George Bush's historical standing - a flowchart

Cool Aussie Summer

Well, at least here in South-Eastern Australia:
As summer comes to an end today, Sydneysiders may wonder whether it was ever here at all.

Searing heat, parched gardens and sunny skies - trademarks of an Australian summer - were replaced by cloudy days and lots of rain, according to the Bureau of Meteorology.

"In terms of rainfall it's been the wettest summer for six years," said Shannon Symons from the bureau's climate centre.

Sydney received 438 millimetres of summer rain, a figure achieved by consistent rainfall throughout summer, rather than a handful of large falls, Ms Symons said.

No single-day rainfall records were broken, she said.

Remarkably, not one day this summer pushed past 31 degrees.

"That's only happened three times in the past (in 149 years of the bureau's weather records), with the last being 1956 - it's quite significant," Ms Symons said.

Average maximum temperatures were 25.2 degrees, making it the coolest summer in Sydney since 1996-97.

There were an average of just 6.7 hours of sunshine each day, the lowest since 1991-92, Ms Symons said.

Sydneysiders can blame La Nina, the weather phenomenon in effect in the Pacific Ocean since November, for the rain and cold weather, Ms Symons said.

Typical of the entire summer, its last week saw heavy rainfall and violent storms lash parts of the state.
Here in Newcastle, about 130km (81 miles) north of Sydney, the weather has been similar. The highest February temperature was 29.7°C (82.2°F) and the average top temperature was 25.5°C (77.9°F).

In fact, throughout this 2007/2008 summer, only 10 days in Newcastle exceeded 30°C (86°F). The average is 23.4 days.

There are two basic theories as to why this has occurred.


The other, mentioned in the SMH article, is that the La Nina weather phenomenon has affected it. More than that, although this sort of weather pattern doesn't occur all the time, it does happen now and then.

For me, the world's greatest warmophobe, this summer will live long in my memory as one of the most tolerable on record.

Of course, Autumn is tomorrow, and March/April weather can still be quite warm. But at least the nights are getting cool. Last night it got down to 15°C (59°F), which was most pleasant. I'm still wearing my tracksuit pants!

New Line Cinema is no more

From the department-of-oh-that-explains -why-they-were-reneging-on-payments-to- Peter-Jackson-and-Tolkein's-estate:
It's the end of the line for New Line -- at least in its current form.

The 40-year-old studio behind such franchises as "Lord of the Rings," "Austin Powers" and "Rush Hour" will become a significantly smaller version of itself and merge into the Warner Brothers unit of Time Warner's Warner Bros.

The development marks the end of an era for New Line founder Bob Shaye and his longtime top lieutenant, co-chairman and co-CEO Michael Lynne, who will leave the company. In recent weeks, the pair, whose contracts expire at the end of the year, made a last-ditch failed attempt to stay aboard, presenting Time Warner management with a reorganization plan that would have ensured their continued employment.

It is unclear how many people will lose their jobs as a result of the consolidation. New Line Cinema employs more than 600 people in Los Angeles and New York.
I just don't understand how a film company responsible for the three Lord of the Rings films - which were absolutely MASSIVE cash cows - could manage to go under. Inefficiency and stupidity most likely.

1 in 100 Americans are in prison

From the department of We're-no.1:
For the first time in the nation’s history, more than one in 100 American adults are behind bars, according to a new report.

Nationwide, the prison population grew by 25,000 last year, bringing it to almost 1.6 million, after three decades of growth that has seen the prison population nearly triple. Another 723,000 people are in local jails.

The number of American adults is about 230 million, meaning that one in every 99.1 adults is behind bars.
The incarceration rate is higher than virtually every single country in the world. Is this because America is more able to punish criminals? Or is it because there is more criminal behaviour in America?

Global Warming Flowchart

McCain may be ineligible to run for President

It seems as though John McCain may not be eligible for president:
McCain's likely nomination as the Republican candidate for president and the happenstance of his birth in the Panama Canal Zone in 1936 are reviving a musty debate that has surfaced periodically since the founders first set quill to parchment and declared that only a "natural-born citizen" can hold the nation's highest office.
Despite widespread popular belief, U.S. military installations abroad and U.S. diplomatic or consular facilities are not part of the United States within the meaning of the 14th Amendment. A child born on the premises of such a facility is not subject to the jurisdiction of the United States and does not acquire U.S. citizenship by reason of birth.
The Twelfth Amendment explicitly precluded from being Vice President those ineligible to be President: people under thirty-five years of age, those who have not inhabited the United States for at least fourteen years, and those who are not natural-born citizens.
Basically it's the same thing that prevents Arnie for running as President.


Whilst reading a comments thread over at Calculated Risk - an economics blogsite that is probably the best place on the internet to go to understand the whole subprime mess - I came across some rather disturbing revelations (click on the comments button on this post):
Everyone at work is talking guns! "I bought the wife a 38 special." Coworker #2: "I bought my wife a 9mm Barretta, military model." Later: "We have 1200 rounds for the new gun on hand." Another coworker just bought a 30-06 and a 357...

I wish I was kidding... Four years ago everyone was buying aircraft and boats. Now...

Got Popcorn?
neil | Homepage | 02.28.08 - 4:31 pm | #
sunsetbeachguy writes:
Neil has got a point.

The mood around the office has gotten quite surly lately.

I had the thought of arming up.
sunsetbeachguy | 02.28.08 - 4:34 pm | #
tj & the bear writes:
I'm itching to get a new 12 gauge.

If I lived anywhere but CA I'd already have a couple ARs, too. Glen over at Winter Watch has been teasing me with the Rock River Arms AR-15 chambered for .458 SOCOM.

tj & the bear | 02.28.08 - 4:41 pm | #
mock turtle writes:

yes BB is in over his head...we all are and anybody in his position would be as well. this is like so many games of chess played where after so many moves there is no way out.

now it's time for the pain.

gold still has lots of upside potential but who knows for sure...not me. my play in the last year has been palladium as an alternative to platinum AND because it is the only material on earth that filters hydrogen gas from all others (is also a sponge) H2 economy?!

i also recommend investing in a bicycle, a garden plot and seeds...throw in a roto-tiller or a horse with a plow.
mock turtle | 02.28.08 - 4:47 pm | #
Dr. N writes:
what's all this talk about guns?? We have a slight (so far) economic downturn and people are imagining mobs running through their neighbourhoods looting and pillaging or worse?
Dr. N | 02.28.08 - 4:48 pm | #
wally writes:
Wherever you work, watch your back.
wally | 02.28.08 - 4:50 pm | #
mock turtle writes:
suggestions to my friends in the gun crowd,

(i'm pro 2nd amend)

give yourself a choice other than deadly physical force if you need to defend.

most cops and others, who have had to take extreme measures are haunted and suffer... (unless you are a sociopath)...but sometimes you have little choice.

12 gauge pump with the double 0 removed from the first round and replaced with, salt or a bean bag is formidable and of course loud.

also, a mega can of bear spray is awesome (looks like a small fire extinguisher and is filled with 10% oleo-capsicum)..sprays 15 feet...,non lethal and feels like fire has been poured on you.

let's pray non of this comes to pass.
mock turtle | 02.28.08 - 5:05 pm |
Ella writes:
Tazer anyone?
Ella | 02.28.08 - 5:05 pm | #
The current recession and all the bad news that is coming out of America has obviously got people spooked - but the people spooked on this thread are not anti-government redneck militia members, they are people with an interest in economics.

Let me say for the record that I do not believe that US society will collapse into anarchy as a result of this recession. Even the 1930s depression wasn't as bad as the possible collapse that these commentators fear. Even they would probably realise that there was some fearful irrationality behind their comments.

