Friday, March 01, 2013

FRIDAY MORNING RAMBLE: A slow news week?

This week I’ve had time to ramble around the internet.  Here’s some of what I found.

Nice for those who can get it.  “A Crown Treaty negotiator has pocketed $1.5-million, another more than $1m and several others large six-figure sums according to information released in response to detailed questioning by New Zealand First leader Winston Peters. Treaty Negotiations Minister Chris Finlayson revealed that $5.5-million has been paid to 14 individuals since 2008, several of them former Cabinet ministers and MPs.”
Mike Butler: Treaty troughers revealed – Mike Butler, BREAKING VIEWS

Larry Mitchell has ranked all NZ’s councils on the basis of how heavily indebted they are—and how much liability you as ratepayer have for that debt. Highlight’s exposed by this year’s report include persistent deficits; debt continuing to build up; average debt per ratepayer up 10% from $3,834 to $4,176; and continuing low levels of asset replacement reserve funds.
How does your council do?
A Brief Summary of the 2013 Local Government League Table and its results – LARRY N. MITCHELL

Tim Watkin is having a commuting crisis due to rubbish Auckland trains, the very trains he once so loved. Here's why.
An open letter on Auckland trains. Grrrr – Tim Watkin, PUNDIT

There is no reason for EQC to exist, and every reason for it to be exterminated as soon as practically possible. More evidence here: (“Usual grain of salt warning about blogs written by former employees, but still…”)
EQC Truths

So why does the government own a coal company anyway?
Some Solid questions on energy – Colin Espiner, BULL DUST

So who owns graffiti? Passersby?
It's not "your" Banksy – LIBERTY SCOTT

Well, the Maori Party and the ACT caucus are nominally in coalition, so why should this be considered unusual?
Maori Party president makes plea for charter schools – RADIO NZ

The Oscar Pistorius case is a good illustration of the dangers of turning athletic stars into role models or symbols of evil.
Oscar Pistorius: when good metaphors turn bad – Duleep Allirajah, SPIKED

“Ninety eight percent of the adults in this country are decent,
hardworking, honest folk. It's the other lousy two percent that
get all the publicity. But then, we elected them.”
           — Lily Tomlin

Economist Armen Alchian, who died the other day at age 98, puts it plainly: “Economic law is not suppressed by legislated law.” Yet politicians think they can keep raising the minimum wage with no consequence to those they claim to be helping.
What support for the minimum wage reveals – Sheldon Richman
Real minimum wages – Eric Crampton, OFFSETTING BEHAVIOUR

You want proof that Keynesian economics is insane. Well, here it is. From The Telegraph in London: a strategy to discourage saving! What complete fools/
Keynesian insanity reaches a new peak – Steven Kates, CATALLAXY FILES

The British Pound is getting pounded. It deserves to be.
The British Pound Gets Pounded – MONEY MORNING AUSTRALIA

It looks like whatever he tries, David Cameron’s Treasurer can’t get the British economy off its knees.  Except that he hasn’t actually tried anything sensible.
Osborne cornered – Alasdair Macleod, COBDEN CENTRE

Maybe he wouldn’t be cornered if he stepped outside his ‘paradigm.’
My 10-point plan to reboot Britain – Allister Heath, TELEGRAPH

Ask Yaron:

“Having mostly failed to see this crisis coming before failing to predict even the general pattern of events, senior economists now want more of the medicine which already nearly killed the patient. This may look like madness or stupidity to those of us without a high level of formal education in economics. It is neither. Contemporary economists are trapped in an intellectual prison founded on now-old errors of method and epistemology: the knowledge and simplifications necessary to make their mathematical models work are unavailable and invalid respectively.”
The madness of contemporary economists – Steven Baker, MP, COBDEN CENTRE

There is little evidence economic forecasting is any better than guessing, abundant evidence that economic forecasting, abundant evidence that economic forecasting by “elite economists” such as those in Treasury or the Reserve Bank performs worse than guess-work, and no evidence whatsoever economic forecasting has improved in recent decades.
Dispelling Some Big Myths About Economic Forecasts – Murray Dawes, MONEY MORNING AUSTRALIA

It’s sometimes worth reflecting that Paul Krugman may be insane. Except that he’s not—he’s just the perfect reflection of the insanity of mainstream economics.
Krugman's Call for a Housing Bubble – Daniel Sanchez, MISES DAILY

It’s far from perfect, but “the Pulitzer Prize-winning book Lords of Finance: The Bankers Who Broke the World reveals the destructive, surreptitious, incestuous, and highly corrupt nature of central banking… One of the jewels here is the rare look into the lives of the powerful men, the ‘lords of finance,’ who were behind the solidification of modern central banking in the US and Europe during the years 1910 to 1935.”
Lords of Finance: The Backroom World of Central Banking – Dan O’Connor, MISES DAILY

“Once the rule of law is established, an economy thrives
despite government, not because of it.”
                 - Adam Creighton, writing in The Australian

When is the U.S. getting rid of “too big to fail?” Says America’s central banker “ah, uh…”
Elizabeth Warren Grills Bernanke on "Too Big to Fail" Policy – MISH’S GLOBAL ECONOMIC ANALYSIS

More key excerpts from Bernanke's first Humphrey Hawkins testimony before the Senate. “Highlights obviously ours..”
Bernanke's Tools: "Belts, Suspenders... Two Pairs Of Suspenders" And Other Senate Testimony Highlights – ZERO HEDGE

“Waiting for Japan's economy to make a strong recovery has been an ongoing game since 1990. Shall we play that game one more time? There have been many false dawns in Japan over the past 20 years. Is this another false dawn for the rising sun? Or sunset?
The Arrival of Japan's Sunset: The repercussions will be tremendous 
- Gregor McDonald, PEAK PROSPERITY

“It is becoming more apparent that modern macro with its Keynesian Y=C+I+G is utterly defective to the point of vacuity but the problem remains what ought to replace it? Here is my formula in brief…”
How to manage an economy – Steven Kates, CATALAXY FILES

