How much is that company worth? You can look at its PE, debt, market spread, sovereign risk, and discounted cash flow, but in the end, it’s the Ben Factor (BF) which dominates all companies, metal prices, and sovereign currencies in the West.
The Ben hath spoken, and said that in future, if the economy is looking better, he might slow the printing of $85 billion US dollars a month, some indefinite non-specified day. All that was … obvious. But, world-wide investors and traders hang off the words, trying to second-guess what the BF banality implies. No one will say it, but everyone knows that it the rate of the flow of easy cash so much as slows, all hell will break loose. Balanced on this thin veneer of pretense, stocks, metals and whole national currencies change direction within minutes.
The Ben has spoken.
What hath changed since yesterday? Not much. But global paroxysm ensues.
Bernanke taper talk sends markets into a tailspin
Closing Bell: S&P 500 posts biggest fall since November 2011 on Fed’s stimulus plan
EMERGING MARKETS-Latin American stocks tumble to four-year low
China, Fed frenzy send Aust stocks tumbling 2%
Oil posts biggest drop in seven months
Stocks tumble around the globe
Respected commentators in the mainstream media report these events with straight faces, as if it is normal that economic activity in a free market depends on the King-maker-called-Ben. A bureaucrat. Millions of investors have effectively stopped assessing company profits, and they place bets instead on money supply. Will The Ben keep printing money at the same rate? Will it get harder to get loans? Will consumers stop buying things they don’t really need? Will consumers just stop? Can the BF manage an exponential rise with tweaks and announcements, opening the flow of the IV drip while telling the patient he is using less medication? How long will the placebo effect keep working?
The Dow, the S&P500, the ASX, TSX, FTSE have all become giant roulette wheels, but people stopped betting on the roll of the dice, and bet instead on whether the dice have six sides and six numbers. They bet on what the croupier will do next. How is his mood? Will he keep using the dice with three sixes, or switch back to the one with two? Will he say he’s using the slower dice, but secretly roll a more loaded one? Who checks the dice?
In an economy where supply and demand are known to be the key drivers of every price, no one utters the phrase that must not be spoken: “money supply”. No one discusses monetary aggregates. The US Fed tells us they are so irrelevant that they even stopped publishing the large aggregate known as “M3” a few years ago. No one in the mainstream complained.
In the West we have a paper-based financial economy and trust banks and government, more or less. The Western media hail the bureaucrats at central banks who set interest rates as heroes. (Central planners in the Soviet Union were also hailed as heroes by their press — but how could that possibly be relevant, eh?)
The big unspoken charade continues.
PS: The Ben apparently is on the way out. Who will be the next Ben? You can vote > “Other” > “Ron Paul” like I did. Go on. Poke them.
I’ve been trying to understand why reducing (“tapering off”) the stimulus should be bad news. The quantitive easing is another way of “printing money”, I thought normally considered a bad thing. The fact that an end to the stimulus is in sight should be because the economy is improving, leading to more employment, more money in the hands of consumers, higher corporate profits, rising share prices. Yet the markets go down?
60
If all the money in the world doubled at exactly the same time, it would have no effect at all. Think of it, we all go to bed with X dollars, we wake up with 2X dollars. All mortgages double, all prices double, all wages double, etc. No effect.
So the REASON that money printing has any effect at all it because it is not distributed evenly. The new money is injected strategically and made available to some people but not others. One way this happens is reserve banks buying government bonds at stupidly low interest rates, another way this happens is via the banking industry getting access to easy money at lower interests than you or I could borrow. By injecting money in some places and not others you create a distortion in the normal price structure of the economy. Over time, economic activity adjusts to account for this price distortion and life goes on. This was first documented by Richard Cantillon and is known as the “Cantillon Effect”. You get the same result when someone prints counterfeit dollars in a secret room under their house, the only difference is that central banks are a little bit more upfront about it.
If you want to see a live Cantillon Effect play out, take a look in the USA at how government backed student loans are cranking up tuition fees, thus forcing more people to take out student loans, which in turn cranks up tuition fees. When those loans collapse (and they must do, because the massive tuition fees don’t reflect any value that might become a realistic return on investment) there will be a reverse Cantillon Effect as money is destroyed by debt deflation and taken out of the system.
Whenever the money printing “tapers” off, prices need to readjust and in the process some speculators take a beating. Don’t worry about those guys, plenty more speculators will fill the gap where they came from. They are speculating with your Superannuation money, but anyhow you will keep paying the money because you have no choice really, so don’t worry about that either. These things are not the issue (although they may be a bother to individual people caught in the mix). The real question is whether all that stimulus has improved employment or not.
A number of points here, firstly the employment participation rate in the USA has been falling since 2000 and has not turned around. The trend is still down. Sorry about that, go check it yourself. In Australia we are hanging in there, but nothing overly exciting is happening.
The next problem is overall uncertainty, people need to make plans, it is part of any rational being; and when powerful entities inflict uncertainty they essentially force people to abandon any long-term thinking they might have had. That’s usually bad, unless there are very good reasons why we need to rapidly adjust to a coming calamity. Sadly, the calamity we are adjusting to is of our own making, thanks to the disruption of long term plans. Part of the job of a central bank (presuming it has any purpose) is to ensure monetary stability, that allows people to write contracts with a decent expectation that the contract will be meaningful on a future date. Keynes said that wages are sticky, but if you think in terms of the physical world, most of the things you do are sticky — your daily routine, the skills you know, the tools and property you own, the people you hang around with are all sticky. That stuff can’t just be changed around in an afternoon.
Lastly, there is the issue of economic calculation. If the best and brightest waste their lives making short-term profits by double guessing the Fed, then they are not using their time and effort to optimize productive output. Without production there can be no consumption, other than consumption of capital, and that’s bad. Disruption of prices spoils economic calculation, and smart people understand this so they don’t bother trying any more… they just do and play games double guessing the Fed because there’s more profit doing that. This is a long term effect, and the long term is bad. The best the Fed can do is keep things as even as possible and try not to cause any major disturbance, but then again governments demand that someone just keep buying those bonds. The Fed can also now and then act a little crazy to spoil the people trying to double guess, but doing that makes other people more nervous about investing (back to uncertainty). So the Fed just act a tiny tiny bit crazy to blow off the foam as it were.
Fundamentally we have a deeper problem that people have been promised a lot of stuff that they can’t get because it never existed, and probably never will do. That’s what debt is, a promise. Either something amazing comes along, or else someone misses out… then we ask ourselves how we go about finding out who does miss out, and who has to explain it to those guys.
280
Well, DUH! Of course Governments don’t print shed loads of money every day just for fun of it. It’s so they can spend it at the expense of everyone else. But thanks for stating the bleeding obvious, Tel.
113
It may be obvious to you, but trust me there are a lot of people who not only don’t find it obvious, but if you try to tell them, they simply won’t believe you.
Have a go at reconciling the Keynesian concept of stimulated “Aggregate Demand” with the principle that the only thing government does to the economy is create Cantillon Effects. In other words, how does a price distortion boost an aggregate?
100
Tel, yes, I have had the same experience trying to explain the obvious to people who seem otherwise pretty bright. Thank God for Mises and Rothbard! I shudder to think of a world with only Krugman to guide us! 🙂
50
Thanks Tel,
That is a keeper. On of the best and succinct explanations I have seen in a long time.
70
Thanks for the encouragement, I’ve been spending a lot of time on Bob Murphy’s blog, where this stuff gets discussed. Also, the old Murray Rothbard books are available for free download from the Mises Institute, and although Rothbard was a bit of an intellectual extremist, he absolutely did his research, and writes with great clarity and great precision. They are a little bit dry but very readable. Try “The Case Against the Fed” and “America’s Great Depression” in that order, if you want a good place to start.
You can buy the books in paper form as well, if you know someone who deserves the boxed set for Christmas this year.
Another guy worth reading is Professor Edward Ketz, from Penn State who writes about accounting ethics, about ethics in general, and white collar fraud. Ketz wrote an open letter of surrender to the banking industry. Now he calls himself a grumpy old accountant, so you know he is honest to a fault.
80
That’s Ketz:
http://accounting.smartpros.com/x71113.xml
You get the general idea…
80
I know a very senior accounting academic who cheated on every exam when he was an undergraduate. Ironically he now specialises in teaching ethics.
40
Well, would you want to be lectured by somebody who had no experience of the subject? 🙂
20
I’m not a Keynesian, but I’m more Keenian than pure Austrian these days.
Also, would you recommend Rothbard over Mises for a newbie introduction? I’ve been dipping into Human Action occasionally but a more succinct explanation would be appreciated.
Okay I’ll have a go. The ability to print money from nothing means it’s not a zero sum game, so the initial price distortion is not the result of underinvestment in other sectors regardless of how quickly the Cantillon effect readjusts the prices to maintain scarcity/unaffordability. That should create a boost in aggregate demand which lasts as long as it takes to Cantillon back down to irrelevance.
Now where’s the newbie error in that? 🙂
00
Multiple times I have approached “Human Action” and find it both very difficult and very annoying. I just don’t gel with it somehow. I find Rothbard a lot easier to read. That’s a personal appraisal, there’s no reason to presume everyone will agree.
As for Steve Keen, I’ve been keeping an eye on his stuff for years (even posting on his blog), and I agree that he has some interesting ideas. There was a high profile interview, where he said that the economic problems of Europe could be solved by just printing money and giving it in equal amounts to everyone (with automatic first dibs on paying off debt wherever possible). That’s an inflationist scenario to be sure, but if you go back to the idea of a Cantillon Effect, Steve Keen is pushing for a different distribution of injected money, thus a different shaped distortion. I think of it as a “Sixpack Inflationist” (i.e. Keen) vs a “Champaign Inflationist” (i.e. Bernanke).