What is DOES show, however, is that people are frightened. When Bush appears on TV and says "there won't be a recession" they don't believe him. When Bernanke appears on TV and says "the Fed will fix things up", they don't believe him. With faith in these institutions now at a nadir, people are naturally resorting to "preparing for the worse". This is NOT similar to the Y2K panic.

But, then again, you can hardly be unconcerned about recent panic when the US Dollar is doing this:

Inflation Targeting criticised by Mish

This is good stuff. Any of you who read my blog regularly know that I am all for inflation targeting, but my target is zero percent inflation, what is also known as Absolute Price Stability. What Mish criticises is the idea that inflation can be targeted at 2% and still be described as "price stability":
The reason banks (and government) want inflation targets is that inflation is beneficial to those with first access to money: banks, government, and the wealthy. By the time access to credit filters down to everyone, the economy is poised to reverse. This happens time and time again in every cycle. The current housing bust is the latest example.
What it all boils down to however, is inflation targeting is nothing more than Fed sponsored theft to the detriment of those who obtain access to credit late in the cycle.
In the final analysis the Fed undershoots, overshoots, and blows serial bubbles. It matters not whether this is by accident or design. The end result is the same: wealth concentration in the hands of the banks and the wealthy, fear sponsored government fascism, and the impoverishment of the middle class. For these reasons the Fed should be abolished.

Note that the inflation cycle ends when consumers are no longer willing or able to borrow, and banks are no longer willing or able to lend. The preponderance of data suggests that is precisely where we are now. The last time this happened the US was facing the great depression. There are now safety nets that may prevent a similar occurrence now, then again perhaps not. The real question is whether or not one is prepared.
Personally I think that the whole "abolish the Fed" argument is overdone and this quote ends in an unecessarily apocalyptic tone - nevertheless I think his basic argument is correct in that long-term inflation still creates the investment bubbles and painful corrections that short term inflation has created in the past.

To be honest, the idea that "zeroflation" is now seen by some as a desired economic goal is quite a change from even six months ago. I have argued for this sort of monetary policy for years and it seems as though the current economic downturn - along with Ben Bernanke's panicky rate cutting - has got people rethinking their assumptions and trying to think up new ones. Nevertheless, given the distrust that economically minded Americans now have of the Fed (distrust that was always there but has now been justified by "Helicopter Ben"), I would think that a return to a Gold Standard would be a more likely outcome than a Federal Reserve Bank committed to Absolute Price Stability and under the chairmanship of a Super-Volcker.

And this is a pity, since I believe that returning to a Gold Standard would be a regressive step, while "zeroflation" practised with a floating currency would be far more ideal.


US Dollar History since 1973

NOTE (2010-11-12): This post and chart should be deprecated by my newer analysis, that uses the US Dollar Index and compares it to Real GDP, Real GDP per capita and Market Capitalisation:


Original post as follows:

This graph (courtesy of FRED at the St. Louis Fed) is indexed in the same way as the NYBOT index below. You can see pretty much how the US dollar has performed over the years. A few notes:

  1. You can see the result of the Plaza Accord very clearly here - the meeting in 1985 between 5 nations (including the US) to devalue the dollar.
  2. The Early 1980s Recession was accompanied by a rather large jump in the value of the US Dollar. This was the result of Paul Volcker's contractionary monetary policy. Volcker's high interest rates caused a large international investment in the US Dollar, giving massive confidence in the strength of the currency.
  3. You can also see that, historically, the US Dollar is cheaper than ever. The reason for the graph not going back before 1973 is because, before that, the dollar was fixed in price as per Bretton Woods (and the Gold Standard).
  4. The interest rate increases in the last three years initiated by the Fed did not result in an increase in the value of the US Dollar over the long term.

"SAM" Missile

This photoshopped image has been shamelessly stolen from Something Awful.

Says it all

Inflation graph

Compare this to the US Dollar (below). There seems to be an inverse relationship between the level of the US Dollar and the rate of inflation in 2007, especially near the end.

In fact the rather large increase in inflation on this graph occurred whilst all the subprime stuff was hitting share markets in the US. So while the economy was beginning to contract, inflation increased. This is stagflation.

More Cliff Diving - US Dollar

The Nybot dollar index measures the US Dollar against a range of different currencies.

New Home Sales in the US

As Calculated Risk puts it, so succinctly, "That's what we call Cliff Diving!"

Graph is from Calculated Risk.

Volcker he aint

From the department of how to lose friends:
Federal Reserve Chairman Ben S. Bernanke signaled the U.S. central bank is prepared to lower interest rates again even as inflation accelerates.

The Fed ``will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,'' Bernanke said in testimony to the House Financial Services Committee in Washington.

Bernanke's remarks may reinforce investors' expectations that policy makers will lower rates further to shore up the faltering economy. While officials have expressed concern that inflation is accelerating, Bernanke indicated he shares Vice Chairman Donald Kohn's view that financial-market turmoil and slowing growth pose the ``greater threat.''
No comment required. Everyone who read my blog knows what I think of this strategy.


This photoshopped image has been shamelessly stolen from Something Awful.

The Perfect Storm is beginning to hit

Inflation in the US is rising:
Combined with figures last week showing consumer prices also rose more than forecast, today's producer-price report may prevent prompt the Fed to consider raising rates as soon as the economy stabilizes.

``What you've got is a lot of inflationary pressures building,'' said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, who correctly forecast the rise in core prices. For now, ``the Fed will put them in second position in terms of priority until this financial strife settles down,'' he said.

Over the past 12 months, producer prices rose 7.4 percent, the most since October 1981. Wholesale prices excluding food and energy advanced 2.3 percent in the year through January.

The median forecast of 70 economists in a Bloomberg News survey was for wholesale prices to rise 0.4 percent from December. Core prices were expected to advance 0.2 percent, according to the survey median.
Dollar hits record low:
The dollar sank to a record low against the euro as U.S. home prices and consumer confidence tumbled, bolstering bets the Federal Reserve will keep reducing interest rates.

The U.S. currency declined to the weakest level since the euro began trading in 1999, and slumped against all 16 of its most-active counterparts. It reached its lowest level of the day after Fed Vice Chairman Donald Kohn said turmoil in credit markets and the possibility of slower economic growth pose a ``greater threat'' than inflation.

Kohn's comment ``confirmed the Fed will keep cutting interest rates,'' said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world's biggest currency trader. ``That brought more downward pressure on the dollar.''

The dollar weakened to $1.4981 per euro at 4:32 p.m. in New York, from $1.4830 yesterday, falling past the previous historic low of $1.4967 set Nov. 23. The U.S. currency dropped to 107.24 yen from 108.07, and has lost 4 percent this year.
Oil breaches $100 again:
Crude oil rose above $US100 a barrel to a record close in New York as the weakening US dollar prompted some traders to invest in commodities as a hedge against inflation.

Reports today showed that US home prices tumbled, consumer confidence weakened and producer prices rose last month. Hedge- fund managers and other large speculators increased net-long positions, or bets on higher oil prices, in the week ended Feb. 19, a Commodity Futures Trading Commission report showed.

``The market is being driven by speculation, fear and psychology,'' said Stephen Schork, principal of the trading firm The Schork Group in Villanova, Pennsylvania. ``There were some investors who shorted oil when we reached $US100 ($108) last week, for whatever reason, and they panicked today.'' Shorts are bets that prices will decline.
Fears of recession:
Fear among U.S. consumers and businesses that the world's richest economy could go into a recession, or may already be in one, could help push the economy over the edge and bring on an even deeper, longer downturn.

In the final three months of 2007, the economy screeched to a near standstill, dragged down by what many economists say is the worst housing slump since the Great Depression.

