Friday, 10 October 2008

Beer O'Clock: Brown Ale

Beer O'Clock comes to you this week from the SOBA pen of brewing magnate Stu:

For a country steeped in a tradition of “Brown O’Clock”, and with two main breweries competing for years in a battle of “brown against brown” (Double versus Lion), I am surprised that Brown Ale has not been pushed more in the craft beer market.

Brown ale might be looked upon by some as the big brother of mild ales, which I wrote here at Not PC around this time last year, and by others as the middle brother between that and porter, which I wrote about here a few months ago. It is bigger and hoppier than a mild without being as robust and roasty as a porter. The British-style versions are inclined to be malty with some hop, while the American versions (as regular readers will have come to expect) tend to be hoppy with some malt presence. The New Zealand versions I’ve tasted all lean towards the British-style, perhaps at the hoppier end.

New Zealand’s most easily found brown ale is probably Generation Ale, a British-style brown (ironically made with German malt). This brown ale was the first ale from Duncan family’s Founder’s Organic Brewery – a brewery more known for their Tall Blonde, Red Head and Long Black lager beers. When Generation Ale is fresh, preferably on tap in Nelson, it is a magnificent showcase of nutty, biscuity malt, with a subtle fruity smack of hops. Perfect with roast chicken.

Unfortunately I’ve only had it this fresh in the bottle a few times but one of them was my most recent experience – truly delicious. As it ages the malt character subsides and a grassy hop flavour comes to the fore. It then tends to taste like a hoppy “kiwi brown.” Founders Generation Ale is available in most good bottle stores, supermarkets or from The Beer Store (no, they are not paying me for the constant plugs – their service is just worth it).

A lesser-known craft brewed brown ale is Broomfield Brown from the Brew Moon Café in Amberley near Christchurch. I spot it occasionally in bottle stores but your best bet is to head straight to Beer Store (or pop into the café next time you are driving through Amberley, I’ve heard nothing but good reviews about this place and their beers have always been in very nice condition when I’ve sampled them).

Bigger than both of these, in alcohol terms and metaphorically, is the Mammoth from Pink Elephant Brewery in Blenheim. I wouldn’t call it brown ale, in either looks or taste, but the good folk at both RateBeer and Beer Store have placed it that category and it is most definitely worth a mention. Roger Pink is a mythical figure in the New Zealand brewing scene and a near cult figure amongst beer lovers (even beyond New Zealand). He is probably worth an entire Beer O’Clock trilogy in himself. He certainly brews beers as he likes them, rather than to a style that someone else has described, and he likes to place a little of his own personality in his beers and on his labels. He has been rewarded with several favourable mentions from the late Michael Jackson (acclaimed beer and whisky writer), which is no mean feat.

I’d place this beer between a strong bitter and a barley wine… try it and think about that yourself. If classifying it to a style is not your thing it’ll at least make a nice digestive after you’ve paired the above two beers with your Sunday roast. Sleep tight.

Slainte mhath. Stu


"Price Stability" is Chaos

F.A. Hayek talking as if he were talking yesterday, with sage advice for today's politicians and central bankers:

Hayek-Shirt    Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ...
    To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection--a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end. ...
    It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
    We must not forget that, for the last six or eight years, monetary policy all over the world has followed the
advice of the stabilizers. It is high time that their influence, which has already done harm enough, should be overthrown.

He said that in 1932, just three years after the US economy had crashed under the ministrations of the two 1920s apostles of "price stability,"  central bankers Montagu Norman and Benjamin Strong.  At least Strong had the decency to die before he saw the final results of his destructive reign at the NY Federal Reserve.  Norman was rewarded by the British government for his disastrous failure by having his contract renewed for another twelve years, at which time he was made a Lord.

The bigger your blunder, the bigger the reward by your government. 

I wonder who will get the reward for the disastrous monetary bubble spewed out by the Fed from 2001 to 2004 (see right), the leading cause of the present worldwide calamity?

Anyway, buy the T-shirt and spread the message.

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Lilypads - Vincent Callebaut


The Lilypad, by Belgian architect Vincent Callebaut, is described as "a concept for a completely self-sufficient floating city intended to provide shelter for future climate change refugees."

Forget the dripping wet justification, it's still a pretty neat concept.  Each 'lilypad' is "designed to house about 50,000 people in a man-made landscape that includes an artificial lagoon and three 'ridges'" -- producing its own energy through its "titanium dioxide skin" they're intended either to be moored near the coast, or "to float around on the ocean's Gulf Stream."

I can see a few being moored off the coast of Dubai.

More details here.


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Thursday, 9 October 2008

"Stark differences" on health care

Yesterday the two US presidential candidates both demonstrated once again they have no idea at all about either the causes or the cure of the man-made economic storm now sweeping the world from its source in the States -- I'm going to stop "markets running wild" said Obama -- "what he said," said McCain -- and proceeded to lay out their starkly different views on health care:

"Health care is a right," said one.

"Health care is a responsibility," said the other.

In fact, it's neither -- not that either of those bozos would know.  I doubt they'd even know what a right look like, not unless it jumped up in front of them dressed as a campaign contribution.


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Moving breast awareness

It's still Breast Cancer Awareness Month; still an ideal opportunity to talk about ... well, about breasts, of course, those delightful endowments without which the world would be a much less attractive place

The website Film Threat is helping to raise awareness by celebrating the best breasts to ever grace the cinema screen.

Fine work, complete with the video evidence.

Taxing times taxes Nats' timid tax-cuts

Before the Nats' lame tax-cut announcement yesterday I suggested that given the parlous economic conditions, it would be foolish indeed not to recognise the economic Charybdis ahead and to slash the Scylla of bloated state spending in response -- to realise the urgent necessity of getting the hordes of bureaucrats off our backs if for no other reason than to allow us to be productive again, not to mention the clear and present need to save everyone millions of dollars in tax so they're ready for the economic onslaught to come.

You could do all or even some of what I suggested, I said, or you could make it obvious to everyone that you're not a responsible party, that you have no idea how to respond to the world's economic crisis, that you'd be no damn different to the current bunch of thieves except in the form your election bribes take.

And we got our answer, didn't we.  While headlines presaging our parlous economic future get worse by the hour, all we saw from National's John Key after years for promising sweeping tax cuts was tinkering -- or a promise just to tinker -- while they watch the world burn.


Liberty Scott summarises: The top tax rate inches down to 37% over 2 years, the bottom rate from 21% to.... 20%! The envy tax stays. The threshold for reaching the 33% rate moves up to NZ$50,000.  And for low income earners, there's actually a small increase in tax. 

Truly pathetic.

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Govt spends while economy burns

While the world's economies collapse, and the NZ dollar heads for life support, "your" Government just spent $40 million of your money to buy a high country South Island sheep station you can only get to by helicopter.

Do you think "your" Government has their priorities right?

