ROME, May 31, 2012 – There's method in this madness. Since the butler of His Holiness ended up in jail, the scene has suddenly changed. At center stage is no longer the dispute over the contents of the stolen papers. It's the thieves. Intent on scheming in the shadow of a venerable white robe.
"With justice eliminated, what are kingdoms if not a great band of thieves?" The phrase is from Saint Augustine, but it was Benedict XVI who cited it in his first encyclical, "Deus Caritas Est" of 2005. He didn't know that seven years later it would become the public image of the Vatican. A citadel devastated by thievery, with no corner left inviolate, not even that "sancta sanctorum" which the private desk of the pope should be.
The real or presumed thieves of Vatican papers have declared in chorus to the newspapers, under anonymity, that they acted precisely out of love for the pope, to help him clean house. And it is true that none of the wrondoing laid bare in the documents involves his person. But it is even more true that everything falls upon him, inexorably.
The pope theologian of the great homilies, of the book on Jesus, is the same one who reigns over a curia adrift, a den of "egoism, violence, enmity, discord, jealousy," all of the vices he stigmatized in last Sunday's homily for Pentecost and in so much more of his fruitless prior preaching.
It is the same pope who wanted as his secretary of state Cardinal Tarcisio Bertone, and continues to keep him at his post, in spite of the fact that he sees more and more evidence of his inadequacy every day.
In the Vatican today, the boundary between illicit acts and those of simple mismanagement has become very slender, almost nonexistent.
The glaring proof is showing up right now. Pontifical butler Paolo Gabriele has just been arrested for the theft of documents from the papal apartment, while within and around the Institute for Works of Religion, the Vatican bank (IOR), a clash of unprecedented violence has come to a head, registered with equal brutality first in an official statement from the Holy See itself and then in an internal document deliberately leaked to the press, so that the world would know that the president of the IOR, Ettore Gotti Tedeschi, had received a vote of no confidence from the other members of the bank's supervisory board.
And he had lost his support, the document said, because of his manifest incapacity to perform his role, for culpable ignorance of his duties, for "increasingly bizarre" personal behavior, and also, naturally, because of his suspected release of confidential documents – in short, because of a total of nine accusations shot through and through with a tone of insult, put to a vote and approved one by one by the board of renowned advisers: the German Ronaldo Hermann Schmitz of Deutsche Bank, the American Carl Albert Anderson of the Knights of Columbus, the Spaniard Manuel Soto Serrano of Banco di Santander, and the Italian Antonio Maria Maroccco, a notary in Turin and the latest member to be added to the board.
The first three, in 2009, had given determined support to the appointment of Gotti Tedeschi as president of the IOR. And they had continued to give their support until a short time ago, when there were already bitter disputes between Gotti Tedeshci and the director general of the bank, Paolo Cipriani, a power player of the old guard. For six months, the two have not been on speaking terms.
The statement with the announcement of the challenge to Gotti Tedeschi ended by saying that the next day, Friday, May 25, there would be a meeting of the commission of cardinals that oversees the IOR, the only one that could turn the motion of the board members into an executive order.
The meeting did in fact take place, but without any final statement. Formally, Gotti Tedeschi has not yet been dismissed, and he is mustering the weapons to make his defense.
But meanwhile, the conflict has moved to where it counts the most, within the commission of cardinals. Where there is Bertone as its president, but also Attilio Nicora, who has almost never been in agreement with him, and Jean-Louis Tauran, who as former foreign minister of the Holy See has never been able to swallow the entrusting of the secretariat of state to someone with no expertise in diplomacy, like Bertone.
One of the other two cardinals of the commission, Telesphore Placidus Toppo, lives in India, and the other in Brazil, Odilo Pedro Scherer. Justified absences.
The last battleground between Bertone and Nicora was the set of regulations introduced in Vatican City for admission to the international "white list" of states with the highest standards in fighting money laundering.
It is amazing that in the statement against Gotti Tedeschi there is no reference to this essential point of contention.
To write the regulations, Gotti Tedeschi and Cardinal Nicora had called upon the two leading Italian experts in the matter, Marcello Condemi and Francesco De Pasquale, both of the brood of Banca d'Italia. The law, number 127 in the Vatican numeration, went into effect on April 1, 2011, and in conjunction with this Benedict XVI, with a motu proprio, endowed the Vatican with a Financial Information Authority, headed by Nicora, with powers of absolute control over every movement of money performed by any office within the Holy See or connected to it, including the IOR and the secretariat of state.
