Wednesday, October 22, 2014

The Spectre, or Otherwise, of Deflation

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Here’s what’s on tomorrow night, Thursday, with our friends at the Auckland Uni Economics Group…

A new spectre is haunting the world’s financial houses, say economists.
    After decades of warning that inflation must be kept in check, and years in which central banks claim to have produced price stability -- a little healthy inflation will do you good, they say -- many economists are now fearing an imminent deflation.
    Falling consumer and commodity prices are on the immediate horizon, they say, which will lead to a deadly downward spiral from which only the central banks provide hope of escape.
    Yet falling consumer and commodity prices were precisely the result of the industrial revolution, producing the conditions that created the modern world.
    **So what's the truth about falling prices?  Can that really be all bad?
    **What are the problems of "deflation" that many economists see? And is it possible that deflation may be a blessing, rather than a curse?

Join us to discuss these and other questions.

        Date: Thursday, October 23
        Time: 6-7pm
        Location: Case Room Two, Level Zero, Auckland Uni Business School
                             (plenty of parking in the Business School basement, entrance off Grafton Rd)

We look forward to seeing you there.

PS: Check us out on the web at our Facebook page.

“You didn’t tick Box 6”

Clients sometimes ask me about lodging past at Auckland Council. 

It’s something like this …

,,, except the plan processors still get to reject everything once you've gone.

[Hat tip Auckland Transport Blog]

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Tuesday, October 21, 2014

When the answer is Bryan Gould…

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Bryan Gould has been selected to run the post-election review of Labour’s failure.

He is a man fully qualified for the job.

What he doesn’t know about failing Labour parties isn’t worth knowing. After all, that’s where he spent a whole lifetime.

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_BryanGouldGould was a senior part of the British Labour Party that made themselves unelectable for virtually a generation. Leaders Neil Kinnock and Michael Foot were Labour’s gifts to Margaret Thatcher and John Major – making even the sub-mediocre Major look good enough to bring home the electoral bacon.

Gould however kept the blinders on, describing Welsh windbag Neil Kinnock as a statesman and the insane Michael Foot a genius, before discovering that even  as bad as Labour was, it wasn’t so bad it wanted him as leader – a man the rank and file knew could bore for Britain. (Gould was the man wheeled out at conferences when you wanted to clear a room.)

British Labour’s gain was our loss.

He left party and country in high dudgeon and returned home to nurse his grudges -- with a lifetime’s good timing, just as Tony Blair finally turned the party and its fortunes around. He watched from afar at accolades he thought should have been his, having achieved nothing in his time in politics but rejection.

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The Wairarapa  windbag now nurses his unrecognised genius at the University of Waikato.

And on failing Labour Parties, he has made a career-long study: indeed, it’s the only subject on which he has any expertise at all.

Which makes him an excellent choice, especially if long-term failure is what you’re after.

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Windfall profits for some at the expense of affordable housing for others

Here is how the housing market works under John Key’s crony capitalism: he and his housing minister and the council’s planners have between them just made around half-a-dozen land-owners around Auckland rich beyond their wildest dreams.*

In announcing the “Housing Accord” with the Greater Auckland Council, planners and politicians failed to understand the power of Mr Market.

Announcing out of the blue some land allowed to slip through the council’s zoning net, the land-owners quickly discovered their land formerly zoned rural by planners now had the politicians’ and planners’ tick to build houses – and the value of said land immediately went through the roof.

Some have put land up for sale soon after gaining designation as a Special Housing Area, achieving prices up three times higher than previous valuations.
    In one case, adjoining rural properties valued three years ago at $4.5 million sold for nearly $11 million, after being approved for fast-track housing development.
    A property developer has sold large blocks in the Huapai Triangle, valued three years ago at $8.65 million, for more than $20 million.

By locking up land and releasing it only in dribbles – favouring some land-owners over others, particularly those with pull – planners generate not only the carpet sprawl they claim to despise, but windfall profits for some at the expense of affordable and reasonably priced land for others.

The solution is to shoot the planners – or at least to make them unemployed – and let people exercise their own choice over where and how they live.


* National cronies? No, I don’t know either  (a good job for a good journalist that, discovering the details), but if they weren’t before, you’d think they’d certainly be supporters now. Because that’s how public-private partnerships roll, baby.

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Get your apostrophes right

It’s never the wrong time to get apostrophes right.

Apostrophes are the difference between a supermarket that knows its shit and one that knows it's shit; between feeling you're nuts and feeling your nuts; between "Hell mend them" (an old-fashioned curse) and "He'll mend them" (a bloke's coming round to fix your tiles).

If you can't use an apostrophe, you don't know your shit.

Monday, October 20, 2014

Don’t steal

A would-be purse snatcher in Chile gets some instant justice.

In Chile, the bus driver is a hero.

In New Zealand? It’d probably be him who was arrested.

[Hat tip Julian D.]

