Archive
Times top editorial cartoon of 2009
Who am I to argue with the venerable Old Lady of old media?
When is the market for US bonds not a market?
The imminent global food crisis
Please remember when you read articles like this, that you heard about this first here, and on WP about three years ago.
Why does everyone (including my wife) think I’m mad? It must be the flouride in the water supply poisoning their brains.
There’s gonna be a bull market in canned food and farmland and guns and oil. For the rest of your natural life.
$10,000 gold
It’s possible. Here’s why (from Porter Stansberry):
It’s one of those numbers that’s so unbelievable you have to actually think about it for a while…
Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.
Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from?
How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then “rolling over” the loans when they come due. As they say on Wall Street, “a rolling debt collects no moss.”
What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that’s when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
When governments go bankrupt, it’s called a “default.” Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.
The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world’s largest money-management firm, PIMCO, explains the rule this way: “The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support.”
The principle behind the rule is simple. If you can’t pay off all of your foreign debts in the next 12 months, you’re a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.
So how does America rank on the Greenspan-Guidotti scale? It’s a guaranteed default.
The U.S. holds gold, oil, and foreign currency in reserve. It has 8,133.5 metric tonnes of gold (it is the world’s largest holder). At current dollar values, it’s worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that’s roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether… that’s around $500 billion of reserves. Our short-term foreign debts are far bigger.
According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we’ve been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.
Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.
So… where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we’re still going to come up nearly $3 trillion short. That’s an annual funding requirement equal to roughly 40% of GDP.
Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or Russian central banks, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.
So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.
One thing they’re not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None owns even 1% of its total reserves in gold.
I examined these issues in much greater detail in the most recent issue of my newsletter, Porter Stansberry’s Investment Advisory. Coincidentally, the New York Times repeated my warnings – nearly word for word – a few weeks ago. They didn’t mention Greenspan-Guidotti, however… It’s a real secret of international speculators.
My readers know that Greenspan-Guidotti means the U.S. is likely to have a severe currency crisis within the next two years. How high will gold go during this crisis? Nobody can say for sure. We’ve never been in the situation we are now. The numbers have never been so large and dangerous. But I wouldn’t be surprised at all to see gold at $10,000 an ounce by 2012. Make sure you own some.
Gold wins gold: Best asset to hold this decade
One picture truly can tell a thousand words:
Merry Christmas and Happy New Year
To those readers who have tolerated my rage against the machine, thanks for sticking with me.
As the Buddha stated just before his death, “Everything is Change” – so I am quietly confident things will get better in 2010 (they could hardly get worse).
I leave you with Lew Rockwell’s sage words regarding God’s money and the connection between faith, truth and sound money:
Fiat money with central banking… tempts corrupt politicians and bureaucrats, and it also further corrupts them. It is the great occasion of sin of our public life. The tragedy is that their use of the printing press not only corrupts them; it imposes dreadful and intolerable costs on the rest of society, in the form of price inflation and business cycles.
We’ve seen the corruption grow worse over time. We are living now in the 37th year of fully fiat money with central banking. The politicians of the past were a bit reticent to use all the power they had. They are becoming ever more brazen. The sense of shame seems to be gone forever, their consciousness completely papered over by the ominous power they possess. The pundit class is following them, believing that there are no limits.
In truth, all these bills must be paid. To realize that is to realize the necessity of radical reform. It can be overwhelming to contemplate the glorious results of a full gold standard reform. Inflation would stop eating away our purchasing power. The business cycle would be tamed. International trade would not be disrupted by wild swings in currency values. But of all the benefits, this one is the greatest: it would stop arbitrary rule, dead in its tracks. It would force the government to curb its ways. It would shore up our freedoms.
For this reason, the policy of sound money is very much linked with morality. The Hebrew scriptures, in the nineteenth chapter of the book of Leviticus, warns “you shall have just balances, just weights…” The twenty-fifth chapter of Deuteronomy issues a similar warning: “You shall not have in your bag differing weights, a large and a small.” Proverbs says the same: “A false balance is abomination to the LORD: but a just weight is his delight.” Another passage says: “Diverse weights, and diverse measures, both of them are alike abomination to the LORD.”
