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The Atlantic — “the finance industry has effectively captured our government”

A former chief economist of the International Monetary Fund, wrote in May 2009 about how depressingly similar the US problems are to emerging economies he has worked with. It’s a provocative article: The Quiet Coup (a few excerpts posted here).

“Anything that is too big to fail is too big to exist.”


The Quiet Coup

The problem is oligarchs who overborrow, become too powerful, and gain too much influence:

Click the chart above for a larger view

“Wall Street ran with these opportunities [lightweight regulation, cheap money, securitization, interest rate swaps, and I would add, high frequency trading]. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

“The great wealth that the financial sector created and concentrated gave bankers enormous political weight—a weight not seen in the U.S. since the era of J.P. Morgan (the man)… in the banking panic of 1907…

The USA might be the most powerful economy on the planet, but the pattern is similar:

“...inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt.

“The downward spiral that follows is remarkably steep. Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse. Yesterday’s “public-private partnerships” are relabeled “crony capitalism.” With credit unavailable, economic paralysis ensues, and conditions just get worse and worse. The government is forced to draw down its foreign-currency reserves to pay for imports, service debt, and cover private losses. But these reserves will eventually run out. If the country cannot right itself before that happens, it will default on its sovereign debt and become an economic pariah. The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.

“Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government…

“to IMF officials, all of these crises looked depressingly similar”

The thing that matters to the IMF — the most important point — is whether the government is willing to cut the oligarchs loose:

“So the IMF staff looks into the eyes of the minister of finance and decides whether the government is serious yet. The fund will give even a country like Russia a loan eventually, but first it wants to make sure Prime Minister Putin is ready, willing, and able to be tough on some of his friends. If he is not ready to throw former pals to the wolves, the fund can wait.

The  oligarchs work to prevent the reforms that are needed:

“But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

The line between financial firms and the government has become blurred. It’s not just that members of financial firms are influencing the government, in some senses they are the government:

“One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W.Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.

“These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni—including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson—not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.

The financial institutions get favored treatment:

“Throughout the crisis, the government has taken extreme care not to upset the interests of the financial institutions, or to question the basic outlines of the system that got us here. In September 2008, Henry Paulson asked Congress for $700 billion to buy toxic assets from banks, with no strings attached and no judicial review of his purchase decisions. Many observers suspected that the purpose was to overpay for those assets and thereby take the problem off the banks’ hands—indeed, that is the only way that buying toxic assets would have helped anything. Perhaps because there was no way to make such a blatant subsidy politically acceptable, that plan was shelved.

Instead, the money was used to recapitalize banks…

The banks were desperately ill, yet as the crisis unfolded their political strength grew.

“The IMF’s advice would be, essentially: scale up the standard Federal Deposit Insurance Corporation process. An FDIC “intervention” is basically a government-managed bankruptcy procedure for banks. It would allow the government to wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector.


It’s well worth reading the full article. It’s rich with details that only someone who has years of experience would know. Two years on, it is still “on the money” and everyone is still waiting…

Cheap money IS the problem

My only quibble is that “cheap money” is relegated to a minor role. The root cause of the financial crisis that “started” in 2007 and rolls on with no resolution in sight, is surely debt. Lots and lots of debt. The world is drowning in debt like never before.

Because banks will always be bailed out by government, banks are no longer normal private companies that can fail, but effectively sub-branches of government — which technically they always were, because they manufacture (bank) money which looks like national currency, that is, they effectively manufacture national money on the government’s behalf. (When a bank makes a loan, it manufactures brand new money out of thin air in these days of the Basel Accord. The loan consists of the new money, and the deposits are still there. Traditional fractional reserve banking was retired around 1990. Reserves are now irrelevant, because of “retail sweep”– the bank sweeps the money from your savings account into a different type of account for a few seconds around midnight to evade the reserve requirements. The amount of money a bank can conjure out of thin air is limited by its assets according to Basel, but principally by the banks capital (the amount of money stumped up for new shares by shareholders), and to a lesser extent by deposits. Apologies for this primer on modern banks, but without that knowledge one cannot understand the cause or fix for the current financial crisis.)

Therefore the public debt of western countries really includes the debts of their banks. This is a new development. And it seems no one in western governments noticed how big those debts had become until the last year or two — experts like Rogoff at Harvard were amazed when it was pointed out to them. Ireland has debts of 25 times its annual revenues. Spain and France over 10 times. Historically, such levels of indebtedness have always led to government default, and obviously any interest rate approaching 10% is instant death.

$      $      $

All this excess debt was created after 1982 due to policies of cheap money in the western countries. The central banks set the price of money (short term interest rates) by decree, and they set them as low as possible consistent with CPI not exceeding 2% or 3%. But the banks lent the new money into specific asset markets such as the housing market, so the new money did not show up in the CPI. But the money is leaking out of those markets into the general market.

So cheap money flooded the world and created an unprecedented global debt level — what brings this party to an end?

The crisis started in 2007 because the world ran out of worthy borrowers and unencumbered collateral, and private borrowing faltered. Faced with a recession or worse, governments stepped up and borrowed like crazy to replace the privates — the rate of debt/money creation had to be maintained or the system would go into reverse with disastrous political consequences (party ends with cops and bright lights, very uncool).

I don’t think any amount of regulation can make up for the temptation of cheap money. Like pumping high pressure water through a metropolis of pipes — no complex system can be leakproof. Regulations will always have loopholes. The high pressures means the water will always find all the weaknesses in the system and the leaks cause too much damage. The oligarchs feed off the cheap money. It’s the reason their power and influence expanded so fast. No one else benefits from easy loans as much as the finance industry.

So what next? Governments are losing their ability to borrow. If debt and money manufacture falters, there won’t be enough money to pay back yesterday’s debts (all of last year’s debt has to be paid with all the money, plus interest, so the total pool of money/debt must always expand to avoid widespread defaults and bank failures).

So obviously the governments must print, or else let banks and borrowers fail. One or the other.

By the way, Bernanke, a keen student of the 1930s, has made it abundantly clear he intends to print as required — he will not allow the alternative of a 1930s deflationary depression to occur on his watch, and he’s not called “Helicopter Ben” for nothing.

But then, what would I know?  — Jo

 

Hat Tip: Pat in comments. Ta!

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141 comments to The Atlantic — “the finance industry has effectively captured our government”

  • #
    1DandyTroll

    The problem is that the wall fell and released a horde of angry socialist extremist who wowed to destroy capitalism, like in showing the world capitalism really doesn’t work.

    I wonder how many really are at work still trying to destroy capitalism by perverting the economic systems they think are the core of capitalism. And per usual it takes the socialist fundamentalists themselves to fulfill their own prophecy of evil capitalism.


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    • #
      Madjak

      unfortunately there were even more people who allowed their own selfishness to allow capitalism to be undermined.

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      • #
        John Brookes

        Hey, I thought that selfishness was the bedrock of capitalism!


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        • #
          Madjak

          Actually John, it isn’t. Thats just the pitch made predominantly since the early 80s. The excusefor bad behavior, if you like.

          Capitalism does benefit the lucky, the hardworking and yes, the greedy in boom times.

          But you see capitalism has to have the downturns, the recessions to shake out the inefficiencies in the system. It’s also good for shaking out technological applications that provide little or no value. These times punish the unlucky, the lazy and the greedy during the recessions.

          Often it’s actually the greedy that become most unstuck during the recessions, they’re often the most indebted and they tend to believe their own spin -gee lehman bros is cheap, they’ll never go bust, I’ll sink everything into them, for example.

          Unfortunately, like spoilt kids, we want the never ending boom and punish our ignorant leaders if a recessin happens on their watch. The result is we’re ending up with economies verging on the ussrs levels of gross inefficiencies.

          So we keep insisting on tinkering and gaming the system to make it “more fair”, but each time we do, we just ended adding more inefficiencies to the system which are rarely removed (particularly while you have people who have something to gain from it).


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        • #
          Lionell Griffith

          Actually it is Rational Self Interest or Greed properly understood that is the motivation for capitalism.

          It is neither rational nor greedy to be interested in short term apparent gain and to hell with the future. One’s life lasts longer than until Friday at 5 PM. The real gains come from and depend upon projecting one’s plans into the future and making them happen in the long run AND living in a society that respects individual rights on principle.


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        • #
          brc

          Selfishness is not the same as self-interest.

          Acting in your self interest is the rational way to go. You will only trade something of value to yourself with something else if it is in your self interest. If everyone does the same, it creates specialisation and trade, which is the bedrock of improvements in living standards. Sure, there are selfless people who dedicate their lives to the betterment of others, and that’s good for them. But the rest of us would see that as a terrible way to live. Sure, there are selfish people who try and lie and cheat and rip people off, but that is also a terrible way to live. But these people don’t just exist on one ‘side’ of the political spectrum.

          The problem comes when people who the market doesn’t like (mainly because their skills are not valued) start to get upset about it, and instead of confronting reality and changing their skills to something the market does like (ie, work towards getting a better job) choose instead to declare the system ‘unfair’ and declare all those earning above them to be ‘greedy’ and ‘selfish’.

          But I ask you this, John, what is more greedy – someone who wishes to keep the product of their work, or someone who wishes to help themselves to someone elses work product by complaining of need and special pleading?

          To me, the welfare recipient complaining that they don’t get more is far more greedy than a CEO bringing down $10 million a year willingly paid by their investors (assuming that it’s not a fraudulent $10 million). How many times do we see people demanding more money from the government, which means in reality they are demanding more money from the people who are working? How would we treat a child or relative who demanded to be given more money, and tried to project guilt of ‘greed’ and ‘selfishness’ for not opening our bank accounts to them.

          John, I think you show glimpses in your comments of nearly grasping reality from time to time, probably through your continuous exposure to sites like this. I think you started out trying to rail against the thoughts posted, but instead are slowly becoming less invective, less sure of your thoughts than you once were. You start to realise the people posting here aren’t goons hiding in the backwoods with guns sticking out the window (well, there are some nutters, for sure). You start to realise that maybe you’re talking to the productive members of society, the ones who make things and build things and provide the standard of living we all enjoy.

          In another couple of years you might even realise you’ve been sold down the river by the false gods of socialism and everything that goes with that. You may even grasp that reality means accepting things as they are, and not pretending that your life course is the result of someone keeping you ‘down’ by stealing your wealth.


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    • #
      J.H.

      I think it is a mistake to call it crony capitalism…. It’s crony corporatism. There is nothing capitalistic about it. It’s all Big Government socialism.


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  • #
    Jim Barker

    I wish I could say it’s worse than I thought, but I suspected as much. For want of a nail……


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  • #
    Kevin Moore

    Statute Law Replaces Common Law – The Bankers Quiet Coup – USA

    “….Before 1940, no U.S. flag, civil or military, flew within the forty-eight states except in federal settings and installations. Only state flags did. Since the 1935 institution of Social Security and the Buck Act of 1940, 4 U.S.C.S. Ch. 4 Sec. 104-113, by clever legal maneuvers the feds have entirely circumvented the U.S. Constitution, and have overlaid federal territorial jurisdiction on the sovereign States, bringing them under the admiralty/military jurisdiction of Law Merchant, the Uniform Commercial Code (UCC), the law of Creditors and Debtors.

    Since then the U.S. military flag appears beside, or in place of, the state flags in nearly all locations within the states. All of the state courts and even the municipal ones now openly display it. In the last half century they have more openly declared the military/admiralty law jurisdiction with the addition of the gold fringe to the flag, the military flag of the Commander-in-Chief of the Armed Forces.

    Such has been the path that has brought us under the Law of the Military Flag. This should have raised serious questions from many citizens long ago, but we’ve been educated to listen and believe what we are told, not to ask questions, or think for ourselves and search for the truth…..”

    http://www.barefootsworld.net/uscivilflag.html


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    • #
      Kevin Moore

      http://www.barefootsworld.net/admiralty.html

      “…..How can the President delegate to un-elected officials power that he was elected to have, and declare that it cannot be taken away, by the voters or the courts or Congress. I tell you how, under martial law, under the War Powers Act. The American public is asleep and is unaware nor do they care about what is going on, because it may interfere with their making money. I guess Thomas Jefferson was right again:

      “…And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes; have not time to think, no means of calling the mismanager’s to account; but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow sufferers…” — (Thomas Jefferson) THE MAKING OF AMERICA, p. 395


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      • #
        Kevin Moore

        For those interested in Australia’s Admiralty Law history.

