It doesn't describe the government programs that led to the crisis, just the mechanics of how things became frozen.
Barney Frank, Chris Dodd et al should watch it...
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
EXECUTIVE salaries had reached "sickening" levels, Wayne Swan said today, as he warned the Government is considering a cap on bosses' pay.Parenthetically, Kim Carr is of the hard-left faction and is eerily similar to the incompetent Wesley Mouch of Atlas Shrugged. His tactic is to provide government bailouts to industries that are heavily union controlled. The Wall Street Journal pointed out a few weeks back that Atlas Shrugged had gone from fiction to fact in just 50 years. It's a concern that most of the West's major economies are now run by the Looters.
The Treasurer said the Government was exploring all options when it came to high salaries for executives in businesses where staff were being laid off.
“I think Australians want to see a fair system for all and I think they are rightly sickened when they see some executives walk away with large payments and many workers walk away with virtually nothing,” Mr Swan said.
He was speaking in Melbourne ahead of crisis talks over the planned sacking of 1850 workers at clothing manufacturer Pacific Brands between the company, unions and Industry Minister Kim Carr.
Africa's tropical forests have stored huge amounts of carbon over the last four decades and become a critical sponge for greenhouse gases, according to a study published Thursday.We have spent tens of billions of dollars on climate change and now they tell us that there's some new carbon sink of hitherto unknown capacity?
Long-term measurements taken across the continent's tropical belt showed that African forests absorb as much carbon dioxide as those in the Amazon.
Tropical forests only account for seven-to-ten percent of the Earth's land area. But they hold up to half of the carbon locked inside the planet's terrestrial vegetation, giving them an outsized role in regulating greenhouse gases in the atmosphere.
Previous studies in South America have shown that Amazonian old-growth forests have absorbed, on average, an extra 620 kilogrammes (1,364 pounds) of carbon per hectare (2.47 acres) per year.
This adds up to some 650 billion kilos every year for the entire Amazon basin, which sits astride eight nations.
Before the new study, however, it was not known whether this trend was common to all tropical forests, or varied from one continent to another, especially in Africa.
Having this information is important to broader attempts to project changes wrought by global warming, and how quickly temperatures are likely to rise.
Two dozen international researchers led by Simon Lewis of the University of Leeds in northern England pulled together data from 79 monitoring plots scattered across 10 countries in western and central Africa.
Sifting through the data, the scientists found that the region's rain forests had pumped progressively more carbon dioxide out of the atmosphere as trees underwent photosynthesis and grew.
The average increase was almost identical to those for Amazonia, a net plus of 630 kilos per hectare each year between 1967 and 2007, reported the study, published in the British science journal Nature.
"African tropical forests are providing important ecosystem services by storing carbon and being a carbon sink, thereby reducing the rate of increase in atmospheric CO2," the main driver of global warming, the authors note.
At least one puzzle remains. Left alone, forests will eventually reach a point at which tree growth and death are in equilibrium, meaning they neither take in or give off extra carbon.
The question, then, is why these tropical forests are continuing to draw down ever more CO2.
"There are two possible explanations," said Helen Muller-Landau in a commentary published in Nature.
One is that major disturbances hundreds, or thousands, of years ago -- massive fires, drought, changes in land use -- destroyed portions of the forest which have been growing back ever since.
The second is that climate change has knocked tropical forests in South America and Africa off balance. "Perhaps the increase in atmospheric carbon dioxide is effectively fertilizing tropical tree growth," speculated Muller-Landau.
It is probable, she added, that both factors were at play.
Whether remaining intact forests will continue to sequester carbon is unknown, and will depend in part on how humans manage this precious resource, Lewis and colleagues conclude.
"With adequate protection, these forests are likey to remain large carbon stores in the longer term," they wrote.