30
Tel,
Get a copy of David Stockman’s latest book “The Great Deformation: The Corruption of American Capitalism”. I have the Kindle verision and half-way through it. Literally an eye opener as DS was in government at the time all the various policy changes occurred that gave birth to the present situation. He avoids the usual libertarian style of identifying people as socialist or other labels, but sticks to the facts. It’s complex and the origin started after WWI – in fact it was the bankrupting of nations caused by WWI that led to the present mess.
Importantly none of these policy changes were done malevolently but from a deeply held desire to improve living standards; the problem is they just didn’t realise the ideas were wrong. And they still don’t understand that money printing and stimulus doesn’t work. It’s a total ignorance of Say’s law, apart from other facts, that underlies the whole shambles.
Nixon was the one who killed it when he reneged on the gold standard during 1971. Since then everyone has been living beyond their means, and Australia is headed for the same train smash.
But get the book – it’s occasionally repetitious, but details the process in detail.
Solution is to get back to the gold standard – it is how nation states balance the international trade imbalances. But once off the goal standard everyone started to manipulate their currencies for nationalistic reasons.
One final point – Keynesian deficit funding only works in a closed system, or an autarkic state, hence the relentless move to a world-wide global system – which I why I suspect the central planners are trying to implement a type of energy based medium of exchange – carbon price.
40
A gold standard is an absolutely crazy idea. It is inherently deflationary. This completely stifles economic growth.
Mining also wastes vast amounts of valuable resources producing a rare material that has very few practical uses. The Spanish achieved nothing from nearly 400 years of mining gold and silver in South America. Meanwhile the Dutch and English got extremely rich by trading on credit.
23
1. Devaluation means lowering prices for a fixed money supply and means increased productivity.
2. The largest increase in economic growth occurred during the 19th century in both England and the US, when there was a gold standard.
3. Economic growth since that has crashed – people are becoming poorer, and the west is generally living beyond its means.
Maybe read Stockman’s book?
40
Deflation is the opposite of devaluation. Deflation causes hoarding of the currency because it will have greater future value. That is partly why Japan’s economy stagnated for 20 years – and why the Japanese have deliberately inflated their currency by 25% this year.
Income growth was far higher in the 20th century than in the 19th century. The 19th century was plagued with frequent massive currency fluctuations and frequent boom and bust cycles.
You can’t possibly argue that people are becoming poorer. Purchasing power in Western countries has increased by a factor of >10x over the last century.
21
People are not becoming poorer, except in a relative way. I have a far higher standard of living than my parents 30 years ago. And its not because I’ve moved up the socio-economic ladder!
33
Maybe in the cloistered existence of academe. Meanwhile the rest of us are having to work harder and longer for less, while watching anything saved towards a pension being continually raided & devalued by Governments.
They even say that those without are the most well off because the Government doesn’t like competition.
60
So, an international Carbon Standard, becomes a quasi Gold Standard?
I am not so sure that would be a very good idea.
40
Gold is easier to measure than CO2 emissions, and even tungsten can be difficult to assay properly.
30
Tel,
It’s not theoretical, it’s personal. That SOB has ONCE MORE eaten a chunk of my retirement. And he’s not the only troublemaker in the world by any means.
The problems get discussed, researched and analyzed on a daily basis. But I never see them fixed. Who has a solution? Or better yet, who is the fixer? It certainly isn’t anyone I know of.
Both wisdom and foolishness get rewarded. But I’m tired of reaping the rewards of someone else’s foolishness.
30
If you are one of those poor saps expecting the US government to pay out on Social Security commitments, then my condolences.
If you aren’t one of those poor saps, feel good about that!
40
It got a gold star!
Woot.
50
Congrats. on your Gold Star Tel.
Joanne’s Gold Stars aren’t given lightly and they are rarer than Nobel Prizes.
50
It is like a junkie going cold turkey. The money is propping up the market and consumer confidence (while it eats away their earnings and savings with real inflation). Right now that is all that is keeping the US from double dipping.
But it does have to end eventually. They are running out of bonds to buy. So like a bandaid, they can do it quick and get it over with (and send the US into another recession) or slow and more painful (and a longer recession with a slower recovery.
00
In reality, the markets were ‘overbought’ and were looking for a reason to ‘correct’ and Ben gave it to them.
At least, that is what we would have said back in my time in financial markets.
Ben basically said: “We may soon not need to continue buying government bonds because of the improving economic outlook.” In my interpretation, that should have been interpreted as good news, but it wasn’t.
The conspiracy theorist in me says this has something to do with the Mannian style contortions currently going on in the world’s gold markets. A few months ago it became clear that the gold price was going to have to be manipulated lower, otherwise all the uncovered positions in physical metal were going to cause a gigantic financial problem. If you own a large amount of paper gold, just see how difficult it is right now to get delivery of the physical metal.
Once every 70-80 years the world seems destined to go through a devastating financial crisis, like the 1930s. This time we dodged the bullet by pumping huge amounts of credit into the system. We just don’t know what happens when we stop the pump. Far too few people realise that at the end of 2007 we were looking into the eye of a full blown economic depression. You may not like what was done, but it saved us from a world of soup kitchens and 35% unemployment rates.
Is pumping inflationary? It all depends on what part of the 70 year cycle you find yourself in. Right now, it is not inflationary as the ‘Velocity of Circulation’ of money decreases in response to the extra cash sloshing around the system.
61
The Depression of the 1930’s was essentially ended by the stimulus of the Second World War – at least as far as the US was concerned.
The war provided a production stimulus to the US Economy which later kick-started the recovery in Western Europe and later still, the industrialisation of South-East Asia.
That cycle of stimulus has now run its course, to be replaced, in the West, by the dampening effect of the environmental conservationist movement, which, in reality, bars and locks the exits for Western economies.
Any meaningful recovery will therefore come from Asia, and it will have a more Asian approach to doing business, which implies long term planning, and the early acquisition of resources. That acquisition of resources is happening now, in the Pacific, and has been for some time.
The Russians saw the trend a decade and a half ago, when they “diverted” the construction of a gas pipeline in the Russian Far-East away from its original destination in Vladivostok to rail head in Northern China
40
The market pundits will always provide a dubious post facto explanation for any market movement. In reality people just rapidly switch from greed to fear or vice versa.
10
The reality is that most of the world wasn’t in depression during the 1930s. The Anglosphere and Germany suffered severely but many other places had no more than a minor downturn.
The Great Depression had well and truly ended, except in the USA, long before WW2 even began. Most economies, except the USA, were well into the recovery phase as early as 1932-3. The USA suffered far more than most countries because their stockmarket was valued at >10x the actual intrinsic worth in 1929. If anything the massive financial and human costs of WW2 greatly hampered economic recovery in most combatant nations.
20
It is a game of chicken. The money has way over bought the market. But many are riding the paper gains (especially the retirees). No one wants to buy at the top, so even a sniffle by the feds is going to spook it.
The smart money has already pulled out. They are not waiting for the crest of the market because that is only seen in hindsight. The correction will be large. And it is going to hurt those who cannot wait for it to recover. The retirees.
00
Keynesian vs Classical economics,
A retired accountant explained this to me once and it stuck with me ever since, I’ve even heard Ross Greenwood mention it on TV.
Maybe the subject should be discussed more?
10
With respect to Mr. Keynes, his name has been used to justify all sorts of spendthrift policies, by the left and by those dependent on using other people’s money, to keep spending and continue living on the never-never, forever…
When the money runs out they just have the existence of some more conjured out of thin air by decree, and dignify it by calling it a form of economics. It is the very antithesis of anything economical.
Just like consensus is science, spending what you have not is economic.
Only if your audience is so , so in awe of your authority, or so desperate & dependent on it for a short term fix that they will let you get away with it.
100
Joe V., thanks for the insight.
Now might be a good time to ask for ideas/opinions on Distributism an economic and political system proposed by the DLP, I have looked at it and it seems plausible in theory but not sure in the real world.
Heres a link,
http://www.dlp.org.au/about/distributism/
10
Distribution of wealth can occur only after the wealth to be redistributed is produced.
You have the of distribution of wealth in relation to the actual degree of innovation and productivity of individuals by freely trading value for value among the producers. The alternative is for someone or some institution who does not innovate or produce the wealth using physical force to distribute the wealth according to its whim. The physical force being theft, extortion, deception by a thug or gang of thugs or the government doing exactly the same thing.
The only middle way is to have some exchanges freely done and some exchanges mediated by physical force without regard to the the choices made by the producers. This so middle way is an unstable transition state between genuine free markets (capitalism) and a totalitarian state. Which means there is no such thing as a third way in the long run.
30
“gang of thugs or the government”
There’s a difference?
20
Once upon a time the difference used to be carefully documented in this thing called a “Constitution”.
You will note the fairy tale beginning here, but I won’t promise you a fairy tale ending.
30
I hear that Obama keeps copies of The Constitution in his executive bathroom for his personal use. That’s how much The Constitution means at the moment. It’s fruitless to even mention it because, like the 65 mile/hour speed limit being ignored every day, it doesn’t exist. Words on paper are nothing. We need action according to those words before they mean anything. We don’t have that, do we?
20
The translation from words on paper into actions is people who read those words and think about what they mean.
So the first step is to encourage people to read about and think about limited government, and when enough people do that, we will get action.
20
Tel,
No matter how much the man on the street wants limited government, those who govern will fall ill with the corruption disease that having power always brings with it. We are now at a point where almost 50% of the voting population wants free stuff. I don’t need to explain what that means.
I won’t even discuss the voter fraud that helped Obama get elected in the first place and then reelected him last year.
All this corruption is real and tangible. It operates every day of the week and twice on Sunday for good measure. The Constitution and the laws of The United States are nothing when the chief law enforcement officer, His Majesty The Great Obama, ignores them as a matter of policy — which he provably does.
If he decides to run for a third term in violation of the 22 Amendment, who will stop him? If he was to be impeached and convicted but decided to stay, who would remove him? When he violates the law every day, who will do anything about it? No one, that’s who.
He has built a domestic army within the department of homeland security that he can use at will.