Austerity?
Austerity? I Do Not Think That Word Means What You Think It Means – Don Watkins, LAISSEZ FAIRE

The “Third Way” of politics has been tried and failed. So it’s bound to be tried again. And again. And again.
“Third Way” politics and its fruits – STEPHEN HICKS

But what are think tanks? Who funds them? And what the hell does the LSE Review of Books know about them anyway?
Farcical Concept of the Day – Jim Harper, CATO AT LIBERTY

From the “this is total nanny state bollocks” file:
Man Charged With Felony for Letting Go of Balloons – HIT & RUN

Conservative pundit Ann Coulter calls libertarians pussies for “sucking up to liberals” on pot and gay marriage. "’We're living in a country that is 70 percent socialist,’ she says. ‘The government takes 60 percent of your money. They take care of your health care, your pensions ... who you can hire ... and you (libertarians) want to suck up to your little liberal friends and say, oh, we want to legalize pot?’
“Coulter has a point.  Government rarely makes a dent in people's drug use or their ability to partner with people of their own gender.
“’Seventy percent socialism’ does much more harm. It kills opportunity and wrecks lives.
"But Coulter doesn't just want to downplay ‘liberal’ parts of the libertarian agenda. She opposes them…”
Libertarians' Awkward Bedfellows – John Stossel, REAL CLEAR POLITICS

“Here’s what I don’t get about the drone debate. Why the @#$% did it take so long to start?”
Drone Rage: A Day Late and a Sequester’d Dollar Short? – Wilton Aston, BASTIAT INSTITUTE

“No one expected outgoing Mexican President Felipe Calderon to make the speech he made to the UN General Assembly in September 2012. Calderon, the staunch drug warrior, called time on the Drug War… On the same Wednesday that Calderon made his speech, two other Latin American leaders told the UN Assembly the same thing… Collectively, the three leaders formally asked UN Secretary-General Ban Ki Moon for a review of the organisation’s drug policies.” The UN’s first reaction to the call? Expunging their speeches from the record.
When the drug warriors turn – Russell Brown, HARD NEWS

I didn’t (don’t) watch the Oscars. But it sounds like it was a blast!
Seth MacFarlane: we saw him boob, that’s all – David Bowden, SPIKED

Government regulations hurt small business. How much do they hurt? Here’s one story:
Subway 'Wouldn't Exist' If Started Today Due to Regulations: Founder Deluca – CNBC

“A man's liberties are none the less aggressed upon because
those who coerce him do so in the belief that he will be benefited.”

                 — Herbert Spencer

Hope for Solid Energy? The age of coal may not be altogether over. “Liang-Shih Fan, professor of chemical and biomolecular engineering, and director of the Clean Coal Lab, has just completed a 203 hour test of a radical new way of obtaining energy from coal. Typical coal-fired power plants burn coal to boil water, and run the resultant steam through turbines to produce electricity. Fan’s process, a new technology called “coal-direct chemical looping,” does not burn the coal. Instead, it chemically converts coal to heat in a sealed reactor chamber. Tiny iron oxide beads help to deliver oxygen to the coal particles, which are then cycled through an airflow chamber for re-oxygenation, then run back through the reaction chamber. This is the “looping” in the technology’s name. The process gives off no air pollution, and the captured carbon dioxide is ninety-nine percent pure, enough to make it a valuable commodity.
Scientists Generate Electricity from Coal Without Burning It – Howard Roerig, T.O.S. BLOG

They came, they saw, they confronted and counter-protested the ragtag “anti-energy” rally in America’s capital. This is their report.
The Light Brigade: Confronting the Anti-Energy, Pro-Blackout Rally in DC 
– Travis Fisher, MASTER RESOURCE

image“Fossil fuels improve the planet.” Download the free e-book by Alex Epstein NOW!
Fossil Fuels Improve the Planet: The E-Book – CENTER FOR INDUSTRIAL PROGRESS

Is dark matter the next scientific discovery? Or the latest “ether” or phlogiston? We’ll know, or not, in the next few weeks.
AMS-02 dark matter results in 2-3 weeks – Lubos Motl, REFERENCE FRAME

“What space-age material is two hundred times stronger than structural steel?
What conducts electricity so insanely quickly that researchers at IBM see ‘no intrinsic limits into how fast it can go’?
And which new substance is the subject of three thousand new research projects, and has just been given a one billion Euro research investment from the European Commission?
Amazingly, the answer is the same for all three questions…”
Graphene: The Two-Dimensional Diamond That’s Set to Turn Your World Upside Down – Alex Cowie, MONEY MORNING AUSTRALIA

A new study from the National Bureau of Economic Research by Pinka Chatterji and Sara Markowitz indicates a way that bicycle helmet laws may be creating less bicycle-related head injuries: discouraging getting on the bike in the first place.
Bicycle Helmet Laws: Good At Keeping Kids Off Bikes – Brian Doherty, HIT & RUN

Useful news for parents of autistic children?
Children With Autism Show Increased Positive Social Behaviors When Animals Are Present – SCIENCE DAILY

Dense cities don’t have to be ugly. Take the 3d cities of visionary architect Paolo Soleri, for example…

…or the Mile High city of Frank Lloyd Wright:

Succinctly answering the question so many readers have asked me:
What is Objectivism? – Craig Biddle, OBJECTIVE STANDARD

Succinctly answering another frequent question: What is Montessori?
Listen here to neuropsychologist Dr. Steven Hughes, chair of the Association Montessori International Global Research Committee, and Matt Hillis, executive director of Bergamo Montessori Schools in California:
AUDIO [14:31 min]– CAPITAL PUBLIC RADIO

“I'd suggested last year that there's no alcohol crisis in New Zealand… Well, it turns out that there could be a crisis. Here are the latest figures from Statistics New Zealand…”
A real alcohol crisis [warning: may not actually contain crisis] – Eric Crampton, OFFSETTING BEHAVIOUR

He’s the literary figure who refuses to die. So who owns him?
Who owns Sherlock Holmes?  - THE ECONOMIST