Send in your horror stories

I fear it’s simply a ruse to absorb dissatisfaction rather than the blunt instrument it should be to hit councils around the head, but new Local Government minister Paula Bennett has now

formally launched her Rules Reduction Taskforce aimed at finding 'loopy' property rules and regulations, naming the heads of the new body and setting up a website to solicit examples.
    "People can now head to this
rules reduction website, to start telling us what bugs them when it comes to loopy rules and regulations," Bennett said.

The “Taskforce” is headed by  National MP Jacqui Dean, with no particular qualifications for the task, and Auckland Chamber of Commerce CEO Michael Barnett.

"I'm asking property owners, builders, tradespeople and businesses who have experienced the issues caused by irrelevant or unnecessary regulations, to help draw these to our attention," Bennett said…
    "We need to hear from New Zealanders about examples that have got in the way of their building, renovation, landscaping, and home improvement plans, so that we can cut the red tape where it needs to be cut, to help them get on with the job."

I expect little – and still say the single best thing Bennett could do in her portfolio is to reverse the “powers of general competence” that former minister Sandra Lee granted councils -- but I’d still recommend you fill Bennett’s rules reduction website with all your genuine horror stories, of which I know you will have several dozen each.

At least it will give you somewhere to get them off your chest.

Lindsay Mitchell has already made a start.

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Four Reasons the Bernanke-Yellen Asset-Price Inflation May Be Nearing Its End

The American central bank – the Fed – has exported asset-price inflation to the world. But in  recent times there are signs this asset bubble is beginning to burst. In this guest post, Joseph Salerno offers four reasons the Federal Reserve’s asset-price inflation may be nearing its end.

There are strong indications that the remarkable run up of asset prices in the last few years is beginning to run out of steam and may be on the verge of collapse. (We will leave aside the question of whether the asset inflation is symptomatic of a garden-variety inflationary boom or is a more virulent bubble phenomenon in which prices are rising today simply because buyers anticipate that they will rise tomorrow.)

The Evidence

1. The dizzying climb of London real estate prices since the financial crisis, noted in a recent post by Dave Howden, may be fizzling out. Survey data from real-estate agents indicate London housing prices in September fell 0.1 percent from August, their first decline since November 2012. Meanwhile, an index of U.K. housing prices declined for the first time in 17 months. In explaining the "pronounced slowdown" in the London real estate market, the research director of Hometrack Ltd. commented, “Buyer uncertainty is growing in the face of a possible interest-rate rise, a general election on the horizon and recent warnings of a house-price bubble,” which is playing out "against a backdrop of tougher mortgage affordability checks and limits on high loan-to-income lending."

2. Just released data from the Dow Jones S&P/Case Schiller Composite Home Price Indices through July 2014 shows a marked deceleration of U.S. housing prices. 17 of the 20 cities included in the 20-City Composite Index experienced lower price increases in July than in the previous month. Both the 10- and 20-City Index recorded a 6.7 percent year-over-year rate of increase, down sharply from the post-crisis peak of almost 14 percent less than a year ago.

3. More ominously…

Click here to read more ... >>

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Open Letter to KiwiBank

Dear Sir

I recently had the misfortune of watching your “take the leap” advert on television, apparently aimed at those who have left the security of their jobs to set up a business. In the advert, you claim to know how this feels and that your bank also “took the leap.”

I find this not only an insult to the intelligence, but a bare-faced lie.

At no time since your bank’s inception did anyone in your organisation invest their own capital in your bank. Your bank was started off the backs of the taxpayer, and had continued that way. You risked nothing but the taxpayer’s anger. Thus your future was and still is assured – by the taxpayer. Regardless of how badly managed KiwiBank is, the taxpayer will always be forced to foot the bill.

In short your bank is another example of the State overstepping its mandate, and involving itself in areas of life in which it has no business.

I would therefore ask that you remove this advert from view as a gross misrepresentation of the truth, and an insult to those of us who have risked our own money to start a business -- and who would have  rather kept our earnings in our own pockets and our own businesses, instead of having it go to your own dubious enterprise.

Yours Sincerely

Peter Osborne

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Friday, October 17, 2014

‘Napoleon Visits the Plague House at Jaffa,’ by Antoine-Jean Gros


Bonaparte visitant les pestiférés de Jaffa, 1804, oil on canvas, 5320mm × 7200mm, Louvre, Paris

Dictator visits the severely afflicted, affecting Christ-like stature.

This is a huge canvas (17 feet high and 23 feet wide) divided in three, portraying the conquering hero as a cross between Christ and Apollo, visiting his afflicted troops in Egypt stricken with the deadly disease.

In reality, he was leaving Egypt in defeat, having order the patients’/prisoners’ death.

Such is the power of great art that the portrait nonetheless sticks.

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Thursday, October 16, 2014

A ‘Minarchist’ Environmentalism

Guest post by Nick Sorrentino from the blog Against Crony Capitalism

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This essay has little (directly) to do with crony capitalism, however I wanted to post it here for our readers’ consideration. People who read Against Crony Capitalism regularly know that we care about the environment. We love the ocean, and hiking, and clear skies on a moonless night. We are saddened by the clear cutting of rain forest, (usually due to a wilful lack of property rights) and by plastic floating in our seas; we care about “sustainability” generally.

