Trust: Easy to Break, Hard to Repair | WSJ

Excellent interview of renowned short-seller Jim Chanos by Jason Zweig. Chanos list three reasons why the average investor is right not to trust the integrity of the financial markets…

First, in recent years financial fraud has rarely been detected and exposed by the people the public might reasonably expect to do so: accountants, regulators and law-enforcement authorities, whom Chanos calls “the normal guardians of the marketplace.” Instead, frauds more often have been rooted out by whistleblowers, short-sellers and journalists.

Second, prosecutions of financial crimes are essential in the minds of investors, but are discretionary in the eyes of government officials….. the so-called too big to jail rationale.

Third, individual investors will never trust the market until these issues are addressed.

To me the list is too short.

Chanos fails to mention the revolving door between Washington and Wall Street where regulators frequently swap sides — working for government the one day and in high-paying jobs on Wall Street the next — and have one eye on their career path rather than focusing on their current job.

Fifth, the massive financial leverage that Wall Street has on Capitol Hill where Congressmen, dependent on fundraisers sponsored by Wall Street lobbyists, allow same lobbyists to write some of the legislation that passes through the house.

Read more at Trust: Easy to Break, Hard to Repair – Total Return – WSJ.

Beware China’s civilian-military relationship | The Japan Times

Masahiro Matsumura, professor of international politics at St. Andrew’s University (Momoyama Gakuin Daigaku) in Osaka, writes

…….the Chinese state apparatus is largely detached from the military, while the party’s top civilian leaders have only a loose grip on the generals.

Worse still, the current fifth generation of civilian leaders is made up of veritable dwarfs in military affairs. By contrast, the PLA’s leaders have become increasingly professionalized, but without the tempering influence of effective civilian control, which might well collapse entirely if China’s leaders continue to accept unauthorized military actions, particularly in the East or South China Sea, as faits accomplis. Line commanders could take advantage of the equivocality of civilian policy, particularly given the military’s growing political clout and the CCP’s dependence on popular nationalist sentiment.

Read more at Beware China’s civilian-military relationship – The Japan Times.

Urban sprawl isn’t to blame: unsustainable cities are the product of growth fetish

By Brendan Gleeson, University of Melbourne

In a recent article on The Conversation Robert Nelson argues we are all morally culpable for unsustainable urban sprawl. He goes on to suggest we fix this by taking advantage of opportunities for higher density development in sparsely populated inner suburbs.

But his argument is based on a false opposition: mounting evidence shows that high density development in inner areas performs very poorly in terms of resource consumption and greenhouse emissions. The idea that outer suburbs are inherently less sustainable than inner ones doesn’t bear scrutiny.

The key question is not where we accommodate growth; it’s our slavish pursuit of growth itself.

Urban accumulation

The metro fringe is expected to accommodate 40% of our national population increase in the next 15 or so years. Australia has for some time been experiencing record population growth, cheered on by business lobbies, and rationalised by the expertise they buy. Not all of it is corporate conception, or undesirable: the fertility spike and commitment to a humane migration program are also contributors.

The urban sustainability crisis betrays not bad consumption patterns but the awesome success of accumulation. Our cities express the ceaseless economic expansion imperative and its politico-cultural expression, which Clive Hamilton has memorably described as the “growth fetish”.

We have sprawl in every possible physical form – from low density suburbia to the vertical sprawl produced by market driven compaction. It is a fallacy to describe the latter as sustainable.

The existing urban footprint simply cannot absorb the human increase. It is a physical, social and political impossibility. And the underlying imperative of accumulation will drive excessive urban expansion in its various forms.

Risky business

The physical form of cities and suburbs has little influence on overproduction and its social and ecological consequences.

We are, as Nelson correctly implies, in the tightening grip of a species crisis. As the German sociologist Ulrich Beck describes it, we live in a World at Risk – from climate warming, resource depletion, economic default, and social breakdown. The ecological crisis may be the gravest of these as it appears to be moving with wild speed and threatens to upend the planetary order entirely. But it cannot be divorced from the other calamities which all derive from a human modernity that, as Beck states, is devouring itself.

The looming human catastrophe is not a moral crisis or a consequence of ethical failure. It is the product of a political economy that has defined, if not always exclusively, the process of modernisation through the past five or so centuries. The long haul of capitalist accumulation has brought us to the abyss of species threat.

