You are browsing the archive for 2014 September 08.

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The War on Cash: Latin American Front

September 8, 2014 in Economics

By Joseph Salerno

In the latest episode in the global War on Cash, Uruguay will ban all cash transactions for more than US$5,000.  The law is set to take effect May 2015 and also mandates that all taxes, no matter how small the sum owed, must be paid electronically.

HT to Nick G

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Source: MISES INSTITUTE

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Well-Armed Turkey Aided Rise of Islamic State: Yet NATO Promises to Defend Ankara from Extremists

September 8, 2014 in Economics

By Doug Bandow

Doug Bandow

Apparently America believes its allies to be wimps and weaklings. Why else would NATO officials promise to defend Turkey from the Islamic State? Surely this well-armed U.S. ally can hold off a few thousand Islamic irregulars. Some of whom Ankara allowed to enter Syria, where they were trained and received battlefield experience.

The rise of the Islamic State has led to much nonsense from Washington officials who speak as if several thousand armed Islamists were capable of carrying out the group’s threat to plant its flag on the White House. ISIL is made up of dangerous fanatics, but in the form of the Islamic State they are largely powerless to harm America. Their conventional capabilities are minimal compared to those of the U.S. or its allies, and so long as the Islamists are attempting to conquer territory they cannot afford to launch terrorist attacks on America, which would bring down the full wrath of the U.S. military on the return address they had so thoughtfully provided.

ISIL fighters threaten some Middle Eastern states, but mainly those already weakened by other factors. Syria descended into a bitter, multi-sided civil war three years ago. Sectarian governance undermined Iraq’s government and military, and spurred non-Islamist Sunni support for ISIL. Jordan has been overrun with refugees and long has enjoyed an uneasy peace between Palestinians and Hashemite monarchy. Get the Islamic State’s targets to work together and the radicals are doomed.

Also targeted by ISIL is Turkey. This led NATO Secretary-General Anders Fogh Rasmussen to promise to defend Ankara: “If any of our allies, and in this case of course particularly Turkey, were to be threatened from any source of threat, we won’t hesitate to take all steps necessary to ensure effective defense of Turkey or any other ally.”

As a statement of solidarity Rasmussen’s words might offer comfort. As a guide to Western policy the statement makes no sense.

Turkey and other nations should be held responsible for their past policies.”

After all, Ankara is partly to blame for ISIL’s rise. The Erdogan government long ago decided to support the ouster of Syrian President Bashar al-Assad. Ankara allowed opposition fighters from all sides easy access to the battlefield. None were too brutal or radical to bar passage. This included ISIL, which gained strength and resources by conquering Syrian territory. Reported the Washington Post: “eager to aid any and all enemies of Syrian President Bashar al-Assad, …read more

Source: OP-EDS

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Mysterious 'Back-to-School' Virus Sends Thousands of Midwest Kids to Hospital

September 8, 2014 in Blogs

By Cliff Weathers, AlterNet

Why is the ‘summer cold’ getting so many kids so very ill?

It’s an annual rite: school begins, viruses spread, and the kids bring home a bug. We all expect our kids to catch some type of germ in early September, but we don’t ever think in terms of sending them to the hospital, or them becoming so sick that they need intensive care and oxygen.

But that’s what’s happening in several states. Thousands of children across the Midwest have been sent to the hospital with a severe respiratory virus. Researchers say that the high number of children needing care and being hospitalized may be only “the tip of the iceberg” and are warning the concerned public that they don’t yet know why this particular enterovirus outbreak is so severe.

According to the Centers for Disease Control, 10 states have contacted them for assistance in investigating clusters of enterovirus: Colorado, North Carolina, Georgia, Ohio, Iowa, Illinois, Missouri, Kansas, Oklahoma, and Kentucky. In Kansas City, Missouri, hundreds of children have been sent to the hospital, with some 15% needing to be place in intensive care units, say officials. Dr. Mary Anne Jackson, Children’s Mercy Hospital director of infectious diseases, says she’s “never seen anything like this” in the 30 years she’s practiced pediatrics.

Enteroviruses are a diverse group of viruses that affect millions of people worldwide each year and have a high mutation rate. The most common ones resemble symptoms of an intense cold, such as coughing and difficulty breathing, which may be worse in those also suffering from asthma. Doctors say that the virus can be accompanied with a rash, fever, and wheezing as well. Often described as a “summer cold,” some enteroviruses typically peak just in time for the beginning of the school year.

This particular enterovirus, known as EV-D68, is a distant cousin of the polio virus. The chief symptom of the virus, as it progresses, is difficulty breathing.The virus was first identified in the 1960s but has not been very common until now with only a few reported cases identified since …read more

Source: ALTERNET

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Ten Reasons to Condemn Inflation

September 8, 2014 in Economics

By Ryan McMaken

6871

Mises Daily Monday, by Andreas Marquart:

Increasing the supply of fiat money, also known as inflation, leads to a myriad of social and economic ills, affecting employment, the family, emotional health, and more.

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Source: MISES INSTITUTE

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Richmond Fed President Sees Fed as the Problem

September 8, 2014 in Economics

By David Howden

250px-Federal_Reserve_Bank,_Richmond,_Virginia

How large a problem is moral hazard caused by the Fed helping out troubled bank during financial crises? Pretty large, at least according to Jeffrey Lacker, President of the Federal Reserve Bank of Richmond.

One argument for central bank credit market activism rests on the notion that fragility is inherent in modern financial markets… Four decades of precedent [Fed and FDIC rescues of uninsured creditors] surely encouraged the belief that acute financial distress is likely to elicit some sort of rescue. Although this question is not yet settled, my view is that pre-crisis financial vulnerabilities were in large part induced by financial markets’ response to a long record of discretionary Federal Reserve interventions in credit markets.

Lacker heads one of the country’s 12 Federal Reserve districts, and thinks that the Fed is the problem. Unfortunately, he also thinks it is the solution.

One can appreciate how this interventionist tendency rose, though. When one is confronted with an instance of financial distress, an ex-post mindset makes it tempting to leave moral hazard problems for another day, to be dealt with after the crisis through tougher regulatory constraints on risk-taking.

If Lacker sees a “chicken or the egg” problem, he could appeal to the size of the problem. Richmond Fed economists estimated that at least 45% of financial sector liabilities were implicitly guaranteed by the government at the end of 1999. By the end of 2011 that figure rose to 57%. More than half of these guarantees were set by precedent, rather than explicit legislative solutions like deposit insurance.

Moral hazard is a problem, and every time it leads to a new chapter of crisis it gets worse. Ending Fed support for the financial sector today might cause some disruptions today, but at least it avoids a worse fate in the future.

(Cross posted at Mises Canada.)

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Source: MISES INSTITUTE