However we despise the command and control methods which have traditionally been the weapons of choice for the environmentalist movement. This general disposition toward control has muddied the water on environmental issues. For many outside of the environmentalist movement the perception now is that “environmentalism” is not actually the end. A clean planet is not the end. Instead, the actual end is state domination and regulation of every single aspect of life which is . Indeed that “green” is the new “red.”

I think one can be “green” and pro-market. In fact being “green” and pro-market is not some quaint contrarian position, but the way forward.

Click here to read more ... >>

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Governments Need Inflation, Economies Don't

Guest post by Peter Schiff

In an article in the UK's Telegraph on October 10, veteran economic correspondent and central bank shill Ambrose Evans-Pritchard laid bare the essential truth of the nearly universal current embrace of monetary inflation as an economic panacea. While politicians, CEOs and economists talk about demand stimulus and the avoidance of a deflationary trap, Evans-Pritchard reminds us that monetary inflation is all, and always, about debt management.

Most especially government’s debt management.

Every year the levels of government debt as a percentage of GDP, for both emerging market and developed economies, continue to go higher and higher. As the ratios push out into uncharted territories, particularly in Europe's southern tier, the ability to "inflate away" debt through monetisation remains the only means available to postpone default.

Evans-Pritchard quotes a Bank of America analyst as saying that even "low inflation" (not to mention actual deflation) is the "biggest threat to the dynamics of public debt." IMF Managing Director Christine Lagarde ramped up the rhetoric further when she recently told the Washington Press Club that "deflation is the ogre that must be fought decisively." In other words, governments need inflation to remain viable. It's the drug they just can't do without.  [And “deflation” – falling prices -- My God! -- how would they ever pay back those trillions! – Ed]

But because this simple truth is just too embarrassing to admit, politicians and central bankers (and their academic, journalistic, and financial apologists) have concocted a variety of tortured theories as to why inflation is not just good for overly indebted governments, but an essential economic good for all.

Click here to read more ... >>

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“Avoid , remedy or mitigate”

As minister in charge of housing, building and National’s Resource Management Act, Nick Smith can now do whatever he likes to fix the housing affordability crisis.

Now he has his feet under the cabinet table again, he says that as a matter of urgency he will be amending the Resource Management Act to “address” the housing affordability issue.

Nick Smith was in charge of the Resource Management before, back in the nineties, for around three years. He did nothing.  He told me it was “a wonderful piece of legislation,” bequeathing it to a generation (upon his then departure) as the handbrake on land supply it has become.

He was in charge of it again just five years ago, when he “reformed” it a first time – delivering a chocolate-coated turd allowing an easier passage for government projects and easier theft of property rights.

He now says, again, after six years in aggregate in charge of this Act – longer than any other minister has had their hands on it – that it now needs “urgent” reform “to ease urban development.” [AUDIO]

Click here to read more ... >>

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Wednesday, October 15, 2014

NZ Housing Crisis: Local Government Still Confused

Guest post by Hugh Pavletich

Early 2007, soon after the release of Demographia’s housing affordability survey showing NZ’s housing beccoming increasingly unaffordable, Local Government New Zealand® and the New Zealand Planning Institute® expressed concern about housing affordability, stating:

The New Zealand Planning Institute® strongly supports Demographia’s call for planners, local councils and developers to collaborate more proactively and effectively on the provision of an adequate supply of affordable new residential housing.

Now, some seven-and-a-half years later, 10th October 2014, Local Government New Zealand®  issues a media release stating … stating …

Local Government New Zealand (LGNZ) says local government, central government and the business sector need to work together with communities to address housing affordability across New Zealand.

The emphasis is mine. The sappy confusion is theirs.

My own assessment: Local Government New Zealand® is still lost and confused.

Click here to read more ... >>

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Large Interior 175 (Richard), by Jude Rae

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Large Interior 175 (Richard), 2005, Oil on linen,
1800mm x 1200mm, James Wallace Collection, Auckland, NZ.

No, this isn’t a Vermeer or Caravaggio – you can tell by the watch and T-short it’s not an old master – this is the work of NZ artist Jude Rae, now living in Canberra.

Can you see why I was so excited when I discovered it over the weekend?

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Tuesday, October 14, 2014

On poverty

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The other day one of this blog’s regular trolls expressed amazement that I’d linked to a post on poverty in good faith. Surely, reasoned the troll, the only reason a blog promoting “capitalist acts” would link to the story of a woman living in poverty would be to point and laugh.

The troll doesn’t get it.

Because it is capitalist acts that are lifting people out of poverty all the time. And that’s one of the things this blog was created to celebrate.

Consider this: capitalism inherited millennia of poverty, and (despite battling statism all the way) delivered two centuries of prosperity unimaginable  at any other time in history. That’s a great thing.

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 Nearly 1 billion people have been lifted out of poverty in the last 2o years alone.   That’s a really great thing.

