2013?

Getting back to the straight and narrow can take a lot of time and effort.  Especially after straying far off the beam without much care or sense.  That seems to be what happened to the whole economy during the bubble years last decade.

For some reason, probably the combination of cheap credit and visions of easy riches, people went mad together.  They borrowed and spent money until the whole financial system blew apart in a great big mess.  Since then, picking up the pieces has been a rough task.

But even after the travails of the last five years it could take another five years before all the wrongs have been righted.  That’s what Financial Analyst, Gary Shilling thinks.  According to Shilling, the economy will slump for another five years.

That’s about how much more time Shilling believes it’ll take for households and institutions to pay down their debts.  Moreover, this time is needed for assets to be rebuilt through a rising savings rate.

Shilling, and other economists, refer to this process of paying down debts and raising capital as deleveraging. Continue reading

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Is American Justice Dead?

Is American Justice Dead?
By David Galland, Managing Director

Every nation-state has a body of laws woven into the fabric of society.  As Peruvian economist Hernando de Soto has commented on extensively, the stronger the rule of law, the stronger the economy.

And by “stronger” laws, I mean laws that are impervious to tampering for personal or political gains.  The connection between a sound judiciary and economic health is readily comprehensible, except maybe to a politician… businesses and individuals are far more likely to invest capital in a country with understandable laws that are impartially and universally enforced than if the opposite condition exists.

That’s because the lack of a consistent body of law breeds uncertainty and adds a huge element of risk for entrepreneurs.  That is the case here in Argentina, where hardly a week goes by without La Presidenta and her meddlesome comrades cooking up some new hurdle for businesses to overcome.

Which brings me back to the matter at hand – American justice on a slippery slope. Continue reading

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