Friday, September 14, 2012

FRIDAY MORNING RAMBLE: It hasn’t been a peaceful week

Knowledge is power. Here’s some reading from around the traps.

A sad story with a happy ending. “A New Zealand man who admitted helping his chronically ill wife die has been discharged without conviction.” Thank goodness. But the right to voluntary euthanasia should be enshrined in law, not left up to the discretion of a judge skating the edge of the law to deliver justice—with all the final comforts it denies the loved one, and all the necessary legal safeguards it must flout.
Man avoids conviction for helping wife die – NEWS.MSN

“It was a great disappointment that Justice Venning was not prepared to declare NIWA’s data adjustments to be a breach of the Crown Research Institutes Act 1992.
    On the law, the Judge found that any review should be ‘tolerant’ and ‘cautious’ because NIWA was ‘a specialist body acting within its own sphere of expertise.’ He declined to rule on the disputed science…
   Where does this now leave the NZ Climate Science Coalition’s long-term effort to show that the NIWA temperature adjustments are wrong?”
Quo vadis? – Barry Brill, CLIMATE CONVERSATION GROUP

The Green Party is perpetuating the claim that development beyond Auckland’s “city limits” imposes a high cost on ratepayers—ignoring the impact on affordability for new home-owners priced out of the market. Phil McDermott responds with facts.
The Answer Is Urban Consolidation – What Was The Question? – Phil McDermott, CITIES MATTER

No point propping up newsprint says Steven Joyce in Kawerau, we'll prop up biofuel instead. Nek minnit...
EU going cold on biofuels. – CATALLAXY FILES

I’m still calling for National supporters to tell me what they consider the Key Government’s greatest achievements. I really do want to know, you know.
Calling all National supporters – NOT PC

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Near-simultaneous attacks on US embassies in Libya, Egypt, Yemen, Sudan, Tunisia … all on the anniversary of 9/11, and all are “spontaneous”? Give me a  break. “There was nothing spontaneous about these attacks. They were planned.”
Come and Get It, Hillary – Edward Cline, RULE OF REASON
Muslim rioting, violence in Israel, Gaza, Libya, Egypt, Yemen, Sudan, Tunisia, Morocco, Iraq, Iran and Kashmir – Robert Spencer, JIHAD WATCH

The attacks “had no reference to the current film, which means that they simply searched for anything to use as an excuse.”
Arabic Sources Reveal the Truth Regarding Attacks on U.S. Embassy in Egypt – WALID SHOEBAT
The 9/11 attacks on the US embassies were not about a movie – CAROLINE GLICK

The first reaction of American political leadership? “To condemn the Christians who made the film and to reject the principles of the First Amendment.” It’s a new age of censorship (and, contrary to the link, it’s not just Obama). “The film is just a pretext, argues Robert Spencer. “This is an all-out push to intimidate the West into restricting speech so that Islam and Muslims are established as a privileged class beyond criticism.”
The Second 9/11: Today will go down in infamy as the day our government became our enemy 
– PJ MEDIA
Guardian calls for free speech restrictions in wake of jihad murder of U.S. ambassador – Robert Spencer, JIHAD WATCH
Chairman of the Joint Chiefs of Staff asks preacher not to back anti-Muslim film – AP
UK's Channel 4 cancels Islam documentary screening after presenter threatened – DAILY TELEGRAPH (UK)
The Tragedy of Alexandria’s Book Market - NERVANA
All For One – Amit Ghate, THRUTCH

“Forgive President Obama if he seemed a bit shell-shocked during his brief statement Wednesday on the murderous attack against an American consulate in Libya. In June 2009, he had grand plans for harmony between East and West. In a celebrated speech delivered in Cairo, Obama spoke earnestly about the need for the West and the Muslim world to look past old hostilities and suspicions.
And then on Tuesday night, his grand vision came crashing down.”
The second 9/11 illustrates futility of groveling for peace – Editorial, WASHINGTON EXAMINER
Deconstructing Obama’s Cairo Speech – THE DAILY BLADE (2009)

Meanwhile, “the debate over Iran's nuclear program has become so feckless -- so disconnected from reality -- that perhaps it's time to inject a dose of what those of us who served on the national security side of the Reagan administration used to call "real-world intelligence…. Of course Iran is building a nuclear bomb; the evidence is obvious and overwhelming. The only purpose of those leaked National Intelligence Estimates asserting that Iran hasn't actually made the decision to build a nuclear bomb, and of similar leaked documents from European intelligence services, is to prevent what the analysts fear would happen. They're afraid that if they officially judge Iran to be on the verge of having a nuclear bomb, political pressure for a military attack will become irresistible. They want to delay action until it's too late, so we will be left with no choice except to live with a nuclear-armed Iran.”
A Dose of Real-World Intel on Iran – Herbert Meyer, AMERICAN THINKER

“The capacity for unclouded enjoyment...does not belong to...
fools; an inviolate peace of spirit is not the achievement of a drifter.”

