Call It Corruption

      With the repercussions of the Asian financial
crisis now spreading to Latin America and now beginning to be felt in
the United States, American taxpayers are being asked to make a sucker’s
bet. Just give the International Monetary Fund $18 billion, so the Clinton
administration says, and this global financial crisis will simply disappear
with the wave of a magic wand and plenty of austerity measures for the
developing world.

       But doesn’t the United States,
along and other nations, give billions of dollars to the IMF and the World
Bank to prevent this sort of crisis from happening in the first place?
What are the IMF and the World Bank doing with all that money anyway?
Where does it go?

       It goes to some of the most corrupt
governments in the world. A recent report by Transparency International
tells much of the story; its 1998 Corruption Perceptions Index tracked
the relative corruption of nations around the world based on how investors,
risk analysts and public opinion evaluated the countries.

       And what do you know, the two nations
that received the most aid from the IMF, Russia and Indonesia, also scored
as two of the most corrupt nations in the world. Russia came in at 76th
and Indonesia at 80th out of 85 countries that were considered at least
moderately corrupt. For those keeping score, the West Africa nation of
Cameroon came in dead last as the most corrupt nation in the world.

       But the World Bank and IMF tend
to turn a blind eye toward corruption – occasionally to the point
of denying it exists even when their own reports document massive corruption.
It recently came out, for example, that the World Bank buried an internal
report citing Indonesian corruption at the same time its officials were
publicly denying accusations that officials in that country were skimming
large sums of money from World Bank projects.

       That August 1997 report concluded
that up to 20% of money the World Bank gave to Indonesia for various projects
was skimmed by Indonesia’s political class. But what was its official
line at the time? In July 1997, Jean Michel Severino, World Bank vice
president for East Asia, responded to allegations of Indonesian corruption
by saying, “We know exactly where our money is going. We do not tolerate
corruption in our programs.”

       Is this a case of the blind leading
the corrupt?

       So after these corrupt governments
have skimmed and diverted funds, and in the process driven their national
economies into the ground, what are taxpayers expected to do — why let
the IMF and World Bank give them even more funds as a reward. Of course
in return the IMF and World Bank will ask for “reforms” such
as raising taxes on the poor to pay for the largesse of the political
class.

       In July, House Majority Leader Richard
Armey addressed an audience on the proposed IMF funding saying, “We’re
being asked to shell out $18 billion of your money for a pig in a poke.”
It’s about time the U.S. put at an end to its participation in this ongoing
fraud.

When Is the Federal Reserve Going to Bail Out My Gambling Debts?

       Living in Michigan means the yearly
spectacle of watching the Detroit Lions consistently perform as one of
the worst teams in the National Football League. But even, though they’ve
only won a single game this year, this should not stop you from betting
your life savings on the Lions to win the Super Bowl. Sure, it’s
a long shot, but if you win the returns will be huge and if you lose,
you can always count on the Federal Reserve arranging a bailout to prevent
you from going under.

       Not likely to happen? Tell that
to the investors of Long-Term Capital Management who got the Feds to help
them organize a bailout simply because its managers made such horribly
stupid decisions with is $80 billion portfolio that the Fed insisted LTCM
couldn’t be allowed to fail.

       LTCM is a hedge fund — banks and
brokerage firms, along with some rich individuals, gave LTCM’s managers
$80 billion to invest in extremely risky arbitrage schemes — the hedge
fund, in effect, bet billions of dollars by buying extremely risky lots
of Russian bonds. When the Russian economy tanked and Russia defaulted
on the bonds, LTCM was on the verge of collapsing.

       The Federal Reserve stepped in to
arrange a bailout of the banks and investors who potentially faced write-offs
of $10 billion and upwards. Although all of the funding for the bailout
was put up by private institutions, the Federal Reserve was instrumental
in brokering the deal. Don’t count on similar help if you get into
trouble gambling your money – this sort of intervention is reserved
for the ultra-rich.

      The whole series of events that put
LTCM on the verge of failure only to be rescued by the Federal Reserve
reveals the perverse effects of moral hazard, when government encourages
people and institutions to take on enormous risks with the belief that
if they fail the government will come to their rescue. LTCM bought Russian
bonds in part because its managers believed the IMF would save Russia
from its own economic mismanagement – after all, the IMF has repeatedly
bailed out nations who created their own economic hell.

