Semi-Daily Journal

Before assessing the imapct of this decrease on the German economy relatively to the US, you must take into account that the capitalization of the stock exchange relative to the size economy is probably smaller in Germany than in the US.

Also, the German stock exchange currently trades at a much lower Price Earning Ratio than in the US.

OK, for starters, here are a few gleenings from my feeble memory. Germany launched the Neuer Markt, its version of the Nasdaq, just ahead of the 2000 market peak. Germany no longer has its version of the Nasdaq -- the Neuer Markt failed --though its stodgy corporate sector sorely needs a place for small stock to trade. Germany's banks are reportedly in far worse peril from the high level of US corporate defaults than US banks, because they have put a great deal more in their portfolios than US banks. No secret that Germany (as well as most other Western European) insurers hold far higher levels of equity relative to debt than do US insurers, so they are badly crippled by the relatively greater slide in equities than debt. Nasty mix. You knew most of this, yes?

All true, on top of the well-known economic malaise and demographic implosion Germany faces.

Which raises the question of how long the Euro can continue to appreciate.

I’m glad that some people are finally waking up to reality. It might behoove a few folks to look at some of my past posts where I took to task those who prefer employing the jargon of the macroeconomists. Their brains often turn to mush. Sadly, I’ve long taken it for granted that the land of my ancestors is in deep doo-doo. The very fact that it’s virtually impossible to fire anyone in Germany was alone sufficient for me. A few months back, a zoo was forced to give an employee a six month severance package---after it was proven he ate some of the animals under his care! What more evidence is required?

Germany, France, and the other old European nations are rapidly becoming economic basket cases. Their socialist indulgences are destroying their vitality---and ability to confront reality. This is the number one reason why they are such wimps when it comes to Iraq. Everybody should read Robert Kagan’s excellent “Of Paradise and Power: America and Europe in the New world Order.” This book is very short (only 103 pages) but Kagan’s insights are brilliant. The old European countries may not be our per se enemies, but they are also not our friends. They are losers who are bitter and envious of our success. It’s time to pull the rug from under their feet. We have allowed these parasites to take advantage of us for far too long. Closer to home, the exact same thing can be said of the Canadians.

The bear market in Europe hit it low point yesterday, March 10. The Morgan Stanley Europe Index is down 49% including dividends paid over the past 35.5 months. The 5 year annual return for the MS Europe Index is - 8.5% in both dollars and local European currencies.

Yes, folks, there is a bear market elsewhere. A nasty nasty creature. The German Index has fallen about 13% a year in Euros or dollars over the last 5 years.

Well, of course, David Thomson, all evils everywhere, from Iraq to missing zoo animals, are caused by socialism. It's axiomatic.

Just so any absurd Germany bashing is set aside:

Switzerland - index down 9% a year in dollar, and 11% a year in Francs for the past 5 years.

Netherlands - index down about 12% a year for 5 years in dollars and Euros.

Ireland - index down about 9.5% a year for 5 years in dollars and Euros.

There is a world wide bear market! China by the way is doing just fine. Of well.

“Well, of course, David Thomson, all evils everywhere, from Iraq to missing zoo animals, are caused by socialism. It's axiomatic. “

Well, not exactly. But I think it’s fair to say that Socialism is responsible for at least half of the suffering on this planet. In regards to the present crisis in Europe---Socialism is probably the most important reason why these countries are in a deep funk. This also explains their intense contempt for the United States. Socialists are losers and love to scapegoat others when the crap inevitably hits the fan. In regards to the zoo animals, Socialism does indeed subsidize such vile behavior. This disgusting zoo keeper obviously knew that the penalty would not be too serious if he ever was caught. Heck, he was rewarded with six months pay.

By the way, Iraq is a Socialist nation! Saddam Hussein idolizes Joseph Stalin. I guess you were unaware of this fact.

“China by the way is doing just fine.”

How do you know this? China is a communist dictatorship and not inclined to release truthful reports concerning its economy. Have we already forgotten the lies released by the former Soviet Union?

> China is a communist dictatorship and not inclined to release truthful reports...

China has prospered in direct proportion to its paring back socialism. This is true in aggregate, and in the specific, when you look at the "special economic zones".

Everyone assumes the smiley-face data coming out of Beijing is over-stated, but other data confirms China's economy is improving, albeit in a patchwork pattern.

Their statist problems, such as bureaucracy, corruption, and a rotten banking/finance system, will dog them for a long time, but they have started down that capitalist road.

As others have pointed out, stock prices have been going down in many other places besides Germany. One question that I'm not sure I know the answer to, though, is why stock prices in the US have not declined *more*. On the one hand, P/E ratios are still near or at historical highs, while the (low) quality of earnings has been a front page story for quite some time.

I think the best explanation is that other interest rates are
so low right now, that the stock market is essentially the only choice for an investor who does not wish to lose money with almost complete certainty in something like bonds when interest rates inevitably go up. Or I guess I should say, "hopefully go up". Paul Krugman, in his most pessimistic column yet (how does he do it?) paints a future where either we experience Japanese style deflation or we endure far higher interest rates in the near future due to the stupendous increase in government spending now and in the near future.

Neither scenario seems especially good for the stock market, either. And that would be the US market or any of the overseas markets that have any positive correlation with the US.

"China is a communist dictatorship"
Dictatorship, maybe.
Communist? You should have read the news in the last twenty years.

"China is a communist dictatorship"
Dictatorship, maybe.
Communist? You should have read the news in the last twenty years. "

What in heck are you talking about? China, like Castro's Cuba may allow some capitalist activity---but at the end of the day, the Communist bosses call the shots!

>>A few months back, a zoo was forced to give an employee a six month severance package---after it was proven he ate some of the animals under his care!<<

Reference? This is too good not to keep in the file...

http://www.suntimes.co.za/2002/11/17/lifestyle/life17.asp

ZOO KEEPER'S WALLET, AND TUMMY, FULL

A German zoo keeper, fired last month for eating animals in the Recklinghausen zoo, was awarded six months' severance pay after reaching a settlement in a labour court. Reuters reports that the town, just north of Cologne, fired the zoo keeper after he was caught braaiing five Tibetan mountain chickens and two Cameroonian sheep at the zoo. The animals are popular with children, who are allowed to stroke them.

Just like to mention that I always start by skimming the comments for the name "Anne." I'm waiting for her to start her own blog, whoever she is.

