Tuesday, 16 November 2010

PUBLIC LECTURE TONIGHT: The role of gold in the monetary system [updated]

Reminding you all about tonight’s public lecture in Auckland, to which you’re all welcome.

PUBLIC LECTURE: The role of gold in the monetary system
With special overseas guest - Professor Antal Fekete

_Quote Gold is the leash on which the frugal must keep the
prodigal. It was this leash from which the banks and the
government wanted to escape when they first
sabotaged and then junked the gold standard…
One could say that since taxation and treasury departments
were invented, a great tug-of-war has been going on
between the frugal and the prodigal. The latter is the consortium of banks and government. The former is the saving public…

- Antal Fekete

    President of the World Bank Robert Zoellick wrote this week that a new international monetary system should  "consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."  And yet many, including Paul Krugman, still see gold as a “barbarous relic” that has no place in a modern society.
    Tonight, the University Economics Group is pleased to present a seminar by Professor Antal Fekete, a proponent of the gold standard and critic of the current monetary system.
    With talk of currency wars and continued financial instability dominating the headlines, there has never been a more important time to examine the foundations of the current monetary system. This is a unique opportunity to hear an alternative view about what makes money ‘sound’ and ‘unsound’, as well as the historical (and possibly future) role of gold as the anchor in the monetary system.
    Born in Hungary, Professor Fekete is a retired Professor of Mathematics and Statistics from the Memorial University of Newfoundland in Canada who now devotes his time to writing and lecturing on fiscal and monetary reform with special regard to the role of gold and silver in the monetary system. He has taught at universities around the world including Columbia and Princeton.
    Date: Tonight, Tuesday 16 November
    Time: 7:00pm
    Location: Engineering School, 20 Symonds St, Room 3402
                             UPDATE: There’s been a late change of room to a bigger venue.
                             We’re now in “Case Room 4,” Level O, Owen G. Glenn Business School
                                        (NB:You can park underneath the Business School on Grafton Rd.)
Don't miss this opportunity to hear Professor Fekete speak about this important topic during his brief visit to New Zealand.
There’s no cost for an evening that could not be more topical.
All welcome!
And don't forget to invite your friends.

A good lesson from a young Ferrari

Here's a good story coming from a bad result and a demented overreaction.  RadioNZ reports that

_QuoteFerrari bosses have roasted Italian politicians after some called for heads to roll over the team's failure to win the Formula One championship.
    Roberto Calderoli, a government minister, said Ferrari's president Luca di Montezemolo should quit after a "demented strategy" at yesterday's Abu Dhabi Grand Prix cost Spaniard Fernando Alonso a possible third title.

That’s not the good part of the story. This is:

_Quote Piero Ferrari, son of the carmaker's late founder Enzo, said he was "astonished and saddened" by statements made by some politicians, reminding them that Ferrari has done so much more for Italy's global image than the country's politicians will ever achieve.

True, true, true. With rare and heroic exceptions (Jefferson, Churchill, Thatcher, Havel, Klaus) an undisputable truth in virtually every country you care to name.

And a point worth making every damn day.

“To Sir E. Hillary”

ToSirEd What’s yours isn’t yours as long as the government says it isn’t.

I speak of course of a letter to Lady Hillary, the wife of Sir Ed, to whom he left his watches when he died.

Read that: His watches. Watches owned by him. Watches which were given as gifts to him, over which he therefore had, quite legitimately, complete freedom of disposal.

This, however, is not the view of the meretricious, meddling arsehole from the Orwellianly-titled Ministry of Culture and Heritage who wrote the aforementioned letter.

That shiny-arsed arsehole stated in its letter the view that Sir Ed’s watches—specifically a Rolex Oyster Perpetual Oyster awarded to him after he climbed Mt Everest (I emphasis the appropriate words just to make it clear who was up Everest achieving heroism, and who therefore is the owner of the fruits of that feat)—belong not to the hero who climbed Everest and to whom the watch is actually engraved, Sir E. Hillary, but to all the non-climbers and seat-warmers who sat at home basking in his reflected glory.

The fact that Sir Ed achieved such a magnificent accomplishment is all the more reason, according to the arsehole, for confiscating the fruits therefrom.

What a disgusting perversion of morality.

This letter-writing arsehole would have found a fruitful home for itself in the places whereof Orwell often spoke. The sort of place in which heroes become public property, success becomes a reason for punishment, and the fruits of achievement become the object of confiscation—and the greater the achievement, the more virulent the confiscatory power.

I did not think New Zealand had got there yet.

But perhaps I am wrong.