It’s nice to discuss all this, analyze it and go, “Oh woe is me,” if I need to depend on social security or Medicare. But it doesn’t solve the problem.
Obama operates like a king, dictating everything he can get away with dictating. He will soon enough be able to finish packing the Supreme Court with his chosen majority and then it’s all over but for the inevitable revolution; which will be the only way to bring down this thuggery that has replaced our government. I pray that I’ll not live to see it.
20
There sre two big differences. Gangs of thugs don’t have a flag. Gangs of thugs don’t tell you it is for your own good when they rob from you.
30
There is a distinction but without a difference. The distinction is that a gang of thugs do their dirt privately while government does it under the cover legal fictions.
The so called laws were made up by the government to allow the preplanned thuggish activity. They were subsequently interpreted by the same government as being “consistent” with the constitution. That way the government can be “surprised” when We the People complain they have violated their oaths of office. They can reply that everything they have done is perfectly legal and following “due process”.
40
It was in wondering what your retired accountant might have said, that it set me off on that rant.
Distribution I’ve yet to be acquainted with. Thanks for the link.
40
My previous complaint about Distributism still stands. By eliminating economies of scale of mass production all the widgets will cost more, and 3 times more in a lot of cases.
Since the wages of each worker are now supported by a lower volume of production in a smaller customer catchment area, I don’t see wages going up.
Prices up, wages down, results are then predictable.
I’m struggling to see how any other better outcome is possible. Any ideas, folks?
On the flip side, an inefficient decentralised system is more robust against natural disaster and political interference in the long term. It would also lead to greater social cohesion, simply out of economic necessity.
But good luck getting people to sign on to it considering the depressive hazard above.
20
Andrew, I remember your insight, thanks for that, and tried to get my head around it as well.
I think the ideal has promise but you hit the nail with “But good luck getting people to sign on to it considering the depressive hazard above”. after all why would people drop one system if they thought they’ll lose what their gained or potentially could gain.
I’m actually going to see a DLP member and get them to detail the idea and post it here if anyone is interested.
10
I, for one, am interested in hearing it.
10
Absolutely it should be discussed more. I am of the belief there has been a perversion of Economics in favor of Keynes similar to the perversion of Science in the global warming debate. Every time we have a global economic shock the Paul Krugman’s of the World discourage any suggestion we should wind back fiscal stimulus instead of encouraging more efficient production of goods and services. The results for all to see is ever escalating and unsustainable government debt levels which seems to have no end. It is the volume (not rate) of taxes paid by corporations and individuals that is the only solution. Governments destroy more economic value than they create as they are inherently inefficient as they are not forced through market competition to become more efficient.
Ben Bernanke’s words are over emphasised by the herd of well educated traders and media commentary on Western stock markets just as Alan Greenspan before him. When will people learn to use their own brains & logic?
30
Contrary to Australian government spin lower interest rates, official rate in particular falling is not good, it is a measure taken after careful evaluation of where the Australian economy is heading, lower means going down and RBA attempting to stimulate spending and higher means economy growing and RBA attempting to slow spending to avoid inflationary pressures. It seems that most Australians have taken the opportunity not to spend but to pay more off their mortgages instead. Good, common sense at last.
GDP growth was 0.6% last quarter or annualised 2.4% which is not a disaster but the decline is a warning. Slowing mining boom is a worry because the mining sector and businesses benefiting from it are the main reason why Australia has avoided a new recession. The patchwork economy has many bad patches that for all intents and purposes are in recession now. Consider how many businesses have closed, are retrenching people and are planning to leave Australia. The green and red tape has been strangling business confidence and raising the cost of operating a business here. The cost of employing skilled Australians is now unattractive, as the Fin Review reported not long ago the total cost (not only wages) of employing skilled workers here is more than $600/day compared to the US of more than $400/day, Australians cost 50% more to employ than US workers. And in the third world the cost is less than $200/day. Add poor work practises like treating sick leave as a holiday entitlement, one of many examples, and Australia has prices itself above global labour.
We are going to have to adapt, mend our ways, make governments smaller and less intrusive of business and reinvent our path to maintain, retain and grow national prosperity.
A start will be abandon carbon tax con and renewable energy charges, and inefficient power suppliers such as wind turbines and solar panels. We also need governments with people who understand how markets operate, not new world order fanatic socialist Green Labor from last century when the industrial age was a driver, now the IT age is where it is all happening.
But we also need food (Abbott Coalition northern Australia food bowl iniative, builders and other trades, shops and more, but we must demand modern thinking and an end to roadblocks to progress.
60
Like astrologers, economists are always right. And equally reliable.
When they are obviously wrong, it is due to unforeseen or unavoidable circumstances.
Bernake oversaw the global financial crisis. How is he still there? Who still believes this rubbish?
“Pulling the levers”, “making adjustments”? the real world copes and moves on.
The soothsayers have said enough sooths for me, thanks.
40
It was Churchill who asked for a one armed economist who could not therefore say on the other hand.
110
If you laid all of the worlds economists end to end, they still could not reach a conclusion.
140
Churchill also said,
“A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, and next year. And to have the ability afterwards to explain why it didn’t happen.”
― Winston Churchill
40
From: http://www.smh.com.au/national/newsmaker-martin-parkinson-20110520-1ewi5.html
Economic pedigrees do not come much more blue-blood than that of the new Treasury secretary, Martin Parkinson. A PhD from Princeton University, obtained under the tutelage of Ben Bernanke, now the chairman of the US Federal Reserve, catapults Parkinson into a leading position for the title of the most technically trained treasury secretary this country has seen.
20
Australia is doomed, doomed, I tell you.
100
.
This is not all that difficult – in fact, it is the sheer simplicity of it all that causes people to disbelieve.
In most of the world today, most “money” comes into being as “credit” – a debt with interest. No matter how much “money” there is at any given time, there is always more owed, than exists to pay it back with the accrued interest.
Think of playing Monopoly where the Banker gets 10% of EVERY transaction, which is set aside as the Banker’s “personal wealth”. Pass GO, you get $180.00, the Banker gets $20.00. Buy a property from another player for $500.00, the seller gets $450.00, the Banker gets $50.00, and so on. On EVERY transaction.
Left alone, pretty soon all the “money” is sitting in the Banker’s “personal wealth” pile, and the game grinds to a halt with the rest of the player’s owing the Banker. The only way to avoid this outcome is for someone – in this case, the same Banker – to create some more “money” and feed it into the game. But eventually all that “new” money is in the Banker’s personal wealth pile too, and the other payers are even more hopelessly in debt.
.
It all starts off well enough. Banks offer ever easier credit, and people, businesses and governments borrow money. The debt accrues, always with more owing than exists to pay it. The banks and/or governments create “bubbles” in certain areas to spur ever larger borrowing. Eventually a point is reached where the ability of the people, the businesses, and finally, the governments, to service the debt, is maxed out. Borrowing stops, and the system collapses. That is where we are now. What follows is a massive transfer of “real” wealth – property, farms, businesses, mines, government-owned infrastructure etc, to the banks. Then we start the game all over again.
This game has been played over and over, but people never seem to catch on.
.
The so-called “pumping” by Helicopter Ben has just been a last huzzah of creating easy credit, to entice small investors, super funds, and the like, back into the stock market, so the “real” players could cash out of the game. Now that the people “in the know” – or “the big club” as George Carlin referred to them*** – are now fully cashed out of the game, it can be allowed to collapse.
And collapse it will.
If you have more than a couple of years to go to retirement, and you really believe you are ever going to see any of your superannuation, you’re living in a dream. Time to start making alternative plans.
.
*** WARNING – bad language.
.
180
MV, good analogy, it reminds me of an old photo of someone taking their wage home in a wheelbarrow full of cash, I think it’s post war?
Someone at work last year kept reading a book called “The next big crash”? or something like it, I had a quick look and it predicts a similar situation you propose, interesting we were taught the perils of printing too much money in high school.
40
Wheel barrow picture – Germany in 1923/4.
Massive inflation caused by massive printing of banknotes. Workers soon started being paid BEFORE their shift, as the notes were ‘worth’ more then than at the end of the day. (They handed the notes to their wives who rushed off and spent it as quickly as possible [women are expert at that] Oops Julia will abuse me).
Similar events just prior to the German debacle occurred in Austria and Hungary, so the german authorities should have known what would happen. See also recent history in Zimbabwe.
30
There is a story of a German lady who rushed to the market with her hyper-inflating currency stacked high in a big wicker basket. She set the basket down while she looked at some bread for sale, and when she turned around, someone had stolen —
Stolen the money?
No, they had left the money but taken the basket.
20
OK MV, but what have they “cashed out” into? Gold tanked too.
What do the bankers and wealthy hold when it all tanks? Food? Water?
20
On rereading, perhaps I did not make the point clear enough. The transfer of “money” into REAL assets continues all throughout the game. From start to finish. When I wrote the following:
I didn’t mean it only happens at the end of the game, it just hits a feeding frenzy at the end of the game. Unfortunately for Australians, we have already long passed the end of the game. It’s just that nobody noticed.
If I may quote a relevant example. Prior to the “recession we had to have” under Keating, which saw first-home buyer interest rates rocket to 18% +, the Big Four Australian banks had a paid-up capital value of $32 billion. Four years later, their collective capital asset value was $280 billion, and 300,000 Australian families had lost their homes. What does it take to teach people that 1 plus 1 equals 2.
.
Let’s move to the present. The current NSW government is planning to sell the port of Newcastle. In reality that means selling out all the individuals, small businesses, large businesses, and everybody else who has invested in Newcastle over the last 100+ years. Stiff sh*t, they have no say.
The NSW government needs the money to pay the interest on its accumulated debt – forget the bullsh*t reasons you are fed by the MSM. The NSW government is hopelessly in debt, needs to borrow more, and have been told the “cost” is to sell off Newcastle.
So Newcastle is sold off to the Peabody Group, an American organisation, the world’s third-largest producer of coal, currently suffering major competition in the USA from shale gas, and they simply close the port down, to reduce competition. And this is good for Australia – how??