       In turn, many of the banks investing
in LTCM have federally guaranteed deposit insurance, meaning even should
they fail due to their risky investments, the taxpayers would ultimately
bail them out just as the taxpayers had to bail out the Savings and Loans
industry for its mistakes.

       Of course the usual suspects immediately
discerned what the real problem was — not enough government regulation
of hedge funds. Hedge fund managers, of course, oppose any new regulations,
but they’ll gleefully take the government-brokered bailout, thank you
very much. Hey, if rich people, banks and others want to place their bets
on the economic equivalent of the Detroit Lions to win it all, more power
to them; but the government should get out of the business of riding to
the rescue of those who voluntarily agree to accept such risks.

Short Takes – October 1999

George Soros — Socialism For Thee, But Not For Me

       International financier George Soros
has been complaining that free market capitalism is on the verge of disaster
and can only be saved by government intervention. Finally someone took
him seriously — Malaysian Prime Minster Mahathir Mohamad decided to try
to shore up Malaysia’s economy by imposing foreign exchange and capital
control measures.

       Soros suddenly got that free-market
religion. “The effect on the economy will be disastrous,” Soros
told U.S. lawmakers. “The measures taken by Malaysia will hurt the
other countries which are trying to keep their financial markets open
because it will encourage the flight of capital.”

       Not to mention the fact that Soros
makes his money by speculating on currency which currency control boards
and make much harder to do — in fact Mahathir complains that Soros caused
Malaysia’s economic problems to worsen by attacking Malaysia’s currency.

       Apparently Soros thinks it is just
the rest of us great unwashed who need the “protection” of government
regulation.

 

When Did Liberals Start Reading the Constitution?

       As far as I’m concerned Investor’s
Business Daily is one of the best newspapers in the country and they showed
why on Sept. 25, l998 with the best commentary yet on Bill Clinton’s potential
impeachment. IBD notes that many prominent Democrats are claiming that
the Constitution sets strict guidelines for what Constitutes an impeachable
offense and, they argue Clinton’s White House affair, however unseemly
it is, doesn’t meet that test.

       In an editorial, IBD wants to know
when the Democrats actually began reading the Constitution. “Where
are they,” IBD asks, “when the federal government repeatedly
ignores the Constitution to build up the leviathan welfare state?”

       Ask a Democrat whether a law is
compatible with the Taking Clause test what the original intent of the
General Welfare Clause was, and their eyes will glaze over.

       All of a sudden, however, liberal
Democrats are turning into regular Constitutional scholars and even going
to the heresy of citing the actual words of the Founding Fathers. As IBD
sums it up, “If Congress cares about the Constitution, it can prove
it. It should ax departments, from Agriculture to Veterans Affairs. There
are also more than 100 programs and agencies that can go, as shown by
the Cato Institute Total Annual Savings? More than $200 billion. It’s
a start. Let’s call it a constitutional test.”

North Korean crackup

       It’s bad enough that North
Korea’s Stalinist government has seen its economy decline 30 percent in
just a few years and much of its citizens faced with massive famine. But
North Korea took the extraordinary step in September of looking to the
past to get itself out of its trouble when it named Kim Ii Sung, who died
in 1994, as President. Sung’s son, Kim Jong Il, will stay on as chairman
of the Central Defense Committee and presumably act as a messenger for
his dead father’s dictates.

       Well, if Bill Clinton could raise
the taxes of dead people, why not appoint one as president?

So much for animal rights' activists commitment to free speech

A few weeks ago, Internet search
engine Lycos pulled its financial support of animal rights web provider
|Envirolink.Org| after a story about some of the extremist sites on Envirolink,
such as the Animal Liberation Front Information Site, circulated on the
web. Since then animal rights activists have been screaming up and down
that this is censorship, even though what happened was no different than
the results of animal rights activists’ own boycott activities — Lycos
decided to stop supporting speech it that its customers disagreed with.