Jonathan

Apparently Warren Buffett as well has problems with stock valuations in our market. Paul Krugman as well as John Bogle and Buffett, has guessed S&P companies may have reported more inflated earnings than we knew from 1998 through 2000. Remember, pension fund accounting and use of options allowed for earnings reports that were far more optimistic than warranted.

There is much that puzzles me here. Why is this the deepest and longest bear market in 50 years, and yet still the most expensive one if the S&P p/e ratio is used as a measure of expensive?

Jonathan King:

Because of currency effects, Europeans lost a lot more in the US stock market than Americans did.

And Americans investing in Europe lost less than Europeans.

http://www.prudentbear.com/internationalperspective.asp

Marshall Auerback -

"In the UK, for example, the aggregate market dividend yield is now around 4 per cent, roughly the same level as cash rates. This is usually a good indicator of fair value, if not cheap valuation. And there is little question that 60 per cent falls from the peak (a fairly typical average for most of the major benchmark indices in Europe) would suggest more bargains than might have been the case during the frenzied days of 1999-2000.

Of course, recent earnings shocks, particularly those stemming from huge gaps in pension fund liabilities, have simultaneously called into question the sustainability of such dividend payouts, as well as the underlying quality of the projected earnings. By failing to set more realistic assumptions in their expected pension fund returns, companies are deferring the decision to increase contributions to their pension schemes, thereby presenting an unrealistic earnings picture to the market and calling into question the essence of the “cheap valuation” argument...."

One reason the Dax has had it so bad, is that Deutsche Telekom was a huge part of the index at the height of the boom. The same is true of the Cac, France's major index, where France Telecom has dropped about 90% from its peak.

But as another commenter pointed out, the equity culture here is much less. In France real estate would appear to be the major investment (something the Americans are only now learning?) - and like in the U.S. that hasn't gone down - not yet anyway.

I am trying to imagine what would be most Americans' reaction if a discussion about NASDAQ came down to discussing American zoos and their labor practices, or how Texan immigrant pinguins in San Diego have apparently convinced their Southern Californian counter-parts to emigrate and how that shows that San Diego is in deep economic distress - gna - gna - gna... %-)

Now, when it's not overloaded this server is supposed to be fun, told me a German friend of mine:
http://www.germanysucks.com/

Remember, Anne noted the 5 year annual returns for the European Index are almost the same in dollars and Euros or local European currencies.

The dollar is about where it was 5 years ago relative to a basket of European currencies.

Oh wow, I think I’m also going to start banging my head against the wall. The United States most certainly has its own economic troubles. Much of them due to our leaders ignoring Adam Smith’s wise warning that business people have an innate temptation to do bad things. Still, America possesses the values and institutions necessary to resolve its current economic ills. This is, however, not the situation of France, Germany, and the other old Europeans. They have gone too far embracing socialist doctrines---and it will be extremely difficult for them to pull back. These folks have fried their brains and are now similar to the frog who is unaware that it’s being slowly boiled alive.

“I am trying to imagine what would be most Americans' reaction if a discussion about NASDAQ came down to discussing American zoos and their labor practices”

Thank you for lobbing a slow pitch over the plate which I can easily hit for a home run. Any American zoo keeper caught in such a predicament would have been fired (if not also jailed) without a dime of severance pay. This incident speaks volumes regarding the mess that Germany has gotten itself into. The land of my ancestors is screwed and that why we must form new alliances with the New European countries. Jean-Philippe Stijns and I have something in common: we should be deeply ashamed of our ethnic heritage. Germany and France are responsible for much of the suffering on this planet.

Great zoo story!

How about this? Germany liberalizes its economy, destroys its health and pension systems, fires lots of people, and in the lengthy interim while a supposedly free economy staggers to its feet, they open all the cages at the zoo to feed the starving.

These animals deserve to be eaten anyway because their upkeep has been subsidized by the State. In fact, send their keepers over here and we can feed them to the unemployed in our country who now choose between food and medical care.

Kind of an international soylent green opportunity for some enterprising entrepreneur, if you'll pardon my French.

"Oh wow, I think I’m also going to start banging my head against the wall. The United States most certainly has its own economic troubles. Much of them due to our leaders ignoring Adam Smith’s wise warning that business people have an innate temptation to do bad things. Still, America possesses the values and institutions necessary to resolve its current economic ills."

Very well written, David.

"This is, however, not the situation of France, Germany, and the other old Europeans. They have gone too far embracing socialist doctrines---and it will be extremely difficult for them to pull back. These folks have fried their brains and are now similar to the frog who is unaware that it’s being slowly boiled alive."

Do you realize that European nations have been, on average, back-tracking on socialist politicies for more than 2 decades? Before, America's bubble burst, the European job market was doing very well by its own historical standards.

However, I don't pretend to understand why the variability of European bourses is greater than the that of the DOW or NASDAQ. Everytime, the DOW tanks by, say, 1%, the CAC40 tanks by 2.5%, say, AND it's true the other way around as well: my casual obervations have it that everytime the DOW recovers by 1%, the CAC40 recovers by 2.5%, say. Problem is: we're all on a downhill, as Anne - who sure could have her own blog - pointed out.

Or is it simply that at the marginal propensity to import is so high in the US at the margin that any bad news about the US (say a dip in the DJ) is very bad news for the countries that rely on the American markets for a important share their exports (and thus demand)... Seems to me that Germany and Japan qualify very well for this category. How much mileage one can get of the simple concept of multiplier! ;-)

Does someone know where to obtain P/E ratio charts of indexes and stocks?

Does someone know where to obtain P/E ratio charts of indexes and stocks?

Does someone know where to obtain P/E ratio charts of indexes and stocks?

>>why the variability of European bourses is greater than the that of the DOW or NASDAQ

Plotting the total returns of the Vanguard European Index Fund (VEURX) against an S&P index fund (SPY) they virtually track each other over the last 10 years, with the European underperforming at the end of 98 and never gaining it back. Sorry I don't have a link to the comparison chart I made on MSN. I have noted the same volatility as you, but after the currency change there does not seem to be that volatility. I think the pricing of global markets are quite US-centric, which ties in with what you say about the US driving demand.

“Do you realize that European nations have been, on average, back-tracking on socialist politicies for more than 2 decades?”

The old Europeans have only nipped and tucked at the edges, but have not performed any serious surgery upon their bloated welfare states. The crap is now hitting the fan---and we don’t wish to be splattered by the flying excrement. Once again, the zoo animal story says a lot about how far the situation in Germany has deteriorated. One can make all the excuses they wish, but the Old Europeans are likely too far to gone to save themselves from the approaching Armageddon. Heck, if nothing else their unabated population decline dooms them to utter irrelevance.