There’s Pansy … [updated]

"There's pansies, that's for thoughts."
- Ophelia, Hamlet

The fall of disgraced minister Pansy Wrong offers both thoughts and opportunities.

To lose one minister for abuse of office is an accident. To lose two looks like carelessness. John Key knows that’s what we’re all thinking.

Key says Wrong should not answer questions about her abuse of her parliamentary office to those who paid for her and her husband’s holidays and business trips, i.e., the taxpayers, until all the facts about her abuse of those trips and that office are known.

Translation (straight from the Sir Humphrey Appleby Handbook): “This problem is a bloody nuisance, but we hope that by the time Parliamentary Services reports, four months from now, everyone will have forgotten about it or we can find someone else to blame.*

The fact is that she knows the facts. And if she doesn’t, she’s incompetent. So she should answer now either to her dishonesty or to her incompetence—or both. Now, not when the story has blown over.

The flatulence of John Key on this is disgraceful.

But the demise of the minister of Ethnic Affairs and Women’s Affairs offers a heaven-sent opportunity for him to be decisive.

As the former minister shuffles off into the dustbin of history, he should grasp this as the ideal; opportunity to put the ministries there too over which she presided with such anonymity. Announce that it’s time for them to stop spending money we don’t have to produce reports no-one reads. Time, in other words, to take a hike.

In all the years of their existence, it’s not like they’ve actually achieved anything with all the money we’ve been forced to spend on them.

That’s just one opportunity.

And it offers the opportunity too to declare than MPs will no longer receive the perks about which they’ve demonstrably shown they can’t be trusted to be honest.  They must be confiscated without compensation—the only appropriate reaction in a deep recession.

This is surely however an idea whose time has come.

Naturally, however, since such opportunities exist for the PM to be decisive, this flatulent status-quo worshipper will do neither.

UPDATE: You can always rely on David Farrar to completely fail to understand that there’s a world outside Wellington.

The Royal NZ Herald reports:

_Quote An increase to MPs’ salaries is almost inevitable if the Prime Minister’s bid to get rid of their foreign-travel perks is successful.

To which the pink Tory responds:

_QuoteIt is.

Well, no, David. It is not. Or should not be. But what might help make it inevitable is lame-arse lame-brained “analysis” like yours, suggesting these overpaid burdens on the taxpayer deserve more of the same instead of the kick in the pants they deserve.

In case you and your coterie of Beehive Bludgers hadn’t noticed (which you haven’t), whatever your jacked up figures say, we out here in the real world are in middle of a quite severe recession.

Such a time is not the time to increase salaries. It’s a time to cut them—and really quite savagely. It’s a time for these highly-paid and highly-visible beneficiaries to lead by example.

Pansy’s abuse (on top of abuse by legions of others, including Roger Douglas and Rodney Hide) is the ideal opportunity to do that.

In my submission, if anyone were to listen to the Manatee’s ill-thought rationalisations for raising MPs’ salaries then, it would be an(other) example of the benighted following the delusional.

Monday, 15 November 2010

Birkenhead Library - ArchOffice

BirkenheadLibrary I always enjoy being able to praise local art and architecture, when it’s worthy of such praise.

Here’s another prize-winner in the recent NZ Timber Design Awards.  It’s basically the decoration of an otherwise uninteresting box, but what’s striking for me is how effective the sparse palette and relatively simply-done decoration is (it’s unfortunate that the theme wasn’t carried through a bit more, to the light panels for example, or that more natural light isn’t welcomed in—but there you go).

The theme of the fretted ceiling panels and sun shades evokes the light quality of a forest glade, an effect complemented by the counterpuntal balustrade fins and the reflections from the (otherwise unattractive) glass balustrading.

It makes a welcoming interior appropriate for the space; one that’s pleasant to be in and not at all overdone.Birkenhead02 

Well done ArchOffice.

MONDAY MORNING RAMBLE: Because Monday I have last Friday on my mind

Yes, I’m sure you missed my regular ramble last Friday. So here are some links to stories and shows around the world of the internet to make it harder to do your work on a wet Monday morning, but much easier to understand why you should.