All of these relate in some degree to the need for sound money and condemn the act of fraud and monetary debasement. The consequences of monetary sin cannot be contained to the sinners only. They are spread out all over the whole of society, destroying its economic basis and corrupting the morals of society. They foster crazed illusions that we can magically generate wealth through the act of printing money, and the attempt to do so has catastrophic consequences. As Mises wrote: “Inflation is the fiscal complement of statism and arbitrary government. It is a cog in the complex of policies and institutions which gradually lead toward totalitarianism.”
I find it sickening that there are so few voices outside the Austrian School that will stand up to this policy. And I fear that the consequences of this policy will be felt for many decades into the future. There is still time to reverse course. There is nothing inevitable about despotism. We are not being forced down this road. We can embrace freedom. If we understand that freedom is inseparable from sound money, we can embrace that too. Until then, we will continue to place our trust in the political establishment to do what is right. Call me a gold bug if you will, but I trust hard money far more than our rulers. And that, ultimately, is the choice we must make.
Merry Christmas and Happy New Year. Let us pray for sound money to return in our lifetimes.
The UK is killing itself on bad ideas
You’d think mainstream economists and commentators in the UK would reflect on the fact that output has declined 6% during this recession, the worst since the 1950s (possibly the 1930s), on the fact that financial deregulation only a few short years ago may just have something to do with the current recession, on the fact that the Japanese experience proves low interest rates and massive government spending does nothing other than the delay the necessary adjustments the economy needs to get back on track, on the fact that Keynes was an intellectual lightweight whose ideas have wrought destruction in every country (the UK, the US, Japan) where they have been tried.
But no, this piece by Keynesian disciple Robert Skidelsky in Ft.com proves the British establishment learns nothing, and are willing to walk off a cliff rather than admit they are dumber than the local storekeeper when it comes to economics.
Check out this gem:
Even the normally sober Martin Wolf has fallen for this line (FT, December 16 2009). The pre-crisis UK economy, he says, was a “bubble economy”. The bubble made UK output seem larger than it actually was! This is old-fashioned Puritanism: the boom was the illusion, the slump is the return of reality. However, experience of past recessions suggests that, once the corner is turned, output recovers vigorously from slump conditions (as do prices). Between 1933 and 1937 the UK economy expanded by 4 per cent a year, much higher than its “trend” rate of growth. Yet in 1931 orthodox economists were denying there was an output gap at the bottom of the greatest depression in history.
Based on the wholly fallacious idea that financial deregulation had nothing to do with a false boom (and therefore a bust), Skidelsky looks around, sees the “mad” years of 2000-2007 as “normal” and the adjustment phase after the credit-fuelled boom as the “aberration” and wants to return to normality.
A simple look at credit growth, debt-to-GDP ratios, personal debt levels, and the growth in housing prices and mortgage debt would all irrefutably prove that the UK went through an unprecedented credit-fuelled boom which was completely unsustainable. 2000-2007 was the aberration. 2008-? is the long painful adjustment period, made worse by Skidelsky’s admonitions to return to madness.
Fortunately, the private economy is having none of this, is rapidly reducing its debt levels to stave off mass insolvency, and is leveraging down.
Skidelsky hilariously characterises this necessary de-leveraging as irrational “money hoarding”:
In a slump there is no natural tendency for the rate of interest to fall, because people’s desire to hoard money is increasing. So printing enough money to “satisfy the hoarder” is the only way of getting interest rates or the exchange-rate down.
Err…no. In a slump, there are fewer speculative opportunities and therefore people stop borrowing. They sensibly save their money, recognising that borrowing in this environment would be madness. This “increases” savings (“hoarding” in Skidelsky’s derogatory term), reduces factor prices and eventually allows borrowing to be resumed for profitable activities.