Multiple post apologies to all. I blame Opera.

“Do you realize that European nations have been, on average, back-tracking on socialist politicies for more than 2 decades?”

The old Europeans have only nipped and tucked at the edges, but have not performed any serious surgery upon their bloated welfare states. The crap is now hitting the fan---and we don’t wish to be splattered by the flying excrement. Once again, the zoo animal story says a lot about how far the situation in Germany has deteriorated. One can make all the excuses they wish, but the Old Europeans are likely too far to gone to save themselves from the approaching Armageddon. Heck, if nothing else their unabated population decline dooms them to utter irrelevance.

Multiple post apologies to all. I blame Opera.

“Do you realize that European nations have been, on average, back-tracking on socialist politicies for more than 2 decades?”

The old Europeans have only nipped and tucked at the edges, but have not performed any serious surgery upon their bloated welfare states. The crap is now hitting the fan---and we don’t wish to be splattered by the flying excrement. Once again, the zoo animal story says a lot about how far the situation in Germany has deteriorated. One can make all the excuses they wish, but the Old Europeans are likely too far to gone to save themselves from the approaching Armageddon. Heck, if nothing else their unabated population decline dooms them to utter irrelevance.

There was a similar incident at the Atlanta zoo some years ago. As I dimly recall, the employee was selling meat from animals who had died from natural causes, aggrevated by neglect (poor zoo conditions=sick zoo animals). I do not know what the severence package, if any, was.

“Do you realize that European nations have been, on average, back-tracking on socialist politicies for more than 2 decades?”

The old Europeans have only nipped and tucked at the edges, but have not performed any serious surgery upon their bloated welfare states. The crap is now hitting the fan---and we don’t wish to be splattered by the flying excrement. Once again, the zoo animal story says a lot about how far the situation in Germany has deteriorated. One can make all the excuses they wish, but the Old Europeans are likely too far to gone to save themselves from the approaching Armageddon. Heck, if nothing else their unabated population decline dooms them to utter irrelevance.

Anne says: "...There is a world wide bear market! China by the way is doing just fine. Of well."

Funny you should bring China up.

I asked ol' Brad the other day whether or not any reputable economists believed Greenspan's comments last Friday:

WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan said on Friday that more open economies like the United States tend to attract large flows of foreign capital, which can lead to big and potentially destabilizing current account gaps. [But] such imbalances should not be taken as a sign of a "systemic problem," since the process of global financial integration is not yet complete..."

I mentioned the US "chronic, severe and steadily worsening current accounts deficit" and what macroeconomists used to call a "debt trap" (I cited a very good discussion of that very subject: "Notes on the
U.S. Trade and Balance of Payments Deficits" by a very well regarded macroeconomist (Wynne Godley) too. http://www.levy.org/docs/stratan/stratan.html

AND I sent him a personal e-mail calling his attention to my question.

Brad didn't bother to respond. (Do you think maybe a cat got his fingers or something ;?)

Anyway Anne, did you know:

"the U.S. [trade] deficit is currently around 5.0% of gross domestic product, while the euro zone and Japan enjoy current account surpluses?"-- According to Grant Wilson, senior foreign-exchange trader at Mellon Bank in Pittsburgh http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20030306/bs_dowjones/200303060933000640

And Anne, the US bilateral trade deficit with China amounted to a record of $103.1 billion last year.

By the way, overall US trade losses amounted to another new record [$435.2 billion] during 2002, as U.S. exports declined for the second year. http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030220/bs_nm/economy_trade_dc_1

"Multiple post apologies to all. I blame Opera"

Oh no, I don't believe that I also goofed up this badly. How did I upload four copies of the same post? Who can I blame? I don't use the Opera browser. Is there some way that I can put the blame on Bill and Hillary Clinton?

>Brad didn't bother to respond.

Unlike us obsessive posters, Brad likely has a life. :)

>US trade losses...

I'd characterize that as an eccentric definition of a trade imbalance.

>bear market

Well, at least we can EAT the bears. :)

>Is there some way that I can put the blame on Bill and Hillary Clinton?

I'm afraid not. But you can blame it on Gore, who invented the internet, if that makes you feel better. :)

Chris K >>Does someone know where to obtain P/E ratio charts of indexes and stocks?

One source for the S&P PE ratio is the fed itself

http://research.stlouisfed.org/publications/mt/page15.pdf

It says low-mid 20's on the S&P500. But I'm not sure what they use as earnings. GAAP earnings can include things like goodwill writeoffs which don't change the cash flow, or erratic but very real cash writeoffs. Option expense is reported by some companies but not others. Pensions make a mess out of earnings too. S&P now has "core earnings" in their reports which do a good job but not perfect either. A few respectable people have recently put the P/E on the S&P at 17. For individual stocks I use msn.com to get 10 year historical earnings and charts, but I don't have a way to chart the P/E.

"One can make all the excuses they wish, but the Old Europeans are likely too far to gone to save themselves from the approaching **Armageddon**." (emphasis added)

How close does the National Review think we are from the Armageddon? Does Karl Rove have the last word on the timing? :)

(Note for economists, I obviously need to know more about my tranveraslity conditions in order to re-optimize my hamiltonian. Can you imagine what a party we should be having! Or at least the Europeans...)

"One can make all the excuses they wish, but the Old Europeans are likely too far to gone to save themselves from the approaching **Armageddon**." (emphasis added)

How close does the National Review think we are from the Armageddon? Does Karl Rove have the last word on the timing? :)

(Note for economists, I obviously need to know more about my tranveraslity conditions in order to re-optimize my hamiltonian. Can you imagine what a party we should be having! Or at least the Europeans...)

>imagine what a party we should be having!

That is how many conservatives characterized the Clinton years.

"Can you imagine what a party we should be having! Or at least the Europeans...)"

Let those who remain in the old country have their party and other debauched excesses. I've got a better solution that you are already essentially doing: remain in the United States. One notices the peculiar fact that you do not live in France. Or is Berkeley, California now a French colony? I might add that a number of German and French citizens have abandoned their loser homelands to better themselves in America. Shucks, my great grand parents did so around a hundred years ago. They weren’t about to wait for the roof to collapse. It's better late than never.

We sure aren't having a party these days...

I have a slogan for Jr.'s 2004 campain:

"DOW JONES : OBJECTIVE 5000!"

David, I am not French. Thanks.

"David, I am not French. Thanks."

Oh, that's right. You are from that other loser country, Belgium. The same reality holds true: get out while you can!

