Dow 7062.93 - another prediction

From the beating my own drum department.

The Dow Jones Industrial Average fell 119.15 points, or 1.7 percent, to 7,062.93, leaving it 50 percent below its 2007 record and at its lowest level since May 1997.

OSO's 25 predictions for 2009:
The Dow Jones Industrial Average will drop below 7082.26.

Big Fall in US GDP

Revised 2008 Q4 GDP figures show that the US economy changed by:


Source (pdf, 148kb)

This is revised downwards from the initial release of -3.8%.

2008 Q3 GDP remained at -0.5%.

Bloomberg: Worst since 1982.

Entrail reader median figure was -5.4%, so this is higher than expected.

Current Dollar GDP for 2008 Q4 is now $14.2003 Trillion. I have been using $14.26 Trillion for the debt watch.

Prelim debt watch figures:

GDP: $14.2003 Tr
Public Debt: $6,530,807,049,597.79 (2009-02-25)
Debt/GDP Ratio: 46.0%


This is nice

Where the streets have Dutch names:
Protesters have demonstrated outside the Department of Finance against U2’s decision to move their tax affairs to the Netherlands to avoid paying tax on their royalties in Ireland.

The protest was organised by the Debt and Development Coalition Ireland (DDCI) which campaigns on issues related to the developing world. The coalition contains such organisations as, Trócaire, Oxfam and various Catholic missionary orders.

U2 moved their publishing arm to the Netherlands in 2006 after the Government capped tax-free earnings for artists at €250,000. Previously, U2 had been one of the biggest beneficiaries of Ireland's tax-free status for artist royalties.

The coalition met Minister for Finance Brian Lenihan who pointed out that the Government had abolished the Cinderella rule where people could say they had not spent a day in Ireland if they left by midnight.

“We have tax treaties with other countries that regulate where you pay tax. There is a problem with smaller countries that have to set up deliberate tax havens. We are raising that at EU level,” the Minister said though he did not address the specific issue of U2’s tax affairs. The band are resident in Ireland for tax purposes.

Accounts for 2007 for U2 Ltd show the band paid out more than €21 million in wages in 2007 in a relatively quiet year where they were not touring or releasing new material.

Bono impersonator Paul O’Toole reworked the lyrics of I Still Haven’t Found What I’m Looking For to mock the band’s decision. “I know avoiding tax ain’t fair/it’s just because I’m a millionaire, I don’t need to pay like you, no, I won’t pay like you/because I still haven’t learned about democracy.”

Mr O’Toole said: “Their music does not bother me. It is their policy of avoiding tax that bothers me. Bono talks about dead kids, but he won’t pay a penny towards it.”

Mr O’Toole posed with a mock-up of a donation to the world's poor in one hand and a large sack of unpaid tax in the other.

The DDCI is following it up with the launch of an “international song contest” inviting re-worded versions of U2 classics to highlight the band’s stance on tax.

It is timed to coincide with the release of U2's new album No Line on the Horizon which goes on sale at midnight on Friday.

DDCI co-ordinator Nessa ní Chasaíde said the decision to holding the protest outside the department of Finance was to highlight the fact that U2’s tax avoidance measures deprives the Irish exchequer of taxation revenue that could be spent on development aid.

“Bono has championed the call for increases in aid to impoverished countries, yet in his personal life he is engaged in tax avoidance issues and it is tax avoidance that is undermining the possibility of developing countries fighting their way out of poverty,” she said.

“The practice of being able to move your finances around easily and without high levels of transparency is extremely problematic for developing countries. The kind of practice that U2 is engaging in is part of that problem.”

Nobody from U2 was available for comment, but the band will defend their tax measures in an extensive interview to be published in this newspaper on Friday.
I always preferred it when they were parodying the whole "rich rock band" thing, not actually being it.


Damn lies

I rarely take in much of what liberal blogs say these days. Some of it is intelligent but some of it is laboured and narrow focused. I've made it clear here on my blog about concerns I have about Obama's stimulus plan and that pretty much puts me at odds with many progressive bloggers and econ-bloggers.

But I have to say, there is something like a magnitude of difference between progressive blogs say and what the "Faithful 20%" super-conservatives go on about. Reading their blogs is sickening as they go on about Chairman Obama turning the US into America S.S.R. with his terrible, horrible no good stimulus plan and how he is going to completely wreck the economy with it.

I have been warning for years about the coming crash. Moreover, I have clearly identified the main culprits of the crash as being the Republican Party and their policies under Reagan, Bush 2 and the congresses they controlled (either partly or fully) during the reign of those two presidents.

And just to prove how nice and bipartisan I am, I'll say clearly that George H.W. Bush wasn't much to blame for this, and nor will I say that the Gingrich inspired Republican Congress between 1994 and 2000 is to blame for this mess. Moreover I'll also point out that Democrats under Reagan who helped create the national deficit are to blame as well for being stupid.

But when you look at the big picture, the main culprits are the Republicans. The Republicans ran up huge budget deficits and engaged in tax cutting voodoo economics for most of the period 1981-2006.

So when Obama starts throwing money left right and centre, the super-conservatives suddenly become all economically righteous, throwing out their pathetic chests and rattling their dull swords as they predict dire consequences for such fiscally irresponsible behaviour.

Irresponsible? To be honest they're probably right. Yet to ignore their own party's role in creating the dire circumstances the world economy is in shows up their hypocrisy and blind partisanship. From now on, any drop in the sharemarket, any rise in unemployment, any contraction in GDP, any rise in bankruptcies, can all be blamed upon Chairman Obama and his hand picked politburo in the White House, rubbing their hands in glee at America's downfall.

