... but the beatings will continue until bond yields improve!
Let's try a thought experiment. Imagine you walked into the bank, told them you were going to be taking pay cuts for the next few years, and then asked for a loan. You'd be laughed out of the office or else pay an interest rate so high that "usurious" wouldn't do it justice. The logic is simple: If you're in debt and your income is shrinking, it's mighty hard to pay back what you already owe.
It's not any different when it comes to countries that can't print their own money. That brings us to Spain.
The following charts (courtesy of Reuters) show overall and youth unemployment across the euro zone. Spain tops both measures, with truly depression-level joblessness.
Nearly a quarter of Spain's population is unemployed. Half of its youth are out of work. And it's only going to get worse. Spain is supposed to trim its deficit by some 5.5 percent of GDP over the next two years. That's not a recipe for growth. Just ask the IMF, which downgraded its projections for Spain's economy back in January.
What matters for a nation is its GDP. That's a country's equivalent of personal income. If Spain's GDP is set to fall for the foreseeable future -- and it is -- then who would want to lend to Spain? The markets gave their answer -- practically nobody! -- and ECB was forced to fill the void by giving Eurobanks free money to then invest in sovereign debt. Yields came down. European policymakers declared "Mission Accomplished."
But now the free money is gone. It's unsurprising that Spanish borrowing costs are surging again.
Unsurprising to everybody who isn't a Eurocrat, that is. Consider this mind-boggling quote from the chairman of the euro zone finance ministers, Jean-Claude Juncker:
I invite financial markets to behave in a rational way. Spain is on track.
On track? For national bankruptcy, yes. But for recovery, absolutely not. Juncker's quote betrays a fundamental misreading of what is making markets anxious. He thinks markets shouldn't worry because Spain is going to follow through on its budget cuts. But markets are worried that Spain is going to follow through on its budget cuts. Austerity would almost certainly shrink the economy and make the country's unconscionable unemployment even worse.
If you're persuaded by my opening analogy, you can see why lenders are so concerned about growth. It's why they don't actually like austerity. But just today, the Bundesbank -- Germany's national central bank, and the real power behind the ECB -- came out and told countries not to worry about growth. Telling a country in a debt crisis like Spain not to worry about growth is like telling man in debt to not worry about finding a job. The most polite way to characterize this advice is "delusional."
To crib from Keynes, Europe's policymakers have blundered in the control of a delicate machine, the workings of which they do not understand. They're not evil. But they're almost certainly wrong. Rather than consider the possibility that the economy might work differently than they think, they have settled on a simple message: The beatings will continue. Unfortunately, morale will continue to not improve. Eventually, you have to think leaders in Europe's beat-up countries will begin to wonder if life might be better outside the euro zone. Hopefully, the ECB will come to its senses first.
Rioting broke out on Monday in Baltimore—an angry response to the death of Freddie Gray, a death my native city seems powerless to explain. Gray did not die mysteriously in some back alley but in the custody of the city's publicly appointed guardians of order. And yet the mayor of that city and the commissioner of that city's police still have no idea what happened. I suspect this is not because the mayor and police commissioner are bad people, but because the state of Maryland prioritizes the protection of police officers charged with abuse over the citizens who fall under its purview.
The citizens who live in West Baltimore, where the rioting began, intuitively understand this. I grew up across the street from Mondawmin Mall, where today's riots began. My mother was raised in the same housing project, Gilmor Homes, where Freddie Gray was killed. Everyone I knew who lived in that world regarded the police not with admiration and respect but with fear and caution. People write these feelings off as wholly irrational at their own peril, or their own leisure. The case against the Baltimore police, and the society that superintends them, is easily made:
Freddie Gray's death on April 19 leaves many unanswered questions. But it is clear that when Gray was arrested in West Baltimore on the morning of April 12, he was struggling to walk. By the time he arrived at the police station a half hour later, he was unable to breathe or talk, suffering from wounds that would kill him.*
Gray died Sunday from spinal injuries. Baltimore authorities say they're investigating how the 25-year-old was hurt—a somewhat perverse notion, given that it was while he was in police custody, and hidden from public view, that he apparently suffered injury. How it happened remains unknown. It's even difficult to understand why officers arrested Gray in the first place. But with protestors taking to the streets of Baltimore since Gray's death on Sunday, the incident falls into a line of highly publicized, fatal encounters between black men and the police. Meanwhile, on Tuesday, a reserve sheriff's deputy in Tulsa, Oklahoma, pleaded not guilty to a second-degree manslaughter charge in the death of a man he shot. The deputy says the shooting happened while he was trying to tase the man. Black men dying at the hands of the police is of course nothing new, but the nation is now paying attention and getting outraged.
In Baltimore, where 25-year-old Freddie Gray died shortly after being taken into police custody, an investigation may uncover homicidal misconduct by law enforcement, as happened in the North Charleston, South Carolina, killing of Walter Scott. Or the facts may confound the darkest suspicions of protestors, as when the Department of Justice released its report on the killing of Michael Brown.