David and Jean -

Are you auditioning for a talk show on Fox News? I'd pay to watch the two of you argue past each other until the debate broke down into David (who for some reason I envision as a skinnier clone of Sean Hannity) hurling lame insults at Jean who is incapable of anything but more polite but banal banter. Please Lord, make this happen.

David, it’s great for you to feel cocky and arrogant with respect to Europeans, when the only reason the US is able to sustain its gigantic and ballooning trade and budget deficits is because of the willingness of foreigners (mostly “old” Europeans) to finance it. Imagine, the day Europeans are no longer willing to put money on America, or the day the rest of the world, looking at America’s dreary financial picture, becomes more and more reluctant to use the dollar as currency of reserve, Americans would suddenly realize their need to start saving and live within their means.

AN EXCITING EMERGING MARKET !!!!!

" Baghdad stock exchange booms and land prices rise as investors look to future
By Kim Sengupta in Baghdad
12 March 2003

The Dow Jones tumbled 170 points yesterday, and the Federal Reserve looked set to cut interest rates to below when Eisenhower was President in an attempt to buttress a shaky American economy. But in Baghdad it was a very different picture as shares continued to soar.

Facing an impending war and an industrial infrastructure fractured by years of sanctions, the financial heart of the Iraqi capital should have long stopped. But the Stock Index had risen by 58 per cent, to 2,117, in the past six months, while the Dow Jones in New York fell by 10 per cent, and the FTSE in London by 16 per cent."

My Comment: Maybe the stock exchange has gone up 58%, but what has the Iraqi currency done in the meantime?

http://news.independent.co.uk/world/middle_east/story.jsp?story=386223

"Europeans, when the only reason the US is able to sustain its gigantic and ballooning trade and budget deficits is because of the willingness of foreigners (mostly “old” Europeans) to finance it."

You make it sound like the Old Europeans are being altruistic. This is totally nonsensical. They are not doing us any favors, but merely acting out of motives of rational self interest. The very instant these folks believe that they cannot earn a good return on their investment---the money will disappear literally overnight. Moreover, it is America who subsidizes the Europeans. Our military protects them and unfortunately allows them to indulge in more self destructive welfare spending. They have parasited off of us for many years. It’s time to pull the plug.

Any body interseted in talking about the Marshall Plan?

I am curious if any of you Old Europe Bashers have ever lived there? Most Europeans would never consider migrating to the states, our quality of life is too low for them to consider the move!
As for protecting Europeans, the question is from whom? Who is going around threatening world peace?

David Thompson must have been incredibly upset when Bush said, during the campaign, that he supported a more humble American foreign policy. I would be surprised if David voted for Bush after hearing something like that.

"As for protecting Europeans, the question is from whom? Who is going around threatening world peace?"

Are you from Mars? I guess you are unaware that the totalitarian Muslims and their more secular comrades like Saddam Hussein have every intention of causing harm to the Western nations. Oh well, the United States will fight your battles for you. Nonetheless, we Americans will make sure that you pay a severe price for your betrayal. We will not forget!

"Oh, that's right. You are from that other loser country, Belgium. The same reality holds true: get out while you can!"

David: you don't even know that Belgium doesn't exist?!? Gosh, Belgium is widely known as a Liberal conspiracy:
http://www.zapatopi.net/belgium.html

"Are you auditioning for a talk show on Fox News?"

Dakota: I must confess that I have thought about inviting DT to doing something of that kind. Call us crazy, but we've begun to suspect racism didn't disappear with Trent...
http://www.salon.com/comics/tomo/2003/02/24/tomo/index.html

"I have noted the same volatility as you, but after the currency change there does not seem to be that volatility. I think the pricing of global markets are quite US-centric, which ties in with what you say about the US driving demand."

snsterling: so you mean that if I bought a standard basket of assets in the US and on different European bourses, UIP would more or less hold. Well, that IS interesting. Maybe researchers typically don't use large baskets of stocks to check for UIP, or do they? Something to look up...

"I no much too little about what a large stock market decline in Germany must be doing to the shareholder class, to German finance, to the German economy,...."

You need to cjeck this out. There's been a lot of talk about problems in banking and in the life insurance sector which have both taken a big knock. German consumption is absolutely flat and begining to tilt down. Everything you'd expect from a 'wealth effect'. And don't miss this, while the UK, Australia and Spain are having an enormous property value bonfire, and the US is having a moderate boom, house prices in Germany are falling:

http://economist.com/finance/displayStory.cfm?story_id=1622539

If the current trajectory continues the German economy seems doomed to contract the Japan sickness. Perhaps if it does we'll all finally get round to taking a serious look at why this might be happening.

Meantime, Steven Roach came out unequivocally on Friday and said it: the ECB priority right now has to be to try to fight a last ditch stand to stop Germany falling (remember the Ahearne et al Fed paper on the lessons of Japan, cut early and cut often), and for the rest, well it's the devil take the hindmost I'm afraid, because if Germany sinks it's difficult to see the rest of the euro group swimming.

http://eurowatch.blogspot.com/90468302

"Oh well, the United States will fight your battles for you. Nonetheless, we Americans will make sure that you pay a severe price for your betrayal. We will not forget!"

And here comes a good point from Matt Iglesias:

Isn't there a certain incoherence in conservative discourse about France? On the one hand they're supposed to be puny and absurd, worthy of nothing more than high-handed disdain. On the other hand, we're supposed to think of their failure to support us in Iraq as a major betrayal, some kind of stab in the back, worthy of utmost indignation and retaliation. But it can't really be both. Either their approval is important and worth having, in which case their failure to approve is a big deal, or else they're an insignificant fading power of "old Europe" and we should just ignore them.

http://www.matthewyglesias.com/archives/002604.html#002604

"Isn't there a certain incoherence in conservative discourse about France?"

I think you are trying to equate "conservative" with "anti-French", and this seems to me at least to be a stretch. But on the other hand, there are others who are probably equating "left-wing" with "pro-French", so I guess this terminology is understandable. *Sigh*.

"Either their approval is important and worth having, in which case their failure to approve is a big deal, or else they're an insignificant fading power of "old Europe" and we should just ignore them."

The point in the argument which I think you are missing would be that the French have an inordinate power in the U.N., through their veto, which reflects neither current economic, social, political, or military reality.

I hate to get away from France and it's problems for a moment (other than to note that they also like to 'veto' what they don't like in the EU, like eg the stability pact when it suits the) but wasn't this post about Germany?

Please don't miss this piece today about the pensions problem:

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1045511541021&p=1012571727092

As Schroder says his the measures will involve "sacrifices by many people".

