Here’s the setup:

Deep in the Andean foothills of Chile’s central valley lives a group of German expatriates, the members of a utopian experiment called Colonia Dignidad. They have resided there for decades, separate from the community around them, but widely known and admired, and respected for their cleanliness, their wealth, and their work ethic. Their land stretches across 70 square miles, rising gently from irrigated farmland to low, forested hills, against a backdrop of snowcapped mountains. Today Colonia Dignidad is partially integrated with the rest of Chile. For decades, however, its isolation was nearly complete. Its sole connection to the outside world was a long dirt road that wound through tree farms and fields of wheat, corn, and soybeans, passed through a guarded gate, and led to the center of the property, where the Germans lived in an orderly Bavarian-style village of flower gardens, water fountains, and cream-colored buildings with orange tile roofs. The village had modern apartment complexes, two schools, a chapel, several meetinghouses, and a bakery that produced fresh cakes, breads, and cheeses. There were numerous animal stables, two landing strips, at least one airplane, a hydroelectric power station, and mills and factories of various kinds, including a highly profitable gravel mill that supplied raw materials for numerous road-building projects throughout Chile. On the north side of the village was a hospital, where the Germans provided free care to thousands of patients in one of the country’s poorest areas.

Sounds like scenery right out of The Sound of Music. But it also reminds me a bit of Willy Wonka. A perfectly happy exterior with the hint of something weird and crazy going on behind closed doors:

All this was made possible by one man, a charismatic, Evangelical preacher named Paul Schaefer (not the David Letterman musician, I don’t think…), who founded the community and who, until several years ago, remained very much in charge. Tall, lean, and of strong build, with thin gray hair and a glass eye…

…Few outsiders ever gained access to the Colonia while its reclusive leader remained in power. An old Chilean newsreel, however, filmed at Schaefer’s invitation in 1981, provides a rare picture of life inside the community, a utopia in full and happy bloom. The footage shows a bucolic paradise of sunshine and verdant fields set among clean, fast-flowing rivers and snowy peaks. Its German inhabitants improve the land and work their trades.

And then the Utopian story starts to unfold from there. Paul Schaefer turns out to be quite the pedophile. Tortures his own. Tortures, and kills, political prisoners for Pinochet. Raises kids on their own separate from the parents. Everyone has to confess their sins on a daily basis, or suffer severe punishment. Had young boys sleep in his room, and with him (think Michael Jackson/Neverland setup). Basically, it’s a complete religious-based mindf*ck. And to keep that brainwashing going, Schafer and his lieutenants went to great lengths. Here is a nice little anecdote for you:

All challengers to Schaefer’s authority—real or imagined—were rooted out and destroyed. No one inspired greater love and admiration among the children of the Colonia than Santa Claus. It is said that in the days shortly before Christmas one year in the mid-1970s, Schaefer gathered the Colonia’s children, loaded them onto a bus, and drove them out to a nearby river, where, he told them, Santa was coming to visit. The boys and girls stood excitedly along the riverbank, while an older colono in a fake beard and a red and white suit floated towards them on a raft. Schaefer pulled a pistol from his belt and fired, seeming to wound Santa, who tumbled into the water, where he thrashed about before disappearing below the surface. It was a charade, but Schaefer turned to the children assembled before him and said that Santa was dead. From that day forward, Schaefer’s birthday was the only holiday celebrated inside Colonia Dignidad.

Yeah, it’s pretty much that crazy/unbelievable throughout the entire story. It’s long, but give it a shot. Most of this is coming to light thanks to people who have managed to escape and share their story with Amnesty International over the years.

From The American Scholar: The Torture Colony

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Violet Beauregarde: Well, they can’t be real people.
Willy Wonka: Why, of course they’re real people.
Mr. Salt: Stuff and nonsense!
Willy Wonka: No, Oompa Loompas.
The Group: [turning around] Oompa Loompas?
Willy Wonka: From Loompaland.
Mrs. Teevee: Loompaland? There’s no such place.
Willy Wonka: Excuse me, dear lady, but…
Mrs. Teevee: Mr. Wonka, I am a teacher of geography.
Willy Wonka: Oh, well, then you know all about it and what a terrible country it is. Nothing but desolate wastes and fierce beasts. And the poor little Oompa Loompas were so small and helpless, they would get gobbled up right and left. A Wangdoodle would eat ten of them for breakfast and think nothing of it. And so, I said, “Come and live with me in peace and safety, away from all the Wangdoodles, and Hornswogglers, and Snozzwangers, and rotten, Vermicious Knids.”
Mr. Salt: Snozzwangers? Vermicious Knids? What kind of rubbish is that?
Willy Wonka: I’m sorry, but all questions *must* be submitted in writing. And so, in the greatest of secrecy, I transported the entire population of Oompa Loompas to my factory here.
Veruca Salt: Hey, Daddy, *I* want an Oompa Loompa! I want you to get me an Oompa Loompa right away!
Mr. Salt: All right, Veruca, all right. I’ll get you one before the day is out.
Veruca Salt: I want an Oompa Loompa now!
Violet Beauregarde: Can it, you nit!

