Saturday, July 23, 2016

The Munich terror attack


I've refrained from comment on yesterday's Munich terror attack until details became clearer, because there was a lot of confusion.  However, enough has now been cleared up that we can begin to make sense of it.

First off, a lot of reports are referring to it as a 'shooting' or 'mass murder'.  They're afraid to use the T-word.  'Terrorism' is becoming a politically incorrect description, as these two articles show.  Personally, I think any reporter or news media eschewing that word for politically correct reasons is the epitomy of hypocrisy, cowardice and moonbattery, but I suppose they're not interested in my opinion . . .  In the same light, the BBC initially dropped the shooter's first name, 'Ali', from its reports on the tragedy, presumably trying to hide his Islamic or Middle Eastern connections.  Moonbats indeed!

Next, we're told that the shooter was fixated on mass shootings, in particular the massacre perpetrated by neo-Nazi Anders Breivik in Norway in 2011.  He also claimed (to a bystander during the shooting) that he had been 'bullied for seven years'.  I don't find that surprising;  Turkish migrant workers in Germany have complained about racist abuse and bullying for decades.  If this young man was the child of Iranian refugee parents, as has been reported, he'd have looked very similar to a Turk, and would probably have attracted the same unwelcome attention.  However, not many people commit mass murder as a result of bullying!  He's reported to have had psychotic tendencies for which he'd received treatment.  If those reports are true, then they probably contributed to his last, lethal explosion of anger at the bullying.

Therefore, I don't think we can ascribe this incident to fundamentalist Islamic roots.  It's more likely to have been a single, psychotic explosion of violence.  That doesn't make it less tragic, of course . . . or less of a terrorist act.

The one thing that struck me very forcibly about this attack was how easy it would have been for an armed citizen to stop the terrorist in his tracks, before he'd killed so many people.  Consider this video, showing the perpetrator opening fire on passersby.





Any of those running in panic could have sought cover and fired back, if they'd been armed.  Others nearby (not shown in this particular video) could have done the same.  Anyone who says that armed civilians could not have prevented this attack, or stopped it, is lying to you.  Any competent shooter could have dealt with the terrorist.

The corollary to that is:  if, after all the terror attacks in recent weeks and months, you aren't carrying a gun as you go about your daily routine . . . for heaven's sake, why not?  Do you want to be a helpless victim?  Do you want to have to see your spouse and children shot in front of you because you couldn't stop their murderer?  Get a gun, learn how to use it effectively, get a concealed carry permit if one is available to you - and then carry your gun and be prepared to use it!

Peter

An interesting (and very large) amphibian aircraft from China


Back in the 1970's China designed the large Harbin SH-5 amphibious maritime patrol aircraft.  Only one prototype and six production aircraft were built.



Harbin SH-5 (image courtesy of Wikipedia)


With China's increased activities in the South China Sea, and the need for additional water-bombing aircraft to deal with forest fires, the country embarked on an ambitious design project for an even larger amphibious aircraft.  The prototype of the Avic TA-600 (also known as the AG-600) has just rolled off the assembly line.  Yahoo News reports:

The AG600, which is about the size of a Boeing 737 and was developed by state aircraft maker Aviation Industry Corporation of China (AVIC), rolled off a production line in the southern city of Zhuhai on Saturday, Xinhua said quoting the firm.

AVIC deputy general manager, Geng Rugang, said the plane was "the latest breakthrough in China's aviation industry." A plan for the development and production of the AG600 received government approval in 2009.

The aircraft has a maximum flight range of 4,500 km and can collect 12 tonnes of water in 20 seconds. It has a maximum take-off weight of 53.5 tonnes, Xinhua said.

There's more at the link.

The new plane hasn't flown yet, but already China is making big plans for it.  Here's a promotional video from that country.





I'm not sure of its utility in firefighting, given its very large size.  That's not a problem in the air, of course, but if it needs to land on water to refill its tanks, it's probably going to need a pretty long stretch of unobstructed, smooth water to do so - much longer than a smaller, lighter water-bomber would need.  Still, I daresay the Chinese authorities have made allowance for that.  What's more, 14 Chinese pilots have already completed water-bomber flight training in the USA.

The Coulson Group that owns two huge Martin Mars flying boat air tankers trained 14 Chinese test pilots last year who will be the first to fly the AG-600. The training included ground, water taxi, flight, scooping, and dropping water. The trainee pilots went through classroom and hands on training using Coulson’s Hawaii Martin Mars, actually taxiing and flying the huge flying boat.

Again, more at the link.  You can also read more about the pilots' training here.

It looks as if China's really serious about getting this plane into production.  I'll be watching further developments with interest.

Peter

The economy: "Things fall apart", Part 2


In Part 1 of this article, we looked at the current state of the US economy in terms of the devaluation of money, inflation (which is running right along at plus-or-minus 10% per year, irrespective of 'official' government figures, edicts or prognostications) and globalization.  It's not a happy picture.

In this second half of the article, I'd like to look at the latest ideas from central banks on how to deal with the current crisis, and what they're likely to do to 'ordinary people' like you and I.  I'll then make suggestions as to ways we can prepare for and handle the problems that lie ahead.

Let it be said, right at the outset, that central banks don't care about 'ordinary people'.  They look at the economy overall, examining issues and trends, trying to make it behave according to the blueprint of what they consider desirable and appropriate.  They're also constrained by political reality, irrespective of any lofty words about how they're 'independent'.  If the government of the day wants a given fiscal policy badly enough, it will force its central bank to go along, one way or another.  If persuasion won't work, it'll replace those in charge, or even pass laws that change the status of the central bank to bring it more directly under political control.  To take just one example, witness Japan in 2013:

A joint announcement between the Bank of Japan and government officials said the bank would pursue “open-ended” asset purchases starting next year. The bank also upgraded Japan’s economic growth forecasts...