80
Most people do not understand the difference between an asset and a liability. For example, they buy a house or a car and think that they are assets, whereas in reality for the house they have a mortgage, which is a liability and probably a loan for the car, also a liability. Even if they pay off the car, its constantly depreciating…. losing value.
30
If you don’t buy a house, then you pay rent. The rent is usually set to cover the landlord’s cost of capital (for the deposit), plus their mortgage and maintenance costs, plus any rates and taxes due. Basically the landlord owns the house for free, and lets the value appreciate.
The barrier to owning property is the capital required to obtain a mortgage in the first place. That is why people get trapped in rental properties with no means to break the cycle. But, you need some form of shelter in order to survive, and that is what makes housing different.
Cars on the other hand cars are never an asset. With a car you are paying for the convenience of going where you like, when you like. How much you pay for a car is directly related to how much comfort you want when using it. Contrary to popular opinion, you do not need a car to survive.
10
And here is one of the biggest scams around – the incredibly high cost of a house. Just the land is a massive factor, always way overvalued. But then the house itself – what actually went into it in materials and labor is nowhere near the high price its valued at.
Many people spend almost their entire working life paying off a house (which to me is criminal), so it is hardly an asset for them – it only becomes an asset when it pays back what they have spent on it, including time spent maintaining it and taxes. Maybe there is a chance it will be an asset for the children.
As for cars – fuel, maintenance, registration, insurance, depreciation etc. – ongoing liability.
10
BS, so true about the cost of building, my first trade was around housing/construction and I even built my own house from the ground up, people do not believe the savings you make from owner building and the “sweat equity” you save for your efforts.
The real estate industry is notorious for pumping up prices to stupid over valued levels but then people are stupid enough to pay that price and so it goes on.
The last financial boom has left a whole generation believing you can build a house, wait a few months and then sell for a profit of thousands, this is not good.
00
It is very rare for rental income to make a positive return for owners. House owners almost invariably rely on a combination of tax concessions and capital gains to make their money.
Last year I inspected a luxury waterfront rental house in Brisbane. The rent was $1150/week. The house was valued at $3.5million. This represented a gross return of less than 2% – barely enough to cover the cost of maintenance, insurance and council rates. To purchase the same house would have cost about $6000/weeek for 20 years.
20
If you look at what I wrote, you will find that is what I said, Although I didn’t use the term “capital gains” because that phrase means different things in different countries, depending on the tax regime.
00
Question: when the crash comes and the economy is dead, of what value is all that debt money to the bankers?
That so called money is a demand note on something that does not exist but that must be produced. It can be produced only by use of individual thought, time and energy (lives) applied to actual resources thereby creating actual goods and services. This takes time during which those expected to be productive must have something to live on. Yet the bankers “money” has no goods to call upon to provide that sustenance. No amount of whips, guns, commandments, or boots on necks can change this. That “money” has exactly the same value as the pretense from which it was created. In the long run the bankers will have to get real jobs or starve like the rest of us.
The bottom line is either free individuals are free to produce and trade value for value by their own free choice or a long drawn out and painful death.
20
That is a very good point, Lionell.
There seems to be a whole generation who see money as a means unto itself. The more you manage to accumulate, the better you are at the game.
In fact, I have actually overheard somebody say, “Yeah, so what, he might own a farm, and be a partner in a successful company, but he hasn’t got any money.” Their emphasis.
Is this is the best that the education system can produce? Or shall we blame social media for tending towards the lowest common denominator?
20
That’s tax, not interest. If I borrow a million dollars from the bank and make two million out of it somehow then I owe some interest to the bank. If I borrow the same and make three or five million, I still owe the same interest to the bank, regardless of how much I make… but with tax I owe more when I’m successful and less when I’m not successful.
Banking is even stranger than that when you consider that in Australia the RBA can raise or lower interest rates so you don’t actually know how much you will be paying to the banker (or if you are retired, you don’t know how much you will be getting back from the banker to live on).
40
Tel makes a good point, the monopoly scene is analogous to tax not interest. The end result of everyone being in debt to the banks is still the same though.
Tough choice, the rent trap or the mortgage treadmill. heh.
I’ve also been of the persuasion that the superannuation system is not much different in end result to the social security system it replaced, it’s a Ponzi scheme. if people put less than 1/3rd of their monthly income into super then they are expecting eternal growth in the economy above CPI to compound up the difference for them – expecting a free lunch at retirement.
But the worse prospect is that it is all designed to intentionally crash one day. Well it’s an odd co-incidence that in March 2008 the Visa credit card company became publicly traded. Hmmm, so just before the GFC the hundred or so banks that had owned it privately up until then began to sell their shares so the general market could buy it.
Q: Why on earth would anyone sell their shares in the world’s largest credit card company?
I hope you can think of answers less gloomy than mine.
30
The Asutralian superannuation industry was primarily created to give union officials access to vast amounts of money and power. It was never intended to provide any meaningful retirement income.
Paul Keating claimed that average workers would have ~$80K in super when they retired. He didn’t mention inflation. In 1990 $80K was enough to buy a cheap house. In 2035 $80K probably won’t be enough to buy a family car.
30
This should have been in the thread below , but it cannot go unnoticed. Is it to be a case “who going to be last out(of the scam) to turn off the lights”
http://www.quadrant.org.au/blogs/doomed-planet/2013/06/unexpectedly-climate-change-is-a-global-yawn
20
Speaking of inflating bubbles with taxpayer money… (yeah a bit O/T but I couldn’t wait until the weekend)
Here’s something for TonyFromOz to mull over on Saturday…
Vesta fronts campaign in Melbourne called “Act on Facts”, touting the wonders of wind power.
The logical fallacies I counted in that interview numbered only three, but with a careful ear perhaps more could be found.
#1) Absence of evidence is not evidence of absence.
#2) Argument from consensus.
#3) Says “Green energy” schemes have not recently increased prices and that’s all to blame on natural gas prices going up, but at the same time admits that wind power needs large scale energy storage before it can feed base load. We know currently wind “farms” need gas fired plants to back them up quite a lot, so more wind “farms” without storage lead to greater dependency on gas prices.
– – – – – – –
Speaking of sabotaging the country’s electricity supply and raising prices…
Union shuts down Yallourn Power Station over industrial dispute
Either the fire was deliberately lit by union sympathizers, or these power stations have such flaky and undocumented work practices that the day Unionist Joe doesn’t show up for work for any reason the darn thing bursts into flames.
If I was a betting man my money would be on sabotage again.
Yes I know that strategy didn’t work out for me with the toppled Devon windmill saga, but this time we can place the CFMEU at the scene of the crime. The cynic has much better odds.
50
Andrew McRae:
Interesting bit of propaganda. THe ABC presenter seems rather too familiar with the difficulties of wind power; one wonders if this was rehearsed. She asked some pertinent questions that he didn’t answer and she let him get away on those. Particularly his glide away from ‘base power’.
I picked up that bit on 600 billion subsidies for fossil fuel whereas ‘renewables’ only got 88 billion. Considering that ‘renewables’ only supply less than 5% of electricity, they seem to be well and truly subsidised, even before we ask what are those subsidies for fossil fuels.
The other thing was his constant claim that fossil fuels must get more expensive with time, so (currently more expensive) wind will then be cheaper. Then he implied that wind was reducing electricity prices, and the increase (from 2% to 14% of your bill) noted by Origen (as the green component) was not due to the simultaneous introduction of ‘renewables’ but to rising gas prices. And I thought they were on longterm contracts. I think he was rehearsing his explanations to the South Australians about the cost rises due to wind not supplying recently, and them wearing out their gas turbines.
Vestas may be the largest supplier of wind turbines but they are in financial trouble and being subsidised by the Danish Gov. They aren’t going to invest $19 billion in the next 7 years, they want a share of that.
I can only pre-empt Tony but:
1. wind power costs more than the fossil fuel alternative
2. It is not getting cheaper. Turbines are going up in cost, not down.
3. You will always require fossil fuel backup (98% according to EON the German Company big in wind).
So claims that wind will lead the UK etc. to fuel independence are nonsense. The claim that making german users of lots of electricity pay more, will make them more competitive is ludicrous. So is the claim that wind will ‘real soon now’ not require subsidies. That claim is 25 years old and getting a bit stale.
Storage would certainly help make wind more usable, but the only current large scale method is pumped storage. That loses 25-30% so forcing the cost up (further). The first problem with that is the greenies won’t let you build any hydro, even when you have a suitable site. The second is that Denmark, which generates about 20% of its electricity from wind, has connections to Norway where the hydro scheme is 3+ times bigger than the total Danish capacity. If 15-16 times the capacity of hydro is needed, what does that do to your cost of wind installation?
30
Andrew McRae says here in his block quote, and I’ve highlighted in bold the most intersting point here:
Want to you know when that fire started?
Around 4PM.
Do you want to know how I knew that?
Look at this graph of costs for electricity per MWH shown at the following link, and I’ll point you to where to go and what to do.
Electricity Price And Demand
When the page opens, look down the right hand side of the page. See that chart second from the top. That’s the one I want you to look at. If it isn’t already, highlight Vic by clicking on it. It should now say Vic and the next along should highlight 30 min 3 day.
Now. see the graph. Click on that and it will open in a larger format mid page.
See that red spike at around 4PM. That shows a huge cost spike.
The constantly running always there cheap coal fired power that was supplied by Yallourn has now gone off line, and frantic grid controllers are desperately phoning up smaller and (hugely) more expensive smaller plants to come on line immediately to take up the slack, hence that large spike, going right off the top of the scale around that time.
Remember how I’ve been saying the same thing about South Australia’s electricity costs because their only coal fired plant is umm, hibernating for the Winter, and when the Wind stops, their already expensive power prices skyrocket.
Well the same thing happened here in Victoria when a plant supplying around 25% of Victoria’s power, umm, had a, err, fire incident and was shut down.