When will we learn 1980 - 2000 we were on the virtuous circle. Now we're on the other one, the vicious kind. All the pension numbers go out of the window if economic growth drops near zero. This fall in pensions expectations produces a fall in consumption as people try to save more (the so called Ricardian effect). The decrease in consumption causes a fall in profitability, which causes equity (and hence pension fund values) to fall. All of which reduces economic growth expectations, which reduces pensions expectations, which........

"(other than to note that they also like to 'veto' what they don't like in the EU, like eg the stability pact when it suits the)"

Oh, my... they "also like to veto"? Are you aware of how vetos are used in the UN? and by who it's used?
How often do you think that France has vetoed anything within the last 10 years? Do you think that France has ever vetoed anything that the US didn't want them to veto?
If the answer to the questions differ from 0 (zero) and 'No', then perhaps you should read up on who has vetoed whom.

> the willingness of foreigners

Much, not all to be sure, of the capital comes in from Asian central banks, not thrifty "old Europe".

>I am curious if any of you Old Europe Bashers have ever lived there?

My parents, aunts and uncles all did. The ones not mudered in cold blood by "Old Europeans" emigrated to the four corners of the Anglosphere.

Terribly sorry to get back on the subject. Brad, as you expressed a desire to bone up on Germany's circumstances, you might find a piece in the German FT interesting. Deutsche FT reports that pension contributions will probably rise to 19.9% of gross wages next year, as the roles of contributors fall due to unemployment. The government already hiked contributions to 19.5% of gross wages in January, from a prior 19.1%. Suggests to me that the disincentive to hire is going up.

By the way, stop me if this sort of thing is not useful. Headlines are my life.

One more:

BERLIN, March 12 (Reuters) - Following are measures German
Chancellor Gerhard Schroeder is expected to announce in a
keynote speech to the Bundestag lower house of parliament from
9:00 a.m. (0800 GMT) on Friday, according to statements by
members of Schroeder's Social Democrats and media reports.
* An economic stimulus programme of 15 or 17 billion euros
of low-interest loans for home refurbishment and cash-strapped
local authorities. Economists have said the measure, which will
cost the federal government 500 million euros at most, will have
little positive impact on the economy.
* Shortening the period during which jobless people are
entitled to full unemployment benefit, which amounts to 67
percent of former wages for people with at least one child and
60 percent for the childless, to a maximum of 18 or 12 months
from the current 32 months.
* Cutting unemployment support, which currently amounts to
57 percent of former gross wages and which is paid after
entitlement to higher unemployment benefit has elapsed.
* Relaxing, but not abandoning, rules protecting workers
from dismissal.
* Possibly raising the pension age from 65 and forcing civil
servants to pay pension contributions.
* Reducing statutory health insurance cover and forcing
people to take out private insurance for accidents at home.
For a story on the expected reform measures please
double-click on
((Reporting by David Crossland, Reuters Messaging:
david.crossland@reuters.com@reuters.net; +49 30 2888 5142))

Um, not an economist here, but shouldn't a discussion of Germany's economy with some 60+ posts have at least one mention of reunification? The Germans are still paying a hefty tax to rebuild and restart the east. May or may not be wise (though I believe it's a better alternative to what would probably happen here: let them form ghettos and let our children deal with it), but it's a choice they've made and it would seem to this non-economist that this has to have a large impact on their short term economic outlook. No?

David, I suggest you read Samuel Brittan's article (primarily derived from Adair Turner's paper) on euro-sclerosis. Try your best to read it without your partisan glasses. It is available on his website at: http://www.samuelbrittan.co.uk/text142_p.html

Per Mr. Brittan:

"According to the conventional wisdom, Europe has been growing more slowly than the US for 20 years as a result of structural "rigidities". EU countries have themselves have [sic] signed up to reform declarations at one EU summit after another, starting with Lisbon in 2000. Doubt is cast on this diagnosis in a recent paper, "What's Wrong with Europe's Economy?" by the former CBI director Adair Turner*. At the very least his paper comes as a refreshing contrast to the dead and repetitive prose of EU communiqués and of the latest UK Treasury Paper on European Economic Reform. To start with, the facts are not as they are often made to appear. Over the 21 years 1980-2001 real growth per annum was indeed nearly half as fast again in the US as in the eurozone countries. But if you look at growth per head of population, nearly all the difference disappears; and the US lead represents mostly population growth...

... One of Turner's more surprising findings is that nearly all the differential US productivity spurt since the mid 1990s can be attributed to the distributive sector. His explanation is that the US, which is far more land rich, can rationally allow more freedom for developments such as out of town shopping centres than land-hungry Europe. This diagnosis is corroborated by the fact that France, which is richer in land than many other European countries, had notable improvements in retail productivity in the 1970s and 80s, but has since clamped down for planning reasons."

Before you jump to any conclusions, I do support keeping government economic involvement to a minimum due to increased efficiencies normally found in the private sector. That in no way proscribes the use of transfer payments et.al. as is usually assumed by the far right however.

Yes, Ben, I was actually thinking the same thing. I don't have the statistics in front of me, but unemployment is much closer to the European average in the western Bundeslaender. This gets some coverage in the French press, but almost none in the English press as far as I can see. Of course, in one sense it doesn't matter. The state can't just ignore the east Germans.

I think the first post of this article should have got more attention.

Germany's market cap in 2000 (at the boom's highs) was 68% of GDP. The US level was 154% of Gdp, the UK's 182% of gdp.

Thus in % of GDP terms a 70% fall for Germany was actually less than the UK's 50% fall, and probably less than the US as well.

Obviously if the German non-quoted sector has suffered similar value destruction then there may be other problems...

Even the Bundesbank think it's a crisis - given the title of their paper on the subject...

http://www.bundesbank.de/vo/download/vo_wege_aus_der_krise_en.pdf

"you make it sound like Old Europeans are being altruistic. This is totally nonsensical. They are not doing us any favor, but merely acting out of motives of rational self-interest"

Of course. My point is not that Europeans are altruistic, but that for all the talk about American hegemony and dominance, America's dependence on foreign capital to sustain its structural imbalances make it much more frail than many people think.

>America's dependence on foreign capital to sustain its structural imbalances make it much more frail than many people think.

Foreign dependence on American demand to sustain its structural imbalances make it much more frail than many people think.

How about mutual inter-dependence, uh? This is the heaviest cost to Rumsfeld's Europhobic attitude. But some American egos are so inflated right now, that they will only recognize this when both continents will be in the gutter.