. . .

Prime Minister Shinzo Abe’s government had pressured the Bank of Japan and Gov. Masaaki Shirakawa to enact bolder monetary policy in the run-up to January’s meeting. In light of the new policies, Abe’s chief cabinet secretary backed away from earlier threats by the Prime Minister’s LDP Party to push for reforms that would undermine the central bank’s independence.

There's more at the link.

If you believe that the Bank of Japan would have taken such steps without such pressure from the Japanese government, there's a bridge in Brooklyn, NYC I'd like to sell you.  Cash only, please, and in small bills.  Want another example?  Try German pressure on the European Central Bank.  There are many more, including the Federal Reserve enabling US government deficit spending by 'printing money' to fund it.  Quite literally, without the Fed, present US government spending levels could not possibly continue.  It's as if the Fed were a drug dealer, handing out free crack to keep addicted politicians dependent on it.  Whose fault is that?  The Fed's, for accommodating the politicians, or the politicians, for pressuring the Fed to do so?

Whoever's responsible, the result of the Fed's connivance is the US government deficit, the cumulative effect of which has pushed gross federal debt to almost $20 trillion at the time of writing.  How is that ever going to be repaid?  My guess is that the government and the Fed will tolerate - if not encourage - inflation levels so high that it'll be repaid in dollars that have been inflated into worthlessness.  We discussed that yesterday.  With real inflation running at about 10% per year, that can be accomplished in only a few decades.  The fact that the 'little people' - folks like you and I - will be impoverished in the process doesn't bother either central bankers or politicians, who will make sure they're insulated from such side-effects.

The central banks, influenced by Keynesian economics, went all-out for 'quantitative easing' in an attempt to recover from the 2007-08 financial crisis.  QE temporarily stabilized the situation, but could not solve the problems at the root of the crisis.  Its benefits are now wearing off, despite repeated applications.  Central banks are now talking about 'doubling down' on this approach by deploying so-called 'helicopter money'.  This is, at its root, nothing more than another form of QE:  money 'created' by a central bank, disbursed either to the government in the form of bonds for which it doesn't have to pay, or more directly to corporations and citizens, in an attempt to boost economic activity.

There are great dangers in such an approach.  As David Stockman points out:

... “helicopter money” isn’t some kind of new wrinkle in monetary policy, at all. It’s an old as the hills rationalization for monetization of the public debt—–that is, purchase of government bonds with central bank credit conjured from thin air.

It’s the ultimate in “something for nothing” economics.

. . .

The unstated essence of it is that our monetary politburo would overtly conspire and coordinate with the White House and Capitol Hill to bury future generations in crushing public debts.

They would do this by agreeing to generate incremental fiscal deficits—-as if Uncle Sam’s current $19 trillion isn’t enough debt—–which would be matched dollar for dollar by an increase in the Fed’s bond-buying or monetization rate. That amounts not only to teaching children how to play with matches; it’s tantamount to setting fiscal forest fires across the land.

There are a few additional meaningless bells and whistles to the theory, which we will dispatch in a moment, but the essential crime against democracy and economic rationality should be made very explicit. To wit, this is a central bank power grab like no other because it insinuates our unelected central bankers into the very heart of the fiscal process.

. . .

... what makes helicopter money so positively insidious is that it relieves elected politicians entirely from their vestigial fears of the public debt and from accountability for the burdens it imposes on future generations ... the crucial element in [Bernanke's] helicopter money scheme ... is an explicit and loud announcement by the Fed that the incremental debt will be permanent. It will never, ever be repaid——not even in today’s fictional by-and-by.

Again, more at the link.

A British financial journalist, discussing 'helicopter money' and its prospects in his country, notes:

But what form will [helicopter money] take? The most likely option is probably a direct monetisation of government debt ... The state could create infrastructure bonds to finance a public works programme and those could be bought directly by its central bank and then cancelled. Instead of adding to the national debt, the bonds would simply be written off.

A more radical idea would be directly putting money into people’s pockets. Technically, the Bank of England would simply credit everyone’s account with £1,000, or whatever sum it chose. A more subtle way of doing that might be through a basic citizen’s income, a proposal already being discussed in Finland and Switzerland, two countries either in or close to recession. Everyone could be paid £5,000 a year, and the central bank would pick up the tab.

Another option could be an incomes policy, which some economists are now advocating for Japan, with the government simply mandating a pay rise. Here in Britain, with our traditional reliance on the property market to boost the economy, don’t be surprised if it takes the form of a more generous “Help To Buy” scheme.

If any of those policies were implemented, expect retail sales to soar, along with car sales and house prices.

Of course, helicopter money won’t work any better than Zirp and Nirp did. It will just further undermine faith in the soundness of currency and reduce incentives to work and save. Worse, unless people can be convinced it is permanent, they may not spend it anyway – many of us might just use the “helicopter money” to reduce debts, which will defeat its purpose. It could backfire as badly as negative rates.

In reality, the major problem for our economy is that we have too much debt, the state is too big, productivity is not growing quickly enough, and technology is no longer delivering sufficient innovation to create new industries in the way it once did. None of those problems will be fixed by printing more money.

More at the link.  Bold, underlined text is my emphasis.

Please note the final paragraph quoted above.  Those problems are at the root of our current economic malaise.  None of the measures taken by central banks will solve them.  Those measures are merely 'papering over the cracks' - indeed, they are making some problems (e.g. the levels of debt in the economy) much worse.  What's more, by devaluing our currency and rendering it essentially worthless (as discussed yesterday), they're ensuring that we will never be able to dig our way out from under those problems as long as we follow current policies.  The longer those policies continue, the worse the situation will become.