Intelligent conservatives would be more circumspect. They would pick holes in Obama's plans while acknowledging the damnable role that the GOP had in creating the mess in the first place. They would criticise the president without resorting to insults - not least until the president's poor record demanded it (something that progressives did to Bush).

And the sad thing is that, if things get really bad, we can probably begin to expect violence from these people. Even from some who call themselves Christians and who have drunk the super-conservative Koolaid. And they would participate in the violence with a clear conscience, motivated by the knowledge that they are fighting evil and protecting their liberty. Such is the beginnings of terrorism.


Moron Ubuntu Names

Confirming the fact that I am lacking basic skills, a commenter on my Ubuntu names post pointed out that Ubuntu 10.04 should actually be the letter "L", not "M" as I posted.

(puts head in hands, groans in frustration, kicks self in shins)

Anyway, I began checking out the "L" names and eventually worked out that there are some great adjectives and animal names that Ubuntu should NEVER put together. These are:

  • Lazy Lemur
  • Lethal Lemming
  • Large Lice
  • Lewd Leech
  • Ludicrous Louse
Imagine Ubuntu 10.04 Lethal Lemming being released to universal horror and amusement.

Quote of the Day

neilk from Reddit:
Let's be clear. The Democrats are the party of special interests, corruption, and a policy of aggression. So are the Republicans. The difference is that the Democrats draw the line at pursuing these goals to the point where the destruction of the United States becomes plausible.

OSO's debt watch

Public Debt on 2009-02-19:

$6.50 Trillion

US GDP in 2008 Q4:

$14.26 Trillion

Debt/GDP Ratio:


[Debt ÷ GDP] x 100 )

Public Debt/Person:


(Public Debt ÷ US Population)


Public debt is $6,495,008,105,385.21. Source
Latest GDP is $14,264.6 billion. Source
Population in January 2009 is 305,952,152. Source (Resident population plus armed forces overseas).

* Census figures show a downward revision of population figures.
* Public Debt figures have soared in the past month. Debt has increased by over $206 billion since the 14th of January.
* Revised GDP figures for 2008 Q4 are due out on 2009-02-27 (this Friday)

Ledger gets Oscar

Late Australian actor Heath Ledger has won the Oscar for best supporting actor at the 81st Academy Awards in Hollywood.

Ledger, nominated in the best supporting actor category for his performance as The Joker in The Dark Knight, was favourite to win.
That's one of my 25 predictions for 2009 fulfilled, though pedants would point out that I predicted a Best Actor Oscar, not best supporting Oscar.


The World's Tallest Mountain

I love factoids like this.

The World's tallest mountain depends upon measurement.

  • Mount Everest is 8,840m above sea level.
  • Mauna Kea is 10,203m above its base on the floor of the Pacific Ocean.
  • Chimborazo is 6,384,000m from the centre of the Earth.
There. That should sustain your next dinner conversation for at least 10 minutes.

Ain't gonna happen

Part one:
President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.

Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity. The deficit Obama inherited on taking office last month was $1.3 trillion. The administration next week is to release an overview of its budget proposal for the 2010 fiscal year, which begins Oct. 1.
Part two:
U.S. Secretary of State Hillary Clinton urged China to continue buying Treasury bonds to help finance President Barack Obama’s stimulus plan.

The two nations’ economies are intertwined and it wouldn’t be in China’s interest if the U.S. were unable to sell its government debt, Clinton said in an interview with Shanghai’s Dragon Television today. China knows it needs a healthy American economy as its biggest export market, she said, adding that the U.S. must take “drastic measures” to stimulate growth.

“We are truly going to rise or fall together,” Clinton said. “By continuing to support American treasury instruments, the Chinese are recognizing” that interconnection.
America: the land of (pipe) dreams.

The (bad) luck of the Irish

Do you hear that sound Mr Anderson? That is the sound of inevitability:
DUBLIN (AFP) – Up to 120,000 protesters brought Dublin city centre to a standstill on Saturday over government austerity measures aimed at stabilising the once high-flying economy now wracked by recession.

The demonstration came a day after the global economic crisis led to another political casualty elsewhere in Europe, with Latvia's prime minister quitting as his country grapples with deepening recession.

Organised by the Irish Congress of Trade Unions (ICTU) and featuring teachers, police, civil servants and others, the Irish protest was the "first step in a rolling campaign of action," ICTU general secretary David Begg said.

Police put the number of protesters at up to 120,000.

Marchers are particularly opposed to a pension levy on some 350,000 public servants which is designed to save about 1.4 billion euros (1.8 billion dollars) this year.
Here's how Irish unemployment has been faring recently:

Ouch! 9.2%! And that's up from 8.3% in December and 7.8% before that. Jobless figures in Ireland are shocking, especially when compared to recent years where it has hovered between 4.4% and 4.6%. Before the "Celtic Tiger" days, Ireland's unemployment was often above 10%. It looks like the good fortune that has blessed Ireland in the last 10 years has developed into some rather bad fortune.

This is definitely the worst economic crisis since the Depression. Time will tell whether we surpass it.

Update: According to The Economist, Irish government bonds are running at 5.41%. Compare this to the 2.97% rate offered by Germany for the same currency and you can see how the market has responded to Ireland's fiscal situation (the Irish government ran a budget deficit of -6.6% in 2008).


Bailout adds to UK Public Debt

Well this wasn't unexpected:
Gordon Brown suffered a double blow yesterday when government statisticians recalculated Britain's national debt at £1.5tn and the CBI accused the prime minister of lacking a coherent economic recovery strategy.

As the prime minister warned in Rome that the world was being hit by an "economic hurricane", his fightback plan at home was complicated when the Office for National Statistics raised the prospect of Britain's national debt rising to 150% of national income from its current 48%.