>...will only recognize this when both continents will be in the gutter.

The scale, uniformity and flexibility of the US economy, along with its demographics, make it highly unlikely America "will be in the gutter" alongside Europe.

It's the damndest thing - I've been looking online, I've been to the library - even the "dead stacks" - and I just can't find any maps showing where Europe has gained land, resulting in new countries. Could Dave or Bucky please send me some sort of graphic explaining how Lithuania is newer than Holland?

To the poster who suggested that Brad may have more of a life than his commenters, I'm not sure that dragging one's children though mathematical equations qualifies as "a life" :)

Finally, Dave and Bucky, you're a couple of flipping idiots. You can point to zoos and supposed economic trends all you want (and the fantasy that US bases in Germany are the only thing standing between Saddam Hussein and overlordship in Europe), but the simple reality is that European living standards are higher than American. Housing costs for the middle class is just about the only big exception, but I can tell you as an architect, the housing's MUCH better over there. My wealthiest clients cannot get buildings as good as what is typical in Europe.

I ask DT and Bucky - what do you imagine you get for the additional 8-12 weeks that you work? Don't give me some crap about structural this or rational that. I want it in concrete terms. Every American works far more hours than his European counterpart. For this, he is less likely to have health care, more likely to be poor in old age, more likely to die in a car wreck, and less likely to enjoy leisure, art, and food. What a country!

PS - In response to the inevitable question, why don't you move there? I've considered it. My wife would love to. I would be more satisfied professionally. I'm just too attached to America to give it up at the moment; there's no baseball team in Bregenz (some might say the same about Pittsburgh, but that's another argument...).

Considering I've been called a racist here in the past, being called a "flipping idiot" is nothing.

If America's social fabric distresses you so much, JRoth, but you can't leave for personal reasons, or want of baseball, may I suggest Toronto?

JRoth: David Thompson and Bucky Dent are far worse than flipping idiots. Just the following snips from this thread should give you some idea:

>>Nonetheless, we Americans will make sure that you pay a severe price for your betrayal. We will not forget!>My parents, aunts and uncles all did. The ones not mudered in cold blood by "Old Europeans" emigrated to the four corners of the Anglosphere.<<

Never mind that they both sound as if the Nazis were still running Europe, as opposed to having been killed off by today's Old Europeans, the British, French, and Russians most importantly. What scares the daylights out of me is the inevitable question of which people in the Bush adm. actually think like them. Governments run by people like David and Bucky usually tend to lead their countries to violent times indeed.

Andres: If you read the thread, you'll see I was answering someone who was curious about peoples' personal experiences of living in Europe. I made no representation as to Europe's current leadership as it relates to WW2 parallels.

But since you brought it up, the well-documented and publicized surges in anti-semitic violence on the Continent, along with the EU's financial support for the Middle East heirs of Hitler's allies, does cause one to pause. Now that you mention it.

And please, Dr. Burgos, someone who adresses Marxist scholarly conferences is ill-positioned to lecture others on the types of leaders that are prone to violence.

>>I ask DT and Bucky - what do you imagine you get for the additional 8-12 weeks that you work?

Included in the United States are tens of millions of people who are here because life is better than in South or Central America or Asia. With the exception of Germany (why is this???), Europe does not have the same degree of immigration (my source CIA world factbook). So the average anything for the US might not be comparable to the average for Europe.

>>I ask DT and Bucky - what do you imagine you get for the additional 8-12 weeks that you work?

Included in the United States are tens of millions of people who are here because life is better than it is south of the border. With the exception of Germany (why? where from? and how long?), Europe does not have the same degree of immigration (my source CIA world factbook). So the average anything for the US might not be comparable to the average for Europe.

> Bucky - what do you imagine you get for the additional 8-12 weeks that you work?

Evidently a lot more than you do, assuming, that is, that you put in the same amount of time I do.

For further Germany bashing, go to BlueOvalNews and read about how the German automakers conspired to loot the American automakers. Then go to TheCarConnection and read about how Ford Motor Company will have to rebuild Lincoln/Mercury because of this.

For further Germany bashing, go to BlueOvalNews and read about how the German automakers conspired to loot the American automakers. Then go to TheCarConnection and read about how Ford Motor Company will have to rebuild Lincoln/Mercury because of this.

"what do you imagine you get for the additional 8-12 weeks that you work?"

That's an excellent question. We get more money now and greater future growth. This extra work may not be as productive as a German's workers peak hours, but it would be idiotic to write it off as useless.

The statistic about car accidents is seemingly irrelevant but I also have to wonder whether it is correct. Aren't Spanish, French & Italian drivers among the developed world's most dangerous?

Health care: well, if you have an opt out system like the USs (and the opt-outs are predominantly young people) vs. a system where everyone is insured, it sure makes sense that US insurance rates are lower. Don't confuse that with happiness, though.

When I began commenting on JRoth's post I thought it was interesting, but examination has led me to conclude it's the usual liberal drivel. Try again.

In order to avoid future confusion, I should mention that Andres and andres are two different people--I don't know anything about the former.

>>But since you brought it up, the well-documented and publicized surges in anti-semitic violence on the Continent, along with the EU's financial support for the Middle East heirs of Hitler's allies, does cause one to pause. Now that you mention it.

And please, Dr. Burgos, someone who adresses Marxist scholarly conferences is ill-positioned to lecture others on the types of leaders that are prone to violence.<<

Apparently, Bucky was interested enough in my background that he looked up my website, googled me, and decided to "out" me on this blog. Though not specifically forbidden, this is in questionable taste. Just to comment, I should add that most anti-Semitic violence taking place today in Europe is almost entirely due to Arab and North African immigrants. Apparently, they spend their spare time in the libraries reading Mein Kampf and the Protocols. As for EU support, it's probably small potatoes compared to the amount of aid that the U.S. has dumped on Egypt, Saudi Arabia, and Iran over the past few decades.

And please Mr. Bucky (whoever you are, I really don't give a damn), that I would attend a Marxist conference six years ago does not make me a fan of the likes of Lenin, Stalin, Mao, and Castro. To the contrary. Now please get a grip.

Oops. I said "Europe" when I had in mind France, Britain, and Western Europe. The former East Germany and Eastern Europe may well have their own native anti-Semites, but I doubt they themselves are vociferously opposed to U.S. policies.

>this is in questionable taste.

You signed with your personal school .edu domain. If you didn't know you were identifying yourself, you know nothing of the web. If you did know, and accuse me of being underhanded, you're a knave.