- Ayn Rand

The negative feedback cycle of welfare payments make it obvious that money alone is not a value: it can’t replace the spiritual value of engaging in a productive life.
The Corrupting Influence of Entitlements – Amit Ghate, THRUTCH

“What governs politics is not policy details but ‘the vision thing’–a vision of right and wrong, good and evil. It’s the morality, stupid. The Democrats seem to know that.”
Obama Hears Your Whining, And He's Here to Help You Out – Harry Binswanger, FORBES

“Steven Keen is going around the country right now explaining the many, many evils, as he see them, of standard economics. That the majority of economists don't agree with Keen will not come as any surprise to most people. One person who has done a great service in debunking Keen's ideas on Debunking Economics is Professor Christopher Auld.”
Auld keen on debunking Keen – Paul Walker, ANTI DISMAL

The Greek government may be ready to offload some of the country’s last assets.
Greece may lease some of its sovereign islands to help pay the bills – Eric Crampton, OFFSETTING BEHAVIOUR

image“’The income of the typical U.S. family has fallen to levels last seen in 1995, a long and pernicious slide that likely means it will be a generation before Americans regain the peak income levels reached at the close of the ’90s.’ While one should always be careful using median income figures, the data is consistent with and can be best understood when combined with a capital-structure macro model of the economy.” Which is to say, not only has all that capital consumption of the last decade-and-a-half not made us any richer, but …
New Evidence Supports an Austrian Business Cycle Interpretation of 1995-2012 
– John Cochran, CIRCLE BASTIAT

Um, David Cunliffe seems to think the ministers who are driving economic and finance policies in the National Government are dyed in the wool Chicago economists. Disciples of Milton Friedman. No, he really does.
The cult of National Party economics – David Cunliffe, RED ALERT

Meanwhile, David Parker seems to think the former central bank governor Don Brash “is a Hayek disciple”—apparently unaware Hayek received his Nobel Prize for explaining how central bank meddling is the primary cause of capital consumption and the business cycle. Still, Parker also thinks Hayek was a Friedmanite on today’s central-bank monetary meddling!!-so whatever Parker learned on his world trip, it wasn’t economic history.
Meeting with Joseph Stiglitz – David Parker, RED ALERT
Hayek on the Business Cycle – Joseph Salerno, MISES INSTITUTE
John Maynard Keynes, Milton Friedman, and F.A. Hayek Compared – Jonathan Mariano, TRIPLE PUNDIT

The deficit is not not the biggest problem; the biggest problem is the spending. “Ultimately what matters for the economy is not the size of the budget deficit but the size of government outlays — the amount of resources that government diverts to its own activities.”
Is the "Fiscal Cliff" a Threat to the Economy? – Frank Shostak, MISES DAILY

The UK is the only country surveyed where more people want to increase govt spending than decrease it. But only just.

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And in other news over night…

The US Federal Reserve announced that will buy $40 billion dollars of mortgages per monthindefinitely.
As Predicted, Bernanke Launches QE3 ... Which Will Destroy the Economy – “George Washington,” ZERO HEDGE

XaiUx As Predicted, Bernanke Launches QE3 ... Which Will Destroy the Economy
Image via Zero Hedge

So that’s both the US and Europe’s central banks rapidly throwing money out the window then.
Draghi Acts: Is It Inflationary? – Jeff Harding, THE DAILY CAPITALIST

Any wonder the NZ dollar just spiked above US83c?

“Few of the many analyses on Federal Reserve policy consider the psychology of diminishing political and financial returns of Fed promises.”
Psychoanalyzing The Fed – Charles High Smith, ZERO HEDGE

“Nowadays, the Fed gives banks digital transfusions of money to lower long-term interest rates, which result in … Not much bang for trillions of bucks… Fed Chairman Ben Bernanke evidently thinks that driving up the stock market will quicken the animal spirits of the affluent 20 percent who own 93 percent of equities, and this “wealth effect” will spur economic activity, eventually benefiting others. So, the interest rates Barack Obama favors are a form of the trickle-down economics he execrates.”
A different kind of inflation problem – George Will, WASHINGTON POST

“Here is how it is with Keynesian policy. Fool me once, shame on you. Fool me twice, shame on me. Everywhere you look, there are debt and derangement, direct consequences of the Keynesian expenditure of the past three years…
Economic theory hasn’t kept up with policy so most textbooks still peddle C+I+G and teach about the importance of aggregate demand…. It is value adding production that creates growth and employment, not increased spending on anything. Most people are too polite to say it, but macroeconomic theory is now about as flat earth as it could possibly be.”
Fool me twice, shame on me – Steven Kates, CATALLAXY FILES

Not just the last three years. The result of 99-years of Federal Reserve type playtime economics? “In the entire ‘developed’ world, there is only one country that runs a budget surplus, even as the entire ‘developed’ world is now, according to the Reinhart and Rogoff definition of sustainable public leverage, insolvent.”
99 Years Of Keynesian-Monetarist "Winning" – Tyler Durden, ZERO HEDGE

Let’s remind ourselves shall we…
The Economic Consequences of Cheap Money – Ludwig Von Mises, THE CAUSES OF THE ECONOMIC CRISIS

And in case you needed explaining again how Quantitative Easing works, here’s Mr John Clark.

