Wednesday, November 26, 2008

United States of Funny Money

Zimbabwe here we come !! Right back where I started from:

Weimer style hyper-inflation is a heartbeat away !

Bailout pledges have reached a maximum limit of $7.7 trillion US !

No scratch that !!

The Fed just pledged another $800b in new schemes to bring the grand total to $8.5 trillion !

Where does all this money come from ?

a/ The printing press
b/ Taxes

See those greenbacks in your pockets and bank vaults that you worked so hard for ? Either Americans will be taxed directly (which could pay for a small part of this) or the easier option, is the Fed will run the printing presses and send the supply of money soaring, which makes every existing dollar lose its value.

This has precisely the same impact as a tax for dollar-holders, but with the added benefit of the public being mostly unaware of whats going on until its too late and prices start soaring.

The only guaranteed way to avoid the tax is to dump your dollars early and buy gold.

Monday, November 24, 2008


President-elect Obama now promises the same kind of 'change' that Bush delivered after Clinton.

He promises to get rid of all that harmful 'Bush-era deregulation' that caused the crisis. The only problem with that idea is that Clinton actually delivered more deregulation in the 1990's, whilst Bush added strict accounting regulations for Wall St after the collapse of Enron.

For those clueless pundits (most of them working for the ABC and Fairfax) who still think Bush and Republicans somehow represent 'extreme market based capitalism', maybe they should google "Sarbanes Oxley" and see how the heck more regulation = deregulation.

These same clueless pundits mistakenly assume that the US somehow represents a free market and capitalism in all industries, like health, education, welfare and foreign policy. It would be equally wrong to assume China still represents pure communism.

Reason Magazine has a great piece titled "Obama's Clinton Problem"

When it comes to overall regulation, as my Competitive Enterprise Institute colleague Wayne Crews notes in his study "10,000 Commandments," the Bush administration has set records with the tens of thousands of pages it put in the Federal Register. So to the extent that Obama has said he would reverse financial deregulation, what he would largely be overturning are the financial modernizations Bill Clinton signed into law and that Clinton administration officials agree led to the ‘90s prosperity.


To the extent that Obama's campaign attacked the specific deregulation policies that McCain backed, Obama ended up doing more than just running against McCain and his advisers, such as the much-vilified former Texas Sen. Phil Gramm. Obama was also campaigning against Bill Clinton, Robert Rubin, Larry Summers and virtually all of the Clinton administration's economic officials. The same folks, it's worth nothing, that now often surround Barack Obama.

Friday, November 21, 2008

When governments build cars

Watch out. The Soviets tried it. Crappy cars had to be rationed out to the citizens, whilst people in West Germany were enjoying new BMW and Mercedes cars.

As much as Lenin decried the materialism of Western capitalism, and as much as the elite intelligentsia always (and still do) tell people that the pursuit of happiness is not a noble goal, or that happiness can only be acheived if you follow their plans of one big totalitarian government ruling over all of us... people always fled towards free capitalist economies for the opportunities and prosperity.

Decades have passed and our brains have turned to mush. American car companies like GM, Ford and Chrysler are dying. The Congress approved a $700bil bailout package for the banks, and now senior Democrats Pelosi and Frank want the money to be used to bailout (i.e nationalize) the car industry.

The same thing just happened in Australia under Rudd. Taxpayer funds were thrown at failed enterprises so that these walking zombies can continue to roam the earth and employ workers in their existing role. With strings attached of course - car companies are going to need to build efficient or "environmentally friendly" (a.k.a inefficient to produce and inefficient to convert fuel to energy) cars.

Iowahawk has the best parody of this madness - the Pelosi Lemon

It's in the way you dress. The way you boogie down. The way you sign your unemployment check. You're a man who likes to do things your own way. And on those special odd-numbered Saturdays when driving is permitted, you want it in your car. It's that special feeling of a zero-emissions wind at your back and a road ahead meandering with possibilities. The kind of feeling you get behind the wheel of the Pelosi GTxi SS/Rt Sport Edition from Congressional Motors.

All new for 2012, the Pelosi GTxi SS/Rt Sport Edition is the mandatory American car so advanced it took $100 billion and an entire Congress to design it. We started with same reliable 7-way hybrid ethanol-biodeisel-electric-clean coal-wind-solar-pedal power plant behind the base model Pelosi, but packed it with extra oomph and the sassy styling pizazz that tells the world that 1974 Detroit is back again -- with a vengeance.

