Student Loan Bubble

Here is a perfect example of the law of unintended consequences. The original problem is that college education is expensive. The government intends to solve this problem. The "solution" is to provide easy loans to students so that they don't have to worry about paying tuition while enrolled. This increases demand for enrollment. College administrators, being rational actors in a free market, increase tuition accordingly.

Note that all of the incentives are in favor of initiating the loan. Lenders love it because the loans are non-bankruptable and they get their fees up front. Colleges love it because they are seeing both increased enrollment and increased tuition rates. They now have extra money to spend on all the great programs and projects they have been dreaming about. And besides, high tuition rates bring prestige to the college, and that is always a good thing. Government bureaucrats love it because they get to be the heroes. Parents love it because they get to enroll their child without having to worry about affordability. Even students love it initially.

But eventually the loan is just a loan and not a grant. It must be repaid. And unfortunately it must be repaid when the new graduate is just starting out in a career (assuming they have graduated and were wise enough to actually prepare for a career). Even without student loan debts, this is a period of increased financial pressure due to housing, transportation, food and medical costs now being borne directly by the graduate.


Screw U. Government inflated the college loan bubble, but Obama isn’t fixing it - Glenn Harlan Reynolds

The real problem is that we’ve been running a higher education bubble, one that -- like the real-estate bubble -- has been pumped up by cheap government money. Since 1999, student loan debt has increased by 511%, while disposable income has increased by only 73%.

That’s because when the government subsidizes something, producers respond by raising prices to soak up as much of the subsidy as they can. College is no exception. Tuition has been increasing much faster than disposable income, and families -- believing that a college education is a can’t-lose investment, much as they used to think houses were -- have been making up the difference with debt. After all, we’re told, student loan debt is “good debt,” because a college degree guarantees more earnings.

Tell it to the Occupy Wall Street protesters, many of whom note that they’re deep in debt for fancy degrees that didn’t get them jobs.

The problem is, “college” isn’t an undifferentiated product. Companies can’t hire enough mechanical engineers, but there’s no bidding war for majors in Fine Arts or Women’s Studies, degrees that cost just as much, but deliver a lot less in terms of employment. In an economically rational market, it would be harder to borrow money to finance fields of study that were unlikely to produce enough income to pay back the loans. But since the federal government subsidizes everything -- and makes student loans un-dischargeable in bankruptcy -- there’s no incentive for lenders to care, and even less incentive for colleges and universities to care. They get their money up front, after all -- just like the people who wrote the subprime loans that fueled the housing crisis.

Chart of the Day: Student Loans Have Grown 511% Since 1999 - Daniel Indiviglio

Obviously the number of students didn't grow by 511%. So why are education loans growing so rapidly? One reason could be availability. The government's backing lets credit to students flow very freely. And as the article from yesterday noted, universities are raising tuition aggressively since students are willing to pay more through those loans.

This student loan growth sure looks unsustainable. But it's hard to see how this bubble's inevitable pop might look. Ultimately, it might look more like a balloon slowly deflating, if a large portion of college graduates decide to strategically default on their debt over time.

All this college debt could put the U.S. on a slower growth path in the years to come. As Americans grapple with high student loan payments for the first few decades of their adult lives, they'll have less money to spend and invest. All that money flowing into colleges and universities is being funneled away from other industries where it would have been spent in future years. Of course, this would be a rather unfortunate irony: higher education is supposed to enhance a nation's growth, but with such an enormous debt burden, graduates might not be able to spend and invest enough to allow that growth to occur.

Some great charts at the Federal Reserve Bank of New York.

Rather than rack up a bunch of debt, maybe just go to MIT for free.

More free online resources: 12 Dozen Places To Educate Yourself Online For Free

State Budget Troubles

Rhode Island: Athens of America? - Walter Russell Mead

Rhode Island is looking more and more like Greece, and not in a good way. That is one message of this important piece by Mary Williams Walsh in the New York Times. Years of blue social policy have wrecked local and state government finance in the country’s smallest state, and now the bills are coming due. Services are being cut to the bone and elderly retirees are losing money they thought was secure.