The ONS classified Lloyds and Royal Bank of Scotland as public corporations and thus added all their liabilities - up to £1.5tn - on to the taxpayers' balance sheet. The ONS said the recapitalisations of Royal Bank of Scotland and Lloyds Banking Group meant they had in effect become public corporations, which would have to add the full extent of their liabilities to the national debt.

The move, which the Treasury dismissed as a "technical classification" with few policy implications, prompted Tory warnings that Britain was now facing a debt crisis. Kenneth Clarke, the shadow business secretary, called on Alistair Darling, the chancellor, to introduce a dramatic reduction in the growth in public spending from this April, rather than waiting until next year.

"We are going to quite staggering levels of public debt," Clarke told the BBC. "The voters are going to have to pay the interest on all this mounting debt. "
48% is bad enough. For that to be raised to 150% of GDP is, well, staggering. I can see the same thing happening in the US as well as a result of the bailout.

All this proves one thing - governments should have been fiscally responsible in the years and decades prior to this economic crisis. Many people complained about growing debt levels and how it will come back to bite later on but they were ignored by those in power.

So what will happen?

If UK public debt gets to 150% of GDP, it will mean that public spending will be dominated by debt servicing. Last year I blogged about Italy, which has public debt of around 107% of GDP. As a result, debt servicing (paying interest on debt as well as paying back government bonds when they mature) ate up 41.2% of the budget. It also represented some 17.9% of GDP.

That's right - the amount of money the Italian government paid back in debt servicing represented 17.9% of GDP. Debt servicing outstripped education spending by 5 to 1, health spending by 22 to 1 and spending on public order by 12 to 1.

The result of huge deficits is less spending on public works. Anything that the government spends money on is crowded out by the need to service debt. If public debt does hit 150% in the UK, you can be certain that the result will be either massive cuts in education and health spending, or else substantial tax rises, or else a combination of the two.

And this goes for all countries - including the US. If the cost of Bush's bailout and Obama's stimulus pushes public debt levels beyond 100% of GDP, the cost of servicing debt and paying off the principal will choke society and the economy.

All this makes me glad to be in Australia. Even though our currency is small and is blown by the winds of international finance, at least we completely paid off our public debt. Rudd's stimulus plan is therefore much more sustainable and less likely to "mortgage the future" like the UK or the US.

Ubuntu names

Ubuntu is the most popular Linux distribution and deserves to be. It is the most user-friendly desktop version of Linux. Of course it has its problems, but I switched over from Mandriva to Kubuntu (Ubuntu using KDE) and found it very useful. I now use Xubuntu (Ubuntu running Xfce).

One of the great things about Ubuntu is that there is a major software release every six months. This allows incremental improvements and additions to the software, ensuring that any bugs get fixed up or new features added quickly.

Unlike other software releases, the version number is based not upon an ascending order but upon the release date. The latest version is 8.10, which means it was released in October 2008.

Like a lot of free software, Ubuntu has quirky names for each release. These names are definitely not created by a mainstream marketing department, as you can see:

  • 4.10 - Warty Warthog
  • 5.04 - Hoary Hedgehog
  • 5.10 - Breezy Badger
  • 6.06 - Dapper Drake
  • 6.10 - Edgy Eft
  • 7.04 - Feisty Fawn
  • 7.10 - Gutsy Gibbon
  • 8.04 - Hardy Heron
  • 8.10 - Intrepid Ibex
The names for the next two releases have already been released:
  • 9.04 - Jaunty Jackalope
  • 9.10 - Karmic Koala
Ha! I can't wait for Karmic Koala. What a name.

As far as 10.04 is concerned, here's a list of adjectives and Animal nouns.

  • Mysterious Minnow
  • Mighty Monkey
  • Mystical Magpie
  • Magic Manta
  • Merry Mantis
  • Magnificent Mockingbird
  • Maximum Mouse
  • Major Moose
I like "Magnificent Mockingbird". "Mighty Monkey" could result in the version being dubbed "King Kong".

So what are you waiting for? Come on people, ditch Windows and install Ubuntu Linux! (and that includes you Sam Norton).

Zeroflation: the US achieves price stability

The latest CPI has come out (here pdf 98.1kb) and it shows a monthly increase in inflation of just 0.3%.

The year on year inflation figure is 0%.

Of course, the reason why inflation has suddenly dropped from high to zero is because the economy has contracted and loads of people are out of work.

Nevertheless, I would argue that keeping the price of money stable is essential for any sort of recovery to occur. John Maynard Keynes says this in A Tract on Monetary Reform:
[The economy] cannot work properly if the money... assume[d] as a stable measuring rod, is undependable. Unemployment, the precarious life of the worker, the disappointment of expectation, the sudden loss of savings, the excessive windfalls to individuals, the speculator, the profiteer--all proceed, in large measure, from the instability of the standard of value.

It is often supposed that the costs of production are threefold... labor, enterprise, and accumulation. But there is a fourth cost, namely, risk; and the reward of risk-bearing is one of the heaviest, and perhaps the most avoidable, burden on production....[T]he adoption by this country and the world at large of sound monetary principles, would diminish the wastes of Risk, which consume at present too much of our estate.
In other words, when the price of money is stable, the "wastes of risk" are lowered.

Remember, money functions in the following way:
  1. As a way of measuring the worth of goods and services.
  2. As a means of exchange for these goods and services.
  3. As a commodity that is bought and sold.
In order for 1. to work effectively, the value of money must remain the same. In order for 3. to work alongside 1., the money supply must be expanded or contracted according to demand. If the demand for money drops, so should supply. If the demand for money increases, so should supply.

Normally, 1. is not utilised properly. Markets will naturally use money as a way to determine worth, but if the value of money keeps changing (either through inflation or deflation) the market is more likely to make mistakes in investing, borrowing, producing and consuming.

