As IF Times

link Europe’s prospects brighten as U.S. fades | Reuters.

I guess anything’s possible.  But these kinds of forecasts have been around for a while and somehow, never come to fruition.  It’s very fashionable these days to forecast the demise of America with the associated parallels to the Roman Empire, yada yada yada.  While this particular author may point to short term statistics that purport to show signs of growth in European economies, given the big picture political background, it’s unlikely to be more than a blip in the longer term declining picture.  In an article for The Wall Street Journal a few weeks back, Bret Stephens ( http://online.wsj.com/article/SB10001424052748704057604575080602346820226.html )  articulated the fundamental structural flaw with the European way of doing things:

“…All European economic policies are the cultural derivatives of one dominant, nearly totalitarian statist ideology: the state is good, the market is bad,” says French economist Guy Sorman. The free market, he adds, is “perceived as fundamentally American, while statism is the ultimate form of patriotism…”

as well,

“…Then there is the media. Last week, German Foreign Minister Guido Westerwelle, who leads the country’s market-friendly Free Democrats, took to the pages of Die Welt to lament that Germany’s working poor make less than welfare recipients. “For too long,” he wrote, “we have perfected in Germany the redistribution [of wealth], forgetting where prosperity comes from. For his banal observations, Mr. Westerwelle was roundly accused of “[defaming] millions of welfare recipients” and urged to apologize to them. It takes a remarkably stultified intellectual climate for an op-ed to spark this kind of brouhaha: It is the empire of the Emperor’s New Clothes, adapted to the 21st century welfare state…”

With this mindset entrenched in most European cultures and governments, it is only a matter of time before the events in Greece find their way to the northern neighbors.  Once you have granted a set of entitlements to people, it is very hard to take them back.  Socialist leaning parties will maintain their grip on government because the masses who think they will benefit from wealth spreading will keep them in power.  While it may sound civilized for Europeans to routinely take anywhere from 4 to 8 weeks holiday a year, the fact is, someone pays for this.  Mostly, this will be manifest by higher prices, higher taxes and decreased productivity.  Try to sell this notion to the Chinese or Indians.  Canada is well on it’s way to emulating the European model as most government jobs entitle workers 3 to 4 weeks paid holidays a year.  If you happen to belong to a union, even better. 

Americans have historically operated on a different mindset, that is, the notion of working hard to get ahead.  This fundamental notion is the pillar of what makes America, America and created the whole  image of American exceptionalism.   Of course, at this time, there is strong movement to change this mindset.  The entitlement clamor is loud and alarmingly influential.  The siren song of getting something for nothing is an irresistible lure.  Like a powerful engine with cylinder leaks, the American economy is hampered by drains on productivity rather than aided by contributions to it.  The success or failure of this movement may in fact determine whether the U.S. can continue to be the world’s economic engine. 

 It may be noted that historians have opined that Rome was destroyed by rot from within, not from external forces.  It’s hard to disagree with this premise as it applies to the U.S., given what’s happened over the past few years.  The most important thing Americans can do to reverse their demise is to excise  the rot.  As can be seen in Europe, once rot sets in, it’s pervasive.  As if Americans want to be cheese eating surrender monkeys who think soccer is interesting.

link Short-run tax hikes being used to fill gaps – USATODAY.com.

This is like short term herpes.  As if there’s a precedence in history for a short term tax.  As one of my friends said recently, as likely as a venus fly trap in a hospital.  Not many may know this, but the whole notion of income tax in the U.S. was first broached as a temporary measure in the early 1800′s.  According to the website About.com:

“…In the War of 1812, the U.S. first considered enacting an income tax, but the war ended before the tax was officially created. Yet, during the American Civil War, the first U.S. income tax was created, but this one was meant only as a temporary measure to help pay for the war. It was repealed in 1872.  By the 1890s, the U.S. government was hoping to find a way to more evenly distribute the federal tax burden and thus looked at creating a permanent income tax. However, until the 16th Amendment to the Constitution was ratified n 1913, the federal government was forced to collect taxes based on state population. Once the 16th Amendment was passed, the U.S. government passed its first, permanent income tax law in October 1913…”

And the rest is history as they say.  Speaking of history, this website also speaks of ancient tablets found from the ancient Egyptians where not only was there written evidence of taxes, there also were writings complaining of high taxation.  So, as we can see, nothing has changed throughout history.

If the naive folk in the places listed in the article think that temporary taxes will fix whatever shortfall they have to fix, then I’m going into the bridge selling business.  What has been true for eons is that people would rather not cut back but rather borrow into the future.  Instead of taking the correct measures by cutting spending on programs, on salaries or benefits, it is always easier to gouge the taxpayer.  Costs never go down and inflation expectations are permanently wired into the system.

Instead of many numerous corrections in spending like the regular tacking of a sailboat to keep it on a steady course, the imbalances in a government system build until one day they collapse of their own weight, as per the analogy of the boat crashing on shore because a sudden drastic action is needed.  We saw this happen with GM, essentially a government run entity where entitlements were not curbed even as income was collapsing.  In the case of GM, government bailed them out…sort of.  In the case of governments, they just keep gouging taxpayers, until that crash on shore happens.

California will be the state to watch in the next year or so.  Misguided wants by the residents are grossly mismatched by taxation revenue.  California is arguably the most important economy in the U.S., home to many of the nation’s vanguard industries.  When Arnold Schwarzenegger came to office, the budget deficit was over $16 billion dollars and now, almost 7 years after being given the mandate of trying to fix that gap, the deficit is an even larger portion of total state funds from 20% then, to 25% now.  Like adolescents, the citizens want their programs, the raises for civil servants, the entitlements, but would not allow tax increases to pay for them.  Looks like the idea of temporary tax is going to be introduced there.  It’s temporary, only in effect until you die.

link How Patricia Cohen Plans to Seek Revenge Against Her Hedge-Fund Superpower Ex-Husband Steve Cohen — New York Magazine.

An entertaining piece and voyeuristic glimpse into the private lives of people who you might only see in movies such as War of the Roses.  No doubt on many smaller scales, similar dramas happen every day by the thousands. 

People should expect that after being put through the grinding legal machinery of divorce, once all  the haggling and legal manoevering are over, it should  be over.  As anyone who has been through it knows, that just isn’t the case as this story amply illustrates.  From a legal perspective, there should be closure to the end of a relationship once both sides have signed off on an agreement.  This particular story is perhaps an egregious example of the entitlement mentality of much of society, supported by a willing legal system.  It’s as if once married, the parties are entitled to participate in a lifelong lottery win.  According to this story at least, the legal system is an accomplice to the ex Mrs. Cohen’s ingrained vindictiveness despite being separted for over 20 years.   Apparently, divorce can actually be a career pursuit even if you’re not a lawyer.

Consider these statistics from divorcerate.org:

The divorce rate in America for first marriage, vs second or third marriage
50% percent of first marriages, 67% of second and 74% of third marriages end in divorce, according to Jennifer Baker of the Forest Institute of Professional Psychology in Springfield, Missouri.”

In addtion, the breakdown (ha ha) according to age distribution:

Age at marriage for those who divorce in America

Given these intimidating statistics, it’s a wonder the institution of marriage still exists.  On the other hand, there has been a very public push by the vocal gay community for marriage rights.  Either they are unaware of the statistics or there are career choices being made.  Hmm.