Forest & Bird and the Department of Conservation -- in whose lap Helen Clark has just thrown this pre-Xmas spend-up -- are both over the moon.  "Forest and Bird's vision to create a coast-to-coast protected corridor is now a reality," said Forest and Bird.  Have the very considered backing up their "visions" with their money -- or, like us, do they have more important things to do with it.

UPDATE: Owen McShane comments:

    Helen actually said out loud that they had to buy the farm to make sure a foreigner didn't get it!
Is she moving into Winston's territory.
    And as always we have a few environment court decisions which turn down a few subdivisions on the grounds they use up a few hectares of "productive farm land."
    But thousands of hectares is OK.?

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A hopeless shower

It's like you've just won the radio competition from hell, and for your prize Helen Clark and Jeanette Fitzsimons will be jumping in to join you in your morning shower -- and to show you who's in control they're going to force you to turn the tap down. Permanently.

Anyone who already knows the green-plated building regulations under which builders, designers and developers have laboured for years will be unsurprised at yet another imposition that makes decent showers illegal -- but for most of you, Nanny's new rules on showering will be a straw that challenges the strength of your camel's spine.

They've fucked up everything else, and now they're fucking up our showers.

"First they came for our lightbulbs," says DPF, and now they're coming for our showers.

It's time to tell Nanny to fuck right off.

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'Bonaparte before the Sphinx' - Jean-Leon Gerome

"In 1798, Napoleon Bonaparte changed history.  In 1868, Jean-Leon Gerome showed us why."


What does historian Scott Powell mean by that comment above?  Find out here, in a thorough and entertaining historical analysis.

    Whatever may be said morally about Napoleon, there can be no question ... that he commands our attention. All of subsequent world history has been irrevocably conditioned by his presence in the time line, and it is in this regard that those of us who wish to change the world for the better should examine him.
What was it about Napoleon that was exceptional, not mundane? What made him ... a world-changer, as opposed to a mere cipher of history? The root of the answer is provided in the deceptively simple painting: Bonaparte before the Sphinx...

Read on here for the answers to these and other questions.  (And just by the way, it's still not too late to sign up for Scott's Ancient-History-by-correspondence courseSign up now before the NZ dollar tanks completely.)

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Wednesday, 8 October 2008

Laugh! What else can you do.

From Gus Van Horn, news of

a hilarious Saturday Night Live skit that lampoons various figures in the "bailout" debacle, including Barney Frank, Nancy Pelosi, the Georges Bush and Soros, and Soros's pals, Herbert and Marion Sandler:

    NBC keeps yanking it off the Internet every time it gets posted ... presumably under pressure from Soros or his friends .... NBC is also apparently deleting all mentions of the skit from its online message boards.
    It is HILARIOUS. It also parodies Bush and Pelosi and they have both of their personalities down pat -- including just how utterly pathetic Bush has become.
The video, at least for now, is posted here.

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Message to National: Stop the spending [updated]

The Hive has a bunch of excellent questions that have just the one obvious answer:

Here we are in the midst of the greatest shock to the global financial system since the 1930s and where is the government response???
Everywhere around the world governments are in crisis mode trying to do something about restoring confidence but all we have here is a government talking about the money being spent, something they seem pleased about because it makes it difficult for the opposition to campaign on the positive agenda of providing support to the productive sector.
We welcome National's announcements today on the tax front, but hope they move more onto the front foot during the election campaign about the need to refocus activity away from boosting government to boosting more productive activity. Don't worry about Michael Cullen. He has no credibility left. He has just been forced to admit that he has squandered nine years of good growth.
What have we got to show for it? One of the lowest productivity growth rates in the OECD and continuing slippage in the per capita wealth ladder.
Why is National not hammering home this message, and why are they not slamming the current crowd over the waste that has occurred under their management?

Why is National not hammering home this message? For the simple reason that their message to date is essentially no different to the other team's. This afternoon is their opportunity to change that.

Let's be clear, if by "government response" is meant bailouts, deficits and spending on "public works" -- the "depression fighting" nostrums tried and failed in the past -- then I definitely mean none of the above.

But National's tax-cut announcement today, so strongly signalled long before the arse fell out of the world's banking system, leaves them in a bind. The Dominion's Tracy Watkins understates the problem:

After a day of carnage on world money markets and grim Treasury predictions of rising government debt and ballooning deficits, National has taken a knife to its tax-cut package - but leader John Key said the pledge to deliver about $50 a week to workers on the average wage remained on track.

Let's get some perspective: the tax-cut announcement comes not just after "a day of carnage," but (as the Hive says) in the face of the greatest shock to the global financial system since the 1930s, with more, much more, to come. It's not just "rising government debt and ballooning deficits," it's collapsing economies and expectations we're staring into an economic void. In the US in the 1930s the sort of carnage we're seeing now led to a whole decade of carnage. That's the enormity of the problem that any tax-cut package needs to address, because whatever problems with government spending were presaged in the 'PREFU' figures, they're dwarfed by the scale of the economic collapse now racing around the world's markets.

And just by the way, if anyone thinks that in a time of such uncertainty that economists can predict government receipts for the next ten years then I have a bridge I can sell them. There's no way to predict ten years ahead as the PREFU has tried to do -- and especially not now with all the changes afoot in the world's economy. This is the sort of crystal-ball gazing that makes economists look about as reliable as TV psychics. Hell, the PREFU figures were prepared just five weeks ago, and with the world collapsing around us they were already out of date on the very day they were released.

Not the least of the many uncertainties is how governments will respond to the ongoing crises, and the effect that will have on the chaos.

Which is the real interest at the heart of this afternoon's announcement, isn't it: Not so much in the size of the tax cuts, but whether Key and English have realised the enormity of the international problem, and whether they're adept enough to address it. (And when you see the words "adept" and "Bill English" used in close proximity, you realise the nub of the problem.)

English said on Monday immediately after the books were opened that the tax cuts would still go ahead as planned. Key said yesterday they would still go ahead, and would be slightly altered. And he said they'd be tax cuts without borrowing,

That doesn't give cause for encouragement. First of all, we're all of us aware the economic outlook has more than slightly altered. If the plans haven't more than slightly altered, that's a worry. And second, we already know Key is spinning when he says he's not borrowing for tax cuts.

A responsible political party doesn't spin. They don't need to.

A responsible political party would know that a cut in taxes should be accompanied by a corresponding cut in government spending.

They would know that when the economy tanks, then government receipts go down -- so even more cuts need to be made.

They would know that if they cut taxes without borrowing to fund either tax cuts or infrastructure, they bid valuable resources and capital away from the people who do grow the economy, leaving them in the hands of the unproductive government sector.

(They would know too that to the extent they don't cut government spending at all, they divert valuable resources and capital into the unproductive government sector, and away from the people who do grow the economy.)