Now that "zeroflation" has been achieved, it is important for the Federal Reserve to adjust interest rates upwards in case of inflation, or to inject more money into the economy in case of deflation. So long as the long term inflation rate is zero (and neither negative or positive), the occasional monthly foray into deflation or inflation can be sustained.

Will the Fed do this? Highly unlikely.


Yet to hit bottom

One way to tell the length of an economic downturn is to examine signs of recovery. In recessions past, whenever important stats began to "bottom out" (ie declined at a very slow rate), economic growth would be positive and unemployment would, eventually, reach a peak and then decline. Check out the following graph:

As you can see, unemployment usually continues to increase once a recession is over, but reaches a peak a while afterwards. This particular phenomenon, however, is only true of the last two recessions. Previous to this, unemployment peaked pretty much at the same time as a recession officially ended (see here).

Assuming that this phenomenon continues, can we see any sign of stats "bottoming out"? Not really. Calculated Risk, which reports on stats on a daily basis, continues to broadcast economic woe:
For the US, at least, 2009 Q1 seems to be an economic contraction. The recent stimulus package should have some impact both on stats and economic growth, and it is possible that Q2 will see some growth as a result. I still predict at least two quarters of negative growth for 2009 though.


Blame everything on Barry

A critical analysis of Beatles lyrics

Fun is the one thing that money can't buy - She's leaving home.

Considered one the Beatles' more "mature" songs, "She's Leaving Home" outlines the story of a young woman moving out of home without her parents' knowledge. There's certainly an interesting juxtaposition between the eager resolve of the young woman and the grief and pain of her parents. Yet all this is undone by this inane line in the final stanza. Has the young woman learned self respect? Has she learned the importance of controlling her own life? No. She's having fun and, despite empirical evidence suggesting that currency can be utilized to procure fun inducing goods and services, it is not because of money.

And in my hour of darkness, She is standing right in front of me. - Let it Be.

People have tried to interpret this song theologically, assuming that McCartney is a closet Catholic who has visions of the Virgin Mary. ("She" in this line being "Mother Mary") The reality is that Paul McCartney was speaking about his mother, who is named Mary and was in the habit of appearing in front of McCartney in the darkness. The problem is, of course, how does McCartney see his dead Mum standing in front of him when everything is dark? I suppose she could be glowing, but then it wouldn't be dark any more would it? Didn't think of that did you Paul? That's why Wings folded (ha ha.... wings folded... sorry).

You keep all your money in a big brown bag inside a zoo
. - Baby You're a Rich Man.

There's all sorts of things wrong with this song. Who are Lennon/McCartney talking to? A literal baby? Yet if it was a literal baby then why call it a "rich man"? And if not a literal baby, why not a symbolic baby - a babe, woman? Yet why call the woman a "rich man"? And if not a woman then why not a man? And why would you call a man "baby?" And why does writing this remind me of Phil Spector and firearms? All terribly confusing. Yet this rich genderless and ageless person keeps his/her money where? In a big brown bag, and not just any brown bag, a BIG brown bag, and not just any coloured big bag, a big BROWN bag to boot. And yet despite the fact that inflation in Britain during the sixties was getting out of control, this genderless and ageless person keeps the money not under the bed, but in a zoo. Is this a metaphor for the city... the high world of finance existing in a concrete jungle that is totally unlike a zoo? Either that or he/she/it thinks he can hide his cash in the elephant enclosure.

Flew in from Miami Beach BOAC. Didn't get to bed last night. On the way the paper bag was on my knee. Man I had a dreadful flight. I'm back in the U.S.S.R. - Back in the U.S.S.R.

For the record, the British Overseas Airways Corporation never had direct flights from Miami to anywhere in the Soviet Union. And what about Georgia? Is this some veiled referential support for Stalin? Or was it a secret desire to escape the shackles of godless communism and return to the deep south of the USA? Too confusing Paul. That's why Wings folded (ha h... oh).

You say it's your birthday. It's my birthday too, yeah. - Birthday.

The chances of randomly discovering that a stranger you met has the same birthday as you do is somewhere in the region of 4 in 1461. I can imagine the sheer oddity of this occurrence being memorable to some. But to write a song about it?

She's a prick teaser, she took me half the way there
. - Day Tripper.

This is about as Spinal Tap as you get with Beatles Lyrics. "Sex farm woman...".

Hope you need my love babe, Just like I need you. - Eight Days a Week.

Surprise surprise, we might think that Robert Plant was the first to substitute "Love" for something a little bit more base but, as usual, the Beatles got there first. Maybe McCartney could sue Zeppelin for publishing rights?

And it really doesn't matter if I'm wrong, I'm right. Where I belong I'm right
. - Fixing a Hole.

I can't understand why so many redneck Americans got so uptight and angry over the Beatles back in the sixties. The idea that one can have a strong opinion about something they know little about should've made them and The Beatles get along fine. After all, the mass of the four human beings who made up The Beatles would've been larger than the mass of the physical body of Jesus.

And when I feel my finger on your trigger I know nobody can do me no harm. Because happiness is a warm gun, momma. - Happiness is a Warm Gun.

Momma? The addition of that final word turns the line from being sleazy into being rather disturbing. But just as the Beatles pre-empted Zeppelin's redefinition of "love", so too do they delve into the deep and dark morass of Freudian interpretations of Oedipus and thus pre-empt The Doors. Jim Morrison wasn't so original after all was he?

Tell me, tell me, tell me your answer, You may be a lover but you ain't no dancer
. - Helter Skelter.