But as soon as these regulations were approved, the counteroffensive began.
The management of the IOR, the secretariat of state and the governorate objected that with it the Vatican was losing its sovereignty and becoming an "enclave" of external banking, political, and judicial powers. They had a trusted American lawyer, Jeffrey Lena, rewrite the law, and last winter, by decree, they implemented a second version that limited the supervisory powers of the Financial Information Authority, subordinating them to those of the secretariat of state.
According to its proponents, the new regulations also correspond better to the international requests for transparency.
But both Nicora and Gotti Tedeschi are of a diametrically opposed view. They judge the new law 127 as "a step backward" that will cost the Holy See its admission to the "white list."
A first response from the international authorities on the anti-laundering regulations in effect at the Vatican is expected in July.
But the preliminary judgments expressed by the inspectors of Moneyval after two rounds of of investigation at the Vatican do not bode well.
The first version of law 127, examined under ten different aspects, had received six votes in favor and four against.
The second version received eight votes against, and only two in favor.
Meanwhile, in the Vatican it is war. Cardinal Bertone is also under fire for the campaign he conducted in 2011 for the purchase, with the money of the IOR, of the San Raffaele, the cutting edge hospital established in Milan by a controversial priest, Fr. Luigi Verzé, plunged into a whirlpool of debt.
At first Gotti Tedeschi supported the purchase offer, but very soon he joined the opponents, including cardinals Nicora and Angelo Scola, the new archbishop of Milan, and Benedict XVI, highly opposed to the purchase not only because of the direct involvement of the Holy See in a worldly affair too far from its spiritual ends but also because at the San Raffaele and the affiliated university activities are practiced and teachings are imparted that are in glaring contradiction with Catholic doctrine; and it is certainly not possible to replace en masse the physicians, scientists, and professors.
In the end, Bertone gave up and the San Raffaele was purchased by a leading Italian entrepreneur in the health care sector, Giuseppe Rotelli.
But for the exuberant secretary of state, the dream of creating a Catholic hospital center under the control and guidance of the Vatican dies hard. As proven by another of his failed initiatives: the conquest of the Gemelli, the Roman general hospital of the Catholic University of the Sacred Heart that became famous all over the world for having accommodated and cared for John Paul II.
There was one obligatory step for the conquest of the Gemelli: the control of the founding and sponsoring institute of the CatholicUniversity, the Toniolo, controlled in turn by the Italian episcopal conference and traditionally headed by the archbishop of Milan.
The Toniolo was for years the target of a hostile takeover that aimed to remove by any means necessary its representatives most closely allied with the cardinal who was the president of the CEI until 2007, Camillo Ruini.
The attack that in 2009 struck Dino Boffo, a member of the Toniolo and the director of the newspaper of the CEI, "Avvenire," with accusations of homosexuality that were afterward acknowledged as false by the very newspaper that had published them, was the fiercest moment of this battle.
Bertone did not defend him. Worse, the director of the newspaper published by the Vatican secretariat of state, "L'Osservatore Romano," Giovanni Maria Vian, peppered Boffo with criticisms in a merciless interview with "Corriere della Sera," precisely at the crucial moment of the attack against him.
There would be no need today to read the heartbroken letters written by Boffo at that juncture, which have appeared among the papers stolen from the pope. The substantial dynamic of the facts was already before the eyes of all.
The San Raffaele operation, the attack on Boffo, the attempted conquest of the Gemelli, Bertone's claim of outranking the CEI in the role of leading the Church in Italy. It all fits together.
In 2010, the irrepressible secretary of state, claiming a presumed mandate from Benedict XVI, even intimated to Cardinal Dionigi Tettamanzi in writing that he should leave the presidency of the Toniolo. The archbishop of Milan flew off the handle. And Benedict XVI agreed with the latter, after calling both contenders before him.
This correspondence was also stolen and made public. But here as well the story was already well known. Today the presidency of the Toniolo has passed peacefully to Tettamanzi's successor in the see of Milan, Cardinal Scola.
In a public letter to the bishops of the whole world, in 2009, Benedict XVI warned: "If you bite and devour one another, take heed that you are not consumed by one another."