In Rhode Island, it is Democrats, not nasty union-hating Republicans, who are doing the dirty work. Democratic mayors are telling their unions that there isn’t any money — not because they are vicious corporate stooges who hate working people and want to see them suffer, but because There. Isn’t. Any. Money.

...

Rhode Island politicians, government and union officials have done everything possible to conceal the true state of affairs from the voters, the bondholders, retirees and even themselves. Unrealistic assumptions about rates of return helped hide the ugly truth about the looming pension meltdown — and anybody who tried to raise the alarm about the coming crisis was hooted down as an enemy of the workers. Even now the true blue firing squads are assembling to shoot the messenger; Mary Williams Walsh can expect angry push back from a whole sector of American political life that thinks this whole problem will go away if we tax the rich, clap our hands and all say together, “I believe in government”.

But “objectively”, as our Marxist friends would say, the union leaders and their political chums were the worst enemies of the workers: they told state workers that their benefits were secure even as it became increasingly obvious that, as a matter of arithmetic, they were not.

Let’s be crystal clear about this. To tell a 50 year old pretty lies about the soundness of a pension plan is one of the most wicked and irresponsible things you can do without actually shedding blood; people who believe these phony promises will not make the extra savings, work the extra years or otherwise take steps to protect themselves until it is too late. Telling those pretty lies is exactly what Rhode Island’s establishment has been doing for some time; it is what Ostrich Party legislators, trade unionists, journalists and governors are still doing across much of the country.

AP Newsbreak: Brown to seek sweeping pension cuts - Juliet Williams

Gov. Jerry Brown will propose sweeping rollbacks to public employee pension benefits in California, including raising the retirement age to 67 for new employees who are not public safety workers and requiring state and local employees to pay more toward their retirement and health care, according to a draft of the plan obtained Wednesday by The Associated Press.

The governor will also propose Thursday a mandatory "hybrid" system in which future retirees would get their retirement from a guaranteed benefit and a 401(k)-style plan subject to market whims. For employees with at least 30 years of service, retirement benefits would aim to replace about 75 percent of an employee's salary through retirement funds and Social Security, according to the draft.

...

A report last year by the Stanford Institute for Economic Policy Research said that retirement funds for 2.6 million California teachers, state workers and university employees together faced long-term gaps of over $500 billion. The California Public Employees' Retirement System has $75 billion in unfunded future pension liabilities, and the state is on the hook for an estimated $51.8 billion in unfunded retiree health care costs.

National Banking Troubles

Monster Prediction From BofA: Another US Debt Downgrade Is Coming In Just A Few Weeks - Joe Weisenthal

The “not-so-super” Deficit Commission is very unlikely to come up with a credible deficit-reduction plan. The committee is more divided than the overall Congress. Since the fall-back plan is sharp cuts in discretionary spending, the whole point of the Committee is to put taxes and entitlements on the table. However, all the Republican members have signed the Norquist “no taxes” pledge and with taxes off the table it is hard to imagine the liberal Democrats on the Committee agreeing to significant entitlement cuts. The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan. Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes

Eurozone summit - despair and backbiting in the corridors of power - Bruno Waterfield

Just when the eurozone governments thought it could not get worse for Europe's single currency, it did.

Shell-shocked EU finance ministers meeting in Brussels on Saturday were already reeling from the worst Franco-German rift for over 20 years and a fractious failure to resolve the problems that have brought Greece, and the euro, close to the brink.

But then a new bombshell hit as a joint report by the EU and the International Monetary Fund (IMF) warned that, without a default, the Greek debt crisis alone could swallow the eurozone's entire €440 billion bailout fund - leaving nothing to spare to help the affected banks of Italy, Spain or France.

An EU already rocked by divisions between France and Germany over how to increase the "firepower" of the European Financial Stability Facility (EFSF) in order to save the wider eurozone from Greek contagion now faced the prospect of losing it all in one go.