The addition of the double negative "You ain't no" ensures that the line fits rhythmically but not grammatically. He's literally saying "You may be a lover but are not no dancer", meaning the woman (I assume it is a woman) may be a lover but is also a dancer. The most logical explanation of these lines is that one of the Beatles had a sexual relationship with one skilled in the arts of choreography in an amusement park somewhere. Either that or it was a secret code ordering us to follow Charles Manson.

There are places I remember all my life though some have changed. Some forever not for better, Some have gone and some remain. - In My Life.

The key to understanding this line (and thus the whole song) is not that the places have changed, but his memory of them have! Hence "There are places I remember all my life, though some (memories) have changed." Early onset dementia is a terrible thing to experience and John Lennon's experience of it (which resulted in him being permanently beer-goggled, hence Yoko) is a lesson for us all to remember. If we can.

When I get older losing my hair, Many years from now, Will you still be sending me a valentine, Birthday greetings bottle of wine?
- When I'm Sixty Four.

Sadly the odds are that either the love of your life has died, or else is taking legal action against you. Or maybe both.


Please read Crimson Dark

Crimson Dark is a webcomic I read on a regular basis. Inspired partly by Firefly and other science fiction shows, it follows the story of the crew of a privateer spaceship as they seek to survive and make a profit during a major war.

Lately, the writer/artist David Simon has been thinking of shutting down the project. Advertising revenue has been dropping off and his regular life has often suffered in his effort to get his "baby" off the ground. Fortunately he has decided to keep going.

Annoyingly, David can't devote any more time to Crimson Dark to create more than one page per week, yet the project needs multiple pages per week to gain popularity.

I can think of numerous ways Crimson Dark can make more money than it does, but for the moment I would like you to spend time reading the Crimson Dark series, beginning at chapter one here. The artwork isn't the best at the beginning but becomes markedly better as the series continues.


There is no point in trying

I challenged T. Boone Pickens to a wager about the price of oil and won.

Where's my money Mr. Pickens? Maybe you could give me a job?

OSO's debt watch

Public Debt on 2009-02-12:

$6.45 Trillion

US GDP in 2008 Q4:

$14.26 Trillion

Debt/GDP Ratio:


[Debt ÷ GDP] x 100 )

Public Debt/Person:


(Public Debt ÷ US Population)


Public debt is $6,453,765,915,043.27. Source
Latest GDP is $14,264.6 billion. Source
Population in November 2008 is 305,971,664. Source (Resident population plus armed forces overseas).

* There has been a noticeable increase in public debt levels in February.
* Public debt has hit a record $6.45 trillion.
* Public debt/GDP ratio has hit a record of 45.24%.
* Public debt/person has hit a record of $21,092.69.
* Still waiting for latest census figures which should naturally lower debt/person.


U2 have a new album out soon I hear...


Abortion laws caused the Victorian fires

Well this is a novel concept:
“Yesterday (Monday 9th February 2009), the front page of the Herald Sun newspaper reported “The Darkest hour for Victoria”. A few months ago the news media should have reported “The darkest hour for the unborn” but unfortunately the “Decriminalization of Abortion bill” went through parliament and was passed, thus making many people call Victoria ‘the baby killing state of Australia,’” Mr (Danny) Nalliah said.

He said on November 7 last year we had sent out an email to our national network and a posting on our website (www.catchthefire.com.au) carried an urgent post titled, ‘STOP PRESS. URGENT PRAYER NEEDED REGARDING AUSTRALIA, ESPECIALLY THE STATE OF VICTORIA’ following a dream he had on the 21st of October 2008, which he shared with his team on 22nd October.

Following is an excerpt from the dream which was published in the article.

“In my dream I saw fire everywhere with flames burning very high and uncontrollably. With this I woke up from my dream with the interpretation as the following words came to me in a flash from the Spirit of God.

That His conditional protection has been removed from the nation of Australia, in particular Victoria, for approving the slaughter of innocent children in the womb.”

“We at CTFM have spent the last few days in prayer and weeping, watching the news and learning that more than 170 people have perished and more than 750 houses have gone up in flames with much property and personal belongings of people all wiped out within hours,” he said.

”Australia is based on Judeo-Christian values. How far have we as a nation moved from these principles instilled in our nation’s inception. How much does it take for a nation to return to God? The Bible is very clear, if you walk out of God’s protection and turn your back on Him, you are an open target for the devil to destroy.

“Can we stop the fires? Yes we can! But it will take God’s children to rally together and repent and cry unto Him as in 2 Chronicles 7:14 (The Holy Bible). We at CTFM have seen this happen several times in the past in Australia, which was also covered by many mainstream media outlets.”
*Sigh*. What can I say? This is exactly the sort of thing that gets my goat up.

You see, the reason is that I am an evangelical Christian. It's there in the blog title. To read how I became a Christian, click here. For a detailed explanation of my opinion on abortion (I am generally pro-life but with important differences to most pro-lifers), click here.

I've included those links in the previous paragraphs to point out to you all the substance of what I believe because I am about to give Nalliah a real serve about what he has done.

Many of you, I am sure, can remember back to the dim dark days following 9/11. One thing you might remember is when evangelical leader Jerry Falwell said this:
"I really believe that the pagans, and the abortionists, and the feminists, and the gays and the lesbians who are actively trying to make that an alternative lifestyle, the ACLU, People For the American Way, all of them who have tried to secularize America. I point the finger in their face and say 'you helped this happen.'"
Of course, such a statement was made during a time of great grief and anger and Falwell later apologised for it, though it was one of those "I'm sorry you feel this way" apologies.

Danny Nalliah's recent comments are similar in tone. They blame a disaster upon the presence of moral evil within society. So, in Falwell's case, it was Paganism + Abortion + Homosexuality = God removing His protection = Terrorists destory the World Trade Center. In Nalliah's case, it is Victorian Abortion Laws = God removes His protection = Fires that kill nearly 200 people.