“Is peace or war the natural state of man? Do men fight primarily over material possessions or over women?” Napoleon Chagnon’s controversial study of the Yanomamö, a remote constantly-warring tribe in South America, tells us more.
An Anthropologist’s War Stories – NEW YORK TIMES

Sex Addiction? Yeah right.
You’re Addicted to What? – Dr Marty Klein, THE HUMANIST

Not sure why it’s news, but it has emerged Britain’s most commonly spoken language is now Bollocks. True story. (Almost.)
Bollocks is Britain’s first language – DAILY MASH

While we’re at the Daily Mash site …
Secret of successful relationship is getting pissed together
Most people don't have any potential

It’s the first day of Autumn. Time for a Vodka Mojito?
Homemade Vodka Mojito – Will de Cleene, GONZO FREAKPOWER

There’s sure to be more in your Vodka Mojito than in my Vaportini.
The Vaportini: A Cocktail Inhaled, Not Stirred – THE SALT

Now this is good. But Brent Grapes’s performance of the Arutinian Trumpet Concerto last night with the Auckland Philharmonia was even better!


Speaking of trumpets, here’s Dizzy Gillespie (turn it up loud!)

Pianist Van Cliburn, hero of the Cold War and creator of the best-selling classical album for a decade (Lindsay Perigo tells the story), passed away this week.  Here on YouTube, he still plays Beethoven.  He plays it beautifully:

This is how the Gods end, not with a whimper but with a bang: In the climax to Richard Wagner’s 'Götterdämmerung', we see Brunnhilde (Anne Evans) throw herself on Siegfried's funeral pyre, setting off the cataclysm that destroys the Gods' castle of Valhalla, and the Gods themselves—who have proved themselves unable to cope in a world with free will.  Only Alberich, the opera's villain, and the new human race are left. (See more at: http://www.greatoperavideos.com/videos/gtterdmmerung/gtterdmmerung.html#sthash.HkDRinHu.dpuf )

[Hat tips Stephen Hicks, Kiwiblog, The Classical Liberal, Geek Press, Eric Crampton, Anthony Smith, Joel Rowan, Erosophia]

Thanks for reading
PC

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Thursday, February 28, 2013

Who comes first? Shark or man?[updated]

Poor Adam Strange was killed yesterday at Auckland’s Muriwai Beach by a White Pointer shark.

Despite police firing shots at the shark after it had killed Mr Strange, the man-eating White Pointer is a protected species in New Zealand, and has been since 2006.

As I said when Chris Carter so cavalierly added the Great White to the Department of Conservation’s list of protected species, this policy conserves everything except human life.  But in that, it is part of a much wider context that

directly pits the anti-concept of 'intrinsic values'-- which environmentalists employ to say things should be protected 'as is, where is'—against real human values, such as the value of human life: from which all real value is actually derived.
    This isn't just a semantic argument, as you’ll soon discover if one of these protected Great Whites starts chewing through your surfboard. Or your arm. Or your loved one.
     A similarly stupid three-decade Australian ban on hunting crocodiles has seen numbers jump from 5,000 to 70,000, and an increase in savage croc attacks.
    David Graber, research biologist with the US National Park Service, once declared on behalf of mainstream environmentalism that “We are not interested in the utility of a particular species or free-flowing river, or ecosystem, to mankind. They have intrinsic value, more value—to me—than another human body, or a billion of them... Until such time as Homo Sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along.” City University of New York philosophy professor Paul Taylor adds: "[T]he ending of the human epoch on Earth would most likely be greeted with a hearty 'Good Riddance.'"
    Graber gives the game away by declaring the notion of 'intrinsic values' itself to be valuable to him: as trees, rocks and mud puddles can’t speak for themselves, environmentalists like Graber must be paid to do it for them. (Idiscussed this phenomenon the other day.) Responding on behalf of human beings, Glenn Woiceshyn argues:

While extreme, these anti-human sentiments are logically consistent with environmentalism's "intrinsic value" philosophy: Since man survives only by conquering nature, man is an inherent threat to the "intrinsic value" of nature and must therefore be eliminated. Environmentalism makes man the endangered species. The only antidote to these haters of mankind and their anti-human philosophy is to uphold man's right to pursue his own life by means of his productive activities.
The real endangered species, says Michael Berliner, is us:
There is a grave danger facing mankind. The danger is not from acid rain, global warming, smog, or the logging of rain forests, as environmentalists would have us believe. The danger to mankind is from environmentalism.
    The fundamental goal of environmentalists is not clean air and clean water; rather it is the demolition of technological/industrial civilization. Their goal is not the advancement of human health, human happiness, and human life; rather it is a subhuman world where "nature" is worshipped like the totem of some primitive religion.

    The history of how a love of nature has turned into a preservationist religion is traced briefly here by Robert Bidinotto. Chris Carter's announcement is just one more example of that policy: Protecting a killer as some sort of 'totem' is a clear threat to the rest of us.
    Fortunately, one person at least came out against Carter's stupidity. Me.

Of course, few listened. The shark was protected as an intrinsic value, and human beings were placed second

But there are good folk about arguing that a love of nature can be put in its place—which has to begin by abandoning the phony notion that pristine nature is sacred, that is has intrinsic value, i.e., value in and of itself regardless of who is around (or not) to value it.   Which means (as I also argued back in 2005) repudiating the “deep ecology” insanity that puts humans at the bottom of the totem pole, and embracing instead an environmentalism that accepts humans as first in the hierarchy of nature. 