        The following Act was repealed by the ‘Statute Law Amendment Act 2002′ by the A.C.T. Government,effective date 18 January 2003. I haven’t researched other States.

        See: http://www.legislation.act.gov.au/a/db_1802/default.asp

        THE] COLONIAL COURTS OF ADMIRALTY ACT, 1890

        (53 AND 54 VICT., C.27)
        [25th July, 1890].
        [The text of the Act printed here is as on 31-12-1990]

        An Act to amend the law respecting the exercise of Admiralty Jurisdiction in Her Majesty’s Dominions and elsewhere out of the United Kingdom.

        1. Short Title – This Act may be cited as The Colonial Courts of Admiralty Act, 1890.

        2. Colonial Courts of Admiralty – (1) Every Court of law in a British possession, which is for the time being declared in pursuance of this Act to be a Court of Admiralty, or which, if no such declaration is in force in the possession, has therein original unlimited civil jurisdiction, shall be a Court of Admiralty, with the jurisdiction in this Act mentioned, and may for the purpose of that jurisdiction, exercise all the powers which it possesses for the purpose of its other civil jurisdiction and such Court in reference to the jurisdiction conferred by this Act is in this Act refereed to as a Colonial Court of Admiralty. Where in a British possession the Governor is the sole judicial authority the expression “Court of law” for the purpose of this section includes such Governor.
        (2) The jurisdiction of a Colonial Court of Admiralty shall, subject to the provisions of this Act, be over the like places, persons, matters and things as the Admiralty jurisdiction of the High Court in England, whether existing by virtue of any statute of otherwise and the Colonial Courts of Admiralty may exercise such jurisdiction in like manner and to as full an extent as the High Court in England, and shall have the same regard as that Court to international law and the comity of nations…..”

        http://www.bruschambers.com/marine/memo45.htm


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  • #
    Rereke Whakaaro

    Leverage Ratios:

    US – 13:1. An 8% drop in asset values wipes out ALL equity.
     
    EU – 26:1. A 4% drop in asset values wipes out ALL equity.
     
    Japan – 23:1. Similar to the EU

    France – 26 to 1. The same as the EU generally.

    Germany is 32:1. A 3% drop in asset values wipes out ALL equity.
     
    But now for the interesting numbers:

    The US Federal Reserve holds $2.8 trillion in assets, but only has $52 billion in capital. Leverage Ratio: 53:1. A 2% drop in asset values wipes out ALL equity.
     
    So where is Sarkosy turning to for help? Who is the US looking towards? China. So Hang on to your hats …

    China is estimated to have a real Debt to GDP ratio of 200% – Two hundred percent.

    I say “estimated” because China keeps two sets of books. There are the official figures which are for international consumption, and there are the off-book figures figures which are for internal administrative use. Of course, there is also an active and thriving black market at the provincial level, which is huge, but unmeasurable. China is not going to be in the position to help anybody.
     
    This is going to get a lot worse before it gets any better.


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    • #
      Madjak

      Rereke, each country runs two sets of books. Real unemployment vs official unemployment, for example.

      Thats why statisticians get work. China probably just has more f them, probably.


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  • #
    Anton

    Yes, that’s essentially what Charles Fersugon said in the excellent 2010 feature-length documentary “Inside Job”. He went into more detail about the subprime mess but the stuff about deregulation, Wall St-Washington-Economic academics links was all there, and Ferguson managed to make some telling hits on prominent figures by asking them hard questions. Christine Lagarde, now head of the IMF, talked good sense in it.


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    • #
      Andrew McRae

      Ferguson was quite selective in which aspects of the crisis he explained and how many errors of inference were permitted in his judgement. Inside Job is a powerful movie, but just like Michael Moore’s cinematic adventures it cannot be described as an honest and complete documentary by anyone who has spent even 20 minutes with Google researching what led to the GFC. He tries to blame capitalism and de-regulation, when genuine capitalism would never allow the TARP bailouts and de-regulation doesn’t make negligence, corruption, and common law fraud okay.
      Many factors, not the least of which is Wall St greed, led to the crisis. By presenting such a clear-cut and simple explanation, and by asking rhetorical questions and cutting away before the interviewee can respond, Ferguson has succeeded in staying on-message. He is therefore trying to make a political statement of good guys and bad guys instead of a journalistic documentary that tries not to make overtly one-sided political judgements.

      Considering Matt Damon’s involvement, an appropriate alternative title would have been “The Bourne Derivative“.

      More even-handedness would be better. Send the Wall St banksters to jail for fraud and extortion, sure, but as cell-mates give them:
      * the inept Icelandic regulators,
      * the biased academics paid to generate foregone conclusions, and other good people who either sold out or just stood by and did nothing,
      * plus the patsies at KPMG who okayed the risks,
      * plus the credit rating agencies who are effectively paid by the same banks they are meant to audit,
      * plus all the other unprincipled cryptofascist corporate welfare patsies who were bribed to game the system at the public’s expense.

      I believe Tyler at Zero Hedge summed it up best: Regulatory capture is the new business model.

      The common opinion that ordinary mum and dad investors do not deserve to ever lose money in these managed fund schemes is also a foolish idea because the investor always wears the risk – it’s one rule for everybody. They only deserve to be insulated from collapse if they were never told what range of risks were being taken with their savings. This is only provable if they have been sent misleading documents. Anyone who expected high returns was naive to not check. In life there are no guarantees.

      The cinematography in this movie is artfully composed. As a work of art “Inside Job” succeeded in making me angry.


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  • #
    The Black Adder

    Well, this is just what the Greens want.

    No money to go around, means we will all be living back in the caves soon. This is what they want to reduce our CO2 emissions.

    And now Qantas grounded, no more evil emissions from Qantas for the next few days, PM Bob Brown will be happy.

    Meanwhile the rest of the sane population shakes it head and wonders how the hell did we ever get into this mess……


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    • #
      brc

      You’re not quite correct.

      The greens aren’t happy with an airline grounded, despite that being their overall objective.

      What they actually want is people to hate, to blame, to sneer at. They want to think the situation is hopeless and need conflict and problems in order to exist.

      Do you really think if all the environmental ‘problems’ the greens have currently highlighted, they would close up their tents and go home? No.

      They want to thrive on hatred, thrive on the belief that other people are making their lives miserable. They need a struggle against a known target so they can avoid looking at themselves and the empty vessel of their lives.

      Why would you applaud the grounding of an airline when there is a CEO to hate and villify?


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  • #
    pattoh

    Recent political & scientific enlightenment along with world wide economic uncertainty have combined to slow down if not de-rail the CAGW Juggernaut

    I get uneasy feelings about the whole “Occupy” movement. It feels like a new orchestrated campaign to bolster the New World Order (Fabian/COR/Bilderberg or whatever) ethos. It even appears to have attracted the same emotional duped foot soldiers.

    Does anybody else get the impression that if the UN can’t get itself a global tax in carbon “to save the planet”(control the planet) it will pull out all stops to get a global Tobin Tax instead?

    The same financial players would be riding/conducting the gravy train, whatever the need(scam, con………………..).

    Any bets that one( in very particular) of Australia’s prominent politicians will be spruiking a Global Tobin Tax in his policy platform before the next election?


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    • #
      Lawrie

      Yes Pattoh,

      Sorry about the spelling but my mum the school teacher always told me proper nouns start with a capital.

      We, meaning those who challenge, are called deniers and skeptics but like you seek the underlying truth. We are also accused of seeing conspiracies where we are told none exist. OTOH we see journalists, politicians and advocates simply accepting of all that an authority tells them except when that authority is of a differnt political persuasion. Obama and Gillard can waste money, introduce or try and introduce economy destroying taxes and yet find many in the media who support and advocate for them at the same time denigrating any opposition. So is it just the bankers who control government or is it also the media?

      Explain what Tony Jones, for example, gets from advocating on behalf of the ALP/Greens. When the AGW scam eventually collapses as it must he will look a fool but be still well regarded by the elite as will 100-metres Williams or no-more-rain Flannery. The left live in a parallel universe where truth does not matter. Reality is what they want it to be not what it is as Donna Laframboise found when she looked into the IPCC.


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    • #
      Twodogs

      More like a case of extremists from the left deluding themselves into thinking that they are representative of the 99%, or even more delusionally thinking they can hijack the movement to control the real 99%…


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  • #
    Madjak

    Here is my load of opinionistic ramble on this one:

    The fact of the matter is that capitalism has the effect of encouraging businesses to where land, labour and capital is cheapest. There are exceptions, of course (like australia where you can add massive mineral wealth, for example).

    The west thought it could compensate this effect by having higher labour and land costs by making capital cheaper. The effect was we had more and more people working in the services sector moving around the capital. Bonus, that sorts out what to do with the unemployed.

    It worked well, everyone thought. Gee that was smart, we can have the worlds masses doing the hard work creating crap for us, we can sit on our ever expanding arses and get fat. Eventually they can join us and get fat too.

    Sitting on our fat arses, we demanded governments not allow any recessions, and our dear ignorant leaders obligued. What on earth could go wrong?

    There was only one problem, it was undermining capitalism itself. The risks grew and grew ( not that many people noticed) and then finally the harsh mistress we call capitalism gave us the thump.

    Right now, our hybrid system of capitalism/socialism is on the ground getting the crap kicked out of it by the anarchists, the communists (greens)and a growing number of dishillusioned fat bastards who never understood capitalism, have never known hunger but were more than happy to go along for a joyride while it lasts.

    To add to the confusion, capitalism itself is metaphorically putting the boot in because for capitalism itself to survive, this current system has to be radically overhauled.

    This last statement is purely because there are so many people who still believe the good times will come back somehow ( just like the stalinists in russia believe stalinism will cure that countrys woes).

    Because of this, in the US and Europe there is no real will at the leadership level to resolve the core issues because our leaders can hardly count and their advisors are educated in the ways of the severely compromised current system.

    IMO, nothing of importance will change until our dear leaders see constitutions fail and political systems overturned. In much the same way as nukes heralded peace because our leaders families weren’t safe from them, our leaders will not make the necessary change to capitalism unless they see their selfish goals threatened.

    On the other hand, maybe i am sounding like russian stalinist who argued that the old system worked well and that a new system isn’t necessary?


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    • #
      Brett_McS

      Capital is made ‘cheaper’ – like all things – by an increase in supply of capital. Capital makes production cheaper, as it allows more optimum methods to be used (using a power saw versus a hand saw for example). This is why the capitalist countries can have higher wages yet still produce goods more cheaply than low wage, capital-poor countries. Poor countries often have a functioning free market at the low level of food and small items; it’s the capital accumulation they lack, because the rulers steal it.


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      • #
        Madjak

        And right now the worlds capital is moving to asia at a rate unprecedented since WW2.

        If you manipulate capital to appear cheaper when it comes from you than anyone else and get caught out, guess what it gets moved to someone else who prople think might handle it more responsibly.


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  • #
    Bulldust

    Saul Eslake has written a timely piece at the SMH on the long-term wealth/income redistribution in the OECD economies as a general justification for the Occupy Wall Street protests copied in so many countries:

    http://www.smh.com.au/business/on-the-money-occupiers-raise-fair-point-20111028-1mo1p.html

    As we might expect, wealth redistribution to the wealthy, which plagues countries like the US and Britain, is not as pronounced in Australia, which leads us to question the opportunistic copycat protests here.

    He does suggest a few minor tweaks to redress the balance in Australia somewhat:

    But I do think there’s a strong case for curtailing the avenues used disproportionately by upper income taxpayers to cut their tax bills, including ”negative gearing”, the concessional tax treatment of capital gains, and the use of trusts.

    Curtailing or eliminating these tax privileges would not only improve the fairness of the tax system (and the resulting distribution of income), it would also reduce its complexity, and the extent to which it distorts investment decisions.

    Fair cop IMO.


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      pattoh

      Bulldust

      Do you reckon GetUp may have been instrumental in organising Occupy in Aus?


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      Madjak

      I don’t think aussies have anything to complain about yet wrt the gfc, and the ows movement in australia is just a bunch of immature hippie wannabes who have probably never known hunger.

      Just because someone may earn as taxable income of say 150,000 in one year doesn’t mean they’re wealthy. They could be supporting a large family, for example. Interestingly if they did, the family unassistance office or centrelink they would be buggered.