As a result, talk of recession has been on the rise among Main Street people as well as economists, the media and a number of high-profile analysts, including former Federal Reserve Chairman Alan Greenspan.

With the housing market showing no sign of reaching bottom and mortgage-related losses mounting at Wall Street firms, many experts wonder if all the talk may add to the tendency of people to dampen their economic activity and spend less.
Fears of stagflation:
"It looks like there is no confidence in an economy where inflation is getting out of control," said Andrew Brenner, market analyst at MF Global in New York. "This is a classic stagflation scenario."

In the face of fresh signs of economic weakness, a top Federal Reserve official played down the risks presented by current price growth, saying the danger the U.S. economy will weaken further is a bigger worry than higher inflation.
House prices continue to tumble:
The (Case-Shiller) index fell to 170.64 in Q4, from 180.31 in Q3. A decline of 5.3%, or over 20% at an annual rate.

This is the lowest level for the index since Q1 2005.

Prices fell 8.9% in 2007 according to Case-Shiller.

The index is off 10.2% from the peak.


Austerity - the solution to America's economic ills

As many commentators have predicted, America is in an economic recession. Although it can't be declared "official" yet - the most popular definition of a recession is two quarters of economic decline - all the signs are there that a serious economic realignment is taking place. Consider the following facts:

  1. The share market is volatile, reacting to good news and bad news wildly. Moreover, important indices show a long term decline in share prices. If you look at this graph of the S&P 500's performance in the last year, you'll see that the share market, while not officially "bearish" is certainly in the process of declining.

  2. House prices in the US have been in marked decline for some time now, and sales figures show that the amount of houses sold in January 2008 has dropped to an eight-year low.

  3. The Service Sector is contracting sharply, with many employers laying off staff.

  4. Unemployment has increased to around 5%. This is still pretty good by historical standards, but the rate has been hovering around 4.5% for a few years now, so the latest figures show an upward trend.
There are many other indicators, to be sure, and some are contra. However the majority of stats point in a downward direction.

The reason for the recession is to be found in the over-heated property market, which popped last year and is now responsible for the overall decline in house prices and the subprime mortgage fiasco that is battering the share market.

But there are other reasons. The over-heated property market was, I believe, the result of expansionary fiscal policy by the Bush administration and expansionary monetary policy by the Federal Reserve Bank for the past few years - both unwarranted.

Greenspan's loose monetary policy ensured that the Federal funds rate remained very low from 2002 to 2004. This encouraged the already forming property bubble. Cheap money was flowing into the housing market, and house prices were sky-rocketing. Had Greenspan and the Fed kept interest rates higher during this period, it would have helped prevent the crash from occurring. It would have also stunted economic growth during that period as well, but, in hindsight, slow growth then to prevent a recession now would be more than worth it.

During the same period, Bush and congress enacted tax cuts. Advocates of "Voodoo Economics", that tax cuts pay themselves (aka Supply Side economics), would argue that such a cut was deserved and would boost growth.

Of course, one problem with any expansionary policy - whether fiscal or monetary - is that they have a short-term positive effect which is eventually balanced out by a long-term negative effect. In other words, higher growth now leads to lower growth later. Conversely, contractionary policy - both fiscal and monetary - has the opposite effect - low growth now and higher growth later.

Nevertheless, because of political reasons, many governments choose to run continual government deficits and to cut taxes - which is expansionary fiscal policy - during periods of economic growth. This goes against the grain of those schooled in Keynesian economics, who would argue that, during periods of economic growth, policies must be contractionary while they should be expansionary during downturns. Whatever the faults that Keynsians have, they know their stuff at this point. What Bush and Greenspan essentially did from 2002-2004 was to implement expansionary fiscal and monetary policy during a period when it was inappropriate. The current downturn has its roots in these bad decision.

The problem now, however, is what is the US going to do in order to solve their current problem? Since careless expansionary fiscal and monetary policy caused the current crisis, should we assume that expansionary fiscal and monetary policy can solve it?

Bush and the Fed (now under Bernanke) certainly think so. Bush is trying to push through a "rescue package" bill in congress that would attempt to provide much needed fiscal stimulus to the different markets in America that need it most (mainly, I believe, the housing market). Meanwhile, Bernanke at the Fed has been lowering rates as though it were going out of style. In fact, the rate cuts have been so substantial that the market is getting spooked by them.

I do not think, though, that these will work. US Federal government debt is already so high that interest repayments on government debt now exceed 3% of GDP. A continual and growing deficit has already begun to eat up federal spending to such a degree that the interest charges alone rival defence spending and health care costs. A fiscal stimulus package of the sort that Bush is proposing will simply result in higher deficits. Whatever growth such a package could encourage would be sucked up by the downturn that high deficits would have later.

Similarly, Bernanke's cutting of interest rates is problematic. I have argued elsewhere on this blog that the declining US currency, now dredging the bottom of historical lows, will have an inflationary effect upon the economy. Oil, now at $100 per barrel, is spreading inflation too. The question is, though, whether the inflationary effects of a declining currency and high oil prices will be balanced out by the deflationary effects of an economic downturn. I doubt it, for the simple reason that other countries who have suffered currency devaluations and/or high oil prices always ended up in the mire of stagflation - high inflation mixed in with economic stagnation. Bernanke's cutting of rates, during a period in which inflation is already eating into the value of people's wages and savings, is a dangerous move.

So, if the solution is not through expansionary policies, then it can only come through contractionary ones - Austerity. Put simply, this involves an increase in saving money - and by money I mean cash in bank accounts, not money invested in shares or property that can lose value. Moreover, such saving needs to be protected from the ravages of inflation.

For an Austerity program to run in America, both the government and the Federal Reserve need to do the exact opposite of what they are currently doing. Instead of spending money and creating deficits, the government needs to run a fiscal surplus and pay back debt owed. This would involve raising taxes or cutting spending (mainly on health care or military costs) or a combination of both, in such a way that tax revenue exceeds expenditure, thus allowing earlier retirement of government debt (which is essentially paying off the principal earlier).

Instead of creating money and stirring inflation through lower interest rates, the Federal Reserve needs to increase rates to encourage household savings and control inflation (higher interest rates will make saving money more attractive to households and businesses, while at the same time killing off inflation, thus making money more valuable to keep rather than spend).

Of course, such actions are clearly contractionary. In other words, the austerity program I am proposing will, in effect, make the recession worse. Such an austerity program would cause a significant economic downturn that will result in high unemployment. Is it worth it?

Yes. It is. At some point in the future, an austerity program will be tried. It may occur next year, it may occur next decade. The issue is that the sooner such a program can be implemented, the easier it will be to recover from its shocks. Leave it too long, however, and the shocks will take longer to recover from, and the more potential damage such inaction will cause.

The shock of running an austerity program will be deep but, as Keynsian economists would point out, a recovery will eventually arrive. Not only that, but increased tax revenues from this recovery will make it easier for governments to pay off debt (assuming they remain fiscally restrained) thus making it easier for future governments to avoid the mess the current generation is in.

Sadly, however, I do not believe that such an austerity program is likely in the short to medium term. The price that politicians would have to pay for such a downturn would be too high for many of them, which will prove, yet again, that the structure of modern politics does not encourage men and women to be willing to do the right thing, no matter what the cost (apologies to The Big Lebowski). Instead we will see a period of stagflation and rising public debt, both of which will result in confused and angry politicians and a reduced standard of living amongst ordinary Americans.

There is one glimmer of hope, however - Paul Volcker could become chairman of the Federal Reserve again.

© 2008 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/

FAQ about the author

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Creative Commons Attribution 3.0 License.