These 'big picture' economic developments are all very well, but what do they imply for us as individuals?
  1. Our incomes are being reduced in purchasing power by approximately 10% per year (the real rate of inflation, as discussed yesterday).  If I earn $50,000 per year, and receive a 1% increase this year to compensate me for the official rate of inflation, this is worse than meaningless.  In reality I will suffer a 9% decrease in my purchasing power.  Next year, my income of $50,500 (including the previous year's 1% increase) will be worth only $45,450 in terms of this year's purchasing power.  That decline will continue, year in, year out.  I have to plan accordingly, and expect that my money will buy less and less as time passes.  Unless I can somehow find extra money from somewhere, I'm going to be in serious financial difficulties in due course.  (Many people already are.)
  2. Our financial preparations for the future will become more uncertain, and much more difficult.  For example, we're being urged to plan for a longer retirement, because we're living longer than our predecessors.  This is all very well . . . but in an era of interest rates so low as to be ridiculous, and with our budgets stretched to afford day-to-day necessities, how are we expected to save for our retirement?  A lot of US pension funds are in trouble.  Technically, their members are state-insured against their failure - but that insurance is very parlous indeed, and should not be relied upon.  Pensions may also be drastically cut if reserves aren't sufficient to pay out what was promised.  Playing the stock or bond markets (particularly given their current turmoil) is an expert's job, and even the experts often get it wrong.  Small investors are effectively reduced to participating in investment funds or other joint investment opportunities, where we're dependent on the judgment of others as to what to buy or sell and when to do it.  If they get it wrong, we suffer.  Furthermore, big Wall Street investors, deprived of meaningful yields in their traditional markets, are moving into avenues that were once dominated by small investors (e.g. the housing market - see this report for more information).  That makes it more difficult for those who lack the huge investment resources of the 'big boys' to compete with them, and get a decent return on their (much smaller) investments.

So, in the light of these cold, hard facts, we are confronted by some stark realities.
  • Just to keep pace with inflation, we have to achieve an increase in disposable income (i.e. after taxes and other 'up-front' costs) of at least 10% per year - and higher than that, if inflation gets worse.  If we can't do that, the purchasing power of our disposable income is going to go down every year, whether we like it or not.
  • If we can't achieve that increase, we have to take a long, hard look at our present economic circumstances, and plan for them to get worse.  We need to reduce our debt load, so that more of our disposable income can go towards everyday needs.  That means reducing or eliminating credit card and other consumer debt.  For example, that may mean buying cheaper vehicles, or buying them used instead of new, and saving up to pay cash for them instead of taking on a loan or lease to buy them.
  • We need to plan for an entirely different savings environment.  It's no longer any use to keep large sums of money in a savings account or certificate of deposit, where the interest rate is a small fraction of the real inflation rate.  Our money will lose value - i.e. purchasing power - every day that it's in such accounts.  Instead, we need to treat bank accounts as convenient places to keep our short-term, day-to-day spending money and our emergency reserves.  Some of those funds (perhaps a significant proportion) might be better kept in a safe place at home or elsewhere, because banks are no longer necessarily a safe haven.  Longer-term savings (e.g. for retirement) will have to go into safer investments producing higher rates of return . . . even though finding them will be very difficult for 'small fry' like you and I.

Our spending decisions need to be realigned to take account of a high-inflation environment.  Every cent we spend on fripperies is basically wasted.  We can afford to do that when we aren't struggling financially, but we can't afford it in a high-inflation environment.  We need to get value for our money, and - apart from essentials like food and household needs - that means concentrating on things that will hold their value.  Let's be honest:  we can do without a lot, if we try.
  • Our kids will have to learn that the latest Barbie doll, or a 'happy meal', isn't essential, no matter what the social pressure from their friends.
  • Many Americans eat out relatively often - several times a week.  Cooking at home is more work, but it's a lot cheaper!
  • The quality of US television programming is generally abysmal.  Miss D. and I haven't had a TV service since we got married, and we don't miss it at all.  We can get all the news, etc. we need over the internet, and if we want to watch a movie, there are streaming video services, DVD's etc.  Why pay a monthly cable subscription?
  • In the same way, membership fees for gyms, subscriptions to periodicals, etc. are often luxuries rather than necessities.  One can keep fit and strong in the comfort of one's own home, if money is tight.  It's not even essential to buy fitness equipment.

Another benefit of reducing non-essential expenditure is that the money thus saved can go towards things of real value.  For example, Miss D. and I are paying extra on our mortgage every month, reducing the capital owed.  We'd like to pay it off within a decade, if possible.  That will give us several hundred dollars a month extra in disposable income, at a time when inflation is likely to be hurting us much more than it is now.  Another option might be to stockpile basic essentials that you know you're going to need in future.  That way, you won't have to buy as much of them in future when your money might be tighter - you can draw on your stockpile instead.  (Of course, you need space to store them as well, which can be a limiting factor.)

As a corollary, if a tax refund or 'helicopter money' program gives us some unexpected cash, let's use it to reduce debt, pay down mortgages, buy essential items like a more reliable or economical car to replace one that's costing us a lot of money, and so on.  Let's use the windfall wisely to improve our long-term financial position, rather than waste it.

We should take a long, hard look at where we're living, and why.  If we absolutely have to be close to family members, or to a particular job (perhaps because there are few or no other jobs available), perhaps we can't move;  but why not consider our options?  If we sell our existing home and move to one that's more affordable, we might save a bundle.  That might even involve moving to another city or state, where housing is cheaper.  Miss D. and I did that early this year, because a good house here cost less than half as much as one of comparable size and quality in our previous location.  We moved for a number of reasons, not only for cheaper housing, but the latter was a decisive factor.