Hey, how unlucky was that too, as that fire started just as the afternoon/evening peak power period started.
So then, now take this following link and look at the cost yesterday (21 June 2013) for power in Victoria for the Peak RRP period, (7AM to 10PM) and note how the average for that period was $205.44 compared to the (pre industrial action period) average of around $50 or so.
AEMO Average Price Tables
THIS IS THE END RESULT OF CLOSING DOWN COAL FIRED POWER PLANTS.
Electricity costs will absolutely skyrocket, that’s IF you have electrical power that is.
50
If Mattb was here, I’m sure he would have pointed out the error in my Comment.
Even so, look at that spike when the afternoon evening peak comes in.
Tony.
POST SCRIPT. The, umm, ABC mentioned that the fire was in the AM.
10
Gee whiz, Tony, I’m afraid I must respectfully disagree about the timing.
Looking at that same chart that high price period began before 3pm and since 3pm is now the left edge of the graph I can’t tell when the high prices began. I do wonder how you say it began at 4pm when it was already high at 3pm.
Maybe the fire did begin in the morning as the article says it did.
The AEMO’s previous two days actual generation data is easy to get, here is the relevant data for what looks like the Yallourn gen set…
21/06/13 08:00 YWPS1 199.74
21/06/13 09:00 YWPS1 199.74
21/06/13 10:00 YWPS1 0
21/06/13 11:00 YWPS1 0
21/06/13 08:00 YWPS2 199.49
21/06/13 09:00 YWPS2 199.24
21/06/13 10:00 YWPS2 0
21/06/13 08:00 YWPS3 201.03
21/06/13 09:00 YWPS3 197.93
21/06/13 10:00 YWPS3 0
The data shows Yallourn shut down between 9am and 10am, and some further querying puts the event between 9:30am and 9:45am.
Now the title of the ABC article has been changed and we’re told it was a fire due to an electrical fault.
Stay calm, citizens. Your government has everything under control. No sabotage occurred. The people are harmonious and united. Go about your business. Move along, move along.
20
Thanks Andrew.
That’s why Joanne’s site is so good. Different people come in and leave links to go and look at.
Thanks for that new link to add.
I mentioned the error in the timing in my comment directly above yours.
I’ve also noticed that the chart I linked to changes quite regularly, so what it looked like in my earlier comment (9.2) has already disappeared.
What I need to find now is the legend for the plant names for the site you linked to when you open it in spreadsheet format. Any hints?
Tony.
00
Good point, Tony, I was looking for that plant ID legend too and had no joy. It must be a conspiracy, they’re talking in code! 😉
But wait! I found their code book. 🙂
On their Registration page on the RHS they have a link to an Excel spreadsheet called “Registration and Exemption List – as at [date]”.
Pick the “Generators and Scheduled Loads” sheet and Column N is your golden ticket to Willy Watthour’s Electric Factory.
00
Oh yeah!
Jackpot!
Remember how I’ve been harping on about how expensive South Australian power has become now that they closed down the Northern Coal fired power plant at the end of Summer.
Now, why I wanted that legend for the codings of those power stations is to find something specific, and lo and behold, thank you Andrew, after some looking I found exactly what I wanted.
What do you know, and I’m willing to bet that this was done on the QT.
That closed down plant, Northern, now has one unit back up and running and delivering 200MW into the Sth Australian grid on week days.
I was wondering why all of a sudden those costs have dropped somewhat from the huge average they had for the Month of May.
It seems that they really do need coal fired power after all.
Andrew, the code is NPS1 and the operator name is Flinders Power, but that code is the one you want. Just pick a time and open up the spreadsheet and then scroll until you see that code NPWS1 and see that it is back on line, not that it’s helping all that much as their average electricity price is still high.
I wonder what sort of inducement the SA government may have offered them.
Tony.
20
Slight error here”
That second code now highlighted in Bold, just leave the letter W out of it. It’s NPS1.
Tony.
00
Super sleuthin’!
Time to leak this to the press, I can see the headlines now…
FIRE ICES WIND’S THUNDER
S.A. BREAKS WIND STRANGLEHOLD
CALM WEATHER FORCES WEATHERILL
GREENS HOPPING AT COAL BACKPEDAL
10
Seems you replied between when I began reading the AEMO site and commenting above. never mind, there’s some more detail and a link in there.
10
Jo,
Not many including politicians realize that banks are private businesses including the “Federal Reserve”. Good marketing name to make everyone believe the US government is actually part of it especially when they have appointed representatives like Ben.
The banks would love to increase borrowing rates to add more profits but have put many, including companies into deep debt that would bankrupt then if interest rates were to rise.
40% of bank profits are allocated as bonuses for the inventiveness of the players to generate new schemes. In some cases “record profits” are a numbers game of deferring their losses to the future and cashing out more money from their banks.
At anytime a bank can call in loans from companies which is suspected of causing the “Great Depression”.
What economists have failed to look at is government programs that suck the life and generate debt from a government due to easy borrowing off of the future. When industry leaves, service sector jobs are all that is left which does not generate many jobs or even good pay.
Banks don’t care, more profits.
Why is our government not printing money instead of the banks in which they will owe debt plus interest?
30
Jo,
A house looses equity as soon as it is built, just like a car.
Yet banks give us loans against this which raises housing prices and generates more inflation.
Banks can hold off properties from the markets to keep the housing prices high and inflated as not to loose money when the housing crash occurred.
30
Dear Jo,
Today I was very excited to see an email from Mr Greg Combet.
I really wanted to write a nice letter back to him congratulation him on all his fine work but I couldn’t put my feelings into words. I thought that like me, your readers and contributors also care pationately about Climate Change. Perhaps we could all brainstorm together on some ideas?
Here is the letter.
“[Sonny],
I know you’re passionate about taking meaningful action against climate change. As the Labor minister responsible for delivering the price on carbon and charged with tackling climate change, I’m determined to do what I can to lower carbon emissions while protecting local jobs.
But as you probably already know, the carbon price and associated support for renewable and clean energy are under threat from Tony Abbott and the Coalition.
After all the mistruths peddled by the Coalition about pricing carbon, we need to hammer home the fact that it’s working and hasn’t been the wrecking ball through our economy that the Coalition said it would be.
Below are three simple facts that you can use to argue the case for a carbon price and against the Coalition over the next three months:
Emissions in the national electricity market are down by 7.4 per cent and renewable energy generation is up by almost 30 per cent since the carbon price started.
This week China kicked off the first of seven trial Emissions Trading Schemes. By the end of this year 1 billion people will live somewhere with a price on carbon.
The carbon price sees the big polluters pay for their emissions. The Coalition wants to give taxpayers’ money to the polluters in a scheme that won’t reduce emissions but will end up costing households $1300 year.
We know that the Labor Government taking action on climate change is important to you, and we’d like to know what else matters to you. Can you click here and let us know what is important to you?
Thanks,
Greg Combet”
20
Did he happen to mention the 30% rise in electricity prices? Or the expected 30% rise next year?
20
Another +30%?? Cripes.
They must be trying to eradicate the consumer dollar. (or consumers.)
20
Ron Paul…if only…
20 June: BBC: Birds ‘show value of conservation investments’
Last year, scientists suggested it would cost about $5bn to reduce the extinction threat for all threatened wildlife, and up to $76bn to maintain a global network of protected areas.
“The total sums may sound large, but they are small in terms of government budgets, and they should be seen as investments, not bills,” said Dr Stuart Butchart, Birdlife’s head of science.
“Saving nature makes economic sense because of the payback in terms of services and benefits that people receive in return, from mitigating climate change to pollinating crops.”
Through the Birdlife Partnership, ***116 conservation groups from around the world pooled their research to create the State of the World’s Birds report….
Results from the publication also show that the biggest pressure on threatened birds comes from agriculture, followed by logging, invasive species and climate change…
http://www.bbc.co.uk/nature/22940947
***116 not-for-profit-taxpayer-funded, no doubt.
yet another Hannam Howler:
21 June: Age: Peter Hannam: Weather is moving south at a rate of knots
Southern Australia is in the midst of a climate tug-of-war that’s giving Melbourne weather previously experienced in NSW Riverina towns such as Deniliquin, according to new CSIRO research.
Warming global temperatures tend to push westerly winds south while El Nino weather patterns tend to push them north.
The atmospheric tussle of the past 50 years is becoming one-sided as global warming wins out, as inland dry zones shift about 250 kilometres south, said Wenju Cai, a principal research scientist and climate modeller at the CSIRO…
”The greenhouse-gas induced climate change is so strong that it overcomes the pulling towards the equator caused by El Nino,” Dr Cai said, referring to the weather pattern involving cooler sea-surface temperatures in the western Pacific often associated with dry spells over eastern Australia…
The dominance of the effect from warming temperatures is notable on an international scale, Dr Cai and co-author Guojian Wang argue in a report published by Nature’s Scientific Reports.
”This is a really rare situation where the climate change signal is able to work against variability and come out so strongly,” Dr Cai said.
The observed poleward shift in weather patterns is particularly strong during autumn meaning farmers can no longer rely on the so-called ”autumn break” that can wet fields for sowing. Catchments are drier when winter rain fronts arrive so there is less run-off for reservoirs in southern Australia…
A ”vast warming” in the Tasman Sea is also producing sea-level rises three times the global average over the past four decades in eastern Tasmania, he said…
”If we can cut carbon dioxide emissions, we can more or less stabilise climate change with the help of the ozone recovery,” Dr Cai said. ”That’s if we grab the opportunity.”
http://www.theage.com.au/environment/weather/weather-is-moving-south-at-a-rate-of-knots-20130620-2olux.html
30
I wouldn’t blame Peter Hannam, he’s just regurgitating the crap he was fed.
Wind patterns moving south???? We’ve just gone back to the patterns of the sixties and seventies. Cold and wet mostly.
The CSIRO badly needs a model (or a modeller) connected to the real world.
40
Actually it is not inaccurate to say that we have gone back (returned) to the pattern of 1946-1975.