We live in an age of grave economic ignorance, if central-bank policy is an indication of prevailing economic theory. It is apparent that we've learned nothing from several millennia of monetary destruction. The persistent demonstration that capital, not paper, is the basis for prosperity has fallen on deaf ears. Daily, we face the sad spectacle of government officials, pundits, and even Nobel laureates telling us that printing money is the answer to an economic downturn. Consider that since the eruption of the financial credit crisis in the second half of 2007, all major central banks have embraced an irresponsibly loose interest-rate stance. For instance, the policy rate of the Bank of England (BOE) was lowered from 5.75 per cent in November 2007 to the current level of 1 per cent.I can't see how any - any - of the so called stimulus packages around the world can have any other effect than to make the situation worse.
The sharp decline in the BOE policy interest rate is in line with policies of other central banks. The US central bank (the Fed) has lowered its policy rate (the federal-funds rate target) from 5.25 per cent in August 2007 to around zero at present. Also, the relatively "conservative" European Central Bank (ECB) has been aggressively lowering its policy interest rate. The rate was lowered from 4.25 per cent in September last year to the present target of 2 per cent. Similarly, the Bank of Japan (BOJ) has visibly eased its interest rate stance. The policy rate was reduced from 0.5 per cent in September 2008 to the current level of 0.1 per cent.
Given that, so far, already extremely low interest rates have failed to revive economic activity, central bankers are now considering another approach. Last Wednesday, February 11, the governor of the Bank of England said that the UK central bank is going to embrace a quantitative easing policy to revive the economy. The idea here is to flood the economy with money by buying government bonds. US central-bank policy makers are currently contemplating a simliar idea. We shouldn't overlook the fact that, since embracing the aggressive lowering of rates, central banks have been aggressively pushing money into the banking system without succeeding in reviving economic activity. So why should aggressive money pumping work now?
The yearly rate of growth of the US central-bank balance sheet (money pumping) jumped from 3.9 per cent in August last year to 152.8 per cent in December 2008 before falling to 127.5 per cent in January. The yearly rate of growth of the balance sheet of the Bank of England jumped from negative 7.2 per cent in May 2007 to positive 179.4 per cent by October 2008 before easing to 157.6 per cent in November last year and 129 per cent in January.
The growth momentum of the European Central Bank balance sheet has accelerated in January. Year on year, the rate of growth jumped from 7 per cent in July 2007 to 45.5 per cent in December and to 56.5 per cent in January. Also, the yearly rate of growth of the BOJ balance sheet follows a visible uptrend. The rate of growth climbed from negative 0.8 per cent in August last year to 10.3 per cent in December before easing to 5.7 per cent in January.
What permits real economic growth is an improvement in the investment infrastructure of the production process. What makes the improvement possible is real savings. It is real savings that fund the enhancement of infrastructure through various tools and machinery, i.e., capital goods. With better tools and machinery, a better quality and a greater quantity of goods and services can be produced.
In a free, unhampered market economy the established infrastructure is in accordance with the tendency toward harmony between various activities. This means that the flow of real savings is sufficient to fund various lines of production without any disruption. On this Murray Rothbard, paraphrasing Ludwig Lachmann, wrote,
Capital is an intricate, delicate, interweaving structure of capital goods. All of the delicate strands of this structure have to fit, and fit precisely, or else malinvestment occurs. The free market is almost an automatic mechanism for such fitting; … with its price system and profit-and-loss criteria, [it] adjusts the output and variety of the different strands of production, preventing any one from getting long out of alignment. (Murray N. Rothbard, Man, Economy, and State with Power and Market, Mises Institute, 2004, p. 967).
As a result of the artificial lowering of interest rates and massive money pumping, an additional demand for various goods and services emerges. This leads to an attempt to expand the infrastructure. This attempt is bound to fail since the flow of real savings is not large enough to support the expansion of the capital structure. Consequently, the attempt to expand the infrastructure leads to the diversion of real funding from various activities that make the present flow of real savings possible. Thus, the flow of real savings comes under pressure and the rate of real economic growth follows suit.