The pope had taken these words from Saint Paul. Because even in Christianity at its origin, there were fierce contrasts.
And also with Jesus, among the apostles, there were some who jostled for places of power, and some who protested against the wasting of the precious ointment poured out upon the Master's feet, instead of "selling it and giving the proceeds to the poor."
Benedict XVI has the refinement and the humility never to identify himself with Jesus. But to associate himself with him, yes. Last May 21, at the toast at a luncheon with cardinals, he concluded trustfully: "We are on the team of the Lord, and therefore on the winning team."
But what a struggle, when everyone is playing against him, even those "disguised with the truth."
Immediately before this, speaking to the cardinals, the pope had cited Saint Augustine: "All of history is a battle between two loves: love of self even to disregard of God; love of God even to disregard of self."
And he added: "We are in this battle, and in it it is very important to have friends. As concerns me, I am surrounded by my friends of the college of cardinals, I feel safe in their company."
Father Federico Lombardi also guaranteed, on May 29: "There are no cardinals among the persons of interest or suspects."
Not to inconvenience the police, but not all of the cardinal "friends" are playing on the team as the pope expects.
This same article was published in "L'Espresso" no. 23 of 2012, on newsstands as of June 1, under the title:
Corvi e demoni nella curia vaticana
GUERRA SANTA Carte trafugate. Veleni. Arresti. Nella Santa Sede è in atto un violento scontro con al centro il potente cardinale Bertone. Mentre il papa è sotto assedio e gravato dagli scandali
On May 29, "L'Osservatore Romano" published its first commentary on the arrest of the pope's butler, Paolo Gabriele, after five days of absolute silence on the case.
It did so in an interview conducted by the director, Giovanni Maria Vian, with the substitute of the secretariat of state for general affairs, Archbishop Giovanni Angelo Becciu.
In the interview, Becciu reports that Benedict XVI is "also pained about the violation suffered by the authors of the letters or of the writings addressed to him."
The crime for which Gabriele is under investigation is defined by "L'Osservatore Romano" as "possession of a large number of confidential documents belonging to the pope."
Benedict XVI expressed himself in this way on these events at the end of the general audience of Wednesday, May 30:
"The events that have taken place in these days concerning the curia and my collaborators have brought sadness to my heart, but have never obfuscated the firm certainty that in spite of human weakness, difficulties and trials, the Church is guided by the Holy Spirit, and the Lord will never deprive it of his help in upholding it on its journey. Nevertheless there has been a multiplication of conjectures, amplified by some means of communication, that are entirely gratuitous and have gone well beyond the facts, offering an image of the Holy See that does not correspond to reality. I therefore would like to renew my trust and my encouragement to my closest collaborators and to all those who on a daily basis, with fidelity, with a spirit of sacrifice, and in silence help me in the fulfillment of my ministry."
With regard to the shakeup at the top of the Institute for Works of Religion, it must be noted that there had been public signals of the rupture between the president and the management of the IOR even before the meeting of the supervisory board on May 24 that produced the vote of no confidence on Ettore Gotti Tedeschi.
On May 15 and then on May 22, in the auditorium of the Vatican bank, director general Paolo Cipriani extensively illustrated the structure of the IOR and the services it administers to two large groups of diplomats accredited to the Holy See.
At the same meetings, vice director Massimo Tulli and director Giovanni Marinozzi provided clarifications on "the compliance of the IOR with the most demanding international standards in the matter of the fight against money laundering."
The convening of the ambassadors was handled by the assessor and the head of protocol of the secretariat of state, Monsignors Peter B. Wells and Fortunatus Nwachukwu, who also spoke at the two meetings.
But Gotti Tedeschi did not take part in either of the meetings, in spite of the fact that his presence was mentioned by "L'Osservatore Romano" in reporting on the first of the two.
Not all of the ambassadors have found the explanations they have received to be satisfactory.
In an interview with Vatican Radio after the first of the meetings, British ambassador Nigel Baker cautioned that the process of adding Vatican City-State to the "white list" would in any case be "bumpy, because there will be some things where the IOR can’t yet say we’ve reached full international compliance and indeed other Vatican institutions."
About the strong reservations expressed by Cardinal Attilio Nicora, president of the Financial Information Authority, on the second version of law 127 on anti-laundering, in effect at the Vatican as of January 25, 2012, see the excerpts from one of his letters in an article in "Il Fatto Quotidiano" of last February 16:
On May 29, "Avvenire" published a defense of Gotti Tedeschi written by Marco Tarquinio, director of the newspaper owned by the Italian episcopal conference.