I've changed the font colour to be dark grey rather than black. I read somewhere that certain "people" find too high a contrast "black on white" to be disturbing, which makes me wonder how they read the newspaper or even pdf documents.

Of course you're not one of them. Let me know if it is better.

Various Protest Signs - Cracked.com

I already have a bran you moron!

I may disagree with you, but I will fight for the right for you to express your desire to forcibly shut me up.

Which oil-free bus does he ride?

Reminds me of Bart Simpson getting out of class: "Oh my ovaries!"

Hmmm, God's judgement is coming against baby killers AND "sports nuts".

More here.

Poll fixed up

Please vote again. I had forgotten to allow multiple answers.

Foot in mouth

Republican Jack Kingston is angry I tells ya:
During Friday night’s Real Time, Republican Congressman Jack Kingston took to the airwaves to echo the right wing talking points of Obama being “not patriotic enough”. One of the memes that Kingston brought up was about Obama not wearing his lapel pin.
Yep. You read that right. Obama is the worst thing to happen to America since 9/11 because he dares to not wear a lapel pin.

Here's a picture of Jack Kingston complaining about the lack of lapel pin.

Notice anything missing?

h/t Crooks and Liars for this one.


Larry Norman, Christian musician, is dead

From his website:
Our friend and my wonderful brother Larry passed away at 2:45 Sunday morning. Kristin and I were with him, holding his hands and sitting in bed with him when his heart finally slowed to a stop. We spent this past week laughing, singing, and praying with him, and all the while he had us taking notes on new song ideas and instructions on how to continue his ministry and art.

Several of his friends got to come and visit with him in the last couple of weeks and were a great source of help and friendship to Larry. Ray Sievers, Derek Robertson, Mike Makinster, Tim and Christine Gilman, Matt and Becky Simmons, Kerry Hopkins, Allen Fleming and a few more. Thank you guys. Larry appreciated your visits very much. And he greatly appreciated the thoughts, wishes, support and prayers that came from all of you Solid Rock friends on a daily basis. Thank you for being part of his small circle of friends over the years. Yesterday afternoon he knew he was going to go home to God very soon and he dictated the following message to you while his friend Allen Fleming typed these words into Larry's computer:


I feel like a prize in a box of cracker jacks with God's hand reaching down to pick me up. I have been under medical care for months. My wounds are getting bigger. I have trouble breathing. I am ready to fly home.

My brother Charles is right, I won't be here much longer. I can't do anything about it. My heart is too weak. I want to say goodbye to everyone. In the past you have generously supported me with prayer and finance and we will probably still need financial help.

My plan is to be buried in a simple pine box with some flowers inside. But still it will be costly because of funeral arrangement, transportation to the gravesite, entombment, coordination, legal papers etc. However money is not really what I need, I want to say I love you.

I'd like to push back the darkness with my bravest effort. There will be a funeral posted here on the website, in case some of you want to attend. We are not sure of the date when I will die. Goodbye, farewell, we will meet again.

Goodbye, farewell, we'll meet again
Somewhere beyond the sky.
I pray that you will stay with God
Goodbye, my friends, goodbye.

Unnamed police drama. Chapter two.

This is chapter two. To read chapter one, click here.

It has been years since Ed Jakes felt this tired. He sat nursing his cup of coffee – his third that morning – while his stomach digested the oatmeal the diner had provided.

He thought back to the previous evening. The town meeting went the way he wanted it to but not without controversy. A meeting which officially ended at 8pm with the Mayor's declaration did not stop the questions, the accusations and the fear of an endless line of Gerrold county residents who saw him as a cross between a character from the Turner Diaries who was bent on getting the United Nations to invade America, and Virgil Tibbs, the mild mannered homicide detective played by actor Sidney Poitier.

Of course he was neither, and was at pains to let every individual he spoke to that he was just trying to make things better for everyone. Jakes' career was boosted by his capacity to negotiate and compromise, rather than to dominate and control. A spell as a hostage negotiator ten years previously had given his superiors ample reason to promote him to assistant director.

But, successful though he was in almost single-handedly winning over two-thirds of the vote, he knew that the challenge had only just begun. Like a President elected to power on the basis of change, he knew that results, not his effective rhetoric, would determine what happened next.

“'Scuse me?” a voice said to his left. Jakes looked up and saw a grizzled man who looked far older than he really was. Like a badge of honour, this man wore his ill-fitted clothes with a pride Jakes rarely saw. The man was a “cracker”, a West Virginian mountain man whose family had been part of the county for generations. He was what some people called a “hillbilly”.

“I just like t'say, I thought you spoke real good last night” the man said, “I never thought man o' your skin colour would be able to settle us down like you did.”

“Thank you very much” Jakes replied, feeling grateful for the man's words.

“I can't speak for all the Crackers you understand, but me and mine, we're right behind you.”

“Again, thank you.” Jakes said. The man smiled and walked away.

Ordinarily he would've used this sort of opening to find out the man's name so that could speak to him in the future. A little red book he carried in his jacket pocket was full of names and contact details of people he had spoken to the night before. This morning, however, he was just too weary.

Crackers. That was one of the first things he had learned when he came here – that the “hillbillies” in Gerrold county actually called themselves by that word. Like many, he assumed that, because it was a racist term in many places in Appalachia, that its usage would insult and divide. It didn't. They were proud to be called Crackers and not the least bit offended by its usage.

Gerrold County was, in Jakes' opinion, one of the strangest rural counties he had ever encountered. Oh it was similar to many in that there was a mixture of poverty and wealth, a mixture of different sub-cultures that were invisible at first glance – yes Gerrold County was not dissimilar at all. Nevertheless, there was a feeling, a “vibe” that Jakes had felt for the past few months of investigation and which came to a head during the meeting.

There were around 500 people packed into the town hall. Even with so many people he could notice distinct groups. The crackers, for example, seemed to be seated in three different sections of the hall. What was this about? One group looked especially angry at the goings on while the other two groups seemed quite interested. A small contingent of black Crackers was also present, and they seemed to be on good terms with one group of white crackers but not the other two. The townsfolk were typical middle America somehow transported into Appalachia – small business owners; professionals like lawyers and doctors and teachers. But even they seemed divided, though he could not see where. The strangest group were the Intech people. These people were mainly biomedical engineers and researchers and had taken the 20 mile trip to Gerrold itself, out of their protective gated community. They knew little of the people in the hall and hardly spoke to townsfolk, or even one another. Amongst them Jakes spotted a number of Intech security personnel. Mean, well built and dangerous looking, they seemed more concerned with the Intech employees than they did with anyone else.

Of course, all the Intech people voted against him, but that wasn't enough to make a difference.

Jakes blinked his eyes hard. He finished off his coffee and decided that he wasn't going to get any more awake than he was going to get. He had collapsed into bed at 3am, fell asleep 90 minutes later, and then woke with a blinding headache at 6.00am.

He looked at his watch. It was 7.21am. The headache was still there, though dulled somewhat by a combination of Tylenol and caffeine.

Then the door of the diner opened. In walked the man he was waiting for. The man spied Jakes immediately and smiled a greeting. He wore blue jeans, a check shirt and a fashionable light leather jacket. He didn't need the moustache to look Hispanic.

“Hey! Can I have an autograph?” yelled a man at a table on the other side of the diner. Customers looked around and saw who it was at the door. Some – those who had been at the meeting – laughed out loud. The man at the door laughed with them as he sat down opposite Jakes.

“You know I figure that that joke gets pretty old” Jakes said.

“You wouldn't believe how old it got in New York.” he said “People would make jokes about it every week in the precinct”

Jakes smiled. The Hispanic man sitting opposite him was a former NYPD police captain and one of the most competent police officers he had ever met. He was a bona fide hero, retired gloriously from the force through injury, and then moved to Quantico, Virginia, to work with FBI special agent training.