It is wrong to explain this historical process in moral terms. This merely distracts attention from the role of capitalism as a driver of growth. As the philosopher Slavoj Žižek put it recently, “The point of emphasising morality is to prevent the critique of capitalism”.

Capitalism is a force for ceaseless accumulation driven by valorisation (value creating value). It is hard-wired to expansion, and can never be reconceived or reformed as a “steady state” economic order. It expands or it dies.

And therein lays its marvellous, terrifying power. It is a human order set in epic contest with the natural order, scaling ever upwards the heights of risk. One day it will reach the precipice of possibility and a structural transformation will ensue. Humanity will survive this, as it has all other historical transformations, but we do not know what new social dispensation will be possible in its wake.

Weathering the storm

It is simply impossible to dramatically change the urban form in the timescales of looming climate and resource emergencies. Absent war or massive calamity, cities resist sudden change. We cannot design our way out of a crisis generated by the underlying political economy that has driven modernisation for centuries.

However, good planning and design are vital to the project of making our cities as safe and resilient as possible. Elsewhere I have urged us to reconceive cities as lifeboats that will carry an increasingly urbanised humanity through the storms that lie inevitably in our path.

It is only fair that we break from our long habit of malign neglect and cut the outer suburbs an appropriate share of national resources. The investment should be in a massive suburban overhaul to realise the latent environmental potential of the low density form. In quest for resilience, households should be assisted towards self-sufficiency in water, energy and food production.

Paul Mees’ important Australian book, Transport for Suburbia, shows decisively that good public transport is possible in the low density form. We must lament the intellectual and political idiocy that has convinced us that it cannot be made to work in the suburbs.

The outer suburbs simply aren’t the source of our mounting environmental problems. And neither is social delinquency a helpful way of thinking about what is a long run failing of the market economy. We have to prepare the lifeboats for what lies ahead.

Brendan Gleeson does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

This article was originally published at The Conversation.
Read the original article.

Colin Twiggs:

I agree with Brendan Gleeson’s defense of suburbia, but what concerns me is the focus on sustainability in terms of energy usage and a critique of the economic system. No doubt these are important, but I would like to see more attention given to the health dangers of high-density living, both physical and psychological — from the impact on childhood obesity to feelings of isolation, increased aggression and pathological behavior in inner city environments. Biologists as far back as Konrad Lorenz (Civilized Man’s Eight Deadly Sins) have warned of the dangers of over-crowding and their impact on aggression levels.

Lorenz also warned of the ‘avalanche’ effect of positive feedback from technological development and how this could create an environment where humans struggle to cope. Prof. Gleeson I believe is trying to make a similar point when he refers to a ‘growth fetish’.

Capitalism is a force for ceaseless accumulation …… It is hard-wired to expansion, and can never be reconceived or reformed as a “steady state” economic order. It expands or it dies.

To lay the blame for this ceaseless expansion at the foot of Capitalism is I believe misguided. Capitalism covers the full spectrum from intense competition in cities like New York to peaceful co-existence in rural communities such as Pennsylvania or the Outer-Hebrides. And we find a similar spectrum in Communist or Socialist societies. The underlying cause of the malaise appears to be the impact of high-density living — no matter what economic system — and the consequent breakdown of the individual’s sense of community and belonging. A study (can anyone recall the name?) done in Australia several years ago found that Australians living in small to medium-sized towns (10,000 to 50,000) enjoyed greater psychological well-being than their city or rural counter-parts. These towns seem to offer balance between community (belonging) and the spectrum of opportunities only normally available to larger communities. More effort should be made to identify the underlying causes of that well-being and attempt to replicate the benefits in both rural and city environments. Economic and energy efficiency are important, but first and foremost we need to create cities that are healthy to live in — from both a physical and psychological aspect.

Is China Carelessly Overextending Itself? | Flashpoints

Robert Farley writes:

Over the past two weeks, Indian media has reported several border incursions along the two states’ disputed Himalayan border . While the Indian government has downplayed the incidents, Indian strategic commentators have suggested that China is moving to leverage its logistical advantages in the region.

At nearly the same time, China has upped the ante with respect to the Senkaku/Diaoyus…..