Your writings make your statist political stance clear. There is nothing wrong with that.

But it leaves you little moral cover to accuse others of being impure on account of alleged authoritarianism.

Professor DeLong: I think it's time to note that there is a witch hunt taking place in your comment section. In other words, your blog has started to yield enough potential political influence to... Kudos to you!

Witch hunt? Yeah, I guess Bucky and their like think that, with my supposedly godawful Marxist credentials, I eat little children for breakfast. Bucky, I use my official e-mail because you and anyone else on this blog should be free to read my measly handful of posted writings in order to establish that I am a threat to western civilization. But please do not use it as a pretext to issue highly misleading innuendo. If I am a supposed supporter of totalitarian regimes, you should come to that conclusion based on what I have written in the past on this blog, not on what conference I attended n number of years ago. Capisce?

May I apologise for about 20 posts ago trying to make my contribution relevant to the topic on Brad's website? A few others had done it and I got sucked in.

“What scares the daylights out of me is the inevitable question of which people in the Bush adm. actually think like them. Governments run by people like David and Bucky usually tend to lead their countries to violent times indeed.”

The exact opposite is true. Appeasers like yourself unwittingly cause much suffering. People like Bucky and me would have almost certainly prevented World War II. We believe in nipping a problem in the bud---and not allowing it to fester into something far worse. There are times when the prudent use military power is the most humane option to exercise.

That's brilliant. David Thompson would have prevented world war II all by himself!

JT, I may be wrong, but it seems you are suggesting that young people "opt out" of our health care system? If so it is not believable. Non-participation is not a choice for the vast majority.

>Non-participation is not a choice for the vast majority.

Can they be permitted to reach that conclusion on their own?

"That's brilliant. David Thompson would have prevented world war II all by himself!"

Your sarcasm reveals your utter lack of knowledge of history. There is a startling quote on page sixteen of Robert Kagan’s splendid new book, “Of Paradise and Power.” Joseph Goebbels remarked in 1940 concerning the earlier naive appeasement policies of the French:

“In 1933 a French premier ought to have said (and if I had been the French premier I would have said it): ‘The new Reich Chancellor is the man who wrote Mein Kampf, which says this and that. This man cannot be tolerated in our vicinity. Either he disappears or we march!’ But they didn’t do it. They left us alone and let us slip through the risky zone, and we were able to sail around all dangerous reefs. And when we were done, and well armed, better than they, then they started the war!”

>a French premier ought to have said...

Now, can we speculate on why the CURRENT French govt seems to have unlearned this?

matthewn, it only takes the slightest provocation for the true fire-eaters on this blog to get on their high horse, regardless of what the discussion is. If the subject is the defects of the German economy, it is _unavoidable_ that someone reading will say that the German economy is in horrible shape because Germans are idiots or assholes or both. The only remedy is to point out to such individuals the gaping holes in their own arguments, or if that is too much effort, to indulge in some creative license. See the following:

"And if I had been running the U.S. government, the Vietnam war would have never started. I would have told Ho Chi Mihn that either he stepped down or we would haul him down! And if he refused, we would overthrow him, in part by shooting every VietCong between the eyes, in part by bombing Hanoi into the stone age, if necessary with atomic weapons. But not before we shipped them Jane Fonda and Abbie Hoffman and all the other cowardly, lily-livered appeasers. In this way, the U.S. would not have given in to the totalitarian communists and Vietnam would have had true democracy and peace!" (For good effect, accompany this diatribe with the sounds of hyperventilation and fists banging on furniture).

David Thomson, you are a true cartoon. Don't ever change... ;-)

Note: I used the case of Vietnam above to give the note a more local flavor, but there was nothing that could have prevented not just the French, but also the British, Americans, and Russians from attacking Germany in 1933 just because we were miffed at their electoral results. And before attacking we could also have shipped them Neville Chamberlain, Henry Ford, Rockefeller, Randolph Hearst, and all the other yellow-bellied appeasers and Nazi-lovers...

Warning, JT: Drivel to follow.

For the record, DT couldn't do it singlehandedly; he generously enlisted Bucky's aid in stopping WW2.

DT's 20/20 hindsight miraculously gets past the fact that Europeans who thought like him in the 30s were, in fact, the chief appeasers. No-nonsense, pro-business types adored Hitler for his anti-Communist, anti-unionist stances. The fact that he put an end to the decadent Weimar era was icing on the cake.

As late as 1938, a modest show of resistance in the Sudetenland would have stopped Hitler; but at that time, it was business interests in France & Britain, more than any other, who opposed action (granted that Communists were, perversely, pro-Hitler at the time as well, due to the non-aggression pact). Churchill ably foresaw the danger, and was disdained by his own Tory party for speaking up on the matter. In 1941, English businessmen were all in favor of treating with Hitler - what a business opportunity!

Of course, DT & Bucky are not indistinguishable from mid-century English businessmen in their outlooks; but for them (just DT I guess, but Bucky hasn't objected, has he?) to pretend that their worldviews are so very different is, well, delusional.

>DT & Bucky are not indistinguishable from mid-century English businessmen in their outlooks

I have zero knowledge of what "English businessmen" were up to in the run-up to WW2. Or what modern day historians looking back at that era make of it all.

One thing that has struck me, however, is the eerie parallel between the reporting and editorial positions of the London Times back then, and New York Times today.

"Europeans who thought like him in the 30s were, in fact, the chief appeasers."

Excuse me? Of all the things I could say, I don't think either DT or BD are "appeasers". What you mean, as indeed you explain in your post, is that a large class of appeasers corresponded to a large class of businessmen. Now I don't know if either DT or BD are businessmen or even think like businessmen - perhaps you do. But such a remark seems to me as below the belt as - say - making the point that teachers are "Stalinists" because some university professors supported the Russian communists.

Bucky, OK we'll start with you. Choose between food and water. Its your choice! All choices are not equal and calling non-participation in healthcare a choice for people who are not likely able to afford it is a lie via semantics. The option is not viable.

Stan, I am willing to spend as much as you give me for health care. Hit my email address, and I'll forward the names of all 3 doctors whose bills are literally on my desk.

"Its your choice," as you put it.

I see Bucky. You want to say that people choose to opt out of our healthcare system so that you feel better about not paying taxes. If you try hard enough maybe you can convince yourself that you earn all of the income at your disposal as well. Try clicking your heals together while you are repeating your mantra.

You dodged the point because calling it a choice is a lie Bucky. It is still a lie.

