Christine Lagarde gets a short sharp lesson in history.

Following comments by IMF supremo Christine Lagarde to the Guardian (that now it is payback time for Greece) Facebook exploded

Yannis Chamalakis Ms Lagarde…If I could afford the clothes you're wearing, your jewellery, the posh hotels you stay at, your expensive cars, your bodyguards, your spas, your personal chefs and lived in a multimillion dollar condo then yes I would be very inclined to sympathise with the children of Niger. However, I have to make sure on a daily basis that my own children do not ever end up like the children of Niger thanks to the utterly moronic, inhuman and utopian plans, treaties and contracts that you and your cronies have tricked/pressured my nation into. Rest assured that whether Greece stays in the Euro or not we are going to make it as we have under the Romans, the Ottomans, the Germans and now the shadowy characters infesting the corridors and offices of your prestigious organisation. What should concern you the most is the broken dreams, hunger and anger of an entire generation that has seen its future utterly destroyed in the space of two years. These young people who will now thanks to your stance grow up in a country ravaged by poverty whilst being labelled by everyone as lazy, dodgy trash will one day be the ones who will hold in their hands government offices and will have to cooperate with you and your colleagues. This anger, this sentiment of the underdog, the unwanted and the scorned will return to bite you and the world in the butt. You and your cronies are dangerously short-sighted Ms Lagarde. Your lack of sympathy is appalling and indicative of a person who will simply never realise fiscal policies are not imposed on faceless numbers on A4 pages stuffed in a folder. They are imposed on human beings with lives, loved ones, plans, dreams and above all self respect. I find your stance and comments offensive and unacceptable to say the least. It's not time for the dirty Greeks to pay up as many of you self-righteous foreign politicians may think. The people protesting and complaining right now are the ones who have indeed been paying their taxes all their lives. They are the ones who are still being asked to pay more and more to their complete exhaustion for the mistakes and dodgy deals that their former governments made in full cooperation with European multinational trusts and cooperations and in full view of yourself and the people now wagging their fingers at us. The corrupt few who brought us to this through tax evasion, embezzlement of public funds and scams will be dealt with in Greece by our legal authorities. The People are angry and determined to see this through. But the sweeping way in which my entire nation is being slated and labelled as an unproductive bunch of ignorant, lazy, drunk party animals is not only inaccurate but it borders on racism and anti-hellenism. Life and history are wheels and they revolve Ms Lagard, your nation may not have that long a history to understand that but take it from someone whose people have been around for at least 3000 years. What goes up must come down, what is now down will one day find its way to the top. And when that happens Ms Lagard every scorned, hungry, angry Greek will remember everything you ever did and said to us or about us. I only hope that my fellow Greeks will remember the superior teachings and upbringing that our parents raised us by and find the strength, will and courage to forgive you --A lazy, tax-dodger HELLEN for my connationals,greek for you and your fellow IMF vultures

If Tony Abbott read this, do you think he would understand?

What is surprising about this comment, amongst others, is that one of the authors* is a rusted on true blue conservative

The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.

*Norman J. Ornstein is a member of conservative think tank American Enterprise Institute.

IMF urges UK to dump austerity.

Link here

The International Monetary Fund has called on the Bank of England to cut interest rates and resume printing money to boost demand in the economy. It has also asked the UK government to prepare a Plan B for deficit reduction if these measures do not work.

In a tough assessment of economic prospects for Britain, the fund said that the economy had not responded as it had hoped and that risks of continued stagnation were high.

It said “further monetary easing is required” and should happen with more quantitative easing and a cut in the 0.5 per cent interest rate.

Good news for coalition - Australia ranks last on unhappiness index.

This must come as bad news for those who regularly talk the country down

SYDNEY—Australia is living up to its nickname of 'the lucky country,' with a new survey marking it as the happiest industrialized nation in the world based on criteria such as jobs, income and health.

Having sidestepped the economic malaise gripping much of Europe and with near full employment owing to a once-in-a-century resources boom, Australia has come out on top ahead of Norway and the U.S. in the annual Better Life Index compiled by the Organization for Economic Cooperation and Development...