      I think we’re all aware that the really wealthy people pay bugger all in income tax because they juggle things so they have almost no taxable income.

      Tax brackets and higher taxes for higher income earners is just another way for the middle class to be screwed over. If you want to find a way to make things fairer (whatever that means), taxes would be based on someones net worth, or on the amount of money they spend, imo.

      There are plenty of people driving mercedes who have an extremely low personal income. This doesn’t mean that they’re not wealthy, or smart.


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        Lawrie

        Kerry Packer was always being accused of not paying his taxes. He said he paid every penny he was obliged to and not a penny more. He also said it was everybody’s duty to pay the minimum tax they had to. He also said he was more capable of spending his own money than anyone in government. I would have to agree.

        If the wealth of the nation was divided equally among all what would be the result? We have a trillion dollar economy so each person would get $50000 per annum which is about the national average wage. If we leave out the kids it comes to about $100,000 each which is less than most miners earn. Many families where both mum and dad work earn between 150k and 200k so they wouldn’t be any better off. Now why would a worker want to give a non-worker the same as themselves? Would equal outcomes lead to a better world? If we were all paid the same why bust a gut, why spend nights worrying about building the new factory? Why take financial risks when whatever you profit will be taken from you? Without the risk takers the trillion dollar economy would soon collapse and the average wage would be very like China’s. Subsistance farming would be the norm and a necessity.

        If you don’t like being screwed by the banks don’t use them. Don’t like high interest on credit cards, don’t use them use lay-by or go without. Don’t like the low interest paid on deposits, buy bank shares instead.

        Everyone wants a no interest loan to buy something they can’t afford. Don’t blame the banks if they give you what you want.


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        Hasbeen

        Isn’t that the whole idea of GST? The wealthy may pay it out of before tax income, but they do pay it

        Perhaps GST should be increased & income tax reduced, or abolished.


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      Lawrie

      Bulldust,

      Negative gearing was a mechanism to encourage construction of rental accommodation. The alternative was the Housing Commission. Negative gearing saves taxpayers and encourages private savings and wealth creation. It also helps to reduce house prices by making more available. When one considers the very minimal return on investment in rentals a tax concession is justifiable. If it was to be changed it should only apply to new construction which should reduce pressure on the lower end of the house market.

      Capital Gains tax is a tax on investment. When an asset that is subject to CGT is purchased it is purchased with after tax dollars; a farm or business for example. The interest is tax deductable but repayments have to come from after tax profits. While machinery and buildings can be depreciated the land they sit or work on can not. It usually appreciates, hopefully, but at about the same rate as inflation in reality unless there are major location factors such as land use changes. Current CGT takes into account length of ownership, (the longer it’s held the greater the concession) and future use of the capital raised by the sale. Contribution to Super or buying another business will also gain concessions. In all cases the concession will save the government, read taxpayers, money down the track. BTW the government don’t reimburse the owner if they lose on the deal and if we talk fair then maybe they should.

      CGT does not apply to homes occupied by the owner as their primary residence. The asbestos covered shack on the headland overlooking the newest coastal growth area bought in 1936 for 176 pounds has been sold for $2.2 million by dear old mum who has moved into a nursing home and given the bulk to her three daughters tax free. No complaints about that but let’s stick it to the guy who backed his everything on a dream that succeeded.

      What’s needed in this country is some incentive to invest, take risks and create employment so others can have a go. The biggest whingers are those who don’t take a chance, who don’t back themselves and who don’t do the hard yards.


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        Madjak

        lawrie,

        what I don’t understand is why real estate should get any special treatment over any other form of investment leverage.

        Negative gearing has helped to create a massive re bubble so large than many people coming through now are passing on the opportunity to borrow, say, half a million dollars for a home.


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          Russell

          It’s not limited to Real Estate – that’s just higher profile because so many taxpayers rely on negative gearing to make an investment worthwhile.
          (a) it only applies to income producing properties (ie a holiday home or bush weekender doesn’t get any negative gearing benefit, and
          (b) it aplies to any income producing asset – you can but a franchise business ans if it loses money you offset those losses against your salary income, for example.
          The only time rental property negative gearing is treated differently to other assets is in Child Support calculations, to avoid payers using negative gearing to artificially reduce the taxable income at the expense of the payee (and their children).


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          Real Estate (long term asset) gets that special treatment because rental properties are needed for those who can’t afford to buy their own.
          Otherwise investors would transfer their monies to more liquid assets such as shares and commodities for flexibility.


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          CameronH

          Are you seriously suggesting that people should not be able to get a tax deduction for legitiment business expenses and that this issue is the major cause of the real estate bubble. As an example, if I have a wage income of $100,000 and I earn $20,000 from real estate rental, this $20,000 is added to my wage income and taxed at the marginal rate. You are now suggesting that I should not be able claim the expenses of managing these properties against my income?
          The real estate bubble has been caused by the same oversupply of cheap money as everywhere else in the world. It has been further exacerbated by Government intervention in the market such as the forcing of banks to lower lending standards for “the poor” in the USA and the first home buyers grants in Australia. To try to scapegoat real estate investors is to use the same type of class warfare rhetoric we are seeing from the socialists and hippies at the various occuppy sites.


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            Madjak

            Cameron,

            What I am saying is that there are unintended consequences when a market is manipulated for political means.

            If demand exists for rentals, i am sure people would invest in it. Right now RE prices are getting so high that people looking for their own home are baulking at the amount of debt required. The ratio of house values to incomes is getting pretty extreme.

            Negative gearing has helped this situation to occur, just like cheap credit and other factors.


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            Twodogs

            Realise of course that both house prices and rental prices are both exorbitant. They are relative to each other in terms of investment, however the limited supply artificially increases the price of both. This increases the cost of living across the board as it sucks a greater proportion of everyone’s income, and so is less productive. Mind you, shelter is unproductive, but a necessary evil. Our supply is artificially kept low as dropping house prices is electoral poison, but appropriate increases in supply would have significant economic benefits.


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            John Brookes

            Yes, CameronH, yes.

            I would keep negative gearing in a limited way. If the owner of the property was prepared to give an indefinite lease, then let them negative gear.

            As a tenant, it is extremely disruptive to take a 12 month lease (which is the longest you can usually get in Perth) and then have to move at the end of that time. Maybe to capable resilient people its no big deal, but to those of us who find life a bit of a struggle, having to move can be the proverbial straw that breaks the camels back.

            So given that negative gearing was designed to provide a stock of rentals so that government didn’t have to, just make sure that negatively geared properties are offered on similar terms to government housing.


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            brc

            John Brookes @above – for once I agree with you on something. The biggest problem in residential property is short leases and lack of security for tenancies.

            The problem of course, is evicting problem tenants, which is why nobody will sign anything longer than a 12 month lease.

            But, if a new standard residential tenancy agreement were brought in, which allowed for more commercial like tenancies – say 3 years + 3 years option and with the tenant able to make changes such as painting and carpets, but with the caveat that it’s not quite so protracted to turf them out if they stop paying or damage the property – then we would see a difference in tenancies. The lease would also have agreed rent raises in line with CPI and probably have the tenant paying outgoings like water rates and body corporate fees, if applicable.

            This would be better for property owners and tenants if more certainty could be created for the length of lease, which makes for a better investmetn and a more secure residence for the tenant.

            Plenty of other countries routinely have longer leases, it would be good if it caught on here. It would certainly make renting more of an attractive option for many people. One of the reasons I have bought instead of rented is because every time I rented somewhere, the owner wanted to play property trader and you’d end up with strangers tramping through the house every weekend inspecting the property. And as soon as they sold the new owners would turf you out.


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          brc

          ‘Negative Gearing’ is just a fancy term given by spruikers of investment products.

          It is simply the tax-deductibility of expenses incurred while generating an income. This same principle applies to any other tax deduction, such as a tradesman purchasing tools or a famer purchasing a tractor. If you lose money – then you pay less tax. If a farmer spends too much on a tractor and can’t pay for the finance on it, it’s hardly fair to expect him to pay income tax on what he would have earnt had he not bought the tractor.

          You can apply the strategy to purchasing investments such as property, or financial instruments such as shares.

          Negative Gearing with real estate is actually a bad idea in most cases – you’re guaranteeing current losses in the hope of a future profit. If that future profit never materialises then you’ve just lost money. Sure, in best-case scenarios it pays off quite well, but as people will increasingly find out in the comgin years, it’s not always a great idea.

          Removing negative gearing on property isn’t a great idea as it would simultaneously hit property prices and rental affordability. Dropping property prices would endanger the banks because so much of their loan book is tied up in property.


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      Bulldust

      Wow mention abolishment of negative gearing and self interest rears it’s angry head pretty damned quick.

      I have never understood the logic that two people could own each other’s homes, rent off each other and both make off with negative gearing… I assume that could be done? or does the ATO check into such things (which I highly doubt).

      Would it not make more sense to make the interest payments on the own family home tax deductible? That way people are saving money into an asset they could milk in retirement … another form of super saving. Paying rent to some landlord that owns 10 properties and negative gears the lot makes no sense to me … that’s a lot of benefit to the landlord, and sweet FA to the renters. Sure, some of the benefit may flow from the landlord to the renter as reduced rents, but in my example ALL the negative gearing benefit flows to the former renter who now is building a retirement asset.

      Happy for you to demonstrate how the current negative gearing is a superior solution. I have never heard a convincing argument for it…


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        Dave

        Within the framework of the renting situation – there are no benefits handed on to renters regarding the following:
        1. Solar Hot water government installation rebates.
        2. Solar Panel installation Govt rebate.

        A lot of the price rises in electricity will be felt by renters (who cannot afford to buy their own home) as the installation of solar panels or solar hot water is out of their reach in dollars. This group may become even poorer – with only (what $10.00 a week tax relief).


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          Bulldust

          …and there’s bracket creep to add to that, which is not factored into the Government’s tax impact statements in the media. But I won’t dwell on that again at this point, just to say that most Australian’s don’t even seem to know what the concept is, let alone teh impact on their incomes.


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        brc

        Bulldust – to engage in negative gearing, you have to lose money.

        Two people renting each others homes and losing money wouldn’t be a great strategy. Apart from the transaction costs, the lack of ‘ownership’ rewards, when you went to sell you’d seriously detriment yourself because of capital gains tax.

        There is no interest deductability on your principle place of residence because there is no capital gains tax when you sell. It would make no sense to deduct interest on your home unless you also made rent tax-deductible for families as well. In a business rent is tax deductible, because it’s an expense of running the business. But for families, it is not. But why stop at rent? Why not then make electricity, insurance, food, everything tax deductible? Sounds great to me, paying tax after personal expenses, but the government won’t have it.

        Tax deductibility of home interest payments is how it is in the USA. THis leads to oversized homes as people try and get the tax savings. It also leads to more speculation in housing than if tax deductibility applies only to investment properties. More people own a single home than own investment properties.

        In short, negative gearing is a strategy which requires you to lose money every week in the hope of a larger future gain. In my opinion, nobody should do it because it is highly risky. But trying to change the rules to exclude it will just force ever-more complex financial structures for people to own properties through trusts, corporations and more. This would concentrate ownership of rental housing into larger entities away from individuals, because you would need scale in order to make it pay. Rental properties are a marginal investment at best for most people, so making it even slightly less attractive is going to smash the market around.

        Just leave it alone – overall it does no real harm and at the margins it probably increases the supply of rentable properties. Stability and simplicity is far more important.

        If you want to get rid of anything to do with property, make it stamp duty and first home buyers grants. These cause more problem for affordability than anything else by reducing liquidity and forcing up prices, respectively.


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    Joe Lalonde

    Jo,

    Politicians are fantastic at making it the next guy’s problem!
    At some point, the next guy will have absolutely no alternative when they cannot import due to the money is no good.


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    Mike

    It’s the mispricing of risk. While ever the finance industry implicitly understands that they can and will be bailed out, they will continue to gamble vast amounts of money, which inevitably lead to massive losses. But what do they care? They got their wins and now their losses have been put on the taxpayer (either explicitly through bailouts or implicitly through printing money).

    It’s like if I was going to a casino. I would only bet a small amount of money because I understand it’s my money and I might lose it. Otoh, if the casino said to me, we will reimburse you for any losses you incur I would mortgage the house and bet it all. Why not? I can’t lose. But somebody always loses. There is no such thing as a free lunch.