We've subsidized the features you want and taxed away the rest. With its advanced Al Gore-designed V-3 under the hood pumping out 22.5 thumping, carbon-neutral ponies of Detroit muscle, you'll never be late for the Disco or the Day Labor Shelter. Engage the pedal drive or strap on the optional jumbo mizzenmast, and the GTxi SS/Rt Sport Edition easily exceeds 2016 CAFE mileage standards. At an estimated 268 MPG, that's a savings of nearly $1800 per week in fuel cost over the 2011 Pelosi.

Even with increased performance we didn't skimp on safety. With 11-point passenger racing harnesses, 15-way airbags, and mandatory hockey helmet, you'll have the security knowing that you could survive a 45 MPH collision even if the GTxi SS/Rt were capable of that kind of illegal speed.

But the changes don't stop there. Sporty mag-style hubcaps and an all-new aggressive wedge shape designed by CM's Chief Stylist Ted Kennedy slices through the wind like an omnibus spending bill. It even features an airtight undercarriage to keep you and a passenger afloat up to 15 minutes -- even in the choppy waters of a Cap Cod inlet. Available a rainbow of color choices to match any wardrobe, from Harvest Avocado to French Mustard.

Inside, a luxurious all-velour interior designed by Barney Frank features thoughtful appointments like in-dash condom dispenser and detachable vibrating shift knob. A special high capacity hatchback holds up to 300 aluminum cans, meaning fewer trips to the redemption center. And the standard 3 speaker Fairness ActoPhonic FM low-band sound system means you'll never miss a segment of NPR again.

Best of all, the Pelosi GTxi SS/Rt is made right here in the U.S.A. by fully card-checked unionized workers and Detroit's famous visionary jet-set managers. Even if you don't own one, you can enjoy the patriotic satisfaction that you're supporting the high wages, good benefits, and generous political donations that are once again making the American car industry the envy of the world.

But why not buy one anyway? With an MSRP starting at only $629,999.99, it's affordable too. Don't forget to ask about dealer incentives, rebates, tax credits, and wealth redistribution plans for customers from dozens of qualifying special interest groups. Plus easy-pay financing programs from Fanny Mae.

So take the bus to your local CM dealer today and find out why the Pelosi GTxi SS/Rt Sport Edition is the only car endorsed by President Barack Obama. One test drive will convince you that you'd choose it over the import brands. Even if they were still legal

Monday, November 17, 2008

Where's my bailout, dude ?

2008 is a year of bailouts.

First the banks, then the insurance companies, then the car-makers, even some childcare centres. And this is before the first year of the depression is over !

Here is a simplified illustration (hat tip: Liberty Papers) of the concept for your education:

Friday, November 07, 2008

Attention Australia :Don't install solar panels !

Solar energy is, at least for now, nothing more than a feel-good alternative where you don't actually generate any decent amount of electricity after paying tens of thousands to install expensive equipment in your home.

Firstly, if you live in a city area, you cannot install solar energy as a stand alone option. It is banned, and besides, you would not have any electricity when it is dark (and barely any during the day).

Secondly, you need to install 6-16 expensive panels on your roof, and connect them to an inverter which feeds the solar energy into the grid. You never actually use the energy you create, you always buy and source your energy off the existing grid.

Thirdly, a recent report shows that manufacturing of solar panels creates global warming:

Atmospheric concentrations of nitrogen trifluoride — a gas used in the manufacture of liquid crystal flat-panel displays, thin-film photovoltaic cells and microcircuits — are at least four times higher than previously estimated, reports a new study published in the journal Geophysical Research Letters.

Fourth, the solar panels don't last forever. Here in Australia, they come with a 10 year warranty, but they aren't expected to last for more than 20-25 years.

And last but not least, the inverters they use actually consume power themselves, as revealed with wind energy (via Greenie Watch ):

The October edition of Which? Magazine [in the UK] reported on domestic wind turbines in an article entitled 'Wind turbine blows cold.' Which? installed one in a house and monitored it from December 2007 to June 2008. The result was that it used more electricity than it generated. This is because the turbine includes an "inverter" that converts the energy into electricity to go into the mains, and the inverter needs power which it draws whether the wind is turning the turbine or not. If the 'greens' want to 'save the planet' with domestic wind turbines, then they will have to make sure that they live somewhere very windy. Given the energy used and costs involved in manufacturing, installing, maintaining, plus eventual decommissioning - there may not be anywhere that is windy enough!