Neither an artificial lowering of interest rates nor monetary pumping by central banks has direct input in the production of capital goods and the production of goods and services that are required to promote and maintain human life and well-being. The artificial lowering of interest rates and monetary pumping only give rise to various false activities by diverting a portion of the flow of real savings to these activities. The more false activities that emerge on the back of the artificial lowering of interest rates and monetary pumping, the less real savings will be available for wealth-generating activities.
The fact that economic conditions have continued to deteriorate despite the aggressive lowering of interest rates and massive money pumping by central banks raises the likelihood that the flow of real savings is in trouble. Note again that monetary pumping and the artificial lowering of interest rates can't replace nonexistent real savings. Without additional real savings, it is not possible to undertake various new projects without weakening the existent structure of production.
Remember that the interest rate is just an indicator of the state of demand and supply for real savings. The falsification of this indicator cannot expand the flow of real savings. Likewise money is just a medium of exchange. Its function is to permit the exchange of the products of one specialist for the products of another specialist. More money cannot generate more real savings or real economic growth.
On the contrary, a further planned expansion in monetary pumping by central banks can only weaken the flow of real savings and undermine prospects for a sustained economic revival.
VICTORIA'S bushfires have released a massive amount of carbon dioxide into the atmosphere - almost equal to Australia's industrial emission for an entire year.How much greater can the disaster be?
Mark Adams, from the University of Sydney, said the emissions from bushfires were far beyond what could be contained through carbon capture and needed to be addressed in the next international agreement.
"Once you are starting to burn millions of hectares of eucalypt forest, then you are putting into the atmosphere very large amounts of carbon," Professor Adams said.
Just as they used Hurricane Katrina, warmenists are preparing to use Australia’s fires:I have pointed out before that there is a deep immorality behind the accusation that mankind's CO2 emissions are responsible, or will be responsible, for all sorts of disasters.
Thanks for the kind thoughts, Karen.
- I’m an American climate activist. My heart goes out to all suffering this devastation. I also appeal to you to tell your stories, in blogs or wherever you can; we need your voices to help get climate change laws and treaties passed. Americans don’t understand the harsh reality of GW coming to us all - Karen, San Francisco, USA
UPDATE. It’s on. A warmenist swarm commences at the ABC, Crikey and the Age, where Freya Mathews—a research fellow in the philosophy department at La Trobe University, if you don’t mind—writes:
Congratulations, geniuses. You’ve successfully predicted bushfires in Australia during the Australian bushfire season.
- It is only a couple of years since scientists first told us we could expect a whole new order of fires in south-eastern Australia, fires of such ferocity they would simply engulf the towns in their path. And here they are.
Greens leader Bob Brown says bushfires like the ones raging across Victoria and New South Wales this weekend will be more frequent if climate change continues…At the time he made the statement people were being killed by the fires.
“Global warming is predicted to make this sort of event happen 25 per cent, 50 per cent more,” he told Sky News.
“It’s a sobering reminder of the need for this nation and the whole world to act and put at a priority our need to tackle climate change.”
Rudd's solution to the financial crisis and the recession is the discredited Keynesian one of swilling billions of dollars down a toilet bowl. In this he has the full support Treasury Secretary Dr Ken Henry who argued that Rudd's spending binge would prevent the economy from stalling. According to Henry's fallacious economic thinking investing in infrastructure and using cash handouts to promote consumption will create enough spending power to lift the economy out of recession. If it doesn't, then spend and borrow some more until it does. This line of 'economic thought' is complete hogwash.(Nothing Follows)
The brilliant Dr Henry has stated that cash handouts are more effective than tax cuts. Turnbull's response to this nonsense was to dredge up Friedman's permanent income hypothesis, which immediately swung public opinion behind him (some hope). The problem is that Turnbull and his advisors are a bunch of economic illiterates while Henry is nothing but a vulgar little Keynesian whose lousy economics — that are also shared by officials at the Reserve Bank of Australia — are in grave danger of making matters much worse than they would otherwise be.