Sometime around 2030 we may return to the pattern of 1976-1999.
Hey ! What if it is a cycle( within bigger cycles)?
40
The CSIRO is correct in saying that more heat leads to the winds moving away from the equator; technically an expansion of the Hadley cells. Equally a cooling causes the wind circulation to move closer to the equator.
There is not a new discovery; I have a book published in 1975 which uses this explanation for droughts in the Horn of Africa, and less certainly for monsoon failure in India. They relied on existing work. Quite why the CSIRO had to spend our money to develop a computer model to tell us this is beyond my comprehension.
I agree that we haven’t got back to that same pattern, assuming that we ever do so, but the change from ‘perpetual drought’ to flooding rains coming up from the southern ocean into Vic. and SA has been quite noticeable, except to the CSIRO. I am worried that the change in the sun will result in us returning to conditions more like those in the Dalton Minimum.
20
That sounds like a different way of explaining the less frequent incursions of tropical cyclones into the temperate zone.
Does the tropic zone get larger during warming? Are cyclones propelled by temperature difference and therefore in an enlarged tropic zone they travel south more slowly and don’t reach land as often?
10
In other words, global warming is causing it to get colder. Who is still buying this bullshit?
This is the sort of article that explains why the public is losing interest in climate change and global warming.
40
could TonyfromOz evaluate this? figures can be found in the article.
21 June: Bloomberg: Sara Jerving: Geothermal Power Tanzania Plans First Steam Generation Next Year
Geothermal Power Tanzania Ltd. plans to invest as much as $350 million to drill steam fields in the country’s south and build its first geothermal plants with the capacity to generate up to 140 megawatts by 2018…
Changing Climates
“The country is facing a lot of drought because of climate change, which means we need an energy mix so we are not so dependent on hydro power and non-renewable,” Jacob Mayalla, a principal geologist at the Ministry of Energy, said yesterday in an interview in the commercial hub, Dar es Salaam…
Geothermal Power is exploring options to raise funds including approaching development lenders such as the World Bank and African Development Bank, Robertson said.
Geothermal Power Tanzania Ltd. is 70 percent owned and managed by Mauritius-based Geothermal Power Ltd. The rest is held by Tanzania’s National Development Corp. and Interstate Mining & Minerals Ltd. in Tanzania, according to its website/
http://www.bloomberg.com/news/2013-06-21/geothermal-power-tanzania-plans-first-steam-generation-next-year.html
Geothermal Power Limited (GPL) has been established in Mauritius by leading German geothermal consultants together with Mauritius, Australian and Singapore partners with the objective of developing Geothermal Power resources in Africa and later in Asia…
http://www.gpl-international.com/corporate
GPL: Board & Management
http://www.gpl-international.com/corporate/board-and-management
11
Thanks pat. It’s off topic I know, but seriously, every time something like this is mentioned, it should be highlighted.
Green hearts everywhere are tremulously aflutter in ecstatic paroxysms at this wonderful news about renewable power in the Developing World.
140MW of Geothermal power, and if all goes to plan, hopefully only five years away.
140MW. Impressive.
Judas priest, it’s about the same as a fart from Bayswater.
Lets look then. Tanzania, is already a shining example of green wonderment. 71% of all their power comes from renewables already.
71%
Huge!
All of that Hydro.
Tanzania currently has a grand TOTAL capacity for electrical power from every source in the whole Country of 840MW.
Australia’s total Capacity from every source is 62,000MW, which is greater than Tanzania’s by a factor of 74.
Tanzania’s population is 48 Million, double that of Australia.
You do the Math on who has electrical power in Tanzania. Probably the school where all their distance runners train. Not the people, and that’s a fact.
This extra 140MW from geothermal, provided it comes on stream five years away is probably enough to power, say, Dubbo.
And all for only $350 Million.
I can see the Green renewable urgers right now, clapping their hands together and saying ….. That’s Tanzania fixed ….. Next.
Tony.
110
thanx TonyfromOz –
your response was, sadly, pretty much as expected. this kind of nonsense is going on all over the undeveloped world, all in the name of CAGW.
maybe jo can do a thread one day where we can seek out the most ridiculous ones to highlight.
20
Let’s give this some context.
The total electric power consumption for Australia’s smallest two States, Northern Territory and Tasmania comes in at 90% of the total power consumption for the whole of Tanzania.
Population Tas and NT 750,000
Population Tanzania 48,000,000
So, Tanzania has a little more power consumption for a population 64 times higher than those two States.
Tony.
20
Tony – the power they intend to tap is from the eastern riff that runs through eastern africa from the red sea down to Mozambique. They estimate there is potential for 15GW of power from the system.
http://www.greenpowerconferences.com/EF/?sSubSystem=Prospectus&sEventCode=GE1307TZ&sSessionID=ec6f2c7k5rm0m5k77s6en2est4-403847
00
Mind you – there is no evidence geothermal of the steam type can produce any power of notable dimensions. NZ has geothermal power in the Lake Taupo district but it only produces 700MW.
10
http://www.os.is/gogn/unu-gtp-sc/UNU-GTP-SC-10-0204.pdf
00
20 June: Guardian: Joris Luyendijk: Our banks are not merely out of control. They’re beyond control
Jailing reckless bankers is a dangerously incomplete solution. The market is bust. Institutions that are too big to fail are too big to exist
Seeing the British establishment struggle with the financial sector is like watching an alcoholic who still resists the idea that something drastic needs to happen for him to turn his life around. Until 2008 there was denial over what finance had become…
Today’s report by the parliamentary commission on banking standards (to which I gave evidence) is a perfect example of this tendency to fight the symptoms while keeping the dysfunctional system itself intact. The commission, set up after last year’s Libor scandal, identifies all the structural problems and nails the fundamental flaw in finance today: “Too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility.” Indeed, as they like to say in the City, running a mega-bank these days is like “Catholicism without a hell”, or “playing russian roulette with someone else’s head”…
Taken together, they leave but one conclusion: employees at the big banks themselves do not believe their top people know what’s going on; the big banks have simply become too complex and too big to manage. If this is true, the solution is not so much to jail the top bankers when something goes wrong, it is to break up the banks into manageable parts. But the British establishment still seems incapable of accepting the notion that a bank that is too big to fail or manage is a also bank that is too big to exist.
The same seems to apply to the need to restore market forces in the financial sector: the second source of structural dysfunctionality. Imagine a restaurant had served up product as toxic as that which big banks, credit rating agencies and accountancy firms were churning out until 2008. You would expect that restaurant to have closed. You would also expect new restaurants to have opened up in the area. This is how a free market should work: competition drives out bad practices.
But where are the new credit-rating agencies, accountancy firms or big banks? Even worse, not only are there just four major accountancy firms, they are also financially dependent on the very banks they are supposed to audit critically. It’s the same with the three credit-rating agencies dominating the market…
So where are the new players in high finance?
The reality is that global high finance is de facto a set of interlocking cartels that divide the market among themselves and use their advantages to keep out competitors…
More from Joris Luyendijk’s banking blog
‘It’s a proto-fascist ideology. Top bankers as predators and us as prey’.
http://www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog/2013/jun/19/banking-britain-beyond-control
31
Meaning they are all targeting a razor-thin short term gain, and depend on jumping ship at just the right time. Meaning everything you see in the trade statistics is so much crap (except employment statistics which are real, and also real crap).
10
Actually, I believe things are in pretty good shape. Our Maximum Leader has said that things are better, and we will do more to control that pesky climate thingy.
All will well.
21
Thank you for that, Bob.
Whatever it was.
10
United States political types have struggled with whether to give aid to individuals or do so indirectly via a process to encourage a certain (approved) behavior. One way of doing this has been to fund to regional economic commissions whereby training programs, schools, roads, and other activities are directed toward improving the (abstract) region, and thereby, the individuals there. The efficiencies with this strategy are quite low, but do sometimes work.
Single-family ownership of housing is the main other approved way. It is believed that ownership of one’s home plays an important role to the nation and the individuals. Building homes and furnishing them stimulates the economy. This is not done by giving money to individuals to buy a house but, rather lending institutions and others on the supply side are directed to offer low interest loans and other incentives to get folks in houses. The recently past housing boom and bust is not the first of these to go horribly wrong. A similar thing took place in the late 1960s but then the schemes involved “dressing up” inferior housing, selling it to a person with no resources to fix and maintain it, but having a government loan guarantee. As soon as the “dressing” fell off, the house would be abandoned and revert to the US Dept. of Housing and Urban Development (HUD). The HUD would shuffle some paper around and unload the house to an investor for pennies on the dollar. The investor could “dress up” the house, get a cooperating appraiser to tag it with a high valuation, and the loan originator – with the guarantee of the full faith and credit of Uncle Sam, and sell it a second time. When that owner walked away there would be another “paint, dry, sell” sequence and the government ends up paying for the same derelict building several times. It has been estimated this cost the US taxpayers about 70 Billion dollars.
The more recent housing bubble had the same thoughtful origin – encourage homeownership. Loans called “no interest” or “adjustable rate” and having a heart beat was sufficient for a person to buy a house they could not afford, and in many cases did not intend to live in. The idea was to “flip” the house. Houses could not be built fast enough so the selling prices escalated. So a money making strategy was to buy a house and in weeks (not years) the price would zoom and unit could be resold as a new house for much more than the builder sold it for. Housing developments with, say, five basic shapes and floor plans,
(See here: 36.134556, -115.323041 at Google Earth; zoom in)
sprang up with their most interesting aspect being the “flipping” and wealth creation this brought to the quick in/out investor. Then it became apparent that folks actually wanting to live in one of these houses had paid excessively for the privilege. Then a few people couldn’t pay the monthly costs because of a job loss or unexpected other bills. When the few such sales grew in number the oversupply of houses became apparent and the bubble burst. A few “get out early types” made money. Many have lost money. Wealth evaporated.