As dark-suited finance ministers contemplated the pains au chocolat laid out on their desks alongside their talking points and position papers, Jan Kees de Jager, the Dutch finance minister, told colleagues: "We've got to get real. People are talking about new defences but with one gulp the whole €440 billion could be gone, leaving the eurozone with no protection at all."

Charting Europe's Toxic Debt Jack In The Box - Redux - Tyler Durden

That Europe is, and for a long time has been nothing more than one spring club loaded, and destructive Jack in the Box, just waiting to be unleashed upon the world when the conditions are most dire, is by now nothing new to regular readers: it was roughly two years ago when we presented for the first time the case of how European bank debt is not only orders of magnitude greater than American debt, but that the equity tranches is a tiny sliver in a world where one bank's assets are another bank's liabilities, and any modest write down of debt would result in a cascading domino effect which wipes out billions and possibly trillions in "book value."

See the linked graphic.

The Economy - October 2011

This is just the beginning. Things are going to get worse before they get better. Americans need to follow some good old-fashioned advice:

• If you're in debt, pay off your debts.
• If you're out of debt, do not borrow.
• If you're having trouble making ends meet, reduce your overhead.
• If you're unemployed, acquire some marketable skills asap, or start your own business. Do not rest until you get some cash-flow.
  
• If you're earning money, set some aside for the future.
  
• If you're going to college, pay as you go. Under no circumstances enroll in a college you cannot afford. And while you're there, gain some knowledge that will get you started on a rewarding career.
• Have some self-respect: Do not depend on the government to take care of you, and don't mooch off of friends and relatives.
• Create wealth through your own productive labor (including mental labor). Labor is only productive if someone is willing to exchange cash or services for it, or it increases your personal capital.
• Don't vote for politicians who promise to give you something. They are con-artists and thieves.

A long, steep drop for Americans' standard of living - Ron Scherer

What has led to the most dramatic drop in the US standard of living since at least 1960? One factor is stagnant incomes: Real median income is down 9.8 percent since the start of the recession through this June, according to Sentier Research in Annapolis, Md., citing census bureau data. Another is falling net worth – think about the value of your home and, if you have one, your retirement portfolio. A third is rising consumer prices, with inflation eroding people's buying power by 3.25 percent since mid-2008.

Scary Budget Fact of the Day - Peter Suderman

The United States will officially pass the 100 percent debt-to-GDP line on Halloween. Via Zero Hedge:

October 31, elsewhere known as Halloween. Yes, ladies and gentlemen: All Hallows E'en will be doubly scary this year: for the first time since World War II, US debt will officially surpass GDP on Halloween 2011.

Student Loan Bubble To Exceed $1 Trillion: "It's Going To Create A Generation Of Wage Slavery" And Another Taxpayer Bailout - Tyler Durden

USA Today reports once again on one of its favorite subjects, student loans are set to surpass $1 trillion in total notional for the first time in history on what appears to be relentless demand and interest for this cheap form of educational financing, making this debt burden the single largest form of consumer debt, well bigger than outstanding credit card debt, and smaller only compared to mortgage debt. "The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York. Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what's owed on home loans and credit cards."

...

So... debtors know it's a bubble, lenders know it's a bubble, everyone knows it's a bubble, yet it is growing faster now than ever before.

The Teleprompter

Even More Fast and Furious

‘Fast & Furious’: How a botched operation spawned fatal results - Jerry Seper

Agent Carlos Canino, ATF’s acting attache to Mexico, angrily told the committee that “walking guns” was not a recognized investigative technique, adding that hundreds of weapons ultimately went to ruthless criminals in Mexico.

“It infuriates me that people, including my law enforcement, diplomatic and military colleagues, may be killed or injured with these weapons,” he said, adding that “never in my wildest dreams” would he have thought that ATF agents would allow guns to be walked to Mexican criminals.