Responding to some letters from readers, Tarquinio praised the president of the IOR not only for his "professional expertise, his dedication and generosity in resolving open problems in a transparent way by looking always to a greater good," but also because "his constant, delicate, and primary thought has been and is for Pope Benedict."
No one will argue that texting while driving can be a major source of driver distraction, leading to an increasing number of accidents every year.In fact, at least 38 states have adopted some form of “texting while driving” ban.And motorists who get into accidents because that text simply couldn’t wait should probably expect their digital distraction to land them in court.But what about the person on the other end of that text?Can he or she be held at fault?
That was the novel issue being debated in a first-of-its-kind case unfolding recently in a New Jersey courtroom.David and Linda Kubert were injured in a September 21, 2009 auto accident with 19 year-old Kyle Best.Best had clocked out of his job at a local YMCA at 5:41 p.m.; his pickup truck crossed the yellow line and struck the motorcycle on which the Kuberts were riding at 5:49 p.m.Both husband and wife were severely injured in the crash and each would lose a leg as a result.Best was charged with careless driving, improper use of a cellphone, and failure to stay in his lane.He pleaded guilty to the counts and was fined, given a probated sentence, and ordered to speak at 14 local high schools about the dangers of texting while driving.In the resulting civil lawsuit, Best testified in a deposition that he didn’t know exactly where his truck was on the road because he was distracted by a text he had just received.Best’s cellphone records were subpoenaed.They revealed that on that day, Best had exchanged a total of 62 text messages with his 17 year-old girlfriend, Shannon Colonna (30 from Best to Colonna, and 32 from Colonna to Best).Right before the accident, the records showed that Best texted his girlfriend at 5:47:56 p.m., she replied at 5:48:23 p.m., and he responded at 5:49:07 p.m.
The lawyer for the Kuberts, Stephen “Skippy” Weinstein, decided to add Ms. Colonna as a defendant to the lawsuit on the novel theory that she was “electronically present” in Best’s vehicle, that she knew or should have known that he would be driving, and that she owed third parties a “duty of care” to prevent Best from getting into an accident.The attorney analogized this to the criminal justice system’s use of “aiding and abetting” charges against third parties.The Kuberts also made the argument that as a matter of public policy, senders of texts that distract drivers should share in the blame for any resulting accident.They pointed to a bill introduced earlier this year in the New Jersey legislature that would create an inference that illegal use of a cellphone amounts to reckless driving.The proposed legislation would also increase the penalties for texting or talking on a cellphone while driving.
But should a person who texts someone be held legally responsible for that person’s distraction and any resulting accident?Can the legal system assume clairvoyance on the part of a message sender—that the sender is somehow aware that the message recipient is doing something else at the exact moment he reads the text, such as driving, operating heavy machinery, or even performing surgery?Colonna testified in her deposition that she didn’t know whether her boyfriend was driving at the time.Her lawyer, Joseph McGlone, also pointed out that when the crash occurred, Best was typing a text, not reading one from Colonna.McGlone argued that it would be both impractical and unfair to impose a duty on the texter, since she has no control over when, where, or how a recipient would read and respond to a text.“Quite simply,” he says, “once the message sender transmits an electronic message, it is the message receiver’s responsibility to read it at the appropriate and safe time.”
That makes perfect sense.Whether it is an incoming phone call, text message, Facebook update, or whatever form of communication, the sender should have every right to expect the recipient to exercise common sense in reading, listening to, or reacting to that message.If I was careless enough to open and read my “snail mail” while going 65 mph down the freeway, how can I or anyone else blame the person who sent me that mail for an accident that I later get into?
Fortunately, N.J. State Superior Court Judge David Rand agrees.He dismissed the claims against Ms. Colonna, saying it is reasonable for text message senders to assume that recipients will behave responsibly.He also observed that drivers today are bombarded with all sorts of distractions, including GPS devices and signs along the road, and that “were I to extend this duty to this case, in my judgment, any form of distraction could potentially serve as the basis for a liability case.”Hopefully, any other judges encountering similar attempts to broaden the scope of liability will follow Judge Rand’s example and keep this Pandora’s box that is our wired world shut.