The Ben of this post did not create the problem but in trying to mitigate the damage his Fed’s stimulus plan has created another. It is important to the US government to keep borrowing costs (their own) low. The debt is huge. Any uptick in interest rates raises the cost. Jo says “ “no one utters the phrase that must not be spoken: “money supply”.” ” To me it amounts to the fact that if you can’t pay what you owe and have no hope to do so, you are more than just broke – you are a xz#vx7px! This isn’t ending prettily.
40
“This isn’t ending prettily.”
I nominate this as the grandest understatement of the millennium.
The only thing I can think of that can come close to topping it is that jumping off a hundred story skyscraper isn’t going to end well for the jumper. This even though everything seems fine has he passes the fiftieth story and the view is spectactular.
50
For those with a penchant for Doom and Gloom
http://www.realecontv.com/videos/the-stock-market/10-trillion-printed-where-did-it-go.html#sthash.hvMIx9Qf.dpuf
Maximise the screen size so graphs are readable. Note also 55 minutes in length; if you get there you won’t want to invest in Iceland, Japan, Greece etc.
00
From Peter Miller #2 above:
To make Peter’s point acute, about 5 weeks ago a group of German banks that have notarised London Metal Exchange Certificates of Ownership of physical bullion ostensibly stored in vaults in the US asked that their physical metal be transferred to vaults in Germany.
“Not for about 7 years”, they were told
So the Germans asked that they inspect the US vaults to ensure their bullion actually existed
“No way”, they were told
Conclusion? … the physical bullion that the Germans payed for and received notarised affirmation of ownership for simply does NOT exist. It may, or may not, be mined within the next 7 years
This deliberate manipulation of the LME market is a significant underlying factor in Newcrest’s current problems, and is being carried out for the express purpose of inflating currencies such as the US$$ out of debt (ie. to destroy gold as a hedge against devaluing currencies)
30
This deliberate manipulation of the LME market is a significant underlying factor in Newcrest’s current problems, and is being carried out for the express purpose of inflating currencies such as the US$$ out of debt (ie. to destroy gold as a hedge against devaluing currencies)
Newcrest is in trouble because they a) bought Lihir Gold for vastly more than it’s worth, b) kept the wraps on their massive writedowns and c) is accused of selectively briefing some institutions which is illegal.
Many gold miners are going bust because they are greedy and stupid. They expanded massively in the vague expectation that gold prices would soar. Gold prices never stay high for more than a few years.
10
Second carbon trader leaves Morgan Stanley: sources
LONDON, June 21 (Reuters Point Carbon) – Morgan Stanley’s top carbon trader has left the bank as part of wider cuts to its European power and gas division, two sources with knowledge of the matter said on Friday…
http://www.pointcarbon.com/news/1.2429472?&ref=searchlist
10
enumeracy on show again:
VIDEO 3’25”: 21 June: Bloomberg: Climate Change by the Numbers
London School of Economics Bob Ward discusses climate change with Erik Schatzker on Bloomberg Television’s “Market Makers.”
http://www.bloomberg.com/video/climate-change-by-the-numbers-zz7RhAzLQJiI6plMghVQaQ.html
00
Mr Wolf licks his chops…
“Come in, take a seat. Let’s speak of foreclosures & mortgages sweet. There’s only one rule in the game that we play. I am the predator & you are the prey.”
“On the freeway of debt you will drive. 30 years working hard for me, 9 to 5. Work hard,run fast, you might get away, but I am the predator & you are the prey.”
“Kiddies I know, I know it ain’t fair. It’s all funny money I make from thin air butI want it back triple & if you can’t pay, I’ll huff and I’ll puff and blow Mayfair away.”
“I’m the cat you’re the mouse, I’m the shark, you’re the fish. On a rice bed of debt you’re a tasty dish. There’s only one rule in the game that we play. I am the predator and you are the prey”
60
hope the carbon tax is abolished before our govt gets ideas!
19 June: Reuters: China threatens death penalty for serious polluters
A new judicial interpretation which took effect on Wednesday would impose “harsher punishments” and tighten “lax and superficial” enforcement of the country’s environmental protection laws, the official Xinhua news agency reported.
“In the most serious cases the death penalty could be handed down,” it said…
Previous promises to tackle China’s pollution crisis have had mixed results, and enforcement has been a problem at the local level, where governments often heavily rely on ***tax receipts from polluting industries under their jurisdiction…
http://www.reuters.com/article/2013/06/19/us-china-pollution-idUSBRE95I10D20130619
the somewhat less sensational source for the above:
18 June: People’s Daily: Xinhua: China targets polluters with judicial action
http://english.peopledaily.com.cn/90785/8289699.html
00
Waiting for and exit strategy that will never arrive.
20
Farmland has proven to be a good store of value ; and you can provide food , fuel, and building and clothing materials for your family and friends , while being hailed as an eco-hero for soaking up the demon CARBON. The more carbon that you sequester in your topsoil, the better it gets.
It’s really not a bad deal.
21
A west to east northern Australia food bowl is an exciting proposed economic prosperity zone.
20
Bernanke has no more influence on the global economy than CO2 has on the global climate. The economy and climate are both chaotic, non-linear and quasi-cyclic.
No one, except cloistered academics, really thinks the economy is a rational market acting on a free exchange of information. The economy is largely driven by human behaviour which fluctuates between excessive fear and irrational exubarance. JM Keynes called this behaviour animal spirits. That is why value investors can consistently outperform the market indices by huge margins for decades – they ignore the mood of the market and concentrate on the real value of companies.
Some Australian mining companies are currently trading at less than 20% of their book value. In extreme cases their cash holdings are greater than their share price.
40
I’m guessing this is the favourite funny tweet doing the rounds at the US Fed Reserve.
20
The only thing the tweet shows is a complete ignorance of basic economics.
The US dollar has real value because the US government will accept payment of taxes in US dollars. The US government won’t accept payment in Monopoly money which means it is completely worthless.
00
BB has it right, tax is the difference, and if you print your own monopoly money people don’t arrest you (other than for trademark infringement).
Fiat currency is backed by force of arms, and violence is a commodity which can be bought and sold so in an obscure way modern paper money is a type of commodity money.
Speaking of commodity money:
http://research.stlouisfed.org/fred2/series/PPIACO
Note that the US dollar has been stable at 200 for a couple of years now. It looks kind of artificial the way it jumps neatly to 200 then sits flat, most financial charts don’t do that. Make of that what you will.
10
Baa Humbug – My belief is those two images are of a piece of paper having the exact same utility value. They each: 1) when burned provide the same amount of warmth for you, 2) shelter you from the rain in equal amounts, 3)…
However the price of acquiring each of them IS different.
Same with the charts in the top post, the Bernanke changed the price quickly but the value remained pretty much the same.
00
how did our farmers lose control of their land? does “entering their land” mean “drilling their land”? if it’s the latter, then i would be on the side of the greens in this particular case.
the election campaign headlines i see on the political blogs are so superficial & meaningless; meanwhile our farmers’ property rights have been taken from them with the approval of both major political parties, if i am reading this right:
19 June: Australian: AAP: Farmers denied ‘lockout’ powers under new coal-seam gas legislation
But farmers won’t have the power to stop coal-seam gas and coal mining companies from entering their land, after a proposal by the Australian Greens was shot down in the Senate…
A Greens amendment to grant farmers “lockout” powers wasn’t successful, with Labor deeming it a constitutional risk and the Coalition claiming it conflicted with state laws…
http://www.theaustralian.com.au/national-affairs/farmers-denied-lockout-powers-under-new-coal-seam-gas-legislation/story-fn59niix-1226666254911
00
The Liberals and Nationals are correct, it should be handled at the state level. Mind you so should all mining issues including any tax on minerals.
10
Farmers don’t won the minerals. The states do. The farmers have never had a legal right to block exploration on their properties.
10
Typo:
Farmers don’t OWN the minerals.
00
This is perfectly correct. As a miner who has entered a farmer’s “property”, pegged claims and mined I could never support any move to lock out exploration or mining.
If a mining lease is granted, then the farmer can be locked out of certain areas (naturally, since infrastructure on top of the ground is required). Farmers only have a lease on the top of the ground and have always known that exploration and mining is permitted in most areas. They do not own the land.
10
The farmer isn’t laying claim to any minerals. He is just laying claim to the dirt that sits on top of them, and the fences that sit around them.
The US system makes a lot more sense to me, but I still maintain it is a state issue, not a Commonwealth one.
00
This is how it is and how it should be. The farmer has no claim to “the dirt that sits on top of them” in respect to mining. Minerals begin at the top. To have the rights that he does have he is incredibly privileged and has nothing to whine about.
00
Jo,
The biggest downfall that is occurring is “inflation”.
The cost of goods and services over the years has risen higher than the “net income”.
This is also effecting the purchasing power of currency worldwide due to the importing and exporting of goods keeps going up.
Basic needs like food is becoming unaffordable and food banks cannot keep up with the demand which has escalated and will become worse.
Many farmers this year have had weather related problems due to the increase in precipitation and cooler temperatures. Some areas in Canada still have had frost warning last night, in the middle of June…
00
I know nothing about economics so please judge me accordingly.
Here in Dubai there is a developer (DAMAC) building a block of apartments next door. They have a team of imported labourers from India building it. They flew the workers in from India and bussed them to their accommodation, 8 to a room in most cases. Every day at 6am they arrive on site and the busses pick them up at night, 6 days a week.
The developer is increasing his wealth by building these apartments and using cheap imported labour.
The Labourers on the other hand are increasing their wealth because even though that are being paid a measly $150/month they can still send money home where it supports their families.
It’s all about levels of wealth. The developer will sell the apartments for AUD$350,000 for 1 bedroom, AUD$750,000+ a 3 bedroom. He will increase his wealth, yet the labourer will increase his wealth back home, his family will have already invested in local real estate and when he returns will be a wealthy man.
The British gained wealth in this way via the colonies they created around the world, the middle east is doing the same except it’s on their own soil.
Once the project is finished these workers will be sent back to whence they came, unless of course the developer has another project in mind.