To quote Rothbard (pp. 40-41):
In their stress on the liquidity trap as a potent factor in aggravating depression and perpetuating unemployment, the Keynesians make much fuss over the alleged fact that people, in a financial crisis, hoard money instead of purchasing bonds and contributing toward lower rates. It is this “speculative hoard” that constitutes the “liquidity trap,” and is supposed to indicate the relation between liquidity preference and the interest rate. But the Keynesians are here misled by their superficial treatment of the interest rate as simply the price of loan contracts. The crucial interest rate, as we have indicated, is the natural rate—the “profit spread” on the market. Since loans are simply a form of investment, the rate on loans is but a pale reflection of the natural rate. What, then, does an expectation of rising interest rates really mean? It means that people expect increases in the rate of net return on the market, via wages and other producers’ goods prices falling faster than do consumer goods’ prices. But this needs no labyrinthine explanation; investors expect falling wages and other factor prices, and they are therefore holding off investing in factors until the fall occurs… Far from “speculative” hoarding being a bogy of depression, therefore, it is actually a welcome stimulant to more rapid recovery.
For a simpler explanation of the Austrian analysis, look at my five rules for the Ponzi-economy here.
This piece proves beyond a reasonable doubt that some members of the British establishment are literally insane, and are leading the British economy over a cliff. Why is it that no Keynesian zealot can ever swerve out of the way of an economic obstacle? They must all be zealot-zombies.
Twitch, twitch…
More twitches on my financial seismograph. This time on the fringes of Europe.
Enormous pressure will be brought to bear on Latvia, Iceland and Greece to get their budgets under control and pay their debts.
If one country is allowed to run, then chaos will ensue, with lots of other indebted governments asking the question, “If there’s no shame in defaulting, why don’t we do it too?”
That’s what’s happened in the US, with housing debt. It’s no longer a source of shame to walk away from an underwater house. So the whole housing crisis has become the creditor’s problem, not the debtor’s.
Shame is really the only thing holding back the tide at the government level. And once people work through the shame of default, anything can happen.
Which is why creditors cultivate shame in their debtors.
Perhaps the Greeks have no shame?
We’ll see.
Austrians are NOT for financial “deregulation”
I have not met one Australian who understands Austrian economics.
99% of economists have no idea about Austrianism.
The five (including Steve Keen) who do know something about it don’t like it.
Some think it’s just another extreme form of “free market” capitalism.
Some think it’s just about returning to an “old” gold standard.
Some think it’s about anarchism.
Some think it’s pro-deregulation everything.
Some (like “Phil” in the Steve Keen post below) link Austrianism with fascism, using one sentence from von Mises’ millions of sentences on human action to “prove” Austrianism is sympathetic to fascism. Austrianism (despite its name) has nothing whatever to do with 20th century fascism. Mises had to flee fascist Europe. Austrianism is more “sympathetic” to libertarianism (and classical liberalism and possibly anarchism in its extreme form) than any other political philosophy.
In attempt to kill off the slander and libel over Austrianism:
1. Austrians do NOT support financial deregulation
Financial deregulation means for most people what Dr John Hewson called for recently in the AFR: More competition in banking, the entry of foreign banks, lower interest rate margins, more non-bank lenders.
This is deregulation WITHIN a monopoly fiat paper money system. Modern banking is nothing other than a simple form of recursive embezzlement. To allow competition to see who can lie and embezzle “the best” is MADNESS.
Austrians call for one of the following:
(a) the outlawing of fractional reserve banking;
(b) the abolition of the “definition of a moral hazard” (central banking) and simultaneous implementation of free banking (possibly after resolution or nationalisation and then re-sale of insolvent or TBTF banks); or
(c) if either of these is not possible, the HEAVY regulation of cartel banking - in particular the highest possible reserve ratio enforced by government to minimise the deliterious effects of the Ponzi-like activity.
[(d) no Austrian I know supports this fourth option, but I do: Nationalisation is preferable to the current system, so I would prefer nationalisation of the banking system compared to the current system we now have. I base my analysis on Hoppe's critique of democracy - you do not want competition in the production of "bads" and given banking produces "bads" it is better to have an inefficient govt-owned monopoly producing "bads" rather than competition in the produciton of "bads". But this is not a common Austrian position.]