That’s not easy, not when

fully a fourth of all Americans "see nature as sacred, want to stop corporate polluters, are suspicious of big business, are interested in voluntary simplicity, and are willing to pay to clean up the environment and stop global warming." That's one quarter of Americans who see nature as sacred, just as the deep ecologists do.
    It's true that there is now a growing tension between those who sympathise with the view of the deep ecologists--what you might call the 'romantic' or 'religionist' environmentalists-- and a growing minority who have reversed their views on issues of population growth, urbani­zation, genetically engineered organisms, and nuclear power (as I discuss in a previous blog called 'Religionists for Nuclear.'), but this latter group is not yet in the environmental mainstream, although they do deserve to be.
    On this question of who comes first, consider the case of Florida boy Jessie Arbogast, whose arm was bitten off by a shark. It's easy to agree (or to maintain a discreet silence as animal rights activists did) with the shark being shot so the arm could be retrieved and successfully reattached (but do note that such an action might now be illegal if the shark was one of Chris Carter's protected Great Whites) . That's an easy case with which to agree, and the justice of shooting the shark and retrieving the boy's arm should be obvious, as Tibor Machan quite properly points out:

Few among us would have hesitated at this choice: boy's arm versus life of shark. Of course the boy's arm is more important, and so the shark had to go. Yet, there are millions of animal-rights advocates around the world, many of them Hollywood celebrities with easy access to talk shows and news reporters, who have remained completely silent about their professed view—namely, that human beings are not more important than non-human animals.
But consider Tibor's further point. An environmentalism that honestly puts humans first would go further and apply the same principle applied correctly to secure the boy's survival and well-being to all the day-to-day activities human must undertake to secure their livelihood: Rather than seek to shackle human production and fecundity, they must recognise that the unique nature of human beings requires that they use, alter and sometimes despoil nature in order to maintain their lives and to produce wealth: no other means of livelihood is possible to the human animal.
    Supporting human life means opposing the 'religious' environmentalism that is often economically devastating to farmers, fishers, miners, loggers, and others who necessarily 'despoil' untrammeled nature in the necessary pursuit of their, and our, livelihood.
    So that's the challenge I put to you: do you agree that humans should be put first in the hierarchy of nature? And if so, do you agree with my conclusion here; that is, in an "environmentalism ... that...eschews any idea of 'intrinsic values' or deep ecology, and embraces instead the idea of seeking and advancing those environmental values that support and enhance human life."

This is not a “pave the world” argument, it is moving from the extremism saying (to borrow from Monty Python) that:

Every tree is sacred,
Every bird is great,
If a dune is built on,
Greens get quite irate.
Every bush is wanted,
Every swamp is good,
every shark is needed,
in your neighbourhood.

Are there really and truly environmentalists that don't put humans first, I hear you ask? that put bugs, rocks and mud puddles ahead of human beings? Well, yes there are. I quote two above. I quoted many more here.

As I say here, I'm sure we can all embrace an "environmentalism ... that...eschews any idea of 'intrinsic values' or deep ecology, and embraces instead the idea of seeking and advancing those environmental values that support and enhance human life."

A property-rights based environmentalism putting humans first is such a beast.

Good reading on this important subject here:

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Bubble Trouble: Is There an End to Endless Quantitative Easing?

imageGuest post by Detlev Schlicter

The publication earlier this week of the Federal Reserve’s Federal Open Market Committee minutes of Jan. 29-30 seemed to have a similar effect on equity markets as a call from room service to a Las Vegas hotel suite, informing the partying high rollers that the hotel might be running out of Cristal Champagne. Around the world, stocks sold off, and so did gold.

Here are two sentences that caused such consternation:

_bernanke-helicopterHowever, many participants also expressed some concerns about potential costs and risks arising from further asset purchases [the Fed's open-ended, $85 billion-a-month debt monetization program called 'quantitative easing']. Several participants discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behavior that could undermine financial stability.

Loosely translated:

Guys, let’s face it: All this money printing is not without costs and risks. Three problems present themselves:

1) The bigger our balance sheet gets (currently $3 trillion and counting), the more difficult it will be to ever load off some of these assets in the future. When we start liquidating, markets will panic. We might end up having absolutely no manoeuvring space whatsoever.

2) All this money printing will one day feed into higher headline inflation that no statistical gimmickry will manage to hide. Then some folks may expect us to tighten policy, which we won’t be able to do because of 1.

3) We are persistently manipulating quite a few major asset markets here. Against this backdrop, market participants are not able to price risk properly. We are encouraging financial risk-taking and the type of behaviour that has led to the financial crisis in the first place.

All these points are, of course, valid and excellent reasons for stopping “quantitative easing” right away. You may not be surprised that I would advocate the immediate end to “quantitative easing” and any other central bank measures to artificially “stimulate” the economy.

_BenIn fact, the whole idea must appear entirely preposterous to any student of capitalism. First, a bunch of bureaucrats in Washington scan an incredible amount of data, plus some anecdotal “evidence,” every month (with the help of 200 or so economists) and then they “set” interest rates. Next, they astutely manipulate bank refunding rates and cleverly guide various market prices so that the overall economy comes out creating more new jobs. All the while, the officially sanctioned devaluing of money (meaning your dollar is worth less today than it was just a year ago) unfolds at the regularly scheduled “harmless pace” of 2%.

There should be no monetary policy in a free market, just as there should be no policy of setting food prices or wage rates, or of centrally adjusting the number of hours in a day.

But the question here is not what I would like to happen, but what is most likely to happen. There is no doubt that we should see an end to “quantitative easing,” but will we see it anytime soon? Has the Fed finally — after creating $1.9 trillion in new “reserves” since Lehman went bust — seen the light? Did they finally get some sense?

Maybe, but I still doubt it. Of course, we cannot know, but my present guess is that they won’t stop quantitative easing anytime soon; they may pause or slow things down for a while, but a meaningful change in monetary policy looks unlikely to me.

The boxed-in central banker
I think that the financial markets and media overestimate the degrees of freedom that central bank officials enjoy. I consider central bankers to be captives of three overwhelming forces:

1. Their own belief system, which still holds that they are the last line of defense between dark and inexplicable economic forces and the helpless public, and that therefore, whenever the data or the markets go down, it is their duty to ride to the rescue. Thus, when the withdrawal of the Cristal dampens the party mood, the Fed will soon feel obliged, by its own inner logic and without any motivation from outside influences, to open another bottle. Just wait until the present debate about an end to QE leads to weaker markets and until, in the absence of the diversion from rallying equity markets, the almost consistently uninspiring “fundamental data” become the focus of attention again, and we will witness another shift in Fed language, again back to “stimulus.”