Noting that Fast and Furious ended with the killing of a U.S. Border Patrol agent, one high-ranking former Border Patrol official described the operation as “scary.”

“The only thing I can figure is that the politicians in the upper management of the agencies involved decided it would work,” the official told The Washington Times on the condition of anonymity for fear of being reprimanded. “They sure as hell couldn’t have run it by the agents in the field who would have known what would happen.”

...

Mr. Newell testified that ATF had good intentions when it began the operation in 2009 and that it was not its purpose to permit the transfer of firearms to Mexico. He said he would do such an investigation again with some changes.

Emphasis added.

Socialized Medicine

Annals of Government Medicine - John Hinderaker

An investigation reveals that under socialized medicine in the U.K., the death panel process has been delegated to hospital staff who designate patients “do not resuscitate” without the knowledge of the patient or his family and occasionally through clerical error:

Elderly patients are being condemned to an early death by hospitals making secret use of “do not resuscitate” orders, an investigation has found.

Economic Production

How Government Spending Impoverished Us All - Tyler Durden

A tonne of copper can't be consumed until it is produced. But the government can spend money that it doesn't have. So government spending can't be part of what was produced by a country unless it has been covered by taxation--then at least the wealth was produced prior to consumption. If the spending is empowered by debt creation, then no production was involved.

It's like measuring the wealth of a family by counting the money they spend, with no regard as to whether they are piling up credit card debt.

College and Debt

Higher Education Bubble Update - Glenn Reynolds

Here’s what [Florida Gov. Rick] Scott said:

You know, we don’t need a lot more anthropologists in the state. It’s a great degree if people want to get it, but we don’t need them here. I want to spend our dollars giving people science, technology, engineering, math degrees. That’s what our kids need to focus all their time and attention on. Those type of degrees. So when they get out of school, they can get a job.

Even at Mother Jones we hear: “Scott’s reasoning could attract a lot of Floridians.” Ya think? But there’s this, too: “Is a degree’s intrinsic value really reducible to its marketability?”

After decades of selling college as an “investment” — and pricing it accordingly — it’s going to be hard for the higher education establishment to pivot to a college-as-personal-fulfillment argument. If it’s the latter, it’s a consumption good, priced on a par with a Porsche or Ferrari. Those shouldn’t be financed by debt, or bought by 18-year-olds. If college liberal-arts degrees, on the other hand, are to be sold as a public good, benefiting society so much that society should pay the freight, then (1) Society should have a much bigger say in what’s being taught; and (2) It might be nice to see some actual, you know, evidence of that. Also, students should be warned up front that they’ll be spending 4 years (or 5, or 6) of their lifespan doing something that’s good for society. The trust-funders may be okay with that, but that’s not a lot.

Happy Columbus Day

Happy Columbus Day - Glenn Reynolds

HAPPY COLUMBUS DAY: Many in the West will demonstrate their fierce originality and intellectual independence today by condemning Christopher Columbus using the same shopworn cliches they used last year. For those of a different bent, I recommend Samuel Eliot Morison’s Admiral of the Ocean Sea: A Life of Christopher Columbus, which takes a somewhat different position. Here’s an excerpt:

At the end of 1492 most men in Western Europe felt exceedingly gloomy about the future. Christian civilization appeared to be shrinking in area and dividing into hostile units as its sphere contracted. For over a century there had been no important advance in natural science and registration in the universities dwindled as the instruction they offered became increasingly jejune and lifeless. Institutions were decaying, well-meaning people were growing cynical or desperate, and many intelligent men, for want of something better to do, were endeavoring to escape the present through studying the pagan past. . . .

Yet, even as the chroniclers of Nuremberg were correcting their proofs from Koberger’s press, a Spanish caravel named Nina scudded before a winter gale into Lisbon with news of a discovery that was to give old Europe another chance. In a few years we find the mental picture completely changed. Strong monarchs are stamping out privy conspiracy and rebellion; the Church, purged and chastened by the Protestant Reformation, puts her house in order; new ideas flare up throughout Italy, France, Germany and the northern nations; faith in God revives and the human spirit is renewed. The change is complete and startling: “A new envisagement of the world has begun, and men are no longer sighing after the imaginary golden age that lay in the distant past, but speculating as to the golden age that might possibly lie in the oncoming future.”