You don’t believe that Austrians are against financial deregulation?
Read this, from the Austro-Libertarian website, LRC. You will never see such an article in the WSJ , the AFR, the Economist or any other supposedly “free market” mainstream publication. The mainstream free marketeers are quiet on central banking and free banking. They are deadly quiet, because they know to talk about it means the death of their careers. So they shut up. Only Austrians dare to raise this issue against the money trusts.
Noted Austrian Ron Paul did not support the repeal of Glass-Steagall in the US for these very reasons. That alone should be proof enough.
2. Austrians do not want to deregulate everything that moves immediately
A corollary to the first point is that Austrians clearly do not want to deregulate indiscriminately. Order matters.
Austrians do NOT support the deregulation of banking WITHOUT the abolition of legal tender laws and the central bank FIRST.
Austrians do NOT support elimination of the minimum wage and all social security benefits whilst at the same time allowing bailouts for the banking system and billion dollar bonuses to Goldman Sachs.
Austrians do NOT support the destruction of family farms into major industrial farms when the central bank supported financial institutions are bankrupting the small farmers and financing the large agricultural corporations.
The order matters. Austrians focus on the abolition of the central bank, returning banking to a “normal” market function rather than a symbiotic tool of the State, and a return to a free market in money, allowing any currency to be chosen by the people to act as money. We believe it’s likely gold will be chosen but are open the market deciding. We believe good outcomes will result when the market is given the opportunity to innovate and supply new money products in a GENUINELY free market.
There is nothing more basic to the economy than its unit of exchange. Corrupt that, and the whole economy is corrupted. Austrians are the only economists who see how monopoly money is inefficient, how it is fundamentally corrupt and how it needs to change.
Anyone who characterises Austrians as just another group of free market capitalists should think carefully. And read Rothbard before parroting that kind of idiocy again.
Worst decade EVER for stocks
We’ve just come through the worst decade ever for U.S. stocks. Ever. Worse even that the 1930s.
If you think the economic crisis is over within 2 years because of the various stimulus plans then you need to read history.
It ain’t over just yet.
Marc Faber reassures me that we are doomed
It’s mildly reassuring when another analyst is suicidal about the future. It reassures me that I am not totally alone.
I disagree with Faber on two points however.
First, it’s unlikely we will see hyperinflation and the “pure” monetisation of the trillions in US debt. No hyperinflationist thinks through the precise mechanism of monetisation. To increase the budget deficit by even more, the US govt will have to increase its own debt levels. Bonds yields will likely spike at some point. Then the Fed will try to buy the bonds to keep prices up (yields low). This will allow relatively limited leakage of money to the US govt’s friends, but in no way plug the hole left by the collapse in the housing bubble. Not only will govt spending not replace the hole left by Peak Credit, govt spending further distorts the economy, resulting in more failed private businesses the further away you get from the US govt’s largesse.
You’ll end up with millions of debt-slaves sycophantically praying to the bankers and the Fed govt, running around doing the bidding of their Masters, and economic chaos and widespread starvation beyond the tiny green gated communities of bankers and govt employees.
Kabul is a good future model for the major Western economies (especially the US): There are some massive luxury (tasteless!) villas going up in Kabul. I’ve seen them. They are the houses for the govt ministers and associated hangers-on from the opium trade. Nearby are the hotels the UN employees frequent. Beyond these few blocks, hundreds beg for food from aid agencies and there’s complete chaos. But within these tiny communities connected close to the corrupt govt, the opulence is incredible. Govt banquets are frequent, whilst literally right outside the banquet halls, local Afghanis are starving.
That is our future. Kabul is our future.
And remember – Kabul is a city now created by the US. It is what the US govt “wanted” to create (or at least what it did create after taking over).
So that’s the best the US and UK govts can do today when “creating” a city. That’s the proof regarding what they are capable of. Sad, but true.