We had these little twists and turns a couple of times without any major change in trend. Anybody remember the talk of “exit strategies” in the spring of 2011?

Of course, like most state officials, central bank bureaucrats are largely preoccupied with the problems of their own making. It is precisely the Fed’s frequent rescue operations that have created the excessive leverage that causes instability and repeated crises in the first place. However, there are no signs anywhere that, intellectually, the Fed is willing and able to break out of this policy loop.

2. After years of Greenspan puts, Bernanke bailouts, and zero interest rates, the size of the dislocations may be as large as ever. The Wall Street Journal reported that total borrowing by financial institutions is down by about $3 trillion from its all-time high in 2008. That’s the widely heralded “deleveraging.” But does that mean that the current level of about $13.8 trillion is a new equilibrium? The Fed’s balance sheet expanded by almost $2 trillion over the same period, and super-easy monetary policy has provided a powerful disincentive for banks to shrink meaningfully. What is truly sustainable or not will only be discernible once the Fed stops its manipulations altogether and lets the market price things freely. My guess is that we would still have to go through a period of deleveraging and probably of headline deflation. This would be a necessary correction for a still unbalanced economy addicted to cheap credit, but nobody is willing to take this medicine.

3. Politics. Falling stocks, shrinking 401(k) plans, and shaky banks don’t make for a happy electorate. Additionally, the state is increasingly dependent on low borrowing costs and central bank purchases of its debt. The chances of the U.S. government repairing its own balance sheet are slim to none. So dependence on ultralow funding rates and the Fed as lender of last resort (and every resort) will likely continue.

Look at Japan
When it comes to any of the major trends in global central banking of the past 25 years, Japan has consistently been leading the pack. In the mid-’90s, Japan had set the fed funds rate to 1%, which at the time was deemed exceedingly low compared with other countries, like the U.S. The global community still looked upon these rates with disbelief and growing annoyance at the small payoff in terms of real growth.

Japan was the first to have zero policy rates and the first to conduct “quantitative easing.” Albeit, Japan’s version of QE was on an altogether smaller scale than some of the Western central banks have, to date, managed since 2008. Now the country seems to point the way toward the next phase in the evolution of modern central banking: the open and unapologetic politicization of the central bank and the demotion of the head central banker to PR man.

Any pretence of the “independence” of central bankers has been unceremoniously dumped in Japan. Ministers take part in central bank meetings and give joint statements with central bank governors afterward. New Prime Minister Shinzo Abe has made it very clear what he wants the central bank to do (print more money faster, devalue the yen, create inflation), and to that end, he is looking for a new central bank governor. Of course, only accredited “doves” need apply. A few days ago, Mr. Abe also spelled out what skill set he is really looking for: good marketing skills. Salesmanship:

_Quote_IdiotSince we all have our national interests, sometimes there will be criticism about the monetary policy we are pursuing.
The person needs to be able to counter such criticism using logic.

The course of monetary policy is pretty much fixed. Now it is all about marketing.

In the meantime, the debasement of paper money continues.

Sincerely,
Detlev Schlichter

Paper Money Collapse bookcoverDetlev Schlichter is a writer and Austrian School economist who has spent nearly twenty years working in international finance, including for Merrill Lynch, J.P. Morgan, and Wester Asset Management. 
    His book
Paper Money Collapse conclusively illustrates why paper money systems—those based on an elastic and constantly expanding supply of money as opposed to a system of commodity money of essentially fixed supply—are inherently unstable and why they must lead to economic disintegration.
   
Paper Money Collapse shows that the present crisis is the unavoidable result of elastic money; and that the continuous money production to stimulate the economy could lead to a complete collapse of the monetary system.

This post first reappeared at Laissez Faire Today 

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Marriage, under government

What’s the role of government in marriage—what is its legitimate role?

Note that I’m not asking what’s the role or position of marriage itself; I’m not asking what marriage is, nor with whom one should be allowed to get married. What I’m asking is: "what is is government’s proper place in the process?

Understand that marriages (however you might personally might choose to define them) pre-dates government recognition of the phenomenon. In fact, the institution of marriage pre-dates government altogether, so historically it’s not a matter of government defining marriage, but recognising it. Governments saw what people were up to, and thought they could take a cut.  (As, incidentally, did the church.)

And what were people up to? They were making agreements between themselves, mostly about co-habiting. As far as the government was legitimately concerned, what they were recognising that people were making these agreements—and it was the government’s job to protect them.  In this sense, in this particular context, the marriage contract is no different to any other contract the government agrees to protect.

Every contract protects an agreement.  You and I can make a contract with whomever we like, agreeing to anything at all, just as long as what we’re agreeing to do is not illegal. You agree to deliver the goods and I agree to pay you. That’s a contract. You agree to deliver a service and I agree to pay you. That’s a contract. You  agree to love, honour and obey, and I agree to give you half of everything I own when we divorce. That’s another contract—what we choose to call a marriage contract. We agree on that deal (maybe after a little negotiation on the details) and the government registers and prepares to defend the contract if necessary.

That’s their job. Our job is simply to live up to what we’ve agreed to (while keeping out of other people’s similar agreements).

And we can agree to anything we like, just as long as what we’re agreeing to do is not itself illegal.

So where does this put gay marriage, and government’s role in it?

Well, what do you think? 

It seems clear enough to me.

Meanwhile, back in the United Police States

Some Americans are still not sheeple.  And I love principled civil disobedience. 

But I wish it were not necessary.  From Reason.Com:

Enjoy This Montage of People Refusing to Cooperate with DHS Checkpoints:
Here’s a crew of folks refusing to submit to questioning at Department of Homeland Security immigration checkpoints that aren’t actually at the border (and one case of a driver refusing to cooperate with one of California’s produce checkpoints as an employee hilariously thinks he can make him leave the state).

[Hat tip Daily Pundit]

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Wednesday, February 27, 2013

Calling all beer historians

KauriPaleAle

Calling all beer historians: What do you know about Kauri Pale Ale, which appears to be a brew produced by a Woodville brewery in the 1930s.

All information gratefully received—good people want to know.