We need to consider whether we will ever be able to afford to retire.  We may need to continue earning at least something, to supplement inadequate pensions and Social Security benefits (which won't keep pace with the real rate of inflation, as we've already pointed out).  Some examples:
  • Have you noticed how many elderly people are working as greeters at Walmart and similar businesses these days?  There are a lot of them.
  • In my case, I'll go on writing books for as long as I'm able.
  • Other folks I know are using their knowledge of antiques or other markets to buy things at garage sales or from other sources, then re-sell them on eBay or other outlets.  Some are making a tidy living out of it.
  • It may be that younger families will no longer be able to rely on free child care from grandparents while the parents are out at work.  Without grandparents' help, parents would have to pay for child care;  so why not expect them to pay at least something (in cash and/or in kind) to relatives doing the same job?

We can try to improve our self-sufficiency.  Many people are growing their own herbs, fruits, vegetables, etc. in their back yards.  The produce is usually cheaper than store-bought, and often tastier, too.  Others are learning skills such as plumbing, vehicle maintenance, furniture-making, etc.  By doing at least some of that work themselves, they're saving what they would otherwise have had to pay to others to do it for them.  Some groups (e.g. churches, neighborhoods, clubs, etc.) are pooling their skills and resources in this way.  One person might be good at plumbing, and help his friends in that area in return for help cutting the grass, or cleaning gutters, or in exchange for a piece of furniture he needs.  Another might can or bottle fruits and vegetables, and trade them for electrical work or vehicle maintenance.  (Best of all, such trades are tax-free, unless the taxman gets to hear about them!)

Finally, we can learn useful lessons from countries that have already experienced high inflation.  For example, in Zimbabwe, Venezuela, Argentina and other nations, canny consumers used their spare cash to buy goods that they knew were - and would continue to be - in constant demand:  easily stored foods (e.g. rice, pasta, cereals, etc.);  household goods (e.g. toilet paper, diapers, feminine hygiene products, soap, etc.);  automotive spare parts;  tools;  and so on.  When they found themselves in need of cash, they would take some of their accumulated stockpile and sell or trade it (at its then-inflated price) to buy what they needed.  If, after the transaction, they had money left over, they immediately bought more goods to add to their stockpile, in the confident expectation that they'd get more for them in future than they paid for them now.  (The danger, of course, was that if they bought goods that turned out to be not in high demand, their prices didn't rise as much, so they lost money.  This applied even to seemingly solid investments like jewelry or precious metals.  In a high-inflation environment, with all its stresses and risks, essentials come first;  and you can't eat diamonds or gold!)

I know a number of people who are already trying to do this in the USA.  Right now, their stockpiles aren't in much demand because there are enough goods available at affordable prices;  but in future, they expect that to change.  Some of them were encouraged by the recent 'ammunition drought'.  They took ammo from their stockpiles and sold it at greatly inflated prices, netting a return of several hundred per cent on their initial investment, then used their profits to buy other things they needed.  Now that ammunition is more freely available, they're replenishing their stocks in anticipation of another 'ammo drought' in future.

I'm sure there are more things we can do to prepare for and endure the problems that lie ahead.  Please contribute your suggestions in Comments.

Peter

(EDITED TO ADD:  There are those who say that in a high-inflation environment, it makes sense to incur more debt by buying items on instalment credit.  Future years' instalments will be the same dollar amount as this year's, but they can be paid in inflation-depreciated dollars, making them cheaper in real terms.  That's all very well if, and only if, one's income is indexed to the true inflation rate.  In other words, if real inflation is 10% per year, one's income will also rise by at least 10% per year.  If that's not the case (and for most of us, it isn't) then it makes no sense to increase one's indebtedness and incur higher monthly payments.)

Friday, July 22, 2016

Oops!


Some recent lessons in how not to drive a rally car.





Those were some expensive-sounding noises . . .

Peter

The economy: "Things fall apart", Part 1


There have been a number of insightful articles in recent weeks that have started me thinking again about the world economy.  I've analyzed it often on this blog in recent years, and haven't seen much reason for optimism.  These recent articles have shed new light on a few things I've noticed and written about, and added new concerns.

First, here's how Don Pittis sees the value of money when it's being 'printed' by central banks at the drop of a hat.

A basic principle of economics is that money has value because there isn't enough to go round, but as governments keep creating more of it, the rules may be starting to change.

. . .

The greater the threat to the financial system (Turkish coup, anyone?) the more likely central bankers will propose to create more money.

There is an odd thing going on in global economics right now that's very hard to grasp because it's outside our day-to-day experience, and it's contrary to the founding paradigm of conventional economics: the world's central banks are increasingly making money valueless.

As I've mentioned before, it may be possible to adapt to a world where capital is free, but if so, the rules must change radically.

Among the conventions of economics, the idea that money is in short supply is near the top of the list. But if the value of money is zero or negative, many of the rules go out the window.

If governments produce all the money needed for finance, why should retired people expect interest on their savings? After all, interest is someone paying you for your scarce money. Why pay if it's not scarce?

Far more revolutionary, why should rich people — those who have somehow captured large chunks of money — profit from something that's being created, free, by governments, while so many other citizens get a much lesser benefit?

There's more at the link.

This has huge - I say again, HUGE - implications for investors large and small.  Let's put it in terms relevant to us as individuals.  We're told to save for retirement;  but what if the interest rate on our savings is so low that it's less than the rate of inflation?  If we leave our money in savings accounts or IRA's, we're effectively losing money on it.

In particular, with governments manipulating the 'official' rate of inflation so as to limit inflation-indexed spending (e.g increases in entitlement payments, Social Security, etc.), we can no longer rely on the 'official' numbers for planning purposes.  (I examined this in detail a few years ago.)  The current reality of inflation is dire.  I'll give you two examples.

First, from Shadowstats (which we've met in these pages before), two charts.  The upper calculates inflation according to the standards used in 1990, the second those of 1980.  Compare both lines to the standards currently in use, and you'll get a very good idea of how the 'official' numbers have been deliberately skewed in order to make the 'official' rate of inflation appear lower than the economic reality.  (You can learn more about why they're doing that here and here.)