  • Cartoon characters explain Ben Bernanke. [Hat tip Scott P]
     QE2 Explained by Cartoon Characters – D V O R A K    U N C E N S O R E D
  • Robert Higgs fisks Ben Bernanke.
    Notes on Bernanke’s Apologia for QE2  - Robert Higgs,  I N D E P E N D E N T   I N S T I T U T E
  • In the wake of the ongoing collapse of Bretton Woods II, World Bank president Robert Zoellick called for a “managed” gold standard last week. Richard Ebeling explains why his call should be taken seriously.
    A Return to the Gold Standard – Richard Ebeling,   N O R T H W O O D  U N I V E R S I T Y
  • But Zoellick’s “managed” gold standard would leave all the gold in the hands of government. Constitutional lawyer, historian and scholar Edwin Vieira agrees the world urgently needs the sound money of a gold standard, but insists it must be one that leaves gold coins in the pockets of workers.  It’s really all or nothing for financial freedom.
    A Cross of Gold – E dwin Vieira, G . A . T . A
  • _Fekete My thanks to economist Alntal Fekete for the above story, the man sometimes called “the Einstein of Money,” to whom I listened with rapt attention over the weekend (right), and will again this week at his Auckland Symposium on sound money.
    Auckland: Symposium on Sound Money  - Louis Boulanger
  • “We are seeing a steady erosion of fundamental legal protections in New Zealand and a parallel increase in the powers of the police and other state agencies.”  And they all claim to speak for “the public good.” Bet you didn’t know which long-dead French philosopher is ultimately to blame.
    Rousseau and the right to silence 
    –   M A N D E N O    M U S I N G S
  • Tim Black explains why the British housing industry is in ruins. There are lessons here to which our own central planners are blind, blind, blind.
    Why the housing industry is in ruins – S P IK E D
  • Measuring the Stimulunacy: Just another reason it didn’t work, and can’t: “Not all jobs are created equal. It cost more than $500,000 in economic stimulus funds to create a single highway construction job…”
    Tracking the stimulus: Some jobs cost more to create –  U S A   T O D A Y
  • The Gulf of Mexico oil spill was the best thing for fish stock since … well, ever!
    Oils spills versus fishing – O F S E T T I N G   B E H A V I O U R
  • As we approach the next financial crisis—the one the central bankers are making more necessary—it’s worth watching (again) this ‘Four Corners’ special that appeared on Australian television back in August.

This week American travellers “enjoyed” the introduction of pervert-cam and forced fisking. Here’s one liberal who got mugged by the thugs.

  • I’ve discovered the VERY best way to make yourself immune to Christopher Hitchens. It’s to read his memoirs. Spend a few days in the company of the smug git, who could name-drop for England, and you’re left unwilling to spend any more time in his company ever again.
    Hitch-22 is more interesting for what it leaves out – S P I K E D
  • Russia today is looking the same politically as it did under the Czar. After seven years in prison for the crime of being successful, the former owner of Yukos—who watched his business nationalised by Putin’s goons from his cell—finally gets his day in court before being shipped to today’s Gulag. “Says he:"Here and now the fate of every citizen of our country is being decided.”
    ‘The Fate of Every Citizen Is Being Decided’ – N E W  Y O R K   T I M E S
  • "The Day The Internet Threw A Righteous Hissyfit About Copyright And Pie" [hat tip PaulB] http://n.pr/cWHHAx
  • I’ve been telling you this for years, but if you don’t believe me, maybe you’ll believe these archaeologists:
    Beer Lubricated the Rise of Civilization, Study Suggests – L I V E   S C I E N C E
    [Hat tip Ian J.
  • Australia’s ABC radio’s Classical Music Station just ran a listener’s poll on their top 100 classical pieces. No Wagner, no Verdi, and they’ve voted a piece of shopping music into number four, but it’s a pretty good top three, and if you’re new to classical music and want to explore more, it might be useful to start exploring what spins other folks’ wheels.
    The Classic 100 –  A B C    C L A S S I C   F M
  • All this talk about “multiculturalism.” Does everyone really know what multiculturalism means?
     Multiculturalism Gone Wild [PODCAST] – Alex Epstein,   J E S S E   L E E  P E T E R S O N  S H O W
  • More stupid stories that become news: Irish PriceWaterhouse employees rank female employees. Story goes viral. Check out the story (and the top ten skirt-wearers).
    The 'Top 10' Office Email That's Scandalizing Ireland – G A W K E R
  • The great H. L, Mencken explains how to perpetrate a scholastic urban myth.
    Millard Fillmore’s Bathtub – C U L T U R E   J A M M I N G
  • Peikoff speaks. And so does Yaron.
    Peikoff vs an ARI Board Member  - L E N A R D   P E I K O F F
    Dear ARI supporter:... - A . R . I .
    People react all over.
  • Bye bye Dim Post. We didn’t always agree, but I almost always laughed.
    This rough magic I here abjure  - D I M   P O S T
  • 500x_hamburga Important news for Burger users.
    The Truth Behind the Everlasting Happy Meal: Burgers That Size Don't Rot 
    – G I Z M O D O
  • Good people die, while others who should have don’t…
    Polish composer Henryk Gorecki dies at the age of 76 – B B C
    Meanwhile, ”according to Stuff: Phil Collins has contemplated killing himself, and would always pick an option that "didn't hurt". I so identify with this story. I too have contemplated killing Phil Collins..”
    We Came So Close To Losing Phil Collins – I M P E R A T O R   F I S H
  • How do great artists become great? Ask Stephen Hicks.
    More on how great artists become great -  S T E P H E N   H I C K S
  • Two comedians do Michael Caine at three paces.