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“I want to be a crony”

Vote over at the Economic Freedom blog for the finalists in the Best Liberty Video for 2012.

Here’s my favourite, one I’ve shown here before:

Why be a taxpayer, when you can be a tax spender?

[Hat tip the very discriminating Dr. Marc Street, at his On Liberty Street blog.]

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Portugal ended the War On Drugs, and the results are in

Portugal Decriminalized All Drugs Eleven Years Ago And The Results Are Staggering: On July 1st, 2001, Portugal decriminalized every imaginable drug, from marijuana, to cocaine, to heroin. Some thought Lisbon would become a drug tourist haven, others predicted usage rates among youths to surge.  Eleven years later, it turns out they were both wrong.”

The results are in, and they’re clear:

  • a drastic reduction in addicts, with Portuguese officials and reports highlighting that this number, at 100,000 before the new policy was enacted, has been halved in the following ten years;
  • Portugal's drug usage rates are now among the lowest of EU member states;
  • a lot fewer sick people. Drug related diseases including STDs and overdoses have been reduced even more than usage rates.

What’s more, criminal gangs are left without the windfall profits from drugs they enjoy in every other jurisdiction. “The worst thing that can happen to the gangsters and organized crime is for marijuana or other drugs to be legalized.”

Freedom works. Prohibition still doesn’t.

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“China Has Its Own Debt Bomb” [updated]

This excerpt from the Wall Street Journal was sent to me by a reader with the comment, “This is very telling”:

China Has Its Own Debt Bomb”: … Even if China dodges a financial crisis, then, it is not likely to dodge a slowdown in its increasingly debt-clogged economy. Through 2007, creating a dollar of economic growth in China required just over a dollar of debt. Since then it has taken three dollars of debt to generate a dollar of growth. This is what you normally see in the late stages of a credit binge, as more debt goes to increasingly less productive investments. In China, exports and manufacturing are slowing as more money flows into real-estate speculation. About a third of the bank loans in China are now for real estate, or are backed by real estate, roughly similar to U.S. levels in 2007...

“And how much of this is "sunk" in inflated land prices?” asks my correspondent.  Probably a fair proportion, would be my answer—perhaps because in China, even more than elsewhere, more savings are held in property as property is one of the chief ways in which savings are thought to be secure.  Just one reason so much Chinese money is finding its way into NZ real estate.

Which means the Chinese credit bubble is also our own credit bubble.

UPDATE: “As Goes China, So Goes The World And Definitely Australia

QUOTE OF THE DAY: How to handle exploding govt debt

“What about defaulting on [exploding government] debt? San Jose State University economist Jeff Hummel has written that government default would be ‘a balanced budget amendment with teeth’ because it would be hard for the [government] to borrow after stiffing their creditors. Bruce Bartlett argues that default ‘would constitute a grossly immoral theft of trillions of dollars from those who loaned money to the federal government in good faith.’ Really? It’s worse to default on creditors who took a risk than to forcibly take money from taxpayers who have no choice?” [emphasis added]
             - David Henderson, “Bartlett on Tax Reform

[Hat tip John Cochran]

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Tuesday, February 26, 2013

SUMMER SNIPPETS: ‘The Mystery of Capital’

More snippets from some of my summer reading, this time from Peruvian economist Hernando de Soto’s 2003 classic The Mystery of Capital, the work that brought home to all those who read it that what the have-nots have not is at root property rights, without which they will forever remain without.

The major stumbling block that keeps the rest of the world from benefiting from capitalism is its inability to produce capital. Capital is the force that raises the productivity of labour and creates the wealth of nations. It is the lifeblood of the capitalist system, the foundation of progress, and the one thing that the poor countries of the world cannot seem to produce for themselves, no matter how eagerly their peoples engage in all the other activities that characterize a capitalist economy.”

Even in the poorest countries the poor save. The value of savings among the poor is, in fact, immense: forty times all the foreign aid received throughout the world since 1945. In Egypt, for instance, the wealth that the poor have accumulated is worth fifty-five times as much as the sum of all direct foreign investment ever recorded there, including the Suez Canal and the Aswan Dam.
    “In Haiti, the poorest nation in Latin America, the total assets of the poor are more than 150 times greater than all the foreign investment received since the country’s independence from France in 1804. If the United States were to hike its foreign-aid budget to the level recommended by the United Nations – 0.7 per cent of national income – it would take the richest country on earth more than 150 years to transfer to the world’s poor resources equal to those that they already possess.
    “But they hold these resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan and cannot be used as a share against an investment. In the West, by contrast, every parcel of land, every building, every piece of equipment or store of inventories is represented in a property document that is the visible sign of a vast hidden process that connects all these assets to the rest of the economy.”

One of the greatest challenges to the human mind is to comprehend and gain access to those things we know exist but cannot see. Not everything that is real and useful is tangible and visible. Time, for example, is real, but it can only be efficiently managed when it is represented by a clock or a calendar. Throughout history, human beings have invented representational systems – writing, musical notation, double-entry bookkeeping – to grasp with the mind what human hands could never touch. In the same way the great practitioners of capitalism, from the creators of integrated title systems and corporate stock to Michael Milken, were able to reveal and extract capital where others saw just junk by devising new ways to represent the invisible potential that is locked into the assets we accumulate.”

imageThe proof that property is pure concept comes when a house changes hands; nothing physically changes. Looking at a house will not tell you who owns it. A house that is yours today looks exactly as it did yesterday when it was mine. It looks the same whether I own it, rent it or sell it to you. Property is not the house itself but an economic concept about the house, embodied in a legal representation. This means that a formal property representation is something separate from the asset itself.”

