In Ireland, bacon comes from dogs and in Australia, sultanas come from Kangaroos.

From WW2 Canadian photos.


Not Sceptics: Conspiracy Theorists

Just found this over at Dave's site about the CRU Hack:
I’ve been watching the ‘controversy’ develop over the last week or so, and I have to say, it’s pretty dispiriting. Not because a global leftist conspiracy as been unearthed, but because of the renewed enthusiasm of the sceptics to shoot first, and ask questions later. It’s saddening to see how little hey understand, and how little they want to understand.

There’s a couple of posts here that look at a couple of the accusations: http://allegationaudit.blogspot.com

There’s a couple of reasonable posts here:
- Scientific American: Climate change cover-up? You better believe it
- OpenDemocracy: The real scandal in the hacked climate change e-mails controversy

Personally, I think I’m going to stop referring to the sceptics as sceptics, but rather conspiracy theorists. There’s nothing sceptical about the sceptics (and that’s nothing new) - but the wild political conspiracies people are so quick to believe in, and anything that looks vaguely like evidence for the conspiracy instantly becomes not just a smoking gun, but ‘the mushroom cloud’.

These are clearly irony-deficient people. They claim AGW is a religion for true believes, yet they believe in crazy, global conspiracies on scant evidence. There’s still no scientific counter to AGW, there’s not even a desire to understand the issue, or examine the new ‘controversy’ in any depth.

But then again, these are the people that gave us Iraq’s WMDs, so I guess a desire for understanding is not a high priority.
(emphasis mine)
Original Link.

OSO's Debt Watch

GDP = $14.2663 Trillion (2009 Q3 second estimate)
Public Debt = $7.61135586846705 Trillion (2009-11-24)
Debt/GDP ratio = 53.35%
Population = 308,013,326 (Resident Population + Armed Forces Overseas, 2009-10-01)
Public Debt / person = $24,711.13
Tax Receipts = $2.104614 Trillion (Year-to-date, Monthly Treasury Statement, 2009-10-01)
Debt/Receipt ratio* = 361.65%

In October 2008, the Debt/GDP ratio was 43.43%
In October 2008, Public Debt / person was $20,264.04
In October 2008, the Debt/Receipt* ratio was 231.82%

* The Debt/Receipt ratio measures year-to-date government revenue as a percentage of current public debt. A good way to compare it would be to compare your current income to what you owe on your mortgage.


I'm not alone on Government debt

James Hamilton, Professor of Economics at the University of California, San Diego, and a contributor to Econbrowser, says this about Paul Krugman's sanguine attitude towards government debt:
Normally, you'd think that putting off repaying a debt does not make it any smaller. The federal government can (with my wallet) pay the trillion today, or it can wait 10 years to pay one trillion plus 10 years' interest, or wait 20 years to pay one trillion plus 20 years' interest. The present value of the service cost on one trillion dollars in debt is exactly one trillion dollars today, no matter how long you put off paying. My comments on how much a trillion really is are perfectly appropriate for discussion of any repayment timetable.

Perhaps Paul is suggesting that there may be a potential free lunch available from postponing payment in this case, arising from the fact that the economy's growth rate has historically exceeded the government's cost of borrowing. If I put off paying another year, with interest the amount I owe grows 2% in real terms, but my income grows 3%, so things get easier the longer I put it off.

Let me go on the record as favoring the consumption of truly free lunches. If everything the government buys really is free, then by all means, let's have them buy more, and more, and more, and rather than double my taxes, let's cut taxes all the way to zero. Unfortunately, I expect that Paul would agree with me that in fact there is a limit to just how much we can count on supersizing this particular happy meal.
That last point is one of my arguments - if there is a limit to cutting taxes then logically there is a limit to how much debt the government can take upon itself.

I asked a friend the other day to compare his mortgage to his annual income, which he figured out to be 580%. For smaller economic entities like households and businesses, such a huge debt/income ratio is expected and normal. Nevertheless the bigger an economic entity is, the more risky such debt/income ratios become since its collapse would have a huge secondary impact.

The US Government's debt/income ratio is currently 362.64%. That's too large in my opinion.


Nazism and book burning

One way to check on the various beliefs of German Nazism is to look at the books they banned and/or burned. Thanks to someone at Reddit, a link has been provided to a site which translates the original German book-banning guidelines into English. What we find is interesting:
  1. "The literature of Marxism, Communism and Bolshevism." Well I guess that pretty much confirms the idea that Nazism and Communism are NOT the same thing.
  2. "Pacifist literature", which means that anyone morally against war cannot be described as a Nazi.
  3. "Literature with liberal, democratic tendencies and attitudes", so anyone slightly interested in, say, progressive policies cannot be described as a Nazi.
  4. " Writings of a philosophical and social nature whose content deals with the false scientific enlightenment of primitive Darwinism and Monism", which means that Nazis were not Darwinists or Evolutionists when it came to Eugenics, and which pretty much proves that Darwinists are not Nazis.
  5. "All writings that ridicule, belittle or besmirch the Christian religion and its institution, faith in God, or other things that are holy to the healthy sentiments of the Volk." which means that atheism was certainly not a Nazi ideal and that atheism is not associated with Nazism (BTW, Hitler was not an atheist).
So what can we conclude?
  • Nazis hated Marxism and Communism.
  • Nazis hated Pacifism.
  • Nazis hated Democracy and progressive politics.
  • Nazis hated Darwinism and Evolutionary Theory.
  • Nazis hated Atheists.
Jonah Goldberg and Ben Stein need to check their sources.

Why invest in America?

This graphic is from the recent Economist magazine and can be found at this link:

It seems rather clear that overseas sharemarkets are performing better than the DJIA and S&P500 - even when you take out the falling dollar they are better.

Update on the CRU hack

I just discovered that the hack and the emails did not originate from the Hadley Climate Research Unit but from the University of East Anglia. Obviously some emails from CRU ended up being shown (since CRU and UEA would communicate with one another) but the hack and the data should be read in this particular light. No one is going to get a complete picture of how an organisation works by looking at emails from another organisation, so any evidence needs to be incontrovertible and clear, which it apparently is not.

