Last week, the government of Argentina decided that it wanted to own an oil company, so it took one.  Nevermind that 57% of the company was already owned by the Spanish oil company Repsol.  President Kirschner’s I am not a thug comments were not exactly comforting.

The move prompted not just an outcry by the Wall Street Journal, but a poignant counter-attack:

A better way to send a message to Buenos Aires would be for the world’s civilized countries to expel Argentina from the G-20. When its president wants to behave like a real head of state and not a thug, the country can be invited back into the club of serious nations.

The Argentine Model (Wall Street Journal)

An interesting salvo.  While it seems very unlikely that the other 19 countries in the G-20 would take the idea seriously – but they probably should.   The story of Argentina is a sad one.

100 years ago, it was on track to be one of the most prosperous nations in the world, and it is government that has kept this from happening.  In a way, Argentina was a “BRIC’ country before any of the BRICs were.  Their example should serve as a cautionary tale of the many things that might derail their futures…

Subsidiarity is a principle of governance that relates to which level of government should be involved in regulating which activities.  To simplify, the principle of subsidiarity states that no higher level of government should do what a lower level could also do adaquately.

It’s very clear that Santorum sees the family as the basic building block of society, and it is from the family that larger societal and governmental spheres extend outwards.  From your neighborhood to the federal government exists a continuum of structures.  Ideally, one’s interaction with government would be most significant at the most local level, and most tangential at the most remote level.

In the Santorum model, if a family can educate their children, then they should.  If they can not, it is to their local community that families should look.  There doesn’t seem to be any role for the federal government to play.  As you work up the food chain to the county and state levels… it’s easy to see almost all of a family’s concerns getting taken care of long before you get to the federal government.

The same goes for health care, defense, economics, environmental concerns, immigration  - you name it.  Santorum’s sometimes curious-seeming comments or mix of positions can almost always be explained by subsidiarity.  The question, “Where are a family’s concerns about this issue best addressed?” is the question that is being asked.  It’s only the answer that is debatable.

While odd in 21st century America, the principle of subsidiarity offers an unusual way of building consensus among usually contentious groups.  It can sometimes act as a method for Santorum’s conservatism, and sometimes as a third way out of no-win political situations.  It is no silver bullet, but there is a subset of issues that are simply best not handled at the federal level.

To be sure, this principle can be quirky.  How many times does an audience need to hear that Rick Santorum favors “block grants” of Medicare to the states?  His speeches would probably be better off without this “insider-speak.”  Even if this is a pseudo-subsidiarity position (since the money is funneled up to the federal government and then back down), it’s still a solution that solves more than a few problems by moving things towards the level which subsidiarity would direct.

Solidarity meanwhile, Santorum’s other go-to political principle, was born of necessity in Catholic shipyards of Poland.  Standing in stark contrast to the unions in the United States, the Solidarity movement was brought into existence to thwart a tyrannical Communist regime.

Newt Gingrich once criticized Santorum for being a “big labor” Republican – but this betrays a lack of understanding about the obscure brand of workers’ rights that the former Senator preaches.  It is wholly consistent with the conservative package that Santorum projects.  Not just because it provides a blue collar roadmap without the socialist trappings, but because it is essentially a movement about fairness for families.

Exit polls show that Rick Santorum’s appeal is by far strongest among those who make less than $100,000 per year, and stronger still among those who make less than $50,000.   He plays up his family heritage as immigrant coal miners, and relies on being able to connect with hard-working but down-trodden blue collar families – often in amusingly stereotypical blue collar locales (Applebees, bowling alleys, and shooting ranges).

Hewing between the lines of economic philosophies, Santorum tries to offer these voters a practical family-oriented vision rather than pretending to be an economic idealist or purest.  That is, he offers them a tax code that strongly favors rearing children and charitable giving, and a jobs plan focused on creating high-wage jobs.  And, let’s not mince words – this clearly means jobs that pay fathers enough so that mothers can stay at home with their brood.

Santorum sees these families are under attack from many forces, and with them, their values, way of life, and work ethic.  Already, such familes are slipping into the culture of dependency.  His pitch for restoring self-reliance to these families may or may not work in practice – but these are the families that see both Romney and Obama as something alien, aloof, and living in another world.

One negative about subsidiarity and solidarity is that they are ill-defined concepts.  There is no clear platform associated with these ideas (despite Santorum’s attempts), and it isn’t even clear how well these ideas translate outside of certain small subsets of the population.  Both ideas are famliy-centric ideas first articulated in Catholic circles, and both steer clear of adherence to “right vs. left” politics.

The ideas that have spawned from these unspoken principles have revived Santorum’s career and political legitimacy.  His slim chances at winning a floor vote at the Republican convention appear to be… at least… non-zero.  And to win, he will need all the solidarity he can muster.

