No new road regulations ! A letter to VicRoads !

VicRoads is the Victorian government authority in charge of roads, road laws, speed limits, regulations and traffic signal timing. There has been a huge protest over the State Government's proposal to extend clearways in commercial areas to 6am-10am, and 3pm-7pm.

Angry traders and residents took to the streets at Bridge Rd in Richmond, High St in Armadale, Toorak Rd in South Yarra, High St in Prahran East and St George’s Rd in North Fitzroy around 9am.

The latest protests come as the Herald Sun revealed VicRoads received 783 submissions about their plan to extend clearways. Only 20 or 2.6 per cent, declared support for the State Government's proposal.

I encourage all readers to leave VicRoads a complaint on their feedback form.

Let them know that the roads are already over-regulated, that we need less restrictions, less parking and speed regulations, and certainly congesting the road with more mobile barriers (a.k.a trams) is not going to alleviate congestion.

VicRoads use false reasoning to suggest that extending clearways will benefit half the galaxy:

Clearway changes will benefit over 300,000 tram and bus passengers and over 250,000 private vehicle road users in Melbourne every day – this is not reflected in the submissions received.

Thats it.. thats the only reason provided for the clearways which has angered so many local businesses and traders. Here is my letter to VicRoads.

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I am writing to express my strong opposition to the proposed extension of clearways. The reasons given for the extension of clearways are very superficial, they are based on assumptions that do not hold up to scrutiny and they do not present a strong case for the new regulations.

On your website, the only defence of the clearway extension was as follows:

http://www.vicroads.vic.gov.au/Home/RoadsAndProjects/RoadAndTrafficManagmement/KeepingMelbourneMovingClearwaysUpdate.htm

"Most submissions were critical of the decision to change clearway times, but it is important to note that the ‘silent majority’, who may be pleased with, or indifferent to, a particular issue, may not be motivated to respond to a call for submissions. Clearway changes will benefit over 300,000 tram and bus passengers and over 250,000 private vehicle road users in Melbourne every day – this is not reflected in the submissions received."

Firstly, those figures and the benefit they convey are grossly overstated. Will every single motorist and public transport user, regardless of what time of day they use the roads, benefit ?

And what is the value of the benefit ? Is the reduction in travel time significant ? Is it negligible due to other bottlenecks in the road system ?

Secondly, it is downright dishonest to assume and declare that the silent majority are most likely supporters of whatever legislation is being implemented.

There is not one public statements where VicRoads has even acknowledged the costs of this new legislation.

Obviously there is the loss of revenue to traders and businesses. There is also the cost of new signage, additional parking enforcement and probably some advertising costs in some "public awareness campaign" to explain the changes.

Then there is the cost to motorists who are looking for parking during these extended times, as well as the threat of being penalised with huge fines at specific times of the day, even if they make an informed judgement that there is very little traffic flow and that parking would be a good use of the public land. The hardship and burden placed on many motorists alone would outweigh the small benefits in travel times.

As it stands, our roads are already over-regulated.

Another aspect that shows that the legislation will not accomplish its so-called intention is the focus on supporting trams and increasing the number of trams in service as a method of reducing congestion. Common sense dictates that trams cause massive congestion, perhaps more than any other vehicle. Trams effectively occupy 2 lanes of traffic, especially when they stop or when they turn corners. They never travel at a speed that matches the flow of traffic, and they seem all too keen to observe the timetable regulations and arrive at a specific time, even if it means travelling at half the speed limit when no traffic is in front of a tram.

The amount of congestion that can be seen behind a tram is astonishing, and I cannot see how more of these mobile barriers can solve congestion when they are the problem itself.

Putting aside the astronomical cost of tram infrastructure, tracks, electrical cables and stops, there is absolutely no justification for the continued use of trams except perhaps in the Melbourne's inner CBD.

The glaring reality is that every single tram can be immediately and easily replaced by a bus service, with not one significant drawback to any commuters.

Buses do not cause congestion, are cheaper, do not require tracks and overhead grids, and do not cause massive blockages when stopping for passengers.