Realclimate says:
As many of you will be aware, a large number of emails from the University of East Anglia webmail server were hacked recently (Despite some confusion generated by Anthony Watts, this has absolutely nothing to do with the Hadley Centre which is a completely separate institution).
In regards to actual quotes being used, Realclimate says:
No doubt, instances of cherry-picked and poorly-worded “gotcha” phrases will be pulled out of context. One example is worth mentioning quickly. Phil Jones in discussing the presentation of temperature reconstructions stated that “I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years (ie from 1981 onwards) and from 1961 for Keith’s to hide the decline.” The paper in question is the Mann, Bradley and Hughes (1998) Nature paper on the original multiproxy temperature reconstruction, and the ‘trick’ is just to plot the instrumental records along with reconstruction so that the context of the recent warming is clear. Scientists often use the term “trick” to refer to a “a good way to deal with a problem”, rather than something that is “secret”, and so there is nothing problematic in this at all. As for the ‘decline’, it is well known that Keith Briffa’s maximum latewood tree ring density proxy diverges from the temperature records after 1960 (this is more commonly known as the “divergence problem”–see e.g. the recent discussion in this paper) and has been discussed in the literature since Briffa et al in Nature in 1998 (Nature, 391, 678-682). Those authors have always recommend not using the post 1960 part of their reconstruction, and so while ‘hiding’ is probably a poor choice of words (since it is ‘hidden’ in plain sight), not using the data in the plot is completely appropriate, as is further research to understand why this happens.
Of course, committed climate change denialists would begin reading that sentence before their eyes glazed over, and then respond to it by saying:
  • You're just trying to explain it away!
  • But the email says...
When in reality they are saying
  • I have no idea what that explanation means, so I'll just keep saying it's wrong because it's easier than trying to understand sciencey stuff.
  • How come a heavy metal band has a guy playing a keytar?


Current Real Interest Rates

AGW and the Cru Hack

AGW and the Cru hack sounds like a really bad band, hence the picture. Actually it's got nothing to do with music, so sorry for misleading you!

AGW is, of course, "Anthropogenic Global Warming". CRU is short for "Climatic Research Unit", specifically the one at the University of East Anglia. And "hack", in this case, means "to devise or modify (a computer program), usually skillfully".

What it all adds up to is that hackers have broken into the CRU server, stolen a whole heap of information - specifically climate data and staff emails - and then sent copies of the 61mb file all over the internet for people to see. The BBC is reporting it here.

Although the hackers themselves have broken dozens of laws and making private emails is, shall we put it, unethical, the security breach may help to provide vital information for those interested in Global Warming - both the advocates (like myself) and the sceptics. What it will show is the pure, unadulterated and honest opinions of those who work for an organisation that promotes one side of climate science thinking. It is a snapshot - warts and all - of what goes on in a scientific community that believes current global warming is caused by human activity.

Of course there will be plenty of dross. The emails will contain derisive opinions of Manchester United fans, discussions about what sort of Indian restaurant in Norwich provides the best Korma, the Heydon bed and breakfast booking for two research students conducting a secret affair and whether or not "New Moon" will be a good film. But what it will also provide (hopefully) is evidence as to whether data is ignored or manipulated or not, and whether there is some sort of shadowy conspiracy going on.

RealClimate, the blog I go to on a daily basis to read about Climate Science, has this to say about the CRU hack:
Since emails are normally intended to be private, people writing them are, shall we say, somewhat freer in expressing themselves than they would in a public statement. For instance, we are sure it comes as no shock to know that many scientists do not hold Steve McIntyre in high regard. Nor that a large group of them thought that the Soon and Baliunas (2003), Douglass et al (2008) or McClean et al (2009) papers were not very good (to say the least) and should not have been published. These sentiments have been made abundantly clear in the literature (though possibly less bluntly).

More interesting is what is not contained in the emails. There is no evidence of any worldwide conspiracy, no mention of George Soros nefariously funding climate research, no grand plan to ‘get rid of the MWP’, no admission that global warming is a hoax, no evidence of the falsifying of data, and no ‘marching orders’ from our socialist/communist/vegetarian overlords. The truly paranoid will put this down to the hackers also being in on the plot though.

Instead, there is a peek into how scientists actually interact and the conflicts show that the community is a far cry from the monolith that is sometimes imagined. People working constructively to improve joint publications; scientists who are friendly and agree on many of the big picture issues, disagreeing at times about details and engaging in ‘robust’ discussions; Scientists expressing frustration at the misrepresentation of their work in politicized arenas and complaining when media reports get it wrong; Scientists resenting the time they have to take out of their research to deal with over-hyped nonsense. None of this should be shocking.

It’s obvious that the noise-generating components of the blogosphere will generate a lot of noise about this. but it’s important to remember that science doesn’t work because people are polite at all times. Gravity isn’t a useful theory because Newton was a nice person. QED isn’t powerful because Feynman was respectful of other people around him. Science works because different groups go about trying to find the best approximations of the truth, and are generally very competitive about that. That the same scientists can still all agree on the wording of an IPCC chapter for instance is thus even more remarkable.
Linus' Law states "given enough eyeballs, all bugs are shallow", which in the context of software development means that open source coding is superior to closed source because its very openness and transparency ensures quality. While the CRU hack was certainly an invasion of privacy, it does allow us to view the "bugs" in this scientific community and determine whether or not their work is flawed. I await the results, and am reasonably confident that it will only bolster the case for those who believe in AGW.

If it doesn't, I'll start listening to Alestorm.

EDIT: 160mb of data. Sorry. Link also to The Guardian.


OSO's Debt Watch

GDP = $14.3015 Trillion (2009 Q3 advance figures)
Public Debt = $7.63227364191639 Trillion (2009-11-18)
Debt/GDP ratio = 53.37%
Population = 308,013,326 (Resident Population + Armed Forces Overseas, 2009-10-01)
Public Debt / person = $24,779.04
Tax Receipts = 2.104614 Trillion (Year-to-date, Monthly Treasury Statement, 2009-10-01)
Debt/Receipt ratio* = 362.64%

In October 2008, the Debt/GDP ratio was 43.43%
In October 2008, Public Debt / person was $20,264.04
In October 2008, the Debt/Receipt* ratio was 231.82%

* The Debt/Receipt ratio measures year-to-date government revenue as a percentage of current public debt. A good way to compare it would be to compare your current income to what you owe on your mortgage.


Adelaide has been hot these last 12 months

Why government deficits are a problem

I feel rather alone in the economics world at the moment, especially after reading this:
Think of an economy this way: the people in any economy buy goods and services from one another and from the outside. In any given time period, one person, one company or one group/sector might use credit in order to buy more goods and services than it makes in income. It’s like spending future income by using credit. This puts that individual, company or group/sector in deficit i.e. they have spent more money than they have earned. Now obviously, if one sector is in deficit in a given period (i.e. they have spent more capital than they have earned), then the other sectors are in net surplus (i.e. they have received more cash than they have earned).

Let’s give these groups/sectors of the economy names: the private sector, the public sector and the foreign sector. Giving the groups names makes it plain that if the public sector is in deficit, the combined foreign and private sectors must be in surplus. Simply put, if you look at all of the households and businesses that make up the private sector and aggregate them together, you can determine if the private sector has a net surplus or a net deficit in any individual time period. And if the private sector has a net surplus, the combined foreign sector and public sector must have a deficit for that time period. The sector financial balances move in concert.