But what do the numbers really say?  Is it a forgone conclusion that Romney has won and now the Republicans are just wasting time and money? Hardly.  Romney has several strong factors working against his nomination.

For starters, at the time his campaign issued the statement, Romney had won just over half of the delegates that have been up for grabs so far – about 51% by most totals.  He would still have to win the majority of future delegates to win the nomination.  Not exactly what would normally be called an “advantage”.

But there are other problems.  A lot of the Romney delegates aren’t exactly solidly Romney’s.  The media continue to report caucus results based on something akin to divination.  Don’t be surprised if you later learn that there has been an overstating of his delegates.  Ron Paul’s people are much more involved in doing battle for every last delegate here than Romney’s somewhat lackluster supporters.

Additionally, Arizona’s delegates – all won by Mitt Romney – are essentially invalid.  The state Republican Party simply decided it would arrogantly ignore the rules.  This doesn’t exactly bode well for Romney’s delegate totals.  We don’t know what will happen, but if things get dicey, expect only half of these delegates to be seated at the convention.

To top it off, the entire process is much less straightforward than it first appears.  Each state sends its delegates, but the rules vary widely about just which delegates from which states have to vote for which candidates, and when.  A few delegates (not counting “super delegates”) will even show up to the convention completely uncommitted – they can vote for whomever they want at that moment.

The one thing you can be sure of in this Republican nomination process is that no one can predict what will happen next week – or today.  Don’t let anyone tell you otherwise.

After running the numbers for a bit, this allows the banks to make money by selling the insurance, and the investor to eek out a little extra yield.  It turns out, not surprisingly, that there is one glaring flaw in the system.

A default isn’t what it used it to be.  The insurance contracts are only activated when a “credit event” has occurred, at which point the bank will have to pay out on the insurance to the investor.  The contracts stipulate that the International Swaps and Derivatives Association (ISDA) will determine when such a credit event happened.

The minor flaw in the system, is that the ISDA is more or less controlled by the banking system itself.  So there is a built-in desire to protect the banks and refuse to payout on the insurance.

So along come the geniuses at MF Global and they decide to use insane amounts of leverage on a “sure bet” – which now means Greek bonds with offsetting insurance in case Greece defaults.  At the time, it would have seemed like they have structured a foolproof investment.

Only, something very unexpected happened.  It turned out that investors (somehow collectively) have made “agreements” with the Greek government – and the ISDA has decided (to their great benefit) that the sellers of the insurance don’t have to pay out on the contracts.

To be fair, there are now so many derivatives related to credit default swaps that have been written in such large amounts that is very possible that the whole  financial system will come crashing down as soon as the ISDA declares a “credit event” in almost any country’s bonds.

The losses investors are taking are now above 70% – and yet still, the ISDA pretends that everything is normal.  And, I guess they have to… but it’s getting a little silly.  A default used to mean when you couldn’t pay back the money you were lent.  I’m not sure what it means these days.

And if the lender is Germany and the debtor is Greece, the time has come for something even more drastic in Germany’s eyes.  Jokes about island transfers long having soured.

Brazenly, the Germans have asked that the budget of Greece be turned over an EU official.  This, no doubt, seems natural to the Germans.  If a budget is out of control, it needs to be fixed – by whomever is responsible enough to do it.

Pantelis Kapsis, a Greek government spokesman, insisted there was no need for such controls. “It’s a matter of national sovereignty,” he said.

Belfast Telegraph

I’ll admit, I am stunned.  It’s 2012.  Greece gave up its currency that was continuously in circulation for thousands of years like it was no big deal.  There are few border crossings left in Europe.  The leader elected by Greek citizens was ousted in favor an EU-friendly technocrat who has never been elected.  A daily stream of EU edicts is ensnaring Italy and Greece without anyone so much as noticing.

And now… now it’s a matter of national sovereignty?  It’s shocking they still believe there is any such thing left, or even that they can imagine what sovereignty might look like.  True, we know Great Britain has been causing trouble in the EU’s “masterplan”, but never for long.

Still, without a fuller transcript, we can only be amused at the report of the Greek official’s words.  He insisted there is no need for controls, and followed up with stating that it is a matter of sovereignty.  There is no need; it’s a matter of national sovereignty.

Non sequitur.

You know, the kind of place where the workers of the world unite only to find out that somehow their land was stolen by the government they created:

Farms were being taken and handed over to developers for tens and hundreds of millions of dollars, with none of the proceeds going to the original occupants. Anti-government demonstrations in September were put down with excessive force, but the party agreed to mount an investigation and negotiate with representatives chosen by village residents.