Read more at Is China Carelessly Overextending Itself? | Flashpoints.

As honey bee population dwindles, U.S. sees threat to food supply

By Ian Simpson reports:

Honey bees, which play a key role in pollinating a wide variety of food crops, are in sharp decline in the United States, due to parasites, disease and pesticides, said a federal report released on Thursday……..

Honey bee colonies have been dying and the number of colonies has more than halved since 1947, said the report by the Environmental Protection Agency and the Agriculture Department.

Read more at As honey bee population dwindles, U.S. sees threat to food supply | Thomson Reuters Foundation.

Xi’s War Drums – By John Garnaut | Foreign Policy

John Garnaut writes:

[Capt. James Fanell], in comments that went largely unnoticed outside the small circle of China military specialists, spelled out in rare detail the reasons the United States is shifting 60 percent of its naval assets — including its most advanced capabilities — to the Pacific. He was blunt: The Chinese People’s Liberation Army (PLA) Navy is focused on war, and it is expanding into the “blue waters” explicitly to counter the U.S. Pacific Fleet. “I can tell you, as the fleet intelligence officer, the PLA Navy is going to sea to learn how to do naval warfare,” he said. “My assessment is the PLA Navy has become a very capable fighting force.”

Read more at Xi's War Drums – By John Garnaut | Foreign Policy.

Afghanistan: What Went Wrong? | Colonel Gian Gentile

“History…. suggests that whatever we decide to do, let’s decide to do it on the premise of: there are limits to what our power can accomplish in the world — especially military power — and sometimes there may be other alternatives to using military power to shape a world that we want to see……”

To paraphrase Abraham Maslow: If your favorite tool is a hammer, every problem starts to resemble a nail.

The views expressed by Colonel Gentile here do not necessarily represent those of the United States government or the Department of Defense.

This interview was recorded shortly after the event, “The War in Afghanistan: What Went Wrong?” at the Cato Institute April 5, 2013.
http://www.cato.org/events/war-afghan.

 

One Soviet Leader China Could Emulate…and it’s not Gorbachev | The Diplomat

Professor Minxin Pei analyzes the options facing the Chinese Communist Party:

…it appears that what informs the political thinking of China’s new leadership is the experience of the late-Soviet regime. In particular, three different leaders and their policies apparently weigh heavily on the minds of the new occupants of Zhongnanhai. Having endured a decade of political stagnation amid rapid economic growth, China’s new leaders are obviously not in a mood to try another version of the Brezhnev model, the essence of which is pretending to govern while doing nothing in reality. Yet, aware of the enormous risks of introducing democratic reforms into a sclerotic political system, they abhor the radical Gorbachev model even more.

Read more at One Soviet Leader China Could Emulate…and it’s not Gorbachev | The Diplomat.

Their problem is that the other roads lead to nowhere and eventually they will be forced to embrace democratic reform. Rather than rejecting the Gorbachev option, the CCP should analyze the process and look for ways to minimize the disruption. Gradual transition to a central governing council of 7 to 9 elected officials representing all major political parties, with the CCP initially holding the majority of seats, seems the lowest risk alternative.

The Freedom to Diminish Other Peoples’ Freedom | Angry Bear – Financial and Economic Commentary

Mike Kimel at Angry Bear takes a dim view of how some studies define “freedom”:

This Mercatus study, like so much else that comes from that institution, seems to be promoting a specific kind of freedom, namely the freedom of some parties to diminish other people’s freedom and the ability of one group of people to make decisions about what goes onto someone else’s property. And this, to me, is not really a measure freedom, but rather a measure of the right to oppress.

Read more at The Freedom to Diminish Other Peoples' Freedom | Angry Bear – Financial and Economic Commentary.

Reminiscences of a German World War II Veteran | SPIEGEL ONLINE

Jürgen Dahlkamp reports on an interview with a 92 year-old WW II veteran who lost his leg on the Russian front.

“I was a good soldier,” says Heinz Otto Fausten, which seems like the beginning of a sentence that can’t possibly turn out well. But then he says: “I see today that because of that, I was merely a good tool for an unbelievably criminal regime.”

The interview raises questions about individual culpability for collective crimes and when should a “good soldier” disobey orders.

Read more at Reminiscences of a German World War II Veteran – SPIEGEL ONLINE.