What this means for today is that a government which reduces its deficit in a given time period is forcing an equal reduction in surplus in the private and foreign sectors. So that means, in aggregate, the private sector and the foreign sector will reduce the surplus cash it is taking in over what it spends.
I see this viewpoint as being very blinkered. I mean, if the recession is destroying the ability of the non government sector to save, and if the government runs deficits such saving increases, then what is the point of even having taxes? I mean, why not simply remove taxes completely and have the government simply borrow what it needs and run massive, massive deficits all the time? And if people are worried that the government can't pay the money back, why not simply borrow more money to pay off increasing debt levels?

Businesses can close, individuals can go bankrupt, but governments cannot be allowed to fail. If a government reaches a fiscal crisis it must transfer its problems to individuals and businesses via taxation or inflation. The alternative - letting a government collapse - will result in everything collapsing. If government can survive, then new businesses can eventually form to employ individuals. Without government, such a recovery would be impossible (unless you think anarchy is a good thing).

No business runs itself completely on debt. Acme Widget Corporation can't borrow $1 billion per year to produce widgets that it provides for free for anyone who wants one. In such a scenario, AWC will no longer be able to procure funds and the company will collapse. When it comes to government, you can't just keep borrowing money and running deficits all the time. And although government is "safe" from a financial perspective, any deficits the government run ends up having the negative effects being transferred to the economy. These negative effects are:

1. Internal: Reduced levels of government spending in order to pay back debt.

Let's assume a government runs a fixed deficit year after year and also a fixed amount of spending year after year. This government, spending $10 billion per year and borrowing $1 billion per year, may look reasonably stable in its expenses. The actual numbers themselves don't change much.

This, however, hides what actually occurs. With increased levels of debt comes an increasing amounts of debt servicing, which - if spending is kept fixed - means that the government spends less on important things (defence, law enforcement, education, health, etc) and more on debt servicing. As I pointed out back in 2008, Italy has gotten itself into so much government debt that more than 41% of government spending is directed towards debt servicing. From an accounting point of view, things are balanced... but the reality is less money going to where it is needed.

In short, what occurs when governments run big deficits is more money going towards investors and less money going towards the people. Social problems caused by a poorer population then begin to eat into GDP.

2. External: A devaluation in currency.

Because the national government is linked to the national currency, any increasing risk of government debt default results in scaring international investors. This then results in the international market repricing that nation's currency accordingly - not only does the price of borrowing increase (interest rates) but so too does the value of the currency drop. Inflation hits the nation, along with increased import prices and a drop in real wages.

An inability to control fiscal deficits was one reason why so many Latin American economies had currency devaluations during the 1970s and 1980s. This is why controlling deficits was part of the Washington Consensus.
Now while I'm not a Keynesian per se, I do agree with the idea that governments should run fiscal deficits during recessions to increase aggregate demand. However, I also believe that governments should run fiscal surpluses during periods of growth. You can't be a Keynesian during a recession and then expect to become a Reaganite during a growth period.

Some people have likened the idea of cutting deficits during a recession to be as short-sighted as Hoover back during the depression. But the United States in 2009 is much different to the United States under Hoover in 1930. It's true that Hoover shouldn't have been afraid of government debt and should've embraced deficits. but the level of public debt in the US in 1930 was minuscule in proportion to the economy. By contrast, Obama in 2009 is embracing big deficits, but the sheer amount of money already borrowed since 1981 has placed the US government into a very poor fiscal position. That is why I believe current US government deficit spending is unsustainable.


Catastrophic Fire Warning for South Australia

A heatwave has been hitting South Australia hard since the beginning of November. I'll let the stats tell you:

Australian Bureau of Meteorology. Link.

For American readers who read things in Farenheit, you might like to convert the figures here. Basically the mean low and high temperatures this month have ranged from 17.5°C (63.5°F) to 32.1°C (89.8°F). As you can see, temperatures passed 37°C (98.6°F) six times this month. Whew! And now there's this:
The weather bureau has issued Australia's first "catastrophic" bushfire danger rating for two parts of northern South Australia tomorrow.
The Country Fire Service (CFS) says any fires in the North West Pastoral and Flinders districts will be uncontrollable and there is a very high likelihood that people in their path will die.
The weather bureau says there will be a combination of extremely high temperatures, strong winds and low humidity in the two districts.
It is the first time the rating has been used in Australia since a new national warning system was introduced after Victoria's deadly Black Saturday bushfires in February.
The Country Fire Service's Euan Ferguson says even the most prepared residents should leave their homes by the morning.
"It really will depend on the onset of those very strong wind conditions," he said.
"I would say that at the very latest by 10:00 tomorrow morning they should be in their safer place."
Wendy Shirley of the CFS Volunteers Association estimates that about two-thirds of those in bushfire-prone areas have not heard warnings or do not think it affects them.
"It's those two thirds of people that are not only putting their own, their families' lives and their neighbours' lives at risk, but also the lives of our volunteer firefighters," she said.
The Adelaide Forecast doesn't look good:
  • Wednesday. Min 20°C (68°F) Max 39°C (102.2°F)
  • Thursday. Min 25°C (77°F) Max 41°C (105.8°F)
After that things should cool down for a few days. Adelaide is not, of course, the target of the fire warning but areas to the north. I visited South Australia back in November 1999 and to the Flinders districts mentioned in the warning and, while it can get quite hot and dry, it was certainly not a desert. There'll be plenty of trees and scrub - and properties - that might get consumed if any fire breaks out. Dust storms are also likely.

Need I remind people that it is not summer yet down under?

Mount Remarkable National Park. Will this be gone in a few days?


(I just found this funny. I'm not making any hints about my personal life!)


Experimenting with grain cooking

As a result of my creation of that rice and lentil dish a while back, I've been doing some more thinking and research, and this morning I made a rice and lentil porridge:

  • 50ml White Rice (I used Basmati)
  • 50ml Red Lentils
  • 400ml Water
  • 1 teaspoon powdered chicken stock (or 1 chicken stock cube)
  1. Place ingredients in saucepan.
  2. Heat to boiling point.
  3. Reduce heat to low, place lid on saucepan.
  4. Simmer for 25 minutes.
  5. Serve.
  • Serves one adult - adjust servings to fit the amount of people being cooked for (double for two people, triple for three people, etc)
  • Powdered beef stock can be substituted for the chicken stock in the ingredients.
  • Powdered vegetable stock can be substituted for the chicken stock in the ingredients, making it a truly vegetarian dish.
  • I measured the rice and lentils by using a shot glass of each.

What I ended up with was a nice, tasty, savoury porridge. The lentils had disintegrated while the rice was engorged with water. While it was different in taste and consistency to regular porridge (what Americans call "oatmeal") the same proportion of dry ingredients to liquid is used, namely 4 parts liquid for every dry ingredient. For Oatmeal it is generally 4 parts water to one part oats.

Of course I have added lentils to the mix, and lentils pretty much act the same way as a grain when cooking. Lentils, however, are high in protein and when added to rice provide the body with a complete set of proteins that are missing if a person eats only staple food.