So, Yaron: How Would One Phase Out The Federal Reserve?

And now for something completely different…

Yes, you can help this poor Nigerian astronaut collect his $15 million in back pay.
Won’t you help a poor Nigerian astronaut who just wants to come home from space 
– VENTURE BEAT

There can be poetry in profanity.
On cursing – Tom Jacobs, 3 QUARKS DAILY

imageGood news still happens. Let’s celebrate some of the successes of children taught in Montessori schools.
The Montessori Mafia – WALL STREET JOURNAL

Yaron Brook has a new book!  Here’s the introduction.
Introduction to  Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government 
– Yaron Brook, LAISSEZ FAIRE

Do orchestral conductors do anything useful? Science discovers the truth.
The science of conducting: Von Karajan was right – THE ECONOMIST

“As a former Waldorf class teacher, I've seen first hand how unchecked screentime from films, tv and computer games can adversely affect young children as they grow, but I also believe in doing what I can as a parent to educate and turn a potential problem into an opportunity.”
My Favorite Films for Children — Maxwell's Finds – Maxwell Gillingham-Ryan, APARTMENT THERAPY

“An exclusive look inside Ground Truth, the secretive program to build the world's most accurate maps.”
How Google Builds Its Maps—and What It Means for the Future of Everything – THE ATLANTIC

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No, I’ve never procrastinated either. Ahem. Dr Diana Hsieh discusses why you find yourself washing your windows when you’re supposed to be getting that report finished. 
The Problem of Procrastination – Diana Hsieh, PHILOSOPHY RADIO [AUDIO]

In today’s world, the income of one parent in each family goes out just to pay the tax bill. And what about the cost of those kids!
Dummy's guide: the cost of raising kids – THE AGE

A sad day. The greatest fullback in the history of AFL retires.
Matthew Scarlett tribute – GEELONG CATS
Brian Cook called him "The Senator" – HERALD SUN

First Wellington, then the world!
St Kilda will host Sydney in New Zealand on Anzac Day – HERALD SUN
AFL's four points to be earned on foreign shores for first time – WORLD FOOTY NEWS

31 life skills every young man needs to know.
Heading Out on Your Own: 31 Life Skills in 31 Days – THE ART OF MANLINESS

Did you wonder how two British newspapers reported one of the biggest politically-driven cover-ups in modern British history.  I did:

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It’s not the full and justifiably famous ten-minute blast from the Carnegie Hall, but with Gene Krupa, Harry James and Benny Goodman (natch) this still rocks like a bastard.

Jimmy Lunceford tries a special kind of mazurka.

Glenn Miller (in the guise of Jimmy Stewart) swings the US Army.

I have her newest album, but it hasn’t grabbed me yet. Head here to watch Amanda Palmer’s full-concert party-on-the-internet album launch to check it out yourself. And enjoy this classic, which has nothing at all to do with soccer.

[Hat tips to Edward Cline, Thrutch, Geek Press, Don Watkins, Lindsay Perigo, Marginal Revolution, Small Dead Animals, Amanda Morrall, Jeremy Vine, Faisal Islam]

Thanks for reading,
And have a great weekend.
PC

PS: Wellington is indisputably the country’s craft-beer capital. Not least because it is the capital. So celebrate a trilogy of beer epiphanies from famous Wellington beer personalities.
Great Beer Epiphanies 3: Lester Dunn and Matt Kristofski 
Great Beer Epiphanies 2: Mike Conroy and Matt Warner
Great Beer Epiphanies 1: Michael Donaldson and Brayden Rawlinson– Neil Miller, MALTHOUSE BLOG

And the reason for one of those epiphanies:

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Happy drinking!

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Thursday, September 13, 2012

A vile litany gains another entry in Libya [updated]

“If your religion is worth killing for, start with yourself.”
- Gerry Duggan

With yesterday’s vile atrocity in Benghazi, we can add another entry to a long list beginning more than half-a-century ago.

Each of these direct attacks on the west was met with appeasement, apology and capitulation. Each of them resulted in the (correct) assessment that the west was morally weak, that there would be no negative consequences for either perpetrators or supporter, and emboldened further escalation. By surrender, each of them invited escalation.

The invitation was enthusiastically taken up.

The attacks on September 11, 2001 and after saw the culmination of this attitude, and an outbreak of massive, violent and orchestrated attacks on civilians.