How much can one man earn a day? if he’s earning more than you he’s relying on the labour of others to make his fortune.
20
I don’t really agree. Many individuals can earn a great deal of money relying on their own skills. Examples include professional poker players, barristers, professional golfers, upmarket prostitutes and some medical specialists.
10
Hey bananabender, you just described our local council!
00
We have a highly structured economy, everyone in the Western world relies on the labour of others, even for their basic needs. Because of division of labour, and because of specialised infrastructure this is much more efficient than each person doing everything themselves.
The question of someone else earning more than you proves nothing about depending on the labour of others. Even if there was a rule that everyone must build their own house, and no one was allowed to help anyone else, still some houses would be bigger than others.
10
Exactly.
For example if the best someone can do is dig a ditch using a shovel, should he be paid as much as the engineer who designs the machines that can dig ditches faster, wider, and deeper than a thousand men using a shovel?
The value of pure physical labor of using a shovel to dig a ditch is orders of magnitude lower than the value of the intellectual labor required to design and build the ditch digging machine that can do the work of thousands.
It could be said that the engineer’s intellectual labor eliminated the jobs of a thousand men. I ask: what right do the shovel diggers have to constrain the engineer and millions of other people to their primitive and low level of productivity? None! What right do the shovel diggers who have lost their jobs have to take the value earned by others to live on? Also none! No one has an undeniable right to lay a claim on the lives and products of others no matter how much it is “needed”. They must either get another job or rely on the voluntary charity of others.
20
The most underused phrase in the English language.
00
I am on my fourth career.
Which happens to be remarkably like my first career, except now I am working for me, and not for the Government.
00
As we post there is a Climate Change conference going on in Sydney.
It’s called Australia’s Climate Action Summit.
It was quoted in the SMH and of course they quoted our old friend John Cook of the scepticalscience.com website who said:
here’s the conference link.
http://climatesummit.org.au/2013-summit/2013-program/
here’s an extract from the program:
9.45am Latest Climate Science – Extreme Weather and the Social Consequences of Climate Change
Prof Lesley Hughes, Climate Commissioner, Macquarie University
John Cook, Climate Communication Fellow, The Global Change Institute, University of Queensland
Assoc. Prof Erica Bell, Climate and Health Alliance (CAHA), University of Tasmania
Prof Colin Butler, Uni of Canberra & CAHA
here are their qualifications to address the topic:
The opening address featured the following speakers.
1. Professor Lesley Hughes
Member of the Climate Commission. An ecologist in the Department of Biological Sciences at Macquarie University and an expert on the impacts of climate change on species and ecosystems. She is the co-convenor of the Terrestrial Biodiversity Adaptation Research Network, Chair of the Tasmanian Climate Action Council and a member of Climate Scientists Australia and the Wentworth Group of Concerned Scientists. Lead author, IPCC working group II that assesses the vulnerability of socio-economic and natural systems to climate change.
(I could not find any reference to her qualifications)
2. Assoc/Prof Erica Bell
Associate professor – Deputy Director
University of Tasmania.
University Department of Rural Health
Ph.D, M.A (Qual), B.A. (Psych)
3. John Cook
University of Queensland, Bachelor of Science Honours, 1989
Research Areas
Psychology And Cognitive Sciences
4. BUTLER, PROF COLIN
ARC Future Fellow, Public Health
Faculty of Health
BMedSci(Hons) (Newcastle, 1984)
BMed (Newcastle, 1987)
DTM&H (Royal College of Physicians, 1990)
These are the people being quoted in our newspapers as authorities on the subject!
John Cook has a Bsc(hons) – my daughter achieved a similar degree in 3 years to gain entry to Medical School!
Sheesh!!
30
Did Cookie really say that ?
An’ him being a Scientist an’ all. Surely he meant heat ? Did he just sat temperature for dramatic effect , again. These are plainly just the rantings of an Alarmist.
Read more: http://www.smh.com.au/environment/climate-change/climate-change-like-atom-bomb-20130622-2op3i.html#ixzz2Wxr9aqXE
20
That just goes to show that Homo sapiens ability to affect climate is minimal, and that the energy required to influence Nature even minutely is so vast. I think Mr Cook just made our argument for us, completely contrary to the point he thinks he is making.
30
The public just aren’t buying it any more. The Academics presume it is because they are ignorant and need better ‘Communication’. They are right of course, but have they noticed who are the ignorant are ?
50
No. Says John Cook and other alarmists. We really need to challenge these people on where exactly they get their figures.
Were this really true, the only thing that would be left on the surface of the planet is dust. Utter rot!!
30
To be fair Cook’s BSc (Hons) degree was in solar physics – not psychology. He managed to jump the shark later on.
30
To be fair, it seems Cook never pursued qualifications in his career as a comedian, until finding an opening at University of Queensland recently.
40
O.T. http://blogs.news.com.au/dailytelegraph/piersakerman/index.php/dailytelegraph/comments/the_carbon_tax_is_a_crime/
Maybe, just maybe, the descent into green hell can be averted.
10
Bolt today raised this subject with Nationals leader Warren Truss who agreed that renewable was questionable and needed to be examined, and acknowledged that Nationals Senator Bosswell has been arguing again renewable for some time, amongst a nunber of Coalition members.
30
Only three months to go until the election. How much worse can it get for workers in that time ?
How quickly can the Carbon Tax be repealed ? Will it be in time to avert the industrial wasteland now developing ? Is ALP’s only hope to abolish the Carbon Tax now and claim some of the credit ? Was that their plan all along ? Could they really be that clever ? Is their Dogma about to be run over by their Karma ?
20
Jo,
janama
June 22, 2013 at 11:14 pm
Importing Labour.
I live in Ontario, Canada…We have a vast array of safety codes and also the minimum wage for workers.
If a worker is to even step on a ladder, they need Fall Arrest training and Certificate, they also need to be trained for WHIMIS(hazardous materials) and the employer has to pay 10% of the wages to WSIB(worker safety board). They need safety equipment such as work boots, hardhats and harnesses and ropes. There are a vast array of safety codes that have to be followed and the employer can be fined for each infraction. The worker also can be fined for some safety code violations as well if they are not wearing the proper equipment that has expiry dates on their equipment.
So, where is the fair competition and fair trade?
10
I totally agree Joe. If the building next door to me was being built in Australia there would be a full scaffold formwork surrounding the building that was totally encased on a modern plastic mesh, no one could fall out and falling objects couldn’t fall in. The building I view has no such thing – there are platforms lowered on cables that they raise and lower on the side of the building to add the external cladding – there is no safety regulations here apart from they must wear helmets and they aren’t allowed out in the sun from 12.30pm – 3pm. It’s 25 floors high.
10
janama,
Here also is what we have to have to even build a house.
A plan or drawings stamped by an engineer, a land survey, a site survey, a licensed machine operator(machinery), a footing inspection, a foundation inspection, a licensed plumber, a licensed electrician, a rough framing inspection, a plumbing inspection, an electrical inspection, a insulation inspection with vapour barrier, a final grade inspection and a final inspection for occupancy.
It has been made illegal to build a shelter…
It has been made illegal for basic survival to even gather food or to fish and hunt.
Is our governments really helping when they make all these laws and restrictions?
Especially when this is suppose to make us more competitive and create jobs???
10
Yes Joe – having spent since last October to get council (Municipal) approval for our construction here in Dubai I know what you mean. It’s the insurance industry that has created all this red tape.
We are doing an internal modification of an existing building. The tradies in Oz would cover the insurance and council approval wouldn’t be necessary but here in Dubai the municipal council covers it, so naturally they are extremely strict and as bureaucrats compete with other councils to dot every i and cross every t.
Their whole directive is distorted by the procedure they operate under.
The interesting aspect is that I was expecting our plan to be rejected on fire escape access yet the most powerful department, Civil Defence, approved it! It would have been rejected in Australia. Bureaucrats!
00
So what sort of economy do we want? There are lots of levers that can be adjusted to give different results. You can cling to the idea of a gold standard if you like, but the type of currency you have, and how it is controlled, really just depend on the results you want. Do you want higher inflation and lower unemployment? Or would you rather low inflation? Its not just the type of money that you can adjust. Labor laws, anti-monopoly laws, intellectual property laws – all of these effect how the economy works.
But just because it is a bit complicated is no reason to fall back on religious superstitions like the gold standard and the free market (by which people usually mean a market regulated in a way that they approve of).
Economists are often employed, and they naturally put forward views that further the interests of their employers. And governments are prone to tailor economic policies that suit some more than others. As a rule, governments seem to prefer to look after people who have borrowed money more than people who lend money. Maybe its because those who have borrowed are often more ambitious and pushy.
I worry that in building an economic system we’ve constructed something unstable. But that is probably mainly because I don’t understand it.
00
Some things are fundamental. Departing from the fundamentals only works for so long. Progressive types love to think that they’ve discovered some new paradigm where the old rules no longer apply. They are often the most easily led. Constructed economic systems are inherently unstable, but mainly to the extent that they are allowed to grow so big in the first place, that collapse is so much bigger when it eventually comes. Whereas a Fred market system would have been allowed to self correct long before it got so detached from reality.
The only good thing about planned economies, is it keeps the planners busy- preferably on someone else’s economy.
10
Joe V.,
This system cannot work in any way shape or form as it is totally unrealistic to factors of government interference, even if the economy was still booming. Imposing even more programs and restrictions drive business away for easier investments.
Holding gold and silver will not work as most of it is held by the wealthy and would have no bearing on materials that are essential for basic survival.
Better to investing in lower metals that have value when melted and turned into useful products.
The other factor is what would the poor have left to barter with?
00
The US Federal Reserve is a banking cartel, owned by its member banks. The basis of their power is the integrity of Treasury Bills. You can count on them to save themselves, same as they did during the last great depression. Ben is preparing to sacrifice the economy to preserve the power of the Federal Reserve. The dollar will be preserved, but the six banks will have most of them.
10