Australia's economic state — and that of the rest of the world — is the result of the appalling economic fallacies that have shackled the central banks. Without exception every central banker believes that he can stabilise the economy by manipulating interest rates. Let us once again turn to our own central banking experience. March 1996 to October 2008 currency grew by 129 per cent, bank deposits by 201 per cent and M1 by 185 per cent. It was this utterly incompetent (some would call it criminal) monetary policy that created a boom that once again gave us a "recession we had to have".
A loose monetary policy always distorts the production structure. By this it is meant that activities are encouraged that rely for their continued expansion — if not existence — on more and more monetary injections. The longer this policy is pursued the greater will be the distortions. Sooner or later the central bank will gradually begin to raise interest rates. A turning point will finally be reached where rising rates will cause manufacturing to start contracting*.
The latest Australian Industry Group's PricewaterhouseCoopers performance of manufacturing index reports that "seasonally adjusted manufacturing employment fell for an 11th consecutive month", which suggest that the turning point was reached in early 2008 when the cash rate target was raised to 7 per cent. That it was also reported that while manufacturing contracted for the eighth consecutive month in January might suggest to readers that there is a contradiction here. Not at all.
Austrian theory explains that the production structure consists of complex stages of production, which each stage being further from the point of consumption than the preceding stage. (Austrian capital theory is a lot more complicated than this might suggest). Therefore, because of the structure's time dimension — we expect the higher stages to contract first then in turn by the lower stages. Therefore a manufacturing index could for a time conceal the fact that some manufacturing activities are contracting and shedding labour. It would not be until the contraction became more widespread that the index would drop below 50.
Without a reasonable grasp of capital theory it is impossible to fully comprehend what is going on with the economy. This is why so much economic commentary is very bad, including the stuff Treasury officials come out with, which brings us right back to Dr Henry's nonsense. His only argument for increased government spending as opposed to tax cuts has to rest on Keynes' magical multiplier, according to which, the less you save and the more you consume the richer you will become. Hence wealth springs from consumption (demand) and not production.
Rudd is going to give — with Dr Henry's approval — small businesses a temporary $2.7 billion tax break. It ought to be obvious, even to a Keynesian, that no business is going to expand production on the basis of a temporary tax break. This is why tax cuts need to be permanent. Unfortunately, even the sound idea of tax cuts is burdened with fallacies. For example, Andrew Norton, a research fellow at the Centre for Independent Studies, argues that "tax cuts would be less inflationary than the spending we are seeing, because they would be partly saved". But tax cuts are never inflationary. Moreover, government spending is only inflationary when it is monetised by the central bank. In addition, to save, as Ricardo pointed out to Malthus, is to spend.
The question is not one of tax cuts v. government spending but the fact that not a single member of the economic commentariat gets it. First and foremost, nearly all of the spending is directed to personal and government consumption. For instance, nearly $4 billion is going to be spent on home insulation and just over $21 billion is to be spent on schools and public housing. That's a total of some $25 billion alone.
All of the spending is taking place at the lower end of the production structure. This is guaranteed to worsen the plight of the higher stages of production. The orthodox argument is that because consumption spending is about 66 per cent of GDP Rudd's spending binge will jump start the economy by spurring consumer spending. This approach is totally blind to the fact that total spending is about three time the size of GDP with business spending being about 66 per cent. It is not consumption that needs to be promoted but savings and production, out of which consumption springs — irrespective of what Dr Henry thinks.
The RBA recently said it expected GDP to bottom out at an annual pace of 0.25 per cent by the June quarter of 2009. But if the Reserve had used total spending (or total outlays) as its measure it would have found that the economy had actually contracted. Our so-called meagre growth figure is in fact negative. The country is in recession and Rudd's so-called stimulus will make it worse.