  • And finally pinched from Lindsay Mitchell (who I have to thank again for an excellent presentation at the Libz conference)…  this was said over one hundred years ago but people still don't get it:

“I'd rather that England should be free than
that England should be compulsorily sober.
With freedom we might in the end attain sobriety, but
in the other alternative we should eventually lose
both freedom and sobriety.”
— W.C. Magee, Archbishop of York, Sermon to Peterborough [1868]

Friday, 12 November 2010

Stuff to go to

Three events here to get excited about, in reverse chronological order.

* * This Tuesday it’s…

UoA Econ Group 16 Nov-1

PUBLIC LECTURE: The role of gold in the monetary system

With special overseas guest - Professor Antal Fekete

    President of the World Bank Robert Zoellick wrote this week that a new international monetary system should  "consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."  And yet many, including Paul Krugman, still see gold as a “barbarous relic” that has no place in a modern society.
    This coming Tuesday the 16th of November at 7pm, the University Economics Group is pleased to present a seminar by Professor Antal Fekete, a proponent of the gold standard and critic of the current monetary system. With talk of currency wars and continued financial instability dominating the headlines, there has never been a more important time to examine the foundations of the current monetary system. This is a unique opportunity to hear an alternative view about what makes money ‘sound’ and ‘unsound’, as well as the historical (and possibly future) role of gold as the anchor in the monetary system.
    Born in Hungary, Professor Fekete is a retired Professor of Mathematics and Statistics from the Memorial University of Newfoundland in Canada who now devotes his time to writing and lecturing on fiscal and monetary reform with special regard to the role of gold and silver in the monetary system. He has taught at universities around the world including Columbia and Princeton.
    Date: Tuesday 16 November
    Time: 7:00pm
    Location: Engineering School, 20 Symonds St, Room 3402
Don't miss this opportunity to hear Professor Fekete speak about this important topic during his brief visit to New Zealand. There’s no cost for an evening that could not be more topical.
Al welcome! And don't forget to invite your friends.

* * Starting next Monday…

Auckland: Symposium on Sound Money

When the US Federal Reserve dumps a half-trillion dollar bolus of money created out of thin air into the veins of the American banking system (a mainline of government bailout crack representing the last gasp of a desperate but already exploded Keynesian orthodoxy) and the Bank of England governor Mervyn King says it’s time to talk about “eliminating fractional reserve banking” (the first gasp, perhaps, of a much-needed and long-overdue mainstream sanity) you should know it’s time to get the concept of sound money into perspective.
It’s essential self-defence for your pocket book!

goldstandard3 A week-long Symposium on Sound Money, presented by Louis Boulanger, and
delivered by the man sometimes called the “Einstein of Money," Professor Antal Fekete from his School of New Austrian Economics.
    Professor Fekete will explain  what he means by an ‘unadulterated gold standard,’ how today’s fiat-based monetary system is destroying both savings and jobs, and the role of gold as numéraire and the ultimate extinguisher of all debts.
    This is a unique opportunity to hear a world authority present an alternative view about what makes money ‘sound,’ and how ‘unsound ‘ money is pushing us to the very brink of disaster once again, based on history…
    Each of the ten lectures will last one hour and will be followed by a question and answers period lasting up to one hour. There will be one lecture per morning, starting at 9.30am, and one lecture per afternoon, starting at 2pm.

The course runs from Monday 15 November to Friday 19 November 2010, at the Owen G. Glenn Business School of the University of Auckland. Get on to it now. (Tell them I sent you.)

Details here.

Download the symposium programme here.

Email the event manager here.

Tomorrow (Saturday)…


Auckland plays host tomorrow to the annual Libertarianz party conference--and, naturally, you're invited.
We have a fantastic line-up of speakers, including world-leading Austrian economist Anton Fekete--here to talk about everything that's topical, including gold, and more--and local campaigner to abolish the DPB, Lindsay Mitchell. On top of that we have all our regular speakers including leading local blogger Peter Cresswell; Libz candidate in the Mana by-election Sean Fitzpatrick; NZ's answer to PJ O'Rourke, Bernard Darnton; and Libz leader and luminary Dr Richard McGrath.
So come Down to the Doctor’s and charge your freedom-loving batteries at the 2010 Libz conference this Saturday, for the risibly low price of just $40. Come along and register on the day.
        WHEN: Saturday November 13, 9:30am to 4pm
        WHERE: Dukes Midway Lodge, off Pah Rd, Royal Oak.
For more details, jump onto www.libertarianz.org.nz,
It's going to be a great day! Don't miss out.