I hope somebody in VicRoads does a serious consideration of these suggestions, and that they consider simplifying our road system, removing trams, and allowing a free community where commuters use their own discretion and judgment to determine the when/how and where of each journey they undertake. Parking restrictions have absolutely no benefit, and a huge cost to society. The idea that employing an army of public servants to impose fines on parked cars, and that society is more prosperous as a result, is yet another underlying assumption that needs to be examined.

Economics in one lesson

Austrian economics is right.

I've never read such an impressive body of knowledge with such good foresight and prediction, as the Austrian economists.

I'm reading Henry Hazlitt's "Economics in One Lesson", written back in 1962. He warned about the perils of socialism again and again, and in the last week, as a result of all the doomy predictions that have come to pass, the American government has brought about even more socialism.

The individual, the tax-payer is the biggest victim of our times. I thought it very interesting and relevant to post a key section from the book:
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Chapter VI:
Credit Diverts Production;

"Government encouragement to business is sometimes as much to be feared as government hostility. This supposed encouragement often takes the form of direct grant of government credit or a guarantee of private loans."

"But there is a decisive difference between the loans supplied by private lenders and by a government agency. Each private lender risks his own funds. When people risk their own funds they are usually careful in their investigations to determine the adequacy of the assets pledged and the business acumen and honesty of the borrower.
If the government operated by the same strict standards, there would be no good argument for its entering the field at all. Why do precisely what private agencies already do ? But the government almost invariably operates by different standards. The whole argument for its entering the lending business, in fact, is that it will make loans to people who could not get them from private lenders. This is only another way of saying that the government lenders will take risks with other people's money (the taxpayers') that private lenders will not take with their own money."

And this summary should also serve as a warning to our financial alchemists:

"There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it."

Austrian economics was right !

Here is a poster of Lehman's boss, Dick Fuld, which has been autographed personally by the disgruntled former employees who now have to find somewhere else to work.

Most amusing is the quote up top in the middle - "Austrian economics was right !"



This issue to me, the issue of whose theory of economics holds up to rational inquiry, to the historical evidence, is the most important issue of our time. Austrian economics correctly and accurately predicted the implosion of communist economies back in the 1920's. It has a superb track record and in my opinion, it deserves some serious consideration.

We've seen the problems with big government, with socialism, with Keynesian economics, with fractional reserve lending and central banking.

Many people would be well served by reading up on some Rothbard, Hazlitt and von Mises. The von Mises blog is an excellent source of analysis and insight into today's affairs from an Austraian perspective. Today's article has a great summary of the turmoil swirling around the financial markets:
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What's Behind the Financial Market Crisis?

Daily Article by Antony Mueller | Posted on 9/18/2008

The financial crisis is not over. Neither tax rebates nor low interest rates nor higher or lower exchange rates can do the job of reviving an economy that is burdened by debt loads that are too high. On the contrary: the policy measures that the US authorities have been applying will prolong the agony. Be prepared for the challenges of extended financial turmoil and economic stagnation.

Early this year, the US central bank decided to manage the debt crisis in the light-hearted belief that a few aggressive rate cuts would "unfreeze" the banking system. Yet as of the end of the third quarter of 2008, the arteries of the financial system are still cluttered, and the financial system has moved even closer to total collapse.

Those banks and brokerages that haven't yet failed have been kept alive by emergency monetary transfusions from the US central bank. The Fed has cast away all restraints of economic rationality and is acting in a purely political way. The Board of Governors of the US Federal Reserve System is pursuing the goal of getting the financial system through the mess — at least until the end of the year, no matter how high the costs will be thereafter.

The American central bank has adopted the financial equivalent of the military strategy of scorched earth. The economic philosophy of the current chairman of the US Federal Reserve System can be summarized in the slogan, "No depression under my rule!" He resembles a military leader who stubbornly declares, "No defeat under my rule!" the more the chance of victory is slipping away, and defeat can be denied no longer.