What's crucial to understand, as Baltimore residents take to the streets in long-simmering frustration, is that their general grievances are valid regardless of how this case plays out. For as in Ferguson, where residents suffered through years of misconduct so egregious that most Americans could scarcely conceive of what was going on, the people of Baltimore are policed by an entity that perpetrates stunning abuses. The difference is that this time we needn't wait for a DOJ report to tell us so. Harrowing evidence has been presented. Yet America hasn't looked.
Does Adam Sandler have an expiration date? Does his particular brand of slapstick—humor that's infused with a wan self-deprecation, that manages to be simultaneously silly and sociopathic, that once found Sandler punching Bob Barker in the face while informing him that "the price is wrong, bitch"—hold up? Is Sandler's own price now, finally, wrong?
Recent events would suggest yes. Late last week, in the course of filming Sandler's newest project, the made-for-Netflix Western spoof The Ridiculous 6, a Native-American cultural advisor and several performers and extras walked off the set in protest. (Sample characters: Beaver Breath, No Bra, Sits-on-Face. Sample line: "Say honey: how about after this, we go someplace and I put my peepee in your teepee?") As Allison Young, a Navajo actress who quit after being asked to do a scene "requiring her to fall down drunk, surrounded by jeering white men who rouse her by dousing her with more alcohol" told the Indian Country Media Network, “We talked to the producers about our concerns. They just told us, ‘If you guys are so sensitive, you should leave.’”
On Monday, Americans watched televised images of riots and looting in Baltimore, Maryland, where days of peaceful protests sparked by the killing of Freddie Gray gave way to mayhem in at least several locations. As CNN broadcast scenes of young people looting a CVS pharmacy and police cars burning in the streets, its commentators, including anchor Wolf Blitzer, criticized Baltimore officials for allowing such flagrant lawlessness to transpire. "I keep asking where are the police," he said. "They seem to be invisible." In fact, law enforcement had come under attack by high school students throwing cinder blocks, dispersed that crowd, and had officers massed at several spots, just not the particular corner where the news helicopter trained its cameras. The anchor treated truths not captured on CNN's video feeds as if they didn't exist. Americans should avoid that sort of myopia.
Atheism is intellectually fashionable. In the past month, The New York Times has run severalstories about lack of faith in its series on religion. The New Yorker ran an article on the history of non-belief in reaction to twonew books on the subject that were released within a week of each other in February. The veteran writer, Adam Gopnik, concludes this:
What the noes, whatever their numbers, really have now … is a monopoly on legitimate forms of knowledge about the natural world. They have this monopoly for the same reason that computer manufacturers have an edge over crystal-ball makers: The advantages of having an actual explanation of things and processes are self-evident.
This is a perfect summary of the intellectual claim of those who set out to prove that God is dead and religion is false: Atheists have legitimate knowledge, and those who believe do not. This is the epistemological assumption looming in the so-called “culture war” between the caricatures of godless liberals and Bible-thumping conservatives in America: One group wields rational argumentation and intellectual history as an indictment of God, while the other looks to tradition and text as defenses against modernity’s encroachment on religious life.
On Monday afternoon the funeral for Freddie Gray took place in Baltimore, Maryland. Gray died last week from spinal injuries suffered while in Baltimore Police custody. After the funeral, against the wishes of the Gray family, some peaceful demonstrations took place, but other protests became violent, devolving into chaotic clashes.
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
At a large distribution center located north of Boston, a robot lifts a shelf holding merchandise and navigates it through the warehouse to the workstation of an employee who then picks the item needed for an order and places it in a shipping box. Incoming orders are processed by a computer that sends picking requests to sixty-nine robots. Then, the robots deliver storage units to roughly a hundred workers, saving the workers the task of walking through the warehouse to find the items. In other distribution centers, this is work that warehouse workers do.
The distribution center, run by Quiet Logistics—a company that fills orders for sellers of premium-branded apparel, is featured in the60 Minutes episode “Are Robots Hurting Job Growth?” In the segment, Steve Kroft poses the following question to Bruce Welty, the CEO of Quiet Logistics: "If you had to replace the robots with people, how many people would you have to hire?" Welty estimates that he would have to hire one and a half people for every robot, and that the robots are saving him a lot of money.
Police say that intentionally banging a suspect around in the back of a van isn't common practice. But the range of slang terms to describe the practice suggests it's more common that anyone would hope—and a roster of cases show that Freddie Gray is hardly the first person whose serious injuries allegedly occurred while in police transit. Citizens have accused police of using aggressive driving to rough suspects up for decades in jurisdictions across the country. Though experts don't think it's a widespread practice, rough rides have injured many people, frayed relationships, and cost taxpayers, including Baltimore's, millions of dollars in damages.