These are just a few, a very few, of the murders of innocent people perpetrated by followers of Islam.

There have been several blood-soaked new entries in recent years in this litany of Islamist-driven death and destruction.

The latest is the murder in his country’s Libyan Embassy yesterday, in other words on American soil, of US Ambassador Christopher Stevens and three colleagues, by a mob wielding rocket-propelled grenades—an armed calling itself the ‘Islamic Law Supporters,’ who were said to have been directed towards the Embassy by Libyan police.

Killed over what?

A satiric movie about Mohammad and the poisonous fraud of Islam that few Americans even knew about? Or was it about the death by drone of a Libyan Al-Qada leader?
Who knows? Who cares? This is Islam at its best. This is Islam and Muslims shining through. Muslims don’t need an excuse. The Koran tells them so.
Trying to sift through the multifaceted motives for the attacks in Cairo and Benghazi is as pointless as sorting through the ruins of the World Trade Center on 9/11, 2001 searching for the identities of the plane hijackers. Once it was known who supported, funded, recruited, and triggered the attacks, why waste any time trying to identify the expendable "martyrs"?
It was the ideology that launched the attacks, in 2001 and in 2012. It was the ideology that has launched such attacks ever since the plane hijackings of the 1970's. It was behind the Munich massacre and every casualty-strewn bombing and murder spree committed in the name of Islam for the last five decades…
[T]he cause was immaterial. This was just Islam doing what it does best: killing and destroying.

We are at war.

Like it or not, we, the people of the west, are at war with people—people? with inhuman savages!—who wish to see us bleed, beheaded, destroyed.

It's a different war than we're used to, an asymmetric war -- a so-called fourth-generation war -- so some folk still don't recognise we're even in a state of war (or don't want to recognise it), but the fact remains we are under sustained attack and have been for some time.
That's not scare-mongering, that's just the way it is. Like it or not, we are at war. We didn't start this war, but a litany of appeasement by those under attack has fanned its flames, encouraged the attackers and emboldened the growth of violence.
It's not caused by the war in Iraq, by an expansionist US foreign policy, by a search for new oil fields or pipe lines, any more than it is caused by the drawing of cartoons, the making of movies, or the public burning of copies of The Koran. It was started by Islamo-totalitarians who by their own admission "worship death" as we in the west worship life; who want the prosperous, freedom-loving west dead, as dead as their own dark souls; and who see the cowardly west as easy prey.

On these last point at least, they're right. We are easy prey. And there is an essential difference between the essentially individualistic, prosperous, freedom-loving civilisation of the west and the stone-age culture that has declared war on it. Said Osama bin Laden on behalf of those who declared war:

“We love death. The [west] loves life. That is the difference between us two.”

On that, we agree.

Allahu Akbar my arse.

In the name of those who do love life and who treasure the life-loving civilisation of the west, on this anniversary week of the most visible attack on the west and all it stands for we should consider all that led to it: a series of snubs, trial balloons and atrocities by Islamists and Islamist sympathisers, the tepid and pathetic response to most of which emboldened those who love death to even greater atrocities, and the supporters of the death-worshippers to even greater support, both financial and logistical.

Just as it did in the thirties, turning the cheek to violence led not to peace but greater savagery—with the savages secure in the knowledge that cheek-turning was the best the west would do. Purveyors of violence can smell fear; they can smell weakness; they smell it and they prey upon it—just as they can in Iran and Saudi Arabia, the unacknowledged sources of so much Islamic savagery; just as they can in Afghanistan where the weak-kneed “nation building” is coming to an end without any end to the savagery the Afghan mission was supposed to have wiped out; just as they have now in Benghazi where, with the revelation that Ambassador Stevens was slaughtered by the very jihadists who  had gone there to aid, in an embassy lying entirely unprotected against barbarian incursion, the failure of US foreign policy almost seems complete.

So, like cockroaches, the disciples of brutality will feed off another example of western weakness—just as they have for over fifty years, where they've had an awful lot of food to sustain them and make them stronger.

What will stop the savages? Recognition, for a start, that we have an enemy. That this enemy has a name, a specific religion, and a specific blood-soaked anti-human ideology. That this enemy has incubated this hatred of the west for centuries. That his savagery cannot be successfully resisted with appeasement, hand-holding and clumsy attempts to censor or airbrush away those who point out the truth about Islam, but only by continued resistance to the savagery of it adherents, and understanding they are emboldened by weakness to think they might succeed. Obama pledged yesterday:

We will not waver in our commitment to see that justice will be done. Make no mistake, justice will be done.

If he means it, that would be something. But meaning it, really meaning, and going through with it,needs a 180-degree U-turn.”