For [Adam] Smith, economic specialization – the division of labour and the subsequent exchange of products in the market – was the source of increasing productivity and therefore ‘the wealth of nations’. What made this specialization and exchange possible was capital, which Smith defined as the stock of assets accumulated for productive purposes. Entrepreneurs could use their accumulated resources to support specialized enterprises until they could exchange their products for the other things they needed. The more capital was accumulated, the more specialization became possible, and the higher society’s productivity would be. Marx agreed; for him, the wealth capitalism produces presents itself as an immense pile of commodities…
     “It is, as it were, a certain quantity of labour stocked and stored up to be employed, if necessary, upon some other occasion.’
    … “What I take from [Smith] is that capital is not the accumulated stock of assets but the potential it holds to deploy new production. This potential is, of course, abstract. It must be processed and fixed into a tangible form before we can release it – just like the potential nuclear energy in Einstein’s brick. Without a conversion process – one that draws out and fixes the potential energy contained in the brick – there is no explosion; a brick is just a brick. Creating capital also requires a conversion process.
    “This notion – that capital is first an abstract concept and must be given a fixed, tangible form to be useful – was familiar to other classical economists. Simonde de Sismondi, the nineteenth-century Swiss economist, wrote that capital was ‘a permanent value, that multiplies and does not perish . . . Now this value detaches itself from the product that creates it, it becomes a metaphysical and insubstantial quantity always in the possession of whoever produced it, for whom this value could [be fixed in] different forms.’ The great French economist Jean Baptiste Say believed that ‘capital is always immaterial by nature since it is not matter which makes capital but the value of that matter, value has nothing corporeal about it’.
    “This essential meaning of capital has been lost to history. Capital is now confused with money, which is only one of the many forms in which it travels…”

As Aristotle discovered 2,300 years ago, what you can do with things increases infinitely when you focus your thinking on their potential. By learning to fix the economic potential of their assets through property records, Westerners created a fast track to explore the most productive aspects of their possessions. Formal property became the staircase to the conceptual realm where the economic meaning of things can be discovered and where capital is born.”

The genius of the West was to have created a system that allowed people to grasp with the mind values that human eyes could never see and to manipulate things that hands could never touch.”

Formal property is more than a system for titling, recording and mapping assets – it is an instrument of thought, representing assets in such a way that people’s minds can work on them to generate surplus value. That is why formal property must be universally accessible: to bring everyone into one social contract where they can cooperate to raise society’s productivity.”

imageA good legal property system is a medium that allows us to understand each other, make connections and synthesize knowledge about our assets to enhance our productivity. It is a way to represent reality that lets us transcend the limitations of our senses. Well-crafted property representations enable us to pinpoint the economic potential of resources so as to enhance what we can do with them. They are not ‘mere paper’: they are mediating devices that give us useful knowledge about things that are not manifestly present.”

The capacity of property to reveal the capital that is latent in the assets we accumulate is borne out of the best intellectual tradition of controlling our environment in order to prosper.”

The philosopher John Searle has noted that by human agreement we can assign ‘a new status to some phenomenon, where that status has an accompanying function that cannot be performed solely in virtue of the intrinsic physical features of the phenomenon in question’. This seems to me very close to what legal property does: it assigns to assets, by social contract, in a conceptual universe, a status that allows them to perform functions that generate capital.”

Throughout history people have confused the efficiency of the representational tools they have inherited to create surplus value with the inherent values of their culture. They forget that often what gives an edge to a particular group of people is the innovative use they make of a representational system developed by another culture. For example, Northerners had to copy the legal institutions of ancient Rome to organize themselves, and learn the Greek alphabet and Arabic number symbols and systems to convey information and calculate. And so, today, few are aware of the tremendous edge that formal property systems have given Western societies. As a result, many Westerners have been led to believe that what underpins their successful capitalism is the work ethic they have inherited, or the existential anguish created by their religions – in spite of the fact that people all over the world all work hard when they can, and that existential angst or overbearing mothers are not Calvinist or Jewish monopolies… Therefore, a great part of the research agenda needed to explain why capitalism fails outside the West remains mired in a mass of unexamined and largely untestable assumptions labelled ‘culture’, whose main effect is to allow too many of those who live in the privileged enclaves of this world to enjoy feeling superior… 
    “This is not to say that culture does not count. All people in the world have specific preferences, skills and patterns of behaviour that can be regarded as cultural. The challenge is fathoming which of these traits are really the ingrained, unchangeable identity of a people and which are determined by economic and legal constraints. Is illegal squatting on real estate in Egypt and Peru the result of ancient, ineradicable nomadic traditions among the Arabs and the Quechuas’ back-and-forth custom of cultivating crops at different vertical levels of the Andes? Or does it happen because in both Egypt and Peru it takes more than fifteen years to obtain legal property rights to desert land? In my experience squatting is mainly due to the latter. When people have access to an orderly mechanism to settle land that reflects the social contract, they will take the legal route and only a minority, like anywhere else, will insist on extra-legal appropriation. Much behaviour that is today attributed to cultural heritage is not the inevitable result of people’s ethnic or idiosyncratic traits but of their rational evaluation of the relative costs and benefits of entering the legal property system.
    “Legal property empowers individuals in any culture, and I doubt that property per se directly contradicts any major culture. Vietnamese, Cuban and Indian migrants have clearly had few problems adapting to US property law. If correctly conceived, property law can reach beyond cultures to increase trust between them and, at the same time, reduce the costs of bringing things and thoughts together. Legal property sets the exchange rates between different cultures and thus gives them a bedrock of economic commonalities from which to do business with each other.”

And so formal property is this extraordinary thing, much bigger than simple ownership. Unlike tigers and wolves, who bare their teeth to protect their territory, man, physically a much weaker animal, has used his mind to create a legal environment – property – to protect his territory. Without anyone fully realizing it, the representational systems the West created to settle territorial claims took on lives of their own, providing the knowledge base and rules necessary to fix and realize capital.”

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Monday, February 25, 2013

Responding to the Census demand.

Guest post by Sam Pierson

Census demanders will shortly be knocking on your door demanding you respond. Here's one idea for a principled, gentlemanly and appropriate response.

1.  Write a letter to the Government Statistician in the next few days that goes something like this:-

        Geoff Bascand, Government Statistician
        PO Box 2922
        Wellington 6140

        Dear Sir,
        I wish to let you know in advance that I will not be filling out the census forms I have received.  I
        understand that this is against the law.

        I will expect to be prosecuted as per the law.