The current economic disaster is the result of the combination of negligence, hubris, and wrong economic theory. For decades, an economic and monetary policy has been practiced based on the illusion of, "It doesn't matter." At first it was, "Deficits don't matter." From that, the policy of "it doesn't matter" got extended to money creation, the credit expansion, the stock-market bubble, and the housing boom. Now, we're being told that buying financial junk by the central bank to beef up banks and brokerages also doesn't matter.

John McCain's dishonesty

I am no fan of Obama (Change you dog can roll in !) , but John McCain is one of the most dishonest people around today, he repeatedly contradicts himself and his very own viewpoints from only a few years ago.

John McCain is really abandonding all his past principles and positions in his run for the presidency.

Heres a gem of a story:

The lawsuit, filed by a Republican Party official in Cumberland County, PA, sought to remove Barr's name from the ballot—contrary to promises made by John McCain during his first bid for the presidency after then Texas Governor George Bush tried to have McCain blocked from the New York primary ballot. "I would never consider, ever consider," McCain said during his 2000 campaign, "allowing a supporter of mine to challenge [an opponent's] right to be on the ballot in all 50 states."

McCain went on to call such tactics, "Stalinist politics."

Also, his foreign policy views seem to have shifted from non-inverventionism (during Clinton's presidency) to pro-interventionism during the Bush presidency:

Don't blame the markets !

...for the credit crunch and global financial crisis.

This is not a symptom of capitalism.

It is a predictable outcome from government regulating the American banking system.

I have just started reading Henry Hazlitt's famous work "Economics in One Lesson" where he always points out government regulation has unintended and unwanted consequences.

Read this article to see one of the biggest examples in history:
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The government compels banks to make loans in poor neighborhoods even if the applicants are not considered prime borrowers. You may not know about that because the Community Reinvestment Act is not exactly a household (excuse the pun) name.

But the commercial banks do know about it. They have a CRA department. They get a CRA rating. They know that the way to get a high CRA rating is to make loans to poor applicants or in poor urban neighborhoods regardless of the financial prudence of the loans.

They know that if they don't do this, they will be punished severely by the regulators when they try to make any major change which is dependent on regulatory approval. And they know that pretty much every major change a traditional bank makes is, in fact, subject to regulatory approval. So, they grit their teeth and stamp a big inky "yes" on an application which they know, according to traditional financial standards, deserves a "no."

Up until 1995 the Community Reinvestment Act was largely a requirement to support "community groups" in poor neighborhoods. Of course, this often meant left wing groups like ACORN, etc. But after 1995 the scope of the law was dramatically increased.

Over the strenuous objections of the banks themselves and some Republicans in Congress, CRA was renewed and modified in such a way that it gave far more power to the federal government to punish banks for not lending more widely in poor neighborhoods.

The classic "fair housing" laws from the Martin Luther King Jr. era of civil rights were deemed insufficient. Under CRA, not only were realtors required to sell to qualified buyers regardless of race, which they should have been, but banks were accused of a new kind of "financial redlining" if they didn't provide the funds. Income, credit history, assets, debts were out. Urban neighborhoods were in. The Home Mortgage Disclosure Act pushed things along too by requiring banks to ask about and disclose the race of its mortgage applicants. In effect, banks were forced to provide the evidence of their own alleged discrimination.

Subprime loans to minority applicants exploded ten fold in the mid-1990s as a result. In fact the Clinton administration found a rapid increase in subprime loans in minority neighborhoods. Their principle worry was that, even then, not enough lending was going on in these communities. More was needed. And they got what they asked for.

Under New Deal-era regulatory rules of Glass-Steagall, commercial banks and investment banks were separated. When that act was repealed as part of banking deregulation in 1999, commercial banks and investment banks were able to merge, subject to approval by regulators.

However, the banks' CRA rating was taken into account in the decision. This meant that a high CRA rating became an important prerequisite for mergers, which increased the pressure on the banks to make these risky loans. The banks also were given permission to put these loans into packages of securities that could then be sold into investment markets.

Last week, a front page Wall Street Journal article set off a national debate about the legacy of Alan Greenspan. Critics have been taking the former chief of the Federal Reserve to task for failing to see the alleged excesses of the marketplace and neglecting to issue new diktats to punish those excesses accordingly.