I'm not going to approach this from the typical perspective (ie the guy's statement is insensitive and shows how horrible he is) because that is a given in this case. No, I'm going to approach this from a Christian and Biblical perspective, to show from that perspective how wrong he is.

Central to Nalliah's belief is his interpretation of 2 Chronicles 7.14, which says:
When I shut up the heavens so that there is no rain, or command the locust to devour the land, or send pestilence among my people, if my people who are called by my name humble themselves, and pray and seek my face and turn from their wicked ways, then I will hear from heaven and will forgive their sin and heal their land. (ESV)
I've included verse 13 in that quote to show you exactly what is going on. This is a statement by God made to King Solomon after the temple has finally been dedicated. What we see here are two very important things:
  1. God is speaking to King Solomon.
  2. God is speaking about the nation of Israel.
Now the thing about interpreting the Bible is to ensure that you don't misinterpret words or commands. The Bible is not a magical quote machine. You don't open the Bible up and point at a random verse looking for direct guidance. When the Bible is being read, it needs to be read according to its literary genre, which is often quite plain.

There's the great story of someone who opens the Bible and plunks his finger down to find the verse "Judas hung himself". Confused, he then opens it again and plunks his finger down again. This time the verse says "Go and do likewise". Is God ordering him to commit suicide? Or is the man being stupid?

So when Danny Nalliah comes to this passage what does he assume?
  1. God is speaking to Australians.
  2. God is speaking about Australia.
Now that is a really long bow to draw. When Nalliah says that abortion causes deadly bushfires he is saying that the "land" in 2 Chronicles 7.13-14 is Australia. But it isn't. The land is Israel. Moreover, you can't make the association without doing violence to the text. Ancient Israel was, according to the Bible, God's special people who lived in the land God gave them under the rules that God gives in the Old Testament. But when we read the Old Testament we discover that God has chosen to create a "New Covenant" because Israel has broken the old one. This "New Covenant" is explained by the Apostles of Jesus as faith in Christ. In other words, Israel as God's special people has been replaced by the Church. This idea is called supersessionism and is found in places like Galatians 3.29, which says:
if you are Christ’s, then you are Abraham’s offspring, heirs according to promise.
"If you are Christ's" = being a Christian.
"Abraham's Offspring" = the nation of Israel.
"heirs of the promise" = the promise God made to Abraham and Israel also applies to Christians.

Therefore, the concept of "Israel" post-Christ is no longer a political and geographical entity, but a "spiritual nation" that is the universal church.

When it comes to reading 2 Chronicles, therefore, we can interpret it to mean that Israel's relative safety has a lot to do with their covenant keeping. If Israel does not keep the covenant, God will take away his protection from them. That is very clear from the passage. Yet what we see in the Old Testament is God's covenant people NOT keeping the covenant, and disaster befalling them as a result (including political division, invasion and eventual exile by the Assyrian and Babylonian empires).

But does the passage mean the same today? If Australia were to, for example, outlaw abortion, homosexuality and paganism, would God bless us with prosperity and happiness and spiritual utopia? But what if Australia did not do this? Are we going to be visited by more fires and earthquakes and terrorists attacks if we don't outlaw abortion, homosexuality and so on? No. Of course not. For the passage to be applicable today, the "Israel" ("land") spoken to in 2 Chronicles 7 is replaced not by the nation of Australia, but by the church. It is the church who will suffer if they do not keep the covenant, not Australia, not Britain, not America.

Of course, supersessionism (and, by implication, Covenant Theology and Biblical Theology) is not always held by Christians, meaning that Nalliah is probably one of those who still place some level of emphasis upon Israel.

Yet there remains a real problem with Nalliah's understanding of how God blesses people. Western Europe is one of the most secular places in the world, with liberal abortion laws and societal acceptance of them. What disaster has befallen Europe? Even considering the latest financial distress, Western Europe is one of the safest and most prosperous places in the world, and they do that without honouring God. You can say the same thing about Japan, which is full of non-Christians and non-Christian thinking. Conversely, Ireland, where abortion is illegal, is collapsing economically. Moreover, nations with very conservative abortion laws are often developing nations whose economy and society have not necessarily been improving because of their "godly" abortion laws. In other words, there is no actual empirical evidence which suggests that nations who have outlawed abortion are socially and materially superior than those who allow abortion.

There is in eastern philosophy the concept of Karma. This idea has been appropriated and distorted by Western culture and has also infiltrated the church including, I might add, the thinking of evangelical leaders like Danny Nalliah. This Westernised bastardisation of Karma can be best described as "what goes around comes around". In other words, a person who does bad things will experience bad things in return. So when Nalliah says "the state of Victoria allows Abortion, so God takes away His protection and Victoria suffers bushfires" (my paraphrase), he is merely repeating the bastardised, western idea of Karma and applying it to Christianity (syncretism).

The reality is that rain falls on the good and bad alike (Matthew 5.45). Moreover, Jesus points this out in Luke 13.1-5:
There were some present at that very time who told him about the Galileans whose blood Pilate had mingled with their sacrifices. And he answered them, "Do you think that these Galileans were worse sinners than all the other Galileans, because they suffered in this way? No, I tell you; but unless you repent, you will all likewise perish. Or those eighteen on whom the tower in Siloam fell and killed them: do you think that they were worse offenders than all the others who lived in Jerusalem? No, I tell you; but unless you repent, you will all likewise perish." (ESV)
What Jesus is saying here is that those who suffered particular horrible deaths did not suffer so because of some particular sin in their lives. He also points out that judgement is universal and that everyone should repent - from the worst sinner to the least sinner. In conjunction with my critique of Nalliah's beliefs, Jesus' words here completely negate Nalliah's understanding of 2 Chronicles 7 while reinforcing my argument that the 2 Chronicles passage can only be applied today in reference to the church (eg 1 Corinthians 11.30).