We have to reverse years of Obama, Bush, Clinton, Bush, Reagan and Carter when it comes to the Middle East—and immediately.
    Until or unless that happens, the rising tide of Islam—a religion whose Koran actually calls for the literal genocide of non-Muslims worldwide—will continue to act as a moralistic and physical wrecking ball to civilization as we’ve known it. It's the Koran, stupid.

He, and all western leaders, must recognise that to 'respect' the religious beliefs of those who wish to kill us is suicidal nonsense.  Which is to say they will need to recognise Islam for what it is.

Which is Islam.

Which is not a religion of peace.

When it comes to the defeat of totalitarian Islam, there truly is no substitute for victory.

America successfully targeted, dismantled, and discredited a warring enemy's ideology once before. I fear however that the knowledge to do that again, to Islamism, is now long gone from the corridors of power.  But I fear too that there is no other way.

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murDURIN
Cartoon by Blunt

[Hat tips to Michael Caution, Edward Cline, Noodle Food, Bosch Fawstin, Harry Binswanger, TOS Blog, and the late John David Lewis. The opinions expressed here are, however, my own.]

imageUPDATE:  Hope?  Buzzfeed has 15 Photos Of Libyans Apologizing To Americans, (that’s one of them, on the right) about which Diana Hsieh says:

These signs make me just a tiny bit happy and hopeful. To anyone who thinks that Islam cannot fundamentally change because it's forever bound to its texts, you need to study the history of Judaism. The destruction of the second temple by Rome (after a hiccup or two) hugely transformed Judaism -- from an aggressive, fundamentalist, and political religion to a peaceful, and studious, and accommodating one. That was a win for civilization... and particularly for Jews. (Alas, the Christians were not as civilized as they could and should have been in response.)

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Calling all National supporters

Muldoon calcified. The Lange Government liberalised. The Bolger Government revolutionised (well, sort of) then gave itself a six-year siesta. The mercifully brief Shipley Government gave us a Headmistress. Mistress Clark then gave us nine long years of screaming for mercy, and two things (civil unions & legalising sex for money) to celebrate.

These are the things we remember governments for.

So with the Key Government’s flagship “sell-part-of-the-assets” policy now on the rocks, what exactly will this government be remembered for.

They’ve done very little policy-wise. They’ve done nothing to overturn the policies against which they howled so loudly in opposition. They’ve done nothing at all to turn around the spendthrift culture of Wellington (if anything they’ve spent more on consultants than Clark, borrowed more heavily than Cullen, and with Sir Double Dipton in the chair have hardly led by example). And they’ve done nothing whatsoever, have they, to rescue NZ from the depths of economic depression.

So what exactly is their greatest achievement in government?

What will history, and you, remember them for?

This is an honest question, not a fatuous request. I really do want to know.  From National supporters especially: what do you think your government will be remembered for?

And what do you consider their greatest achievement in government?

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QUOTE OF THE DAY: Science-free environmentalism

"The environmentalist movement is ... stealing the terminology of science
to provide cover for an irrational, unscientific fear of industry and
technology. And so while they loudly claim to be the tribunes of science,
they actually play to and rely on the public’s ignorance of science.
"That is how we ended up living in a world of carbon-free sugar, chemical-
free H2O, and science-free environmentalism."

- Robert Tracinscki, “Carbon-Free Sugar, Science-Free Environmentalism,” THE TRACINSKI LETTER

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Wednesday, September 12, 2012

September 11, 2012

The single-best tribute I’ve seen, in just thirteen words:

Some of us witnessed. Some of us understood. Some of us still remember.

[From Jason Roth, at Save the Humans. Thanks Jason.]

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Nanny takes the benefit away?

The commentariat is all a-twitter this morning about the Social Welfare Minister* imposing sanctions on beneficiaries if they don’t send their kids to the doctor and along the road to learn finger-painting.

Now you can argue all you like about the desirability of making kids visit doctor's’ clinics and finger-painting classes—and Lindsay Mitchell did this morning on State Radio when she was allowed to get a word in—but to object to the sanctions because beneficiaries’ liberties are being infringed by them, because this is a “nanny state intrusion,” is, well, it’s absurd.

You could only object it’s a nanny-state infringement of your liberty if you consider beneficiaries’ benefits to be an entitlement, to be a right. You could only object if you’re blind to where the money for those benefits comes from, which is from working people stretched to the limit—working people, many of whom can’t afford to have children themselves; working people, many of whom have one parent going out to work just pay the tax bill—working people from whom money is extracted to give to other people, who are not working.

If you’re going to object to people’s liberties being infringed here, then let’s start where it starts—with the basic infringement of liberty that  constitutes the welfare state.

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* …or whatever title she has this week.

