CHINA & DEMOCRACY
& the GFC.
From a cynic's point of view, any
government is a band of thieves or
brigands who take over the country by force of arms and extract ongoing
tribute (aka taxes) from the people on threat of imprisonment.
that tribute to oppress the citizens and protect themselves
developed to manage the business of
changing that government. Perhaps
the least violent is called "democracy" as practiced in Western Europe
and some of it's ex-colonies. Most everywhere else in the world
they use a system of revolution. In China this happens when the
gang in charge lose "the mandate of heaven" which means hopeless
incompetence or really bad luck (depending on your point of
view). Most political pundits agree that the only time that a
ruthless dictator has a problem is when the people are starved.
Everyone from Salman Rushdie to the
USA is criticizing China over human rights. The Chinese do seem
to be rather sensitive at the moment. After Tienanmen Square, the
gang in charge stimulated the economy. They thought they had hit
the perfect method. Print Yuan to buy US dollars which made
Chinese goods cheap and allowed the Chinese economy to expand sales to
the USA. Those sales provided work for the masses and produced a
flood of dollars to invest back in US treasury bonds and pay for raw
materials from Australia. Unfortunately they trod on a few toes
in the process.
Some years earlier Clinton had made the stupendous
mistake of reversing a law made to end the great (1929)
allowed savings (commerce) banks to invest money on risky
assets. The Wall street bankers thought Christmas had
come in perpetuity. All this cheap Chinese money flowing in, and
could now lend it out on real estate guaranteed by Fanny May (and
Freddie Mack). Of course then the bubble burst and real estate
wasn't worth so much any more.
So the US had a problem. Well actually two problems. One
was a swag of insolvent saving banks. Those banks are a crucial
part of the real economy, and cannot be allowed to go bust. The
investment banks are important, but if they go bust it is not
necessarily going to lose an election. The
other problem was a seemingly unstoppable inflow of Chinese Yuan.
the banks did not solve the Chinese investment issue. So they
decided to kill two birds with one stone. It is called
Quantitative Easement, and means printing money to buy federal debt and
save those banks. Of course that is inflationary. So that
means that buying US treasuries is a losing proposition.
same in Australia. Except here the government allowed the
Federally owned Commonwealth savings bank (started during the
depression) to become an investment trading bank, then sold it.
Our flood of
investment money came not from the Chinese, but from Keating's laws
requiring superannuation savings. Those savings
wound up invested either in the share market bubble or in our real
estate bubble, which is several orders of magnitude worse that the
bubble that did exist in the USA.
So that means the problem is back to the Chinese. They are
getting imported inflation, and the value of their US bonds holdings is
diminishing. Of course much of what is happening is speculative
inference, because the only accurate data we have is exchange rates and
I am reminded of one of my favourite Marvel characters. The one
who says "You don't want to make me angry". Because when he gets
angry, the Hulk turns into an unstoppable and unthinking monster.
We can hope that the Chinese gang in charge manages to restrain their
people's anger. I do not know whether the Gadaffi method would
work in China. The Mubarak method is not looking like the
universal panacea at the moment. Perhaps they should try a
reverse takeover with Taiwan?
It seems that a world resource "correction" is about
due. You might wonder where that leaves Australian
investors. Buying gold is not the answer. After all,
Australia is a major gold producer. Our unions have a
stranglehold on key transport, mining, building, education and
government (wages & other infrastructure) costs. Fortunately
for Australian consumers, manufacturing is not a union bailiwick any
more. This means that only food, energy and accommodation costs
vary to Australian consumers. So the only certain investment game
in town is betting on exchange rates.
One result of the coming world economic "correction" (aka "depression")
will be a massive swing by governments around the world to political
(economic) conservatism. The
unions around the world have been too greedy, and John Howard's "work
choices" is about
to become the model for industrial anti-union legislation around the
I predict that the USA will ride out the recession with minimal
problems. Quantitative Easing is restoring US industry to be more
competitive with imports. It will produce some apparent
inflation, but inflation data published has not included an assessment
of the falling cost of real estate. If real estate prices were
included in inflationary data I suspect that the US would still be in a
deflationary spiral. I suggest that inflationary data should be
modified to include the changing value of real estate. Using that
data, QE should be continued until inflation reaches long term 2%-3%
So if you are looking to a career in politics, I suggest that you join
a conservative party.