One thing which I have not addressed here is Nalliah's "vision of fire" which he believed was a message from God reinforcing this idea that Victorian abortion laws = God removing His protection = deadly bushfires. All I can say is that even the Prophet Jeremiah heard this from God:
"The prophets are prophesying lies in my name. I did not send them, nor did I command them or speak to them. They are prophesying to you a lying vision, worthless divination, and the deceit of their own minds.
Ironically, this quote (from Jeremiah 14.13-16), is one of those passages in which God portends suffering and judgement for Israel for not keeping his covenant. In the context of what I have been arguing, such a passage speaks volumes for today's church who follow dreamers like Danny Nalliah rather than following the Word of God. Nalliah may be rightly concerned about abortion, but his dreams and his erroneous interpretation of the Bible have led him to say things which have hurt the families of the dead and injured while simultaneously bringing disrepute to the church and to God. I call on Danny Nalliah to repent.


OSO's debt watch

Public Debt on 2009-02-05:

$6.41 Trillion

US GDP in 2008 Q4:

$14.26 Trillion

Debt/GDP Ratio:


[Debt ÷ GDP] x 100 )

Public Debt/Person:


(Public Debt ÷ US Population)


Public debt is $6,410,020,405,165.47. Source
Latest GDP is $14,264.6 billion. Source
Population in November 2008 is 305,971,664. Source (Resident population plus armed forces overseas).

* 44.94% Public Debt/GDP ratio is the highest recorded since I began this debt watch.
* Waiting for latest census figures.

Who controls the US Dollar?

Not the White House; not Congress; not the Federal Reserve.

Rather, the Bank of Japan and the People's Bank of China. Source.

The only thing keeping the US Dollar at its current valuation are foreigners.

How long will it be before the politicians and economists in Japan and China see such a situation as unprofitable?

John Christie

Sorry I didn't get back to you re: Cricket. Thanks for the offer but I'm rather busy at the moment, especially with an increasingly sick mother-in-law.

(John lives in Newcastle and is one of the few people I actually know personally who reads my blog regularly)

Australia on Fire

By now you would've heard the news of severe wildfires here in Australia - it is one of the top news stories around the world at the moment. So far 107 people have been confirmed dead and over 750 homes lost in Australia's greatest bushfire tragedy.

Fortunately for me and my family, we are located about 1000km (620 miles) away from this tragedy. Nevertheless we have suffered 12 days in a row of temperatures exceeding 30°C (86°F). Our grass is brown and leaves are wilting. Today is the first day of sub-30 temperatures and rain is predicted in the next few days, which is good news.

Bushfires (what Australians call wildfires) are a natural hazard. Australia is a dry continent and bushfires are a common occurrence. Our history is replete with deadly bushfires dating back to the 19th century.

Until the weekend, Australia's deadliest Bushfire was the Ash Wednesday fires in 1983. Spread across two states (Victoria and South Australia), these fires killed a total of 75 people - 47 in Victoria and 28 in South Australia. The Ash Wednesday fires were an important step in changing Australian fire-fighting, especially in regards to bushfires.

One of the most important things that was discovered during the months of examination that followed was that many of the dead were found in their burnt-out cars. From this they deduced (quite rightly) that there was a greater chance of survival if people stayed with their homes rather than evacuating at the last minute.

Another important discovery was that the earlier communities were advised of danger, the more likely they were to survive. This was because people either evacuated early, or were able to prepare their houses in time to face the onslaught.

Along with more advanced fire fighting techniques, aided by more accurate meteorological information and satellites, bushfires in Australia became less life-threatening. Here's a list of Australia's major bushfires and their death toll:

1898 Red Tuesday: 12 dead.
1939 Black Friday: 71 dead.
1967 Black Tuesday: 62 dead.
1983 Ash Wednesday: 75 dead.
1994 Sydney Bushfires: 4 dead.
2003 Canberra Bushfire: 4 dead.

I lived in Sydney In 1994 and I clearly remember those fires. All three major highways out of Sydney were affected, leaving Sydney essentially cut off from the rest of Australia for a number of days. Ash fell onto our lawn and I even picked up a carbonised gum leaf that had obviously travelled from the fires many kilometres to our house in Merrylands (which was nowhere near the fires). I remember riding my motorbike on the raised section of the M4 motorway and glancing North, South and West and seeing huge plumes of smoke in the distance from the three fires that threatened Sydney.

And yet, despite the massive danger these fires posed, and despite all the houses destroyed, early warnings and more detailed data helped to reduce the 1994 death toll to just 4.

So it is therefore with a great sense of surprise and sadness that I learn of the deaths of so many in Victoria on Saturday. Obviously there will be a Royal Commission into what transpired in Victoria and this inquiry will expose any human error. Knowing this, though, I do suggest that a number of problems have already been exposed:
  1. People died in their cars. As I stated before, evacuating at the last minute was shown to be more fatal than staying with your property as the fire hit. That was one of the discoveries made after 1983. Why then, in the year 2009, were people doing this? I had always believed that people who lived in bushfire prone areas had had this fact drilled into them and told to either evacuate early or stay with your home. Yet in Victoria 2009, many people died in their cars. This suggests a number of things, including the potential failure of authorities to educate people.
  2. People said they had no warning. As I watched the network news reporting, I was stunned to hear story after story of survivors in tears as they explained just how quick and devastating the fires were, and how unprepared they were for their onslaught. Why was this the case? When residents are notified early enough, people can evacuate sooner or prepare for the worst. From what I can gather, some people were only aware of the impending disaster once their house caught fire. The fact that so many were unprepared could be because fire authorities did not notify residents quickly enough, or if they did, then only in some places and not in others. One of the more damning pieces of evidence was that Victorian fire authorities announced on Friday - the day before the bushfires - that weather conditions on Saturday were very much like the 1983 fires. In other words, people knew before the fires struck that a potential disaster could take place. Yet despite this announcement to the entire state on Friday, people on Saturday were unprepared.
Having said all this, it is also possible that weather conditions were so severe and so unique that no amount of preparation or skill in command and control or communication could have saved the 107+ confirmed dead. In this case, the disaster is simply an uncontrollable act of nature that could not have been avoided nor mitigated. Part of me hopes that this is the case, yet the idea that bushfires - a natural Australian phenomenon - should somehow become more unpredictable and severe than normal is questionable. The human element - notably a failure in communication - is likely to be a major factor in the deaths resulting in these fires.