Thursday, November 06, 2008

Central planning for failure, bad forecasts and bad decisions

I keep laughing/crying at the irony of it all. The more that central planning fails, the more that the "planners continue to plan" (to paraphrase Reagan).

In a time where budget forecasts are proven to be wildly inaccurate, where the governments plans have to finally be revised, and where the public get to see how wrong they were, it seems that Kevin Rudd is boastful and proud. Only days ago, he promoted the idea of central planning on the radio.

To summarise the latest developments:

FUTURE tax cuts, major road and rail projects and the reform of federal-state relations are on the budget chopping block as the world financial crisis strips $40billion from Rudd government revenue.

Only pensioners will be spared in next year's budget, with the Government's commitment to raise payments to them threatening to push the budget into deficit.

Now if you take a look at past budget's, especially 2005-06 and 2007-08, you can see all kinds of reports that were eagerly reproduced in the media, predicting a steadily growing budget surplus. Those forecasts aren't worth the paper they're written on, yet Canberra plans to splurge $200b a year based on them.

And when the forecasts fail, governments never slash welfare or spending on arts, culture, sports, but instead they abandon the tax cuts and spending on areas which even I approve of, like roads and rail,

Treasury estimates that the surplus will drop from a budgeted $19.7 billion next year to just $3.6billion, and will fall to $2.6billion in 2010-11.

"If international conditions were to deteriorate further, then there could be more to come," Mr Swan said.

Reagan himself told Americans that they were forced to choose, between self-government and between a system where we elect a group of elites in a far-distant capital to make decisions for us. Central planning is a dirty word. It is the reason the Soviet states all collapsed after 30 years of experimenting with it (and it had nothing to do with a lack of elections or democracy).

Ask yourself, are you too stupid to decide for yourself ?

Wednesday, November 05, 2008

Change your dog can roll in

Obama wins. I really don't care.

Since WW1, America has been growing its government.

You want more government, you're going to get more government.

See you at the polling booths in 4 more years where you vote for the next person to grow government.

The word democracy is about as substantial as mini-umbrellas in your cocktail. Democracy does not correspond with liberty.

If you want to study a great example of capitalism and free markets in the real world, you'll have to start reading the history books.

Fact of the day

For people watching the economic collapse unfold who have a sudden interest in markets, exchange rates, economic indicators and historic trends, there has been a change in people's understandings.

We no longer accept the 'conventional wisdom' of the earlier part of this decade:

  • Property doesn't "always go up"
  • Shares don't "always go up over the long run" (i.e long run = 20 -30 year periods)
  • Governments can't fix, manage or guide an economy to produce economic growth and stability.
Here's some wisdom from the folks at Daily Reckoning, who continue to promote their "trade of the decade" otherwise known as: Buy Gold on the dips, Sell Stocks on the rallies.

In 1982, briefly, you could have bought every one of the stocks in the Dow index for a single ounce of gold. But by the time the stock market finished its epic rise, in January 2000, (while gold was doing an epic fall!) you would have needed 44 ounces of gold to buy the Dow. Now, that ratio has come down considerably. You only need about 13 ounces of gold to buy the Dow. And as stocks come down, the ratio is likely to fall below 5...and eventually back to 1 to 1 (at which time, remember, it will be time to sell gold and buy shares).

Monday, November 03, 2008

How to reduce your carbon footprint to zero

Buy a gas powered car:

The businessman thought that he was saving money and the environment by switching to a car that ran on liquid petroleum gas, which is cheaper and less polluting than petrol or diesel.

And reduce your carbon footprint:

... his gas-powered car exploded when he lit up at the wheel. Peter Tidbury, 50, had a "miraculous" escape when his Peugot 607 blew up after he lit a cigarette.

A suspected leak in the vehicle's pipes led to an explosion that blew the windscreen 50ft down the road and forced the evacuation of nearby houses. The incident happened after Mr Tidbury, who works for an energy-saving company, stopped at a service station in Barnsley to fill up with gas. He said: "I was doing about 30mph and as I lit the cigarette there was an almighty explosion. The windows went out, the bonnet went up and the boot went up just as you see in the Hollywood movies."

Mr Tidbury, who was treated for flash burns at Barnsley District Hospital, is now looking for another car. It will be a diesel.