That, of course, was not the reason for the joke. The reason was that this man's name was Keith Hernandez.

When Hernandez arrived at Quantico to teach he made it very clear to everyone that yes, he likes baseball, but he rooted for the Yankees because that's what the NYPD did. He also assured people that he never watched Seinfeld, but he knew everything about that episode from what people had told him over the years. After that things were easy, except when he got into conversations with any woman named Elaine.

Unfortunately, he wasn't able to tell anyone last night, which resulted in a whole evening of people making up jokes he had heard too many times and being introduced to a number of Elaines who smiled and laughed. He would smile tightly and tried to steer the conversation back to something meaningful.

“I can see you're exhausted” said Hernandez, “I managed to fall asleep around 2am. You?”


At that point the waitress appeared. Hernandez ordered his breakfast and the woman walked away.

“Well, people really took to you, that's for sure” Jakes said.

Hernandez sighed and then laughed. “Well, from what I could see, they really took to you. I don't envy you man!”

“It wasn't anything that I hadn't heard before, but it was certainly more intense”

“You happy with the outcome?” Hernandez asked.

Jakes nodded “Yeah. Yes of course.”

There was a pause.

“....but?” asked Hernandez

“Well, it's obvious that everything is going according to plan which means...”

“More work for you...” Hernandez finished.

“Hmmm. What about you. What do you think?”

“Well, it looks like a nice place to work in for a while” Hernandez said meaningfully.

“So is that a yes?”

“Won't look good on my resume though. NYPD: 20 years. Rank: Captain. Medically retired. Lecturing at Quantico. Current employment: Sheriff of nowhere county, Western West Virginia. So. Yeah. It's a yes.”

“What about your health?”

“I'll manage. There are some Sheriffs out there who are more unhealthy than me.”

“That's true, but not many have had Mesothelioma”

Hernandez grimaced and paused. “Well, you're right. But. At least it got cured in time huh?”

Another person walked over to the table. This time it was a middle aged woman. She knelt down on one knee and placed her hand on the former NYPD officer's shoulder. She was on the verge of crying.

“Mr Hernandez, I'd just like to say thank you for all that you've done for our country.” she choked.

“Well. As I said last night, I wish I could've done more.”

“My cousin was... I was speaking to her on the phone before... before...”

The woman stopped suddenly. Her eyes were wet and red. Hernandez grabbed her hand firmly and looked at her directly.

“It's okay... I know.” he said.

“Thank you” she whispered. “I'm so glad you're here”.

The woman walked back to her table, wiping her nose and eyes.

“Does that happen often?” Jakes asked quietly.

Hernandez looked embarrassed. “Not very often. Only when I meet a family member of someone who died who knew that I was there. You know I never really liked the 'hero' label...”

“But you are a hero...”

“I just don't like the label. Besides. As I said, I didn't do much.”

Jakes sat back and exhaled. He looked around. Some of the customers in the diner were at the meeting last night. He knew that some were lifting their heads and looking at them, wondering what they had been discussing, wondering what the woman had said to Hernandez, wondering what the Cracker had said to him.

He turned back to Hernandez.

“You know as well as I that these people need a hero at a time like this.” he said quietly.

Hernandez nodded. “That's why I'm in.”

Sorry for the delay. I was lacking inspiration! I originally wanted a scene depicting the town hall meeting but worked out that I could pretty much tell everything that happened through this scene with Jakes and Hernandez.

Keith Hernandez does not look like Keith Hernandez. He looks like Thomas Rosales Jr.

As for Hernandez's history, I've given plenty of hints here as to why he is considered a "hero".

Regarding the use of the term "cracker". From what I can gather, the term is similar to the Australian expression "Wog". "Wogs" were essentially Italian and Greek immigrants to Australia in the 50s and 60s. They were called "wogs" as a racist epithet but as time went by and the culture changed, the term "wog" lost its power and many 2nd generation Italians and Greeks didn't mind the term as it had become more "friendly". I realise that to some rural people who live in the Appalachians, such a term might be offensive but others might not. Read the Wikipedia article.

Quantico, Virginia, is where the FBI academy is. Everyone who saw Silence of the Lambs or The X-Files knows this.

I'm going back to teaching

For all of 2007 I basically functioned as a "house husband" after I returned from teaching in Griffith. It's had its advantages - not least the time to blog a lot - but I've decided to go back to work.

This decision is not so much an emotional one but a practical one. As many of you know my mother in law is ill with cancer. There's a very good chance that she might die this year. My wife, who has been working at Centrelink as a Social Worker, needs to stop work to care more for her mum.

So, Anna will be finishing up work this Friday, and I will begin - again - a period of "casual teaching" whereby High schools in our area who have sick teachers will ring me up and ask me to work that day. This sort of work isn't always reliable, but as Autumn is around the corner, more teachers will catch colds or go on professional development days and need their classes taken care of.

Today I visited four schools - two Christian schools, a private non-Christian school and a small public school near our home that specialises in children with physical disabilities. I handed over my resume, filled in forms, spoke to people in charge, etc etc. My experience is that once you have taught at a school once and "proved" yourself to the right staff members, you tend to become the no. 1 person they call when they need someone. When I was working like this back in 2002/2003, two schools in particular would call me up. Most of my work would come from these two schools, with one or two others thrown in as well.

Will this affect my blogging? I don't know. Usually if a school rings me up it occurs between 6.30am and 8.00pm, which means that I need to be up and showered by at least 6.30am. I may be able to spend a bit of time blogging in the "early hours" as a result. At night, though, with no lessons to prepare or exams to mark, it will be easy to blog.

So anyway, if people could pray that things work out that would be wonderful!


First the Good News

In December world production of total liquids increased by 745,000 barrels per day from October according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.20 million b/d, which is the all time maximum liquids production. For the third consecutive month world production has increased significantly. The IEA figures result in an average global production in 2007 of 85.26 million b/d, more than the average 2006 production of 85.00 million b/d and the average 2005 production of 84.10 million b/d. The EIA in their International Petroleum Monthly puts the average global 2007 production up to November at 84.53 million b/d, slightly lower than the average 2006 production of 84.60 million b/d and the average 2005 production of 84.63 million b/d.

Now the bad news

Conventional crude - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 202,000 b/d from October to November. Total production in November was estimated at 73.17 million b/d, which is 518,000 b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005.
This is the latest report from The Oil Drum, a website dedicated to the science of Peak Oil and the statistics of the oil industry. While the first graph shows that the total amount of liquid hydrocarbons has increased, the amount of crude oil produced continues to decline from the May 2005 peak. In short, this means that things like Liquefied Petroleum Gas (LPG) has managed to increase production significantly while crude oil is getting harder to extract.

Remember, these graphs (especially the second one) are clear evidence of Peak Oil. If oil could be extracted faster, it would, and oil producers like OPEC would be taking full advantage of oil at $100 per barrel. But it's not happening. The price has increased as demand has continued to climb, while supply has remained static. Either the world's oil producers are deliberately not producing enough oil (for what reason I don't know, it would certainly not be profitable for them) or there is something preventing the oil from being extracted at the desired speed. The latter explanation fits the theory of Peak Oil. If this subject is new to you, please read the Wikipedia page on the subject... and be frightened.


This photoshopped image has been shamelessly stolen from Something Awful.

PBF - it's over

This is tragic:
Nicholas Gurewitch's "Perry Bible Fellowship," the offbeat comic that ran online and in newspapers, will end next week.

"I'm making this decision for a variety of reasons, but mainly because I want to do other things besides be a cartoonist," said Gurewitch.