Second example:  the Chapwood Index calculates actual (not theoretical) inflation rates for specific cities in the USA, using a standardized basket of goods as a hard measurement of year-on-year price increases.  It's very hard to 'fudge' that sort of calculation.  Here's Ed Butowsky, founder of Chapwood Investments, explaining what he does and why.  The video dates from August 2013, and the figures quoted in it are accurate for that period.





Here's an example of ten cities analyzed by the Chapwood Index, taken as a screen-shot from their Web site this morning.  (Click the chart for a larger view.)




Note that the 5-year average annual rate of inflation, averaged across those 10 cities, is 10.91% - let's round it up to 11%, for convenience.  The Chapwood Index thus indicates an even higher city-specific inflation rate than the Shadowstats calculations.  There's an easy way to check their calculations for yourself.  Compare the cost of a shopping trolley full of goods that you used to buy at the supermarket ten years ago, with the cost of that same trolley full of goods today.  For almost anyone in the USA, it's probably at least doubled, if not more so, hasn't it?  That indicates a real, compound inflation rate of at least 10% per year as experienced by consumers like you and I - and demonstrates in real life that Shadowstats and Chapman's calculations are far more accurate than the 'official' statistics.

Compare that real rate of inflation to the risible rates of interest you're being offered by the banks.  They range from fractions of one per cent up to a couple of per cent per year (the latter only for really big deposits).  On the other hand, inflation is eating the value of your deposit at five to ten times that rate every year.  What's even worse is that you have to pay tax on your interest earnings, so your return on your savings is even lower than that.  It's no longer worth leaving money in the bank except as a safe deposit facility for short-term use.  Apart from the safety aspect, you may as well keep cash at home (and if the bank should fail, you'll definitely be better off with cash at home, since your bank deposits are likely to be 'bailed-in' to save the bank!).

In the light of those real inflation figures, let's go back to Don Pittis' remarks quoted above:

Among the conventions of economics, the idea that money is in short supply is near the top of the list. But if the value of money is zero or negative, many of the rules go out the window.

If governments produce all the money needed for finance, why should retired people expect interest on their savings? After all, interest is someone paying you for your scarce money. Why pay if it's not scarce?

That's precisely the point.  The artificial 'creation' of money (merely binary zeroes and ones in an official computer system somewhere) means that there's no economic value underlying that currency.  It's 'funny money' in the un-funniest sense of the world.  If it can be created out of thin air, with no assets underpinning it, is there any wonder that the real inflation rate is so much higher than what officialdom would have us believe?  The value of our money is being deliberately undermined each and every year.  Inflation is merely a way to measure that officially-sanctioned and deliberately-caused reduction in value.

What's more, on top of inflation, globalization has contributed to a fall in real income levels across the lower- and middle-income sections of our society.  Thus, our already inflation-ravaged incomes have been even further reduced, to the benefit of a small upper-income slice of our population, and poorer nations abroad.  They have every reason to be grateful for globalization.  Apart from the flow of cheaper goods to our supermarkets, we have rather fewer reasons for gratitude.  Globalization has cost the average American and European a lot of money in terms of lower and/or lost earnings.

The impact of (real) inflation and globalization has led to people seeking better returns on their investments, by turning to the stock and bond markets, and to assets such as property.  However, all is far from well there too.  Central banks now own large parts of their countries' private corporations, as they've bought up bonds in an effort to stimulate economic growth.  They've also guaranteed loans and other financial instruments to aid companies (and entire sectors of their economies) that are in trouble.  Combined, those measures have led to a stealthy and possibly unintended form of partial nationalization, although they'd never refer to it as such - and it's having the same unhealthy effects on the economy.

Let's face it:  if a government - through its central bank - owns large parts of a nation's productive capacity, or owns or guarantees the debt (i.e. bonds and loans) owed by that productive capacity, it's going to face irresistible pressure to take economic measures that favor the productive capacity it owns, at the expense of other parts of the economy and of its trading partners.  That's one of the factors that's led to so-called 'currency wars' all around the globe, as well as countries with cheaper manufacturing costs 'dumping' their products on those with higher costs of production.  (China is a particularly egregious offender in this regard at present.)  The effects of those practices are currently affecting trade all around the world.  Local businesses can't compete price-wise with such low-cost imports.  That means more local workers lose their jobs as employers are forced to cut back.

What will these pressures lead to?  What can central banks do to 'fix things' that they are not already doing?  And what can we, as individuals, do to prepare for the risks these factors are bringing with them?  That'll be discussed in a second part to this article, later today or tomorrow.

Peter

Thursday, July 21, 2016

More jokes that write themselves


Real life continues to be stranger than fiction.  From Minneapolis it's reported:

A western Wisconsin woman faces prostitution charges after she allegedly performed sexual services from inside a chicken coop.

There's more at the link.

What can one say?
  • Did she tell the investigators to cluck off when they came to a-roost her?
  • She must have had problems persuading her clients to 'perform' in such a location.  She probably had to egg them on.
  • Well, chicken coops are intended for layers, aren't they?
  • I'm sure they only charged her with a misdemeanor.  After all, it was a poultry offense.

Try the veal.  I'll be here all week!




Peter

Computer security alert


For those using the Opera Web browser, be advised that its long-term security may now be doubtful, to say the least.  Engadget reports:

After a $1.2 billion deal fell through, Opera has sold most of itself to a Chinese consortium for $600 million. The buyers, led by search and security firm Qihoo 360, are purchasing Opera's browser business, its privacy and performance apps, its tech licensing and, most importantly, its name.

. . .

Opera is the fifth most popular desktop browser with a meager 1.9 percent share, but it does hold a very respectable 10 percent of the mobile market. The company has been especially innovative in that arena, having introduced built-in ad-blocking, data and video compression and a built-in VPN.

