Press and Journal Article on Ending Foreign Aid, Greece Downgraded, Global Economic Slowdown, and a Black Market Website to Buy Any Drugs You Want?

Kind of quick post today, I feel like crap due to an infected cut.  Got an article in the Press and Journal today on ending foreign aid (I should mention I didn't choose the title, no offense to Gary if he is listening)

Bomb, bomb, pay, pay, bomb, pay: Foreign aid is a crazy, costly business

by James Miller

Imagine you are overseeing the construction of a new house for your family.

 You have borrowed close to half a million dollars in order to finance this construction. Toward the beginning of process, you notice termites have begun to chew away at the initial infrastructure.

 Without thinking, you set fire to the part of the house in order to drive the termites out. The house is partially destroyed, the termites are gone, and you continue construction. Once the termites return, you go through the process yet again. Constructing a new home becomes much more expensive than you initially thought.

Capital is scarce in our world, so naturally any sane person would put a stop to the above situation before they go bankrupt. When it comes to our government however, wasting scarce resources has quickly become its greatest talent.

 Amid the countless tax breaks, highways to nowhere, and special interest subsidies, the federal government makes throwing away money look like child’s play. Nowhere is this more prevalent in the ultimate waste of taxpayer money: foreign aid.

The death of Osama bin Laden has ignited a fury of writings on the topic, yet few are touching on the fact that our supposed friend and ally of Pakistan has been providing a safe haven for bin Laden all while receiving billions in foreign aid.  Since 9/11, Pakistan has received over $20 billion in economic and military aid from the U.S. The annual pay out was tripled under President Obama.

While we have been providing billions in aid to Pakistan, we have also been launching unmanned drone strikes in the country for the past seven years. According to the New American Foundation, the number of unarmed drone strikes in Pakistan amounted to 42 between 2004 and 2008.  Since President Obama took office, 193 drone attacks have been launched.

So let me get this straight: In the past three years we have spent money bombing Pakistan while at the same time paying for it to be rebuilt? Pardon the language, but what the hell are we thinking?

 We recently witnessed the federal government almost shut down over less than 1 percent of the overall budget and yet we are spending billions blowing up bridges, hospitals, and schools and then paying to reconstruct them. If this is Washington’s idea of a sane foreign policy, God help us if we witness an insane one.

The truth is that the U.S. has used foreign aid to prop up those who actively support our interests for decades. In the Middle East, it has meant a guaranteed oil supply to keep up with our increasing demand.

The side effect has been dictators latching onto power for 30-plus years by suppressing political opposition from their citizens.

The notion of America promoting freedom and democracy has become a cruel joke to those living under oppressive regimes.

Economist Ludwig von Mises said it best in regard to foreign aid: “We must comprehend that it is impossible to improve the economic conditions of the underdeveloped nations by grants in aid. If we send them foodstuffs to fight famines, we merely relieve their governments from the necessity of abandoning their disastrous agricultural policies.”

The quote dates back to 1952 yet still rings just as true today. The embrace of capitalism and free market policies has provided countries the environment to better their living standards for centuries.
If lawmakers in Washington truly have their heart set on reining in the massive spending, all foreign aid should end immediately.

Besides the idiotic notion of bombing foreign lands and then spending billions to repair the damage, economic and military aid only provides the disincentive for impoverished nations to take the necessary steps to relieve their own condition.

It is well past time to end our foreign policy of throwing money at problems hoping to resolve them.
Sending aid overseas may only represent fewer than 3 percent of the federal budget, but the unintended consequences of providing it only serve to further impoverish nations, not improve them.

James E. Miller is a graduate of Middletown Area High School and a 2011 graduate of Shippensburg University, where he earned a bachelor’s degree in public administration.

Okay, big news today as Moody's downgrades Greece (probably too late as usual) to Caa1 with a negative outlook, this apparently means there is a 50/50 chance of a default.  Too bad the chances are actually 100%, but at least the market is slowly accounting for it.  Paul Krugman points out this graph from a Financial Times article that truly shows the extent of how much the Germany Central Bank has claims to bad Greece, Irish, and Portugal debt.

Krugman's description:

A very important column from Martin Wolf. One way to summarize his argument is to say that slow-motion bank runs are already in progress in the European periphery, and that these countries’ banking systems are being sustained only by a process in which, say, Ireland’s central bank borrows from the Bundesbank and then lends the funds on to Irish private banks to replace the fleeing deposits.

If you ask me, the water level has now dropped so far that the fuel rods are exposed. We really are in meltdown territory.

Say what you will about him, but Krugman knows what's up when it comes to the Eurozone.

