News, and What's not in the News

March 24, 2009

   It just gets stranger all the time.  With all the gang violence in the US south due to illegal drug smuggling out of Mexico, the US still refuses to get serious about securing its border.  You have to wonder.  On the one hand they want to stop the drug trade, yet on the other they want to let illegal immigrants flood across the border.  I am sure some will try to argue this point, but when you look at their approach it is clear that they want the illegal immigrants coming in.

There is no other logical conclusion that you can come to. 

  Meanwhile the rest of the world is still in a quandry as to how to deal with the economic mess.  In Europe they appear to be alienating the newer members.  England is quite the mess.  And China is getting concerned about US debt levels.  At some point they may decide to stop propping up the US and things will really get interesting.  With the wonders of globalization maybe they can make the whole world look like Iceland's economy.

 

March 18, 2009

  The circus show just gets worse.  The AIG bonuses are all the rage today - imagine, you get a bonus for engineering the largest loss in history.  Where can the rest of us get work like that.  The real story though is who put the loophole in the legislation that allowed this to happen.

  One Senator tried to add an amendment to the bailout bill that would have prevented this from happening.  When it all went to committee behind closed doors to reconcile the House and Senate versions it got dropped.  We all know that the House Republicans were not involved in the process to any degree so we have to conclude that Democrats put this in.  If amendments came from the Senate and were dropped in the reconciliation process, it boils down to House Democrats as the culprits.

  This brings up another point: where is all the transparency we were promised?  All this process should have been out in the open, not behind closed doors.  This is nothing that requires any secrecy.  It also highlights that governments do not operate in the best interest of the people.  So much for all that change we were promised.

  Meanwhile back in Canada, the Prime Minister says there is a need to go out and recruit immigrants from the rest of the world.  I have to wonder, is he nuts?

  In an overpopulated world, nobody needs more people.  Whose interest is he looking after?  Certainly not those of Canadians.

  The argument is always that we need people to replace aging baby boomers.  But that is just a bunch of bunk.  If these guys were capable of reading their own government's data they would know that most baby boomers can't afford to retire.  When you run a system that robs the middle class to make the rich richer, guess what - they can't retire because they can't afford to.

  Bringing in more people is just going to create a huge problem because there will be old people who need work and fewer jobs to go around. 

  There are also some interesting developments in Europe.  The western members of the EU are not willing to help the newer members from the east out.  There are a lot of serious problems in the eastern part of Europe due to the financial calamity that hits us all.

  They ended up taking in a lot of debt in foreign currency.  They got a low interest rate, but the problem is that exchange rate moves have effectively increased the total debt dramatically.  One of the hazards of borrowing somebody else's currency.  The EU is going to bail out some in the west and have various stimulus plans there, but little or nothing for the east.  I would guess this, combined with the rumblings from Russia might be the beginning of a new look further east for these newer members of the EU.

  If they can't get any help in the EU, they may look to Russia.  I would guess Ukraine would be the first to head off that direction.  So much for all the benefits of western democracy.  I guess they just weren't aware that our form of democracy is just rule by a different minority - instead of the politburo it is key business interests that run the western democracies.  Just look at who gets all the taxpayer help when they screw up. 

 

March 14, 2009

  Remember Obama saying he worked for the American people?  Well, he is out there trying to prove himself a liar.

  This week he made the comments that he didn't want to stifle innovation in the financial markets.  Wait a minute, it was innovations in the markets that led to all the mess we are now in.  If Obama is working for the American people and not special interests, he would be putting an end to this innovation.  He would be regulating things like derivatives out of existence.

  As Jon Stewart pointed out when he pinned Cramer (of CNBC's Mad Money) to the wall - it was these derivatives - the side bets by traders - that were at the root of the problem.  He was chastising Cramer for not pointing out the dangers along the way instead being a supporter of the markets.

  Another great example comes from the Lou Dobbs show.  It seems the Obama administration and several Democratic Members of Congress are going after Sherriff Arpio in Arizona for enforcing immigration laws and going after illegal immigrants.  In his county, 53% of crime is by illegal immigrants.  The Sherriff keeps getting re-elected because folks like the job he is doing.  But not the special interest groups that want to open things up for illegal immigrants.

  It seems that the Obama Administration is not working for the American people there either.  On Dobbs' show, he asked a Democratic strategist his opinion on this situation, and got a non-response.  The guy said he was not familiar with the specific case, but the question was what he thought about the idea of going after a law enforcement official who was doing his job.  All Dobbs got was a doge and not a straight answer.

  On CNN this morning there was discussion about the President breaking campaign promises.  The key one was regarding earmarks.  You may recall that in the campaign he said he would not sign any bill with earmarks in it.  James Carville, a Democrat said that Obama never said he was against earmarks.  Am I missing something here?  Over the last couple of weeks when this topic came up the usual response was to the effect that the earmarks were not significant so they did not matter.

  And I guess from the general gist of the comments that Democrat supporters don't think that the truth matters.  They sure don't think that serving the American people matters either.  Hillary Clinton said in the Primaries that Obama was all talk and no substance, and he seems to be proving it out so far.

 

March 10, 2009

  Fed Chairman Bernanke made some interesting comments this morning.  He said things to the effect that they want to provide oversight and regulation but don't want to stifle innovation in the markets.

  I guess these guys still don't get it.  It's the innovation that has caused all the problems in the first place.  Without all the derivatives and innovative financial instruments we would not be in this mess.  As I stated last fall, they might be able to buy some time with all the bail outs and stimulus, but it will only delay the inevitable because they refuse to address the underlying problem.  All they care about is a short term fix for the symptoms.  That is no solution at all. 

  Last week on the news there was a short story on how some people are resorting to barter in this lousy economy.  This enables them to get by without full time jobs.  It was interesting to see how people are trying to adapt.  I wondered at the time though how long it would be before the tax folks would go after this behaviour.

  I didn't have to wait long.  today there was a story on how the tax man is going after the underground economy.  The thinking is that the government is losing a lot of tax revenues.  I would argue that many of these folks can't afford to pay taxes and going underground is keeping them off the welfare rolls.  My guess is that the government is being to clever here and will find the unintended consequence of losing money if they are successful.  They will force more folks on to welfare and or put them in jail.  Either way they will take people who are supporting themselves and turn them into liabilities for the state.

  Of course we can't expect anything like sensible thinking from the government here at all.  After all, the whole mess developed and blew up under their noses.  If or when the economy recovers, it will be in spite of government, not because of them.  And don't be too quick to give business any credit either.  This whole mess is a classic case of what happens when business and government get into bed together.

 

March 1, 2009

  What do Barack Obama and Rush Limbaugh have in common?  This is not a trick question.

  Yesterday I listened to as much of Limbaugh as I could take - and that was not much by the way.  He said, among other things, that he wanted America to "succeed" and that he wanted Americans to be "the best."  That got me thinking:  Succeed at what and how?  Be the best at what?  Looking at the past few decades all the benefits of the kind of policies Limbaugh embraces have gone to a very small minority at the expense of the general public.  Does "succeed" mean more of the same?  It must because he supports the same agenda he always has.  By success and being best I guess he means at transferring wealth to the wealthy at the expense of the ordinary person.

  On a separate front, Obama was saying he works for the American people not special interests and Washington insiders.  Well, the American people want the borders secured and they want illegal immigration stopped.  Obama on the other hand supports what is called by Lou Dobbs the "amnesty agenda" and wants to let those folks stay.  He doesn't want any meaningful enforcement of immigration laws as they pertain to one specific group - the Spanish speaking.  His budget does little for the average person either.  People interviewed on TV say as much - they don't see how it will help them at all. 

   Obama also wants to get "sustainable growth" going.  Growth is at the root of most of the world's problems.  Growth does benefit a minority at the top - it makes them wealthier.  but it has a cost to the average person in the form of reduced standard of living.  Whether liberal or conservative, all support the same basics when you boil it all down.

  So what do Obama and Limbaugh have in common?  From my vantage point neither one cares about the welfare of the average American.  Both cater to special interests, regardless of what they may say.  I base this on observing what they do rather than what they say.

  This brings me to an interesting example of what is called "cognitive dissonance."  This is where a person or people hold conflicting views to be true.  At some point they have to let one or the other, or sometimes both, go.