And they would know too that they need to resist the siren calls of those who claim deficit spending is desirable in a depression because it provides the "purchasing power" to "stimulate" the economy. They know that the US government under both Hoover and Rooosevelt ran enormous, eye-watering deficits right throughout the thirties and early forties, with the only effect being to delay the recovery for that long (the deficit went from 20% of US GDP then to 40%, then finally, desperately, to 128% of GDP! It was "bold" interventions like this that prolonged the Depression, turning it into the only market correction that is associated with an entire decade. (The Depression actually lasted 16 years, all of which featured high-powered deficit spending.))

What anyone with a brain does know is that things are going to be bad, and that when things are bad government receipts will drop -- there's just no way round that. So what's crucial this afternoon is to see whether National knows this, whether it has planned for this, and whether therefore its tax-cut plans include plans to cut spending to match those cuts in receipts.

It's not like Mother Hubbard's cupboard is bare. It's not. It's just dripping with fat, fat rich with pork -- much of it very easily excised. It's just laden down with sacred cows that need killing. You could start with these boondoggles and just work on down:

  • Cindy Kiro's Office for the Children's Commissioner (he hasn't stopped the killing, has he)
  • Peter Dunne's Families Commission (ditto)
  • Paula Rebstock's Commerce Commission (AKA Communist Commission)
  • David Lange's Ministry for Women's Affairs
  • Jim Anderton's Ministry of Economic Development (the economy would develop quite nicely without Jim, thank you)
  • The Ministry of Pacific Island Affairs
  • The Ministry for Maori Affairs (let all 'their people' organise their own damn affairs)
  • The Race Relations Conciliator (have you noticed him successfully conciliating any races? No, me either)
  • The Ministry of Youth Development (let hoodie-wearers buy their own spray cans)
  • Alcohol Advisory Council of New Zealand
  • Asia New Zealand Foundation
  • Electricity Commission (nice work, guys, well done)
  • Energy Efficiency & Conservation Authority (ditto)
  • The National Advisory Council on the Employment of Women, part of Department of Labour (bet there's some unemployable women on this 'council,' right?)
  • The Department of Labour (let's see them work for their money)

As PJ O'Rourke points out, the first secret when you're trying to balance the budget and give tax cuts the size of Texas is to avoid looking for ridiculous examples of government waste. Nope. What you have to do, particularly when things are as parlous as they are now, is to slash wholesale, cutting bone if necessary -- after all, this is only government bone, with most of it concentrated around government skulls.

There's no shortage of spending to cut.

There's no shortage of parasites to sack -- thirteen more hectares of the buggers since 1999!

There's at least $20 billion of fat to cut.

You can stop the wasteful spending on FailRail in its tracks -- stopping the expensive electrification, and the upgrades to Auckland's rail network from which few will ever benefit.

You can stop some of the more ethereal roading projects, like the Penlink highway in Whangaparoa, freeing up construction resources for more important private activity.

You could pull some or all of past and future election bribes -- interest-free student loans, Welfare for Working Families and the like.

You can realise there are 407 -- four hundred and goddamn seven! -- government departments, offices, organisations, councils, SOEs and quangos just waiting, nay demanding, to be chopped down to size, in which hundreds of thousands of people spend their days drawing down a tax-paid salary just to dream up new methods by which to get in our way. Given the parlous economic conditions, it would be foolish indeed not to liberate these guys and gals just to get them off our backs, not to mention to save us millions of dollars in tax.

You could do all or even some of that ... or you could make it obvious to everyone that you're not a responsible party, that you have no idea how to respond to the world's economic crisis, that you'd be no damn different to the current bunch of thieves except in the form your election bribes take.

In just a few hours time I guess we'll have our answer.

UPDATE 1: We had our answer: it was the latter. Liberty Scott summarises: The top tax rate inches down to 37% over 2 years, the bottom rate from 21% to.... 20%! The envy tax stays. The threshold for reaching the 33% rate moves up to NZ$50,000. And for low income earners, there's actually a small increase in tax.

Truly pathetic.

UPDATE 2: Pacific Empire updates the complete list of bureaucratic sacred cows that need to be slaughtered. See How Big is Our Government?

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It's Breast Awareness Month!

And to celebrate, here's Sophia Loren checking out Jayne Mansfield:
Sophia just kept right on looking ... and why the hell wouldn't you.

Come on people: let's see more celebrations around the blogs.  And remember:

Winking witches

Did you know winking is evil? 

Well, yes it is according to some people's favourite book

No wonder Sarah Palin needs regular cleansing from witchcraft.

No wonder she thanked her witchdoctor for his help in getting her elected governor. "She said his invocation was 'very, very powerful'."


Let's play 'Poke Winston'

Cactus is right: "The election campaign is sucking the big one at present. Boring. Boring. Boring."

And politics will be a damn sight more boring when/if/eventually voters finally dump Winston Peters.  Which other parliamentary party leader would be so, ahem, colourful.  Just prod Winston and watch him go.


One thousand reasons to despise the Electoral Finance Act

Here are one-thousand reasons not to have home addresses on political literature: one-thousand knives stuck into Family First's Bob McCroskie's lawn:

As a couple of bloggers have noticed, this is precisely why Libertarianz have placed the following statement on their billboards:

We figured that since Helen Elizabeth Clark, of 4 Cromwell St, Mt Eden, had introduced a law regulating political speech one-year-in-three, including a rule that all such speech must include the name and address of the person who "authorises" it -- in McCroskie's case his Value Your Vote website -- she needs to personally understand the chilling effect of such a law.

After all, if she's going to write laws placing at risk the homes of people who criticise her, people whose homes don't come complete with police protection...

NB: The photo comes from the Herald, who for their own reasons chose to digitally remove the number of Helen Clark's house, while leaving the address above. Go figure.  [Hat tip

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Epsom push-polling

We were phoned last evening by an automated push-poll.  The meat-and-potatoes questions were:

Which party will you be voting for?  Press:
    1 for Act
    2 for National
    3 for Other
    4 for Don't Know

Which candidate will you be voting for? Press:
    1 for Rodney Hide
    2 for Kate Sutton
    3 for Richard Worth
    4 for Other
    5 for Don't Know

So which party do you imagine was pushing this poll?  Not hard to figure out, eh.

Keep in mind the methodology when you see that party push the results upon us as if this were a proper poll ... just as they did last election.

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'Walking inside a Grahame Sydney painting' - Diane Brown

That uninterrupted blue, then the mountains, snow
rapidly disappearing on this first real day of summer
and closer, another range, lower and crouching, shadows
draped over brown hides, and in the foreground, fields
wheat-coloured, rolling, legendary as the sky. Inside,

the sun stalks the angle of the dormer window, bleaching
clothes thrown not artfully enough on a chair. My lover
and I are writers, after all, and careless of  fabrics and folds.
I tell Grahame I’d use this but I’m not sure how
my poems are usually peopled, crowded with conversations

and this view is too large to contain in words.
Upstairs, windows divide the landscape into bite-sized
chunks. Perhaps if I take it one line at a time?
Already I notice I’ve forgotten three power poles
sprouting in the paddocks opposite. Lines I can’t see

but can imagine, ushering in the rest of the world.