The following are a couple of examples of the type of economic commentary that I am forever condemning
Terry McCrann stated:
Now we've got massive co-ordinated stimulus for the first time in 17 years — and indeed arguably much more than back then. It's a big, bold experiment. (The phone call that never came , Herald Sun, 4 February 2009).
It's neither bold nor experimental. This kind of economic hooey has always failed whenever it has been tried. What is needed is sound economic advice, which is not what McCrann is offering. However, McCrann is a fount of economic wisdom when compared with Anatole Kaletsky. According to this expert:
As a result of moralistic witch-hunts against debt and consumption, pragmatic Keynesian solutions to the credit crunch have been thwarted by an unholy alliance of ideological monetarists who believe that the market is always right...(How we all got it wrong this year , The Australian, 30 December 2008).
It is completely beyond the ken of this vulgar little Keynesian that it was his "debt and consumption" policies that caused the bloody crisis in the first place. But what can we expect from a moralising twit who thinks that a country can grow rich by bombing its own cities.
The economy sinks deeper into recession while the economic commentariat flounders.
Marysville north of Melbourne has been all but wiped off the map and ambulance authorities say there are not enough vehicles to reach all the injured in nearby Kinglake, a town which is also feared to have been destroyed.Please help in any way you can.
It is unclear how many homes have been destroyed in the fires, but tens of thousands of hectares have been razed and the army has been called in to assist exhausted firefighters.
The number of destroyed homes will be in the hundreds.
This morning there were also unconfirmed reports of bodies being found in cars overtaken by the fires in Gippsland in the state's east.
Six of the confirmed dead have been found at Kinglake, six at Kinglake West and four each at St Andrews and Wandong, all north of Melbourne.
Five people are dead in Callignee, three in Hazelwood and one in Jeeralang. More bodies have been found at Humevale, Bendigo, and Arthurs Creek.
Victoria's deputy police commissioner Kieran Walshe says the death toll will rise and it is expected to include children.
Digging through some old magazines I came across an attack on Elia Kazan by the author of the Culture Vulture column (The Australian Magazine 19-20 September 1998) in which he used the word "odious" to describe Kazan whose crime was to reveal the names of Hollywood Stalinists. Now the left is very hot on free speech, especially for the left. But having a totalitarian mindset means that they define 'free speech' as complete agreement with their current 'party line'.The double standard of the elites can also be shown in how they treat Castro versus how they treated Pinochet.
I know that many of us have heard or read about the fiendish Senator McCarthy and his Hollywood blacklist that denied work to patriotic American actors, producers, writers and directors because they had allegedly been associated with the CPUSA (Communist Party of the United States of America). Because of this infamy the mere mention of his name causes 'progressives' to turn apoplectic, even as they defend — as does Steven Soderbergh, Ed Asner, Benicio Del Toro, Robert Rederford, Sean Penn, etc. — sadistic leftwing killers like Che Guevara and Fidel Castro.
While Hollywood’s celluloid intellectuals blame McCarthy for the blacklisting and excoriate HUAC (House of Un-American Activities Committee) they overlook the simple historical fact that McCarthy was a Senator and was not elected until 1947 while HUAC had been set up in 1934 by Democrats.
At the time of the HUAC hearings McCarthy was running his own investigation into communist infiltration of the State Department and the military. He had nothing at all to do with any hearings on communism in the film industry which were conducted in the House of Representatives. Moreover, these investigations started in the 1940s and were requested by actors and studio executives, mainly as a reaction to the Communist Party's own blacklist, something the likes of Redford, Soderbergh, and the truly hateful Clooney would never think of mentioning.
The American left assiduously cultivate the myth that the CPUSA was never a threat to America anyway and that those associated with it were honest people motivated by idealism and a love of liberty. (Our left has used the same tactic to defend the treasonable activities of the Australian Communist Party). It follows that it is both absurd, as well as slanderous, to suggest that these people would use their positions in Hollywood to promote tyranny.