  Most people, according to polls on TV, don't believe the Obama stimulus will do anything.  They also by a wide margin trust Obama.  At some point these differing views will have to get reconciled.  If the economy does not turn around for the average person they will lose trust of the President.  They also trust him to bring change and there is precious little of that in evidence so far.  We have seen a lot of backpedalling and position changes as things  move ahead.  The fact remains that if things do not change and improve, the trust will be lost along the way.

  I guess there is the other possibility.  the stimulus plan may actually work.  But there is not much for any consensus on that one.  There is a lot of consensus that future generations will be burdened with a lot of debt.  The federal debt is estimated at about $35,000 per person now, and that does not include things like social security liability and some other items that are much larger.  Adding it all up the total will end up being around $200,000 for every man, woman and child in the US in a couple of years or so.  Remember, all government debt ends up being personal debt because businesses pass it on.  So, add that to the average personal debt and presto - you get a number that will soon approach $1 million per family of 4.  That is not repayable in any way shape or form.

  Debt that can't be repaid won't be repaid.  It only remains to be seen how the default looks.  Will it be direct default, or will it be via inflation?

 

February 26, 2009

  There have been some interesting lies told recently in both Canada and the US regarding foreign investment.  In the US for example they say they need folks like the Chinese to invest their US currency holdings in the US.  Well, wait a minute.  Where else would they invest US money?  I guess these experts know nothing about foreign exchange principles.  If the Chinese don't want to invest in the US then they will trade their $US to people who do.  That is the way it works.  One way or the other the US currency will end up in the US.  It only remains to be seen who ends up doing the investing, and what the effects on the exchange rate will be.

  If the Chinese don't want to invest, they will dump their holdings of US currency and drive the value down.  That will hurt their exports to the US though so they have a vested interest in keeping the money and investing it here. 

  The Canadian government wants to encourage foreign investment.  That can't happen under the existing exchange system.  Foreigners can exchange their currency for Canadian currency and invest that in Canada.  However they do it the bottom line is that money that is here already gets invested here.

  In any event, nobody brings any money into a country.  The money is effectively there already and the only thing to play out is who owns the money when the dust clears.  It will always end up being somebody that wants to invest or spend it in its country of origin.

  That makes you wonder why we don't just invest the money ourselves sine it is here already.   And we shouldn't worry too much about who owns the money - one way or the other it will end up in our economy.  It never really left.  Ironically foreigners who own our currency are a bit captive to us.  Their only choice is to try to get somebody to take it off their hands, and that may have a high price if they own enough like the Chinese do.  Their options are limited - invest here or collapse the currency and get little in return.

  The alarmists who say the trade deficit is sending money out of the country are dead wrong - the money hasn't gone anywhere, it is just owned by foreigners who don't have much else to do with it but invest here.  The irony is that their hands are somewhat tied and they have limited options as to what they can do with the money.  We saw it with the Japanese - the best manufacturers end up having to locate here because they have all their money here and nothing to do with it.  That's actually a good thing, not bad.  Instead of GM, we have Toyota and Honda for example.

   Here's a great example of how stupid things can get.  "Top medical experts" in Canada say that if we spend $700 million on a program we can save billions in health care costs.  It sounds really good until you think a bit about what they are saying.

  among other things they want to educate people on the benefits of eating a healthy diet.  I guess these guys don't read the news.  A couple of weeks ago it was reported that Canadians can't afford a healthy diet.  A few years ago Statistics Canada released a study with the same conclusion.  So, educate all you want, if people can't afford to eat properly, they won't.  It is pretty simple.

  They also recommend exercise.  And I guess the folks who can't afford to buy good food will go down to the local gym and buy a membership there too, right?  It seems like you can't turn around without seeing another example of how nobody thinks through things systematically.

  The Canadian national police force - the RCMP - is making headlines again.  Some folks stranded in the mountains were not rescued for several days despite having made an SOS that was spotted more than once.  One of them died.  You have to wonder.  This was in British Columbia - surprise, surprise.  That is where the RCMP tasered a Polish guy 5 times in the airport and killed him when he needed help.  It is also where they have had several gang related shootings but no arrests.

  They always have enough resources to go taser innocent people and to operate radar traps, but can't seem to do any real police work.  It might just be time to set their priorities straight and get them focused on solving crimes and helping people first rather than revenue generation and trying out their new toys needlessly on people.

  Meanwhile the US auto makers are sinking further into the quicksand.  GM lost close to $10 billion in the last quarter.  Now they will need almost double what we originally thought to keep them afloat.  When will the nonsense stop?  Without an integrated plan to save and increase manufacturing in the US there will be no point.  It will just be money wasted.  My suggestion for any country is to have a policy that if it's sold there, it should be made there.

  Otherwise there is no hope of generating good quality jobs. 

 

February 20, 2009

  There were interesting developments today on the stock market.  The analogy is that it went to the cliff and hung its toes over the edge.  At the end of the day, it stepped back a bit, then a bit closer at the bell.  Next week will be interesting indeed.  Will we get another sucker rally?  will it tip over the edge?  Last fall the S&P 500 broke below the 2002 lows - and now the Dow is close to doing the same.  If it breaks these levels there is not much for support anywhere near these levels.

It could get interesting soon.  Who knows, maybe we will get the rally that will get everybody breathing a sigh of relief before it heads down again.  If I sound less than optimistic it is because nobody is even close to addressing the real problems.  None of the experts think there is anything like real stimulus to the US package.  I think it is more like tossing a pillow under a falling person - it may cushion the fall a bit but not much more.

 

 The Detroit auto makers had to deliver their restructuring packages today.  The Canadian one was  close to double what was originally asked for.  I am wondering why the Auto workers don't put in an offer for GM and Chrysler.  Gm's market capitalization was down to $1 billion on Friday, roughly 1/4 what it was in 1929, and the share price was where it was in 1937.

  I figure the true test of whether there is any hope at all is if the union wants to take over.  If the auto workers don't have enough confidence to put in an offer then I don't see why anyone else would want to.  The government should buy all the GM shares for $1 billion and give it to the union.  Let them deal with all the issues surrounding wages, pensions and benefits.  Maybe they could invest their union funds to keep the companies afloat.

  If they did they would take a much different view to things than they have to this point.  And you can bet things like quality would improve.  I'm not sure how a union designed car would turn out though.  

 

February 18, 2009

  So far there isn't much of any value in anybody's so-called "stimulus" packages.  Looking through things announced in both Canada and the US you can't find much of any use to the ordinary person.

  Obama announced his new plan to help folks with their mortgages.  It amounted to a drop in the bucket at best.  By the time you look through all the if's, and's, but's and maybe's it gets even worse.  Like with so many other features supposedly to help, the whole thing is full of hoops that will discourage ordinary people form even trying.  Many will find it better to just walk away from their mortgages rather than take on the burden of paying them off at reduced interest rates.

  Many estimate that stopping the drop in house prices will come at the expense of flat prices for a decade or so.  And that is if, and it's a big if, the slide can be stopped.  Other of the stimulus features are similar to many announced in Canada.

  For example there are tax credits for those who improve their homes  with things like energy efficient windows or other renovations.  Well, to get the credit you have to spend money.  And you don't even get the credit at the top end of the scale but at the bottom.

  It all boils down to at best a few hundred dollars a year for the average family.  This isn't going to stimulate any spending at all.  Obama claims that his plan will add or save 3.5 million or so jobs over the next 2 or 3 years.  Well, there will be 3-4.5 illegal immigrants taking jobs over that time, so for all intents and purposes there will be no net benefit for the average American.

  And speaking of illegal immigrants - look at California, one of the havens for many of them.  That state is a disaster financially.  They have no idea of how to get themselves out of the mess they are in.  Meanwhile they have taken on all the additional costs of schooling and supplying health care to illegal's. 

  It is pretty hard to find a plan anywhere that actually addresses any of the underlying systematic problems.  The key one is the inequity of wealth distribution due to decades of preferential treatment for the wealthy at the expense of the general populace.  One of the key reasons the economy is in a mess is that the top 1% or so own more than 80% of everything.  there isn't anything left for the rest to spend even if they wanted to.  They have had to support their lifestyle on debt that was supported by rising real estate prices.