- Diane Brown -


Hat tip to Home Paddock for the poetry, from Brown's 2004 collection learning to lie together -- and for the brief biographical note on Diane Brown.

Image above is Sydney's 'Fiddler's Flat,' available (as a print) at NZ Prints.  And don't forget to check out Grahame Sydney's website.

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Tuesday, 7 October 2008


An economic recession is the sign that a correction is necessary.  Prices are too high -- resources are misallocated -- prices and wages need to be corrected so that markets can clear and resources be reallocated so that the economy can recover and get back on track.

But what if prices don't drop when they need to?  Any student of supply and demand can tell you the answer: markets don't clear. Instead of You're left standing there with your dick in your hand and a big bundle of unsold oversupply -- and that's the same for every producer. Businesses that need to reduce costs in order to recover, and can't, are forced instead to go to the wall, and the labour they would have employed is forced instead to go hungry.

So just when the urgency of a major correction -- especially the necessity of price flexibility -- should be on the mind of any sober commentator over the age of twelve, the dim bulbs at The Standard blog are instead talking up the notion of a rise in the government-mandated minimum wage.  A rise to $15/hour!

Have they not seen the news?   Do they not realise an economic tsunami is on its way?  Do they have any idea what happens when you keep prices artificially high at the  start of a depression?

In fact, have they any idea what happened when prices, including labour prices, were kept artificially high at the start of a depression?  The answer, as the total and complete failure of Herbert Hoover at the start of the 1930s depression would tell you, is widespread capital destruction and a giant leap in unemployment.

great-depression4 Hoover's plans, continued by Roosevelt in 1932, did precisely the opposite of what he intended: instead of protecting labour and failing businesses and providing the funds necessary for recovery as he hoped, the failure to let the market contract and flush out the dead wood and malinvestments (urgently necessary for recovery) simply prolonged the pain.  As Murray Rothbard points out in his history of America's Great Depression:

    Led by President Hoover, the government embarked on what Benjamin Anderson has accurately called the "Hoover New Deal." For if we define "New Deal" as an antidepression program marked by extensive governmental economic planning and intervention – including bolstering of wage rates and prices, expansion of credit, propping up of weak firms, and increased government spending (e.g., subsidies to unemployment and public works) – Herbert Clark Hoover must be considered the founder of the New Deal in America.
    Hoover, from the very start of the depression, set his course unerringly toward the violation of all the laissez-faire canons. As a consequence, he left office with the economy at the depths of an unprecedented depression, with no recovery in sight after three and a half years, and with unemployment at the terrible and unprecedented rate of 25 percent of the labor force.

I'm sure none of us want that -- whatever our political persuasion -- so can't we please learn from the mistakes of history?

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More records from Bob

BobDylanSmileyBuzz The economy's goin' to hell, but at least there's still free, legal downloads.

NPR has a free download, if you're quick, of Bob Dylan's new double album from his Bootleg series, Tell Tale Signs covering Dylan's past 20 years, a period that produced the albums Time Out of Mind, Love and Theft, Modern Times and Oh Mercy.

Head here to fill your boots up while you can.  As the man says, for those who like this sort of thing, and I do, this is very much the sort of thing they will like.


Parlous plonkers right across the media

Penny Wise at NZBC deplores the local so-called news media; she compares the recent childish reactions of the two main channels to the global economic crisis, which they both treated with all the gravity you'd expect of a story about a cute cat stuck up a tree.

As she points out, the problem of flatulent content is exacerbated by the plonkers who regularly appear all over most of the media, spreading their expertise like manure across a parched paddock.

Plonkers like this muppet, a one-time senior political advisor with aspirations to that same job again, who in his most recent blog peddles this crap:  "that Franklin Roosevelt [led] the world out of the Great Depression in the 1930s."

This is bullshit on stilts upon Acrow props.  Allow me to recommend again to him, and to every other commentator who opens their mouth on this topic just to let the wind blow their tongue around, that they try to divest themselves of the many myths about the Great Depression and about how the world eventually escaped it.

On the former, Lawrence Reed's 'Great Myths of the Great Depression' is ideal reading.  And on the latter, Mark Skousen's 'Saving the Depression: A New Look at World War II' is the most succinct explanation.

Print them out and keep them by your phone so you have them to hand when the media come calling.

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Planned Chaos!! [with a Douglas update!]

FedDecline Well, that worked!  The overnight collapse of world stock markets, led by a seven percent one-day drop in the US Dow Jones index, shows just how well the trillion-dollar bailout worked to arrest economic collapse.

In two words: It didn't.

One trillion dollars of printed money just disappeared down the black hole marked "failed economic theory."

The lesson is obvious to those who know what they're looking at.  The naked emperors of mainstream economic theory have no clothes. To everyone else however -- and sadly, "everyone else" seems to describe most of the emperors themselves: the people with their fingers in the till, their heads up their arse and their hands on the legislative tillers -- the failure of the bailout is only going to lead to more calls for more bailouts, more regulation and even more government control of the economy.

And like the leeches and blood-letting of an earlier age, the cures will only exacerbate the disease, and credit crunch will lead to credit crunch which will eventually lead to near-complete state takeover of the financial system.

For most of the ignorati in positions of power and influence, the state played no part in the economic collapse.  No part in the government-sponsored mortgage banks and the state's insistence on lending to people who couldn't pay for it; no part in the state's restrictions on land and lack of restrictions on their own destructive spending; no part in setting up and backstopping the inherently bankrupt fractional reserve banking system ,and Alan Greenspan's pumping of the money supply.  For people with bone where their brain should be, all this was the product of "deregulation." 

Talk about ignoring the obvious: especially the multi-billion dollar golden shower that Alan sprayed over financial markets in his post-Dot.Com "bailout" from 2001 to 2004.  What we're left with is economic destruction combined with widespread economic ignorance -- which means, as Sharon Harris observes, we now face "The biggest assault on free market ideas since the 1930s New Deal. That's what we're facing with the current economic crisis. Overnight, decades of hard work building public support for free markets has been threatened. Enemies of economic liberty are gleefully using this crisis to discredit free market ideas and ram through a Big Government agenda. We're hearing them everywhere."

We sure are, some from people who should know better, but most from people in a position to do even more damage:

  • "Raw capitalism is dead." -- Henry Paulson, U.S. Treasury secretary, TIME magazine, September 18.
  • "The high priests of capitalism are in sackcloth and ashes, their belief in markets shattered, their catechism of risk-taking renounced. From Wall Street to Detroit, once-devout believers in unfettered private enterprise are running from their religion. ... Perhaps the pendulum is finally swinging back to a widespread recognition that government has a role to play in regulating markets, protecting consumers and providing a social safety net. ... The worship of unfettered private enterprise has been exposed for what it is -- just another cult." -- Cynthia Tucker, syndicated columnist and editor of the opinion page of the Atlanta Journal-Constitution, the South's largest newspaper.
  • "[The idea that] the market knows best -- that era is over. Market fundamentalism is taking a beating in policy circles and the public mind." -- Lawrence Mishel, president of the Economic Policy Institute.
  • "This can bring about a turn toward a new era. If we have the money to bail out Wall Street, we can provide funding for health care, childhood poverty, infrastructure and sustainable energy." -- avowed socialist U.S. Sen. Bernie Sanders, I-Vermont.
  • "... The free market in finance, unregulated and unsupervised, has failed." -- New York Times.

