Words of the Weasel Part 23

"Austerity". Used to mean reducing spending to the point where it hurt. Going without stuff. Not any longer. Today "Austerity" means tax hikes.
Just the other day a piece about French "austerity" imposed to keep their AAA bond rating. Read the piece, and we find that all the "austerity measures" are all tax hikes.

Psychiatric-drug use climbs 22%

From the Wall St Journal. Hmm. Does that mean that Americans are 22% crazier than they used to be?
We are talking prescription drugs here, so that means doctors are writing 22% more prescriptions. Have we developed new drugs to treat the previously untreatable? Is this a reflection of the decline of Freudian psycho-analysis in favor of drugs to set the head right? According to this article 20% of the population is taking psychiatric drugs. That's a lot.
Apparently a lot of the growth is in ADHD prescriptions for grownups. Ritalin is rising.
Anyhow, it's bound to increase the awful cost of American health care.

A few WSJ words about Credit Default Swaps

For those who tuned in late, a credit default swap (CDS) is paper insurance, if the financial paper you hold defaults, the credit default swapper will pay you off. For a slight fee of course. The swapper will charge a percent or two to cover his expenses. So eager beaver young hi-roller can buy Greek bonds that pay 28% and tell his supervisor "It's OK, I bought a credit default swap on them, so when the Greeks default, we get paid off."
Only, the Greeks or the ECB or somebody worked some kind of evil magic and the Greek CDS's won't pay off after the bondholders took a 50% haircut. Woe is me.
"investors concluded that the CDS's of other EU countries weren't to be trusted either. So when fears mounted over Italy's solvency last week, investors bailed out of euro-zone debt."
Oh the horror of it. Investors will stop pouring money down an Italian drain. The world will end on Tuesday. Francesco Guerrera, a Wall St Journal editor, thinks this is terrible.
Actually, it's a good thing. Capital ought to be invested in economic development, factories, mines, off-shore oil platforms, sea going ships, roads, bridges, airliners, you know, stuff that employs people and makes money. Money loaned to EU governments just goes to pay pensions of retired bureaucrats. The bad part about CDS's, is that they encourage investors to invest in loser government bonds instead of useful things.
Far as I am concerned, anything we can do to stamp out CDS's is a good thing. Investors ought to look at the risk involved in any investment. CDS's (when they work) shuffle the risk off on the third party, and allow the investor to put his money into really risky stuff but without assuming the risk himself.
Society's capital will be better directed, resulting in greater economic growth and more employment, if the investors have to face up to risk.

Do I believe in stimulus?

In this day and age of scary big budget deficits, some governments (like NH) have reacted by cutting government spending. Others (like CA, USofA and Greece) have not. Each time a thrifty government cuts spending a whole bunch of pundits pipe up and say "Reducing government spending reduces economic stimulus and casts us deeper into Great Depressions 2.0". Is this really true?
The pundits have all been brought up on Dr. Maynard Keynes, British economist from Great Depression I. Keynes claimed that the Great Depression was caused by a "failure of demand" and the proper role of government was to create demand by spending money, and if necessary, printing it in order to spend it. This theory is attractive to politicians (who love spending money), business (who receives this largess), and liberals.
But does it work in the real world? Certainly Obama's $1 trillion porkulus bill didn't do much for Great Depression 2.0. Keynesian spending requires money that has to come from somewhere, either out of taxes, or inflation (which takes money out of everyone's hide). Could it be that taking all that money away from taxpayers reduces those taxpayer's ability to spend?

Maxims

Napoleon is remembered for saying "In war the moral is the the physical as three is to one". By which he meant that his army won because his solders believed in the cause they were fighting for. And there must be something in it, Napoleon repeatedly beat enemies as numerous as his and equipped with the same weapons that his men carried.

Of course we should remember that Napoleon is also the man who said "Le feu est tout", which translates into English as "Firepower is everything".

Words of the Weasel Part 22

"Nuanced." As in "President Obama's nuanced response to the Iranian nuclear weapons program. Quoted from Elizabeth Warren, currently running for Scott Brown's Massachusetts senate seat. Nuanced. Speak softly and slink out of the room. The Iranians are dead set on getting the bomb. Only military action or regime change will stop them. Nuanced won't cut it. Once the Iranians get the bomb, they are immune to invasion. With nukes they can pretty much do anything they like, and if we move to stop them, they will threaten to nuke someplace we care about, Jerusalem, Baghdad, Tel Aviv.
"Firepower." As in "The European Stability Facility needs more firepower". The Economist and even the Wall St Journal have taken to using "firepower" in place of "money" which is what they are actually talking about. Not quite sure why. Can it be that all these good liberals really think "firepower" sounds nicer than "money"?

Back to the Civil War

Whenever times get slow, the services change their uniform. The US Army has gone back to Civil War style blue uniforms and rank insignia. I just saw Chief of Staff Gen Ray Ordiero on TV. Instead of the traditional silver stars on the shoulder loops, he was wearing gold shoulder straps of the sort that William T. Sherman and U.S. Grant used to wear.
Only took 65 years for the Army to get back to blue. When the US Air Force got started in 1947 it picked blue for it's uniform. To prevent anyone from confusing Army soldiers with Air Force airmen, the Army promptly switched over to green uniforms. Now the Army is over it's snit with the Air Force and the soldiers are going with two tone blue uniforms.