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1 billion people lifted out of poverty not through charity, welfare, or the donations of the pope or Gwyneth Paltrow. But through greater capitalism: its markets, its rule of law, its production, its innovations.

Click here to read more ... >>

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Does the “Left” actually need people to be on welfare to win elections?

This guest post by  Nick Sorrentino is something we might wonder about Labour…

First, what is called “Right ” and “Left” in politics today is increasingly up for grabs. The left-wing/right-wing political paradigm makes much less sense now that a significant part of the population self identifies as “libertarian,” which does not fit into the 20th Century way of looking at politics.

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But the question of terminology is less important than whether those who advocate ever-larger government have to keep people “hooked” on welfare of one sort or another in order to win elections. Whether creating dependence on government is in itself a political strategy.

These are pretty fair questions. If the government sends money in the mail, and one comes to rely of that money, would one ever vote for someone who threatens to limit or eliminate that check? Probably not.

Is it fair then to say that statist politicians might actually seek to expand government reliance simply to increase their political power?

I think the answer is obviously yes. But I’ll leave the question open, especially for our lefty readers.

And I’ll ask another related question.

Isn’t the elimination of various types of welfare 100% the ultimate goal? Isn’t that what we’d want ideally? A private sector so vital that the issue of jobs is a non issue? Isn’t that where we’d want to go, and isn’t that what we should be aiming for?

Or are there people who in fact need other people to rely on government to remain in power? Political people who need other humans to remain permanent wards of the state. Modern serfs. And that’s a kind way of putting it.

Here’s a case study, from IBD.com:

Brazil's Election Shows How The Left Thrives On Welfare Dependency
A Brazilian economist has shown a near-exact correlation between last Sunday’s presidential election voting choices and each state’s welfare ratios. Sure enough, handouts are the lifeblood of the left…

Click here to read more ... >>

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‘Coastal Landscape in Moonlight,’ by Knud Andreassen Baade


Coastal Landscape in Moonlight, 1851, oil on canvas, 159.5 x 132 cm,
by Norwegian artist,
Knud Andreassen Baade, (1808-1879)

[Hat tip Stephen DaLuz]

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Monday, October 13, 2014

Disruptive business: Paypal's Peter Thiel on technology entrepreneurs

I haven’t watched it myself yet, but our friend Suzuki Samurai reckons once you get through the intro blather, this is definitely worth a look: PayPal and Facebook investor Peter Thiel drawing lessons from his experiences as a startup investor about successful entrepreneurship and innovation.

Thiel argues that successful people find value in unexpected places. and that entrepreneurs and society benefit most when businesses create something new rather than copy existing models.

The Capitalist Cure for Terrorism

If that sounds like an unusual headline, then consider that the ideas of Hernando De Soto have been credited not just with helping turn around Peruvian poverty, but also to putting an end to the Marxist guerrilla movements like Shining Path that plagued the place.

As he explains in one book, two TV documentaries, and countless speeches, lectures and articles, the two are not unconnected.

His weapons in this struggle: capitalism, and property rights – and he says the recipe can work just as well for the Middle East. Indeed, he says, it is how the Arab Spring began:

Deploy capitalism, he argues, and you can stop recruitment to Islamic State’s “network of death.”

Click here to read more ... >>

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What science makes possible

Science and technology making human life greater: watch a man see for the first time in 33 years, thanks to his new bionic eye.

[Hat tip Julian D.]

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QUOTE OF THE DAY: On Education

"Credentialing, not education, has become the primary business
of North American universities. … One wonders at the docility
of the students who evidently must be satisfied enough
with the credentials to be uncaring about the lack of education."

- Jane Jacobs, author of The Death and Life of Great American Cities

[Hat tip Lawrence Reed]

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Friday, October 10, 2014

Friday Afternoon Ramble:

“The basic and crucial political issue of our age is: capitalism versus socialism, or
freedom versus statism. For decades, this issue has been silenced, suppressed, evaded,
and hidden under the foggy, undefined rubber-terms of
‘conservatism’ and ‘liberalism’
which had lost their original meaning and could be stretched to mean all things to all men.
    “The goal of the ‘liberals’—as it emerges from the record of the past decades—was to
smuggle this country into welfare statism by means of single, concrete, specific
measures, enlarging the power of the government a step at a time, never permitting
these steps to be summed up into principles, never permitting their direction to be
identified or the basic issue to be named. Thus statism was to come, not by vote or
by violence, but by slow rot—by a long process of evasion and epistemological corruption,
leading to a fait accompli. (The goal of the ‘
conservatives’ was only to retard that process.)”
- Ayn Rand, From ‘Extremism,’ or the Art of Smearing,’ in Capitalism: The Unknown Ideal

“An independent Electricity Authority report may tell us whether some of the $17m Vector  admitted to spending on lawyers and experts fighting the Commerce Commission’s methodology for price control, could have been better spent on a few sprinklers and engineers.”
NBR covering the right questions on Auckland electricity – STEPHEN FRANKS

“As explained by the great economist Harold Demsetz, the theory of perfect competition is not a theory of competition at all.”
Competition: Real and Mistaken – Don Boudreaux, CAFE HAYEK
Peter Thiel on the Virtues of Monopoly – TRUTH ON THE MARKET

Will the NZ left ever recover from the fact the National Party now embodies all the socialism the public is able to support? 
NZ election 2014 post-mortem – LIBERTY SCOTT

“It is much easier to do to explain your defeat at elections on a conspiracy, rather than on your ideas having been tried and failed time and again.”
How much of the political spectrum is neoliberal (and under the Svengali influence of the Mont Pelerin Society)? – Jim Rose, UTOPIA, YOU ARE STANDING IN IT!