Well, no it hasn't, but it's going to be a hard job convincing the ignorati of that.

The plaintive cries are almost messianic -- a clear and present danger when the present US election pits two economic ignoramuses against each other, one of them with a messianic aura not seen since Franklin Roosevelt hit the White House and began to strangle the US economy.

Roosevelt is a reliable litmus test of statism: as an unreconstructed apostle of big government, exuberant interventionism, voodoo economics, and state welfare used as an electoral club, anyone who calls himself an admirer can be seen immediately as a statist of the first water.

There are two admirers just one election away from the White House.

We are in a crisis of political economy.  The crisis is economic; it was caused by politics.  As Chris Sciabarra argues, "The current state and the current banking system require one another; neither can exist without the other.  They're so reciprocally intertwined that each is an extension of the other."

The present banking system needs the state's imprimatur to maintain its dangerously fraudulent (and fragile) fractional reserve system, and the credit spigot of the world's central banks; and the state desperately needs the smoke and mirrors and the inflation of the fractional reserve system, and it regularly mainlines from the banking system's credit spigot (and as of yesterday afternoon we've all been reminded of just how much NZ's engines of state need the products of that credit spigot).

The crisis was caused by governments.  It will be exacerbated by governments.  Just as there is no escape from the crisis, there is now way out from the intellectual battle against those who would squelch recovery and make the crisis worse.   Said Ludwig von Mises:

No one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result.

When we see the destruction caused by the depression of the thirties and the means by which the Roosevelts of the world both extended it and then used it to permanently enthrone big government, it should be clear to anyone with eyes to see that what politicians do in the next few months will effect us all for good or ill for at least a generation. 

I urge all readers of NOT PC who do understand the issues at stake to make your voices heard.  Loudly! 

As Ayn Rand writes in “What Can One Do?”: “When you ask ‘What can one do?’—the answer is ‘SPEAK’ (provided you know what you are saying).”

A few suggestions: do not wait for a national audience. Speak on any scale open to you, large or small—to your friends, your associates, your professional organizations, or any legitimate public forum. You can never tell when your words will reach the right mind at the right time. You will see no immediate results—but it is of such activities that public opinion is made.

Speak up: Write blog posts -- and comment on blogs that toe the statist line.  Write letters to the editors of newspapers and magazines, to TV and radio commentators and even to politicians (who depend on their constituents). If your letters are brief and rational (which will be an unusual pleasure for them to receive), they will have more influence than you suspect.  Take every opportunity you can to debunk the lies, and to tell the truth about the failures of government intervention

Two invaluable resources for intellectual ammunition are the Mises Institute's Bailout Reader and the Ayn Rand Center's Financial Crisis website. Bookmark them now.

UPDATE 1: "Regulators cannot avert the next crisis," says Johan Norberg in The Australian, but they can make it much, much worse.

UPDATE 2: European commentators are now screaming for the printing presses to be turned up high to rescue all the blunderers.  Screams one idiot in The [UK] Telegraph:

    We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough.
Drastic rate cuts would be a good start. Central bankers still paralysed by a misplaced fear of inflation – whether in Europe, Britain, or the US – have become a public menace and should be held to severe account by our democracies. The imminent and massive danger is now self-feeding debt deflation...

Well, no, the imminent and present danger is more of what caused the problem in the first place, which is more and more money pouring off the government's printing presses. The Telegraph commentator quotes approvingly US Fed chairman Ben Bernanke from his 2002 "helicopter" speech extolling the virtues of his inflationary central bank:

The US government has a technology, called a printing press(or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost... under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

As Lew Rockwell explained a year ago, when the cost of Bernanke's printing press was already obvious to those who knew what they were looking at:

    Picture the Joker from the movie Batman throwing money from his float on the parade and you can see where this is going. Or imagine the alchemist of medieval lore, attempting to conjure up wealth from chemical mixtures. 
    The sea of inflationary credit is the core problem behind the falling dollar, the subprime crisis, the housing meltdown, not to mention the rise in the national debt and a thousand other problems.
    And how do they deal with it? More credit and more calls for controls. No one in Washington seems to understand the reason for the crisis, much less how to fix it...
    A good indication is President Bush's [December '07] freeze on subprime mortgage rates. It is a classic case that provides serious lessons for all of us. It shows the political penchant for intervening in the market, the market response, and the further interventions that are called forth when the first round doesn't bring the utopia they imagine.
    Here is the great mortal threat that intervention poses to the economy: not the first round, not even the second round, but the relentless dynamic of political rescues that drive us further into the pit of state planning...

As Austrian economists, and some of the saner mainstream economists have been saying to little notice, the pain caused by Bernanke's printing press is now inevitable -- the only choice is whether the pain is dragged out for years and even exacerbated by meddling and interventionism, as Roosevelt did in the thirties; whether it's dragged out for a decade of stagflation, as it did for Japan in the "lost decade" of the nineties; or whether we bite the bullet and have our correction, including the necessary correction in wage rates, and get back on track as swiftly as corrections such as that of the early twenties were effected.

UPDATE 3: NZ politicians don't even appear to look like they've realised there's a tsunami on the way. Yes, they've all noticed that the money coming their way is looking somewhat slimmer, but there's little sign they see it as a any reason to slim down -- and no indication at all from any of them that they even see the wider world beyond Molesworth St.

In this interview on Leighton Smith's show this morning, the finance minister who pulled NZ out of a hole in the eighties, Roger Douglas, sounds like he's at least halfway to understanding what needs to happen this time.  Listen here courtesy NewstalkZB - Douglas starts about 34:00 in.

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The world's ugliest tall tower, Dubai


A new "world's tallest building" for the Arab Emirates:

World's next tallest tower in Dubai revealed: DEVELOPERS in Dubai have announced plans to build a tower 1km high - beating the booming city state's own world record.
    With the world's tallest building, the Burj Dubai, nearing completion, Dubai World president Sultan Ahmed bin Sulaim said the new tower would be "one of a kind."
    ...Foundation work has already begun on the tower, Nakheel Chief Executive Chris O'Donnell told FoxNews.
    ...The final height of Nakheel's proposed tower is likewise a secret, as is the price tag. The company would only say it will be more than 1km tall, or the height of more than three of New York's Chrysler Buildings stacked end-to-end.

Sure will be.  Ugly, but tall. 