In the long run all equities are dead.

Gregory McKenna, from Lighthouse Securities, takes a long look at the short term

Longer term though I remain committed to the view that this selloff recently is part of a broader selloff which is resulting from a shift in focus from free money associated with zero interest rate policy and monetary stimulus globally to a recognition that the global growth profile is and has deteriorated. Thus future earnings and future cashflows are being adjusted and so to then price targets and risk tolerance amongst investors and traders.

But for now markets are making hay while the sun shines.

In consideration of the evidence.

Link here

Incestuous investments - a game all the family of financiers can play.

Back in 2009, following the collapse of Lehman Bros, Nassim N. Taleb, author of “The Black Swan: The Impact of the Highly Improbable” told a packed room of financiers

“I hate traders”

and explained that the business of creating and trading derivatives is solely about finding a way to take advantage of clients.

This is just a tad curious as he also said

“I was happy when Lehman went bust,”

and explained how he had shorted the company and literally danced when he heard the news.

By his own admission he blames the current financial mess on people just like himself, traders.

Romney supportive of more not less risk and govt bailouts.

In light of previous taxpayer funded bank bailouts this is a very odd comment from presidential hopeful Mitt Romney

“A trading loss of this nature is something from which JPMorgan should learn, and I think as well regulators should look at it just to understand what happened and why it happened. But…this was not a loss to the taxpayers of America. This was a loss to shareholders and owners of JPMorgan and that’s the way America works Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain. The $2 billion JPMorgan lost someone else gained.”

The reality is that it was trades such as this one which led up to the global financial crisis of 2008 and had there been a regulator on Wall St it is most likely that these risky trades would not have happened.

Tabb Group’s Rhode went further.

“This makes the Volcker rule a foregone conclusion,” he said. “The entire financial community is holding their heads in their hands saying this JPMorgan event could not have happened at a worse time.”

It would appear that contrary to what Romney asserts JPM have not shown that they have learnt from their previous mistakes

...What is difficult to tell is exactly how widespread the practices are that got JPMorgan into trouble -- partly because without financial reforms, the riskier corners of Wall Street are still just as murky as they were before the crisis.

“We never hear about these things if they profit from it," said William D. Cohan, a former managing director at JPMorgan who now writes frequently about the banks. "They never call a five o’clock press conference saying we made $4 billion on a London Whale trade.

"We’ll never know who else is doing it, and this is one of the big problems," he added. "It’s an opaque black box.”

A global perspective on water, sea level rise etc.

All the Water on Planet Earth

Illustration Credit & Copyright: Jack Cook, Woods Hole Oceanographic Institution, Howard Perlman, USGS

Explanation: How much of planet Earth is made of water? Very little, actually. Although oceans of water cover about 70 percent of Earth's surface, these oceans are shallow compared to the Earth's radius. The above illustration shows what would happen if all of the water on or near the surface of the Earth were bunched up into a ball. The radius of this ball would be only about 700 kilometers, less than half the radius of the Earth's Moon, but slightly larger than Saturn's moon Rhea which, like many moons in our outer Solar System, is mostly water ice. How even this much water came to be on the Earth and whether any significant amount is trapped far beneath Earth's surface remain topics of research.

LINK

Ken Henry on the intrinsic value of money.

ABC interview

CHRIS UHLMANN: So can you tell us exactly what you said in that little phrase?

DR KEN HENRY: Well I did say, ‘Go Hard, Go Early and Go to Households.’ I did say that.

CHRIS UHLMANN: And do you feel vindicated, particularly after that first stimulus package because you did see an effect on the economy which came very quickly?

DR KEN HENRY: Yeah, I think so, I do. It’s not a personal thing. I must say that in the Treasury we had discussed this possibility years earlier. And we’d asked ourselves a question, senior group of people in the Treasury – what would we do if we were to be hit with another big negative shock and how would we respond, what would our advice to the Government be? And everybody in the senior levels of the Department was of a one mind on how the Department should provide advice.