A "Perry Bible Fellowship" hardcover book called "The Trial of Colonel Sweeto and Other Stories" was published last fall by Dark Horse Comics.
This was my favourite internet comic. Arggh!

Global warming believers - what music do they listen to?

Well, according to the global warming last.fm group (which I have just joined), these are some of the most popular songs listened to by those who want to do something about global warming:

  • The Beatles - All you need is love (and negative net carbon emissions as well I assume)
  • Pink Floyd - Money (lots of it needed)
  • Judas Priest - Breaking the law (if need be I suppose)
  • The Beatles - Strawberry Fields Forever (so long as there's a lot a trees as well to go with those endless fields)
  • Placebo - Song to say goodbye (If nothing is achieved, why not?)
  • Pink Floyd - Brain Damage (believers in anthropogenic global warming? Nah not us!)
  • Pink Floyd - Time (it's running out)
  • Jimi Hendrix - Purple Haze (time to cut down on smog)
  • Pink Floyd - Us and Them (believers vs sceptics)

Hillary Clinton - unfit to rule

No, it isn't because I'm affected by Obamarama - for starters I haven't seen any footage at all of the guy at his rock concerts healing crusades speeches.

Before today, I wasn't really too worried about either candidate. I knew that complaints about Obama's popularity weren't sustainable, and that the whole Hillary-hating enterprise that has infected a certain subset of American society is just too intense to be believable.

It was, however, the following statement by Hillary Clinton during the last debate with Barack Obama:
I think it’s imperative that we approach this mortgage crisis with the seriousness that it is presenting. There are 95,000 homes in foreclosure in California right now. I want a moratorium on foreclosures for 90 days so we can try to work out keeping people in their homes instead of having them lose their homes, and I want to freeze interest rates for five years.
It's this sort of statement - a populist solution that has little serious economic thinking behind it - that makes me worried.

I remember back in the late 1990s here in Australia when Pauline Hanson was running around getting votes and attention for her far-out brand of conservative populism. Apart from the blatant racism of her policies, it was her economics that ended any respect she had amongst people in the know. She went on about a strange new tax system that no one understood and proposed things like community banks lending out money to people in rural areas at a fixed rate of 1% interest. But that wasn't the worst bit. No. One of her lackeys - I think it was David Ettridge - declared that it was official One Nation policy to prevent overseas companies and individuals from investing directly in Australian businesses. When a reporter mentioned that overseas investment was a significant form of economic growth for Australia and wouldn't this policy basically ruin the economy, Ettridge responded by saying that the government could just "print the money" to use rather than getting it from overseas. At that point pretty much every serious voter with knowledge of basic economics said "these guys are not fit to rule".

And that is how I feel now about Clinton regarding this statement.

This idea - freezing interest rates and stopping foreclosures - is certainly a populist idea. However you can't just bang your fist onto the desk and say "no more foreclosures!" and "interest rates will stay where they are" (and by interest rates she probably means the interest rates on current mortgages, not the interest rates set by the Federal Reserve). You might as well argue for price controls or reducing the budget deficit simply by getting a big pen and crossing it out on a bit of paper.

If such policies were enacted they would be disastrous, and create more problems that they solve... if they solved anything in the first place.

Of course, with highly trained and competent advisors at her beck and call, this sort of policy would be nipped in the bud straight away if she managed to become president. So either Clinton knew this would happen and said it anyway (which would make her a liar) or she actually did think it would work and did not realise that her advisors would change her mind (which essentially makes her a fool).

Some basic understanding of economics needs to be essential for any politician - but especially those who aim for a higher office like President of the United States. This "solution" presented by Hillary Clinton as a way of dealing with the current economic crisis has its basis in a deadly combination of populism and ignorance. As soon as I read this statement from Clinton, I immediately determined that she is "not fit to rule".

© 2008 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/

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Meanwhile, in Parliament today

Tony Abbott produces a cardboard cutout of Kevin Rudd.

The full report from the ABC is here.

That bloke to the bottom left of Tony Abbott - he looks like Kel Knight from Kath & Kim.

The Kel Knight lookalike is National party member Luke Hartsuyker, and was the one who brought the cutout in. He was ejected from the chamber as a result of his stunt.

Bush's 19% disapproval - now looking like an error

Some more recent polls have been taken. They don't support the recent poll.

The American Research Group poll was conducted between 16-19 February and gave an approval rating of 19%. A Diegeo/Hotline poll conducted between 14-17 Feburary and a Fox/Opinion Dynamics poll conducted between 19-20 February (visible here) both have presidential support in the 30% range.

The only reasonable conclusion to come to is that the ARG poll was badly wrong.


This photoshopped image has been shamelessly stolen from Something Awful.

Back to the seventies with Stagflation

From the department of I-told-you-so:
Lately, many people are hearing an echo — faintly perhaps but distinctly audible — of the stagflation of the 1970s.

Even as economic growth sags, oil and gasoline prices are surging to new heights. Gold is on the rise, along with the prices of such basic commodities as wheat and steel. And on Wednesday, with the latest government report on consumer prices, there are signs that overall inflation, after years of only modest increases, may be breaking out of its box.

For the Federal Reserve and its chairman, Ben S. Bernanke, all this could not come at a worse time. With the credit markets in disarray from the collapse of the housing bubble, Mr. Bernanke is cutting rates in a headlong rush to blunt the risks of recession.

But in putting its emphasis above all on reviving growth, America’s central bank, according to some economists and even a few Fed officials, may face a bigger inflation problem down the road.

“They are cutting rates with a bill to be paid later," said John Ryding, chief United States economist at Bear Stearns. “The question is not, will we get inflation, but how much will it cost to stuff the genie back in the bottle. This has the feel of 1970s stagflation.”

A sanitation officer on board the Death Star

Well, it was some stormtrooper's birthday last night and they were having a pizza party with cake and ice cream. The birthday boy eats a ton of crap, like five or six pieces of pizza, two or three pieces of cake, and a whole bowl of ice cream. When those guys want to pack away the food they can do it.

So the clones see this, but there isn't enough pizza and cake left for them to eat that much. What do they do? They start destroying the locker rooms and the lounge area and everything they can get their hands on. They're basically rioting until the officers bring in more pizza and cake.

Then it just gets insane. The officers bring in about two hundred pizzas and twenty big cakes for these guys and the clones just start tearing them apart with their bare hands. I have the security video of this. I've seen Rancors eating that wasn't as gross and they were eating people.

If you haven't figured out where this story involves me, stop a second and think about what happens when about a hundred identical dudes eat way more food than they should all at the same time. They carpet bombed the heads within a half mile radius of the barracks. Every toilet jammed full of stormtrooper loaves and too much toilet paper.
- Read the whole article here at somethingawful.

Bush approval ratings suddenly drop

From the department of cliff diving:
George W. Bush's overall job approval rating has dropped to a new low in American Research Group polling as 78% of Americans say that the national economy is getting worse according to the latest survey from the American Research Group.

Among all Americans, 19% approve of the way Bush is handling his job as president and 77% disapprove. When it comes to Bush's handling of the economy, 14% approve and 79% disapprove.

Among Americans registered to vote, 18% approve of the way Bush is handling his job as president and 78% disapprove. When it comes to the way Bush is handling the economy, 15% of registered voters approve of the way Bush is handling the economy and 79% disapprove.
The fact that most Americans don't like Bush is now well entrenched. Bush's approval ratings dropped below 50% somewhere between his re-election and Hurricane Katrina, and has continued to drop.

What is notable is that this drop in support appears to be very precipitous. The January 2008 poll indicated a 34% approval rate, while the February poll drops down to 19%. That's not a drop in support, it's cliff diving!