        Yours sincerely,
        [Name, Address, Sex, Age]

2.  When the collector comes, return the blank forms explaining that you have not filled them out, that you have let Mr Bascand know. and that you expect to be prosecuted.  Be polite.  Be courteous. Be brief.

3.  Within a month or so following the census, write to Mr Bascand referring to your original letter, and asking when you can expect prosecution proceedings to commence.

4.  If you get a fine in the mail, seek to go to court.

5.  In court, make a clear and concise statement explaining why you disagree with the law in principle. Do not try to get out of it. Openly accept that under the law you should be prosecuted for your offence and agree you have broken the law.

6.  If you hear nothing at all, go to the Statistics Department office in person & turn yourself in to Mr Bascand.

In all dealings be the model of polite & cheerful.  This is important.  Don't try to convert or convince anybody over the rightness of your cause.  Don't grandstand or seek attention.  Other than in court, and even then, be of few words.  The line is: 'I did not fill out my census form and I expect the Department to do its job, under law, and prosecute me.'

Within government & popular opinion, the census is seen as a minor imposition for the greater good of gathering the data to make 'better' public policy decisions in a 'modern' nation-state.  The aim of this response is to register dignified, civilised disagreement to all that: disagreement to the imposition & disagreement to the idea that the data collected for the state planners is good for us & our fellow countryfolk.  (See Doc McGrath's post here for more, and for his alternative response.)

As we also believe in the rule of law, we believe laws that are made should be followed.  Hence the request that the department do its lawful job & prosecute.

You'll probably need be prepared to spend $500, maybe some more—hard to tell.  We'll have a pub meetup a little while after the census to exchange stories & progress for those interested.  This is an individual by individual response, but no one will get left behind.

Do it with low to no expectations, in a breezy spirit. 

Good luck.  
Tallyho!

UPDATE: And in Northland,

Party rebels over 'intrusive' Census
Libertarianz Northland coordinator Helen Hughes will be holding a party on Census day - March 5 - to "responsibly" destroy her form with others opposed to the information gathering exercise.
Ms Hughes admits it's exhorting people to take part in a mass form of civil disobedience, but said many didn't like the intrusive nature of the Census and don't trust the Government.
"Nobody should destroy their [census] forms unless they know what they are protesting against. Yes, it's urging people to break the law, but when the law is wrong then protest is absolutely necessary."

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The Biggest Crisis to Hit the Stock Market Since the Last One

Guest post by Kris Sayce from Money Morning Australia 

The Biggest Crisis to Hit the Stock Market Since the Last One

What did we tell you a few weeks ago?  It’s impossible for the stock market to move up or down until the Wall Street whiz kids and mainstream media create a new catchphrase.

‘Debt ceiling’, ‘fiscal cliff’, ‘credit crunch’, and ‘Grexit’.  You’ve heard them all.  Each time one of those terms rears its head, the market falls. Then soon enough someone finds a ‘solution’ and stocks roar again.

Well, it looks as though we’ve got a new excuse for stocks to fall. And this one is the scariest of all.

It’s ‘The Sequester‘.

What does it mean and should you worry about it?  For an explanation of The Sequester, here’s the Washington Post:

The sequester is a group of cuts to federal spending set to take effect March 1, barring further congressional action.
    The sequester was originally passed as part of the Budget Control Act of 2011 (BCA), better known as the debt ceiling compromise.
    It was intended to serve as incentive for the Joint Select Committee on Deficit Reduction to come to a deal to cut $1.5 trillion over 10 years. If the committee had done so, and Congress had passed it by Dec. 23, 2011, then the sequester would have been averted.

In short, the US Congress and Obama Administration need to agree to cut a bunch of government spending, raise taxes, or both. If they don’t then it means a total of USD$85.4 billion in mandatory cuts spread across defence, discretionary spending and Medicare.

So, they’ve got just about a week to figure things out. Will they? Or will you see history repeat itself? Here, let us explain…

Stocks Fall Again, Will They Rise Again?

Last Thursday the Australian share market dropped 118.6 points…or 2.3%.  Investors are worried. They’re worried the US Federal Reserve may turn off the money tap. If that happens the stock market will have to fend for itself.

Add that to The Sequester and you’ve got a recipe for a stock sell-off.

As we said at the start, the market and mainstream investors are so insecure that they can’t buy or sell anything without an excuse. They need a big macro-economic disaster…and they need to give it a name.

They’ve done that before. So many times we’re bored of it. Here’s a chart of the US S&P 500 going back to 2007. We’ve overlaid data from Google Trends. The marks on the chart indicate the point at which each phrase reaches the peak in news headlines:

Click here to enlarge
Source: Google Finance, Google Trends

You remember the ‘Credit Crunch’. Headlines containing that phrase peaked in October 2008. The fear of a Greek exit (‘Grexit’) from the European Union peaked in May 2012.

And the Fiscal Cliff hit a crescendo in December…just before US stocks bagged a 9% gain in four weeks!

Each of these phrases has something in common – a short shelf life. The media reaches a frenzy,stocks sell-off and then…that’s right, politicians reach a bogus deal and the crisis is over…until the next crisis arrives.

That’s where we are with ‘The Sequester’…

That’s where we are with ‘The Sequester’. Use of the term has gone sky-high since the start of the year. Check it out for yourself on Google Trends (and sign up for Google+ while you’re there so you can follow our commentary throughout the day).

But we’re prepared to bet that you’ll see another eleventh-hour squib of a deal and they’ll avert the crisis…until the next time anyway. And you can guess what will happen then: stocks will take off, as we dare say part of the deal will involve more spending and/or more money printing.  And if we’re wrong? That’s why we hold dividend-paying stocks for income, cash for safety and gold for insurance. This volatility and fake crisis solving is why we’ve gone on so much about spreading your money around into various asset classes.  If you’ve followed this advice, then yesterday you should have just sat back and enjoyed the view.

Just because politicians and everyone else is irrational, doesn’t mean you have to be.

Cheers,
Kris
Kris Sayce is an Investment Director for Port Phillip Publishing and an editor for Money Morning Australia.

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