The world's skyscrapers are not where they used to be.  Says Pardeesh Bata:

Asia and Middle East are the new “high-rise” dream locations... William F. Baker, a partner at Skidmore Owings & Merrill Properties and the chief structural engineer of Burj Dubai, has summarized the world-wide phenomenon of this new type of 21st-century supertall proposals:

“If skyscraper construction had stopped in 1990, one would say that the tallest skyscrapers are made of steel, built in the United States, and are office buildings. Today, one would say that the tallest skyscrapers are made of concrete or composite, are erected in Asia or the Middle East, and likely to be residential.” (source)

Look at this distribution of proposed and under-construction super-tall skyscraper projects in the world:
Architecture, Real Estate
Asian projects definitely dominate the scene.

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Monday, 6 October 2008

Pinching policies? Be our guest.

I like it when other parties pinch Libz policies. That's what good policies are for. Amidst the baloney about entrenching the Maori seats and a Waitangi gravy train that goes on for ever, here's what the Maori Party has "pinched" for their "social policies":
Social policies are aimed at eliminating child poverty by 2020 - including no tax on the first $25,000, removing GST on food and increasing the minimum wage to $15 an hour. It also wants business tax lowered to 25 per cent for small businesses to help small Maori enterprises grow.
No tax on the first $25,000; removing GST on food; business tax lowered ... drop the other garbage and the economically illiterate minimum-wage proposal (just watch how the present minimum-wage law increases unemployment over the next few years, let alone a higher one) and they're nearly halfway there.

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Laura Norder wins elections

Fool me once, shame on you. Fool me twice, shame on me. To my great surprise, John Boy Key appears to be sending that very sensible message to violent criminals, and to shop-owners and others who've been the target of those criminals he's sending the message (well, sort of) that it's okay to defend themselves.

Bravo for that much.

John Boy has finally come out with a policy that's both worth a damn, and is different to the other team's. Yes, it's election year, but two cheers for that anyway. It's been twelve years since Libertarianz first introduced its policy that "Life sentences for real crimes will mean life" -- unlike other parties I could mention it's not changed every few years depending on which way the wind is blowing -- so it's worth a cheer or two when the mainstream parties finally catch up.

National's policy of ensuring, or trying to, that thugs won't get the chance to destroy people's lives *more than twice* is half-good, and will keep the rest of us half-safe. Two very loud cheers for that.

Contrary to the claims of both Helen Clark MP and Peter Williams QC in objecting to his policy, "corrections" isn't about "redemption" or rehabilitation for criminals -- and contrary to John Key's claim it's not primarily about "deterrence" either -- it's primarily about restitution for victims, and then protection for us.

The only reason not to take violent criminals off the street -- the only reason -- is that not doing so would safely allow a criminal to make recompense for their crime to the victim.

Government's primary job -- the only one for which it has any moral justification -- is to protect those who value their life, liberty, property and happiness from those who've shown beyond reasonable doubt that they're quite partial to taking them all away. ("The rights of the accused are not a primary," argues Ayn Rand, "they are a consequence derived from a man’s inalienable, individual rights. A consequence cannot survive the destruction of its cause.") That's the only reason to lock people up: not to not to rehabilitate criminals, and nor even to punish them, but to protect us from their savagery.

If John Key understands that much, then he perhaps understands more than I'd ever given him credit for.

That said, Key still resolutely ignores a fairly significant elephant in the room, and his policy has a fairly substantial fish-hook -- its price-tag: at least $314 million plus $43 million annually for a new prison to lock up the estimated 572 or so thugs that will be locked up under this policy who aren't locked up now.

That's why he gets just two cheers. Ignoring the obvious, and a new prison that's both expensive and unnecessary. Repairing to the reason we have laws against violent crime will tell you why it's unnecessary:

All actions defined as criminal in a free society are actions involving force—and only such actions are answered by force.

Do not be misled by sloppy expressions such as “A murderer commits a crime against society.” It is not society that a murderer murders, but an individual man. It is not a social right that he breaks, but an individual right. He is not punished for hurting a collective—he has not hurt a whole collective—he has hurt one man. If a criminal robs ten men—it is still not “society” that he has robbed, but ten individuals. There are no “crimes against society”—all crimes are committed against specific men, against individuals. And it is precisely the duty of a proper social system and of a proper government to protect an individual against criminal attack—against force.

Which means "crimes" without a victim are not in fact a crime -- "crimes," that is, such as smoking a joint, cutting down a tree on your own land, or putting a chocolate bar in your kid's lunchbox. Locking people up who've committed no crime against anyone else is not only immoral, its not only expensive, but it's urgently necessary to solve the problems Key seems at least to want to.

The main point here is of course the failed War on Drugs, whose results we can see on the streets of South Auckland and the gangs of Wanganui, in the increased profits of those gangs and the increased abundance of more and more dangerous drugs -- in the increased time taken away from real crimes by concentrating on bogus victimless crimes; in the rise and rise of 'P' -- the ideal prohibition drug -- and in the explosion of prison numbers in recent years.

It's now so serious that even a mainstream political parties really has to focus attention on what the War on Drugs has done, and how ending it will solve so many problems:

  • End the War on Drugs to fix the gang problem, by taking away their source of profits.
  • End the War on Drugs to fix the 'p' problem by taking away the need for such a *virulent* drug -- the ideal prohibition drug.
  • End the War on Drugs to fix the prison overcrowding problem, by not locking up people who have committed no crime against anyone.
  • End the War on Drugs to solve the policing problem, by taking police resources from so called 'crimes' with no victims so that real crimes with genuine victims like rape, robbery, murder, theft and fraud can be vigorously pursued and the rights of these real victims enforced and upheld.
UPDATE 1: More on the damage that dullards do:
BZP ban boosted the illegal drug market, survey shows - A survey of Otago University students has found the ban on party pill ingredient BZP has only boosted the illegal drug market. [Hat tip Whale Oil]
UPDATE 2: Lindsay Mitchell reckons the Nats "two strikes" policy has gazumped her own party's "three strikes" headline policy. "Clever move by National," she says. "Makes ACT irrelevant on the very ground they chose to fight the election on."
Where ACT should have gone [she says] is to the root of most crime and the best way to prevent it: Serious and radical welfare reform. National would never follow them there.
Thanks goodness one party at least has pointed out that road, huh?

But as Susan says at Lindsay's, why stop at two strikes?
I don't know why you'd subject another one (or two, in the case of ACT) innocent people to a serious [violent] offence before locking the offender away for a long time?
Why not get serious with the first conviction for violent crime?
As long as the justice system is fixed first and it's restricted to violent crimes only, why not?

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Another naked emperor with gobs of cash

Ignorance abounds about both the cause of the present economic turmoil, and the way out of it.  (I won't repeat my own comments on both, just check the archives.)

But perhaps the dumbest comments come from those who simply place their faith (and by that I do mean "belief without proof") totally in the expertise of Fed Governor Ben bloody Bernanke.  Mike Moore for example in this morning's Herald, says:

Why will this not be like the Great Depression? The biggest difference is what policy-makers have learned. The President of the US Federal Reserve Bank, Ben Bernanke, did his economic thesis on the Great Depression.