Christopher Columbus belonged to an age that was past, yet he became the sign and symbol of this new age of hope, glory and accomplishment. His medieval faith impelled him to a modern solution: Expansion.

Targeting Anwar al-Awlaki

The Administration’s Strange Reasoning on al-Awlaki - John Yoo

Let’s give partial credit where it is due. Apparently the Obama administration argues that al-Awlaki was a legitimate target because he is a member of an enemy engaged in hostile conduct against the United States. At least Obama has figured out that the war on terrorism is in fact a war, and that it is not limited just to Afghanistan. We should be thankful that Obama officials have quietly put aside the arguments they made during the Bush years that any terrorist outside the Afghani battlefield was a criminal suspect who deserved his day in federal court. By my lights, I would rather the Obama folks be hypocrites in favor of protecting the national security than principled fools (which they are free to be in the faculty lounges both before and after their time in government).

More EU Crisis

Europe on the Brink - Megan McArdle

I haven't been blogging much about Europe because I felt like I was mostly repeating myself. Europe is not an optimal currency zone. It opted for monetary union without the fiscal or labor market integration that make America's sprawling currency zone work. So far, the various governments have failed to mount a really credible coordinated response. I don't see how the thing can hold together, except that Jesus, it will be hell if it all falls apart.

But it's probably worth interrupting your regularly scheduled unemployment-and-kitchen-blogging to point out that it all really seems to be coming to a head:

In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone's mind: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008.... What we don't know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems."

The Sheriff's Press Conference

Sheriff Paul Babeu: “And You Should Ask Yourself, My God, What Have I Done” - Robert Farago

Some may ask what’s the issue here: All of this gunfire is happening in run-down small towns in a country that’s always been a mess. Sheriff Babeu clearly lays out why Operation Fast and Furious isn’t just Mexico’s problem, it’s a problem for all of us.

Every time there’s a shooting or there’s a crime committed on American soil, the first question SHOULDN’T be, ‘My God, were these the guns that our own government gave these criminals.’

Bottle Lights

The Reasonable Press

Has the press ever been "reasonable" in the past? Have they ever eased up on Republican administrations?

• Watergate
• Iran/Contra
• Scooter Libby

Or how about the highly vaunted public's "right to know"?

• Terrorist Finance Tracking Program
• Terrorist Surveillance Program

Except for a few bravely inquisitive reporters, they suddenly seem to have decided "There's nothing to see here folks. Move along."

Why Obama’s Flacks Bullied a CBS Reporter - Keith Koffler

President Obama’s press office bullies are in high gear, a sure sign that there are legs to the story about Attorney General Eric Holder’s potential perjury before the House Judiciary Committee.

CBS reporter Sharyl Attkisson is doggedly pursuing the case, reporting that Holder knew about the Fast and Furious operation well before he said he did under oath last May, when he testified to the panel he’d just learned of it “over the last few weeks.” In fact, it appears, he was told about Fast and Furious in 2010.

A Justice Department spokeswoman and White House spokesman launched at Attkisson what few people realize is a routine Obama administration tactic – attempt to quash good journalism that’s bad for Obama by intimidating reporters.

...

ATTKISSON: They will tell you that I’m the only reporter- as they told me- that is not reasonable. They say ‘The Washington Post’ is reasonable, the ‘LA Times’ is reasonable, ‘The New York Times’ is reasonable- I’m the only one who thinks this is a story, and they think I’m unfair and biased by pursuing it.

Elizabeth Warren and the Social Contract

Back in my college days I would often get caught in traffic while driving my economy car on Southern California' s freeways. During one of these traffic snarls a driver in an expensive new luxury car crept by in the left lane. It struck me as ironic that even though he was certainly traveling in style, he was stuck on the same congested roads that I was.