“Self-determination of the manner and means of one's death is an individual’s basic right. But unfortunately politicians follow a dreadful pragmatism, rather than a principled view toward our freedom, so let me provide it.”
Why This Government Urgently Needs to Pick Up Maryan Street’s Euthanasia Bill – Mark Hubbard, LIFE BEHIND THE IRON DRAPE

“The problem of the deserted wife” is what started us down the DPB slippery slope. But check out the size of that problem…
ODT: 100 years ago – LINDSAY MITCHELL

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“One tool in the compact cities toolbox is boosting residential densities along arterial roads. It’s a tool that should be used sparingly.”
Hardening Arteries: Intensification and Inner City Congestion – Phil McDermott, CITIES MATTER

“QThere’s a story that charging your phone in your bedroom make you fat.
“A: Yes, there is.
“Q: Why?
“A: Because it looked like a good headline.”
…and to divide the light from the darkness – Thomas Lumley, STATS CHAT

“You ask why I cannot “be more practical about trade.”  My answer is that unconditional support for unconditional free trade is the most practical policy that is practically available…”
Impractical Practicality – Don Boudreaux, CAFE HAYEK

The scientific method in 61 seconds, delivered by the great Richard Feynman:

“Steven Guilbeault of Greenpeace said that anything proved AGW; Guilbeault stated: 'Global warming can mean colder, it can mean drier, it can mean wetter, that's what we're dealing with.'”
Man-made Global Warming Causes everything including a freezing Antarctic – AUSTRALIAN CLIMATE SCEPTICS’ PARTY

“Climate scientists have confessed they are baffled – yet again – by another all-time record area of sea covered by ice around the Antarctic coasts.”
Antarctic ice reaches ALL TIME RECORD HIGH: ‘Climate scientists have confessed themselves baffled’ – THE REGISTER
Antarctic Sea Ice Reaches New Record Maximum – WATTS UP WITH THAT

More bafflement.
September Snow Cover Was Highest On Record In North America – STEVEN GODDARD

“A new paper published in the Open Journal of Atmospheric and Climate Change by renowned professor of physics and expert on spectroscopy Dr. Hermann Harde finds that climate sensitivity to a doubling of CO2 levels is only about 0.43C, about 7 times less than the IPCC claims, but in line with many other published low estimates of climate sensitivity.”
New paper finds climate sensitivity to CO2 is only 0.43C, about 7 times less than the IPCC claims – HOCKEY SCHTICK

“'The scientific reality is that virtually every claim — from A to Z — of the promoters of manmade climate fears is falling short or going in the opposite direction from reality.'”
Climate Truth Fact File: 2014 – CFACT

“Man-made climate change is the only scientific theory where
the people who point to evidence are called deniers and
conspiracy theorists, yet the people who stick to a computer
models that have all failed, are called the ones defending ‘science.’”
- Carbon Dioxide

“The Sceptical Science kidz and Trenberth think that the deep ocean has absorbed all the heat that isn’t showing up in the atmosphere, and that’s [why] we have “the pause”. Well, that’s busted now according to ARGO data and JPL and it has NOT gone into the deep ocean.”
The “heat went to the oceans” excuse and Trenberth’s missing heat is AWOL – deep ocean has not warmed since 2005 – WATTS UP WITH THAT
No, the missing heat isn’t hiding in the deep ocean, either – ANDREW BOLT
New paper is a brazen & unjustified attempt to claim the oceans have warmed 'more than we thought' – HOCKEY SCHTICK

“Now we know why alarmists like to use 1979 instead of 1975 to start their graphs.”
Climate Change LIES – CARBON DIOXIDE

“Temperatures at the Melbourne Regional Office were the hottest ever this past year, with their thermometer located five feet away from the asphalt of Victoria street…”
Melbourne Asphalt Was The Hottest Ever – CLIMATISM

“If you put the government in charge of the Sahara
Desert, in 5 years there'd be a shortage of sand.”