Memorial Day was originally designated as the 30th of May, but starting in 1971 it has been held the last Monday in May creating a convenient 3-day weekend. Memorial Day is observed today as a public holiday dedicated to the memory of the fallen who died in service to their country in wartime. Its origin dates to the terrible War Between the States. The day was actually inaugurated in 1868 as a holiday on which graves of Civil War veterans serving the Union were decorated. The South did not recognize the day as such, but set aside separate days on which to decorate graves belonging to its Confederate veterans. Indeed, organized women’s groups in the South had been decorating graves even before the end of the Civil War. Ironically the last Confederate Widow, Alberta S. Martin actually died on Memorial Day, 2004 in Alabama.
The word “memorial” (serving to help people remember some person or event) is ignored too often on Memorial Day by those of us who are the direct beneficiaries of thousands of men and women, who bore the ultimate sacrifice. It is perhaps a hard thing to come to grips with the fact that it is the willing sacrifice of life that has secured for us our blessed freedoms, and continues to do so every day. The least that we should do is to actively remember those who gave their all—our ancestors, family members, neighbors and loved ones who served in uniform and died in service defending and advancing our way of life. Traditionally we are invited each year on Memorial Day to do the following: to visit cemeteries and place flags or flowers on the graves of fallen heroes; to attend memorial services and other public events; to fly the U.S. Flag at half-mast until Noon; to observe moments of silence for special reflection and remembrance; to renew pledges of support and aid to the widows and orphans of veterans, as well as to disabled veterans; and to salute the fallen and/or to play Taps in their honor (Taps is a bugle call written during the Civil War, which dates to 1862 and was used by both sides).
Memorial Day of course has its counterpart in other nations, and amongst the Western nations in particular there is a very similar ethos surrounding the honoring of the dead, who died for freedom and the safety of their homeland. One of the most famous poems of remembrance was written by Lieutenant Colonel John McCrae, MD (1872-1918), Canadian Army called “In Flanders Fields” and written in 1915. A beautiful response poem was written by Moina Belle Michael (1869-1944), a native Georgian and American professor, called “We Shall Keep The Faith” written in 1918. Moina Michael became known as the Poppy Lady after she conceived of the idea of using poppies (based on the poem by McCrae) as a symbol of remembrance for those who had served in World War I. A U.S. Postage Stamp was even issued in her honor. Together the two poems do much to bring to mind the importance of Memorial Day, its meaning and why the day matters so much.
John McCrae in his third stanza writes: “To you from failing hands we throw/The torch; be yours to hold it high. /If ye break faith with us who die/We shall not sleep, though poppies grow/ In Flanders fields.” Moina Michael writes this rejoinder in the first stanza of her poem: “Oh! You who sleep in Flanders Fields, /Sleep sweet—to rise anew! /We caught the torch you threw/And holding high, we keep the Faith/With All who died.” And in the third stanza Moina Michael refers to that one thing all soldiers and those who remember them ask and must reaffirm every Memorial Day and in all the days between, and that is that none of those who died shall have died in vain: “Fear not that ye have died for naught;/We’ll teach the lesson that ye wrought/In Flanders Fields.” It is up to us from generation to generation to teach the lesson wrought as it were, of life and blood and treasure, that so far has kept the Torch of Liberty burning bright in the heart of all true patriots. The lesson reduced to its core is that Freedom isn’t free. God bless those who died for it and those who fight for us still.
Wesley Allen Riddle is a retired military officer with degrees and honors from West Point and Oxford. Widely published in the academic and opinion press, he serves as State Director of the Republican freedom Coalition (RFC) and is currently running for U. S. Congress (TX-District 25 in the Republican Primary. He is also author of two books, Horse Sense for the New Millennium (2011), and The Nexus of Faith and Freedom (2012). Both books are available on-line at http://www.wesriddle,net/ and from fine bookstores everywhere. Email:
Here in RockwallCounty, there are a number of judicial races guaranteed to have an impact for years to come.Traditionally, “down ballot” races like these for judicial office tend to attract less voter attention than more highly-publicized races.Yet, in many ways, the outcome of a judicial election can have a more direct and far-reaching effect on the lives of local voters.All too frequently, such races receive scant media attention and everyday voters lack sufficient information to make an informed choice.Lawyers have somewhat more information to go on, based on professional experience in front of a judge or judicial candidate, but even attorneys often have to seek out additional facts before deciding.