There's more at the link.

Given the frequency of reports about Chinese hacking activities, I have little doubt that the 'Chinese consortium' that now owns Opera will come under irresistible state pressure to allow that country's agents to 'hack' the browser, ensuring that any and all 'interesting' data viewed using it will be leaked back to Chinese servers.  I use Opera myself occasionally, but in the interests of personal security that's got to stop.  I'm going to uninstall Opera and scrub its remnants from my system.  I can only recommend to my readers that they do likewise.

Peter

This should be worth waiting for


Move over, Hollywood, here comes Terry!

A new film of Sir Terry Pratchett's young adult novel The Wee Free Men is in development, it was announced yesterday. The film is to be produced by the Jim Henson Company, creators of The Muppets and the 1986 film Labyrinth, which starred David Bowie.




The 2003 novel will be adapted by the author's daughter, Rhianna Pratchett. “I’ve loved the Jim Henson Company’s work all my life, so it’s a great honour to team up with them and bring Wee Free Men to the big screen.” she said. Best known as a video-game writer for Tomb Raider, Pratchett is co-founder of Narrativia Limited, the company which owns the rights to the works of her late father, who died in March last year.

“My role will be to protect the brand that Dad has established,” she told The Telegraph in 2015. “I will steer Discworld. I will be a caretaker and look after how it’s used and adapted.”

. . .

“As a family owned company, we fully understand the importance of legacy properties,” said The Jim Henson Company chairman Brian Henson. “The Discworld series is a richly developed world with devoted fans, myself included, and there is no one better than Rhianna to bring Terry’s beloved project to life on the big screen.”

. . .

The Wee Free Men would be the first Pratchett novel to reach the big screen, though several of his books have been adapted for television by Sky, and for radio by the BBC. There are also plans for a 13-part Discworld series called The Watch, and a six-part TV adaptation of Neil Gaiman and Terry Pratchett’s Good Omens, but as yet both projects are still in pre-production.

There's more at the link.

Sir Terry Pratchett's humor will probably be difficult to translate to the big screen, but I suspect there's no-one better qualified to do so than his daughter and the Jim Henson Company.  Both have extensive experience with translating fantasies to the screen environment.  I'm looking forward to seeing the results of their collaboration.  If it works, there might be a series coming out of this - The Wee Free Men was the first of five books 'starring' Tiffany Aching, and the others would make natural sequel material.

Now, if the Jim Henson Company can just keep Animal away from the Wee Free Men . . . although if worse came to worst, I suppose Rhianna could always have Nanny Ogg take care of him!




Peter

The greatest tragedy of recent attacks on police . . .


. . . is that not only 'bad cops', but also the law enforcement 'system' in the USA, have helped to produce the attitudes towards law enforcement that have been amplified and exploited by extremist groups to justify these attacks.

I have the highest regard for honest law enforcement.  I've worked for years within the criminal justice system.  I have friends in law enforcement whom I trust absolutely.  Nevertheless, to deny that there is a widespread problem in the law enforcement field would be to hide from the truth.  We've discussed it many times in these pages.  Here are just a few articles selected from my blog's archives, sorted chronologically from oldest to newest, discussing various aspects of it:

I submit the real problem is twofold.  First, law enforcement in general has been co-opted by the 'establishment' to be more than just law enforcement.  It's now a revenue-generating arm of government.  By that I mean enforcing measures that are designed to raise revenues under threat of law enforcement action if they're not paid.  They're not malum in se (i.e. wrong in and of themselves), but malum prohibitum (wrong because someone has arbitrarily decided or decreed that they're wrong).  The situation in Ferguson, Missouri, and the wider area of St. Louis County, is a classic example of the latter - and Ferguson's far from the only place where such abuses occurred.

Second, in far too many areas and agencies, law enforcement has been militarized.  Mark Steyn has observed:

So, when the police are dressed like combat troops, it's not a fashion faux pas, it's a fundamental misunderstanding of who they are. Forget the armored vehicles with the gun turrets, forget the faceless, helmeted, anonymous Robocops, and just listen to how these "policemen" talk. Look at the video as they're arresting the New York Times and Huffington Post reporters. Watch the St Louis County deputy ordering everyone to leave, and then adding: "This is not up for discussion."

Really? You're a constable. You may be carrying on like the military commander of an occupying army faced with a rabble of revolting natives, but in the end you're a constable. And the fact that you and your colleagues in that McDonald's are comfortable speaking to your fellow citizens like this is part of the problem. The most important of the "nine principles of good policing" (formulated by the first two commissioners of the Metropolitan Police in 1829 and thereafter issued to every officer joining the force) is a very simple one: The police are the public and the public are the police. Not in Ferguson. Long before the teargassing begins and the bullets start flying, the way these guys talk is the first indication of how the remorseless militarization has corroded the soul of American policing.

There's more at the link.

Claire Wolfe, no friend of either the establishment or self-proclaimed 'progressives', had this to say earlier this week as the Republican Party convention began.

Today a convention begins in chaos, amid cries of law and order, that classic killer of freedom. Today, the media mourns three blue lives, as if the murder of armed agents of the state is worse than decades of police murders of the less politically protected.

Decades of unaccountable beatings and killings.

Decades of testilying us into prison.

Decades of stealing our possessions.

Decades of corruption.

Decades of militarization.

Decades of intimidation, thuggery, and abuse.

Decades of videos contradicting “official” stories.

Decades of creatures of government getting away with it, just because they are creatures of government.

—–

Today the news is full of noise about the need to crack down, federalize crimes against cops, impose harsh minimum sentences, build walls against scary people, punish the innocent for the deeds of the guilty, curtail freedom, surveil everybody.