Last night I was in my favourite midnight coffee house, and managed to
strike up a conversation with five Muslim youths. Although all
were Australian born, four of them identified as Turks, one as
Lebanese. I joked to the Turks that they had been the Muslim
world Power for the last thousand years. They amended it to "last eight hundred years".
They were brimful of righteousness for Muslim causes, indignant that
the media were painting all Muslims as terrorists, looking for an
argument about Jews. They wanted to know my religion, and were
happy enough with my answer, "born to Presbyterians, now an agnostic".
To them Israel was in the wrong. It was terrorism. So was
the USA. I said to me terrorism was not national armies, but
people hiding among Gaza families to shoot rockets at Israeli
families. Then calling the Israeli army terrorists because they
shot back and killed Gaza families.
They were hesitantly for the revolutionaries in Libya and Syria.
Not enthusiastically, but like clams. I showed them a cartoon in
the Australian. It quoted the Koran "Take not Life, which God hath made sacred,
Except by way of Justice and Law", and showed a picture of the
Syrian dictator in a tank killing his people, and adding to the Koranic
quote: "..and political self
I explained to them what I had against the Muslim religion. When
Muslims rule, they charge Christians an extra tax for keeping them
safe. I explained that I would be unhappy living in a sectarian
state that controlled my life according to a religious law that I did
not want. They appeared to sympathize, perhaps because that is
the situation they are in themselves.
In further discussion they revealed that they felt that 9/11 was a CIA
plot. The way the twin towers fell, they claimed, indicated a
planned demolition, with floors collapsing like an accordion. I
claimed status as an engineer, and stated that no, the heat melted the
steel structure on the bombed floor, and the shock when that floor
collapsed and the upper part of the building fell caused a chain
reaction as the upper part of the building impacted the lower floors in
succession. They claimed that no parts of any plane had been
found at the Pentagon site. They live in Australia, which is as
close as you get to an American style democracy. They held
skilled jobs (Computer tech, Pharmacist), looked weird, were bearded,
but spoke fluent Australian.
I wonder. Would they have revealed
any news of terrorism that came to their notice? If they knew of
the location of a wanted Muslim terrorist, would they have immediately
disclosed his location to the authorities?
If they had known where Bin Laden was, would they have revealed that
information to our authorities? Because
no, then they were
after the above conversation there were reports of Bin Laden's
death. I wonder now how those youths would have responded to Bin
I must say the reports of Osama
It is the day following the raid and
Drudge and the US media are already defending the scenario that OBL is
alive. On the ground that he was not still at large.
- There seems to be confusion about
what were the rules of engagement. Some reports were that there
no intention to capture Bin Laden alive. Others that he was
wanted alive. His death occurred because (presumably) he was
resisting arrest (by using a wife/concubine as a
human shield and shooting back?)
- It appears that, apart from the
SEALS present, there
are no surviving witnesses to the death of OBL. There is no
"corpse" that can be
investigated by independent witnesses. We have to rely on the
word of the president of the USA. There are precedents where a US
president was lied to by subordinates. There are precedents where
the president of the USA lied to the people. The reason that OBL
was buried at sea, allegedly to
stop the site of his burial from becoming the centre of a shrine, is
Let's imagine that we are CIA
management and speculate on what would be our objectives and
procedures if we were the planner of the operation.
Our primary objective would be to take OBL
alive, and drain him of intelligence on associates. To do this we
highly trained SEALS to do the job. These guys are better than
"The Terminator". Put a slug through the eye of a mouse at 50
yards. Not one SEAL was killed. Reports are saying
"22 captured or killed". It does not appear that the SEALS were
under pressure. I just do not believe
that those SEALS could not have captured OBL alive.
CIA intelligence bosses, we
would prefer that everybody thought he was dead. For the
- If his followers thought him dead
then he couldn't betray them, so they wouldn't take special precautions
- If his followers thought him dead there
take hostages for his release.