  Now the game is over and it hasn't dawned on anyone yet that to get it going they have to redistribute wealth.  This happened in the post WWII years through punitive taxes on higher income levels.  This was forced on the economy because the war debt had to be serviced and the only people who had any money were the rich.   This was the remnant of the 1920's when the government tacitly supported the establishment of a 2 class system.  It was on hold for a couple of decades after WWII but was firmly reinstated by Reagan, and got its legs under Clinton/Greenspan.

  The system has moved to a form of socialism for the rich - a perverse situation where the poor sacrifice to maintain the lifestyle of the wealthy.  One bitter irony of the current malaise is that the wealthy are actually better off.  They can acquire assets at much more attractive prices and actually improve their holdings.  The government stimulus will go mostly to businesses and much will come off the top as profits.  There won't be many jobs created, just some saved perhaps.  Manufacturers will use the funds to reduce inventories that are stacked up, but won't fully replace them so laid-off workers won't get hired back.

  The same mistakes that led to the Great Depression were made again, and exacerbated by globalization.  The same failed responses were implemented and I predict the results will be the same.   The rich will benefit while the rest of us and future generations will get the debt.

 

February 8, 2009

  We were provided with a great example of how government protects business at the expense of the public good this week.

  For some time now there have been stories on the salmonella outbreak that has claimed several lives.  It has now been claimed that the company knowingly shipped tainted material.  As reported on CNN recently the maximum fine for this is $1000 and up to 6 months in jail.  That is all for knowingly shipping a product that has killed several people?

  As I have said previously if we want to get dangerous goods off the shelves we need to have serious consequences for businesses that put them there in the first place.  Inspection by some government agency or other is not enough.  Instead of having all the onus on government inspection we needs some serious laws that place the accountability squarely on the shoulders of those who run the companies. 

  Significant jail time - like 25 years to life for knowingly putting the public at risk and 10 to 15 years for accidentally killing people, plus civil liability for all the negative outcomes whether health related or death.  That is the kind of thing we need to insure safe products on shelves.

  We are getting closer to Obama's Canadian visit.  Apparently it is a short whistle stop visit with a very short private meeting with the Canadian Prime Minister.  You have to wonder how serious Obama really is about the environment.  Here he is burning thousands of pounds of jet fuel to fly Air Force 1 to Ottawa for a short meeting.  For all this trip amounts to they may just as well have talked on the phone.

  Instead he cavalierly wastes a bunch of fuel and is creating greenhouse gases unnecessarily.  The word "hypocrite" comes to mind.

 

February 6, 2009

  As Yogi Berra would say "it's deja vu all over again."

  Remember last fall?  The Bush Administration was saying that the bail out bill had to be passed right away or the sky would fall.  As we all know, the bill was passed and the sky fell anyway, but after a few hundred billion taxpayer dollars were flushed down the toilet.

  Now fast forward to today.  Obama is saying that if the stimulus package is not passed right now, the sky will fall.  We have the same sense of urgency.  We have a Democratic Congress and Senate putting together the legislation - gee, it all sounds so familiar.  All this from a guy who promised "change."

  The stimulus package is more of the same failed policy that got everybody in the mess to start with.  While Bush gets a lot of the blame, and deservedly so, remember that for the last 4 years he was dealing with a Democratic congress.  He couldn't have gotten too far without them passing bills.

  A press conference was eerily familiar too.  Jon Stewart's "Today Show" made fun of the fact that Obama's press secretary gave the same responses as several before him.  So now we see the same kind of non answers given at press conferences.  Some are criticizing the media for being tough on the Obama Administration in these press conferences, but it should be remembered that Obama was the one who promised change.  So if it all starts looking the same as before, then the press has every right to be harsh with him.  Change was promised, and so far it is starting to look all too familiar.

  Obama also put together a team of advisors on the economy.  They are all from big business and the establishment.  Pretty much representatives of the same elites that got us all in the mess to begin with.   I didn't see anybody from small business, and there were certainly no ordinary citizens in the group.  It makes you wonder how they plan to help ordinary people when they don't even have a clue what is needed to help them.  This is pretty much the same-old same-old too.

  Obama took Air Force 1 up the road to Virginia for a democratic conference.  That 747 burns a lot of fuel at a time when he supposedly is against fuel use and greenhouse gases, and it also costs a lot.   He went to preach to the converted, a waste of time and money.  He could have just as easily teleconferenced the whole thing at less cost.  Besides, isn't his main job to be in Washington anyway?  Or is this another case of not practicing what you preach?  I guess saving the environment and sacrificing are just for the rest of us.  Maybe to set an example he should downsize the jet to something with a smaller ecological footprint and get some kind of bulletproof hybrid or electric car.

 

February 4, 2009

  More strange developments on the economic front.  The whole world is worried about protectionism due to provisions in a US stimulus package that would require American taxpayer money to be spent on American goods and labour.  Now that's an interesting concept.  I don't understand all the crying about "protectionism" in that.  There is no restriction on private sector spending at all, but only on taxpayer money.  This is not protectionism but rather reasonable provisions on the spending of the public's money.

  After all, if you take their money, it should be spent doing them some good.  I don't get taking public money to give to people and businesses in other countries.  That makes no sense at all.

  The most perverse responses, not unexpectedly, came from Canada.  In the House of Commons, the opposition first complained that the Canadian Government was not involved in the drafting of US legislation - a strange idea at best - and that Canada should make sure that we can sell things like steel under the US stimulus package.  These comments were followed by demands that the Canadian Government insure that Canadian taxpayer dollars be spent in Canada.  No conflicting principles here.

  There is resistance in the US to another provision that only those legal to work in the US get any pay from the stimulus package.  It seems that business wants to use the money to hire illegal workers.  And as it now stands, it seems they will be able to get away with it.   You have to love government - they will use your money to help their friends at your expense.  You pay them to screw you.

  At least the French have some balls - they went out en masse protesting that their stimulus is only benefitting business and not the ordinary person.  It goes to show that all over the world business does the same things.  Meanwhile the wonders of globalization are causing the contagion to spread out of control.  And nobody can tell if any of the measures to get things going again will work.  It just gives more evidence to what I have been saying for ages - economists don't really understand the economy.

  In the "strange but true" column is the conflicting advice out there.

  Individuals are told that the best thing they can do is to save and pay down debt.  This makes sense.  Then we hear that the economy will be in the dumpster until people start spending again.  Duh!!!  These guys really don't get it.  And they have no problem with the conflict in what they are saying.  It makes you wonder whether anybody out there has any clue.  Their fairy tale solution is to get credit flowing again.  That won't give people more money to spend.  It may in the short term give the illusion of more money t spend, but creates nothing.  I am thinking that folks might be smart enough to figure this one out.

  One thing is for sure - both government and business are fighting for the title "most stupid."  Meanwhile there is nothing for the individual or small business.  Small business - you know, the ones who create something like 80% of the jobs.  All government types can come up with are ideas for how to help out the big guys.  Meanwhile back at the ranch, or white House that is, more of the same old.  It seems that Obama likes guys who don't pay their taxes.  Daschle was the latest - he withdrew his candidacy.  Obama did manage to get a tax cheat in as the head of the IRS.

  Isn't it Ironic that guys form the Democratic Party, known for its tax and spend philosophy, don't like paying taxes. 

 

January 31, 2009

  This week we saw the economic stimulus plans for both the US and Canada.  The common factor in each is that neither had much, if anything for the ordinary person.  Pretty much all of the focus was on helping business.  They were both continuing exercises in the failed notion of "trickle down" economics.  This is where they pour the money in at the top and hope it eventually works its way down to average people.

  Noticeably absent was any attempt at putting the help in at the bottom and letting it work its way up.  The elitist view is so far out of touch with reality that those in government are not even able to comprehend anything other than helping those at the top.  Obama was out raged at the announcement that the Wall Street banker types got $18 billion or so in bonuses last year despite running the world's economy off the rails.  Yet his stimulus package helps those people more than it does the average person.

  The Congressional Budget Office confirmed that the proposed stimulus package was short on benefits for ordinary folks.  Meanwhile the rest of the world is upset that some in the US want to restrict spending to American made products and services.  Well what did they expect?  Are the American taxpayers supposed to support foreign businesses?  The Canadian Prime Minister is upset because the proposal would hurt Canadian steel producers among others, but he does not seem to grasp that countries should help their own first when there is trouble.