CHRIS UHLMANN: Was there a problem not with the first stimulus package, but perhaps with the shape and delivery of the second one?

DR KEN HENRY: Well, a lot of people say that in hindsight. But you know when you’re, when you’re putting money out the door so to speak, and I know this is difficult for people to understand, it sounds counterintuitive, but actually if it’s fiscal stimulus the most important thing is to get the money out the door. But how the money is, whether the money is in some sense wasted because there’s overcharging or whatever, of course it’s an important point but from a macroeconomic perspective it’s very much second order, maybe even third order.

Rumors of a Greek exit are just rumours and propaganda-EU President Juncker

REUTERS

EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER ON ANY POSSIBLE CHANGES TO GREEK BAILOUT PROGRAMME:

"If there were to be dramatic changes in the circumstances, we wouldn't preclude a debate about an extension of the period (for Greece to meet targets). I didn't say there was any intention to extend the periods, we have to do things in the appropriate order.

"We need a Greek government, the Greek government would have to make clear it was fully committed to the programme, and then if there were exceptional circumstances, we wouldn't exclude the possibility of discussing this issue.

"It wasn't discussed today because those two other conditions were not met: we haven't got a Greek government and we haven't got any particular circumstances to warrant this discussion.

"Anyway, there wouldn't be any substantive change involved."

ON POSSIBILITY OF GREECE LEAVING EURO ZONE:
"I made it perfectly clear that nobody was mentioning an exit of Greece from the euro area. I am strongly against. We are 17 member states being co-owners of our common currency.

"I don't envisage, not even for one second, Greece leaving the euro area. This is nonsense, this is propaganda.

"We have to respect Greek democracy. I'm against this way of dealing with Greece consisting in provoking the Greek public opinion and giving advice and indications to the Greek sovereign.

"Greece has voted, we have to take into account the result. We do hope that a government will be formed in the next coming days or weeks and then we have to deal with that government. We don't have to lecture Greece.

"But the Greek public, the Greek citizens, have to know that we agreed on a programme and this programme has to be implemented. But I don't like the way of dealing with Greece, those that are threatening Greece day after day. This is not the way of dealing with partners, colleagues and friends and citizens in the European Union."

ON GREEK PROGRAMME:
"We took note of the results of the Greek elections on May 6. The democratic process in Greece should now run its course. The Eurogroup looks forward to the swift formation of a new Greek government that will take ownership of the programme and that has a sufficient parliamentary majority to implement fully the agreed policy conditionality."

ON GREEK REFORMS:
"The Eurogroup is fully aware of the significant efforts already made by Greek citizens. This is not a time to relax the reform efforts. On the contrary, continued fiscal and structural reforms are Greece's best guarantee for a more prosperous future in the euro area. We therefore encourage Greece to resolutely continue to adjust the structural weakness of its economy."

ON GREECE IN EURO ZONE:
"Our unshakeable desire is to maintain Greece within the euro area. We will do everything possible to that effect. The exit of Greece out of the euro was not the subject of our debate today. Absolutely no one, absolutely no one, argued in that sense."

Looking back...at the ruins of conservatism.

Guess who?

The country has great and imperative obligations to the weak, the sick, the unfortunate. It must give to them all the sustenance and support it can. We look forward to social and unemployment insurances, to improved health services, to a wiser control of our economy to avert if possible all booms and slumps which tend to convert labour into a commodity, to a better distribution of wealth, to a keener sense of social justice and social responsibility. We not only look forward to these things, we shall demand and obtain them.

Sir Robert Menzies

Lest we forget.

Brad de Long asks us to reflect on the not so distant past

POWELL: My colleagues, every statement I make today is backed up by sources, solid sources. These are not assertions. What we're giving you are facts and conclusions based on solid intelligence.

By any measure Powell was a sceptic.

A worse govt than Whitlam?