Today the media has all that it wishes to change the world: terrorism, attacks on state agents, and political rah-rah. Grand excuses for killing liberty.

Today the pundits predict that the fall of cops, if not checked with pacifying words and unyielding punishments, signals the fall of civilization. They don’t notice or care that the long rampage of the State vs the People was, and remains, the real engine of destruction.

Again, more at the link.  It makes uncomfortable, thought-provoking reading.

I think there really is a problem with law enforcement in the United States.  It's not the fault of the good officers and/or agencies;  they're doing their best under very difficult circumstances.  It's the fault of the demands placed on police agencies and the law enforcement 'system' in general.  That 'system' has all too often been warped into a tool of the establishment (whether local, regional or national) rather than doing what it's supposed to do - enforce the laws in a neutral, non-partisan manner.  Furthermore, law enforcement powers have been arrogated by and to agencies that neither need nor deserve them.  Witness the fact that there are now more armed Federal law enforcement officers than there are US Marines.  That fact alone stinks to high heaven.  There is no possible need or justification for most of them . . . but there they are, paid for by our tax dollars.  What's more, thousands of them belong to agencies already notorious for being partisan and politically biased in their operations, such as the ATF and the IRS.  The distrust with which most of us view their agencies is thus automatically transferred to the law enforcement officers of those agencies.

These problems work their way down to the 'cop on the beat'.  Corruption in one area soon crosses boundaries to other areas.  One bad apple begets a bunch of them.  That's why some individual officers seem to think they can (sometimes literally) get away with murder.  That's why entire precincts can actively engage in illegal, unconstitutional activity in the name of 'law enforcement'.

That's why it's no good to simply fulminate against 'cop-haters', as in this recent sign in Indiana.




We must address the attacks on police in the USA.  We must find and convict those responsible, and do all we can to prevent more attacks.  But, at the same time, we must address the problems I've discussed above.  We must restore our law enforcement agencies and officers to what they're supposed to be;  representatives of the community, operating in support of and to protect that community, not militarized jackbooted thugs.

How do we do that?  I honestly don't know.  We've gone so far down the road of police militarization and social radicalization that I can't see where to begin, except on every street where a policeman patrols.  It's up to our officers and agencies to win back the public support they've lost.  It's all very well to say that we have to give them the respect that is their due.  For someone like me (and, I'm sure, for most of my readers) that goes without saying.  However, for those suffering under abuses such as those described above, it does not go without saying.  They have an institutionalized and entirely justified fear and distrust of police.  How can we overcome that?  Your guess is as good as mine.

Peter

Wednesday, July 20, 2016

Too cute!


The dog seems almost oblivious . . .





All together, now:   Aaaawwwww!

Peter

What will you do when Big Brother controls your transport options?


Coming soon to a city near you, perhaps?  Bold, underlined text is my emphasis.

Helsinki has an audacious goal: By 2025, it plans to eliminate the need for any city resident to own a private car. The idea is to combine public and private transport providers so citizens can assemble the fastest or cheapest mode of travel. "The city’s role is to enable that market to emerge," explains Sonja Heikkilä, a transportation engineer with the Helsinki government.

Bus routes would be dynamic, changing based on demand at any given moment. From planning to payment, every element of the system would be accessible through mobile devices. Citizens could use their phones to arrange a rideshare, an on-demand bus, an automated car, special transport for children, or traditional public transit. They could purchase "mobility packages" from private operators that would give them a host of options depending on weather, time of day, and demand.

The idea is to take a quintessentially physical transportation system designed around vehicles, roads, bridges, subways, and buses, and reverse it to revolve around digitally enabled individual mobility—moving each traveler from point A to point B as quickly and efficiently as possible.

. . .

Urban planners are trying to understand how today’s digitally enabled mobility ecosystem can help advance public policy goals such as reducing congestion. These policies also could yield related benefits such as fewer traffic accidents, better air quality, and a smaller urban footprint for parking. Yet today these benefits go largely unrealized because innovative transportation business models tend to operate in silos.

What’s needed is an entity that can integrate all these different transportation players and innovations. Government transportation agencies are the logical organizations to take on this challenge.

There's more at the link.

In other words, Helsinki wants its residents to become less self-reliant and more public-services-reliant.  Trouble is, any time I hear anyone, or any organization (particularly a bureaucracy), tell me that a more public-services-oriented or 'public-spirited' approach will be good for me, I automatically assume it will be bad for my privacy, independence, and wallet.  So far, experience has yet to prove me wrong.


Rule #1:  Distrust Big Brother.

Rule #2:  When in doubt, see Rule #1.


And no, I'm not about to give up my own vehicle, any more than I'm about to give up my firearms - and to hell with any 'urban planner' or transportation engineer or bureaucrat who tells me I must!

Peter

Doofus Of The Day #915


I'm sure most of us are familiar with the list of things that there's a time to do, as found in the Book of Ecclesiastes in the Bible.  They include birth, death, planting, harvesting, and so on.  However, one man seems to have taken the 'time' thing a bit too literally.

A man who walked into McDonalds and tried to purchase items with a watch told officers he had authority from God to use his watch as tender.

. . .

When they asked him for identification, the 22-year-old Crestview man said he had an ID by man’s laws, but his real names were Yahweh, Jesus and Christopher, according to his arrest report.

There's more at the link.

Two points, buddy:
  1. The Good Book says there's a time for everything - not a timepiece!
  2. 'A time to eat' isn't on the list.  Sorry about that.




Peter

Tuesday, July 19, 2016

Some jokes just write themselves . . .


From KPLC TV in Cleveland:

It's the largest gathering of protest groups and the largest gathering of police since the beginning of the Republican National Convention.

Activists from Black Lives Matter, Westboro Baptist Church and the KKK were in the square and, at one time, were said to be throwing urine at each other.

Um . . . ah . . . er . . .