//
Stan, I am willing to spend as much as you give me for health care. Hit my email address, and I'll forward the names of all 3 doctors whose bills are literally on my desk.

"Its your choice," as you put it.
Posted by Bucky Dent
//

So you are trying insurance fraud. Typical.

DSW

I don't understand what income and fraud have to do with this.

I NEED health care, Stan. It's not a choice. You said so yourself.

Are you opting out of paying for my health care?

“Excuse me? Of all the things I could say, I don't think either DT or BD are "appeasers". What you mean, as indeed you explain in your post, is that a large class of appeasers corresponded to a large class of businessmen. Now I don't know if either DT or BD are businessmen or even think like businessmen - perhaps you do. But such a remark seems to me as below the belt as - say - making the point that teachers are "Stalinists" because some university professors supported the Russian communists. “

The paradox is that I strongly believe that Capitalism is the best economic system to generate wealth for the masses. However, I also adamantly agree with Adam Smith’s warning that business people are inclined to collude against the general public. Lenin was right to sarcastically remark that the capitalists might sell the rope which is used to hang them. I always take whatever they say with a huge grain of salt if their economic interests are involved.

It is fascinating that David Thompson believes Joseph Goebbels. Says it all really.

Bucky, how you feel about taxes has zero bearing on whether or not terming non-participation a choice when it isn't a viable option is a lie. Your response is a dodge from that point. Your dodge is itself pathetic.

If you really advocated choice and freedom you would be asking that any money taken from government run social services be instead given out via enhanced Earned Income Tax credits or other direct payments to the indigent. No, you are simply using those terms because they are Heritage Foundation tested to give people a false impression of your ultimate aim.

What you are really advocating is simply a sop to yourself. Hence, that's another lie. You are on a run aren't you?

If you do a [ control - F ] search on this thread, you will discover that I have never used the word tax. Nor have I alluded to taxation in any way.

Nor have I received a forwarding address for my doctor bills.

Andrew-

I appreciate your careful reading, and I understand your point. I would never have raised appeasement (or WW2, for that matter), had DT not raised it himself. Therefore, I do not think it a below-the-belt comment. DT said he would have prevented WW2; I responded that a close reading of history might suggest the contrary.

Unlike the War Party, I do not view "appeaser" as an accusation beyond the pale; not because I think the appeasers were right, nor because (God forbid) the results of appeasement were tolerable. Rather, "appeaser" has become an epithet to throw at anyone who opposes any particular military adventure or international intervention. I thikn it's fair to say it's covered by Godwin.

One of the biggest misconceptions is that appeasers were starry-eyed idealists - peaceniks, if you will - while their opposition were steely-eyed realists. Countless times on this board, DT has characterized himself as the latter, and this is part of why he imagines that he would have stopped Hitler. The problem is that, at the time, it was primarily steely-eyed realists who were, in fact, the appeasers. Obviously, peaceniks were not agitating for military confrontation with Hitler; but it's a fallacy to pretend that they were the drivers of policy (I'll confess here that I know much more about English than French politics in the 30s; my comments primarily apply to the UK). The same type of "realists" who, after the war, would support Marcos, the Shah, Suharto, and, indeed, Hussein, in the 1930s felt that Hitler was an acceptable tyrant with whom they would like to do business (esp. if he would do the dirty work of killing Communists).

All that said, DT defended himself as one who is skeptical of capitalists and their claims. I'm willing to accept his skepticism, if only because no one here could deny his drive to be contrary. But I would like to point out that, for someone who doubts capitalists, he pretty stridently opposes and policy or action that would limit their power. Hmm.

>"realists" who, after the war, would support Marcos, the Shah, Suharto...

There is truth in this.

But similarly, there were realists in Moscow and Beijing who supported Castro, the Hermits of North Korea, Budapest 1956, the seizing of Tibet, etc.

The choice is between relative, not absolute, evils.

I wasn't going to respond to JT, discretion and valor, etc, but walking the dog last night, I was struck by the absurdity of his health insurance statement. Availability of health care isn't a happiness issue!? For most of my 20s, I couldn't afford health insurance. It worked out great - I never needed it. But that's not nearly the same as saying I was just as happy as if I'd had it. I was constantly reminded of my precarious situation, and that a single accident could ruin me financially. Obviously, in Europe my takehome would have been less, but not by nearly as much as the cost of insuring myself in the States.

Meanwhile, JT may be so insulated from reality as not to know this (talk about drivel), but most of the tens of millions of uninsured in America are not carefree 22 year olds. They are pregnant women and children, 40 year old working men, and the elderly. Do you really dream that they'd be no happier with insurance? Are you a fool or a knave?

"But I would like to point out that, for someone who doubts capitalists, he pretty stridently opposes and policy or action that would limit their power. Hmm."

You miss the point. The at least metaphorical reality of Original Sin affects everyone. This includes both business people---and government bureaucrats! The latter often are not our saviors, but actually make the situation worse. The standard trust of government by Liberals is nonsensical. Why are you so anxious on taking a chance of jumping out of the pan and into the fire?

OK, no one's reading this at all any more, but I can't very well write David directly at his Amazon review page.

David, you've addressed an issue that I've discussed often with a libertarian friend of mine: why do I trust bureaucrats more than businessmen?

It's pretty simple, really: the fundamental principles of the two enterprises are different. At the very bottom, gov't is motivated by patriotism and service. Business is motivated by greed. You're probably laughing at such a simplistic dichotomy, but stick with it for a moment. Success in business is universally measured in profits. If you make more profit, then you are a better businessman; no reader of the Wall Street Journal can dispute this. But only militia members seriously claim that the measure of success for a bureaucrat is to obstruct peoples' freedom. No, a good gov't employee is one who creates or enacts policies that benefit his fellow citizens. Awards in gov't go to those who are most helpful; awards in business go to those who are most profitable.

Obviously, most businessmen are good, ethical people who make their money by providing goods and services to their fellow citizens. But the actual goal of business is served by perfidy just as much as by honesty (OK, that's a lie - perfidy wins, every time). Whereas the nightmare bureaucrat (again, the exception and not the rule!) is perverting his mission - whether he is enriching himself or "expanding his bureaucratic powerbase" (an absurd acusation I once heard levelled at the preservation planner here in Pittsburgh), it has nothing to do with the goals of gov't.

Civil servants get the benefit of my doubt for the same reason that ministers do; sure, I may not agree with them every time, and some of them are bastards, but by and large, they've chosen a vocation, not a job. Somehow I don't feel like Ken Lay (or some contractors I'd love to name) would say they've been "called" to do what they do.