As I pointed out, though, what has interested me is the proportions. In my last rice/lentil post I gave instructions for a 2:1 liquid:dry ingredient ratio, and this was great for creating a fluffy rice and lentil dish. Today's recipe, however, doubles the amount of liquid (and that's the only real difference), which means that it produced a porridge consistency. As I did more research I discovered gruel, which seems to have an even greater proportion of liquid. Congee, a tasty Chinese gruel, appears to have an 8:1 liquid:dry ingredient ratio. I'll try to make that at some point, probably with short grain rice.

What I'm also going to experiment with is the use of other grains. If I replace the rice/oats with millet, barley, sorghum, maize or wheat, will I end up with the same sort of result (though different in taste and consistency)? Moreover, will the liquid:dry ingredient proportions remain the same?

Let me just end here by saying that this sort of food is exceptionally cheap to buy and cook. It is high in complex carbohydrate and protein, low in fat, and high in fibre.

Liquid:Dry Ingredient ratio

Steamed = 2:1
Porridge = 4:1
Gruel (Congee) = 8:1

Some good news for Europe

The Lisbon Treaty finally got ratified. It took its time. This should make EU-wide decision-making a lot easier, not to mention the potential for adding new members.

One nation which aspires to join is Moldova, a former Soviet republic (as opposed to an Eastern-bloc nation). Recent elections in the nation have placed a coalition government in place that call themselves the Alliance for European Integration.

2012 and the problem of taking real threats seriously

2012 is a new film about the end of the world starring John Cusack. It is directed by Ronald Emmerlich - the same guy who destroyed the world in Independence Day and The Day After Tomorrow. The choice of the title, the year 2012, is due mainly to the idea that the Mayan calender predicts that the end of the world will occur in 2012 (apparently, if read and interpreted in a certain way). No doubt the film will also highlight the 2012 phenomenon, which Wikipedia says is "a range of beliefs and proposals positing that cataclysmic or transformative events will occur in the year 2012."

So the idea is that you have 2012 the phenomenon, and you have 2012 the film, which is based very loosely upon that phenomenon.

Aang finally defeats the evil Fire Lord, but at what price to humanity?

Apparently the film has received all sorts of bad reviews. I think that's a good thing. I personally think that the entire 2012 phenomenon is going to be a load of rubbish and people will look back upon it in the same way as other apocalyptic scenarios that never happened (eg Comet Kohoutek; The Montanists and their New Jerusalem).

As a believer in Peak Oil and Global Warming, though, I do believe that the world is heading towards some sort of economic and social disaster that will take a long time to recover from. Annoyingly, apocalyptic films like 2012 end up misinforming people as to the nature of the problem and any potential solutions. When global warming and the whole "Greenhouse effect" was first touted as a serious problem back in the 1990s, Hollywood decided to use good science as the basis of a particular film, and in the process threw science out the window.

Not a denialist.

, from what I can gather, is just another Emmerlich destroy-the-world pic. Aliens did it in Independence Day, Godzilla did it in some film I can't remember the name of, and global warming did it in The Day After Tomorrow. 2012 just continues the theme, except it's based on wow weird Mayan prophecy (you know, the same people who didn't prophesy the Spanish conquest of South America).

For Hollywood, the premise can be weird, it can be spiritual, it can be scientific - what matters is what the result looks like on the big screen. So for the consumers what we have is a simple conclusion - the world can end through weird prophecy, through monsters, through global warming and through alien invasion. And all are fictional.

Just another bad Hollywood screenplay.

The reality is that both Global Warming and Peak Oil are threats to our world, but they are threats which are grounded in science, not fiction. Will there be some major threat to our world which appears in 2012? There might just be, but it won't be on the scale of 2012 the film. And even if nothing of consequence occurs in 2012 it may occur later. When it comes to being a futurist, the what is more important than the when - we don't exactly know when things will get worse, we just know that they will.

Societal collapse is the danger we face when we take into account the dangers posed by Global Warming and Peak Oil. History is replete with examples of societal collapse, from the Great Depression to the Black Plague.

I'm not dead yet!

What we have learned from societal collapses in the past is that it is never the "end of the world", and that some areas are worse hit than others. Some collapses are localised or regionalised. Other collapses are mild while some are severe and last centuries.

What we do know is this: Peak Oil advocates believe that the world's oil output will begin to steadily and irreversibly drop, forcing our society to find alternatives to motorised transport and suburban living, a process which will result in a lengthy period of economic stagnation. Global Warming advocates believe that mankind's pumping of carbon dioxide into the atmosphere since the industrial revolution has led to a warming effect upon climate, and will eventually lead to rising sea levels. The climate change caused by this process will result in low-lying areas of the world being permanently inundated by seawater, as well as causing droughts in food producing areas as well as floods and increased threat of hurricanes and cyclones in tropical regions. This is enough to measure potential deaths in the millions. It will not be the "end of the world", but it will be the end for many.

To conclude, don't watch 2012. It's silly. Don't worry about Hollywood threats to the world - but do worry about threats that have a sound scientific basis.



"Our very way of life is under siege," said Mortensen, whose understanding of the Constitution derives not from a close reading of the document but from talk-show pundits, books by television personalities, and the limitless expanse of his own colorful imagination. "It's time for true Americans to stand up and protect the values that make us who we are."

According to Mortensen—an otherwise mild-mannered husband, father, and small-business owner—the most serious threat to his fanciful version of the 222-year-old Constitution is the attempt by far-left "traitors" to strip it of its religious foundation.

"Right there in the preamble, the authors make their priorities clear: 'one nation under God,'" said Mortensen, attributing to the Constitution a line from the Pledge of Allegiance, which itself did not include any reference to a deity until 1954. "Well, there's a reason they put that right at the top."

"Men like Madison and Jefferson were moved by the ideals of Christianity, and wanted the United States to reflect those values as a Christian nation," continued Mortensen, referring to the "Father of the Constitution," James Madison, considered by many historians to be an atheist, and Thomas Jefferson, an Enlightenment-era thinker who rejected the divinity of Christ and was in France at the time the document was written. "The words on the page speak for themselves."

According to sources who have read the nation's charter, the U.S. Constitution and its 27 amendments do not contain the word "God" or "Christ."

Mortensen said his admiration for the loose assemblage of vague half-notions he calls the Constitution has only grown over time. He believes that each detail he has pulled from thin air—from prohibitions on sodomy and flag-burning, to mandatory crackdowns on immigrants, to the right of citizens not to have their hard-earned income confiscated in the form of taxes—has contributed to making it the best framework for governance "since the Ten Commandments."

Full factual report here.

Photograph: The U.S.S. U.S. Constitution.

American Physical Society rejects Global Warming denialism

The American Physical Society, one of the largest and oldest scientific societies in the world, has an "official statement" regarding Global Warming. Here it is:
Emissions of greenhouse gases from human activities are changing the atmosphere in ways that affect the Earth's climate. Greenhouse gases include carbon dioxide as well as methane, nitrous oxide and other gases. They are emitted from fossil fuel combustion and a range of industrial and agricultural processes.