  There are also moves in the US to make workers prove they are working legally in the US before they can get paid out of the stimulus package.  This would make sense too, but it seems that many key business types are opposed to this.  Gee, I would think it sensible to make sure you are helping your own workers rather than supporting illegal immigrants.  You really have to wonder how it got so stupid.  Many in Congress and the Senate are taking the business side against their own people.  And this is supposed to be democracy in action?

  If they want to stimulate the economy they could have easily reduced interest rates on mortgages and done way more good for everybody.   This step would have the added benefit of not costing the taxpayer anything.  Instead they introduce policies that run up huge debt and burden future generations in order to pump short term cash into banks and other key sectors at the long term expense of the economy and the ordinary person.  Ironically, if they reduced interest rates on mortgages it would help the banks more in the long run as there would be fewer bad loans to soak up, and it would help stem the drop in housing prices.  I guess they can't get their heads around the fact that this is where the problem started.

  Through it all, they keep reminding us that the problem started in the housing market, and that things won't turn around until they get this area under control.  Then they set about doing anything but address the key problem area.  It makes you wonder how people this stupid get into office.  Or, if they are not stupid, then you have to wonder what they are really up to.  Just looking at what they are doing, you have to conclude that whether by design or through ignorance they are setting about destroying the whole US economy, and the US taxpayer.

  The next phase, which will come sometime in the near future will likely be runaway inflation.  The track record has been to do all the wrong things, so this would fit in that pattern.  When all else fails, print money.  That will make the debt go away.  This will hurt the responsible people the most - those who did not run up personal debt, those who saved and want to live off their savings.  It will benefit the rich - those who own property and hard assets will not be hurt by inflation, but will actually benefit.  Those who aer in debt up to their eyeballs will be okay too.

  Following this to its logical conclusion, people should be ready to act when they see it getting started.  The only thing that will make sense will be to buy as much as you can as fast as you can and borrow as much as you can.  And of course this is what will drive it all and keep it going.  Remember, we are now where monetary policy cannot work anymore - any increase in interest rates will collapse the economy.  There are only 2 ways to make the debt bubble go away - default by not paying, or default via inflation.  This debt cannot be repaid otherwise, and is spiralling out of control.

  In Canada, the government seems to be relying on the rosy scenario put out by the Bank of Canada Governor.  He thinks the recession will be over in 6 months or so.  Of course he is the only person in the world who thinks that way.  His rationale is that we have taken independent action to deal with the problem.  I guess he doesn't know about globalization and the fact that our economy is not independent and that we are not able to take independent action anymore.   I wonder where this guy has been all his life that he doesn't seem to understand that.  Scary.

  At the economic meeting at Davos, Switzerland, everybody is warning against protectionism, saying that would make things worse.  Well, globalization is the cause and driver behind this mess, and more of the same that caused the problems is not the way out.  In the long run, countries that are able to set their own course independently will be the only ones that have any long run hope.  Otherwise you have to count on the rest of the world to look after you.  You know, the guys who caused all the grief so far.  Sure, i believe they will fix everything.  And there is a tooth fairy and Santa Claus too. 

  Interdependence makes things worse.   We are experiencing the world that globalization gives us.  Inflation, collapse, dislocation and hardship.  Globalization is the wonderful means by which one country's problems become the world's problems.

 

January 26, 2009

After watching the US inauguration and the Canadian Government's Speech from the Throne (sounds like talking in the can, doesn't it?) I couldn't help but think about how elitist this stuff is.  These guys really do think they are better than the rest of us.  They sure do love their pomp and ceremony.  And it seems pretty much the case around the world.  The message seems to be that they are important, and by extension, we are not. 

  In Canada, the Province of British Columbia sure seems to be a mess and a good example of what is wrong with our society.

  The Olympic games are in disarray, with the athlete's village being in dire financial straights.  The province had to come to the rescue of the City of Vancouver to salvage the athlete's village.  Though it was on a smaller scale than Beijing, Vancouver used the same approach of throwing people out of their homes and expropriating property for the 2010 Winter Olympics.  Sad, but true.  Putting on the games that only benefit a small minority of developers and hospitality businesses was more important than people having a place to live.  It sure doesn't say much about our culture, does it?

  On top of that it was reported that some local off-duty police beat up and robbed a delivery man, apparently because they did not like "brown people."  A recent article on Canada.co listed a bunch of incidents where police have been charged or accused in the Vancouver area over the last few years.  And there have been lots of cases where the police have hurt people and not been charged.  But that is one of the benefits of getting to investigate yourself -  they usually find that they didn't do any wrong.  Hey, maybe we should all get to police ourselves - then we can do away with police altogether.  After all, if it makes sense for one group to police themselves, maybe we all should.

  It should be pretty obvious by now that we need independent watchdogs to monitor police activities and especially to investigate possible wrongdoing.  The police carry the idea of "innocent until proven guilty" to the extreme when investigating their own.  To all appearances the view is "innocent, period."

  For the last item, we also get to go to the same area.  More bird flu has been discovered and a bunch of turkeys have to be destroyed (no, not our politicians unfortunately).  We keep seeing more instances of how our highly intensive food supply system is showing signs of failure.  Technology just can't keep up with it.  This all boils down to the nature of disease and its spread.  Whether people, animals, plants, you name it, if you cram more into smaller spaces you get disease.  And it can spread more rapidly.  Add to that all the chemicals and antibiotics we use to try to keep a handle on it and the end is just more disease that is more resistant to treatment.

  We can't keep going this way without some major disaster befalling us soon.  Fifty years ago we had warning signs - things like potatoes.  Have you ever noticed that many potatoes have lots of black in the middle?  Well, that is another sign of the intensive agriculture times.  Now we have all kinds of food poisoning, disease and the like.  Guess what - a highly interconnected world of chemicals, drugs and intensive production methods, not to speak of the preservation chemicals and means, are turning out to be bad for us, as well as unsustainable.  Surprise, surprise. 

 

January 18, 2009

 The economic mess continues to worsen.  A great example of the approach being used to deal with this mess comes from Canada.  The Canadian Prime Minister met behind closed doors with business leaders to get their ideas on what needs to be done to turn things around.  This is pretty much the standard method around the world: meet with the same people whose ideas caused the problems to start with and ask them what they want.

  The ordinary person is left out in the cold, literally since the weather has been pretty bad.  Notice that nobody is sitting around in the open with cameras running recording the proceedings.  We will never really know what was discussed, and will only be able to guess after watching the policies that develop over the next little while.  We never see our leaders meet in the open with ordinary folks and ask them their opinions.  But that would not be in keeping with the elitist mentality that is behind the current malaise.

  Meanwhile we look at the spectacle in America.  One thing is for sure, the expectations are high and increasing.  I believe it is getting to where there is no way for Obama to meet the expectation that is now almost to the messiah level.  We are also seeing signs that he may not be quite up to his billing.  Look at his appointment for Treasury Secretary - a guy who failed to pay a bunch of taxes.  Obama says it was an "honest mistake."  If Bush tried the same argument he would have been laughed off the planet.  This is not an auspicious move by a man who says he wants to change the culture in Washington.  Indeed, his whole team looks a lot like recycled hacks who have been around DC a long time.  Hardly the substance of change.

  The inauguration is taking on a circus like atmosphere.  And further illustrates the elitist nature of all involved, including the new President.  At a time when a more restrained approach would be fitting for the times, it is being churned into a huge event with the rock stars and celebrities all over the place.  But then we knew the Washington types love this kind of spectacle.

  People are losing their jobs and homes and money can be wasted celebrating the Washington insiders and providing an excuse for celebrities to be out there on display.  Gee - isn't this what happens when every new President takes office?  Where's the "change" in all that?  Well, there isn't any really, and my prediction is that over the next 4 years you will see the focus not on the ordinary person, but on what the key democratic Party insiders want.

  Nobody is talking about what might happen if Obama goes down in flames after his first term.  With all the expectations that are probably out of reach, this should be a key topic.  What will happen to race relations then?  Will there be a backlash from white voters?  Will there be further alienation of the black community?  Unrealistic expectations always lead to disappointment, and there is no talk of that at this point.  but the media is so short sighted that they won't see it until it hits them in the face.  Obama is first and foremost a politician.  He is part of a group that has no reputation for accomplishing much of anything other than pursuing their own lust for power.  Yes, he may be different.  But it would not be wise to count on it or to have any great hopes for big changes.