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On the explicit language of pirates (and how it kept their booty more secure)

imageGuest post by Daniel Wahl of The Purposeful Reader.
Being a pirate in the early 1700s wasn’t easy. There were storms to worry about, flying cannonballs in the midst of sea fights and, if caught alive, the hangman’s noose.
As a result, and as you might imagine, the men who chose to become pirates were no strangers to violence. However, according to Peter Leeson—BB&T Professor for the Study of Capitalism at the Mercatus Center, George Mason University—these men, universally recognized as “hell hounds,” lived remarkably peaceful and orderly lives aboard their own ships.
imageThe reason, he says, had to do with the constitution (or “articles”) that pirates agreed to before boarding. In his book The Invisible Hook: The Hidden Economics of Pirates, Leeson shares, among other things, how the pirates protected themselves and cooperated with each other peacefully by separating and delimiting power on their ships.
For example, in order to not suffer under a dictatorial captain, constitutions said that everyone aboard would elect the captain (each pirate getting one vote) and that they could depose him at any time in the same manner. Also, a second officer, the quartermaster, gained office in the same way, and held important powers—such as distributing loot or disciplining rule-breakers—that served as checks on the power of the captain.
All this probably sounds wildly inapplicable to your life today, but that’s hardly the case. Consider in a little more detail how the constitutions were written. As Leeson puts it:
Pirate constitutions [checked the quartermaster’s ability to prey on the crew] by making regulations, compensation, and punishments explicit, which circumscribed the quartermaster’s discretion in his duties. This narrowed his latitude in exercising the power his crew endowed him with to check the captain’s authority.
The operative word here is explicit. They did not, for example, say that compensation “would be determined by the quartermaster”—or that punishment for breaking various rules “would be at his discretion”—or that he may decide how much each person makes “according to what he thinks is fair.”
Say what you will about pirates—and there are many bad things to say about them—it’s to their credit that they would not board a ship without such assurances and that they took the time to find out what they were getting into before hopping on board. Again, according to Leeson, considered separately from the ultimately doomed game they were involved in, this worked out well for them:
Since the constitution clearly delineated guidelines for the quartermaster to follow in administering the ship’s rules, and constitutions were unanimously consented to, everyone knew when the quartermaster was transgressing his power and could agree that a transgression was in fact a transgression. This enabled pirates to coordinate a common response to quartermaster abuse, which was to depose him and elect a new one.
The clearly written constitutions also served to squelch abuse before it began:
Since quartermasters knew everyone consented and agreed to the rules governing the ship, and furthermore, because the constitution made the rules quartermasters were to administer explicit, quartermasters also knew they couldn’t get away with abusing their authority. If a quartermaster tried to abuse his power, the entire crew might react against him.
Throughout The Invisible Hook, on the issue of constitutions and many others, Leeson points out that we could learn a lot from these pirates. And he’s right.
To indicate why, leave the pirates at bay for a moment, fast forward to the present and to your own life—particularly the laws you live under. Have you ever asked yourself if you know even a tiny percentage of those laws—or, considering the rules of the future as applied to your work, wondered how much of what you earn over the next few years you will be allowed to take home?
Such questions are presently unanswerable. To name a percentage, you must know the totality of laws in existence. But there are too many to count. It’s also impossible to know how much you can keep of what you will one day in the future earn. After all, your neighbors haven’t voted on that yet and whatever number they decide on doesn’t mean anything specific today anyway given how quickly the dollar is being debased.
In many more ways than the above, you and everyone you know are currently on a ship where the “captain” and “quartermaster” can do almost whatever they want. The problem is not just that there are so many laws, however, or that they are increasing so fast. It’s something much more and ultimately much worse.
If you want to name the key to so much current uncertainty, so much strife, and so much growing hatred between people, you can place the blame in large part on the vagueness of our laws today—on the lack of rules being stated clearly and explicitly, as was the case for those pirates.
This vagueness leaves people increasingly subject to the whim of bureaucrats, with nothing to protect them but the hope that those who hold power will either not abuse the laws into which they can read anything they want or that the bureaucrats will abuse such laws—granting them special favors and more security, at least for a time.
In other words, the very thing that provided pirates in the 1700s with a great measure of security aboard their own ships is increasingly absent today. And absent clearly written laws governing what we can of right do, or not, and why, the ship we’re all on is increasingly chaotic, at war with itself, and going down.
It’s sad to say so, but nevertheless true: when you think about the ambiguity of laws being written today and thus the amount of leeway government officials are given over our lives, it’s enough to look fondly back on the constitutions of these pirates and at least in that one respect wish we had it so good.
Daniel Wahl writes for The Purposeful Reader on everything from what counted as money before even gold to the DIM hypothesis by Leonard Peikoff. If you're wondering what book to read next, you may find the site's combination of useful quotes and in-depth reviews a big help.

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Tuesday, September 11, 2012

Financial tsunami heading for China

Australasia has relied for its insulation from the global financial crisis on continuing Chinese growth.

But where did China’s growth come from

From the beginning of 2009 to the end of June this year, Chinese banks have issued roughly 35 trillion yuan ($5.4 trillion) in new loans, equal to 73 percent of China's GDP in 2011.