The evidence is incontrovertible: Global warming is occurring. If no mitigating actions are taken, significant disruptions in the Earth’s physical and ecological systems, social systems, security and human health are likely to occur. We must reduce emissions of greenhouse gases beginning now.

Because the complexity of the climate makes accurate prediction difficult, the APS urges an enhanced effort to understand the effects of human activity on the Earth’s climate, and to provide the technological options for meeting the climate challenge in the near and longer terms. The APS also urges governments, universities, national laboratories and its membership to support policies and actions that will reduce the emission of greenhouse gases.
Naturally the "denialists" (those who actively promote the view that global warming is either not occurring or is not man-made) have had an issue with the APS statement, so a number of APS members put a petition through to the APS council. The idea was to change the "official statement" (which I quoted above) to the following:
Greenhouse gas emissions, such as carbon dioxide, methane, and nitrous oxide, accompany human industrial and agricultural activity. While substantial concern has been expressed that emissions may cause significant climate change, measured or reconstructed temperature records indicate that 20th 21st century changes are neither exceptional nor persistent, and the historical and geological records show many periods warmer than today. In addition, there is an extensive scientific literature that examines beneficial effects of increased levels of carbon dioxide for both plants and animals.

Studies of a variety of natural processes, including ocean cycles and solar variability, indicate that they can account for variations in the Earth’s climate on the time scale of decades and centuries. Current climate models appear insufficiently reliable to properly account for natural and anthropogenic contributions to past climate change, much less project future climate.

The APS supports an objective scientific effort to understand the effects of all processes – natural and human --on the Earth’s climate and the biosphere’s response to climate change, and promotes technological options for meeting challenges of future climate changes, regardless of cause.
The APS responded thus:
The Council of the American Physical Society has overwhelmingly rejected a proposal to replace the Society’s 2007 Statement on Climate Change with a version that raised doubts about global warming. The Council’s vote came after it received a report from a committee of eminent scientists who reviewed the existing statement in response to a petition submitted by a group of APS members.
What is interesting about the APS response are the final two sentences:
As a membership organization of more than 47,000 physicists, APS adheres to rigorous scientific standards in developing its statements. The Society is always open to review of its statements when significant numbers of its members request it to do so.
So how many APS members backed the denialist proposal? It seems that the number was around 160, which is a very small number when compared to the 46,840 members who didn't sign it. If denialists are to succeed in swaying scientific opinion, they need to get more scientists on their side. A proposal backed by 0.34% of APS members is hardly enough to matter. Moreover it seems to suggest that a consensus of scientific opinion exists within the APS that the current official statement is correct.

It is true that over 31,000 American scientists have signed a denialist petition, but since there are 2,157,300 scientists in the US (at least in 2001), that's still barely more than 1.4%. If a controversy did exist, you'd expect there to be more scientists up in arms about global warming. A good rule of thumb would be 20% - if 20% of scientists disagree with anthropogenic global warming then you could argue that a controversy does exist. I look forward to denialists getting 400,000 more signatures.

Posted this at Reddit

Here: Someone was complaining (rightly) about Krugman's latest column.

There's something to be said for the axiom that any problems caused by cheap money in an economy cannot be solved by cheap money in an economy.

I have no problems with Keynesian stimuli - I just think it should be sustainable.

Here in Australia, our government completely paid off public debt, so when the time came to spend up big to kick start the economy, it was sustainable.

In the US, however, big spending stimulus occurred when public debt was already at absurdly high levels. In effect the government had been "stimulating" the economy for most of Reagan and most of Bush 1 and Bush 2. At some point the "chickens have to come home to roost" and the debt must be paid off by running fiscal surpluses (which occurred under Clinton's second term but was nowhere near enough). The longer you leave paying debt off, the harder it will be to do and the more negative effect it will have upon America.

BTW This is not like Hoover and the great depression. Keynes rightly argued that governments should run fiscal surpluses during a depression. Hoover tried to limit government spending because running large deficits was not really a policy that had been tried before. There was certainly no huge debt already there preventing Hoover from doing it.

Fast forward to Obama and the general consensus amongst more left-leaning economists like Krugman is that the stimulus was justified and it worked. I disagree, mainly because of the fact that the US has accrued too much debt already. Had Bush 2 continued Clinton's surpluses it is likely that the federal government's fiscal position would be such that Obama's big spending would be sustainable and would not come back to "haunt" America. But since the debt was already too big, the only option is austerity (the government paying off debt during a recession).


Current Real Interest Rates

OSO's Debt Watch

GDP = $14.3015 Trillion (2009 Q3 advance figures)
Public Debt = $7.58837393303829 Trillion (2009-11-10)
Debt/GDP ratio = 53.06%
Population = 308,013,326 (Resident Population + Armed Forces Overseas, 2009-10-01)
Public Debt / person = $24,636.51
Tax Receipts = 2.104614 Trillion (Year-to-date, Monthly Treasury Statement, 2009-10-01)
Debt/Receipt ratio = 360.56%

Note: In October 2008, the Debt/GDP ratio was 43.43%

I have begun to include the "debt/receipt ratio". The idea is that you measure annual income against debt in the same way as you would compare a company's level of net debt compared to their income. This will be measured as year-to-date tax receipts compared to the current level of public debt. By way of comparison, here are the results from 12 months ago:

Tax Receipts on 2008-10-01: $2.523858 Trillion (also see here)
Public Debt on 2008-10-01: $5.85079125496739 Trillion
The Debt/Receipt ratio on 2008-10-01 was 231.82%


Them Crooked Vultures

Them Crooked Vultures is a supergroup. Over the least few months the internet has been raving about this band and their upcoming new album, which is due very soon.

The band, knowing just how to appeal to the world's internet citizens, has uploaded their entire album onto Youtube so anyone can hear it for free. Will this hurt their CD sales? I very much doubt it.

The three people who make up the supergroup are a who's who of musical talent. In the picture you see here on the page (better version here) you can see the three members. The guy at the top is Dave Grohl and he is the drummer. He is playing a guitar in the picture because he is a multi-instrumentalist. Grohl is known for being the drummer for Nirvana and the guitarist / lead vocalist for the Foo Fighters. The ordinary looking bloke in the middle is Josh Homme, the guitarist for the band and also a multi-instrumentalist. Homme is known as the guitarist for Kyuss (one of my favourite bands) and for Queens of the Stone Age (who Grohl used to drum for once), and as the drummer for The Eagles of Death Metal (which is neither a death metal band nor an Eagles-sounding band).

But it is the third person in the picture who is the real star - John Paul Jones, the former bass player for Led Zeppelin. Jones is 63 frigging years old but still rocks like a youth. By comparison, Grohl is 40 and Homme is 36, so Jones is almost as old as the other two guys put together. To put it in even more perspective, when Homme was born, Stairway to Heaven had been out nearly two years. Jones, in other words, is old enough to be Grohl's and Homme's father. I've seen live footage of Them Crooked Vultures of the band in action (see here) and Jones looks like he is enjoying himself greatly.