But what have the policy-makers learned?  And so what if Bernanke did his thesis on the Great Depression if he learned all the wrong lessons by it. How many academics do you know who are on the right side of any argument?

As an example of the former problem, Moore himself appears to have learned next to nothing. He seems to think that throwing gobs of government cash around pulled the world out of depression -- it didn't.  He claims it's all about "confidence" and seems completely unaware of the real capital and real savings that those gobs of malinvested cash have been and will be consuming.  And he appears to think that at "at the time of the Great Depression, there were few effective Government-owned central banks," when in fact the US Federal Reserve System, largely responsible for the crisis, was kicked off in 1913!  (Moore compounds the error by claiming 'The Fed' was created in the thirties by Franklin Roosevelt, and that along with Fannie and Freddie and gazillions of dollars of phony "liquidity" it effected the recovery.)

Let's face it, the policymakers in power (or on the hustings looking for it) are no better than Moore, who no longer has any.  As their answers on the economy indicate all too clearly, they really don't have a clue so they too place their faith in Bloody Bernanke.

But Bernanke has nary a clue either.  He too seems to have formed the view that gobs of government cash are the answer -- and it's him who has control of the printing press.  He has one tool, a printing press, and all he knows is he's going to use it, and you're going to pay for it.

The problem with putting all your faith in Bernanke and his friends is not  that he's not smart -- he is -- it's that he's been blinded by a flawed economic philosophy.

If he's had his eyes open he would have seen some years ago how the product of his printing press were already causing wobbles -- just as they did in the twenties, with those wobbles eventually becoming a crash -- but the blinkers of his flawed economic philosophy blinded him to the facts then just as they do now, even when the likes of Ron Paul throws them in his face.

If he'd done his research without his Keynesian blinkers on, he would have seen that the 1929 crash wasn't caused by the Fed's deflation, it was made inevitable by the earlier monetary inflation that helped create the phony boom; and he would have noticed the recovery wasn't helped by the gobs of counterfeit credit being thrown around (in fact, that helped create a "depression within the depression" in 1937), but by the pool of real savings that canny workers kept and invested from their own earnings.

He might be smart, but his flawed economic theory just makes him another man without a clue about to lead us all into destruction.

In the latest of his seven-part series on the economic crisis, writer Jeff Perren continues his examination of The Naked Emperors with a closer look at the man to whom the faithful are now praying.  But is there anything at all behind Bernanke's curtain?

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Take the Obama Test

I'm an embarrassment to Barack!
I only scored 14 on the Obama Test

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Palin-Biden: The loser was us.

So who else  saw the Vice-Presidential debate on Friday?  Some of you must have -- it rated more highly than last week's Presidential debate.

So if you saw it, what did you make of it?

For me it looked like the vacuous in pursuit of the venal -- and on every important issue in a very important election they were in agreement, and they were usually wrong :  "corruption and greed on Wall Street" -- "more regulation" -- "We have got to clean up this planet" - "regulation," "regulation," "regulation."

My "Palin Bingo" and "Biden Bullshit" counters were both working overtime, but I think if I hear the word "Maverick" again I'm gonna scream.  And just for your information, "maverick" in my dictionary is defined thus:

maverick, n. (N.Am) an unbranded beast; anything got hold of dishonestly; an irresponsible or independent person. v.t. to brand (a stray beast); hence, to seize or appropriate illegally.

I make absolutely no comment on the relevance or otherwise of that description to any of the candidates for the White House.

By the way, if you missed it and you have ninety minutes to spare, head to You Tube and type in "Palin" "Biden" "debate."  You can find excerpts and even the full debate to spare.


An election based on trust

mitchlees Here's the campaign speech delivered last night by Mitch Lees, Libertarianz candidate for Annette King's electorate...

     Hello Rongotai!
    Libertarianz are a party of optimists. We are glad that Helen Clark made trust a major issue of this election, as we are the only party that trusts you to manage your own life.
    We know that Helen Clark is not better able to organise your family,
    We know Michael Cullen is not better able to organise your money,
    And we know the Green Party are not better able to organise your lunchbox.
    Libertarianz fundamentally believes in small government and consistently promotes individual rights.
    We strive to ensure that the government does not remain above the law.
    I am standing as the candidate for Rongotai. Last year I organised the Wellington march against the anti-smacking bill. I did this – not because I had the desire to hit children - but because I saw it as a further intrusion of the government into the lives of all New Zealanders.
    While this ludicrous bill was being debated, New Zealand was experiencing record murder rates.  The Minister of Police and member for Rongotai dismissed this atrocity as being caused by phases of the moon.
    Helen Clark blamed the recent murder of Navtej Singh on Navtej Singh himself, because (she said) he owned an alcohol store – or as she put it, a "dirty little grog shop."
    She did not blame the perpetrator. She did not blame the years of welfare dependency that have destroyed South Auckland.
    No place in the country gets more government money and interventions poured into it than South Auckland – yet no place in New Zealand has worse social statistics.
    The only answer you will get from National, Labour or any other government party is more money, more programs, more social workers. And then they shut their eyes to the inevitable crime blow-out and blame it ….. on the weather.  Or the moon.
    Libertarianz will entrench the right to self-defence, get rid of welfare dependency and have real sentences for violent criminals that gets them off the streets.
    Libertarianz will ensure that the police do not prosecute people for defending themselves, as happened as recently as last week.
    And to free up police and prison resources for real crimes, Libertarianz WILL NOT pursue or prosecute victimless crimes.

    After the last election it was discovered that the Labour Party had unlawfully used taxpayer money to fund its election campaign. 
    Libertarianz was the only party to challenge this rort.  We took it to the High Court.
    As our case seemed likely to succeed, the Labour Party's response was to pass retrospective legislation making the unlawful lawful.
    This gross abuse of public trust must never be allowed to happen again. Libertarianz will ensure that the government must obey the same laws as its citizens.
    Libertarianz are the only party that refuses to take taxpayer money for our election campaign. We also refuse to bribe you with your own money.
    This afternoon, from the other politicians here, you are going to hear a lot of the word "Free."  They sure don't mean "freedom."  What "free" means in their mouths is … "Bribe!"  Someone else has to pick up the bill for their promises, and that someone else is you –- the taxpayer.
    Libertarianz key policies in this election and every election are to minimise government interference in your life. We have a fully costed budget which will mean your first $50,000 of income would be tax free, and all other taxes, including Government Slavery Tax, or GST, will be abolished.
    Having your put your own money back in your pocket, you can then choose the best form and style of healthcare, education and superannuation -– customised to your needs.
    You would not put up with 6 month waiting lists from your supermarket, why should you put it up with it from your hospitals?  You would not patronise a system where you are restricted to the supermarket for which you are "zoned," which provides food both over-priced and inedible.
    So why do you accept what the government presently doles out?
    In countries where the government organises the food supplies – people starve.
    In New Zealand where the government organises education and healthcare – we have 20% functional illiteracy, and over 1000 people die each year from medical misadventure.  
    No private organisation would get away with these atrocious results, yet when it is government you just accept it. It does not matter if it is a blue, red, or green government – there is no desire for real improvement.
    The points to ponder that were handed out as you entered were written 6 years ago – and nothing since has changed.
    And still nothing will change as long as parties stand up here wanting to control and spend your money, and you keep on electing them.
    The parties you see up here should be ashamed of their consistent failure. 
    The current government has squandered eight years of economic golden weather. It continues to promote fear and ignorance as a means to maintain power. 
    Libertarianz will let you run your own life and get nanny state off your back. Although I am asking for your vote as the candidate for Rongotai and the party vote for Libertarianz, ultimately a vote for Libertarianz is a vote for yourself.