Unemployment 7.6%

Direct download here (pdf 194.9kb).

  • Highest rate of unemployment since September 1992, which was also 7.6%.
  • The last unemployment peak was 7.8% in June 1992.
  • The last time unemployment reached 8.0% was January 1984.
  • The postwar unemployment peak was 10.8% in November and December 1982.
  • Unemployment has increased from 4.9% in January 2008 to 7.6% in January 2009. That's a 250 basis point year-on-year increase. The last time that happened was between October 1981 and October 1982, when unemployment increased from 7.9% to 10.4% - 250 basis points. It should be noted that such a movement in the unemployment rate over a 12 month period is more damaging if the original level was low. This means that the current increase is more damaging than the 1981-82 increase. Source.
  • A 390 basis point increase occurred between May 1974 (5.1%) and May 1975 (9.0%).
  • Reuters says that the 598,000 increase is the worst in 34 years (1975).


Borrowing our way out of debt?

Obama is gunning for the stimulus and the Republicans are trying to stop it. Confirming yet again that Australia follows America's lead in everything, our centre-left Labor Party is gunning for our own stimulus while the conservatives are trying to stop it. It the situation weren't so serious it would be funny.

Many regular readers know that I run a (semi) weekly report on the state of public debt in the US. The facts are not pretty - public debt in the US in the days since my last report has now exceeded 44.6% of GDP. ($6.36 Trillion debt ÷ $14.2646 trillion GDP x 100 = 44.61), which is the second highest reading since I began these reports.

But why worry about debt? Some people think that debt doesn't really matter because everything balances. From an accounting perspective this is true, yet increasing levels of debt will ultimately lead to either long term tax increases or long term spending cuts or a combination of the two. The only other alternative would be inflationary money printing or just keep borrowing.

We need to remember that "crowding out" will still occur. In a faltering economy like now, such an action may not seem worrisome (investment has pretty much stopped) but over the long term it is. The more money the economy invests in Government bonds, the more the US government puts on the national credit card.

And the more money put on the card now, the more that will be needed to pay off in the future.

Economists often talk about "the paradox of thrift" as though it were an axiom not worth debating. The idea behind the "paradox of thrift" is that when an economy suddenly shifts from a spending culture to a saving culture, the result ends up being an economic downturn and, as a result, less money saved. While this is true, I would also suggest that "The paradox of spending" should also apply, namely that when an economy spends too much, it eventually results in the inability to spend.

All things being equal, of course, running a deficit and even having a stimulus package is not necessarily a bad thing. The problem is that Keynes prescribed fiscal surpluses to balance out these deficits. Since the US government has been running the opposite of Keynesian fiscal policy since, well, since Reagan, the result has been a growing level of public debt. At this point economic common sense begins to take over, in which it is obvious that if a person just keeps living on credit, a time will come when he has to pay it back or go bankrupt. Governments - even those with the power to create money - just can't ignore this simple economic fact.

With Public Debt over 44.6% of GDP, I do not think that there is much room for the US Government to run a stimulus package of the size currently trying to passed through congress. Moreover, I don't think the previous stimulus package (the Bernanke/Paulson one supported by Bush) was a good idea either.

Now travel in your mind's eye here to Australia. Although unemployment here is still relatively low (4.5% compared to 7.2% in the US) only a fool would think that our little nation is somehow insulated from the crisis engulfing the world. Rudd is trying to push a new stimulus package as a typical Keynesian way to help mitigate the crisis. What is my opinion? I think it's a good idea - and the reason is because net Public Debt in Australia is negative. There is plenty of room for the Australian government to spend big without much fear that it go out of control (unless they go all Whitlam again).

Yet America's fiscal situation, already worrisome before the crisis hit, is likely to counter the effects of the stimulus plan far more than the Republicans can do in Congress.

As a result, I'll simply return to the prescriptions outlined in the Washington Consensus, which I have written previously and write here again:
  • Cut military spending
  • Raise taxes on the rich
  • Run a fiscal surplus to pay off debt
  • Use interest rates to keep inflation low
  • Re-regulate the financial industry to prevent such a crisis from occurring again
  • Fire Ben Bernanke
  • Create a universal health care system that will cut present health costs
I am reasonably certain that, in hindsight, my prescriptions here (which are lifted from the Washington Consensus and applied to the US government in the present) will be the ones most future historians and economists will say should have been applied.


OSO's debt watch

Public Debt on 2009-01-29:

$6.31 Trillion

US GDP in 2008 Q4:

$14.26 Trillion

Debt/GDP Ratio:


[Debt ÷ GDP] x 100 )

Public Debt/Person:


(Public Debt ÷US Population)


Public debt is $6,309,860,670,347.08. Source
Latest GDP is $14,264.6 billion. Source
Population in November 2008 is 305,971,664. Source (Resident population plus armed forces overseas).

Notes: Sorry for lateness!