    The finance industry has to be cut loose from the govt. No lender of last resort. It just leads to reckless behaviour. They have to suffer their losses.

    That includes the banks in Australia when the Oz property market starts to collapse.


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      Madjak

      I agree completely. Right now, the bankers are the most expensive pack of bludging beneficiaries ever.

      They’re such a sap on the peoples money that governments are struggling to pay their bank benefits to keep the banks afloat.


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    pat

    i don’t need a Hat Tip, jo, but i put it up in this thread:

    http://joannenova.com.au/2011/10/kyoto-ii-is-dead-eu-bails-out-as-australia-tries-to-save-earth/

    i was reading a library book, forget what it was, and it referenced the following quote from the article, which u have excerpted above. did a search and, thankfully, found the amazing original article:

    “From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent”

    surely this explains why we are in such a globaln financial crisis, and why we have an ABSOLUTE DUTY to prevent the trading of the air we breathe, which surely must be the financial instrument of last resort.

    the fact pollies of all stripes, including pseudo-Greens – with the complicity of virtually all the MSM – are pushing for CO2 trading says everything about how utterly corrupt our institutions have become.

    —–
    REPLY: Thanks Pat! That’s why I couldn’t find “the” email. — Jo


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    ROM

    Here in Australia our news, particularly the financial news is almost totally American orientated but the Europeans also have a financial industry that rivals the Americans and they also have views on the role of the financial industry in society. And that role is increasingly being questioned by European society which is also getting totally fed up with both the increasing corruption within the financial industry and it’s increasingly corrupting effects on Governments, industry and European society generally.
    The “Financial Industry” and here a very interesting distinction is made by Der Spiegal, “Financial Industry” as distinct from “Financial Services”, is in very deep strife within societies everywhere but it is too arrogant, too full of their own hubris and so totally self centered that they fail to even realise that the process has already started where politically and socially they are going to be thrown to the wolves of financial destruction by the very societies that they have abused and corrupted for so long.

    A view from Europe. “Spiegal on line International”;

    The Destructive Power of the Financial Markets

    [ http://www.spiegel.de/international/business/0,1518,781590,00.html ]
    &
    Has America Become an Oligarchy?

    [ http://www.spiegel.de/international/spiegel/0,1518,793896,00.html ]


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    pat

    26 Oct: Marketwatch: Press Release: ERA Holds Annual AGM and Provides Corporate Update on Operations
    VANCOUVER, BRITISH COLUMBIA:
    African REDD Operations Update
    ERA is developing a 300,000 hectare REDD+ project on the west side of Mai-NdombeLake in the Democratic Republic of Congo (the “DRC”)…
    This contract provides that ERA will manage the concession area for 25 years and benefit from the carbon offsets generated by the project during that time. Current modeling indicates that the project may generate between 1.5 million and 3.0 million tonnes of carbon offsets per year for the next 25 years…
    ERA is developing a Verified Carbon Standard (VCS) methodology for use in the project area in conjunction with independent third party VCS forestry and REDD experts. The company is also in discussions with international funds and others interested in becoming financiers and/or anchor buyers of the carbon offsets expected from the DRC project…
    The company is also exploring other African forest based carbon projects and related opportunities which could produce carbon offsets for both the voluntary market and for trading under the European Union Emissions Trading System and/or emerging compliance markets…

    These are significant developments as California will soon have the first North American “cap and trade” market, which is expected to include the world’s largest market for forestry based carbon offsets. Initial estimates are that AB-32 may require up to 225 million tonnes of carbon offsets to meet compliance demand during its first 3 compliance periods, between 2013 and 2020…
    ERA is also developing a pipeline of carbon offset projects expected to be eligible for trading under California’s new emissions trading scheme. Specifically, resources are being directed towards strategic partnerships and origination opportunities, which could deliver multi-year streams of carbon offsets eligible for sale under the California system and, potentially, under the WCI should additional jurisdictions come on board…

    FORWARD LOOKING STATEMENTS: This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, the continued advancement of the company’s general business development, research development and the company’s development of forest-based carbon offsets. When used in this document, the words “anticipate”, “believe”, “estimate”, “expect”, “intent”, “may”, “project”, “plan”, “should” and similar expressions may identify forward-looking statements. Although ERA Carbon Offsets Ltd. believes that their expectations reflected in these forward looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include fluctuations in the marketplace for the sale of carbon credits, the inability to implement corporate strategies, the ability to obtain financing and other risks disclosed in our filings made with Canadian Securities Regulators.
    http://www.marketwatch.com/story/era-holds-annual-agm-and-provides-corporate-update-on-operations-2011-10-26-93190

    how appropriate the home of the dotcom bubble is salivating at the prospects!

    28 Oct: Reuters: Rory Carroll: Analysis – High California CO2 prices to spur offset scramble
    California will in 2013 likely launch an emissions trading scheme with a CO2 price far higher than the EU or NZ markets, a move that could trigger a gold rush for cheap offset projects.
    Under rules approved last week, companies covered by the state’s scheme will be able to use carbon credits from emission reduction projects, instead of state-issued permits to cover up to 8 percent of their emissions…

    And with Californian CO2 permit prices already fetching around $19 — 30 percent more than prices in the EU — the rules could spark a scramble to develop emission reduction projects that can produce credits that the state’s emitters can use…
    They currently fetch around $12 and are already in demand due to the $7 discount they fetch below permit prices, but the number of approved projects is set to expand.
    “Yes, we do expect a significant bump in offset projects with many of the nearly 500 projects already in our system now getting the green light to go ahead to verification and lots of new projects coming in,” said Gary Gero, president of the Climate Action Reserve, which approves project types on behalf of the state…

    While the price of carbon offset credits that EU companies can use to meet targets hit a record low of just $9.40 last week, investment bank Barclays Capital predicts there will not be enough California-eligible credits to meet demand.
    To bridge the demand-supply gap and keep compliance costs down, regulators have suggested they will allow companies to use other types of credits, a prospect that is enticing developers.
    Trevor Sikorski, a carbon analyst at Barclays Capital, said the expectation that offset prices will rise in the second compliance period in 2015 and third compliance period of 2018, will attract capital to fledgling projects.
    “Certainly the expectation of higher prices should encourage plenty of investment in the offset space,” he said.
    California officials have suggested they will allow three additional project types to count for compliance, but even if that happens, the market may still need more credits…

    The state wants buyers of credits to replace them if they later turn out to be faulty – a move that could cost them millions of dollars and drive buyers to the relative safe haven of the permit market.
    She added power companies may have an appetite to develop their own offset projects, a move that has seen big utilities in Europe snap up staff from developers as they seek to cut out the middle man.
    But with the price of U.N.-backed offsets on its knees and supply set to outstrip demand, investors in offsets could be looking across the Atlantic.
    “It is possible that investors previously active in the CDM could enter the CA market with the purpose of using their experience to make speculative wins,” she said.
    http://uk.reuters.com/article/2011/10/28/uk-california-point-carbon-idUKTRE79R1IV20111028

    another reason i keep repeating how necessary it is to ensure your Super is not being invested in the CO2 bubble being created under the CAGW scam:

    27 Oct: ABC America: Dave Biscobing: Risky investments, poor oversight lead to $1.6B taxpayer bailout of police and fire pension fund
    Legislators called the Arizona Public Safety Personnel Retirement System, known as PSPRS, a “platinum plan” and they complained that it is better than other pension plans…
    The pension system was once more than fully funded with assets totaling more than 126 percent of the amount needed to pay all claims and costs.
    And we found that unlike many public pension systems across the country, the contribution made to the retirement fund by rank and file police and firefighters in Arizona has gone from 7 percent to 11 percent.
    The men and women depending on that fund are not eligible for Social Security.
    But ABC15 Investigators discovered documents that demonstrate how risky investments, a lack of effective oversight and a failure to adhere to common standards of diversification left the fund in serious financial trouble.
    The fund had invested in some of the biggest losers in Wall Street history including Enron, WorldCom and JDS Uniphase…
    ABC15 discovered that contrary to standard practices for public pension funds, Cross never hired outside investment advisors or outside auditors until his waning days as fund manager.
    While some of the losses the fund sustained under Cross might be attributable to market declines at the time the high tech stock bubble burst, critics like Brian Livingston and Senator Sinema say his investment strategy amounted to high stakes gambling…
    We asked Jack Cross to sit down and help us understand what happened and why.
    He declined to be interviewed…
    Today, Cross works out of his home as an investment advisor and serves as the chairman of Scottsdale’s public employee pension board.
    In documents filed with the SEC, he reports his firm, JAT Investments manages $30 million dollars of investments for more than a hundred clients.
    When Cross “retired” from PSPRS at age 47 in 2004, he was collecting $18,000 a month from his pension…
    ***Tune in to ABC15 News Friday night to see our story about the former manager of the police and fire pension fund suing because his $18,000 a month pension was cut off when officials ruled he had inflated his own pension.http://www.abc15.com/dpp/news/local_news/investigations/Risky-investments,-poor-oversight-lead-to-$1.6B-taxpayer-bailout-of-police-and-fire-pension-fund


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    Dave

    How much money is being spent on renewable engery schemes (by banks, super funds, etc) currently?
    Will this result in the Renewable Energy crash like the Carbon Trading is heading toward?

    So much money being invested in totally useless energy production such as solar, wave, wind, geo and the like – that it has to collapse!


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      Twodogs

      It doesn’t have to even be useless, only uneconomical. If enough people believe the promises of long-term reward, they will over-invest in the short-term. Hopefully there are enough sceptics to avoid mass-overinvestment.


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    Joe Lalonde

    Jo,
    A present for ya….

    Quotes from film producer: Michael Moore. October 27, 2011

    I believed the concept of making money off your money had created a greedy, lazy class who didn’t produce any product, just misery and fear among the populace. They invented ways to buy out companies and then shut them down. They dreamed up schemes to play with people’s pension funds as if it were their own money. They demanded companies keep posting record profits (which was accomplished by firing thousands and eliminating health benefits for those who remained).

    Capitalism is a system, a pyramid scheme of sorts, that exploits the vast majority so that the few at the top can enrich themselves more.

    http://michaelmoore.com/words/mike-friends-blog/life-among-1


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      Madjak

      That would be the multimillionaire Michael more who has a team of lawyers fighting for him to get more money from the producers of his films, wouldn’t it?

      Funny, he still dresses like a peasant, I guess thats his image.

      He most definitely is not one of the so called 99%


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    rukidding

    Cheap Money hmm.
    Could that be some of the compulsory superannuation money sloshing around in the system looking for a home any home that at least pays some kind of return until the shonkey investments they are put in eventually collapse,subprime,and the superannuate is left with nothing.
    Buy land at least you will have somewhere to pitch your tent when the time comes. :-)


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      janama

      When I was in Singapore in 92 a taxi driver invited us to see his flat as he had to pick something up before taking us across the island to Malaysia. It was a regular 2 bedroom flat in a highrise like many in Australia except it had no lift.

      He told us he was buying the flat from the Government using money from his superannuation investment. The superannuation company was the Singapore Government and it was the only superannuation company in Singapore.

      The Government was using that superannuation money to establish companies like Optus (Subsidiary of SingTel) and Singapore airlines.

      Strikes me as a better way of handling super funds than our system.


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        Twodogs

        It’s still using other people’s money. People always look after their own money better than they would look after someone else’s. Feel free to enlighten us on the superior, innate and wise investment abilities of those in the Singaporean government.


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    Andrew McRae

    Thankfully in Australia our regulations (seemingly) don’t let investment houses get away with as much as their cousins across the pond.

    Local investment company Storm Financial went bankrupt because of the USA sub-prime mortgages and the way this was handled did seem to be unfair. The Commonwealth bank got first dibs on whatever was left in Storm, so nothing was left for the more corporeal entities. This seems unfair because whilst the Commonwealth Bank was the largest single investor in Storm, it is also the one that suffers the least by the losses compared to individual people. I reckon if you’re relying on ASIC to protect you, you’ve already lost. Ultimately people who expect money for nothing are taking a risk that may not pay off. The longer you eat the free lunch the more likely you’ll be the one who gets stiffed with the bill.

    When you consider our entire economy expects unending 3% growth and 9% returns on mandatory superannuation funds, thus forcing the entire working population to expect a free lunch called “retirement”, one wonders which generation will be stiffed with the bill of this unsustainable Ponzi scheme.