Washington Times

Handed over to developers?  Okay, so maybe that doesn’t sound as communistic as I thought.  Still, that is no way to engender support among the proletariat:

Mobs seized control of government offices and police stations. Party officials fled, and 1,000 riot police, armed with water cannons and tear gas, attempted to take back the town. The insurgents held fast behind makeshift barricades, and the authorities retreated.

(Image from Foreign Policy)

That’s no mean feat for a small town.  Wukan, the village in question, appears to just be a typical Chinese fishing village.  There doesn’t seem to be anything special about it, other than that it felt abused and especially picked on by the ever-expanding bureaucracy.

After several negotiation attempts to bully or subdue the angry villagers, they seem to have – astonishingly – not had tanks roll into their village through their “makeshift barricades”, but rather have scared the authorities into giving in.

Up until Wednesday, officials had employed intimidation tactics common in such disputes. Riot police raided the village two weeks ago and took away leaders and set up road blocks to prevent food from being transported in. Officials blamed the unrest on “foreign forces” and threatened to crack down on protest leaders.

But the villagers refused to be cowed and issued an ultimatum at the start of the week, saying they would march to the government offices of the nearby city of Lufeng on Wednesday if authorities did not meet their demands. That would have been a direct challenge to police who have set up checkpoints on main roads outside the village.

Huffington Post

Whether or not we believe, as Mao did, that political power grows out of the barrel of a gun, it is heartening to see people stand up to defend whatever small freedoms they have left.  Actually, come to think of it, it’s pretty nice hearing anyone issuing ultimatums to the Chinese government.

Everyone knows that times are tough, and also that the banks have been on very shaky ground.  If you were a bank, you’d probably be pretty worried.

And the banks know better than everyone else just how bad off they are.  Such a bank might think long and hard about just how to protect itself and come back in from the ledge of insolvency.

“Wait a minute! I’ve got it!” shouts an eager 40-something bank employee, in an otherwise grim meeting.  ”Our bank is terrible.  The best investment possible… is to bet against ourselves! We quite literally can’t lose this bet.”

And so it was, as investors learned that JPMorgan Chase Manhattan First National WaMu (okay – just JPMorgan Chase will do) did just that.

You might think this is a troubling sign, or that Chase is just crazy.  But let’s face it, almost everything looks like a bad investment right now, and if betting against a bank – even if that’s yourself – fits into your survival plans, go for it.

One thing only seems for sure: that JP Morgan’s legacy will still be around 100 years from now.  Somehow, one way or another, they will be with us.  You can take that to the bank.

What is that gold going to do for you anyway? Just listen to Charles L. Sizemore complain:

Unlike a stock, bond, rental property, piece of productive farmland or even a piece of artwork that can be lent out for viewing, gold produces no income, nor does it create anything of value. It’s a shiny trinket.

MarketWatch

The level of hate towards gold continues to expand as everyone who doesn’t understand the precious metal becomes more and more convinced that it is in a bubble already.  Surely, they would understand if it truly were a good investment.  But wait – the article concludes that gold isn’t even an investment at all:

But investors should use last week’s gold-price plunge to get a little perspective — and maybe a little humility too. Gold is not a safe haven. It’s not even an investment. It’s a high-risk speculation that’s had a great run. And that run, if it hasn’t already, will come to an end.

The sad truth is, that these same people will signal the true top in gold – but only after they at last give up their skepticism and turn into manic supporters.  They will signal the bubble alright – but they will be on the wrong side yet again.

Of course, you’d be wrong.  The reality is that the Swiss are outraged.  Their currency is much too strong, you see.  They can’t export goods if no one else can afford the requisite price in Francs.  So they are on a mission to make it follow the same downward trajectory as the currencies of their trading partners.

The Swiss have decided to peg their currency to the Euro.  They are committed to printing an unlimited number of Swiss Francs and buying Euros with them and will not let 1.2 Swiss Francs buy more than 1 Euro.  The move shocked investors, and isn’t particularly likely to help combat a growing distrust in all government currencies.

The Swiss National Bank has made plenty of noise about its currency in the last few years – but nothing like this.  Just in case you weren’t sure, the venerable Swiss Franc is no longer a safe haven asset.  Don’t say you weren’t warned.

According to Baja, Qaddafi loyalists in Sirte have two options: “To speed up the negotiations process and accept the liberation of Sirte, or to face the military solution.”

It’s always a little disturbing to hear people talk like that: accept your liberation or face a military solution.  That kind of double-speak is certainly unexpected from a Libyan rebel.  Maybe it was just an unfortunate translation.

So just who is “Baja”?  It turns out that Fathi Mohammed Baja was educated in the United States, and is the head of the National Transitional Council’s political committee – that explains the double-speak.

In fact, I take all of my skepticism back.  This is a leadership we can understand and deal with.