The poll itself was not conducted by any of the major polling companies, so we need to take that into consideration. As soon as I saw this poll I checked out the pollingreport.com page on Bush's support which summarises monthly polling from major polling companies. So far, there has yet to be any major drop in support like the one experienced by this particular poll. Nevertheless, this poll has been conducted recently (less than a week ago), while the latest ones at pollingreport.com are dated in early February.

But what this poll - conducted by the American Research Group - indicates is that their previous polling was in line with the majors. Up to January 2008, ARG polling matched with polling conducted by CBS, Pew, NPR, Fox and others. Basically ARG polling indicated that Bush's support level was hovering around 34%.

I would suggest, therefore, that this calamitous decline in support has actually occurred and is likely to be revealed in the next week or two by the major polling companies.

But what is causing this drop in support?

Bush's decline in support has been going on for a while. Essentially, two-thirds of Americans have disapproved of the Bush presidency for about three years. Yet in this time there has always been a "stubborn" (or "loyal", depending upon your bias) minority who have stuck through with Bush. If this polling is correct (and it may not be), just under half of these stubborn supporters have suddenly fallen out of love with the president. Moreover, it appears as though 3 out of every 4 Americans now disapprove of the president.

Polls come and go, and there is certainly evidence that the people can sometimes change their minds in hindsight long after the president has gone - which is certainly what happened to Truman. Oftentimes, though, drops or increases in presidential support come as a result of some major decision or speech or whatnot. Jimmy Carter's "malaise speech", for example, marked a significant decline in his popularity as recorded by the polls at the time.

But what has Bush done between January 2008 and February 2008 that caused this? I check the internet and the news every day, and I don't remember President Bush saying "I hate America" or "The people who voted for me are idiots". I don't remember him signing a treaty allowing Mexicans to legally kidnap Americans and take them across the border to be forced to work in their underground Burrito mines. I don't remember him being photographed in bondage gear while Dick Cheney whipped him with one of the original declarations of independence.

Something has happened to the American people - specifically loyal Bush supporters - between January 2008 and February 2008 that has caused support for the president to plummet.

Assuming that this poll is right - and polls can be wrong - I'm thinking that there has been a rather large decrease in small business revenue as well as a rather large increase in unemployment. Let's see if I'm right.

Movie quotes

Mystery Man: We've met before, haven't we?

Fred Madison: I don't think so. Where was it you think we met?

Mystery Man: At your house. Don't you remember?

Fred Madison: No. No, I don't. Are you sure?

Mystery Man: Of course. As a matter of fact, I'm there right now.

Fred Madison: What do you mean? You're where right now?

Mystery Man: At your house.

Fred Madison: That's f*****g crazy, man.

Mystery Man: Call me. Dial your number. Go ahead.

[Fred dials the number and the Mystery Man answers]

Mystery Man: [over the phone] I told you I was here.

Fred Madison: [amused] How'd you do that?

Mystery Man: Ask me.

Fred Madison: [angrily into the phone] How did you get inside my house?

Mystery Man: [over the phone] You invited me. It is not my custom to go where I am not wanted.

Fred Madison: [into the phone] Who are you?

[Both Mystery Men laugh mechanically]

Mystery Man: [over the phone] Give me back my phone.

[Fred gives the phone back]

Mystery Man: It's been a pleasure talking to you.

Deflation is under control in Zimbabwe

From the department of deflation is bad:
Zimbabwe's annual inflation rate has soared to over 100,000 per cent, according to official figures.

"The year-on-year inflation rate for the month of January 2008, as measured by the all items Consumer Price Index (CPI) stood at 100,580.2 per cent, gaining 34,367.9 percentage points on the December rate of 66,212.3 per cent," the Central Statistical Office (CSO) said in a statement.

"This means that prices as measured by the all items CPI increased by an average of 100,580.2 per cent between January 2007 and January 2008."

Inflation of food and non-alcoholic beverages reached 105,428.0 per cent while non-food inflation was 97,885.7 per cent."

The southern African country's economy has been in a tailspin for the past seven years, characterised by shortages of basic commodities like sugar, cooking oil and petrol.

While the products are readily available on a burgeoning black market, many Zimbabweans have resorted to buying their essentials from neighbouring countries like Botswana, South Africa and Zambia.

At least 80 per cent of the population is living below the poverty line, often skipping meals to stretch their income which frequently fails to cover basic needs.

The government has introduced several measures to try and curb inflation, including imposing a ceiling on the prices of some goods and services and knocking three zeros off the country's currency.

The CSO last released monthly inflation statistics to the media in September. The November figure was only released by the central bank chief in a statement last month.
It's good to know that Zimbabwe isn't going to collapse into some deflationary spiral anytime soon. That would ruin the country.

Irony in Dr Zhivago

Why the hell can't a grown-up man talk to a grown-up woman without being suspected of some ulterior motive!
- Yury Zhivago, while talking to Lara, long before their friendship turns into a love affair. (Chapter - "Farewell to the past")

NSW Labor - as corrupt as you can get

Morris Iemma was battling an escalating corruption scandal last night that threatened to draw in two of his most senior ministers and to bring down one of the state's biggest Labor-controlled councils.

Joe Scimone - a close ally of the Minister for Ports and Waterways, Joe Tripodi, and a friend for 30 years of the former Wollongong lord mayor and current Police Minister, David Campbell - stood down from his job managing property within NSW Maritime yesterday pending the outcome of an Independent Commission Against Corruption inquiry.

There are allegations before the commission that Mr Scimone, a former Wollongong Council officer, paid $30,000 last year to conmen posing as commission officers who were offering to destroy evidence against him.

Mr Tripodi's office confirmed last night that Mr Scimone, a former federal Labor preselection candidate and Labor branch president, had been stood down on full pay.

The future of Wollongong City Council was in doubt last night as some of its ALP councillors were further implicated in the growing sexual and corruption scandal inside the council.
And that's why I don't vote for the ALP. I am sick of how easy it is for corruption to infiltrate politics. I may be down on John Howard and his government, but at least there was little evidence of this sort of corruption. If the Rudd government gets drawn into a corruption scandal in the next few years, I wouldn't be surprised.


Why is US Federal government debt so important?

When governments go into debt, they are essentially borrowing money from the marketplace to cover their costs. Governments, like businesses and households, often spend more than they gain in revenue. In order to the cash flowing, money has to be borrowed.

Keynesian fiscal policy worked out that government fiscal policy should be completely neutral over the course of the business cycle. In practice, this meant that government could (and should) run fiscal deficits during times of economic hardship, while also running fiscal surpluses when things are good. Overall, though, governments should balance their books.

The problem with this sort of activity is that governments have found it easy to run long term deficits. It is easy for governments to cut taxes and/or increase spending. It is harder for them to increase taxes and/or reduce spending. The reason for this is political - those in power want to please the electorate rather than being fiscally responsible.

Long term and growing government deficits are, however, a source of great hardship to the countries that run them. Countries which are suffering from large net debt include Japan, Jamaica, Belgium and Italy. In the case of these countries, net government debt runs to around 100% of GDP or more.

Imagine you had a credit card in which you owed more than you brought home in a year. If you earn, say, $50,000 in a year, imagine having a $50,000 credit card debt.

The United States is hardly at the debt levels of the countries I have mentioned - but it is getting there. The CIA World factbook has it at around 36.8% of GDP (2007 est.), but other sources indicate that it has exceeded 60% of GDP.

The problem is that when deficits get out of control, interest payments on debt can quickly begin to dominate government spending. According to this website, the Federal government spends nearly $700 billion in health costs (2007) and nearly $600 billion on defence. The next highest is the Department of Agriculture, which is below $100 billion. Other spending includes the department of education at around $61 billion and NASA at $15 billion.