Stephen Koukoulas looks at the data

Despite the massive growth in real government spending during the Whitlam years, the level of negative net debt was little changed when Whitlam was sacked in November 1975.  I am not sure whether to use the 1974-75 data which shows negative net debt at 2.7% of GDP or the 1975-76 data which shows negative net debt at 0.4% of GDP due to the timing of the change of government at that time, but either way, it doesn’t really matter other than to show that when the Fraser Government took control of the Treasury benches, net government debt was negative.

The government worse (fiscal not political) than Whitlam was Fraser

The Fraser Government was in power for 7 years.  By 1983-84, the level of net government debt had risen to 7.5% of GDP and would reach 9.3% of GDP in 1984-85 as Treasurer Howard covered up the Budget problems during the 1983 election campaign.  Such were the dynamics of the early 1980s domestic and global recession, that net debt rose a bit more over the next year and it peaked at 10.3% of GDP in 1985-86.

No wonder the Libs and their agrarian socialist partners were chucked out.

Taking trust more seriously than most - Warren Buffett.

Despite being a big fan of Jamie Dimon 

One CEO who always stresses the price/value factor in repurchase decisions is Jamie Dimon at J.P. Morgan; I recommend that you read his annual letter.

Warren Buffett remained tight lipped on his investment in JPM. At the last Berkshire Hathaway annual shareholder meeting Buffett was again asked about JPM

"My best ideas are all in Berkshire," he said according . "That I can promise you."
...Comparing Wells Fargo and JP Morgan, Mr Buffett said: "I know Wells better and it's easier to understand."

Despite his personal admiration for the CEO Buffett did not commit shareholder funds to JPM because he was not completely satisfied. Subsequent history has proved this reluctance to be correct - not only did Buffett not fully understand JPM it now appears that the CEO lacked complete understanding.

Forecasting, an evidence free game we can all play.

Writing in the AFR David Bassanese says 

....new evidence suggests the economy was far healthier than commonly assumed. If so, that would help explain some anomalies such as the surprising strength in employment over 2010, and the surprising weakness in jobs growth last year relative to job advertisements. 

To my mind, had the Reserve Bank of Australia had this new evidence, it might have thought twice about slashing official interest rates by 50 basis points last month. It might not have cut them at all.

 
Contrast that with the forecast made by NAB CEO Cameron Clyne 

"We're likely to see another 50 basis points of cuts over the course of the year,"

With record low inflation and low unemployment there is little evidence to see why the RBA take further action on interest rates, certainly for the foreseeable future.

The choice is tax now or face far greater economic disruption later.

ScienceDaily (May 1, 2012) — It's a message no one wants to hear: To slow down global warming, we'll either have to put the brakes on economic growth or transform the way the world's economies work. That's the implication of an innovative University of Michigan study examining the most likely causes of global warming.

The study, conducted by José Tapia Granados and Edward Ionides of U-M and Óscar Carpintero of the University of Valladolid in Spain, was published online in the peer-reviewed journal Environmental Science and Policy. It is the first analysis to use measurable levels of atmospheric carbon dioxide to assess fluctuations in the gas, rather than estimates of CO2 emissions, which are less accurate.

"If 'business as usual' conditions continue, economic contractions the size of the Great Recession or even bigger will be needed to reduce atmospheric levels of CO2," said Tapia Granados, who is a researcher at the U-M Institute for Social Research.

For the study, the researchers assessed the impact of four factors on short-run, year-to-year changes in atmospheric concentrations of CO2, widely considered the most important greenhouse gas. Those factors included two natural phenomena believed to affect CO2 levels -- volcanic eruptions and the El Niño Southern oscillation -- and also world population and the world economy, as measured by worldwide gross domestic product.

Tapia Granados and colleagues found no observable relation between short-term growth of world population and CO2 concentrations, and they show that incidents of volcanic activity coincide with global recessions, which may confound any slight volcanic effects on CO2.

With El Niño outside of human control, economic activity is the sole modifiable factor. In years of above-trend world GDP, from 1958 to 2010, the researchers found greater increases in CO2 concentrations. For every $10 trillion in U.S. dollars that the world GDP deviates from trend, CO2 levels deviate from trend about half a part per million, they found. Preindustrial concentrations are estimated to be 200-300 parts per million.