So that’s what they will continue to produce at home.
“Kabul” does not spell hyperinflation to me. It spells stag-deflation with a possible sudden depreciation of the US dollar at some point – but not hyperinflation. So I still think US govt bonds and gold are a better bet than US stocks if I was forced to choose. Of course, long-term, farmland, security services, and govt jobs will all be highly sort after. But I wouldn’t be buying canned food just yet. You don’t want it to go out-of-date before you need to eat it.
Second, there will be war, but it won’t be to distract people from their debt problems. It will be over the rapidly diminishing supply of food and water and oil. The malinvestments caused by the decade-long low-density housing boom in the West have actually caused massive environmental destruction as well as financial chaos. Literally millions of acres of fertile arable land across the US and Australia and other countries has been re-zoned and “redeveloped” (destroyed) for what is euphemistically termed a “more intensive use” (i.e. “for speculative property development”) – just at the time when unprecedented climate change has destroyed many “food basins” around the world (Myanmar, Thailand, Cambodia, Australia, China, Europe and the US have all experienced tsunamis, typhoons, hurricanes or drought in their vital farming areas).
CCD is also a massive threat to our food supply. It is still a problem that no media organisation wants to talk about. The cause is unknown (I suspect GM crops, but who knows?).
No one seems to have connected up the housing boom and bust with massive unprecedented and irreversible environmental destruction.
But they will. Eventually.
I’m with MISH
MISH, noted deflationist, does a superb hit piece on the inflationists here on his blog.
Bottom line is that banks cannot use “excess” reserves to kickstart the FRB process if there are no creditworthy borrowers to lend to.
Either mass debt forgiveness will have to take place to allow lending to restart, or Bennie Boy will have to get the helicopter powered up and literally throw money out into the streets for the plebs to pay back their loans and start borrowing again. If the plebs don’t get the money to pay back their loans when the velocity of money slows down due to the high leverage levels grinding down the velocity of money to a crawl in every area other than where the banking parasites live, lending will continue to be frozen.
You cannot convince someone about to lose their job to borrow to gear up into the stockmarket or property market. You cannot convince a bank to lend to a borrower who will go bankrupt in a few short months.
The US has reached “Peak Credit.”
What is hard to understand about that?
Why some Austrians are confused on this issue is beyond me. Frank Shostak isn’t. Robert K. Landis wasn’t in 2004. Ludwig von Mises didn’t predict hyperinflation at the end of a credit-fuelled boom. He predicted “catastrophe”, not “hyperinflation”. Catastrophe in my view means “extreme price volatility in all asset classes leading to collapse of the division of labour and eventually state bankruptcy” – not hyperinflation.
So, excess reserves will subsidise the banks back to profitability, but the big banks will be islands of paper profits in sea of red-ink insolvency in the real economy.
My financial seismograph twitches
Greece is told “No bailout from the ECB, philos.”
Dubai tells nervous bankers to wait at the door, Abu Dhabi is getting its make-up on for the rendezvous.
Could the sovereign debt crisis occur in early rather than late 2010?
The suspense is killing me.
“All Labor” govts deliver 100% failure
Remember when “all Labor” Cth and State govts were finally going to “deliver” in contentious areas such as water rights, health and tax sharing?
Finally, there would be “no excuses” to deliver on these vital issues of national long-term interest.
Ha Ha Ha.
Paul Sheehan comments on the complete failure of that idea in today’s SMH, at least as it applies to the environment and water rights.
Last week I received shocking photos of the Wyangala Dam, which once held several times the volume of Sydney Harbour but is now reduced to a chain of brown pools. The Lachlan River, which once fed a majestic floodplain with regular healthy flooding, has been blocked off below Condobolin to ensure water supplies for the town. This has never happened before. A rich flood plain has become an arid zone.
We don’t have to wait for global warming for adverse climate change in Australia. It’s already here, and all man-made. The landscape of the Murray-Darling Basin was changed on a large scale, and the climate of the Murray-Darling Basin has changed.