Put that another way: Nearly three-quarters one-quarter* of the Chinese GDP (if that figure can be relied on) was produced directly from loans created out of thin air by its banks.

!

How could that possibly be sustainable? 

This was not organic growth—growth paid for by real savings  and real demand. It was growth propped up by raiding the pool of real savings, phony growth pumped up in the stages and sectors of the economic structure which are particularly susceptible not to long-term sustainable growth but instead to credit-fuelled expansion. It went

to fueling a property bubble, funding the profligacy of state-owned enterprises, and underwriting ill-conceived infrastructure investments by local governments.  The result is predictable: years of painstaking efforts to strengthen the Chinese banking system [and to build up the pool of real savings] were undone by a spate of careless lending as new bad loans began to build up inside the financial sector.

The result now is predictable.

Local governments had taken advantage of loose credit to amass a mountain of debt, most of it squandered on prestige projects or economically wasteful investments… Professor Victor Shih of Northwestern University has estimated that the real amount of local government debt was between 15.4 and 20.1 trillion yuan, or between 40 and 50% of China’s GDP… Chinese local government financing vehicles (LGFVs) are known mainly for their unique ability to sink perfectly good money into bottomless holes in the ground.  So taking on such a huge mountain of debt can mean only one thing — a future wave of default when the projects into which LGFVs have piled funds fail to yield viable returns to service the debt…. Chinese banks [could] have to write down 2 to 2.8 trillion yuan, a move sure to destroy their balance sheets.

And:

Over-leveraged real estate developers… are struggling to stay a step ahead of bankruptcy. The Chinese media has reported several instances of suicides of bankrupt real estate developers.…

And:

Chinese manufacturing companies, state-owned and private alike, could be next in line… a slowdown in economic growth will result in a rapid build-up of inventory and a glut of unsold goods in all industries.  Getting rid of their inventories at a discount will wipe out their slim profits and incur financial losses.  Some of the loans extended to them in good times will surely go bad.

And:

But the potential risk for a financial tsunami is greatest in China's shadow banking system.  Because of very low-yield for savings by Chinese banks (since deposit rates are regulated) and competition among banks for deposits and new fee-generating businesses, a complex, unregulated shadow banking system has emerged and grown significantly in China in the last few years… Borrowers that use funds provided by [China's shadow banking system] tend to be private entrepreneurs and real estate developers denied access to the official banking system… To evade regulatory oversight, [their loans] do not appear on a bank's balance sheet … [but] according to a recent report in the Wall Street Journal, [they could] account for 43 percent of total outstanding loans, 70 percent higher than at the end of 2009.
   Disturbingly, none of these huge risks are reflected in the financial statements of Chinese banks…
    Either we should not believe our "lying eyes" or Chinese banks are trying to hide the mother of all debt bombs.

China's massive bank-financed stimulus was intended to keep the economy moving. It may instead lead to economic disaster.

For them, and for those like us who’ve relied on their growth—almost all of which was built up by a debt bomb.

[Hat tip Russell W.]

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Monday, September 10, 2012

“Ban profits!”

Peter Schiff went to the Democrat’s National Convention to see how many how quickly he could get to support banning corporate profits. It was disappointingly easy.

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Why do journalists get economics so wrong?

Guest post by Vedran Vuk of Casey Daily Dispatch 

Over the years, I've heard many people gripe about the media. It's always so anti-free market and economically illiterate. When there is some favorable mention of markets, it's usually a trained economist or financial person. Insightful commentary from a journalist on economic matters is, sadly, a rare commodity. In my opinion, the root of the problem comes from the sort of person who wants to become a writer.

As an analyst and a financial writer, I meet a lot of people who want to be writers. It's quite a strange aspiration. Personally, I enjoyed studying economics and finance and kept having ideas which I wanted to share with others. Hence, I started writing about them. A few twists and turns later, and here I am.

The problem with journalism is that most journalists come from the exact opposite approach. They decided to write long before having any background knowledge to write about. The vast majority of college freshman enter their first journalism or English class without anything important to say on the matters of economics and politics. Despite their ignorance in the ways of the world, they still want to write about it anyway. Reflect for a second on what an odd concept that is.

It's kind of like wanting to open an art gallery just so that you can sip wine with artsy people. Shouldn't the point be to use your art as medium to express an idea or emotion or something else significant?

Call me biased, but I'm of the persuasion that one should know something about a topic before writing on it. Otherwise, writing is just screaming at a mountain to hear one's own voice. There's no point to it.

Unfortunately, after four years of reading poetry and the classics, the young aspiring writer is no better prepared for his or her future role of commenting on economics, politics, and science. After college, you've got a very dangerous weapon on your hands – a person who can write persuasively but doesn't really know much about anything. It's quite irresponsible of colleges to let such people loose on society.