Starting locally, Judge Brett Hall, the incumbent presiding judge of RockwallCounty’s 382nd Judicial District Court, is unopposed in the May 29 Republican primary and will not face a Democratic candidate in the general election.Judge David Rakow, judge of the new 439th Judicial District Court, and Judge J. Brian Williams of the Rockwall County Court at Law, are similarly unopposed.All have done fine jobs of administering justice and managing steadily growing dockets as Rockwall’s population and commercial development continues to expand.
On the 5th District Court of Appeals, RockwallCounty voters have a more difficult task.In the race for Chief Justice of the appellate court (which handles civil and criminal appeals for Dallas, Collin, Hunt, Grayson, Kaufman, and Rockwall counties), incumbent Chief Justice Carolyn Wright—who hails from Rockwall County—is unopposed in both the primary and the general elections.Likewise, incumbents Justice Jim Moseley in Place 5, Justice Molly Francis in Place 10, and Justice Elizabeth Lang-Miers in Place 13 all have no opposition in the primary.Penny Phillips has filed for the Place 5 Democratic primary and will go up against Justice Moseley in November.For incumbent Justice Robert Fillmore in Place 12, it is a case of déjà vu.Unopposed in the Republican primary, Justice Fillmore has drawn a familiar general election opponent, a Dallas solo practitioner named Lawrence Praeger, running in the Democratic primary.In 2010, Justice Fillmore dispatched Mr. Praeger handily, and the 2012 Judicial Poll conducted by the State Bar of Texas gives a sense of why: Fillmore is a respected jurist who garnered a plurality of the vote in that poll.In the Place 11 race, Justice Douglas Lang is the Republican incumbent who has served 10 years on the appellate bench.Justice Lang has personally authored over 1100 judicial opinions, and served on panels deciding more than 4700 cases.He is unopposed in the May 29th primary but looming ahead in the November general election is a showdown with Democratic challenger Tonya Holt, a former Assistant Attorney General and in-house counsel with over 17 years of experience.
Place 9’s Republican primary race pits incumbent Justice Martin Richter, who is seeking his third term on the Court of Appeals, against challenger David Lewis. Justice Richter came to the appellate bench after a distinguished career serving as first a Dallas county court at law judge and then a civil district court judge.The 64 year-old Richter has had 21 years of judicial experience, unlike his 61 year-old opponent, who has no judicial experience and has already made 2 previous unsuccessful runs for office.It hardly comes as a surprise that Justice Richter gained both the Dallas Morning News’ endorsement and a dominating finish in the State Bar Judicial Poll, scoring more than both his primary opponent and the Democratic challenger combined.The winner of the Richter/Lewis primary will face Democratic challenger David Hanschen in November.Hanschen, a controversial former Dallas family court judge, made a losing bid for the Dallas Court of Appeals in 2008.
But it’s the race for the Place 2 spot on the Dallas Court of Appeals being vacated by retiring Justice Joe Morris that has attracted the most crowded field.Five candidates are vying for the Republican slot: former Dallas county-court-at-law and civil district court Judge David Evans; former criminal court judge Jennifer Balido; former family court judge Jeff Coen; experienced appellate specialist Bill Whitehill; and another seasoned appellate lawyer, Kevin Keith.This race offers an abundance of well-qualified candidates and is likely to result in a runoff election.Both the 54 year-old Whitehill and 57 year-old Keith bring a wealth of appellate experience as practitioners, while Coen and Balido tout their respective family court and criminal court experience.In what it termed a “very close call,” the Dallas Morning News gave its endorsement to David Evans, who claimed a narrow victory as well in the State Bar of Texas Judicial Poll (a 99 vote edge over his closest challenger, Bill Whitehill).Evans points to his 12 year judicial record, his leadership on the bench (where his peers chose him to be the presiding judge as well as the administrative district judge), his record of cost-cutting measures, and his acknowledgement by members of the bar (who voted him Judge of the Year in 2005).But he’s also quick to point out his bona fides as a conservative Republican, distinguishing himself in his campaign literature from opponents like Kevin Keith and Bill Whitehill (according to the Evans campaign, Dallas County voting records reflect that Keith voted in 4 Democratic primaries, including 2008, and that Whitehill voted in the 2008 Democratic primary).Democrat Dan Wood awaits the eventual winner of the Republican primary.