To break the economic habits contributing to a rise in atmospheric CO2 levels and global warming, Tapia Granados says that societies around the world would need to make enormous changes.

"Since the mid 1970s, scientists like James Hansen have been warning us about the effects global warming will have on the Earth," Tapia Granados said. "One solution that has promise is a carbon tax levied on any activity producing CO2 in order to create incentives to reduce emissions. The money would be returned to individuals so the tax would not burden the population at large.

"What our study makes clear is that climate change will soon have a serious impact on the world, and the time is growing short to take corrective action."

Unpublished letter to the Editor, Politics of envy edition

This is pretty much typical of News Ltd.

Your editorial (Politics of envy threatens our economy and ethos, 2 May) claims that “Research by the National Centre for Social and Economic Modelling has shown that all income levels prospered in the Howard years and that under the Rudd-Gillard governments the gap between rich and poor has widened.”  This is close to the exact opposite of the facts. While it is true that all income groups benefited from real income increases in the Howard years, the gains for high income groups were much greater than for low income groups, and the gap between rich and poor widened.  In contrast, ABS statistics show that income inequality fell slightly under the Rudd-Gillard government, partly due to the impact of the GFC, but also because the very large increase in pensions in 2009 helped some of the poorest by the most. I have not been able to find any NATSEM document that actually says what the editorial claims.

Peter Whiteford, University of New South Wales

Reasons to be cheerful - sea level rise better calculated.

Article on recent glacial work in Greenland

Earlier analyses of Greenland's glaciers found their speed has doubled in 10 years and were accelerating. Extrapolation of that doubling implied glacier loss in Greenland would drive up sea level by 9cm by 2100, leading to an overall rise of 80cm. Another extrapolation imagined a tenfold rise in glacier speed, leading to 47cm of sea level rise from Greenland and 2m overall. The new research shows glacier acceleration remains "well below" even the lower scenario.

"A doubling in all glacier speeds was never a prediction for Greenland, it was a thought experiment, a "what if" scenario," said Bamber.

Moon noted: "Ten years is still a short time when studying glaciers. There is no reason to think we won't get to the 80cm level. And even small rises in sea level will have very big impact in some places, as storm surges hit coasts. If you raise the floor of a basketball court by just a few inches, you will see many more slam dunks."

Bad news for farmers and consumers.

Hard to deny the evidence especially when it comes to kids

This study reports significant associations of prenatal exposure to a widely used environmental neurotoxicant, at standard use levels, with structural changes in the developing human brain.

Something for little Joe to ponder on - Korea's ETS

Link

South Korea has passed legislation to establish a national emissions trading scheme from 2015, covering 500 of that country's largest emitters.

Korea is Australia's fourth largest trading partner.

It will join Australia, New Zealand, the European Union and the US state of California, among others, in putting a price on carbon pollution.

Always looking on the bright side..

Another study from UQ, this time on optimism in Australia

Our results support the idea than unless individuals are able to alter their future health outcomes by changing their behavior, a benevolent health care provider should only provide good information about the future.

Happiness is a Chinese puzzle.

From UQ this study

“We found that the poorest group was the happiest. People in the countryside had incomes less than a third of that of people in the cities, but still 62% of the rural respondents said they were happy or very happy, while only 56% of the urban respondents were at least happy,” said Professor Frijters.

“The most miserable group in China were the migrants who had come to the cities from the countryside. While they were earning more than double what those ‘back home in the countryside' were earning, only 44% of them were happy.

The political crap of climate change.

Link

Making heretics of scientists casts a shadow


Recent revelations that several prominent global warming sceptics are in the pay of the free-market American think tank the Heartland Institute come as no surprise to many who have witnessed the slow descent of the debate from the lofty ''great moral issue of our time" to the cynical "great big tax on everything".

The national climate report released by the CSIRO and Bureau of Meteorology on Wednesday added to the overwhelming body of scientific evidence supporting anthropogenic warming, but a recent CSIRO survey found politics was the primary factor in determining public views on the matter. A large majority of those who agree with the science are Labor/Green voters, while most of those who disagree are Coalition voters.