  A more realistic expectation would be that he is "better" than what we have seen, though he might still not be "good."  Unfortunately "improvement" might not be enough in this circus atmosphere of unrealistic expectation.  This might be his biggest problem.  If he only delivers improvements, the public will turn on him for not saving the world.

  Have you noticed lately that you don't hear or see the term "global warming" used much, if at all?  Now the by line is "climate change."  I think the reason is straightforward - the world is not warming up, and it is obvious that it is not warming up.  So we hear about "climate change" instead of "global warming."  Next we will be told that cooling is caused by human activity or some silly thing. 

  We still see "conservation" pushed as a means to minimize "climate change."  The reality is that conservation is to increase populations and thus market for business by stretching resources out over more people.  The objective is not less resource use at all, but lowering quality of life to keep growth going.

  We are seeing signs that this is falling apart.  Ironically it is the same strategy used by failed cultures throughout history.  the elites who are isolated from the effects maintain their lifestyles at the expense of the majority by having the ordinary folks do with less to keep the elites comfortable.  We are just seeing the same thing play out here.

 

January 9, 2009

  The new year has started off in depressing fashion with violence in the middle east and worsening news on the economic front.  Wit all the important and urgent things going on, folks like CNN spent, or rather wasted, a lot of time focusing on Oprah's weight.  I'm not sure what the significance of that is.  I know it is an issue for her, but frankly, in the grand scheme of things, it is just not that important.

  Meanwhile we are starting to get some real dandy advice from the so-called investment professionals.  Now it seems is a good time to start guying stocks, according to lots of these advisors.  You know, the same ones who told you to buy before everything went down so much.  Well, it would be a good thing to remember that they have been wrong before.  Really wrong.

  In a fashion that only Orwell could appreciate - like something right out of "1984" we are hearing on the one hand that individuals should save money and pay down debt to protect themselves form the effects of this downturn.  In almost the next breath they tell us that they hope credit will loosen up and people will start spending more to revive the economy.  Duh!!  This provides another great example of how they don't seem to really read and understand the news they put on TV.  They have no problem contradicting themselves.  My advice:  don't get in a rush to spend.

  We have been seeing lots of commercials about supporting Olympic athletes by donating money.  Let's see: we have starving people, unemployed folks, the homeless, people can't get health care, the food banks aer running out of food feeding the hungry and we should support our Olympic athletes?  Really?  I don't think so.  We should do out civic duty and look after the less fortunate rather than waste a bunch of scarce money on those who seek self aggrandizement.  As far as the whole Olympics goes I don't see how it does anybody any good, other than those in the development and hospitality industries, and of course the athletes.  We have higher priorities and as a society we should be ashamed of ourselves for throwing money away when we have more important needs.

 

January 6, 2009

The new year literally started with a bang in the middle east.  Israel is having a go at Hamas again in Gaza.  It seems odd to watch the world response to the whole thing.  Hamas fires rockets into Israel targeting civilians, and Israel responds in their usual fashion, which is to say doing an order of magnitude more damage than is done to them.  Everybody wants Israel to take it easy, but I guess if Hamas would just quit firing the rockets, the problem would go away.

  We now hear more talk of "peace" in the middle east, but nobody really addresses the fundamental underlying issue of whether it is possible, and what might have to happen before it is possible.  As long as you have the case where at least one side won't stop until the other is dead and gone, there is no prospect for peace.  It will just be a war of attrition u ntil there is only one left, or until the Sun goes super nova - which ever comes first.

  Before there can be any peace, there needs to be some kind of cultural shift that will allow for the prospect.  This happened in northern Ireland.  Now the two sides there are less likely to go at each other.  What has happened there is that both sides enjoy somewhat similar standards of living and have moved ahead in that regard.  At some point life gets good enough that there is not much reason to fight.

  Contrast that with the middle east.  There we see drastic differences in standards of living and opportunity, with one side not having much prospect for a better future.  This is a situation ripe for violence and terrorism.  We also do not see any effort on their part to make life better.  Instead we see victim mentality.  This is a breeding ground for discontent and religious extremism.  Will this change?  Not likely.

  Until we see some ray of real hope, there is no point in even discussing peace.  Nobody, including other Arab nations, is doing anything substantive to help the Palestinians to move toward some semblance of a better life.  The approach seems to be to keep them in their lousy situation so that they can be the front line pawns in the ongoing battle against Israel.  The old adage "with friend like these, who needs enemies" applies.

  Ironically the Palestinians would be better off trying to get along with Israel.  Peaceful relations with Israel would lead to a lot of help and development.  Unfortunately ideological differences get in the way there.  In the systems context, the result determines the means.  You cannot apply a particular means to solve a problem and expect an outcome that is not feasible given those means.  The means currently being applied will just lead to more violence.  Peace is nowhere on the horizon.

  Russia cut off gas supplies through Ukraine today.  This highlights the problem of our globalized, interconnected economy.  Europe depends on that gas, but has no control over the delivery.  Welcome to the modern world of being dependent on unreliable others for your well being.

  In perhaps the most humorous response I have ever heard or seen, European leaders said the situation is "unacceptable."  They are wrong of course.  The situation is acceptable, because it is happening.  It may be undesirable, but unacceptable is an inappropriate term.  In the future Europe can count on lots of problems with Russia regarding energy supply.  At some point they can probably count on being held for ransom, or perhaps blackmail might be a better word.

  Globalization means interdependence, which in turn means a loss of independence.  Europe better learn to live with it.

  The recent shenanigans in the US give further evidence of why representative democracy is a joke and true democracy is the answer.  We have all brand of political activity going on, including the whole soap opera surrounding the appointment of Obama's replacement to the US Senate by the Governor of Illinois, who happens to be under investigation for corruption.

  Imagine that, a corrupt politician.  So what else is news pray tell?  The only way to depoliticize this kind of situation is for real democracy with the people choosing rather than having appointments.  this is true as well for the executive and cabinet.  In addition, the voters should be able to ride herd on the politicians by having final say on any legislation.  It should be pretty clear by now that no matter who is in office, the same old usual suspects get all the benefits, while the ordinary person gets the tab.

 

December 29, 2008

  Christmas gives us pause to reflect on the events of the year and how they affect us all.   It has been a tough year for many, and hugely unfair.  We see those at the top get all kinds of help and support yet those at the bottom not only don't get any help, but they are getting the bill.  The auto bailout is yet another example of how those who barely make enough to get by will be helping out those who make several times more money.

  We don't see anything that approaches help for the ordinary person.  If you don't have a big lobby behind you, it's tough luck for you.  There is no spirit of cooperation out there - nothing that looks like the better off helping the less fortunate.  Just the reverse - the less fortunate are expected to help those who are doing better.  This is a sad statement on society, and a pathetic example of the loss of community and the lack of any social conscious on the part of business or government.

  On another topic, I have been pondering the views on execution of criminals for some offenses.  I don't look at it as "capital punishment" or "the death penalty."  It is not a penalty but rather a consequence.  If a person takes a course of action, they should also have to accept the consequences for that action.  Allowing separation of consequences from actions is no way to improve behaviour.  Neither is effectively reducing the consequences to a point where they are meaningless. 

  I was thinking about those people and groups that want more lenient approaches.  Then I got an idea.  Let's let them accept responsibility, criminal and civil, for those poor victims of society that commit these horrendous crimes.

  Here's how it could work.  Instead of a criminal getting executed for killing several people, they would be placed in the charge of the bleeding hearts who fell sorry for them.  And if they re-offend, then they loose their pass and go directly to the execution facility.  And, those who vouched for him get the same.  It is a simple approach.  Put up or shut up.  If you won't accept responsibility for a murderer or rapist, then keep quiet and let justice run its course.  It is too easy to spout off about the evils of execution when you have nothing at stake.  To anyone who is against such consequences I ask - would you accept responsibility for the person?  If not, why not?