But the collapse of the Soviet empire and the subsequent opening of some the KGB's intelligence archives revealed the real story, the one the left is still trying to suppress by ignoring it. We now have the evidence that the CPUSA was, like the Australian Communist Party, fully controlled and financed by the Kremlin. In short, it was just a branch of the CPSU (Communist Party of the Soviet Union). This is one story that you can bet your last dollar on that neither Soderbergh or Clooney will ever film. After all, that would be the patriotic thing to do.
There is also the little matter of the Hollywood left-wing blacklist, the one we never hear about. Those who were on this list were anti-communists who suffered for their beliefs because they identified Stalinist toadies. Morrie Ryskind was one such person. He was an award-winning film writer until he told a congressional committee the truth about communists in the film industry. Suddenly he was unemployable.
And just in case you think this blacklist is dead, some years ago two young leftwing writers on the Sony Studio Lot had Robert Montgomery’s name taken off a building because he had been a "friendly witness" for HUAC. Needless to say, Clooney and the rest of the Hollywood left remained unmoved by this intolerant act of leftwing bastardry. Their silence is not surprising considering the degree of leftwing intimidation that comes from the Hollywood elite.
(This reminds of a very revealing complaint by Clooney: "There used to be three networks. Now there's hundreds and hundreds." He believes that news broadcasting should be restricted to three networks controlled entirely by people who agree with him. Tom Hanks is another example of Tinseltown's political intolerance. He called Mormons who support California’s Proposition 8 of being "un-American". It logically follows from this that conservatives are also "un-American").
Now one might say that it is all history now, water under the bridge and all that. But then such a person would have no idea of the left's capacity for hatred and revenge, specially the Hollywood left and its fellow travelling media mates, even those in Australia. This was made sickeningly clear when the Hollywood left blocked the distinguished director Elia Kazan's nomination by colleagues for the lifetime achievement award given each year by the American Film Institute and the Los Angeles Film Critics Association.
Kazan who had directed such masterpieces as On the Waterfront, East of Eden and A Streetcar Named Desire and who had won two Oscars as a director was ignored in favour of the left-wing Norman Corman who won lasting fame for Attack of the Crab Monsters, Swamp Women and other masterpieces of schlock. So heavy was the stench of hypocrisy that even The New York Times felt impelled to comment on Hollywood's vindictiveness.
The famed then 87-year-old Kazan's unforgivable crime was to have truthfully told the House Committee on UnAmerican Activities in 1952 that he and eight of his friends had been fellow members of the communist party, from which he had resigned in disgust. Some of these men later admitted that Kazan told the truth. Nevertheless, until his death in 2003 at the age of 94 Kazan remained a political leper among Hollywood's politically correct.
These are same people who in October 1997 streamed into the Motion Picture Academy of Arts and Sciences in Berverly Hills to see Hollywood Remembers the Blacklist, a film glorifying unrepentant Stalinists who wanted to turn the US into another Gulag. Needless to say, these are also same celluloid intellectuals who support cop-killers and murderous dictators – but only so long as they are socialists.
What is worthy of note here is the hypocrisy, political stupidity and moral baseness of these leftists. No wonder they feel comfortable supporting the Democrats.
It was Otto Katz who bragged: "I discovered Hollwood". Katz was a Comintern agent sent by Stalin to turn Hollywood into an instrument of Soviet policy. He arrived in 1934 and was a great success with Hollywood leftists who fell over themselves to do his bidding. Some of those Stalinists lived long enough to attend the Hollywood Remembers the Blacklist love-in where they were enthusiastically greeted by the glitterati.
As proof that there is a divine providence, Katz (who was said to be implicated in the murder of Willi Münzenberg) was arrested in Prague in 1948 and became a victim of the Rajk-Slansky purges. He was tortured for months before being tried. He was convicted of treason and hanged the next day, His body was burnt and the remains put in a sack which was later dumped on the roadside. Not a tear seems to have been shed by his Hollywood pals. This would make a terrific film. It’s a great pity it will never be made.