The partisan nature of the debate suggests the hegemony of science that has characterised the two centuries since the Enlightenment is under serious threat. Scientists, hitherto in the vanguard of modern civilisation, are viewed by many as irrelevant, incompetent or untrustworthy. A particularly mild summer has only strengthened the view that, in Tony Abbott's words, "climate change is crap".

How have we reached the point where our previous deference to expert scientific opinion on everything from space exploration to hair care has suddenly waned on potentially one of the most significant issues in human history?

It's worth considering our predicament in the context of the Age of Enlightenment, since the tensions of that time reflect significantly the tensions now. The most important Enlightenment values were the rejection of arbitrary power, divine right, irrationality, superstition and myth. In part, these were derived through the ascendent discipline of science. Any claim was to be subject to empirical observation and rational assessment. One of the political dividends of this was that dominant social interests were made more accountable to the public interest.

However, while the Age of Reason effectively challenged the power of church and monarchy, it ultimately did little to arrest the headlong march of the 20th century into secular ideologies. Fascism, communism and neo-liberalism all involved the same pre-Enlightenment subservience to received truth, reversion to myth, and co-opting of reason to support dominant social interests.

Heartland's ideological defence of powerful vested interests and rejection of the inconvenient truths of science is similar to the church's reaction to astronomy in the 16th century. A heliocentric world in which the Earth was not at the centre of the universe contradicted biblical teaching and threatened the power of the church. This led to charges of heresy for inquisitive types such as Galileo.

In much the same way, climate scientists are now being stigmatised and the status quo defended at all costs by free-market purists who view the whole concept of climate change as little more than a vehicle for the market interventions of big government. Amplified through the populist media, the typical narrative involves a cast of rent-seeking bureaucrats, closet socialists and elites, now joined by the scientific academies of the world in their plot to sabotage the wheels of industry.

The ideological rearguard has been bolstered by backyard lobby groups such as the Orwellian-named ''Galileo Movement'', founded by two retirees - an industrial hygienist and an engineer - in order to confront the falsehoods of what it calls "post normal science" and cater for those who "in their gut sense that climate change is natural". The movement boasts Alan Jones as its patron.

The literature of such groups makes clear the objective to restore the integrity of science is secondary to a desire to reassert order and control in the face of uncertainty and change. Implicit in this view is the doctrine of human exceptionalism and a hankering for the kind of scientific triumphalism that facilitated much of the industrial growth of the 20th century under the assumption that humans could control and exploit the natural environment without limit, a perspective that resonates in particular with many older Australians.

Today's Galileos are the scientists, not those who vilify them.

To the challenges of our time, we must confront the distortions and false promises of ideology in much the same way as our Enlightenment forebears confronted irrationalities, myths and vested interests.

This involves prioritising science over the politics of global warming. If not, the time for acting reasonably may pass us by.

Sean Hosking lectures in public policy and politics. His doctoral thesis examined the role of neo-liberal ideology in Australia.

The how what and why of Antarctic Ice melt.

From the British Antarctic Survey

“In most places in Antarctica, we can’t explain the ice-shelf thinning through melting of snow at the surface, so it has to be driven by warm ocean currents melting them from below.

“We’ve looked all around the Antarctic coast and we see a clear pattern: in all the cases where ice shelves are being melted by the ocean, the inland glaciers are speeding up. It’s this glacier acceleration that’s responsible for most of the increase in ice loss from the continent and this is contributing to sea-level rise.

“What’s really interesting is just how sensitive these glaciers seem to be. Some ice shelves are thinning by a few metres a year and, in response, the glaciers drain billions of tons of ice into the sea. This supports the idea that ice shelves are important in slowing down the glaciers that feed them, controlling the loss of ice from the Antarctic ice sheet. It means that we can lose an awful lot of ice to the sea without ever having summers warm enough to make the snow on top of the glaciers melt — the oceans can do all the work from below.