But it is not Mr. Greenspan's fault that Congress substituted identity politics for financial prudence, although his easy money in 2003 didn't help much. If anything, Mr. Greenspan regulated too much.

The fault lies with the small army of hard left political hustlers who spent the early 1990s pushing risky mortgages on home lenders. And the fault lies especially with the legislators that gave them the power to do it.

Turnbull to lead the Libs, and now they have my support

Who would have thought we'd ever see common sense from the leader of one of the 2 main political parties in our life time.

Malcolm Turnbull, who has just been appointed leader of the Liberal Party, is really in fine form, with his plan to slash and simplify the entire tax system, and his appointment of Henry Ergas as chairman of his tax review.

Sometimes its an astonishing moment when a politician admits something so plainly obvious as this:

"Taxes vary in their inefficiency. But all taxes tend to cost the economy more than the revenue they raise.

Now, if we can just get Turnbull to oppose environmental regulations and commit to removing middle class welfare, then we really have a *liberal* Liberal leader.

Video of the day - how to handle losing your job

Everyone copes with disaster in different ways, but watch these 2 comedians in the background of this video.


Awesome Wall Street Prank - Watch more free videos

Sir Richard Branson in fine form

There are many reasons to admire Richard Branson. A self-made entrepreneur who took some massive risks to get started, correctly assessed market sentiment, and continues to build wealth and employ tens of thousands around the world, has done "the community" a greater service than any single politician or bureaucrat, whose resume points to the fact that government can only destroy, confiscate and redistribute wealth.

He is in fine form here as he lashes out against the socialist British government for their nationalisation of Northern Rock (my comments in red)
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Virgin chief Richard Branson has accused British Prime Minister Gordon Brown of having "bottled out" of the Northern Rock crisis in a move that will "haunt" him.

The British entrepreneur wanted to take over the stricken bank but Brown's government nationalised it instead due to a "lack of courage", Branson has told the Daily Mail newspaper.

And he warned that the "tragic error" would cast a shadow over the government for years to come.

The collapse of the mortgage lender last September has been a key point in Brown's 15-month premiership and was a bellwether moment as the economic downturn kicked in.

Branson's Virgin Group was behind one of two private takeover bids which finance minister Alistair Darling rejected saying they would not give taxpayers value for money (?!?!?! - and forcing the taxpayer to buy-out a failed bank is somehow value ?!!?) as he confirmed the temporary nationalisation in February.

"Brown was more concerned with tomorrow's news than jobs," Branson said.

"He didn't care about saving a great British institution. Brown bottled out. He was scared of the prospect of me, a capitalist, turning the bank around.

"Darling didn't even have the courtesy to ring and tell me of their decision!

"I expected the courtesy of a call, especially as they promised me that if they decided to nationalise they would let me know first. Then I heard rumours that the BBC was about to break the news.

"So I rang Darling. It was tense. As we were talking, the news broke on the TV. Unbelievable! Then I got a call from Gordon Brown telling me to move on and not to make a nuisance of myself about the decision.

"It was a tragic error. I would have created thousands of new jobs, but instead it has been made to disappear. It will haunt this government and those who follow it." (You're only half right Richard - governments are never held accountable for their mistakes and it won't haunt them because they will be retired living off a comfortable pension in a few years )

Fitch, Moody's and S&P; Ratings or Reassurance Agencies ?

Lehman has filed for Chapter 11 and is toast.
The stock plummeted to 19cents.
The ratings agencies in America- Fitch, Moody's and S&P - are all SEC (government) sponsored. In the past, they haven't performed their role as ratings agencies nearly as well as they should have.
In fact, to get the cushy position of SEC approved ratings agencies, they have been deliberately optimistic to the point of blindness.

Only yesterday did Fitch change its ratings on Lehman down from A+ to D.

--Long-term IDR to 'D' from 'A+';

--Short-term IDR to 'D' from 'F1';

--Senior debt to 'CCC' from 'A+';

--Subordinated debt to 'C' from 'A';

--Preferred stock to 'C' from 'A'.

What a joke. As Mike Shedlock puts it best, its time to break up the credit rating cartel.