More bad news for the global "recovery" (why is this word seriously still used anymore?) as U.S. and China manufacturing continue to decline, U.S. consumer confidence falls, and Australia shows weak economic growth:

From MarketWatch:

HONG KONG (MarketWatch) — China’s manufacturing activity expanded in May at its weakest pace in three quarters, as the economy faced headwinds of high inflation and government efforts to rein in prices, according to rival surveys of companies released Wednesday.

From MarketWatch:

WASHINGTON (MarketWatch) — A Chicago-area manufacturing gauge dropped by the largest amount in nearly two-and-half years in May, in a further sign that the rise in oil prices and the Japanese earthquake have affected activity. (Scapegoats)

The Chicago PMI fell to a reading of 56.6% in May, the lowest reading since Nov. 2009, from 67.6% in April.

From BBC:

Australia has reported its biggest quarterly fall in gross domestic product (GDP) in 20 years.

Its economy contracted by 1.2% in the first three months of the year compared with the previous quarter, the latest government figures showed.

And from MarketWatch:

WASHINGTON (MarketWatch) — Consumer confidence fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions, according to a closely followed survey.

The nonprofit Conference Board said its consumer-confidence index fell to 60.8 in May — the lowest reading in six months — from a revised 66 in April.

And when combined with the recent plunge of the Dow Jones by 279 points, this will only spark the call for QE III.  I am not entirely sure if Ron Paul chaired the Financial Committee meeting entitled "Federal Reserve Lending Disclosure: FOIA, Dodd-Frank, and the Data Dump" but I am pretty sure he did.  I will have to check on it later due to me being extremely tired, but here is the conclusion of the prepared testimony from Thomas Baxter who is the Executive Vice President and General Counsel:

The Federal Reserve has worked and will continue to work with the Congress to ensure that our operations promote the highest standards of accountability, stewardship, and policy effectiveness, consistent with meeting our statutory responsibilities. We appreciate the opportunity to describe the Federal Reserve’s efforts on this important subject and are happy to answer any questions you may have.

Last I checked, the hearing was delayed till 3 P.M. but I scanned all three C-Span channels around that time and found nothing.  I figured the blogosphere would report on it but I have yet to see anything.  Speaking of Dr. Paul, here is a good video of him from CNBC where he once again tries to bring his views to the mainstream:

Okay, so you know when the government outlaws something in high demand which inevitably creates a black market?  Check this out:

About three weeks ago, the U.S. Postal Service delivered an ordinary envelope to Mark's door. Inside was a tiny plastic bag containing 10 tabs of LSD. "If you had opened it, unless you were looking for it, you wouldn't have even noticed," Mark told us in a phone interview.

Mark, a software developer, had ordered the 100 micrograms of acid through a listing on the online marketplace Silk Road. He found a seller with lots of good feedback who seemed to know what they were talking about, added the acid to his digital shopping cart and hit "check out." He entered his address and paid the seller 50 Bitcoins—untraceable digital currency—worth around $150. Four days later the drugs, sent from Canada, arrived at his house.

Getting to Silk Road is tricky. The URL seems made to be forgotten. But don't point your browser there yet. It's only accessible through the anonymizing network TOR, which requires a bit of technical skill to configure. Once you're there, it's hard to believe that Silk Road isn't simply a scam. Such brazenness is usually displayed only by those fake "online pharmacies" that dupe the dumb and flaccid. There's no sly, Craigslist-style code names here. But while scammers do use the site, most of the listings are legit. Mark's acid worked as advertised. "It was quite enjoyable, to be honest," he said. We spoke to one Connecticut engineer who enjoyed sampling some "silver haze" pot purchased off Silk Road. "It was legit," he said. "It was better than anything I've seen."

Silk Road's administrator cites the anarcho-libertarian philosophy of Agorism. "The state is the primary source of violence, oppression, theft and all forms of coercion," Silk Road wrote to us. "Stop funding the state with your tax dollars and direct your productive energies into the black market." Mark, the LSD buyer, had similar views. "I'm a libertarian anarchist and I believe that anything that's not violent should not be criminalized," he said.
But not all Bitcoin enthusiasts embrace Silk Road. Some think the association with drugs will tarnish the young technology, or might draw the attention of federal authorities. "The real story with Silk Road is the quantity of people anxious to escape a centralized currency and trade," a longtime bitcoin user named Maiya told us in a chat. "Some of us view Bitcoin as a real currency, not drug barter tokens."
Silk Road and Bitcoins could herald a black market eCommerce revolution. But anonymity cuts both ways. How long until a DEA agent sets up a fake Silk Road account and starts sending SWAT teams instead of LSD to the addresses she gets? As Silk Road inevitably spills out of the bitcoin bubble, its drug-swapping utopians will meet a harsh reality no anonymizing network can blur.

Wow, never doubt the passion of the entrepreneur to deliver goods that people want, that's all I have to say.

I will end by pointing out this great video of Mish on The Daily Ticker:

He nails it like always, highly recommended.