“But this does raise the question of why this is happening now. We think that it’s linked to changes in wind patterns. Studies have shown that Antarctic winds have changed because of changes in climate, and that this has affected the strength and direction of ocean currents. As a result warm water is funnelled beneath the floating ice. These studies and our new results therefore suggest that Antarctica’s glaciers are responding rapidly to a changing climate.”

Consumption is eating us up.

Sheldon Gerron in the NYT

CHRISTMAS is nearly upon us. Americans, once again, are told that it’s our civic duty to shop. The economy demands increased consumer spending. And it’s true. The problem is that millions of lower- and middle-income households have lost their capacity to spend. They lack savings and are mired in debt. Although it would be helpful if affluent households spent more, we shouldn’t be calling upon a struggling majority to do so. In the long run, the health of the economy depends on the financial stability of our households.

What might we learn from societies that promote a more balanced approach to saving and spending? Few Americans appreciate that the prosperous economies of western and northern Europe are among the world’s greatest savers. Over the past three decades, Germany, France, Austria and Belgium have maintained household saving rates between 10 and 13 percent, and rates in Sweden recently soared to 13 percent. By contrast, saving rates in the United States dropped to nearly zero by 2005; they rose above 5 percent after the 2008 crisis but have recently fallen below 4 percent.

Unlike the United States, the thrifty societies of Europe have long histories of encouraging the broad populace to save. During the 19th century, European reformers and governments became preoccupied with creating prudent citizens. Civic groups founded hundreds of savings banks that enabled the masses to save by accepting small deposits. Central governments established accessible postal savings banks, whereby small savers could bank at any post office. To inculcate thrifty habits in the young, governments also instituted school savings banks. During the two world wars, citizens everywhere were bombarded with messages to save. Savings campaigns continued long after 1945 in Europe and Japan to finance reconstruction.

All this fostered cultures of saving that endure today in many advanced economies. The French government attracts millions of lower-income and young savers with its Livret A account available at savings banks, postal savings banks and all other banks. This small savers’ account is tax free, requires only a tiny minimum balance, and commonly pays above-market interest rates. In German cities, one cannot turn the corner without coming upon one of the immensely popular savings banks, called Sparkassen. Legally charged with encouraging the “savings mentality,” these banks offer no-fee accounts for the young and sponsor financial education in the schools.

Supported by public opinion, policy makers in European countries have also restrained the expansion of consumer and housing credit, lest citizens become “overindebted.” Home equity loans are rare in Germany, and Belgians, Italians and Germans are rarely offered an American-style credit card that allows the user to carry an unpaid balance.

How did America arrive at its widely divergent approach to saving and consumption? Seldom over the past two centuries has the federal government promoted saving; it left matters to the states or the market. In the 19th century, savings banks and building and loan associations did thrive in the Northeastern and Midwestern states; where they existed, working people saved at high rates. However, the vast majority of Americans in the Southern and Western states lacked access to any savings institution as late as 1910. Most Americans became regular savers only after the federal government decisively intervened to institute the Federal Deposit Insurance Corporation in 1934 and mass-market United States savings bonds in World War II.

The United States emerged from the war with unparalleled prosperity and hardly needed further savings campaigns. Instead politicians, businessmen and labor leaders all promoted consumption as the new driver of economic growth. Rather than democratize saving, the American system rapidly democratized credit. An array of federal housing and tax policies enabled Americans to borrow to buy homes and products as no other people could.

But from the 1980s, financial deregulation and new tax legislation spurred the growth of credit cards, home equity loans, subprime mortgages and predatory lending. Soaring home prices emboldened the financial industry to make housing and consumer loans that many Americans could no longer repay. Still, Americans wondered, why save when it is so easy to borrow? Only after housing prices collapsed in 2008 did they discover that wealth on paper is not the same as money in the bank.