With Labor in power in Canberra and every state except Western Australia, it was logical to expect a policy pay-off over an issue as crucial as water. But no. The National Water Commission recently issued its biennial assessment of the national water initiative and the report reads like a horror novel if you read between the lines of the report’s cautious sober language.
The commission, charged with saving the Murray-Darling Basin from the massive over-allocation of water rights by state governments to irrigators, has encountered a morass of inertia caused by jurisdictional complexity, bureaucratic infighting and state parochialism. On the most important single issue facing the nation – water security – federalism has failed. NSW and Queensland are replaying the State of Origin tribal warfare, except that the stakes are real and enormous.
The Water Commission’s chairman, Ken Matthews, allowed himself some venting in a recent speech when he referred to the ”bickering, arguing and delaying” by state governments. And these are all Labor governments.
To make the problem worse, these same governments have been busy granting mining leases for projects that could need as much ground water as will be saved from the river system by the $10 billion the Federal Government is spending to buy back water rights from irrigators.
Coal-mining leases have been granted, or applied for, over 16,000 hectares in the Maranoa, Balonne and Condamine river basins in Queensland. Petroleum leases have been granted, or applied for, over 23,000 hectares of these same basins.
”One-third of the Murray-Darling Basin is in Queensland where a massive increase in mining for coal, petroleum and liquid natural gas is under way,” said Kathy Ridge, a member of the Basin Community Committee which advises the Murray-Darling Basin Authority.
”There are currently eight liquid natural gas projects proposed in Queensland with a total capital expenditure in excess of $40 billion. If all of the projects were to proceed, their water consumption would amount to almost half the total amount of water entitlements purchased [by the Federal Government] to return environmental flows to the Murray Darling River …
”The water that comes out of mining is heavily polluted with salt and other heavy metals. No one knows what to do with it apart from evaporating it in huge storage dams, causing ongoing water and land pollution.
”NSW is similarly for sale when it comes to mining, particularly coal seam methane, and much of the prospecting for coal-seam methane gas occurs on prime agricultural land, or land with high conservation values.”
Over the next 30 years, governments in Canberra, Sydney and Brisbane expect to receive about $40 billion in royalties from these mines, but these royalties will not cover the economic costs to repair the ecosystem. That cost will be carried by the taxpayer, and absorbed by the environment.
Incoherent environment policy is further personified by the Federal Government ramping up Australia’s emissions with the largest immigration program in Australia’s history – a policy unmentioned during the 2007 election campaign – while at the same time talking about reducing emissions with a massive carbon trading scheme.
Carbon trading is a system dismissed by the world’s most influential scientist on global warming, James Hansen, who, as director of the Goddard Institute for Space Studies in New York, essentially invented and popularised the concept of human-induced global warming.
Hansen believes carbon trading schemes, especially those as complex and compromised as the scheme proposed by the Rudd Government, are misguided: ”These cap-and-trade trading schemes are a terrible idea. They are a way to continue business as usual … ”
Business as usual is exactly what the Rudd Government, the unions and the Labor patronage machine are all about. The soaring rhetoric about climate change is just carbon emission.
Having our water table at the mercy of Queenslanders is so frightening I’m almost going to take the Lithium the doctors have recommended for me. I have not met one Queensland environmentalist. Put a $ bill in front of any Queenslander and they seem to reflexively salivate like one of Pavlov’s dogs. The granting of new mining rights in these vitally important areas is MADNESS.
Allowing mining on fertile arable land, near our national water table is MADNESS.
But never underestimate the madness of a govt deep in debt and looking for any way out. Will the Queensland govt prostitute our children’s futures to the mining industry for some filthy lucre to pay off the debts they’ve stupidly accumulated, rather than negotiating a sensible way out directly with the major creditors and the Cth govt?
Apparently, yes.
Sad.
Another Aussie environmental disaster in the making, this time 100% Labor-made.
This does not make me proud to be an Australian.
Why isn’t Steve Keen an Austrian?