QUOTE OF THE DAY: Peter Schiff on Ben Bernanke [update]

_QuoteDespite the devastation of the Fed’s previous burst bubbles ... Bernanke still believes in the virtue of pumping. His current policy is to inflate another stock market bubble to cure the recession that resulted from the bursting of the housing bubble, which was itself inflated to counter the effects of the bursting tech stock bubble.
Does the story of the old lady who swallowed the fly come to mind? She eventually tried swallowing a horse, and we know how that ended.
It’s hard to decide who is more culpable for the strategy: Bernanke for selling it or the country for buying it.
        -Peter Schiff, “There Was a Fed Chairman Who Swallowed a Fly

UPDATE: “Ben Bernanke Has Never Gotten Anything Right” Peter Schiff tells a room including a panel of Federal Reserve officials. (They respond.)

It’s true. For example:

But weren’t Ben and his boss Alan right that there a nasty “savings glut” that caused the nice chaps all the problems ?

No, Ben, there wasn’t.

Negotiation by riot [updated]

I’m sure you’ve seen the scenes of destruction in London as thousands of British students rampages through buildings in central London protesting their Government’s  announcement that it’s time for  the UK Government to stop living beyond taxpayers’ means.

As Peter McCaffrey quips, you have to love the irony of self-described Anarchists rioting because the STATE won't give them a free education!

And you have to admire the double irony of those who have spent most years in the state’s classrooms using violence, vandalism and destruction to make their case.

Perhaps there’s something about what they’re being taught inside those classrooms that leaves students prone to seeing nihilism as their metier, and reason as their enemy?

Because after years of being immersed in the nihilistic philosophies oozing out of university’s philosophy, psychology and sociology departments (to pick just three), the pictures of those nihilists down at Millbank make evident that Britain’s “intellectual elite” have taken one look at the economic reality in the world outside their ivory towers and can only stamp their feet like children and chant, “I want it. Now.”   [Hat tip Marcus Bachler]

As eloquent an argument as you’d need that what is being taught in their classrooms leaves students unable to cope with reality—and partial to the idea of violence as an end in itself.

Because instead of reasoned arguments, sound thinking and eloquent addresses, all they can offer is broken glass and destruction. Negotiation by riot.

Which is as good a reason as any not to just cut taxpayer funding to universities, but to end it.

UPDATE:  As a brief semi-serious demonstration of the point made above, Gus Van Horn links to this graphic illustration of  the decline of the “queen of the sciences” in terms of the kinds of questions being asked around philosophy departments…


And around some of the other departments…


Nanny wins the day. Again.

The Nanny State is on the march again, with parliament voting 114 to 3 last night to make access to the demon drink more difficult, and life for its would-be sellers more onerous.

And disgracefully, the only serious opposition to the bill came from wowsers demanding even more busybodying than even this bill made possible.

Simon-Power The bill’s author, Simon Power-Lust, must have been giddy with delight as he celebrated the its win in Bellamy’s.  The only serious parliamentary opposition he encountered to running Geoffrey Palmer’s Attack-the-Proles programme was from wowsers who wanted to make it worse.

Meanwhile, as the world’s economies collapse in a welter of sovereign debt and currency wars—and businesses in these tiny islands struggle to keep their heads above water, from Bellamy’s came the cry that “This government sees overhauling our alcohol laws as a priority…”!

Lindsay Perigo states the case plainly:

_Quote Power-lust is More Harmful than Alcohol!
The 114 MPs who voted today in favour of the Alcohol Reform Bill should be drowned on the floor of the House in a flood of the sickliest, sweetest plonk available, says SOLO Principal Lindsay Perigo.
    “The Bill is yet another assault on individual liberty by an array of unedifying authoritarian specimens haunted by the fear, to paraphrase H. L. Mencken, that somebody, somehow, somewhere may just be managing to enjoy himself with an alcoholic beverage,” says Perigo.
    “It bans corner dairies from selling liquor. It raises the purchasing age to 20 in supermarkets and bottle stores. It bans alcohol products which are 'dangerous or particularly appealing to youth,' without specifying what these might be. It bans the 'promotion of the excessive consumption of alcohol'—meaning, in all likelihood, that Happy Hours will be criminalised. In the words of today's illiterate press release from Injustice Mistress Simone de Power-Lust, it 'makes licences harder to get and easier to loose [sic].'
    “…If this striped-skirted wannabe-dominatrix wishes to know why many youth binge-drink she need look no further than the airhead in her own office who doesn't know the difference between 'loose' and 'lose' any more than she does. The crippling of the minds of youngsters by the state education system has produced more than one generation of airheads and slobs who drink exactly as you'd expect airheads and slobs to drink. The fanatical hostility among our educators to reason and civilised values generally, which hostility reached its apogee when National's Lockwood Smith was Minister of Education, is what has produced Generation Airhead and the drinking habits one would expect of the conceptually-damaged.
    “Prohibition and wowserism are not the solution. The solution is to treat and respect citizens as the self-governing adults they inherently are; most will work their way through the damage and rise to the occasion. Even those who do not should become the government's concern only when they commit crimes against others.
    “Removing the vicious influence of nanny-statist, control-freak, power-addicted dregs like De Power-Lust from our lives would be a significant step towards a culture that respects individual sovereignty. Such a culture will assuredly sport alcohol without anarchy,” Perigo concludes.

Simon Power_128 One power-luster is more damaging than a hundred alcoholics.

The Nanny State is worse for all of us than a thousand necrotic livers.

A few lessons that a few wowsers, and their apologists, need to take to heart.

And who voted against this atrocity?  Just three heroic stand-alones.  The parliament’s so-called party of freedom barely manages a rump for their founding principles these days, with both ACT Party leader Rodney Hide and deputy John Boscawen casting their votes with the majority for more power-lust and less freedom.

Just another indication of what most ACT supporters should have worked out about their former party long ago.

Thursday, 11 November 2010

Waitomo Caves Visitors Centre: “The Gridshell” – Architecture Workshop

WaitomoCavesGridshell Here’s a good-looking project, which just won an NZ Wood award for its designers, Wellington’s Architecture Workshop, and their engineers, Dunning Thornton Consultants.

They should take another bow, because there’s nothing else like this in the country.

Waitomo2 Taking its structural cue from the likes of Edward Cullinan’s Downlands Gridshell in Sussex (featured here  a couple of years back) the Waitomo Centre features translucent, “inflated ETFE (Ethylene Tetrafluoroethylene) air pillows tethered over the gridshell structure like a tent fly.” The gridshell structure itself is made of laminated veneer lumber (LVL) ribs made to shape and then locked together in a toroidal grid  floating welcomingly over the new centre.

Waitomo04 Just another reason to detour this way when you’re heading in this direction.  I certainly will be.


“This Is Not Normal”

A timely guest post by David Galland & Chris Wood from Casey Research. In the wake of a change of helm in the US Congress and Ben Bernanke’s “Quantitative Easing II” announcement last week, David & Chris look both forward and backward—looking at how we got into a situation where the debasement of the world’s reserve currency looks like an answer, and what happens now that the deluge has started. There is information here ever intelligent commentator needs to get their head around.


Dear Readers,

Over the last couple of days, I’ve had some interesting exchanges with readers – the majority equal parts excitement and fear about rising precious metals prices… and especially the explosive gains in so many of our recommended stocks.
    After surveying a portfolio that has daily been gaining in leaps and bounds, regular correspondent Dennis M. observed, “This is not normal.”
    And he’s right.
    The chart just below shows the ratcheting price of SLV, the silver Exchange Traded Fund (ETF). As you can see, in the last three months alone the price has steamed ahead by over 50%.

    The next chart shows the share price of Silver Wheaton, a silver royalty company, over the same period of time. Again you can see that it has more than doubled over roughly the same time period.

    It’s notable that Silver Wheaton is no thinly traded microcap – even though it has been acting like one of late – but rather a $12.7 billion company.
    Happily, we first recommended Silver Wheaton as our “go to” silver stock in the International Speculator service on December 10, 2004, when it traded for just $3.35 a share.
    But the same breathless excitement at having been dead right almost simultaneously unsheathes the proverbial double-edged sword that has so many dear readers wondering if what Mr. Market has so kindly provided (with a little help from Casey Research, one is tempted to add), he might soon take away.
    Put another way, given the size of the gains so many subscribers are sitting on in Silver Wheaton – and many other precious metals stocks – is it any wonder they are getting a bit nervous? Is it time to sell? Hold? Buy more?
    With the mind-numbing complexity of today’s globally interconnected economy, I’d be the last person to claim special knowledge about where the precious metals express will stop next – especially now that we’ve taken out the $1,400 level that our own Chief Economist Bud Conrad has been forecasting for 2010. Is $1,500 in the near future, or could a surprise action on the part of the U.S. government hammer the precious metals sharply lower?
    It may be useful to step back to the 50,000-foot view and see if there is any discernable pattern apparent on the landscape.