- Milton Friedman

“Climate-change policy does not turn stones into bread. Hoffman’s claims violate both common sense and the peer-reviewed economics literature. Adding restrictions on businesses and households takes away options, and make us poorer.”
Stones Into Bread: False Claims of CO2 Taxation – Robert Murphy, MASTER RESOURCE

“’It’s absurd to rely on economies based on constant growth on a finite planet.’ But, is it?”
Finite Resources and Infinite Growth – Andrew Leach, RESCUING THE FROG
Environmentalism Refuted – George Reisman, MISES DAILY

“But equally there’s no hard limit on how large that economy can become as long as we keep finding new ways of adding value.”
When Physicists Do Economics We Seem Not To Get Economics As The Result – Tim Worstall, FORBES

“’Alienation’ and ‘disadvantage’ simply cannot explain why jihadist Numan Haider tried to kill two Melbourne police officers.”
Costello: the alienation excuse for jihadists won’t wash – ANDREW BOLT

“Now consider the issue of the moment: the fact that some of our sons and daughters are so alienated from this country that they are prepared to cross half the world to take up arms against our values, our allies and our interests. Not just in Syria and Iraq, either. British Muslims have been picked up on the battlefields of Afghanistan and Pakistan. Two were suicide bombers in Gaza….
    “What, then, should we do? We should offer something better. If British identity is systematically derided and traduced, if British history is presented as a hateful chronicle of racism and exploitation, if British patriotism is seen as knuckle-headed, don’t be surprised if many … grope back towards older patriotisms.”
The way to defeat British jihadis is to offer something better – Daniel Hannan, TELEGRAPH

“25-year-old, middle-class teacher who joined ISIS - then fled after seeing horror of beheading.”
The middle-class teacher who joined ISIS - then fled – MAIL ONLINE

“Alberici asked Doureihi specifically whether [Australian groupp] Hizb ut-Tahrir supports Islamic State fighters, not once, not twice… but 16 times!!”
This Is How Not To Answer When Asked “Do You Support Islamic State?” – BUZZFEED

Tammy Bruce – “Gee, I wonder how that happened?”
Satellite photos reveal massive damage at suspected Iran nuke facility – TIMES OF ISRAEL

"Affleck comes off as hostile and dogmatic in his attacks on Harris, and thereby manages to illustrate one of the purposes of the “Islamophobia” trope. Through intimidation and smear tactics, it aims to shut down desperately needed analysis and discussion of the ideas that in fact animate the global jihadist movement."
    Never go full Affleck.
The 'Islamophobia' Smear: Ben Affleck's Failed Takedown of Sam Harris – Elan Journo, VOICES FOR REASON
What Does Ben Affleck’s Defense of Islam Reveal? – Michael Hurd, CAPITALISM MAGAZINE

“Democracy is a great brake, but it is a terrible steering wheel.”
– Guy Herbert

“While the on-going interventions by the Federal Reserve have inflated asset prices, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else.”
Obama's Economic Recovery In Pictures – ZERO HEDGE

“The reserve currency status of the dollar has cost the United States as many as six million jobs.”
The Rise And Fall And Rise And Fall Of King Dollar, Part 1 – Ralph Benko, COBDEN CENTRE 
The Rise And Fall And Rise And Fall Of King Dollar, Part 2 – Ralph Benko, COBDEN CENTRE

“I don’t mean to burst your bubble, but the leader we’re talking about isn’t the President of the United States.”
Nation’s Leader Rejects Keynesian Economics, Acknowledges that Real Jobs Are Created by the Private Sector – Daniel J. Mitchell, TOWN HALL

“It is impossible to square the concept of velocity of circulation with one simple fact of everyday life: we earn our salaries once and we dispose of it. That’s a constant velocity of roughly one.”
The velocity myth – Alasdair Mcleod, COBDEN CENTRE

“The new accounting rules mandated by the EU’s statistics office, Eurostat, include revenue from illegal activities related to drugs trafficking, prostitution and cigarette smuggling… illegal activities are now the difference between economic growth and economic recession in Europe.”
Presenting the ‘Hookers and Blow’ GDP component for select European economies – Simon Black, SOVEREIGN MAN

“One day he's the king of debasing green pieces of paper, and the next he's talking about gold.”
Is it Alan Greenspan or Alan Goldspan? – ECONOMIC POLICY JOURNAL

“Every student of economic history knows the Austrian tradition had all but died out by the middle of the 20th century, supplanted by Keynesianism and a faith in central planning. Right? Wrong.”
Economic Historians Are Wrong About the Austrian School, Says Israel Kirzner – Stephanie Slade, HIT AND RUN

What really ended the Great Depression?  (Lots of links!)
The Truth About the Great Depression – FREEDOM KEYS

“This. This and more this. Great conversation, and great project!”
Awesome: Austrian Economist Takes on Bestselling College Text, Chapter by Chapter – TOM WOODS

"The term open minded is an invalid package deal, it is used to equate the
thinker with the sceptic and thereby to give sanction to the latter. But the
thinker who actively integrates evidence to arrive at new ideas has nothing
in common with the sceptic who feels free to assert possibilities without
required evidence.... a mind that is open to any possibility regardless of
it's relation to the total context of knowledge is a mind detached from
reality and therefore closed to knowledge."