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    Tim

    We worry that people are apathetic. ( So, what’s happened to the flouride debate)?

    At the end of World War II, the US government sent Charles Eliot Perkins, a research worker in chemistry, biochemistry, physiology and pathology, to take charge of the vast Farben chemical plants in Germany. The German chemists told Perkins of a scheme which they had devised during the war and had been adapted by the German General Staff. The German chemists explained of their attempt to control the population in any given area through the mass medication of drinking water with sodium fluoride, a tactic used in German and Russian prisoner of war camps to make the prisoners “stupid and docile”(Stephen 1995). Farben had developed plans during the war to fluoridate the occupied countries because it was found that fluoridation caused slight damage to a specific part of the brain, making it more difficult for the person affected to defend his freedom and causing the individual to become more docile towards authority. Fluoride remains one of the strongest anti-psychotic substances known, and is contained in twenty-five percent of the major tranquilizers. It may not seem surprising that Hitler’s regime practiced the concept of mind control through chemical means, but the American military continued Nazi research, exploring techniques to incapacitate an enemy or medicate an entire nation. As stated in the Rockerfeller Report, a Presidential briefing on CIA activities, “the drug program was part of a much larger CIA program to study possible means of controlling human behavior”(Stephen 1995).

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      Twodogs

      So why don’t the Chinese use it? A totalitarian regime with 27,000 riots per year might want some of that good stuff, and they might want to try it at far more than the typical 0.6ppm used in most countries. The nazis also tries to develop death rays, so you better get cracking trying to find some of those weapons of mass destruction. Besides, what price to pay for good teeth?

      Fluoride – the enemy of dental dysfunction everywhere!


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      Andrew McRae

      Looks like the “reporting comments” plugin was not reinstalled after the site upgrade. The “report this” form points to a plugin path that does not exist.

      Anyway, I was going to report the above comment as being completely off topic, very short of evidence, and wacko.

      In composing my retort I was part way through researching fluoridation when… I found modern evidence that appears to back up these alarming claims. A 500 page report published by the USA National Academies of Science, no less.
      “Fluoride in Drinking Water: A Scientific Review of EPA’s Standards” 2006.
      Here’s the IQ results of two villages in China
      http://www.nap.edu/openbook.php?record_id=11571&page=207

      the average intelligence quotient (IQ) of the children in Wamiao was found to be significantly lower (92.2 ± 13.00; range, 54-126) than that in Xinhuai (100.41 ± 13.21; range, 60-128).

      The same book cites two other studies with similar conclusions.
      The book authors’ comment on these studies is:

      … Without detailed information about the testing conditions and the tests themselves, the committee was unable to assess the strength of the studies. Despite this, the consistency of the collective results warrants additional research on the effects of fluoride on intelligence in populations that share similar languages, backgrounds, socioeconomic levels, and other commonalities.

      Yikes. That’s not the “definitely safe” I was expecting.

      So… how do the measured village water concentrations compare to our fluoridated supply?

      Fluoride is any compound that releases negative fluorine- ions in water. At least two types are in use. Natural fluoride is unlikely to be the same complex chemical (sodium hexafluorosilicate) used for municipal fluoridation, so it is likely to be the simplest fluoride, NaF (sodium fluoride). WP says NaF has a molecular weight of 42g/mol.

      The “high fluoride” concentration which was “associated” with lower IQ was a mere 2.47mg/L in the well water.

      Convert the measured mass concentration of NaF into ppm and compare directly to the municipal target level.

      1 million × (number of NaF molecules per litre) ÷ (number of H2O molecules per litre)
      = 10⁶ × (0.00247÷41.988×6.022×10²³) ÷ (1000÷18×6.022×10²³)
      = 1.05 ppm

      The target level of municipal fluoridation in Australia is 1 ppm.
      So we may be getting an 8 IQ point drop in exchange for better teeth, which does not seem too bad given how even smart people are wrong quite a lot. (We should be eating and smiling more often or we won’t get full value!)

      Can someone please check my technique and calculation. Please show me where I am wrong.
      I suspect other confounding factors (not controlled for) can provide a benign resolution.
      But if I am not mistaken, and if the Chinese studies are accurate, the possible implications of water fluoridation are serious.
      I had never even contemplated this before today.

      On the other hand…

      In New York State 70% of the population on public water receives fluoridated water, which does not seem to have made them docile enough to prevent the Occupy Wall Street protests, though it may have prevented 30% of childhood dental decay if you believe their government and the WHO.

      I am not sure what to think now, since it is hard to ignore evidence once you’ve seen it.


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        Roy Hogue

        Andrew,

        Whatever you do, don’t believe anyone’s x% reduction/improvement figures unless you can get all the data on which the percentage was based. My guess is that a lot of it is estimated…meaning guesswork.


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        lawrie

        Have you ever considered that an extremely small amount of floridated water is actually consumed. Most ends up flushing toilets, watering lawns and used in industry. What a waste. Then many people use a floridated toothpaste as well. Just how much do we need? I have lived on tank water and my teeth are no worse than those who use treated town water.


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      Tim

      I may have drawn a long bow, but my ‘off topic’ was a reference to oligarchs being able to get away with their schemes, partly because of an apathetic populace.( It seems to have got the argument going, however). There are plenty of references on Google, if anyone cares to check.


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    Brett_McS

    Another example: Japan is entering its second ‘lost decade’ because it will not let its big banks fail. But the bankers and politicians will be all right, Jack.


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    CHIP

    Another nice article Jo,

    I was wondering if anyone here could answer a question for me. How much radiative forcing does the IPCC say that water vapour will have on a doubling of atmospheric CO2? I’ve been trying to find out for ages, but I can’t seem to find it. Do they state it in AR4 anywhere?


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    The Black Adder

    Pat at #12

    “the fact pollies of all stripes, including pseudo-Greens – with the complicity of virtually all the MSM – are pushing for CO2 trading says everything about how utterly corrupt our institutions have become.”

    Wow!! That is it!

    You have nailed it in one Pat, and once again I am sitting here thinking what the F@#k are we doing as a country to stop this insidious tax and this insidious movement against common sense!!

    We can but try our best, and stop the rot from spreading further, so we go on, to fight them on the beaches….

    The messages will get out there, truth will always prosper, the general public will be made aware of this one day, won’t it?


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    Mervyn Sullivan

    About that comment – “…inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt.”

    Sounds like the business model of Macquarie Bank!

    How many people remember the takeover bid of Qantas, and how Qantas CEO, Geoff Dixon, desperately tried persuading shareholders to accept the deal? Geoff, of course, stood to gain millions if the deal went through.

    Just as well it never did go through because when the GFC hit, Qantas would have collapsed under a mountain of debt.


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    pyromancer76

    Articles in the Atlantic, IMHO, will always shill for the Obama administration, and in this case, try to propagandize prospective voters to hate “capitalism” and support marxism, socialism, anarchism, and lazy, slobbish demonstrators of OccupyWallStreet. A few obviously are innocents.

    No, it is not the banks; it is the government — Republican and Democratic administrations alike in the U.S. Governmental (“elected” and bureaucratic) elites changed the requirements for both banks and other financial institutions so that debt could be marketed as equity and little currency had to be kept in reserve against lending or debt. In addition these institutions did not have to reveal exactly what they were marketing that was billed as “so good” (eternal 8% interest return!) but completely bogus. Thus the skyrocketing debt and defaults and the crashing balloons that this “easy so-called money” created. Don’t fall for blaming the banks fundamentally — not that they weren’t glad to go along with and even lobbied for the changes — and the bankers/financiers were thrilled with their high earnings and perks.

    The beginning, the end of this, the cause, is in the laws and in governance. Take back a real economy; the only real economy, the only economy that can Create Wealth is a free market one where there are laws of transparency and accountably and a reasonable debt to equity/assets ratio. The solution actually is quite simple.

    (And completely defund scammy AGW-Evil-CO2.)


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    pyromancer76

    I would not post again if I did not value Jo Nova’s blog as among the best. Another reason to believe that the Atlantic article is simply a red flag to unthinking minds is that the real culprit is the political-bureaucratic-academic(e.g.,BEST) “oligarchy”. See Investors Business Daily on the EPA: http://news.investors.com/Article.aspx?id=589662&p=1

    They have taken the place of the Robber Barons of the nineteenth century. Read about the EPA’s role in dismantling our economies — much bigger than the bankers/financiers (except the changed laws they were delighted about meant they did not have to compete in the free market either.) Who changed the laws/rules? Not the bankers!!!


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    It’s very easy and comfortable to think that a stockmarket crash causes an economic recession but the reality is that a stockmarket boom continues only for as long as the economy is doing well. Once the economy nose dives, the stockmarket follows it.

    Pointman


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      Bulldust

      This is true. I have seen some alarming graphs of late about various economies. In the US, for example, there are the same number (not percentage) of full time jobs today as ten years ago (remember the population has grown significantly in that time). In Japan the savings as a percentage of GDP has almost reached 0% … that is the source of Government debt, so they are about to implode. Add to this mess that only only economy has ever recovered from a 120% or greater debt to GDP ratio. There are plenty of countries about to, or past, that threshhold.

      These are scary times, and I am not even a doomsayer… the facts are there for all to see.


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        Rereke Whakaaro

        There has to be a crash.

        “Quantitive easing” – central banks printing more money – has meant that we are awash with liquidity, but lack the asset base to support it. The only way that the situation will change is if the currency is allowed to reflect the asset base of the issuing country, or that country’s GDP, or something else that is tangible.

        At the moment, the value of a dollar is based on the level of confidence that people have, that the dollar will retain its purchasing power. Yeah, right!


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          Madjak

          QE3 = complete and final resignation and capitulation on the feds part.

          Of course, I could say the same thing for the current “we won’t raise interest rates for 3 years” promise.

          If that isn’t a sign the system has allready done a quiet fukishima, I don’t know what is.


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    Jon-Anders Grannes

    And if you in this setting also elect liberal’s and 68′s that want to terminate todays growth and consumption based socity.
    They probably will just sit there doing nothing while they work on the propaganda(blamegame that this was a failure of the growth and consumption based society and that they could no nothing?


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    RJ

    “y only quibble is that “cheap money” is relegated to a minor role. The root cause of the financial crisis that “started” in 2007 and rolls on with no resolution in sight, is surely debt. Lots and lots of debt. The world is drowning in debt like never before.”

    This article is mostly complete rubbish

    The reason why we have so much debt is because we need more money for retirement

    Credit = money and
    Credit always equals debt and
    Retirement saving requires extra money first

    The current problems stems from too much non Govt debt and not enough Govt debt.

    Simple. The world needs to save more as the population ages so more debt is needed to fund more credit to invest in pension funds

    So what next? Governments are losing their ability to borrow

    This comment takes the cake though. Monetary sovereign (google it) Govts like the US do not need to borrow money. The US uses Fed reserve to fund Govt spending. Bonds simple drain these reserves and deposits to stop inflation

    Govt bonds equals non Govt financial savings
    Govt interest expense equals non Govt interest revenue

    We need more govt debt and bonds to fund pension savings. It is not banks to blame but ignorance about money and banking that is causing our current problems

    The Euro problems could be stopped tomorrow if the ECB funded Govt debt as required.


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      Madjak

      wow RJ do you work for the federal reserve or something?

      Credit does not equal money. Credit is a promise to pay at some future date. Governmentcredit is often a promise that future generations will pay.

      I’m sure there are some cdos kicking around you could buy up cheap.

      Borrow more to pay for your pension. Suuure. try telling that to your grandkids.

      “I know the countrys broke, but you must realise I needed to borrow more money to pay for my retirement so you guys can pay it back for me”


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        Bulldust

        Somehow I think the words “Weimar Republic” would be lost on RJ…


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        RJ

        “Credit does not equal money.

        of course it does. Money is credit and is always supported by debt

        Entries on a computer screen does not have value for no reason. Its because the bank liability of customer deposits or money (your bank asset) is always covered by bank assets (either Govt debt or non Govt debt)

        So bank credit = money = debt


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        RJ

        “I know the countrys broke,

        No you wrongly assume based on nonsense that you have read by ignorant deficit hawks (or people wanting to mislead you)

        As many believe nonsense about global warming


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          Madjak

          Ok RJ,

          Just watch what happens to the US credit rating ver the coming weeks.

          The word is that another downgrade is on its way.