If you'd like to get stuck in helping Mitch in Rongotai, or your local Libz candidate in an electorate near you, then check out their contact details at Libz' candidate pages and get on to them ASAP.

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'The Profits and Loss,' By Berton Braley

A poem from the Great Depression, and tragically topical today, fom New Deal Ditties: or, Running in the Red with Roosevelt, 1936 (hat tip Noodle Food)

When "planned economy" first began
It looked like a swell "idea" –
Until we learned it had no plan
And wasn't economee.

For the taxes rise and the budget's shot
And the New Deal costs are met
By spending money we haven't got
For things that we never get.

The Billions roll in mighty stream,
A regular tidal flood,
With the net result that each spending scheme
Bogs down in a sea of mud.

When plans and programs go all to pot
Do the New Deal planners fret?
Why no, they think up a brand new lot
Of schemes to spend what we haven't got
For things we will never get!

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Sunday, 5 October 2008


I like giving credit where it's deserved, and here's three business-people who deserve it.

If you're in the market for a truck, then Phil Pacey in Otahuhu is your man.  For timber, you shouldn't go past Bargain Boards in Kopu.  And for vinyl, there's Real Groovy in Christchurch, to whose manager I mentioned more than a year ago that I'd love to track down Phil Manzanera's 'Primitive Guitars,' a fine album I could only now enjoy on a deteriorating tape cassette, and on Friday a box arrived in the post -- a vinyl copy of the album with a note saying "A wee something for you."

So for service above and beyond, etc., these people deserve all the praise I could muster.  Thanks to you all.  :-)

Free Ayn Rand audio book

The Audio Books site is offering punters a free Ayn Rand audio book.  How cool is that!

Choose one of either Philosophy: Who Needs It?, The Virtue of Selfishness, or Atlas Shrugged, which would be a very long listen indeed -- although as this YouTube presentation using the Atlas audio book indicates, a damn good listen.

Just the sort of thing you'd want to listen to while touring the country by Winnebago.

UPDATE:  My spies tell me the book is free only if you cancel your order within fourteen days of downloading.  So be careful out there.

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A pyramid of foolishness

Many of the more sober critics of the US government's bailout package have realised the present economic turmoil is not a failure of capitalism, it's a failure of government, but they've still failed to get their head around the fundamental cause of the crisis, or of the bubble that set it off.

They've talked about Smart Growth and the dictatorship of the planners that locked up land and sent housing prices soaring in the more planned markets, but they haven't realised that it only 'directed' the inflationary bubble into housing; it didn't directly cause the bust.

They've talked about the complications of bundled securities that leave even the organisers of those securities clueless as to what they're really based on -- but they haven't understood that this was just a way bankers chose to deal with the flood of easy credit coming down the pike'; and they haven't yet understood that it was the flood of easy credit that was the primary problem.

They've talked about Jimmy Carter's Community Reinvestment Act and "community organisers" like Barack Obama who pushed indigent non-payers into sub-prime 'first-home,' 'easy credit,' 'low-doc' loans, without realising that without the flood of government credit, the number of sub-prime loans being made would have dried up like a pub without beer.

They've talked about Fannie and Freddie, which since 1938 (in the case of Fannie) have been accidents waiting to happen, but they've failed to notice that up until the latest blow out the accidents have only been small.

Each of the proponents of these points is correct in their analysis, at least as far as they go, but in ignoring all the other factors involved they don't go far enough, and in ignoring the more fundamental explanation -- that we've been floating a sea of counterfeit capital fed by a spigot of paper money, and jacked up by a fractional reserve banking system that "leverages" those paper dollars to turn the flood of paper into a tsunami, and every dozen years or so when the spigot is eventually turned off, we see another crisis -- the bubble blows out the same every time, it just blows out in different places.

As Hans Sennholz points out, the fundamental cause of the problem goes back several decades, nearly a century, all the way back to 1913, and the creation in the United States of "the Federal Reserve System," which was never anything but "a creature of politics." 

    It sprang from the most revolutionary single piece of legislation in American currency and banking history, the Federal Reserve Act of 1913.  It meant to improve the earlier financial system created by the National Banking Act of 1863 which placed the federal government in the very center of American money and banking.  Both Acts were designed to reform the market order which was deemed to be unstable and unresponsive to the needs of the federal government and the national economy. 
    Actually, they constituted early steps toward a hybrid fiat system which in time spread to all corners of the world.  It is neither a command system in the manner of radical socialism nor a market order on a gold standard; it probably is the most unstable financial system conceivable which no human being, no matter how brilliant and distinguished, could manage satisfactorily.
    The American money and credit system now resembles an inverted pyramid that rests on legal-tender Federal Reserve notes and credit.  These support various forms of bank money such as commercial bank deposits, savings accounts, large time deposits, and other liquid assets.  The base of some $672 billion may expand rather moderately, presently at some 6 percent a year or $40 billion; the layered superstructure of $8.333 trillion bank money (M3) may grow at a similar rate or $529 billion (as of 10/23/2002).  Commercial banks tend to "securitize" their loans, converting them into marketable securities for sale to investors which enables them to grant new loans in a continuing process of lending, securitizing, selling, and lending again. 
Massive non-bank credit constitutes the upper layers of the money pyramid; there are Federal Home Loan Banks, thrift institutions, life insurance companies, brokerage firms, mutual funds and other credit grantors.  Last but not least, offshore banks in the Bahamas, the Cayman Islands, Panama, Hong Kong, and Singapore, enjoying favorable regulatory and tax treatment, provide the top layer of the multitrillion dollar money pyramid.  And high above the American pyramid hovers the international pyramid which builds on the U.S. dollar standard. 
The Chairman and his fellow governors are expected to balance it all with their high-powered Federal-Reserve-dollar base.  They are expected not only to manage this monstrous pyramid of fiat money and fiduciary credit but also to safeguard the stability of the American economy, to maintain asset prices, protect the value of the dollar, and avoid the business cycle.  They are supposed to manage a monstrous structure which politicians built for their own use and glory.  That's too much to ask of any mortal.

You see, even if they had a clue, it would still be impossible.

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