Upon further reflection it occurred to me that I also enjoyed many the same of the great benefits of our society as he did. Same roads. Same public schools and colleges. Same law enforcement. Same national defense. Same national parks. And yet I, like everyone else in my income bracket, had never paid a dime in income taxes. What a great country this is.

And yet, for some it is never enough. The politics of redistribution has a highly addictive quality to both the recipients and the political middle-men. The recipient of direct subsidies and material giveaways comes to expect an ever increasing level of benefits and security. The political middle-man gains a sense of self-gratification and self-importance as the ever-widening circle of recipients becomes more deeply dependent and loyal to their perceived benefactors. But it cannot go on forever. Eventually the demands outstrip the resources and promises must be broken.

But it was immoral to make the promises in the first place. The promises cannot be kept and they create false expectations in others.

And even without any direct subsidies and giveaways, it is important to remember that every U.S. resident receives a steady stream of benefits every day by just residing in this country.

Elizabeth Warren and liberalism, twisting the ‘social contract’ - George F. Will

“There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. . . . You built a factory and it turned into something terrific or a great idea — God bless, keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

...

Everyone knows that all striving occurs in a social context, so all attainments are conditioned by their context. This does not, however, entail a collectivist political agenda.

Such an agenda’s premise is that individualism is a chimera, that any individual’s achievements should be considered entirely derivative from society, so the achievements need not be treated as belonging to the individual. Society is entitled to socialize — i.e., conscript — whatever portion it considers its share. It may, as an optional act of political grace, allow the individual the remainder of what is misleadingly called the individual’s possession.

The collectivist agenda is antithetical to America’s premise, which is: Government — including such public goods as roads, schools and police — is instituted to facilitate individual striving, a.k.a. the pursuit of happiness. The fact that collective choices facilitate this striving does not compel the conclusion that the collectivity (Warren’s “the rest of us”) is entitled to take as much as it pleases of the results of the striving.

Who is Eric Holder?

Holder’s Dubious History - Andrew C. McCarthy

No one ought to be surprised by what is happening. Readers may recall my vigorous contentions that Mr. Holder’s history should disqualify him from serving as attorney general (see, e.g., here, here, here, here, here). President Obama should not have nominated him, and I urged that the Senate not confirm him. Beltway Republicans, however, rallied to Holder’s defense, and Senate Republicans dutifully joined their Democratic counterparts in overwhelmingly approving his appointment.

One of the many arguments I made was based on Holder’s record of providing misleading congressional testimony.

More Gunwalker

ATF Fast and Furious: New documents show Attorney General Eric Holder was briefed in July 2010 - Sharyl Attkisson

New documents obtained by CBS News show Attorney General Eric Holder was sent briefings on the controversial Fast and Furious operation as far back as July 2010. That directly contradicts his statement to Congress.

On May 3, 2011, Holder told a Judiciary Committee hearing, "I'm not sure of the exact date, but I probably heard about Fast and Furious for the first time over the last few weeks."

Yet internal Justice Department documents show that at least ten months before that hearing, Holder began receiving frequent memos discussing Fast and Furious.

Is CBS News Silencing Fast and Furious Reporter? - Mark Hemingway

Yesterday, CBS News investigative reporter Sharyl Attkisson told radio show host Laura Ingraham that the White House yelled and swore at her over her reporting on the Fast and Furious gunrunning scandal tied to the deaths of two U.S. law enforcement agents. Attkisson also revealed that she'd also been yelled at by the Justice Department.

Today, I called CBS News in an attempt to interview Attkisson. I was told by CBS News senior vice president of communications Sonya McNair that Attkisson would be unavailable for interviews all week. When I asked why Attkisson would be unavailable, McNair would not say.

I've also heard from a producer at another media outlet that has previously booked Attkisson that they tried to book her since she made news with the Laura Ingraham interview yesterday. They were also told that she would be unavailable.