- David Harriman, The Logical Leap

“Envious people believe they will never be strong, capable or content, and it becomes a self-fulfilling prophecy. If I had the power to wish away one – just one – faulty aspect of human nature, it would be envy and jealousy. Nothing contributes more to mental illness and general human destruction.”
The Antidote to Envy – DR HURD.COM

“For the first time, scientists have been able to reverse memory loss in Alzheimer patients.”
Memory Loss Associated with Alzheimer’s Reversed for First Time – NEUROSCIENCE NEWS

“‘Addiction’ is something most addicts grow out of.”
Most People With Addiction Simply Grow Out of It: Why Is This Widely Denied? – SUBSTANCE.COM

“As one of my philosophy professors noted: "I have never experienced a mind that was not in close proximity to a brain."”
Proof of Life After Death? Maybe Not. – Ronald Bailey, HIT AND RUN

“An animal liberationist group storms into a restaurant and pleads with people to stop murdering innocent chickens. Go ahead and laugh. But if you think they're wrong, do you know why?”
Do We Need a Declaration of Independence for Chickens? – Michael Hurd, DR HURD.COM

“To stop sweatshops, we shouldn't outlaw them—they're sometimes the only available employment for those who live in poverty. Instead, we should change institutions in order to spur economic growth and lift sweatshop workers out of poverty.”
Cliché #21 – "Capitalism's Sweatshops and Child Labor Cry Out for Government Intervention" – FOUNDATION FOR ECONOMIC EDUCATION

“No matter how much capitalism develops in the direction of direct worker control and individual sovereignty, reducing the role of large-scale enterprises and monopolies, the socialists still complain with the old bromides of exploitation while calling for government to crack down. So much for revolution. It’s the digital-age capitalists who have recaptured the revolutionary idealism that socialists long ago set aside."
Who's Afraid of the Workers' Revolution? - FOUNDATION FOR ECONOMIC EDUCATION

““Never think of enemies a moment longer than is necessary to fight them.”
Objectivism and the Amount of Anger – Tony White, PERIPATETIC THOUGHTS

“'There are idiots.'”
First sentences of non-fiction texts: The Top Ten3 QUARKS DAILY

This could really help parents...
We Turned Off the TV – HUFFINGTON POST

“A great summary of the most recent studies into outcomes from Montessori education.”
Does it Work? What Research Says About Montessori and Student Outcomes – NATIONAL CENTER FOR MONTESSORI IN THE PUBLIC SECTOR

Definitely worth all the fuss!
Craft Beer: What's all the fuss about? – Matthew Martin, NZ HERALD

“Wright first arrived in Japan in 1917 and that same year he met Arata Endo – 27 years old at the time and fresh off the team working on plans to construct Meiji Shrine.”

yodokoo guest house frank lloyd wright
Introduction to the "only philosophy for living on this earth," in just 10 minutes.... a great value for your time.

The importance of a good wedding photographer.

[Hat tips Maria Montessori Education Foundation, Anoop Verma, On Liberty Street, Maria Montessori Education Foundation, Lawrence Reed, Montessori Australia, Friends of Kebyar, Carol Potts, Betsy Speicher, Bosch Fawstin, slone, Quotable Right, Stephen Gordon, Rudolf E. Havenstein,  Rick Gator, Feisty☀️Floridian]

Thanks for reading,
Have a great weekend!
PC

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We’re in an Economic Neverland - Part 2

Guest post by Bill Bonner, continued from yesterday (check out part one here).

Yesterday, Bill Bonner looked at some of the destructive effects of Zero or Negative Interest Rate Policy (ZIRP or NIRP), and the issuing of all that new debt . Today he continues …

Neverland - Part 2

"There can be nothing more unreal in
its pretensions than debt currency itself."
Charles Holt Carroll (1860)

Ex Nihilo Nihil Fit

I spent much of the spring at our ranch in Argentina. I was cut off from the flow of news and opinion. No telephone. No TV or radio. But I was still thinking… in a desultory way… about how you can get something from nothing.

“Out of nothing comes nothing,” is the expression. It expresses a deep truth, much like the law of conservation of matter and energy. You can’t get something from nothing. You can’t get rid of something once you’ve gotten it, either. That is, you can’t get nothing from something. As you know, the law of conservation of matter and energy tells us that you can just change the way it is expressed… where and how it shows up.

Getting something out of nothing violates the laws of the universe. It doesn’t seem possible. And of course, it’s not. Free money is oxymoronic. Like an “honest dollar” or a “reclusive film star,” it doesn’t exist.

So, if you think this free money coming from the Fed has no cost, you’re probably going to be surprised… and disappointed. The bill for it is out there somewhere. In the future. Debt is essentially a financial arrangement between the past and the future. And eventually, the future comes.

I was thinking about this when I was helping with the roundup at our ranch in Argentina. At the time, I couldn’t figure it out. How can you get something from nothing? Who gets the bill? How? When?

Then a 2,000-pound bull charged me.

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Thursday, October 09, 2014

We’re in an Economic Neverland

In a world of virtually free money – the money of near-Zero or even Negative Interest Rates excreted by central banks – the clear-eyed man could be king. But not if the well-connected man has blinded him first, says Bill Bonner in this guest post.