Anyway, I haven't been this excited by a new band since, um, the last time I was.

John Paul Jones here. Josh Who? Josh from? Josh from where? The Queen of what?

Windy weekend in Spain delivers record amount of renewable energy to grid

Da Guardian:
Wind energy provided more than half of Spain's total electricity needs for several hours over the weekend as the country set a new national record for wind-generated power.

With high winds gusting across much of the country, Spain's huge network of windfarms jointly poured the equivalent of 11 nuclear power stations' worth of electricity into the national grid.

At one stage on Sunday morning, the country's wind farms were able to cover 53% of total electricity demand – a new record in a country that boasts the world's third largest array of wind turbines, after the United States and Germany.

For more than five hours on Sunday morning output from wind power was providing more than half of the electricity being used. At their peak, wind farms were generating 11.5 gigawatts, or two-thirds of their theoretical maximum capacity of almost 18GW.

The new record, which beat a 44 % level set earlier last week, came as strong winds battered the Iberian peninsula.

The massive output of wind turbines meant the Spanish grid had more electricity than was needed over the weekend. In previous years similar weather has forced windfarms to turn turbines off but now the spare electricity is exported or used by hydroelectric plants to pump water back into their dams — effectively storing the electricity for future use.
That last sentence is important - energy was stored. Although wind and solar energy is dependent upon atmospheric conditions, if enough electricity is generated then excess power can be stored. Pumped-storage hydroelectricity is a mature technology that has been used all over the world for decades but is dependent upon good locations for a hydroelectric dam. Other energy storage solutions include Flywheel energy storage, (in which excess energy is turned into mechanical energy which then drives a generator when energy is needed) Hydrogen storage (in which excess energy is used to turn water into hydrogen and oxygen through electrolysis, which is then turned back into electricity via a fuel cell) and Thermal Energy Storage (in which molten salt is heated directly by the sun and the heat used to drive a steam turbine during both day time and night time). None of these solutions prevents a loss of energy, but neither does the pumped-storage hydroelectricity that we have used for decades.

The more renewable energy a grid takes on, the greater will be the need to develop energy storage for the grid.


Why didn't it work?

Marge, I agree with you -- in theory. In theory, communism works. In theory.
- Homer Simpson.
Communism failed for many reasons, not least due to the effects of Stalin's dictatorship. Yet modern communists are quick to point out that Communism as a theory doesn't exclude free and fair elections, nor does it by nature result in a dictatorship of the sort we saw under Stalin. And you know what? They're right. But there's no point protesting and saying "True Communism has never been implemented" when the simple fact is that a massive long-term communist experiment was tried in Russia between 1917 and 1991 and, while it did lead to many notable successes (Nuclear weapons, Space Program, recognised superpower) we need to remember that it did collapse.

One of the more interesting subjects I studied at Macquarie University was "Modern Russian History", taught by David Christian. Christian was a communist in his youth and did his post-grad work in Leningrad in the early 1970s. Over time he became a critic of communism - not so much because of an ideological shift but because he came to realise that, as an economic system, it failed to deliver what it promised. He pointed out that whenever the Soviet Union wanted to increase the production of goods (eg wheat, tractors, AK-47s) it would simply increase the amount of factories or farming land to achieve it. To put it mathematically, if x is the amount of land set aside for growing wheat, and y is the output of wheat, then the path to 2y is to 2x - doubling the output meant doubling the means of production. The problem arose when there was no more room for increasing output - short of felling Siberian forests and forcing women to have lots of babies.

Capitalism, by contrast, (and this is Christian's argument), sought to increase production by increasing efficiency and productivity - and the way this was done was through profit driven innovation. Rather than being content with 2x = 2y, capitalism sought to change the equation to read x = 2y, to increase production without increasing labour or space or equipment by the same proportion. Christian therefore concluded that, in the "war of ideologies" that typified the post-war world, Capitalism had won because it was able to (eventually) deliver better and cheaper goods and services for people. Christian did not embrace capitalism, though - he still saw within industrial capitalism the exploitation and suffering of workers and thus the seeds of dissent that Marx saw. (note: this is my summary from memory of what Christian argues in his book Imperial and Soviet Russia).

Christian's arguments are very cogent because he steers away from the Stalinistic dictatorship / loss of democracy line of argument that so many people today use to explain Communism's failure. While it is no doubt true that Stalin and the lack of democracy were serious blights upon communism, their presence alone did not lead to communism's collapse. There are three nations today which espouse communism - China, North Korea and Cuba. Of those three, only one (North Korea) has remained ideologically true. China and Cuba abandoned Communist principles decades ago, and these nations have essentially become undemocratic societies with varying degrees of free market activity and private ownership of wealth (anathema to pure communism). By contrast, North Korea continues to be the beacon of hope for the workers of the world, and what a terrible, inefficient, controlling and frightening beacon that has turned out to be.

So all hail capitalism? Not quite, of course. I have often in the past compared the misguided ideological purity of the communist party to the ideological purity of conservatism - especially political conservatism in the United States. This is one of those times.

Modern American Conservatism (modern) can be traced back to the election of Ronald Reagan in 1981. For the past 28 years, US political discourse has been dominated by conservative beliefs and ideals. Yet in that time we have not only seen lower GDP growth than the previous period, but also a massive shift of wealth to the rich. Real median household income growth since 1981 has, according to the Krugmeister, been around 0.7% per year. Moreover, US Census figures clearly show that median income has stagnated since 2000, while the top 5% of wage earners have increased their income by 25% over the same period.

Then we add to this the ridiculous level of credit market debt as a percentage of GDP, which shows just how much of America's current wealth is illusionary. Also add the massive expansion of public debt under Reagan and both Bushes, the financial corruption of conservative politicians in recent years, the FEMA debacle in New Orleans and, of course, the housing bubble and credit market collapse which has led the world into the worst economic downturn since the great depression. Not to mention the conservative controlled Federal Reserve Bank (Alan Greenspan and Ben Bernanke were both appointed by conservative Presidents. Alan Greenspan was a disciple of conservative philosopher Ayn Rand).

Conservatives will, of course, offer all sorts of retorts to these problems. Conservatism doesn't condone corruption; conservatism demands fiscal prudence; conservatism demands good government. Yet there is no doubt that conservatives held onto political power during the period of history in which corruption, fiscal stupidity and government incompetence occurred. Arguing that conservatism and free market capitalism wasn't really applied during this period is pretty much the same sort of argument as those who say that the USSR never practised "real" communism.

Nevertheless, I am sympathetic to those who do argue that conservatism and free market capitalism wasn't really applied. I am also sympathetic to those who say that the USSR never practised real communism too. Yet there is no doubt that the conservatives who today complain that conservatism wasn't really tried are the same conservatives who enthusiastically voted for conservative politicians over a long period of time and supported the conservatives in power when things appeared to be going well. When asking the question "why didn't it work?", conservatives need to examine themselves and their own failures rather than blaming others - in short, they should take responsibility for their own actions (or lack of them) rather than threatening civil war if they don't get their way.