  When society determines it necessary to remove someone it should be because that person crossed some boundary and must face the consequences.  It is a simple concept.  It is more than a case of deterrence.  It is more than a case of whether or not the person will offend again.  It is a case of justice and clear consequences that fit the behaviour.  I feel that if you can't see that, you are not responsible enough to be discussing the topic.

  The net result of our permissive approach to everything is an uncivilized society.  A key requirement for the maintenance of a civil society is to remove those who cross certain boundaries.  In the end, their fate is due to their choices.  It is not that society is killing them, they are doing it to themselves. 

 

December 17, 2008

  It should be obvious be now that the US Federal Reserve has lost control of the financial situation.  They effectively adopted a zero interest rate policy in hopes of spurring the economy by making credit easier.  They would have been far better taking all the money used for the bailouts and giving it away to the lowest income people in the US to spend.  That would have done a lot more good for everybody.

  About the only option they have left is to literally print money and give to people.  Ironically that would probably have been a better thing to do right off the bat.  In the end it doesn't really matter - if the economy gets going again, inflation will head through the roof in not time flat, but if the Fed raises rates, the economy will tank again.  It all has a life of its won now, and there is no easy way to  unwind it all.

  Meanwhile, we have the auto workers wanting the taxpayers to bail them out, and they don't expect to take any kind of hit at all.  It is truly amazing that they expect to keep all their pay and benefits while the taxpaying public picks up the tab.   This is the same taxpayer that is getting no relief or help, is facing foreclosure and possible layoff - no problem, as long as the auto workers have security, the world will be fine.  Amazing.

  Canada has a novel approach.  They are loosening up on immigration rules in order for business to hire more foreign workers to keep wages and costs down.  This at a time when there is rising unemployment.  It just goes to illustrate a point I have made for ages - governments look after business elites, not the people.

  I also see that there is a move to get another Kennedy  into the US Senate.  I guess folks haven't got it figured out that there are others just as qualified for the job.  Maybe, just maybe, it would be a good idea to get some different thinking rather than the same old for a change.  This is just another case of the elitism that has led to the inbred thinking that created the whole mess to start with.  It might be a better idea to get someone who has never been anywhere near government for a change.  Isn't "change" the buzzword now?

  Of course "change" seems to mean getting  a group of seasoned insiders together. 

  We are also seeing an increased push on the environmental side.  "Conservation" will be big as the crunch on resources hits home.  We will all be asked to use less and conserve more supposedly in an effort to save the environment, but really it is all about stretching resources out to support increased population.  This is a common theme in societies that have extended beyond any sustainable level.  With the resource base and environment exhausted, the first phase is to get people to use less.  It is not conservation, but a form of rationing.

  It will only get worse until it becomes obvious that there isn't enough to go around, then things will get ugly as society begins to unravel.  Notice that throughout it all no environmental group is making any serious calls to halt to population growth.  In the midst of it all immigration to the US is out of control, and Canada is encouraging more people to move there too.  How can there be any credible argument to conserve when the doors are open to more people?  If we are short of some key resources, more people will only make it worse.

  Maybe that is why most ignore the calls for conservation and the like.  The talk is to conserve, but the actions of government are just the opposite, leading to more, not less resource use through growth.

December 10, 2008

  There are a couple of interesting tidbits in the news this week.

  The first relates to the Earth's spin.  It was reported on the news that the Earth's rotation has speeded up.  It had slowed for a few years previously.  Factors that can influence the spin are the magnetic field of the Earth and the Sun.

  A few years back it was reported that the Earth's magnetic field had decreased by 10% over the last century.  Late in the 20th century the Sun's magnetic field was much stronger.  You might expect that the decrease of our magnetic field might cause the rotation to slow, but this could be countered by the greater increase in the sun's field.  Now I am guessing that the Sun's magnetic field is diminished since solar activity seems to be down.

  Why is this significant?  There are a couple of reasons.  First, changes in the rotational speed would cause varying effects due to slippage of the outer surface over the viscous center.  We can expect things like volcanoes and earthquakes.  We have in fact seen reports of earthquakes, which would be in line with expectations.  The thing we don't hear about is how changes in magnetic fields effect the climate.

  The magnetic field drives the Van Allen Belts which protect us from a lot of harmful radiation.  According to scientists, Venus is as hot as it is due to the fact that it has no magnetic field.  Ours has decreased by 10% over a century.  Logic would dictate that the reduced magnetic field would result in a warmer Earth.  But we hear no discussion of that anywhere in the news.

  This potentially is a greater concern than anything we can control here, because we have no ability to control these effects.   It also highlights the fact that nobody has any suggestion of a robust solution that would work if climate change was natural rather than man=made.  This is pretty short sighted not t speak of irresponsible.

  The other interesting thing is the recent sensational story of possible corruption in Illinois.  The allegations are that the Governor  was soliciting bribes to fill the senate seat left vacant by Obama.  People seem shocked that the Governor might try to get something for the seat.

  What is lost on everyone is that whoever appoints anybody to any position wants to get something out of it, whether it is an illegal bribe or some other less tangible outcome.  However it goes, there will be the desire to get some benefit from the process.  This story just illustrates all that is wrong with allowing any politician to make any appointment.  It is just inviting some for of abuse, whether overt or subtle.

December 3, 2008

  The politics in Canada sure are strange.  If only we could grow bananas we could be a banana republic.  You have to seriously wonder when a country has a situation where none of the leaders hold any favour with the public.  One thing is for sure - the events in Canada this week highlight much of what is wrong with a representative democracy.

  The situation also illustrates the need for a system that tends to de-politicize the legislative process rather than the opposite.  The behaviour of elected politicians under the current system can only be described using words like "disgusting" or "shameful."   But then I guess we let them get away with it.  Of course all but about one so-called "democracy" are "representative" which boils down to removing the voter as far as possible from the process.

  The one example, Switzerland, is the only country that approaches being a democracy.  People there get to vote on everything.  They were smart enough to have a constitution that recognizes the true nature of politicians as people you can't trust to do the right thing.  They provide the example of what might work better.  If you take away all the power from elected representatives, then there is little need for petty partisan politics.  If everything they do has to be approved by the electorate, then the public does not have to worry about what brand of stupidity representatives try - the voter can always put a stop to it.  Another good step would be to make the executive completely separate form the legislative branch.  Putting the executive at the head of the legislative process (the British model) is just a way to give elite control by winning over even fewer folks. 

  In a representative democracy, special interest groups only have to effectively buy off a few politicians to gain control of everything.  A good example of the fruits of that system can be seen in the current economic meltdown.  The business lobby has been getting its way for a couple of decades, and we are seeing the result.  They made a big mess and now expect the taxpayer to bail them out.  And those good, trustworthy politicians are following through.

  True democracy is a better solution.  Take the power away and you take away the motivation.  The majority has the right to be wrong if they choose in a democracy.  The elites want to keep running things, but as we have seen, they sure don't do a very good job, even in looking after their own interests.  And the politicians?  Well, all I need to say is let their performance speak for itself. 

   

November 27, 2008

  The latest terror attacks in India are further evidence that things seem to be picking up in terms of tensions and conflicts in the world.  I recall a while back that Al Qaida called for a holy war against India.  At the time I thought that was probably the one thing that could lead to the undoing of a lot of these extremist groups.

  At some point India is going to get real agitated and start going after its neighbours who are harbouring these groups.  Then the world will get to be quite interesting, and not in a good way if it escalates.

  This brings me back to failed western policies in dealing with these groups.  A good example is the response of America to Al Qaida.  There would have been a much less expensive and more effective way to get Bin Laden and his group.  Instead of invading Afghanistan an action that is starting to prove futile and never ending, the US should have been more imaginative.

  A better approach would have been to pump a couple of billion dollars into the Gurkha  relief fund and have them deal with Al Qaida.  A lot less money would have gone a lot further.  By now Bin Laden would be captured or dead, as would most of his group that is hiding out around the Pakistan-Afghanistan border.  The other benefit of this kind of approach is that we wouldn't have to worry about national boundaries and the like.  Things like not offending our "friends" even though we don't really have any in that neck of the woods.

  In any event the extremists are poking India with a stick and I think they might end up getting a bigger response than they bargained for.  In this time of economic crisis, it will be interesting to see if  this escalates out of hand.  The world has a way of surprising us by taking events of seemingly limited importance and blowing them up.