We’re in an Economic Neverland, Part 1

Anything is possible in a NIRP (negative-interest-rate policy) world.

When central banks are resorting to negative interest rates, as the ECB did recently, everything goes topsy-turvy. A trillion dollars here… a trillion there. Pretty soon we’re talking about the end of the world as we have known it.

In the US, in the first seven decades of the 20th century, the relationship between debt and GDP was fairly stable. Debt was at about 150% of output. Then Nixon severed the link with gold in 1971… and debt grew even faster than GDP. Right now, the ratio of debt to GDP is 370%.

By my calculations, the excess over what is needed to generate growth in the post-war years is about $33 trillion. Annual US GDP is about $17 trillion. At 150% of output, we’d have debt of about $26 trillion. Instead, it’s $59 trillion. We’d have $33 trillion less debt, in other words, if we’d stuck to the 150% ratio.

An Explosion in Debt

The central question we asked at the recent Global Partners’ Reunion in France was: Why didn’t we stick to the old ratio? And where does all the explosion in new debt lead?

imageIn my opening address to the group, I named the place we find ourselves “Neverland,” like Michael Jackson’s ranch in California. It’s a place where anything can happen… and something bad always does.

For example, Elizabeth and I were recently wondering if we should upgrade some apartments we own. What if we spend $50,000 on each of them? How much more in rent would we have to get to make the investment worthwhile?

The answer is it depends on the cost of capital. If it costs you 4% a year to borrow money, you’d need a return somewhere in excess of $2,000 a year—or about $170 a month—to make the improvements pay off.

These are dumpy apartments—renting for about $800 a month each. But it’s a good area. Up and coming, apparently. Putting $50,000 into each one would mean a total investment in the building of about $400,000. And there would be a loss of income while the work was going on.

Still… the investment seemed worthwhile, largely because we wouldn’t have such a dumpy place next door to our house. But the key question is always: What is the real cost of capital? It makes financial sense only if your return on investment is greater than your cost of money. That’s why this is probably the single most important question in a capitalist economy.

The interest rate is often called “the hurdle rate.” Because, if the return on your investment can’t jump the hurdle, it means it’s not a good idea. Instead of adding to the wealth of the human race, it subtracts from it. Net result: a loss of capital. If you don’t know what the hurdle rate really is, you are likely to do a lot of dumb things… and likely to get poorer as a result.

What is the real cost of capital now? What’s the hurdle rate? Does anyone know?

Things Aren’t What They Seem
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Firestone Did What Governments Have Not: Stopped Ebola In Its Tracks

Liberia cc

Out on the edge of the Liberian wilderness, the Firestone company – the tyre company, with rubber plantations in the West African nation ravaged by Ebola – has been showing the way in treatment and containment of the virus. Not because any special knowledge, but because they’re making best use of the knowledge they have.

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Wednesday, October 08, 2014

Confucian Confusion in un-Democratic Hong Kong

Guest post from our roving Asian correspondent Suzuki Samurai

Wasn't it easy a few years back to see who were the good guys and who were the bad guys? Our team were the free(r) societies. Their team, the dictatorships. Or another way of saying: capitalists vs communists. The Hong Kong/PRC & West/East German borders were the front lines in an ideological battle (which at close range must have seemed like an imminent fighting battle).

We in the West proclaimed that what set us apart were free speech, free movement, free(ish) markets,rule of law and democratic elections; and while not the whole truth it’s still mostly true.

I say mostly in this context because rich, prosperous, flourishing Hong Hong had all those attributes except the last: democratic elections.

Yep, it turns out no elections were necessary in a society based on the sound principles of low taxes, low regulation, free movement, and rule of law – it made them rich extraordinarily quickly. Who'd want to vote that away? Well quite a few folk if elections around the world are any indication.

So what are we to make of the Hong Kong 'democracy' protests? On one hand I find myself saying, 'go get ‘em tiger,' in support of the protesters. On the other, I'm wondering if they should be careful what they wish for.

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Things happen slowly on Planet Key

Things happen slowly on Planet Key.

Seven years ago  at the National Party conference, before he was even Prime Minister,

Mr Key signalled a National-led government would improve housing affordability by embarking on a programme of personal tax cuts, changing the building regulatory regime, keeping interest rates lower, reforming development rules to free up land, and allowing state house dwellers to buy their homes.

So seven years later, the promises of jam tomorrow all remain the same.

All but one.

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‘Surrender,’ by Steven DaLuz

Surrender, by Steven DaLuz, oil, composition gold leaf on panel; 36" x 36"

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Tuesday, October 07, 2014

Bonus quote of the day: On local bureaucracy

Auckland architect Jack Manning, asked about retiring

“You’re still working, you said…?”
“Well, it depends. Work now has to be interesting. I'm finding the bureaucracy is getting so over-bearing. The amount of time you have getting delight from what you do diminishes when you're mucking round with councils all the time.
”It used to be so easy. You used to take some scruffy drawings and get a permit in a week. Nowadays you've got resource consents and building consents and you've got to get a consent at the end for the thing as well. It just takes so long…”

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