Ultimately the answer, I think, lies in two areas:

  1. No pure ideology can be practised, so we should embrace a more centrist political position (which is why I describe myself as an Ordoliberal).
  2. Politics corrupts, so stricter anti-corruption policies should be initiated on politicians at all levels (which is why I like the idea of Demarchy).


Fascism and Communism

One of the more unedifying sights in the last twelve months has been American conservatives branding Obama as a Nazi, a Fascist and a Communist. Those of us who know something about history naturally scoff at these things, yet an entire section of the American population seems to think that the three isms - Nazism, Fascism and Communism - are pretty much the same thing. Strangely enough this realisation has only come about in the last few years - due mainly I would argue to a political discourse so crass that labelling your opponents as "Fascist" or "Nazi" or "Communist" or "Socialist" has become the norm (a process which I think will result in the sort of conservative violence already experienced at Oklahoma City and the Atlanta Olympics, both of which were perpetrated by government-hating conservatives).

Fascism and communism have been studied for decades and, while the two share similarities, they are different to one another. Fascism always places political power into the hands of a dictator. By contrast, Communism is run more by a committee. Both are non-democratic. When it comes to relationships with business, the two are very different. Fascism has always been supported by a nation's rich and powerful. Industrialists and business owners were supportive of the Nazi rise to power, they were supportive of Mussolini in Italy and they were supportive of Franco in Spain. Communism, of course, opposed the wealthy class and any form of private enterprise. The Soviet Union gradually removed all forms of private enterprise from Russia and replaced it with government owned and operated factories and farms. Private property under fascism was respected (and the greater the price of the property, the more respect it gave to the owner), whilst under communism it was relegated only to personal belongings (stealing was, after all, an offence in the USSR).

The biggest difference between Fascism and Communism was seen during the Spanish Civil War. Franco and the nationalists were supported heavily by Nazi Germany and Fascist Italy during this war. Those who joined up on the anti-Fascist side and who supported resistance against the Nationalists were called the Republicans. Who sent guns and troops to fight against the Nationalists? One nation was Mexico, while international brigades (the flag of which is to your upper right) existed for any anti-Fascist from overseas who wished to fight for freedom. Oh, did I mention that the Soviet Union was right behind the anti-Fascist effort too? Hardly something a fascist government would do. But then again, the USSR was not fascist.

This is not to say that the Soviet Union wasn't guilty of oppressing people. George Orwell, the famous author (and, let it be said, a socialist), fought against the Nationalists during the Spanish Civil War. He himself criticised the Soviet Union for being just as bad as the Nationalists, an act which the Soviets didn't appreciate.

Communism is not Fascism. The two are very different. But they do share one thing: they have oppressed people. And Obama is neither a Fascist or a Communist - he's just a liberal politician.

Krugman on pre- and post- Reagan

Take the United States, which wasn’t damaged in the war. Take per capita real GDP. Give hostages by taking data from 1950 to 1980, which means including the 1980 recession, but stopping at 2007, so that the current slump isn’t included. Then here’s what you get:

Growth in per capita real GDP from 1950 to 1980: 2.2 percent per year
Growth in per capita real GDP from 1980 to 2007: 2.0 percent per year

Oh, and if we look at real median family income instead, we get:

Growth from 1950 to 1980: 2.3 percent per year
Growth from 1980 to 2007: 0.7 percent per year

Sorry: there’s no measure I can think of by which the U.S. economy has done better since 1980 than it did over an equivalent time span before 1980. It may be something you’ve heard, it may be something you’d like to believe, but it just didn’t happen.

In other words, since Reagan and the era of modern finance, GDP growth has dropped and far more money has gone to rich people. The era of conservatism has led to the ordinary person being left behind.


Current Real Interest Rates

Sources to click on:

10 Year Bond Rates
Inflation Rates


2009-11-20: Figures on Sweden, Switzerland and Mexico were messed up by me.

Random Thoughts on inflation and interest rates

Let's assume that you live in an area that has been flooded. Let's assume that there are thousands of you sitting in houses on a large "island" caused by the flood. Now let's assume that the flood takes years to subside and that you don't have any way of getting goods from the outside or exporting goods to the inside. Let's also assume that there is no legal tender and that rescue is impossible.To summarise:
  • Forcible closed economy for many years.
  • No way for imports/exports.
  • No currency.
  • Rescue is impossible.
So what would you do? Naturally the best option would be to ration out necessities, like food. Because food is so scarce, and because it is so important, hoarding it for future use is logical. Other economic activities, like dance classes, would become less important. As a result, the relative value of food goes up while the relative value of dance classes goes down. In this environment, people are more likely to stop teaching people to dance and more likely to plow up their back yards to grow food. By contrast, people who chose to teach dance instead of grow food are idiots.

Now let's add money into the equation. With the economy suddenly becoming closed and no longer having the ability to export/import goods and services, the result would be a huge jump in inflation in some sectors (such as the cost of food) and deflation in other sectors (such as the cost of dance classes). But let's assume that the net effect is inflationary. What to do?

There is a choice - you can increase interest rates to control prices, or you can keep rates low to stimulate production.

If you increase interest rates to control prices, the "economy" contracts considerably. Because money becomes more valuable, people are no longer using it to purchase food, which results in a drop off in the purchase of food.

In other words, the raising of interest rates to control the inflationary effect of a supply shortage leads to the common sense conditions of the currency-less flooded island economy I have outlined.

By contrast, letting money devalue via inflation will lead to people using it to purchase the wrong goods and services, which occurs because confusion over money's usage increases the more often it changes in value. If money keeps inflating out of value, a barter system will eventually result and the "common-sense conditions" will eventually arrive... except the currency system has been ditched.

So, when faced with inflationary pressures from supply shortages, we have a choice - we can either kill off inflation, which leads to common sense austerity in the face of poverty while still using a currency; or we can let inflation confuse everyone for a while before common sense austerity is finally reached after having ditched the currency.

And, of course, the removal of currency then leads to further poverty, or at least a severely impaired potential to regrow.

tl;dr Price stability is essential when using currency, no matter where the inflationary pressure comes from.

Random thoughts on Keynesianism

The net effect of Keynesian stimuli is proportional to its relative broadness.

The broader the stimuli, the less growth seen in the short term, the more sustainable it becomes in the long term.

The narrower the stimuli, the more growth seen in the short term, the less sustainable it becomes in the long term.

Eg: Should we spend $30 billion on one company or upon 3000 companies?

Question: Is debt reduction a better choice than production?

(these are random thoughts outlining some of my thinking, not any of my conclusions)


A weird thought

I have to write this down, just in case it ends up being true.