These journalists aren't spending their waking hours studying economics to compose the best-informed articles. Instead, they'll just formulate some half-baked idea from the top of their heads with little background knowledge to defend their assertions. Their goal is not to become the most knowledgeable economist, physicist, or historian. It is not the search for truth or important ideas which motivates most. Their goal is simply to write – and the bigger publication, the better. With this as the inspiration for many writers, why are we surprised to see so many economically illiterate articles in the media?

Vedran Vuk is an analyst at Casey Research and the author of the ‘Casey Daily Report.’

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Bugger off Graham

imageLet me say quickly, I have no problem with World-Cup winning coach Graham Henry helping to coach the Argies.

Why should anyone object? Crikey, it says “coach” in the occupation section of his passport—what did you think he was going to to do once he stepped down from this country’s stop coaching spot: take up knitting?  

How long did you really think retirement would hold Henry’s interest? With two coaching contracts already under his belt—one with the light-blue and whites helping them build, and the other team wearing darker-blue and white with a team sure to test the senior coach’s well-documented tendency to depression—you’ve had your answer now: not long.

Why be surprised? This is what he does. This is his job. He coaches. So the only complaint about his coaching a team opposing the All Blacks can be based on nationalism. And nationalism, as they say, is the last refuge of the scoundrel. So forget this bollocks about him “selling his soul” or selling out the country. That’s all it is: just bollocks.

The best thing you can do if you support the All Blacks is to wish your old coach well, while hoping he doesn’t do too well.

That said, why would he or anyone else be surprised to hear after Saturday nights game in Wellington he wouldn’t be welcome back in the All Blacks’ rooms. You’d have to be a loony to let him in to gain any knowledge about what ails players, or how things are set up these days.

As it happens, there was a parallel in the AFL only last week. Sydney Swans legend Brett Kirk, currently a comments man with Channel 7, was banned from Sydney’s dressing room at last week’s game against Geelong because news had emerged he’d signed to help coach Fremantle next year—a team the Swans could have easily met in the finals series if games had gone that way. 

Why give someone with changed loyalties access to anything that might help them, was the call—and the right one.

And now, having got that off my chest with a paragraph joining Geelong and Fremantle in the same sentence, I have to announce that I am going into mourning—and it’s got nothing at all to do with Graham Henry.

In fact, I was distracted from Saturday night’s rugby test by a much, much bigger game going on in Melbourne—an elimination final played between Fremantle and Geelong in which my team—the Geelong Cats—the 2011 premiers—winners of three of the last five AFL premierships--the greatest club of the modern era—were blown off the park by a Fremantle team who have had only won one final before in their club’s life. So that’s my team. Smashed. Out. Eliminated. Humiliated.

So be gentle on me. I’m in mourning.

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The Herald goes tabloid

This morning the Herald goes tabloid, and editor Shayne Currie was on State Radio explaining, and demonstrating in one clause, why.

_Quote_Idiot The reason why we’ve gone compact [he said] is to make it much more easier and convenient for readers…

And perhaps to make it a better fit for an editor unable to master the standard of English expected in a quality daily. Observe:

  • ‘The reason why …’  - “Reason why”? Using both words “reason why” is as redundant as Currie should be. It’s a redundancy because if you say “the reason why” it’s like saying the word “reason” twice; that is to say the reason is already the why.  So that’s one.
  • “…to make it much more easier…” – Lord love us, and this is an editor speaking. He couldn’t have made it much more worserer, really, could he.  He could have said “make it much easier,” which would be correct. He might have said “make it more easy,” which is also correct. Instead he said both, which is neither. So that’s two.

Currie says this morning the Herald is going tabloid. And that’s three: He got the tense wrong.

Because the Herald went tabloid a long time ago.  The format is just catching up with the content.

ECONOMICS FOR REAL PEOPLE: Great Myths of the (First) Great Depression

Here’s the message about tonight’s meeting, from our friends at the Auckland Uni Econ Group:

Hello all,
Sadly, the history of The Great Depression continues to grow more relevant by the day, yet today very little is known about--at least, very little that is true.

This week, we look at a few of the many myths around the Great Depression, and ask:

  • Was the Depression really a Crisis of Capitalism?
  • Did margin trading on the share market truly bring on the Crash?
  • Which great economist lost his shirt in the Crash he never saw coming?
  • Did the Fed really do too little to help?
  • Did Herbert Hoover just sit back and watch things get worse?
  • Were Franklin Roosevelt there, and Michael Savage here, chiefly responsible for getting things back on track?
  • Was it World War II that finally brought about the Recovery?

Join us tonight as we examine these stories and many more about the FIRST Great Depression.

All welcome!

    Date: Monday, September 10
    Location: Room 215, Level 2, Business School, Auckland University
   Time: 6pm – 7pm

And check us out on the web at Facebook & our blog.

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