  • Should the cops try to keep them apart, or offer them water, sodas and coffee to replenish their arsenals, so to speak?  For that matter, should they sell tickets to let the rest of us throw nasty things at all three groups?  I'd be willing to pay for that!
  • Is this what's meant by ap-pee-sment?
  • Will this be the ruinurination of the Republican Party?
  • Urine's not too bad, but anything more solid would be dif-fecal-t to handle.

And so on, and so forth . . .




Peter

I'd never heard of 'The Badpiper' before . . .


. . . and I must confess, my Scottish ancestors are probably spinning like tops in their graves at the thought of a "flame throwing, leather clad, heavily tattooed punk rock" piper - particularly in Australia!  Still, he's certainly entertaining.  Here's his rendition of AC/DC's 'Thunderstruck'.





'Scotland The Brave' it ain't, but you have to admit, it has a certain style . . . particularly the flamethrower accompaniment!

Peter

An interesting foreign perspective on Donald Trump


As I've said many times before, I'm not a Trump disciple.  I'm not sure whether he has what it takes to be President of the United States.  Unless and until I am sure, one way or the other, I'll reserve judgment.  (On the other hand, I'm absolutely convinced that Hillary Clinton would be a disastrous President!  In 1996 William Safire called her a 'congenital liar'.  I've seen nothing in the twenty years since then to make me disagree with him, and her mendacity appears to have extended to what I can only consider wholesale corruption.  I think she'd be a real and present danger to the security of this country if she were to be elected or appointed to any office, let alone the Presidency.)

Despite my reservations, I find Mr. Trump worth studying.  He's a fascinating combination of attractive and . . . well, let's be honest, repulsive elements.  I hope and pray that the former are more numerous and more dominant than the latter!  The fact that the US mainstream media are almost universally opposed to him can only be a positive sign, IMHO.  Here's how the Telegraph in Britain sees him.

To understand how he came this far, we have to understand that his rise and rise has been down not to politics or philosophy but personality. Donald Trump doesn’t just see himself as a man, he sees himself as a brand. And that’s what he’s been selling his whole life. The election is just one more sales pitch.

. . .

Trump flew a flag so large that it broke local zoning restrictions and the town fined him $250 a day. When the fine had grown to $125,000, Trump sued back, claiming that his First Amendment rights were being denied. A compromise was reached that saw the length of the flagpole lowered – but it remained the highest in town.

That has always been the key to Trump’s success: make an unreasonable demand in order to strike a deal for less but which still leaves him the winner. As he wrote in his 1987 manifesto The Art of the Deal: “Sheer persistence is the difference between success and failure.”

. . .

As Trump wrote in The Art of the Deal: “Good publicity is preferable to bad, but from a bottom-line perspective, bad publicity is sometimes better than no publicity at all. Controversy, in short, sells.” One sure fire way to stay in the limelight is to tinker with politics. He’s been doing it for decades.

The big myth about Trump that needs exploding is the idea that he stumbled into politics without a game plan. Again, that’s branding. The reality is that his carefully choreographed flirtation with the presidency goes back decades.

In 1990, Donald gave an interview with Playboy Magazine that he could easily have given this year. He decried the rise of urban anarchy: “we need the death penalty and authority given back to the police.” He bemoaned the success of Asian economies, charging them – as he does today – with currency manipulation. They did it and got away with it, he said, because they had the balls to try: “People need ego, whole nations need ego. I think our country needs more ego, because it is being ripped off so badly by our so-called allies.”

The interviewer asked if Donald would ever run for president and he said no – but if he did then it would be as a Democrat. Not because he was Left-wing but because he suspected he’d appeal more to the Democrats’ working-class base: “the working guy would elect me. He likes me. When I walk down the street, those cabbies start yelling out their windows.”

. . .

... when he declared his candidacy on June 16, Trump was not – as he and the pundits claimed – some complete newcomer who had accidentally tapped into a spirit of rebellion. He was a serious political operative with talking points that had been rigorously tested by pollsters.

He would, he said, end illegal Mexican immigration – and he’d do it by doing what he’d spent his whole life doing. He’d build a wall. By the end of the year, Trump was far ahead in the polls.

Behind that success was a brilliant media strategy, a strategy designed to look naïve. One academic study calculated that Trump’s limited and repetitive use of simple words – wall, great, horrible – gives him the vocabulary level of an eight-year-old. But any accusation of idiocy doesn’t reflect the level of sophistication in Trump’s writings, earlier interviews or his moderate academic success.

It’s more likely that he’s deploying language that experience and polling tells him works very well – words that can be fired like bullets over Twitter. An analysis by Politico found that he Tweets “more adjectives” than any primary candidate bar one, and that they are overwhelmingly rude and directed at other people. He called Jeb Bush “weak” six times during his campaign; Ted Cruz “nasty” four times; Mitt Romney “failed” nine times; and Marco Rubio “lightweight” 47 times. His favourite pejorative is “sad”, which he has used 159 times since 2009.

Another myth about Trump is that he’s anti-press, that as president he might even try to censor it. Yet no candidate before or since has been happier to hold press conferences and take questions. One study found that in the course of a year, Trump made 68 appearances on Sunday talk shows, while Clinton did just 21.

. . .

As the primaries came to an end, it emerged that Trump was running low on cash. Now he has to rely upon the help of the Republican Party to keep afloat, one of the great ironies of this election ... But don’t be surprised if Trump takes the Republicans’ money and then campaigns on his own terms. Why wouldn’t he? He has so far defied the rules of American politics and has succeeded because, for all his many flaws, his instincts are far closer to those of the average American than his rivals can match. Ultimately, Trump has won votes for the same reason that he’s been a success in business. The sales pitch has been smart and many people rather like the product.

There's more at the link.

Whatever Mr. Trump decides to do next, I figure it's going to be interesting!

Peter