          But thats cool, you can put your hands over your ears and keep quoting cheney:

          “we don’t need to worry about the deficit”
          “we don’t need to worry about the deficit”
          “we don’t need to worry aboutthe deficit”

          lalalalalala


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            Tel

            The word is that another downgrade is on its way.

            Obviously the fault of the Tea Party again.

            If Obama spending manages to hit the NEW debt ceiling ($16.4 trillion) before the 2012 election, that will also be the fault of the Tea Party.


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        Truthseeker

        Madjak you have made excellent points here. RJ has completely ignored the time dimension part of the process as well completely ignoring real goods and services.

        Money is credit and is always supported by debt

        Money is an efficient medium for trade as it is a universal representation of value. That value is made of many things of which debt (both owed and owing) is only a portion of the picture. Money is mostly supported by resources (tangible and intangible such as skills of the labour force) and the rest is net debt. The only thing that is true about debt is that debt owed is equal to debt owing (debits = credits).

        RJ, here is an experiment for you – try and spend $250,000 per year on an income of $100,000 per year, make up the difference with debt and see how far you get …


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      brc

      Don’t get this nutcase started again, it destroyed the prior thread on the discussion of of the role of gold. I suggest ignoring anything RJ has to say on the topic of money.


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    Louis Hissink

    The problem is not so much that the oligarch’s are over borrowing but that from the reduction in interest rates by a central bank, a financial illusion of abundant capital is created when it reality it is simply currency inflation. This also happens in fractional reserve banking, which is adequately explained elsewhere on the Mises web site etc.

    It is essentially the ignorant rejection of Say’s Law – by the insistence that recessions are due to aggregate demand deficiencies, and that this deficiency is due to a lack of money. Lack of money when people are saving instead of spending? No lack of money, just that, apart from the essentials of food, people are not spending money on non-essentials.

    A producer of a non essential good or service would then lack sales, and it is these producers who then turn to government for assistance that is the problem. In the unhampered market these producers would otherwise go broke. Of course their employees would also suffer, and in a hampered market where unions have a monopoly of labour, and employers have legal sanctioned advantages, both the result of government interference on the behalf of vested interests, then economic calamities are expected.

    Then financial people do have control of government, but that is more to protect themselves than anything else. It is the initial step of government protection in the first place that created the environment for this to escalate. This is why such systems always end up in totalitarian dictatorships in order to solve the problem.

    And the problem? Having government enact legislation to favour your interests above someone else’s. Remember, no government has money, only that which is takes from you in the first place.


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    kuhnkat

    Jo,

    thank you for this excellent post. The US had a chance to try a different direction in the late 90′s when the hedge funds and Soros were about to default and collapse. Unfortunately Clinton and the political elite decided to bail them out and told us they were TOO BIG TO FAIL. Our current circumstances owe quite a bit to that STUPIDITY!!!


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    Crakar24

    I have not read all the posts so if i am covering old ground i do apologise.

    I found the story to be quite good, he basically says the same thing i have said before that “there is no eleventh marble” essentially you cannot borrow money at interest and ever expect to repay it as the amount owed exceeds the amount in circulation which is whyhe says this

    “So what next? Governments are losing their ability to borrow. If debt and money manufacture falters, there won’t be enough money to pay back yesterday’s debts (all of last year’s debt has to be paid with all the money, plus interest, so the total pool of money/debt must always expand to avoid widespread defaults and bank failures).

    So obviously the governments must print, or else let banks and borrowers fail. One or the other.

    http://whatreallyhappened.com/WRHARTICLES/11thmarble.php

    One other point, i dont see any reference to glass-steagall

    https://secure.wikimedia.org/wikipedia/en/wiki/Glass%E2%80%93Steagall_Act

    This played a major role in the 1930′s crash and a major role in the latest crash, this is what happens when you let the money junkies off the leash.


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      RJ

      Money is created these days by a journal entry

      Govts can do as many journal entries as they wish. Too many of a high value will cause inflation unless the money is drained by Govt bonds.

      So anyone who claims a country like the US can run out of money is writing unbelievable nonsense (maybe to confuse people).

      The euro countries can of course as they have given away their most valuable asset. Their monetary sovereignty (google it). As can a company, state or individual etc

      But Aust and the US Govts are both monetary sovereign so can never run out of money.

      Don;t believe everything you read

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        Truthseeker

        RJ why don’t you look up what happened to the Weimar Republic when it tried to pay debts by printing money. How did that work out?

        According to you that should have solved the problem. Money represents value. If there is too much money and no enough underlying value, the whole system breaks down because money has less and less value until it becomes worthless and then you are back to bartering. Bonds are debt and require servicing. Too much debt and the servicing becomes too onerous and again you are heading for a system failure.

        Nothing about what you are proposing makes any sense.


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        RJ,

        Weimar Germany made a mess of their own Marks value.

        The Nightmare German Inflation

        EXCERPT:

        Introduction

        If history teaches anything, it is that government cannot be trusted to manage money. When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. (That is the situation in this country today.)

        Especially in an economic crisis or a war, the pressure to inflate becomes overwhelming. Any alternative may seem politically disastrous. Whether it be the Roman emperors repeatedly debasing their coinage, the French revolutionary government printing a flood of assignats, John Law flooding France with debased money, or the Continental Congress issuing money until it was literally “not worth a Continental,” the story is similar. A government in financial straits finds its easiest recourse is to issue more and more money until the money loses its value. The entire process is accompanied by a barrage of explanations, propaganda and new regulations which hide the true situation from the eyes of most people until they have lost all their savings. In World War I, Germany — like other governments — borrowed heavily to pay its war costs. This led to inflation, but not much more than in the U.S. during the same period. After the war there was a period of stability, but then the inflation resumed. By 1923, the wildest inflation in history was raging. Often prices doubled in a few hours. A wild stampede developed to buy goods and get rid of money. By late 1923 it took 200 billion marks buy a loaf of bread.


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    Tel

    J Edward Ketz formally conceded defeat a year ago.

    But kudos to the bankers! I and others have been fighting the shenanigans of these managers for some time, but we have lost. My hat is off to you. I wish you the best of luck as you resume your pillaging of the economy and as you line your pockets, regardless of your performance for the economy.

    http://accounting.smartpros.com/x71113.xml


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    Tel

    George Washington also explained the problem back in 2010:

    What’s the hole that is swallowing up the economy? The failure to follow the rule of law.

    The rule of law is what provides trust in our economy, which is essential for a stable economy.

    The rule of law is the basis for our social contract. Indeed, it is the basis for our submission to the power of the state.

    http://www.zerohedge.com/article/our-government-plumber-trying-fill-bathtub-pouring-more-and-more-water-without-plugging-drai


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    John Brookes

    How does (say) Alan Joyce get a $5m salary? Well, his employers, the shareholders, voted for it (97%).

    But who owns the shares? Well, given that we have compulsory superannuation, and that much of it is tied up in shares, it turns out that you and I own a lot of the shares. What’s that? You don’t remember voting on the Irish jerks salary? (Yes, I know he’s really Australian)

    So it turns out that your super fund probably voted for you. The CEO of your super fund would like to get paid $5m. If she votes to keep the salaries of the executives of public companies low, then she is effectively voting to keep her own salary down. Not going to happen.

    So we have a club of people, some talented and hardworking, some just rich, who’s self interest is served by overpaying other members of the club.

    Now what were the Occupy crowd protesting about again?


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      Madjak

      Do you mean the alan joyce that has had the kahunas to call an overly zealous bunch of unionists’ bluff to force a resolution to the negotiations before peoples xmas holidays are disrupted?

      Is that the man you speak of?

      I am sure that if Qantas hadn’t taken the action they did, that xmas this year would have been a game of roulette for travellers.

      Of course, there is allways the point that when a business has to resort to a lockout that the umpire -Fair work Australia- has probably failed abysmally in its duties, just as all other parties had.

      btw – does anyone have an update on the FWAs’ go slow investigation into those allegations against a certain ALP MPs creditcard problems?, or do we have to wait for charges to be laid?


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        John Brookes

        Madjak, it is not as simple as that. I talked to a bloke whose brother is a Qantas pilot. It seems Qantas has been bent of causing the dispute. He cited three actions by Qantas.

        Firstly they took away parking for staff. Secondly they took away staff lockers. Thirdly, they imposed a roster that the pilots perceive as dangerous.

        Of course these are all cost saving measures, so maybe it is just penny pinching, but it sounds more like Qantas is trying to provoke the unions to fight, with the goal of winning an industrial war and getting carte blanche to employ foreign workers.

        You may agree with this strategy, but its a bit rich to blame the unions for taking action Qantas tried to cause.


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      catamon

      If your interested in some background on on the most topical matter Mr Joyce has been involved in have a look at:

      http://www.aph.gov.au/hansard/senate/dailys/ds230811.pdf

      (19:37) pg 5259

      (and no, its not a HUGE PDF).

      There is a lot going on with Qantas, and its only in a minor way related to IR. More to do with the board shifting wanting to shift assets I think. And 2 guesses who Mt Joyce worked for prior to Qantas??


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      Llew Jones

      Alan Joyce stands in contrast to the hopeless ex union officials vainly trying to run the affairs of our country.

      These one time union officials with more or less irrelevant training in law and economics obviously have no understanding of how our climate system functions and even less, it seems, of how a business operates and remains viable.

      Whatever we think of Joyce’s tactics it is important to note that he knew that this clueless government would be forced to act quickly when pressure of this sort was applied (that it could not see how the union tactics were destructive of the longer term viability of Qantas and thus act much earlier is an indication that it is completely out of touch with this sort of issue as it is with most others).

      Here’s a little resume of Joyce’s academic background and gives some indication of why he was headhunted for successively greater leadership responsibilities in several airlines. Contrast that academic and his well known work experience background with the training of incompetent fools like Combet and Conroy.

      “Joyce was born and raised in Tallaght, now a suburb of Dublin but a separate village at the time of his birth. Joyce’s mother was a cleaner and his father worked in a tobacco factory. Joyce and his three siblings attended university. An honours maths and physics student at Trinity College.. Joyce graduated with Honours, receiving a Bachelor of Science degree in Applied Science (Physics and Mathematics) and a Master of Science degree in Management Science. He is a Fellow of the Royal Aeronautical Society.[4]” wiki


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      rukidding

      It is an interesting topic.It would seem that Qantas/Jetstar want to pay third world wages to their work force but expect first world salaries for their executives.It would be interesting to see how Mr Joyce’s salary matches up against the salaries of say Singapore Airlines or one of the Chinese carriers.So I wonder how many people here who support Mr Joyce would like it if their employer decided to replace them with cheaper asian labour.I would remind people that we import Pacific Island labour already to pick our fruit because Australians won’t work for the wages offered.What might happen if a Chinese mining company wants to bring in workers because they can’t get enough workers here for just a short term contract you understand.
      I would think there is not a wage earning job in Australia that could not be done much cheaper if only they could use third world labour.
      Be careful what you wish for.


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      brc

      Funny how you lefties are all for foreigners until they become CEOs or dare to do the same job for less money. Then it’s all ‘irish jerks’ and ‘cheap asian labor’.

      Hypocrisy, the one true identifying trait of someone who falls to the left.

      If you don’t want a superannuation company voting on your behalf run your own fund. If you are in a fund you’re paying someone to make the smart decisions for you. And the smart decision is to back a CEO who is going to make the airline more profitable. That’s why the funds and major shareholders did.

      As for the pay packet – his decisions will probably save the airline $100 million over the next 12 months. I think thats worth a couple of million a year, don’t you?

      It’s funny how people never complain about not being able to bowl as well as Shane Warne, or to act as well as Jack Nicholson, but complain that it’s somehow not fair they aren’t as good as making money as a top CEO.

      I’m sure Alan Joyce has got his skeletons in the closet – you don’t make it to the top mistake free – but to me he just earnt his salary by being the first business leader in Australia in some time to grow a pair and stand up to the unions.

      Militant unionism only works when you have a government protected monopoly in which the owners and the unionists can fight over the spoils from a suffering public. In a free and open market it’s not workable. In the airline market where half the international competitors are government backed, it’s not remotely workable. Any time you see a unionist arguing for more pay and priveleges, you know somewhere the public is suffereing for it.


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        Tristan

        Funny how you lefties are all for foreigners until they become CEOs or dare to do the same job for less money.

        Hypocrisy, the one true identifying trait of someone who falls to the left.

