28th - 30th June 2002


On 21st April 2002  SPIN stated "Arafat is a failure".   Now that Yasir has been found guilty of donating $20,000 to the group responsible for the recent Jerusalem bombing, Bush seems to concur.  Recent presidential pronouncements serve notice that Arafat is no longer part of the US plan for middle east peace.

Being reviled by the US in this way will have given Arafat credibility in Palestine.  Perhaps enough credibility for him to arrest the leadership of Hamas and the rest of those murderous gangs?  Get to it Yasir.  Or vacate your position on the world stage.


Over the last months the US dollar has had a sustained fall (about 15%) against the Euro, the Yen and the Australian dollar.  This is actually a good thing for the US.  The high currency exchange rate had been destroying US export industries (e.g. steel).  Macho is all very well, but not when it means sitting on a thorn.

Things are, however, going to get worse.

In the USA, the cause is Arab oil money.

In Australia the culprit is not the dotcoms or the unions or the insurance industry or Arab oil money.  In Australia, it is the investment corporations.

Let me paint a picture.   A few years ago some nameless base grade treasury clerk remarked to his superior "gee it's so easy to tax the big investment companies".   That observation stimulated the brain cell of the bureaucrat, and the observation shuffled it's way to the top of the food chain.

As a result, we now have legislation that favors the formation of investment (& superannuation) corporations.

Unfortunately there is a new problem.  Whenever a predator finds a particular prey to be succulent, then predator numbers expand rapidly, and the prey becomes extinct.  Then the predators move on to other prey. (historical reference, see "Dodo").

Right now in Australia a flood of money (9% of all wages & salaries) is being channeled into investment funds for retirement benefits.  This diversion has been effected by legislation enacted by "top of the food chain" politicians in an effort to breed more dodos.  The trouble is, there is not a place for that much money to be invested.  So the price of stocks and bonds and real estate is inflating & reaching unrealistic values as the retirement funds "churn" the money, looking for a safe & profitable haven.

Like the "Black Tulip" incident or the "South Sea Island Bubble", these extravagant prices cannot be sustained.

As in the USA, burgeoning investment corporations have damaged the insurance industry.  Previously insurance corporations invested premiums in stocks, bonds & ventures, the income stream generated therefrom helped to sustain profits and reduce premiums.

Insurance corporations did well during the last decade as the value of financial assets rose.  Now the piper must be paid. The investment income from financial assets is now woeful, and must be supplemented by increased premiums.  That is why we have a public liability crisis among doctors, business and recreation insurers.  Proposed legislation (to limit claims and to limit contingency charges by solicitors) will no more stop the flood than a dam could stop the Amazon.  It will only check the flow for a while.

Future problems will arise in the banking industry as real estate falters because unemployed people cannot pay mortgages or rent.

The failure of investment corporations to pay dividends will cause problems with collection of government revenue.

Investment Capitalism is dead.
It is just as well that the USA is a liberal representative democracy.  While the big corporations implode, the small, (size 1 - 100 person) entrepreneurial businesses will prosper, filling the production and supply vacuum.  I realize that information is not much help to the investment industry & would be investors, but face it fellahs, you are overdue for downsizing.  Or did you think that MBA was a license to issue yourselves with free options forever? Or that inheriting a pile of money meant that you could invest it and live off the work of others for life?
  If you want your kids to eat, you better learn to drive a taxi or wait coffee or whatever.

Interestingly, the US court has ruled illegal a 1948 act of Congress (Pub. L. No. 396, Ch. 297, 68 Stat. 249 (1954) ("1954 Act")) that included "God" in the oath of allegiance.

That is the Libertarian approach.  Less interference by legislators in the people's lives results in the best government.

It is heartening to see the US judiciary performing it's function of overruling lawmakers when they exceeded their legislative powers.  (even if it took fifty four years to do it).

I appreciate the angst of those US citizens who believe that the challenge was a waste of time.  The issue is not God, but Liberty.  Even without putting God into the oath, the world recognizes the US as a nation of people to whom religion is important.

Citizens of other countries (like Australia) revel and take heart in the independence of the US Judiciary and it's stand against the power of legislators. Such reversals of legislation by the judiciary happen far too infrequently in Australia.

This picture is worth a thousand words.  With thanks & apologies for copyright infringement to Wiley.