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:

• Architecture Billings index hits record low.
• Industrial Production is cliff diving.
• Housing starts at record low.
• Overcapacity everywhere.
• DJIA going nowhere.

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

• Hot off the press! Barry is to blame for everything!
• Japanese Finance Minister Shoichi Nakagawa has resigned. Obviously he's done so because of Barack Obama.
• Euro drops to ten-year low. This is because of something bad Obama has done lately. I just know it.
  
• GM and Chrysler want more money. This is because of the economic mess Barack Obama has managed to create in his first few weeks in office.
• 20,000 Californians will lost their jobs because, like, Barack Obama was actually the "Shadow Governor" of California and caused their economic demise.
• Joss Whedon is giving up on making Television shows. This must be due to the MSM's love for Barack Obama confusing their senses and not making good choices for shows.
• A 135kg (297lb) woman is refused entry into New Zealand because of her size. Her illness is a direct result of Barry's socialist policies, as is the fascism of New Zealand government officials.
• The founder of an Islamic television station in upstate New York aimed at countering Muslim stereotypes has confessed to beheading his wife. This never would've happened under George W. Bush.
• Internet use is good for the brain. Obviously Barry doesn't surf the net otherwise he would've cut taxes and invaded Mexico by now.
• True Christians who obey the Bible oppose the stimulus.
  

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.

Enjoy!

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?