Fantastic Steve Keen interview with Max Keiser below:
I’m genuinely puzzled by Steve Keen. He correctly, brilliantly, diagnoses the problem – unsustainable growth of Ponzi debt finance that has grown like a cancer in every corrupt-at-the-top Western economy. He correctly, brilliantly, identifies this Ponzi-finance system as the antithesis of true capitalism. He correctly, brilliantly predicts that Japanese-style resuscitation efforts will only result in Zombie banks, Zombie companies, Zombie governments and a Zombie economy. He correctly, brilliantly points out that politicians like Obama have been duped by corrupt advisors into thinking that giving trillions of e-dollars to the bankers will somehow kickstart the economy (it won’t do anything other than save these Ponzi-schemers’ own corrupt skins).
If Steve Keen so clearly sees government as part of the problem, as a cesspool for rent-seeking behaviour, why doesn’t he grasp the only real solution – less government, less corruption, real competition in money – a return to gold and silver as money? Why isn’t he a follower of Murray Rothbard rather than (indirectly) that corrupt confused dandy, that semi-fascist Nazi-sympathiser, J.M. Keynes?
I’m sure if Keen had been schooled in Austrian economics at university he would have become a fantastic Austrian economist.
Then again, given I was unemployable as an Austrian at university and couldn’t even consider pursuing a PhD in the field (given the politics involved), perhaps he did the sensible thing and perhaps he is a closet Austrian on the inside.
So much of what I hear from him is pure Austrianism, pure Peter Schiff, pure Rothbard, I’m sure he’s sympathetic to at least some of ABCT and Austrianism more generally. Or is it just that you can’t teach an old post-Keynesian dog new tricks?
Steve, tell me I’m right. Please.
Beds are still burning
Peter Garrett must think we’re monkeys.
Government suppression of the appalling pollution still resulting from the oil spill off NW WA has been truly impressive. It’s like it never happened.
Have you heard of any updates on the story since August 2009? Have you heard whether or not Indonesian fishermen’s allegations regarding aged oil still appearing in Indonesian waters is correct? Have you heard whether the leak has been completely plugged? Have you heard when the investigation will start as to the cause? Have you heard whether PTTEP will continue to enjoy access to mining rights in Australia?
No, I haven’t either.
All we got after the leak was (supposedly) plugged was a SINGLE GRAINY STILL PICTURE (no live shots or video) of a burnt out oil platform and soothing words from the govt that the leak had been contained. That’s it. End of story.
I have a few additional questions for those with longer memories (longer than 5 minutes that is):
1. Has the leak been proven to have been completely plugged or is there evidence of leaks still continuing?
2. Why has no video footage been released of the oil rig? Can the media now have access to the area? If not, why not?
3. How long will it take for the investigation to start? The longer this drags on the more likely evidence of culpability will be covered up.
4. Has the govt accepted liability for any damage to Indonesian fisheries arising from the spill? What is the estimated compensation? When will this be determined?
5. Has any preliminary study been done of the ecological damage caused by the spill? If not, why not?
6. Will any long-term study be undertaken of the potential after-effects, such as contamination of sea life and potential contamination of our own food supply? Have there been any recommendations regarding the banning of fishing in the waters surrounding the oil spill? If not, why not?
7. What is ASMA doing to ensure the risks of future accidents such as this one are reduced? What recommendations have ASMA issued to oil rig owners? What investigations or compliance visits will be done by ASMA in the coming months on oil rigs, if at all? Who at ASMA is taking responsibility for the oil spill? Anyone? Or was it an “act of God” in ASMA’s view?
Washington Post calls for fascism in America
To quote WaPo directly, to ensure there is no confusion:
Whatever good [the financial regulation bill] might do would be canceled out by the inclusion of Texas Republican Ron Paul’s proposal to subject the Federal Reserve’s monetary policymaking to regular audits by the Government Accountability Office, an arm of Congress.