So how much does the US Federal Government pay in interest charges on money that is has borrowed over the years? Well, according to the latest figures, the amount of interest paid in 2007 was $429,977,998,108.20. Or, put simply:

$430 billion

in interest payments alone

in 2007

Now I don't know about you, but when NASA gets $15 billion and education gets $61 billion, that interest bill looks big, and it is.

Think about what might have happened had the US Federal government been fiscally responsible for the past 25 years. Imagine if net debt was negligible or even zero. It would mean that that $430 billion could have gone in tax cuts or spending increases over time.

US GDP in 2007 was $13.75 Trillion. The amount of money the US government is paying back in interest represents 3.13% of GDP. US Agriculture represents 1% of GDP. Debt repayment is over three times the size of the Agricultural sector!

When a business a household or a government chooses to run up massive amounts of debt, they are using the future to pay off the present. But the higher the debt gets, the more it damages the future. Some belt tightening must occur - which is always going to be hard on the present - or else borrowing money will become harder. In the case of governments who run massive public debt, the effects will be higher market interest rates.

In 2005 I predicted very hard times ahead for the US economy. I predicted that a combination of Peak Oil, a housing market downturn, a large current account deficit and increasing US Federal debt will produce a "perfect storm" that is likely to damage the US economy for years to come. The housing market has definitely imploded, Peak Oil is driving oil prices back up above $100 per barrel again and the large current account deficit has helped the US Dollar scrape the bottom of its historical value. But when you also consider that one of the US government's largest expenses, after health and defence, is paying back interest equivalent to over 3% of GDP, you have to wonder how bad things are going to get.

© 2008 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/

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This is Beamer... and me!

And probably many many many people reading this...



Castro Retires

From the department of crisi-tunity:
Ailing Cuban leader Fidel Castro said on Tuesday that he will not return to lead the country as president or commander-in-chief, retiring as head of state 49 years after he seized power in an armed revolution.

Castro, 81, who has not appeared in public for almost 19 months after undergoing stomach surgery, said in a message to the communist nation that he would not seek a new presidential term when the National Assembly meets on February 24.

"To my dear compatriots, who gave me the immense honor in recent days of electing me a member of parliament ... I communicate to you that I will not aspire to or accept -- I repeat not aspire to or accept -- the positions of President of Council of State and Commander in Chief," Castro said in the statement published on the Web site of the Communist Party's Granma newspaper.
It has been years, probably decades, since Communist Cuba posed any real threat to the United States. Ever since the heady days of the 1959 Revolution, the 1961 botched Bay of Pigs invasion and then the Cuban missile crisis in 1962, Castro has led Cuba to, well, hardly a worker's paradise, but hardly a basket case either.

By some measurements - especially those quoted by Michael Moore - Cuba surpasses the United States. Infant mortality rates are lower than the US and doctors are plentiful enough for people to have adequate state provided health care. These stats are true - and Michael Moore is right to use them - but they can hardly be used to show that Cubans are up there with the best.

Nevertheless, the United Nations Human Development Report has Cuba sitting at a HDI of 0.838, which indicates that it is considered a "high human development". The HDI number is determined by giving equal weight to three important factors - GDP per capita (PPP), average lifespan and educational levels achieved. By this index alone, it could be argued that Cuba represents the only communist state in history to have actually achieved what it set out to do - provide an ever-increasing standard of living for its people. Cuba is not a third-world country and is edging closer to becoming a first world country.

And it is this increasing standard of living that has allowed Castro to remain in power for nearly 50 years. Despite all the past rumblings of counter-revolution in his country, the fact is that most Cubans are probably quite happy with the way their country has gone under Castro's leadership.

Of course, Castro is no angel. I'm certain that human rights violations occurred under his rule (especially early in his presidency). I'm also certain that he rewarded friends and family with juicy positions of power and wealth above and beyond the reaches of ordinary Cubans.

So when you take Castro's contribution to the nation in net terms - the benefits minus the evil - he comes out looking pretty good.

So what of Cuba post Castro?

Despite my comment above about Cuba being the only successful Communist country in history, it turns out that the economy itself is hardly anything Marx or Lenin or Mao or Kim Jong Il would be happy with. While much of the economy is planned, about one quarter of the economy consists of private businesses. In technical terms, I would not describe Cuba as Communist since a strict definition of Communism means that 100% of the economy is planned and controlled by the state. Cuba is more akin to Democratic Socialism which is more tolerant of private industry and letting the market have some say in what goods and services get produced (though I would probably be too generous in describing Cuba as being Democratic, when it is most obviously not!).

The most obvious barrier that needs to be removed is the US trade embargo. This embargo has been in place since 1962 - a 46 year old trade barrier that serves no useful purpose any more. As I have said earlier, Cuba has not been a threat to America for many decades, despite having the same ruler in that period. Now that Castro is stepping down, the US should "extend the olive branch" and resume trade with this important nation on their doorstep. Both countries will benefit.

Radical economic and political change is NOT what Cuba needs. Yes, change probably does need to occur and some aspects of the economy that are planned by the state should be handed over to private industry to do more efficiently - but this needs to be done patiently and judiciously. In the same way, moving Cuba from a one-party state into a more representative democracy is needed too, but not too fast and certainly not at the expense of economic and social stability.

Cuba also needs to look at its past and examine more objectively the events surrounding the 1959 revolution and Castro's consolidation of power in the years after that. Human rights violations need to be exposed and the revolution needs to be demythologised - but not as some sort of national shame, but as part of facing up to the future, much in the same way as South Africa has done with its Truth and Reconciliation Commission, which has exposed much of the sins of South Africa's past without destroying the people of the present.

Of course Cuba should change - but, on the other hand, there is much in Cuba that works. For years the country has refused to co-operate with the United Nations in determining the country's Human Development Index. Now that they have accepted, the UN report shows that Cuba's standard of living is quite high compared to the rest of the world, and surpasses many of its neighbours. Any change that reduces this standard of living should be put aside.

Castro is one of the main reasons why Cuba is in such a good state today. Now that he has retired, a new president will be "elected" and it is hoped that this man will continue the good work that Castro has achieved but also offer something that Castro could not - a more democratic and free Cuba.

Oh dear

Oil nears $98.

Will someone tell me when this recession-about-to-happen will have a deflationary effect upon oil prices?

US Banks have borrowed $50 billion from the Fed

From the department of the lender of last resort:
Banks in the United States have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times.

The newspaper said the use of the Fed's Term Auction Facility (TAF), which allows banks to borrow at relatively attractive rates against a wide range of their assets, saw borrowing of nearly $50 billion of one-month funds from the Fed by mid-February.

The Financial Times said the move has sparked unease among some analysts about the stress developing in opaque corners of the U.S. banking system and the banks' growing reliance on indirect forms of government support.
I'm going to assume here that this report is about unusual borrowings rather than the ordinary ones that banks make from the Fed from time to time.

All central banks function as the "lender of last resort" which basically assures depositors that, even if the bank goes bankrupt (which would be ironic), their money can still be withdrawn. In return, banks are supposed to follow rules set down by the central bank on how it lends money.

What is concerning about this current situation is that more and more banks (I am assuming) are needing to borrow money from the Fed. While at one point we should be happy that our modern financial system has this "safety net" in case of accident, it is worrisome that this safety net is currently being utilised.

To put it simply - this increased borrowing by banks shows that they are suffering rather worrisome losses. In the short term, the Fed's lending of money is a good thing because it props up an increasingly fragile financial system. In the medium-long term this is bad, because such lending will probably have an inflationary effect in a monetary environment that is already overheating, despite the current downturn. Stagflation in other words.