 

November 24, 2008

  It seems that change might not be coming as expected.  Looking at Obama's picks for his new team: New York Federal Reserve president Geithner for Treasury Secretary and former Clinton Treasury Secretary and one time Harvard president Lawrence Summers.  This crisis really got its legs under the Clinton Administration, starting with the hedge fund fiasco and the way it was handled.

  Today we hear on the news that he may backtrack on some of his promises.  One in particular is the Bush tax cut for the rich.  During the campaign Obama said he would eliminate that tax cut, now he is thinking about letting it run out in 2010.  My, my how short a time to start changing your tune.  A stimulus package was unveiled that will cost hundreds of billions - where is the money going to come from?

  Well, apparently not form those who got all the benefits over the last few decades.  The rich will continue to get richer while the poorer folk will get the bill.  The deficit will balloon and taxes will end up increasing on those who can least afford it - the lower and middle class.  Meanwhile those at the top will get off easy.

With Obama picking the same kind of thinkers as caused the problem, a skeptical person wouldn't expect much change.  so far all we are seeing is recycling of some basic establishment types.  And I suspect in the end we will see more of the failed ideas of the past dusted off and presented in new form.

It is starting to look like politics as usual, despite all the rhetoric about change.

 

November 23, 2008

  Sometimes you just can't let something slip by without a comment.  Today on CNN's "In the Money" they seemed to be trying to talk up the markets.  They pulled out a graph of the markets around the time of the 1987 crash.  The gist of the argument was that the market regained the losses in a year.  Are they trying to imply that this is the case today?  Unbelievable.

  A better idea might have been to show a chart of the Nikkei average over the last 25 years.  It hit the tank and has not recovered to this day.  The Nasdaq never got anywhere near back to its old high.  Gee, I noticed they didn't pull out a chart of the 1929-1932 slide where the Dow lost close to 90% of its value.

  The whole point here is that you can never predict the future by looking backward.  I have seen a lot of things tossed around out there using backward looking methods.  The ones I stay away from the most are those that use statistics.  Some imply that over the last hundred years or so "on average" things go one way or the other and thus we are due for a bottom here in the economy or the markets.  Well, "on average" the world hasn't been swimming in debt, consumers haven't been in over their heads and we haven't had such an interconnected world economy.

  Earlier in the day on a different show, same channel, they had guests talking about how this is a world wide problem.  One mentioned that Europe has as big a debt problem as the US.  On another segment they had Steve Forbes suggesting we need to free up more credit.  Until folks catch on to the fact that more credit is not the solution to the problem of too much debt, there will be no bottom in sight.

  Moving on to another story on Canada.com we see that several leaders at a summit in Lima, Peru signed a declaration predicting the economic crisis would be over in 18 months.  It was mighty nice of a bunch of politicians, none of whom saw any of this coming, to say when it would end.  Truly confidence inspiring.  Afterwards, the Canadian Prime Minister, who signed the declaration, said it is premature to say make the prediction.  Well, why did he sign the thing then?  Makes me so proud to be a Canadian - the waffle should be our national symbol.

  To borrow a phrase from the unbridled optimists of the late 1990's who predicted an end to the economic cycle - "this time it's different."  I would not count on things turning around anytime soon - that might not be too prudent given the circumstances.  Better advice would be to be careful and get out of debt if you can.

 

November 19, 2008

  Today on TV the Auto company execs were all lined up like ducks in a row before the government begging for money.  Watching the show it seemed to me that they didn't have their ducks all lined up in a row.  I also noticed that nobody calls them "the big three" anymore. 

  So far there are a lot of unanswered questions.  First and foremost is why we should be doling out tax dollars to help those who are responsible for the mess in the North American auto industry to start with.  I would guess other questions would be what the game plan is, how much will it cost, and what the chances of success be.  I am sure there is a nagging question in the back of everybody's mind as to why we should believe these guys anyway.

  I would guess that one of the first steps should be to replace the current executives.  This would remove any doubt as to whether their real intentions are to keep their own salaries and benefits coming in for as long as they can.  I am somewhat sceptical of the situation.  Are they trying to save the companies, or are they engaging in a self-serving venture here?  The executives will be first and foremost the beneficiaries of a bailout package that keeps them from seeking bankruptcy protection.  With government cash (taxpayer money actually - governments do not have money) the execs can keep the gravy train running.  Under bankruptcy protection the trustee might decide to cut them off.

  The simple fact might be that they will end up in bankruptcy one way or the other and a bail out plan will only delay the inevitable.  It takes years to change a model mix and they don't have the cash to stick it out that long.  The bailout plan only provides for short term cash - a few months at best, so isn't enough to keep them going until things turn around.   Say, I don't suppose this is one of those attempts to get the government on the hook and then keep going after more later to keep from losing what is already invested?  I haven't heard anything that looks like a plan for what happens when the short term help runs out in a few months.

  My guess is that the idea is to get the government on the hook and then go back for more.  What we are seeing is just not enough to keep them afloat until they get their acts together and get a product mix that suits the current and expected market realities. 

  The markets are still tanking, things are still getting worse, and there is certainly not going to be any turnaround in car markets before the $25 billion runs out.  I hope Congress makes sure they get the whole truth before they make any decisions to part with cash.  As it is now, there are too many holes in the whole thing.  It would make no sense to pump money into a venture that is doomed before it starts.  The taxpayers are already on the hook for too much now. 

It is ironic that there are all these efforts to get things going again that require the taxpaying public to take on more debt, either directly or indirectly through taxes.  All these bailouts are going to result in tax increases (unless the government defaults).  Borrowing to buy stuff will add to the monthly drain for the average person too.  And still there is no discussion around the simple fact that the average person is tapped out and can't even think of borrowing anymore to buy stuff, let alone take a hefty tax increase to bail out the big guys.

It all reminds me of a comment from a boxer years ago.  I think it was one of Mohammed Ali's "bum of the month" fights.  The guy had lost all his previous fights, most by knockouts early in the fight.  When asked what he thought about his chances he responded "it doesn't look good, does it?"

 

  Here's one for you skeptics out there about these new energy efficient light bulbs.  There have been previous news stories about things like mercury in many of the new bulbs. Last night on the news there was a new twist.  I tried those new bulbs and had a few problems.  At one point, I changed all the bulbs in the house.  The new energy efficient bulbs are supposed to use much less power and last longer.  Well, they might use less power.  I found that none lasted nearly as long as conventional bulbs.  At several times the cost, that makes them very expensive to own, regardless of the energy savings.

  Here is my theory: the life expectancy estimates in terms of hours were probably determined by screwing the bulbs in beside ordinary bulbs and leaving them on until they all quit.  If this is how they determined the expected life of the energy efficient bulbs, it is an erroneous method.  Flourescent type lights last longest when left on.  They do not fare so well when turned on and off frequently.  To save energy, you turn off a light when not in use, so if anything, an environmentally conscious person would be turning the lights on and off more than normal.  So there's the rub - normal use might mean they don't last as long, which is what I experienced.  If you want them to last, you leave them on, but then that means using more power and undoing the whole benefit of the things.

  The last point is that when using the bulbs at my workspace, I started getting these huge headaches.  I wasn't sure where they were coming from, and at first I thought maybe I needed new glasses.  When the bulbs quit (much sooner than expected), I screwed in a regular bulb.  Funny thing - no more headaches.

  Then I saw an interesting bit on the news.  A lady said there were lots of complaints about headaches from these new bulbs.  She got a measuring device that showed a reading of "500" from an energy efficient bulb, though I am not sure what the measuring units were, and she said acceptable was "50."  There was 10 times as much electro-magnetic noise from the energy efficient bulbs.  But the companies that make and sell the things say they are safe, though I have not seen the studies.  I would like to see one so I can dissect the methods used to make the determination.  If the studies are no better than the ones that determine the expected life of the bulbs, then I would be worried.

  It is well known that the human nervous system works on electrical impulses.  It is well established in physics that changes in magnetic and electromagnetic fields affect electrical flows.  It is logical to conclude that the increased electromagnetic field, caused by alternating current (ie "changing"), will have an effect on the electrical currents in our bodies.