        Funny how people can be so partisan that their ability to evaluate evidence contrary to their opinions simply disappears.


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          Winston

          Ironic isn’t it, that the left are so pro-globalisation, but are the first to bleat when companies like Qantas want to make economic decisions for their future economic viability and profit by outsourcing labour to the 3rd world. Then you wish to denigrate Qantas’ CEO for making these decisions that people like YOU have forced them to entertain. “Be careful what you wish for, you just might get it” is the quote that comes to mind. “You reap what you sow” would be another.

          Why are you surprised, and why are you only now defending the workers in Oz after you have effectively white-anted them? So, now they strike in a concerted fashion (for which I have some sympathy), the company loses buckets of money, making the financial imperative to move overseas even more compelling, until the cycle turns fully to the point that they all lose their jobs or the company goes under or both. Brilliant! Well played, Tristan.

          You really need to take those blinkers off and realise that if you like the idea of a global village where we are all interconnected financially and politically, that this is the price to pay that goes with the territory. You can’t have it both ways. Work it out. You can’t have workers on 1st world wages, competing on a level playing field with businesses paying 3rd world wages and still remain competitive or viable. Something has to give, especially in aviation which was fatally wounded by terrorism/security issues and increasingly by high fuel costs. It’s actually a miracle that airlines can survive at all in the market as it is, but that may not go on indefinitely without many falling off the perch. Hopefully Qantas won’t be one of them, but I wouldn’t be too sure about that.


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          Tristan

          What are you on about Winston, I have said nothing about Qantas management, Qantas workers or globalisation.


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            Winston

            My apologies, I thought you were responding with sarcasm to brc’s comment about Qantas situation. If not, that makes your remark above about conservative bias rather quizzical then. What was the comment about, if not about Qantas and the apportionment of blame in the current impasse?


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            Tristan

            I was on about his blanket sentiments of those on the left side of politics


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            Winston

            Fair enough,
            Probably over read what you were inferring in your comment. iPad tends to narrow the comment focus too much, getting wrong end of the stick. I’d be interested in hearing what you feel about the pros and cons of globalization,and how you think it pertains to viability of businesses like Qantas, trying to compete in a non-level playing field.
            Regards,
            Winston


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            Tristan

            No worries,

            As for the pros and cons of globalisation and how they pertain to viability of Qantas…Complicated question!

            I would say that ‘globalization’ is bad for Qantas. It seems to me that the only thing Qantas has going for it is its brand. They seem to have high operating costs for the level of service they offer. Given that, Qantas probably depends on a fairly high level of trade protection. Whether it is good or bad to protect Qantas is something I don’t have the knowledge to answer.


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            Winston

            Thanks for your considered response, Tristan
            Seems to me that protectionism has an unwarranted bad name. It seems many believe it should be all or nothing. The shift to globalisation, transnationalism, whatever you may call it, seems a bit like Pandora’s box, once opened the laws of unintended consequences take over and undermine perfectly good businesses that flourished under the minor protection of sovereign countries and national business models were perfectly adequate to maintain profitability and protect workers conditions at the same time. Unions could be part of the process and if balanced correctly against business interests where one was not too dominant over the other (take the waterfront as an example of imbalance in favour of excessive union control), the whole thing remained very stable. Now, in directly competing on a global stage, our good business models perfectly adapted to our political system have fallen foul of particularly Asian work practices, with poor wages, terrible work conditions where people are expendable, often little regard for safety or proper procedures in quality control or maintenance, etc, etc. So not surprisingly, we can’t compete and workers lose their jobs hand over fist, or conditions are eroded because they are too “inefficient” under this imbalanced system. Yet, it is conservatives in general who seem to be advocates of at least some degree of sovereign protection of industries from this logical consequence of the global experiment we are currently involved in. I’m not saying we can go back to fully protected industries, but perhaps open slather isn’t the right thing either.


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        Tel

        Well the SMH claims that Qantas lost $110 million to this ongoing dispute, so if Joyce only saves $100 million, we won’t be worth much as a CEO. Hard to say how much Qantas have lost in terms of reputation with the customers, maybe Virgin Airlines should send Joyce a cheque for $5M.

        Looks like his strategy was to bully Julia Gillard into stepping in and getting involved, but she’s a tough lady and she has a lot of personal investment in seeing FWA operate as advertised. I don’t think Joyce’s brinkmanship strategy bought him much, all he gets now is more rounds of negotiations. If Qantas really are angling to employ foreign pilots, I doubt FWA are going to offer that… but ultimately we will see I suppose.

        Thing about CEO’s is they are playing with other people’s money, so sure they deserve a bonus when they do a good job, I have no problem with that. Problem is, what happens when they do a bad job? You only know after the fact where it ended up, so what then?

        Sports heroes are typically paid more for a win than a lose, and if they lose a few times running they will get the boot pretty quick from the selectors. We have seen quite a number of cases of executive staff doing very well while their corporations crash underneath them — witness the British and US banking industries, both getting massive handouts from the taxpayer and still paying generous bonuses. It’s simply rewarding failure.

        As far as I’m concerned, Qantas and the unions should be left alone to sort it out between them, the government has no business getting involved in a private matter. It’s a simple case of mutually assured destruction, and there are plenty of airlines out there to pick up the slack.


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          brc

          My numbers were made up on the spot, as I noted. So trying to tie them into actual amounts is quite poor arguing on your part.

          Joyces strategy was to end the striking and get the unions to the bargaining table. He has achieved this. The unions and the left-leaning media are trying to spin it as ‘Qantas forced to fly again’ when in reality Qantas got exactly what it wanted.

          All the while the unions work against managment, management will work out ways to sideline them and eventually turf them out. I can foresee the Qantas brand being shrunk down to a fraction of it’s former size while other Qantas sub-brands expand further, all with competitive labour.

          Julia Gillard is not a tough lady. This is the woman who negotiated all-expenses paid immigration for 4000 refugees and who will not send one back in return. This is the woman who negotiated a greens alliance and formal meetings with the greens leader and MP in return for a vote that was never going to the coalition anyway, and in return was forced to break a solemn election promise that will cost her not only her leadership, but cements her place in history as an ineffective failure. This is the woman who allowed a faction of her party to trample her on the live cattle exports and destroy a working industry, for no obvious benefit to anyone. This is a woman who has risen far above her station through affirmative action, and who will actually set back the cause of top female politicians through being out of her depth.

          It’s a lovely meme, this ‘Gillard is a tough negotiator’ meme. It’s a pity there is no actual evidence to back up the claim.


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    If you want an education in how the IMF works from start to finish then follow the Egyptian story. The IMF’s honeymoon rate is seen as more attractive than the local financial institutions. Watch Alexandria’s descent into hell over the next few years. It’s going to get messy.

    If you want to look at the set-up, then pay attention to the Ugandan situation. The grift will go down after the upcoming Uganda/Congo US war. The invasion has already begun. Echos of Vietnam…

    Little known factoid: the Libyan invasion was prompted by Gaddafi’s push to introduce the gold standard, the Dinar, for a regional currency which would have left the west unable to fuel their economies on account of having no gold to back their fiat purchase of crude.

    Good to see the trolls on this forum have largely run out of stream.


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      Tim

      Saddam Hussein in 2000 insisted Iraq’s oil be sold for euros – and he got his payback. That leaves Iran, and the sabre’s are rattling.


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      Andrew McRae

      The bizarre thing about the word “factoid” is that the 21st century meaning of the word is itself a factoid by the original 1973 definition, and the original meaning of the word is a factoid under the new definition!

      This is not a problem for anyone born yesterday.

      Actually, since a language is defined by its speakers and not by its dictionary, clinging to the old (opposite) meaning of the word is about as useful as pretending that the word gay still means happy.

      I for one welcome our new trivial overlords.


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    cohenite

    I would ask anyone who is interested in embarrassing that pompous twat, Chomsky, to register and vote for the question currently coming second which asks:

    “How on earth could any one with any sense take you seriously?”

    If this question gets the most votes it will be put to Chomsky; see here:

    http://oursay.org/contours-of-global-order


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    theRealUniverse

    Canadian PM tells the CO2 tax to FO (my interpretation)
    http://www.ozclimatesense.com/2011/10/canadian-pm-shoots-down-case-for-carbon.html
    Why didnt it happen here! AUS is now an international laughing stock and globalist stooge money sink.


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    Please piss off, RJ. Sovereign countries may not run out of money they print themselves but at any given time there is only a certain amount of VALUE in the country. Fiat currencies are backed by the total of goods and services produced. This is called “money” at some rate of exchange. Print more money and the VALUE doesn’t increase so the “money” buys fewer goods and services per monetary unit.
    End state, Weimar Germany. My mother was there. Or Zimbabwe, you evil prick.


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      Mark D.

      Mike Borgelt (39) referring to RJ @ 31.1

      Mike, I couldn’t agree with you more emphatically! RJ is back with more currency hocus pocus. No amount of reasoning works with RJ he/she doesn’t understand the meaning of VALUE. (you could say he/she has NO value)


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    kuhnkat

    Madjak,

    you DO realize that Cheney hasn’t been in office with his boss Bush for over 2 years??? Try and deal with the reality of Socialists or worse doing even WORSE things to us here in the US than Bush and Cheney did won’t you my good man??


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      MadJak

      Kuhnkat,

      I call it as I see it. The current administration inherited 30+ years of problems with many of them coming to a head, and somehow, they managed to make it that little bit worse by stalling for time and fumbling. Just like the last lot, and the lot before that and the lot before that. To blame everything on the current or previous administration is utter hubris.

      The difference now is that just making things a little bit worse (just like the last lot) has a much more visible and catastrophic effect.

      And it’s not just the US suffering from this – look at europe at the moment – they’ve progressively bankrupted themselves in a similar fashion.


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        KuhnKat

        madjak,

        you should be pointing out that the current regimes have been damaging our businesses with over regulation and wasting money on green fantasies that have substantially raised the cost of doing business for everyone.

        You should point out that the housing bubble in the US had its roots as far back as the Reagan administration and that the Democrats were screaming at those trying to reign Frannie and Freddie, the largest producers of junk mortgages for the bundled products of Wallstreet, in that they were racists who didn’t want poor blacks and hispanics to have homes. You should go back to Johnson and his handouts that continued the normalization of people NOT working. you should go back to FDR who implemented the worst pile of Socialist and keynesian trash in the history of our nation and left us with Social Security, among many other anti freedom and business anchors, the ultimate Ponzi Scheme which was left out so it could be easily looted. we can go back to Woodrow Wilson who oversaw the Fed and Income Taxes and Theodore Roosevelt who started locking away large chunks of our country so that it could not be used. You get the idea?? Big gubmint policies have been the bane of the civilized world for a lot longer than 30 years and until people wean themselves away from nanny gubmint it will only get WORSE!!!!! As you say, trying to blame it ALL on the current regime is wrong. Of course, the current regime is fully in favor of ALL the past mistakes and is taking absolutely NO reasonable steps to address any of the problems. It is only making it WORSE by every action it takes!!! FDR is the only previous President we had that was anywhere close to the wrongheaded stupidity of Obama and fellow travellers.

        If you are calling it as you see it you need some really big binoculars at a minimum.


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    Kevin Moore

    MAKING THE COMMONWEALTH A BANKERS’ BANK

    Keynote address by Clyde Cameron to the Victorian Country Conference of the amalgamated Association made up of the former Australian Telecom Employees’ Association and Australian Telephone & Phonogram Officers’ Association held at the Clyde Cameron College on 28 April 1989.

    http://www.johnston-independent.com/privatisation.html


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      Andrew McRae

      The great thing about history is that we can dip into it and pick out the parts we like.

      Before television, election campaigns were run for a tiny fraction of today’s costs. In 1947, while I was still the State President of the Labor Party, the total cost of the whole State election campaign was £1,100. In earlier elections it was even less. But every single penny of those costs was donated by our affiliated unions.

      No surprises.

      Does anyone really believe that Alan Bond and his rich mates kick into Labor Party funds because they believe in our Socialist Objective? Of course they don’t! They do it because they know that he who pays the piper can call the tune.

      At least he’s honest enough to point out the corruption of both sides.

      So it is ironic that when the ALP today point out Howard was in favour of an ETS as though this is some sort of free market Liberal blessing, they are effectively pointing out that Howard sold out to the banks as much as Gillard.