It is 2009-11-06, 10.19 UTC

I have this theory that Major Nidal Malik Hasan, the guy has been charged with the Fort Hood massacre, was not the gunman. I think he was mistaken for the gunmen and shot by someone responding to the massacre.

The gunman himself committed suicide and is one of the 12 dead people.

Just a wild theory, but I've put it out there just in case.


Living for today makes for bad monetary policy

Ben Bernanke has said that US interest rates will remain where they are - at the historically low 0.25% - for the time being. By contrast, Australia's interest rates have been going up. What's going on?

The only real reason to adjust interest rates is in response to inflationary pressures. The latest CPI figures from the US indicate that prices have remained relatively stable over the past month (+0.2%) while the 12 month result is still negative (-1.3%). From that data alone, keeping interest rates where they are appears to be the right move.

But as regular readers know, I'm not a fan of Ben Bernanke. Bernanke not only misjudged the severity of the current downturn while it was happening, he was also partly responsible for the creation of the downturn, being part of the Fed board that approved Greenspan's negative real interest rate regime. My lack of confidence in him knows no bounds.

Good monetary policy doesn't just depend upon current data - it should also look to the future, and the future for the US Dollar is not bright. I have predicted a dollar crash for many years now and while I am happy to be wrong in predicting the when, I stand behind my predictions of what will happen. Whenever currencies drop in value, the result is more expensive imports which is then translated into higher inflation. Inflation can only be dealt with by restricting money creation, which means that interest rates will have to rise. In short, America's future involves inflation.

Given that my predictions about a US dollar crash are correct, Bernanke's decision to keep interest rates low smack of reactivity rather than proactivity. Had Bernake raised interest rates 25 basis points, he would be acting in response to a future event. Instead, he's stuck in the present.

Such activity is not new. The negative real interest rate regime under Greenspan between 2002 and 2005 was based upon present concerns and ignoring the potential for future problems. It also ignored the teachings of history - that negative real interest rates were a recipe for financial and economic disaster (a point which The Washington Consensus makes). If a dollar crash is coming (and the current data shows nothing but a downward trend), then Bernanke should be doing better - adjusting interest rates in response to a future inflationary environment makes perfect sense.

OSO's Debt Watch

GDP = $14.3015 Trillion (source)
Public Debt = $7.58007414906503 Trillion (2009-11-03)
Debt/GDP ratio = 53%
Population = 308,013,326 (Resident Population + Armed Forces Overseas, 2009-10-01)
Public Debt / person = $24,609.57

Note: In October 2008, the Debt/GDP ratio was 43.43%



The signs are there that the US economy is beginning to recover. The last quarter GDP came out at 3.5% - which, though it might end up being revised downwards over the next few months, does indicate some level of economic growth. Moreover, other signals, such as manufacturing increases, seem to indicate a potential recovery.

I can see two possibilities before us.

The first possibility is that growth will continue over the next few years but the rate of growth will be low. Any form of Keynesian spending of the sort practised by Obama and congress will result in an economic slump over the medium term. The hope, of course, is that the spending will stimulate the economy enough for it to be self-sustaining and thus end up paying off the debt accrued by the stimulus in the first place. Given the sheer level of US public debt (which is approaching my predicted 55% of GDP), I doubt that the benefits will end up outweighing the losses. Yet the US economy has had the ability to surprise in the past so I can't discount the idea that GDP will return to growth over the next 4-6 quarters. What I am certain of is that such growth, if it occurs, will be hobbled. I can't see anything beyond 2% being achieved. In terms of unemployment, such hobbled growth will result in only a slight improvement over the current situation, which is, of course, terrible.

The second possibility is that the 3.5% growth is merely a blip on the way further downwards. This means that Q1 2009 and beyond is likely to see a return to recessionary conditions. One of my predictions for 2009 was for the US Dollar to drop below 60 on the US Dollar Index which, in hindsight, appears to be too pessimistic. Nevertheless, the fall in the US Dollar this year has been the steepest on record and there seems to be little evidence that it has reached the bottom. As I have pointed out over the years, with bond yields too low and business profits rare, why would investors wish to invest in America? The US is still ripe for capital flight given the superior conditions elsewhere (or at least "less bad" conditions). The US Dollar cannot continue to fall without some inflationary pressure and, when it comes, will require increasing interest rates in an already poor economic situation (increasing interest rates always dampens economic growth).

What I can't see is any possibility of the US returning to consistent 3-4% GDP growth. The damage caused by runaway public spending since Reagan, a badly unregulated financial market and cheap borrowing cannot be ignored. There is a time for the US to reap what it has sown, and the harvest has only just begun.


In which I might become the author of a meme

In the world of the internets, the meme author is king. Admiral Ackbar, AYBABTU, Do not want - all these meme creators have been glorified by their actions.

So what did I do? Well, it's still developing, but it's possible that I created a meme called "Move to Svalbard". It started at Reddit (as all horrible things start there) where I posted what I felt was an interesting link. I had been going through Wikipedia when I reached the page on Svalbard, which is a Norwegian Island near the north pole. Now the interesting thing about the history of Svalbard is that it was the subject of an international treaty in 1920 which is still in force today. One of the most important bits of the treaty is the following:

All citizens and all companies of every nation under the treaty are allowed to become residents and to have access to Svalbard including the right to fish, hunt or undertake any kind of maritime, industrial, mining or trade activity. The residents of Svalbard must follow Norwegian law though Norwegian authority cannot discriminate or favor any residents of a certain nationality.
Did you get that? Basically it means that anyone from the 39 nations who signed the treaty can migrate to Svalbard to live and work. Even though Svalbard is part of Norway, the Norwegian government cannot prevent people from the 39 nations moving there to work.

So I thought "this demands a Reddit posting", which I titled Sick of your country? Don't mind cold weather? The treaty of Spitzbergen allows citizens of 39 nations to migrate to Svalbard (a Norwegian island near the North pole) and become residents if they want to, no questions asked. Link here.

The response was enthusiastic. The posting reached into the top five postings for a while and it has so far generated over 500 comments. What are the comments about? Well apart from the terrible Reddit humour (which is why I was drawn to Reddit in the first place), there seems to be some level of enthusiasm for actually moving to Svalbard. It would be interesting if people actually DID migrate to Svalbard as a result of my posting. "Jobs in Svalbard" has apparently become a search phrase as a result.

The interest generated has moved on to another posting made by someone else. It is entitled IAMA Request: Someone living in Svalbard, in the hope that a Svalbardian might just read it and respond. The post was created by someone who wants to know what it is like to live there. In response to this, some people have even begun to comment on Svalbard message boards - which is going to be hard since the message boards and the population all speak either Russian or Norwegian.

How far will this go? Who knows? If a "Reddit IT Community" begins in Svalbard (a semi-serious suggestion by a redditor) you can probably thank me. I'm not going to move there - too cold. But if anyone does, make sure you name something after me.

Update: Someone has decided to visit Svalbard and study there.