On the state’s highest court, the Supreme Court of Texas, there are equally vigorous contests.Longtime Justice Nathan Hecht, in the Place 6 slot, may have no Republican primary challenger, but an unheralded Democratic candidate has filed a lawsuit to take him off the ballot, claiming procedural deficiencies in Justice Hecht’s nominating petitions.In the Place 2 race, incumbent Justice Don Willett faces a familiar foe from his inaugural 2006 term, attorney Steve Smith.The 50 year-old Smith is perhaps best known for successfully suing the University of Texas in the Hopwood reverse discrimination case, and riding that notoriety into a winning bid to fill an unexpired term on the Texas Supreme Court from 2002–2004.However, Willett has gained respect for his scholarship and independence during his term, while Smith is looking more and more like a perennial candidate; this marks the fifth time he has run for the Supreme Court.In the race for Place 4, embattled incumbent David Medina has struggled to raise money for his primary battle against two challengers: 53 year-old John Devine, a former civil court judge in Houston perhaps best known for his refusal to remove the Ten Commandments from his courtroom during the 1990s; and attorney Joe Pool, Jr. from Dripping Springs.Medina is no stranger to controversy or to “Legally Speaking” readers.Since his 2006 election, Justice Medina was indicted by a HarrisCounty grand jury after a suspicious fire at his home.Charges that he fabricated evidence were later dismissed by the HarrisCountyD.A.’s office, a move that attracted controversy and the ire of members of the grand jury that had indicted him.Earlier “Legally Speaking” columns chronicled this troubling episode.
Take the time to inform yourself about the judicial races.And regardless of how you vote, please vote on May 29.
The French and Greek elections have made the “austerity” programs favored by Angela Merkel and other sensible policymakers seem politically highly unattractive (never mind that the spending cuts proposed by the austere have almost universally not happened, while tax increases have been onerous). Consequently, Keynesians worldwide are recommending further bouts of government spending combined with partial repudiation of debt. Like the disgraceful monetary policies also peddled by these people, these recommendations amount to the wholesale looting of savers in favor of profligate borrowers and bloated public sectors. It’s worth reminding ourselves of the long-term consequences of such folly.
One of John Maynard Keynes’ principal crimes against sound economics was his demonization of savers. Calling for the “euthanasia of the rentier,” he proposed the paradox of thrift, whereby savers in a recession are supposed to damage the ability for the economy to recover by depressing aggregate demand. Like Keynes’ equally spurious calls for increased government spending as a stimulus, this demonization of savers has been used by intellectually dishonest politicians of the left and squishy center to justify policies that have the effect of robbing savers, whether through inflation, excessive taxation or repudiation of government debt.
In reality, saving is the essential precondition for capital investment, and therefore for economic growth. Societies with inadequate savings cannot generally pull themselves out of poverty, however abundant their natural resources. You only have to look at the track record over the last half century of Asian societies, which mostly have a high cultural propensity to save, compared with Latin American societies that do not. Whereas countries like Argentina or Brazil were richer than Korea and Taiwan, little poorer than Singapore or Japan and far richer than China in 1960, today the comparison has reversed.
One of my major objections to the activities of the World Bank and the IMF is their downgrading of the importance of saving. Those institutions frequently propose high taxes on investment returns, and seem to be under the impression that the only way to start a new company is with a government grant or an investment by a major international private equity fund, such the World Bank’s offshoot the International Finance Corporation. As the Solyndra example in the United States showed, the government is an exceptionally bad venture capitalist. In addition, it can be stated with considerable confidence that enterprises that require $500 million up-front investments before having made a profit or even significant revenue are very unlikely to succeed in the long term.
Middle class saving is the key to enterprise formation in any society. Even when venture capital companies exist, as in the United States, they rapidly get drawn away from genuine venture capital towards the much easier money available in leveraged buyouts. Mitt Romney’s Bain Capital, for example, began by providing genuine venture capital to Tom Stemberg’s Staples, but rapidly discovered that most such investments were too small and the returns too slow, and switched to leveraged buyouts. The vast majority of new ventures, innovative or not, depend on the savings of their founders and their founders’ network of relatives, friends and business contacts, to get going before institutional venture capitalists will look at them.