      Those who are part of the plot to hand over these public assets to private monopolists will use every device and word trickery they can think of to make it easier for the true owners of these public assets to forget that they are the common heritage of every man, woman and child.

      But officer! You shouldn’t arrest the burglar of my house, he’s a free man!

      But what I have to say about the Commonwealth Bank applies with equal force and relevance to Telecom, AUSSAT, the Federal Airports Corporation, Australian Airlines, Australian Industry Development Corporation, Medibank Private, Australian Shipping Commission, OTC, Qantas, Pipeline Authority, Snowy Mountains Engineering Authority, Commonwealth Serum Laboratories, etc., etc.

      Can you imagine how expensive mobile internet access would be if Telecom had never been privatised?

      Anyone else notice that the cost of domestic flights dropped dramatically after privatisation?

      As for CSL, well after they released 700,000 doses of polio vaccine infected with Simian Virus 40 into our population in 1962 possibly leading to Australia having the highest incidence of mesothelioma in the world, who wouldn’t want to part company with them? It is much better that CSL was privatised in 1994 because history shows no dead person has ever successfully sued* the government for malpractice! ;)

      ____

      (* = But to prevent even dead people from suing CSL “On 23 December 1993, CSL and the Commonwealth entered into formal agreements which provided indemnities for claims arising from the use of some CSL products.” Like monkey cancer maybe??)


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        kuhnkat

        Andrew,

        I would agree with most of your post. The one exception is the assumption that costs would go up for telecom if there wasn’t gubmint regulation.

        Here in the US AT&T gained a monopoly on phone service. Many people were unhappy about this and went to the public claiming that AT&T should be broken up so the public’s interest could be protected. This was eventually done. The result has been a steady increase in telecomm costs of all types that are regulated. There was NEVER any decrease in user costs and gubmint has added their own multiplicity of taxes and fees onto this inflated cost, not to mention delays in implementing new technology due to the regulators.

        We were sold a bill of goods. AT&T was actually a reasonable company operating in its customers interests, which is how it became a monopoly in the first place. The only people who profited from the break-up was the friends of the Politicians who got to gain pieces of the pie and the politicians paid off by them for promoting this. The separate phone comapnies made MORE than before the breakup. AT&T was, and still is, one of the innovators spending large amounts of money on R&D.

        Earlier in our history there were the Train companies. The worst excesses by them happened AFTER gubmint became involved and started regulating them. The land grabs and manipulations destroying people to push the Trans Continental Railroad were all in coordination with the gubmint.

        Current huge corporations and especially the banks and mortgages are ALL heavily regulated. The instruments that caused the financial collapse of the housing market were APPROVED by regulators. The insane regulations requiring lending to people without necessary income and on property that should not have been mortgaged were REQUIRED by gubmint. The incest and corruption between gubmint and corporations is the problem, not independent free enterprise.

        The gubmint is NOT here to help anyone but themselves and those who pay them for their COLLUSION!! It is not a solution. It is the problem.


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    Kevin Moore

    http://www.freestatevoice.com.au/finance/item/690-what-a-government-can-do-with-its-own-bank-the-remarkable-model-of-the-commonwealth-bank-of-australia

    Harnessing the Secret Power of Banking for the Public Good

    “…..The Commonwealth Bank was able to achieve so much with so little because its first Governor, Denison Miller, and its first and most ardent proponent, King O’Malley, had both been bankers themselves and knew the secret of banking: that banks create the “money” they lend simply by writing accounting entries into the deposit accounts of borrowers.

    This banking secret was confirmed by a number of early banking insiders. In a 1998 paper titled “Manufacturing Money,” Australian economist Mike Mansfield quoted the Rt. Hon. Reginald McKenna, former Chancellor of the Exchequer, who told shareholders of the Midland Bank on January 25, 1924, “I am afraid the ordinary citizen will not like to be told that the banks can, and do, create and destroy money. The amount of money in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases. We know how this is effected. Every loan, overdraft or bank purchase creates a deposit, and every repayment of a loan, overdraft or bank sale destroys a deposit.”

    Dr. Coombs, former Governor of the Reserve Bank of Australia, said in an address at Queensland University on September 15, 1954, “[W]hen money is lent by a bank it passes into the hands of the person who borrows it without anybody having less. Whenever a bank lends money there is therefore, an increase in the total amount of money available.”

    Ralph Hawtrey, Assistant Under Secretary to the British Treasury in the 1930s, wrote in Trade Depression and the Way Out, “When a bank lends, it creates money out of nothing.” In his book The Art of Central Banking, Hawtrey expanded on this statement, writing, “When a bank lends, it creates credit. Against the advance which it enters amongst its assets, there is a deposit entered in its liabilities. But other lenders have not the mystical power of creating the means of payment out of nothing. What they lend must be money that they have acquired through their economic activities.”

    Banks can do what no one else can: “create the means of payment out of nothing.” The Commonwealth Bank’s far-sighted founders harnessed this guarded banking secret to serve the public interest….”


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    Wayne, s. Job

    I do not know how to breach a new subject on your site Joanna.

    The Japanese launched a satellite in 2009 to measure the CO2 levels over the entire Earth.

    They have released their findings, and it seems that developed countries are nett CO2 sinks, and the undeveloped countries are the CO2 pumps.

    That puts paid to the IPCC guilt trip and BS of of global warming being the fault of the West.

    Now that it is cooling we will no doubt cop the blame for that.


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      Dave

      Wayne, s. Job

      developed countries are nett CO2 sinks, and the undeveloped countries are the CO2 pumps.

      Development will always produce an awareness of the environment, and as a result of better use of land in general – the talk of capitalism causing global warming is garbage. Development in any region combats droughts through fossil fuel powered production allowing better irrigation conditions otherwise unavailable.

      The example of an old Queenslander with lawns and trees is considered by the GREENS and Dept of Climate Change BAD, but the triple insulated concrete 10 STAR rated new minimal dwelling is terrific. WRONG.
      The CO2 sink of the old QLD house lawn, produces enough O2 (mowed couch) each day to provide a family of 6 the O2 required for life. (Not to mention the trees and cooling effects).

      But now the costs are increasing for water and power (WHY?) – most are foregoing the green garden – it won’t be long before we are 3rd world and a CO2 pump.


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      Not at all surprising Wayne. 96% of all CO2 produced is of natural origin so that produced by industrial society is overwhelmed by the natural sources. These results say more about natural sources than anything else.


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    Kevin Moore

    Wall St. and other “Occupy” Protests Should Re-Brand as “Anti-Oligarchy”
    By Kevin Boyle http://kevboyle.blogspot.com/

    Some of the biggest men in the United States are afraid of something. They know there is a power somewhere, so organised, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breath when they speak in condemnation of it. – President Woodrow Wilson

    The “Occupy” protests and other demonstrations across the US and Europe are reported as being “anti-capitalist”, “anti-banker”, “anti-EU” or simply “anti-government”.

    But these labels will just not do.

    The oligarchs who bring us our successive financial crises and wars will be getting rid of capitalism pretty soon.

    Unfortunately they have no intention of disappearing with it.

    We know that the entire financial system is going to collapse in fairly short order.

    It must.

    The ‘more-debt’ solution to irresolvable debt problems is a stalling strategy and everybody knows it.

    A real solution to the nightmare that the financial oligarchs have created for us would end their system, so that ain’t going to happen…….just yet.

    First we are going to endure crises like we have never seen before.

    Currencies will collapse.

    There will be a major and very terrible war, a primary purpose of which will be to make survivors so desperate that they will be glad to accept anything on offer that delivers peace.

    When it is over capitalism will go…….but the same people will remain in charge.

    Therefore there is little point in branding oneself an ‘anti-capitalist’ (because Messrs. Rothschild and Rockefeller will soon be making common cause with you)

    When the time comes we will be expected not to notice that the new, much better, much fairer system on offer will continue to be run by the same banking oligarchy that caused all the problems and nearly destroyed planet earth in the first place.

    This trajectory is well laid out by Richard North in a recent article here.

    We can expect a new Godless tyranny. A ‘humanitarian’ tyranny.

    So let us be clear:

    The system we call ‘democracy’ is really government by agents representing the interests of a financial oligarchy.

    ‘Capitalism’ is government by oligarchy.

    (Wall-Street funded) Soviet ‘Communism’ was government by a tyrannical oligarchy.

    All these disastrous systems were disasters because they were structurally designed to represented the interests of a ruling elite rather than the genuine interests of ordinary people.

    So,

    WHEN THE NEXT OLIGARCHICAL SYSTEM IS OFFERED TO US, ALL HUMANITY MUST RECOGNISE IT FOR WHAT IT IS AND REJECT IT.

    TOTALLY.

    What protesters need to set their minds and hearts against is the continuing dominating influence of a financial juggernaut that is, at its core, led by a small elite of extraordinarily powerful, corrupt and self-serving oligarchs.

    Think it through, be clear about this and explain to everybody you meet.

    Our system is not democratic, it is oligarchical and…..

    WE ARE, FIRST AND FOREMOST, ANTI-OLIGARCHY.

    Film on Oligarchy:-

    http://www.sovereignindependent,com/?p=29098


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    Kevin Moore

    Government Borrowing

    Governments borrow in much the same way as individuals and corporations. In the United States, the Treasury Department gives the banksters at the Federal Reserve their promissory notes, i.e., government bonds. The Fed lodges these valuable documents as assets and, in exchange, gives the government credit. The government now owes the Fed, a private corporation, a whopping pile of money plus interest which must be paid by the long suffering U.S. taxpayer.

    This is another crazy situation where the borrower is actually the lender. It is utter madness to give money to a private corporation like the Fed who then returns it to the government as a debt and then has the gall to demand that it be repaid with interest. Wright Patman, who served as chairman of the House of Representatives Committee on Banking and Currency for 40 years until the time of his death in 1976, tried for 20 years to repeal the Federal Reserve Banking Act of 1913. Patman once said in Congress:

    “When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money…

    “I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue.”

    A predecessor of Patman’s, Louis McFadden, was also chairman of the House Committee on Banking and Currency, from 1920 to 1931. McFadden used stronger language than Patman when talking about the Federal Reserve. He said:

    “We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the nation’s debt. The depredations and iniquities of the Fed has cost enough money to pay the national debt several times over.”

    McFadden once tried to impeach the Secretary of the Treasury, two assistant Secretaries of the Treasury, and the Board of Governors of the Federal Reserve. Although a banker himself, he was a thorn in the side of the Fed and spoke out about their criminality at every opportunity. McFadden died in mysterious circumstances in 1936 after surviving two previous attempts on his life.


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    Crakar24

    Well it is all starting to unravel now, the latest Greek bailout deal is being put to the voters (dow falls 300 pts)

    The Greek PM has sacked all military chiefs

    http://www.larouchepac.com/node/20120

    I am going to take a guess here that Papandreou is going to kick out the opposition, declare Greece to be independent of the EU and tell the international bankers to go shove that 11th marble up their sphincters.


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      Mark D.

      Do you think he was stopping a coup attempt? This could be rather interesting…..

      I don’t know how much glue is left in the EU system. On the other hand I’d like the USD/Euro to get back to even.


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      Kevin Moore

      As Crakar24 points out, if you borrow a dollar it is impossible to payback $1 and 10 cents because the 10 cents is never issued into existence. It is a non repayable loan.

      Banks and loan sharks are on a par – parasites. They live off peoples adversity. You enter the bank promising your labour and possessions – they give you credit with their promise to pay which they create out of thin air. Your promise of labour and your possessions created the money. You actually sold your signature. Your IOU is then onsold to make more money for the fraudsters.


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        Mark D.

        Kevin Moore, I don’t know what you are on about. You can’t borrow money unless your creditor believes you can pay the loan back AND the interest. Your scenario is not logical.

        Banks live off of peoples willingness to live ahead of their means, vanity, and self indulgence.


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    [...] The Atlantic — “the finance industry has effectively captured our … BEST project rescues us from thousands of lying global thermometers ». « BEST statistics … A former chief economist of the International Monetary Fund, wrote in May 2009 about how depressingly similar the US problems are to emerging economies he has worked with. …… surely this explains why we are in such a globaln financial crisis, and why we have an ABSOLUTE DUTY to prevent the trading of the air we breathe, which surely must be the financial instrument of last resort. … http://joannenova.com.au/ — Sat, 29 Oct 2011 10:13:23 -0700 [...]


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