As we seek to restore a balance between saving and consumption, what aspects of other nations’ experiences might we adapt to our circumstances? The new Consumer Financial Protection Bureau, while politically besieged, possesses broad powers to curb predatory lending. The bureau might also promote the creation of financial education programs in every school. Congress should consider ending costly tax incentives for wealthier savers and homebuyers while creating new incentives to encourage low- and middle-income people to save. Finally, federal intervention is needed to stop the banks from fleecing and driving away their poorest customers. If the banks cannot be encouraged to offer low-fee accounts for young and lower-income customers, the government might consider creating postal savings accounts for small savers.

To improve the balance sheets of America’s households, we must approach saving in a more forthright manner — not an easy thing to do when again and again we hear that individual prudence acts to impair the economy.

Sheldon Garon, a professor of history and East Asian studies at Princeton, is the author of “Beyond Our Means: Why America Spends While the World Saves.”

Austerity - the new 4 letter word.

Referring to collapse of the Dutch government and upcoming elections around the EU comes this piece from Kulish

BERLIN — With political allies weakened or ousted, Chancellor Angela Merkel’s seat at the head of the European table has become much less comfortable, as a reckoning with Germany’s insistence on lock-step austerity appears to have begun.

“The formula is not working, and everyone is now talking about whether austerity is the only solution,” said Jordi Vaquer i Fanés, a political scientist and director of the Barcelona Center for International Affairs in Spain. “Does this mean that Merkel has lost completely? No. But it does mean that the very nature of the debate about the euro-zone crisis is changing.”

Murdochs Machiavellian machinations lack subtlety - absolutely.

The thought that voters would make their own decisions and not accept the Murdoch line provoked this tirade

I sat on a sofa, Brooks perched on the arm of another sofa, and Murdoch walked and talked. He was excitable and angry. "You've impugned the reputation of my family," he said at one point. He called me "a fucking fuckwit" and became furious at my bemusement that he should find our campaign so upsetting, given that one of his newspapers famously claimed that it did indeed decide elections.

Brooks said very little, but, when her boss's rage blew itself out, chipped in with: "We thought you were our friend". Their use of language and the threatening nature of their approach came straight from the "Mafioso for Beginners" handbook.

Murdoch referred to "my family" constantly, something he echoed in his Leveson evidence today. Referring to this exchange, he said that I had been the beneficiary "of my family's hospitality for a number of years". Set in the context of his many dissemblings and obfuscations over recent months, the fact that this is a bald-faced lie is neither here nor there, just a casual slur despatched with little regard for the facts. (For the record, I went to Elisabeth Murdoch's 40th birthday party in September 2008, the only time I can be accused of "availing myself" of Murdoch hospitality.)

His statement does, however, reveal a much wider and more significant truth: the Murdoch way of doing business. If you come to our parties, if you join us on our yachts, if you are at our cosily-arranged dinner table, we might expect something in return, but we certainly don't expect you act in a way contrary to our interests. And if our largest-selling newspaper supports your political party … well, it's not difficult to guess the rest.

In retrospect, that incident in the Independent newsroom was the first sign of a fissure in the edifice of News International. Little more than a footnote in newspaper history it may be, but what it betrayed was a breathtaking lack of judgment and discretion, the head of the country's most powerful media organisation straying on to the sovereign territory of another newspaper to berate the editor over an incontestable truth in an advertising campaign. It's the same lack of judgment, together with a monumental arrogance in the wielding of corporate power, that has led us to where we are today. Which, of course, is the eve of the appearance before Lord Justice Leveson of Rupert Murdoch, the capo di tutti capi.

Mankind's unremitting appetite for horror.

George Monbiot writes of the Mau Mau uprising and official efforts to erase any evidence of the horror.

Considering the time, post WW2 and post holocaust, it would appear that mankind has not learnt from its past mistakes.

The austerity pill - for the Dutch just too bitter to swallow.

THE HAGUE, Netherlands (AP) — The Dutch government, one of the most vocal critics of European countries failing to rein in their budgets, quit Monday after failing to agree on a plan to bring its own deficit in line with EU rules.

Prime Minister Mark Rutte tendered the resignation of his entire Cabinet to Queen Beatrix, effective immediately, after Rutte informed her talks on a new austerity package collapsed over the weekend.