This week the Animal Liberation
Front revealed just how committed it is to freedom of speech when it announced
the creation of an “Internet Division.” In a Sept. 21, 1998
release, ALF announced it would begin hacking web sites, sending mail
bombs, launching viruses, initiating denial of service attacks and other
unsavory methods to bring down the web sites and Internet access of those
with whom it disagrees.

In its release, ALF said,

In this day and age when most large animal abuse establishments have
a presence on the Internet they see the world wide web for selling their
blood products and for pushing their warped ideals to the masses. As
other warriors free animals from concentration camp [sic] around the
world, we will take the war to the Internet.

What’s next for these people, public book burnings of medical textbooks?

Source:

“Animal Liberation Front Announces New Strategy: Internet Division,”
North American Animal Liberation Front Press Office, Sept. 21, 1998.

Animal rights activists oppose xenotransplantation

Every year thousands of people die
who would have lived if it weren’t for the continuing shortage of organs
available for transplantation. Scientists around the world are working
to solve this shortage, but animal rights activists are opposing them
at every turn.

The most viable short term solution
is Xenotransplantation — genetically engineered organs from animals that
can be transplanted into human beings. Currently most such development
is concentrated on developing pig organs as a possible source for human
transplantation. Biotech companies are working at genetically modifying
the pig organs so the human recipient is less likely to reject them.

Animal rights activists, of course,
hate the idea of using pigs to do something as frivolous as save a human
life. Mike Baker, head of the British Union for the Abolition of Vivisection,
said developments in xenotransplantation represent “a very backward
step in terms of animal welfare [that] could pose serious health risks
to the human population.”

A group calling itself the Campaign for Responsible Transplantation is already circulating a petition to ban
all animal-to-human transplantation and environmental groups are also
jumping on the bandwagon, citing the possibility of a deadly virus passing
from animals to human beings in the transplantation process.

While the viral issue is certainly
a serious one, it is being addressed by regulatory agencies in the United
States and Europe responsible for approval of medical products. In both
the United States and Europe, for example, regulatory agencies are developing
strict monitoring protocols for tracking all infections and diseases contracted
by human recipients of xenotransplantation in addition to the rigorous
safeguards to minimize the risk of a crossover disease in the first place.
Unfortunately, the animal rights and environmental activists
seem unlikely to be satisfied with anything but zero risk, which of course
is impossible in any human endeavor (after all, the risk that a deadly
disease will cross over from pigs to human beings just from normal contact
on farms is not zero as the various influenza pandemics are evidence of,
though there are ways to minimize the risk).

Xenotransplantation is simply the
best chance we have to save thousands of lives around the world. Lets
hope animal rights activist and environmentalist extremists don’t close
off this important area of research before scientists even get to explore
it fully.

Sources:

“Animal organs could save people if the body would accept them,”
Lauran Neergaard, The Associated Press, September 17, 1998.

“Biotech regulations: paving the way for British xenotransplantations,”
Nigel Williams, Science Magazine, August 6, 1998.

Campaign for Responsible Transplantation petition, http://host.envirolink.org/crt/petition.pl

Scientist says maybe deer hunting isn't cruel after all

Last year the National Trust in
the United Kingdom prohibited Hunting on its land after a study by Patrick
Bateson, a professor of animal behavior, claimed hunting subjected Deer
to incredible level of stress and, therefore, was cruel. In mid-September
Bateson was forced to revise his views to conclude that hunting is not
necessarily cruel.

Bateson, for example, originally
reported that deer subjected to a hunt suffered extensive muscle damage
caused by severe stress. A study by Roger Harris of the Royal Veterinary
College disputed this claim along with a claim Bateson made that stress
from hunting caused red blood cells in the deer to break down.

Perhaps Bateson’s most stunning
claim was that the stress deer experienced from predation by human beings
was unlike any sort of stress deer would experience in a natural environment.
Harris’ study, however, found no evidence of this and concluded that the
stress deer experience during a hunt is not fundamentally different from
other forms of stress.

As a result of Harris’ study, Bateson
and other researchers signed a 9-point statement issuing specific modifications
of the findings of their original research, although Bateson said he still
feels hunting is “knowingly cruel.”

Source:

“Professor revises view on deer hunt cruelty,” Charles Clover, The
Daily Telegraph, September 15, 1998.