  Carrying the logic further.  The body sends the signals it feels are most appropriate.  Any changes to these signals would mean that they are not exactly as the body intended.  Thus, they are counter to what the brain wanted and would be expected to have a negative effect.  Regardless of the degree of the effect, it could not be considered po0sitive or even neutral.  It would have to be, by definition, a negative effect.  So, it is sensible to cnclude that if the electromagnetic field of the energy efficient light bulbs is much stronger than regular bulbs, they must be, by the rules of physics and biology, more harmful than ordinary bulbs.

  So, there you have it.  They might be more expensive, since they don't seem to last as long as they are supposed to (at least from my experience) and there is a good chance they are harmful to some degree.  Why then do we have them?  Well, it is anotehr example of the whole "green" thing being used as an excuse to take more of our money.  The worst part of all this is that ordinary bulbs are going to be outlawed.  We will be forced to take the new ones, and all that goes with them, including the introduction of more hazardous materials such as mercury into the environment as we toss out the dead bulbs (and at a good rate if my experience is any indication).

  Given the energy to make these things and such, there might not be, in the end, any real resource savings.  There may turn out to be a health risk.   And we won't have any alternatives.  Before they get rid of the olds ones I am going to make sure I have a lifetime supply in my basement.

 

November 12, 2008

  Secretary Paulson came out today with a bit of an about face on how the bailout is going to go - more money to buy shares in banks instead of buying up bad paper.  Amidst all that, most seemed to agree that there was nothing in the deal for ordinary folks.

  It provides another glimpse at what everybody should have figured out by now - the Bush Administration doesn't seem to have a clue what it is doing.  Or at least it looks that way.  One might suspect that they are trying to leave as big of a mess as they can for the incoming Obama Administration. 

  It is baffling how supposedly intelligent folks can't seem to come up with any kind of useful game plan.  Maybe it is because they aren't as smart as we give them credit for, or maybe some of this smoke is evidence in line with what die-hard conspiracy theorists would believe.

  An MSNBC report today said that Washington was on the hook for $5 trillion.  That was not quite accurate reporting - it may be true as far as it goes, but really, it is not Washington that is on the hook.  The American taxpayer is on the hook.

It is funny that there isn't a lot of mainstream media discussion of the fact that the American taxpayer, already sinking in debt, will be effectively on the hook for $5 trillion more.  That works out to about $15,000 for every man, woman and child in the US.  Or $60,000 for a family of four.  And there is no sign that this is the end.

  The American consumer just picked up a huge increase in debt without buying a thing.  This debt will impede their ability to buy anything for years if not decades to come.

  Is this a way out of the mess?  To put everybody further in debt?  This all means huge future tax increases or reductions in government programs.  No matter how you cut it, the American taxpayer is getting squeezed further by all this. 

  Business, on the other hand must feel a bit better knowing that everybody is being asked to sacrifice to save big business.  One thing conspicuously absent from the discussion was hedge funds.  Even though notable figures like George Soros put a lot of the blame on the financial institutions themselves, not much is being done to rectify the situation.

  Meanwhile the OECD now says the world economy is in a recession.  And the IEA says we are running out of oil.  Now there's a mixed blessing.  With the recession, oil is cheaper.  As soon as the world's economy starts to pick up, the price of oil, and other commodities will go through the roof again and kick us right back where we started this fiasco.

  The hedge funds and speculators will magnify the swings and make it all worse.  But I suppose they can at least take home their commissions and bonuses. 

  The key lesson in all this is that it probably isn't a good idea to get those who allowed the mess to come up with a plan to fix it. 

  Not only is there no light at the end of the tunnel, there's no end to the tunnel.  Until people come to their senses and realize that you can't pile debt upon debt forever, America will be closer to the beginning of this mess than the end.  The first step in solving a problem is to get a handle on what the problem is.

  To use the old axiom: to get out of a hole, the first thing you do is stop digging.  So far, the Administration's answer has been to pass out shovels.

 

November 5, 2008       What’s not in the news

 On the Election

 The smoke is clearing from an historic election in the US with high hopes (perhaps too high) for change.  All through the campaign the established media seems to have omitted some key points that might be important as we move ahead.

 All the current economic mess is put at the feet of the Bush Administration.  While they have bungled just about everything from the War on Terror to the War in Iraq to the economy, the current economic mess has its roots long before Bush. 

 During the Clinton Administration America experienced it’s longest and strongest period of prosperity.  Clinton generally gets all the credit but there is one minor detail – through most of it there was a Republican Congress forcing his hand.  One area that was within Clinton’s control was the appointment of the Federal Reserve Board Chairman. 

 We are now seeing more and more convergence of opinion that the actions of Alan Greenspan were a key factor in the current economic malaise.  During the 1990’s he kept filling up the punch bowl for the markets and covering for their excesses rather than reigning them in.  He was a supporter of the derivatives markets – a big part of the mess.  During this time there were warnings from folks such as former Fed Chairman Paul Volker that went unheeded.  And here we are.

 Cause and effect are separated in time – things that are happening now began some time before, and we should assign effects to the appropriate causes rather than whoever is standing there when it all hits the fan.  This all started under the Clinton Administration, and got worse under the Bush Administration.  There are no good guys here.

 The question now is whether we will see more of the same failed approaches or whether there really will be a change to something different and more enduring in terms of fixing the systemic problems that face America.  From the systems perspective – the system is the same, so changing some of the people who operate it probably won’t substantially change the outcomes.  We will see.

 Looking at the current economic crisis it may turn out that the luckiest guy on November 4^th was John McCain – because he didn’t win.  Obama faces some pretty high expectations – ones of his own making during the campaign.  Now he faces the tough task of living up to them in an environment that is largely outside of his control and influence.

  

On Racism

 The subject of “race” and racism came up numerous times during the election, with little or no discussion as to what it means exactly.  In reality there are probably not nearly as many racists as one might think.

 Often cultural differences take on a racial persona because cultural differences can often be broken down along racial lines.  This masks what is really happening – cultural friction.  Different cultures may or may not get along depending on how different they are and in what way.  For example, someone who likes to eat other people will not be well received in a culture that abhors the practice.  Either one culture will have to adapt to the other or there will be friction and frustration between the two.

 Looking different is not as critical as behaving differently.  Here are some examples, and you can probably think of more: I have some Chinese friends (I am broadly categorized as “white” – though there are several different types of “white” people).  We get along well because we share many of the same values and views on life.  We are different ethnically but similar culturally.  I know some people from Slovenia, formerly part of Yugoslavia.  Slovenes and Croats are both Slavic and predominantly Catholic, yet they do not get along so well – they differ culturally.  Croats and Serbs differ in religion with Serbs being Eastern Orthodox, and use different alphabets, the Serbs using the Cyrillic alphabet, but get along fine.  So language, ethnicity and religion aren’t necessarily the key factors in determining whether different groups get along or not.

 When an identifiable group presents cultural differences that are at odds with another, all may get tarred with the same brush so to speak.  If say 80% of a group displays what another group considers undesirable cultural tendencies, then all may get stigmatized.  This, I believe is the root of most instances of what we call “racism.”  True, there are true racists, but these are far fewer than what we might imagine.  I believe most cases arise from cultural differences that get attributed to all from a group regardless of how individuals may fit.  They get lumped in with the group.  Another problem is when the differences are perceived, or based on assumptions rather than fact.

 This is profiling – and everybody does it to some degree.  Why?  The answer is pretty straightforward.  If the belief exists that a majority of a group does not fit, folks will tend to shun the whole group rather than expend time and energy to get to know who the exceptions are.  We also have the backdrop of a multi-cultural approach to society that celebrates the differences.  It takes less effort to hang with those you feel comfortable with than reach out to those who you don’t know.  Pretty much everybody takes this approach.  In effect people naturally segregate along cultural lines.

 If we look at the US election we can see a good example of these concepts.  Obama is a mixture of black and white (a good mixture for politics where everything is grey and neither black or white), and considered “black.”  Culturally he is pretty much mainstream – talks, thinks and acts like mainstream America.  He was culturally more in tune than John McCain who seemed to represent more of what the rest of the world sees as the jingoistic fringe.

 True integration requires integration of culture – as long as cultural differences are maintained, there will be segregation to varying degrees and friction between groups.  It will not be based on race, but the cultural differences that are manifested in behaviour.  And the media will continue to sensationalize these differences as "racism" though it might be something much simpler.