Congressman: With Fast and Furious, administration officials might be accessories to murder - Tina Korbe

In a phone interview with The Daily Caller, Rep. Paul Gosar (R-Ariz.), a member of the House Oversight and Government Reform Committee, pulled no punches in a discussion of the implications of Fast and Furious for Obama administration officials:

"We’re talking about consequences of criminal activity — where we actually allowed guns to walk into the hands of criminals — where our livelihoods are at risk,” Gosar said in a phone interview. “When you facilitate that and a murder or a felony occurs, you’re called an accessory. That means that there’s criminal activity."

Indict Eric Holder - IBD Editorial

Scandal: A major-league pitcher was indicted for lying to Congress about steroid use. Administration memos show Eric Holder lied about what he knew about Fast and Furious and when he knew it. What's the difference?

Somewhere, Scooter Libby must be scratching his head. He was indicted and convicted simply because his recall of when a meeting occurred differed from others. He didn't lie about a gun-running operation that led to the deaths of two American agents and at least 200 Mexicans.

But Attorney General Eric Holder did, according to memos obtained by CBS News and Fox News.

They show Holder lied to Congress on May 2, 2011, when he was asked about when he knew about the Bureau of Alcohol, Tobacco, Firearms and Explosives' Fast and Furious gun-running operation. He told House Oversight Committee Chairman Darrell Issa he was "not sure of the exact date, but I probably learned about Fast and Furious over the last few weeks."

The Narrative

Once Upon a Time in America - Peggy Noonan

But this is mostly a problem for the Democratic Party at the national level, and has been since the 1980s. It reflects a disdain for the American people—they need their little stories—and it springs from an inability to understand the Reagan era. Democrats looked at him and the speeches and the crowds and balloons and thought: "I get it, politics is now all show biz." Because they couldn't take Reagan's views and philosophy seriously, they couldn't believe anyone else could, either. So they explained him through a story. The story was that Reagan's success was due not to decisions and their outcomes but to a narrative. The narrative was "Morning in America": Everything's good, everyone's happy.

Democrats vowed to create their own narratives, their own stories.

Here's the problem: There is no story. At the end of the day, there is only reality. Things work or they don't. When they work, people notice, and say it.

Would the next president like a story? Here's one. America was anxious, and feared it was losing the air of opportunity that had allowed it to be what it was—expansive, generous, future-trusting. It was losing faith in its establishments and institutions. And someone came out of that need who led—who was wise and courageous and began to turn the ship around. And we saved our country, and that way saved the world.

There's a narrative for you, the only one that matters. Go be a hero of that story. It will get around. It will bubble up.

EU Crisis

NEIN, NEIN, NEIN, and the death of EU Fiscal Union - Ambrose Evans-Pritchard

Something profound has changed. Germans have begun to sense that the preservation of their own democracy and rule of law is in conflict with demands from Europe. They must choose one or the other.

Yet Europe and the world are so used to German self-abnegation for the EU Project – so used to the teleological destiny of ever-closer Union – that they cannot seem to grasp the fact. It reminds me of 1989 and the establishment failure to understand the Soviet game was up.

Our own Chancellor George Osborne has fallen into this trap. I can entirely understand why he is calling for quick moves towards EMU fiscal union, but such an outcome is not on the table.

Repeat after me:

THERE WILL BE NO FISCAL UNION.

THERE WILL BE NO EUROBONDS.

THERE WILL BE NO DEBT POOL.

THERE WILL BE NO EU TREASURY.

THERE WILL BE NO FISCAL TRANSFERS IN PERPETUITY.

THERE WILL BE A STABILITY UNION – OR NO MONETARY UNION.

Get used to it. This is the political reality of Europe, since nothing of importance can be done without Germany. All else is wishful thinking, clutching at straws, and evasion. If this means the euro will shed some members or blow apart – as it almost certainly does – then the rest of the world must prepare for the day.