Sure, GDP has been back since the second quarter of 2009, but that might not be the most accurate measure. The Economist explains, Slow going:

An alternative explanation for the divergence is that the American economy simply hasn’t been doing as well as the output figures have suggested. GDP—the total market value of output produced each year—is the most commonly used indicator of the “true” state of an economy. A theoretically equivalent but less commonly-cited indicator is Gross Domestic Income, which adds up wages, profits and taxes. In practice, the two numbers often move slightly out of step with each other, and a growing body of research hints that GDI, rather than GDP, should be given more weight in computing an estimate of the economy’s true direction.

By the light of GDI, the American economy looks a bit more pallid. According to the income measure, activity slowed at a 7.3% annual rate in the fourth quarter of 2008. GDP, meanwhile, recorded a 5.4% drop. And in the third quarter of 2009 (the most recent for which income data are available), GDI continued to contract while GDP notched up the increase that led many economists to announce the end of the recession.

The picture painted by GDI throughout the downturn is one of an economy substantially weaker than indicated by GDP: one more in line with the employment data and with the experience of most Americans. But whether productivity or unexpectedly weak growth is to blame for high unemployment, there is a danger that policymakers have failed to recognise the full extent of the slack in the economy. The result may be a disappointingly slow, fragile and jobless exit from recession.

And in the same vein, China, who owns all of our debt, refuses to revalue the yuan against the dollar. From Bloomberg, China’s Wen Rebuffs U.S. Calls for Stronger Currency:

“I don’t think the yuan is undervalued,” Wen said at a press conference in Beijing marking the end of China’s annual parliamentary meetings. Dollar volatility is a “big” concern and “I’m still worried” about China’s U.S. currency holdings, he said.

China’s Premier Wen Jiabao also added:

Ballooning sovereign debt and high unemployment around the world could send the global economy into a second, or “double dip” downturn, Wen said. In China, inflation, combined with wide income gaps and official corruption, could lead to social instability “and even affect the government’s hold on power,” he said.

I guess when you dip, I dip, we dip.

And here is Krugman’s take on our China currency problem: Taking On China.

You should be more than set for your water cooler economic talk today.

1. Maybe we shouldn’t be blaming our leaders for not being able to lead:

A thought-provoking read from Slate.com: Down With the People: “…the biggest culprit in our current predicament: the childishness, ignorance, and growing incoherence of the public at large.”

That’s you, Glenn Bleck-loving, Sarah Palin-voting idiots. (Some Democrats are probably to blame too…)

2. Topline GDP Growth was 5.7% last quarter:

Sounds great. Except that only 2% was final demand. 2/3rds of that growth was just inventory adjustments — which will slow significantly in the coming quarters.

3. Job creation continues to tread water.

As Paul Krugman so eloquently put it: Jobs Are Up! I Mean Down! Whatever…

4. Employment opportunities still remain weak (From Calculated Risk):

5. The Dallas Fed has some interesting charts comparing our current situation to past recessions:

6. Ladies, a great Valentine’s Day gift for that someone special in your life: A Heineken-pouring Robot.

7. Who Dat Gonna Have The Best Picture? Drew Brees and the Saints his young son, obviously:

That has to be a commercial. Or a poster. Or something. Right?

(and thanks again to my dad for sending me yet another piece for my blog. two in two days. i’m set to retire.)

The American Bar Assn. allows unneeded new law schools to open and refuses to regulate them. The government should consider taking steps to stop the flow of attorneys into a saturated marketplace.

Remember the old joke about 20,000 lawyers at the bottom of the sea being “a good start”? Well, in an interesting twist, thousands of lawyers now find themselves drowning in the unemployment line as the legal sector is being badly saturated with attorneys.

Part of the problem can be traced to the American Bar Assn., which continues to allow unneeded new schools to open and refuses to properly regulate the schools, many of which release numbers that paint an overly rosy picture of employment prospects for their recent graduates. There is a finite number of jobs for lawyers, and this continual flood of graduates only suppresses wages. Because the ABA has repeatedly signaled its unwillingness to adapt to this changing reality, the federal government should consider taking steps to stop the rapid flow of attorneys into a marketplace that cannot sustain them.

You can read the rest here: No more room at the bench