Supporters suggest that the measure would merely provide “transparency” for a secretive, powerful institution. But for all its wide, bipartisan backing, this is anything but a prudent or centrist law. In fact, it is an attack — born of crisis and the attendant emotions — on the political independence the central bank must have to do its job.
The case for political independence at the Fed is elementary. Elected officials, such as members of Congress, are inherently loath to tighten the supply of money available to their constituents, even when that might be necessary to fight inflation. U.S. experience, and that of countries around the world, confirms this, which is why Congress exempted the Fed’s money-supply decisions from GAO scrutiny in a 1978 law. Mr. Paul’s proposal would effectively repeal that. Investors already spend enough energy and money trying to figure out where interest rates are heading without this additional dose of permanent uncertainty. Trust in the Fed, and, by extension, the dollar, will evaporate if markets believe that the Fed is courting the approval of Congress’s auditors.
Mr. Paul doesn’t care; he’s an “end the Fed” man. In the past, other members of Congress have basically just humored him. It’s a sign of the times — and not a good one — that they have been Fed-bashed into following him now.
The case for political independence at [insert any important government dept here] is elementary. Elected officials, such as members of Congress, are inherently loath to [do the right thing long-term], even when that might be necessary to [do so for the long-term interests of the country]. U.S. experience, and that of countries around the world, confirms this, which is why [we advocate fascism in America].
Do you see how this argument can apply to any important government policy?
If the same argument can apply to any government policy, why have democracy at all?
It must be because WaPo supports fascism in America.
Financial earthquake in 2010
As I’ve stated previously, something’s gonna crack in 2010.
Will it be CRE?
Will it be the US dollar, US bonds?
Will it be the stockmarket?
Will it be gold?
Will it be Europe?
Will it be oil?
Will we be Zimbabwe or will we be Japan?
I’m still thinking “Japan” myself. But that US budget deficit is something to behold. It’s bigger than King Kong and just as destructive.
But something’s gonna crack. I can feel it.
Sanity returns to the UK faster than the US or Oz
“In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”
Friedrich Nietzsche
“In a mad world, only the mad are sane.”
Akiro Kurosawa
“The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.”
Marcus Aurelius
“I’m not insane. I merely completely and utterly refuse to accept society’s notions of reality as being any more valid than my own.”
— James Norlin
And the very best one of all, from a fantastic book that every investor should read:
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds.
The Bank of England is finally waking up from the mad delusion regarding the benefits of financial deregulation (a.k.a. organised embezzlement) faster than any other nation.
Then again, the Old Lady is very experienced dealing with embezzling shysters and criminal counterfeiters, having been alive for over 300 years, since 1694. She’s seen it all. Lovers cannot seduce the Old Lady for long without having to prove their metal. And the current crop of City bankers have proven to be very poor at the art of seduction. Intimidation, counterfeiting, criminal fraud, embezzlement – well, that’s a different story. I admit they have certain skills in the parallel universe in which all financial Mafioso inhabit.
The younger, more naive Federal Reserve (only born on Jekyll Island in 1913) and the very young pup of Oz, the RBA (only born in 1949) are still in the thrall of Ponzi’s embrace. They’re veritable virgins at this game.
Their hearts are going to be broken.
I weep for the innocents who continue to be seduced, drugged and viciously, brutally gang raped by the bankers.
When will these innocents learn from the Old Lady of Threadneddle Street? Do not meet bankers bearing gifts in the back streets of the financial district.
In central banking, when you are being raped no one can hear you scream.
Snowmageddon means terrible retail sales in the U.S.
“Snowmageddon” will be the poor excuse bankrupt families will use to explain their low-spending Christmas. Whether they could have made it to the shopping malls or not is immaterial. It’s a reasonable excuse to stay at home and insolvent families will take any excuse they can to explain to their friends why they didn’t spend big this Christmas.
Most spending at Christmas is to show off. People still do it even if they’re neck high in debt for the reason they’re neck high in debt in the first place – to keep up with the Kleins and the Steins and the Shleins.
Short major U.S. retailers and REITs with a high proportion of shopping malls in their portfolios. Now.