Nurturing middle class savings is thus the most important task of government. John Locke said “Government has no other end, but the preservation of property,” and he didn’t overstate the position by much. Quite my most gratifying banking experience was designing a simple bond law for the Republic of Macedonia, which allowed 800,000 Macedonian savers, whose savings had been expropriated ten years earlier by the former Yugoslavia, to get most of their savings back immediately. The country’s improvement in economic performance following the implementation of that law has been marked, and extremely pleasing.
Worldwide monetary policies, in place now for almost four years, are uniquely unkind to savers. By forcing interest rates, both short-term and long-term below the rate of inflation, they force savers to receive a negative real return or take large risks to achieve a positive one. That’s the reason for the success of speculative bubbles like that in Facebook shares, which have created a market capitalization larger than General Motors off a stream of advertising revenue only 4% the size of the company’s market capitalization. One commentator described the Facebook IPO as the largest “pump and dump” in stock market history. It has a lot of company for that distinction (when normed by contemporary gross domestic product). Certainly the South Sea Company and the Mississippi Company, those twin British and French bubbles of 1719-20, had more commercial reality to them. After all Robert Knight, the South Sea Company cashier, who absconded to Antwerp with the company’s records, appeared before potential investors in a well-powdered periwig, not a hoodie!
The latest Keynesian solution to the unwillingness of debt markets to finance further bouts of government spending is to spend yet more money, but to finance it by monetary expansion and partial repudiation of debt. This would get debt levels down, but would close the markets to further debt issues, since investors are not so foolish as to lend to borrowers who have already defaulted on their obligations. Even Argentina, which has enjoyed a remarkable economic boom since defaulting on its debt in 2005, has not been able to return to the capital markets, much to the surprise of its leaders. Thus this approach, if undertaken directly, is unlikely to lead to success.
There is however an alternative approach, which currently appears more and more attractive to distraught Keynesians, and that is financial repression. Under this technique, which was most successfully applied by the British government to work down its excessive debt level at the end of World War II, regulations are used to prevent domestic savers from moving their money into international assets. Monetary authorities are then encouraged to promote inflation, to the extent that domestic interest rates are kept below the rate of inflation. Using this technique, governments can run deficits for a generation or more, while the value of their debts is reduced by inflation. Add in a stiff income tax, to penalize further the nominal interest returns of savers foolish enough to buy government debt, and the government’s debt position can be retrieved quite nicely over a 20-30-year period – at the cost of the nation’s savings and the rest of the economy. Needless to say savers, especially those fool enough to believe in the government’s promises to maintain a sound currency, were robbed blind and ended their lives impoverished.
Repression is clearly in the sights of the left at this time – after all, savers generally tend to vote for the right. The idea of looting their political opponents to increase public spending, while having that looting proceed invisibly, so that their fingers are not on the weapon, is attractive to leftist politicians everywhere – it is in a sense THE central flaw of democracy. Of course, the most blame should attach to those politicians like Harold Macmillan, Richard Nixon and, it increasingly seems likely, David Cameron, who rely on savers’ votes to get elected and then betray their own supporters.
Fiscal austerity is needed, but as France and Greece have shown, it is unlikely to win its proponents much electoral support. That is particularly the case if, as in Britain the austerity consists primarily of tax increases, so that the economy declines while the deficit remains unaffected by the apparent austerity. In any case fiscal austerity alone is not enough. If it is not combined with sound monetary policy, savings rates will decline and the savings pool itself will be drained by negative real interest rates. In the long term, that can only lead to impoverishment; in a globalized world, the skills of Western employees are not so superior to those in emerging markets that they can expect to retain higher living standards without a healthy pool of capital to accompany them.
The need now is thus for a revolution in monetary policy, that raises the risk-free interest rate well above the rate of inflation, and allows savers at last to receive a real return on their money without investing in the likes of Facebook. It probably won’t happen until inflation gets seriously out of hand, so my advice to savers is this: make sure a substantial percentage of your money is in gold, in order that you will survive the painful burst of inflation that is needed before global monetary authorities are brought to their senses.
(Originally appeared in The Bear's Lair.)
Martin Hutchinson is the author of "Great Conservatives" (Academica Press, 2005)—details can be found on the Web site —and co-author with Professor Kevin Dowd of “Alchemists of Loss” (Wiley – 2010). Both now available on Amazon.com, “Great Conservatives” only in a Kindle edition, “Alchemists of Loss” in both Kindle and print editions.