- If he was known to be alive, all
sorts of people (At the UN, in the US etc.) would clamor to stop him
being questioned except
Of course all of the above is quite
speculative. But I will bet I am not the only person who notices
the breaks in the chains of evidence. And those breaks lead to a
potential narrative that is a thousand times more believable than that
the twin towers were destroyed by a CIA plot.
Unfortunately there is no way we (CIA) can
provide evidence that OBL was actually killed. We cannot provide
a corpse that can be tested for DNA, (because he is alive? And
maybe in Fort Knox?). We cannot provide a witness to his
death (because he isn't dead?). Unfortunately we had to kill one
his wives/concubines. If she hadn't been killed we would have had
to take her with us, and that was not a plausible scenario. We
cannot even provide (faked?) photographs because sooner
or later technology would improve and would be able to prove that they
to try to divert attention from the "OBL is alive and captured"
scenario. Hence burial at sea. We must lie to the
president, or tell the president to lie to the US people ?) and the
I am totally surprised that the authorities did not
anticipate such speculation. Keeping the corpse available for
inspection would have been an extremely good idea. What idiot
proposed "burial at sea".
Or was it just that there was no alternative?
The narrative has evolved. "Photographs exist", and "Witnesses
(e.g. wives) exist" and "CCTV cameras on the marines' helmets captured
the action". None of this is incontrovertible evidence until it
has been subject to detailed scrutiny by an impartial third
party. Why is there always a reason that irrefutable evidence
cannot be provided?
The other day Drudgereport referenced a media report that Alaskan
oilfields are producing less output. The story continued that the
NW shelf pipeline might have to close because lower output slows the
flow through the pipeline, which means the oil has more time to get
cold and become more viscous. Probably the engineer who was
briefing the reporter did not want to overload his comprehension.
Two possible solutions spring to mind. (1) Increase well productivity
or (2) Design and install parasitic heaters along the pipeline.
I am an avid reader of fiction, but the latest exploit of Dominique
Strauss-Kahn, French Presidential contender and IMF president presents
a story that would never sell as a believable plot.
Apparently that gentleman exited from his
shower to be confronted by an hotel maid who believed that the room was
unoccupied. Whereupon he pounced on and sexually assaulted the
terrified maid. She fled the room, and so apparently did he,
being caught as he boarded a flight to Paris, sans everything but the
clothes he wore.
To me it is incredible that such an attack would be made by a person in
such high office. Let us imagine that you, gentle reader, are a
plotter, determined to discredit someone who is known for his sexual
exploits. How would you go about discrediting him?
Let us suppose that:
With those minimal requirements you could cause this
incident. N'est-ce pas?
- Somehow you come to hear that he has ordered a prostitute be
sent to his room, perhaps dressed in a maid's uniform.
- You can switch service documents of hotel cleaning staff.
The beauty is, even if it is surmised or proven to be a setup as
suggested, the victim still suffers the indignity and cruels his
chances at high political office.
BARRY O'FARRELL & SOLAR REBATES
The best current wholesale price of solar electricity arrays is less
than $1/watt, or $1000.KW. There are quotes on the internet
around $1,500/KWH installed. So a unit to produce a Kilowatt
would cost $1,500. Suppose that it was in sunlight 350 days a
year, and had sunlight for 6 hours a day. Then it would produce
2,100 KWH per annum.
At 60c/KWH that comes to $1,260 pa.
In other words, an investment of $1,500 would pay $1260 per annum,
giving a return of 84% pa for the next five years.
So it certainly sounds like a gold mine, paid for by the taxpayers of
NSW. And DO WE PAY!! The production cost of electricity
from coal is around 6c/KWH.
The cost to NSW taxpayers is estimated to be nearly $2 billion by
2016. There are about 100,000 installations.
The average installation therefore earns about $20,000 over the next 5
years, or $4,000 pa.
for it Barry. I don't think you
should pay any more than 7c/KWH. But at the least, you should cap
total repayments at $0.60c /KWH for hardship cases untill the capital
cost is paid, then
revert to 7c/KWH.