The 50,000-Foot View

    By now I suspect that all but the newest dear readers are well versed in the reasons behind the stunning rise in precious metals.
    Simply, ever since Nixon yanked gold out from under the U.S. dollar in 1971, the world’s nation-states have operated on a pure fiat monetary system. The great advantage of a fiat money system is that as long as no one pays too much attention to the details, a government can create money out of thin air – usually in support of social spending programs designed to win support from the grateful plebes.
    All to the good – until it isn’t. More on that momentarily.
    In any event, armed with the power of the printing press, the nation’s governments – all with the best of intentions, I am sure – began taking on bigger and bigger spending commitments, and because it was also politically pleasing, began papering over even normal business cycle gyrations. Unfortunately, kicking the can down the road didn’t really resolve much of anything, but rather caused the dislocations to become ever larger.
Casey02      Skipping  to the present, the consequence of these actions is a world awash in historic levels of debt, on both the individual level and particularly the governmental level. 
    Of course, individuals who find themselves deep in debt can try to cure the situation by reducing their spending, taking a second job, or even declaring personal bankruptcy in order to begin the process of working things out with creditors.
    By contrast, governments don’t actually produce any wealth and so, when faced with mountainous debt loads as they are now, have a very limited range of options available. For instance, they can raise taxes – but that’s counterproductive in a struggling economy. As for belt-tightening, decades of establishing large bureaucracies and taking on hard-coded obligations aimed at pleasing the citizenry – mandatory spending programs such as Medicare and Social Security – make cutting the budgets increasingly more difficult. In fact, thanks to simple demographics, the mandatory spending is only set to rise from here – and significantly so.
    So here we are, with the U.S. government – long the provider and protector of the world’s reserve fiat currency – up to its eyeballs in debt, and piling on more by the trillions.
    A moment ago I made a passing comment that fiat systems work as long as no one pays too much attention to the details of the government’s monetary actions. Generally speaking, this fact ensures that governments are nuanced and even somewhat reserved in their money printing. If they become so extreme that the market begins to notice, the bond vigilantes will demand higher and higher interest rates.
    Unfortunately, the scale of the problems now facing the U.S. have reached the point where…

  • The U.S. government’s debt and mandatory spending obligations are intractable. Simply, there is no conceivable way that the debt can be paid and the obligations met, at least not through any “normal” government operations.
  • Evidence that this is true can be seen in that it is now accepted as a fait accompli by Democrats and Republicans alike that annual U.S. budget deficits approaching $1.5 trillion will be the norm for years into the future.
    A few days ago, I ran an interview with a newly elected Tea Party congressman in which he states that even the Tea Party has no interest in touching Social Security and Medicare spending. Tack that politically sensible but economically unviable position onto the Republicans’ Pledge to America that explicitly excuses military and homeland security spending from further scrutiny, and you end up with exactly zero chance of making even the slightest of dents in runaway government spending.
  • A lot of people are paying attention. In fact, pretty much everyone is watching the desperate follies of the U.S. government. The watchers may hope for the best, but if the prices of gold and silver are any indication, they are beginning to suspect the worst.
  • Desperate to avoid the debt death spiral that will be triggered by rising interest rates, the Fed has announced that even if no one else shows up at the almost daily auctions of Treasury debt, the Fed will. By doing so, Bernanke & Friends hope to lull the watchers back to a less vigilant posture. So far, it is “sort of” working… the watchers are buying the argument that as long as the Fed keeps buying Treasuries, rates should remain dampened.

It is, however, our contention that this charade cannot last. A sentiment shared, it is clear, by the number of big money players recently piling into sound money.
    There are a number of big questions yet to be answered, but the core issue surrounding the ability of the U.S. government to meet its obligations using normal operations is not one of them. It can’t. Therefore, by definition, it must either default or attempt to debase the dollar to the point where fixed-amount obligations erode back into a range where they can be paid.
    Dipping just a bit deeper into the ability of the government to claw back out of its deep, deep hole, our own Chris Wood took a quick look at the 2011 Federal Budget and found nothing to cheer about. Here’s Chris…

A Quick Look at the U.S. Federal Budget 2011
By Chris Wood

First, here’s a useful interactive graphic on the budget from The New York Times:
    Now, the Times indicates that the 2011 Federal Budget Proposal is $3.69 trillion, but using the actual budget itself (specifically Table S-4 Proposed Budget by Category on page 151) we find total budgeted outlays of $3.834 trillion, of which $1.415 trillion is discretionary and $2.419 trillion is mandatory (including net interest).
    Some sound bites:

  • If you got rid of the whole Department of Education, you’d only shrink the budget 1.9%.
  • If you got rid of the Department of Agriculture, you’d only shrink the budget 3.4%.
  • If you were able to get rid of the EPA, NASA, and the Department of Interior, you’d only shrink the budget by 1.0%.
  • If you were able to cut all discretionary spending from the budget, you’d only be cutting 36.9%.
  • Mandatory budgeted outlays of the Department of Health and Human Services (responsible for Medicare and Medicaid) are greater than the total budgeted spending of all the following departments combined:
    • Dept. of Agriculture
    • Dept. of Commerce
    • Dept. of Education
    • Dept. of Energy
    • Dept. of Housing & Urban Development
    • Dept. of Interior
    • Dept. of Justice
    • Dept. of State & Other International Programs
    • Dept. of Transportation
    • Dept. of Treasury
    • Dept. of Veterans Affairs
  • If you cut the Department of Defense budget in half, you’d only shrink the budget 9.4%.
  • Mandatory budgeted outlays of just the Department of Health and Human Services and the Social Security Administration exceed total discretionary budgeted spending by 13%.

Casey01    David again. As Chris’s quick look makes clear, nothing short of profoundly altering the role of government as an actor in our society will slow the out-of-control spending. And even that assumes the best case: throw in large-scale economic damage caused by higher oil prices (now nearing $87/bbl),  another war in the Middle East, a nascent trade war with China, etc., and the train leaves the rails even quicker.
    But there’s enough to worry about as it is without adding to the pile. Which brings us back to the worries of some that precious metals may now be too expensive and headed for a fall.

Are Precious Metals Too Expensive and Headed for a Fall?

Trying to arrive at a useful answer, ask yourself the following…

  1. Is there any politically feasible way that the U.S. government can avoid an overt or covert default on its obligations?
    Per the data points provided above, we simply cannot see how such a default will be avoided at this point.
  2. As the coming default becomes obvious to a broader universe, is there any way the Fed will be able to keep a lid on interest rates?
    Again, the answer has to be “no.” For awhile the bond vigilantes may continue to show tolerance, but such tolerance has a limit… especially if the Fed continues to become a bigger and bigger factor in the Treasury auctions. Once interest rates start up, the interest expense on the debt will quickly become self-propelling and crushing.
  3. As the dollar era grinds to a halt, will central bankers, institutions, and investors want to replace their dollars with alternative fiat currencies – the euro? British pound? Yen? Renminbi?
    At least for awhile, the answer is likely to be, “All of the above.” But it seems a very safe bet that the shift into precious metals will also continue.
    Given that the combined size of global stock and bond markets is on the order of $120 trillion – with trillions more at risk in faltering dollars and other fiat currencies – it doesn’t take an Einstein to figure out that even a slight additional shift towards the precious metals will send them soaring.

    And, of course, this problem of too much debt is not limited to the U.S., but is the same for all the world’s leading economies. On that topic, this out today in the UK’s Telegraph

    _Quote Is there a second credit crunch looming? Between now and the end of 2012, UK banks and building societies must find ways of refinancing between £750bn and £800bn of lending. That's a number approaching half GDP.

    Full story here.
    So, now, ask yourself again that question of whether precious metals are overvalued.
    Personally, my answer is that they have definitely gotten ahead of themselves. But this is little more than the entirely ordinary ebb and flow to be expected in a secular bull market. It would be shocking to me if the precious metals didn’t take a breather in here – but I don’t think that if they do, they’ll drop overly far (5%?) or stay down for any length of time.
Casey03     Put another way, the situation today – and the outsized returns for precious metals investors – are definitely not normal, but then again, neither is the nature and scale of the crisis now gripping the globe.
    In fact, given the fast-eroding global confidence in the fiat currencies, it seems entirely normal to me that the currencies will continue to stumble against all sorts of tangibles, gold and silver included. And so maybe the rise of precious metals is normal, after all?
    Though you have to make your own decisions, in my view, while the trend for the global economy may not be friendly, those with the foresight – and at this stage, the guts – to stay invested in the precious metals will be well rewarded.
    That said, it is never wise to rule out the government doing something very unconventional to disadvantage gold… so it is worth maintaining a disciplined approach to your investment portfolio. A failure in any particular asset class shouldn’t cause you to have to downgrade your lifestyle.
    Moderation in all things, including your excesses.
    And with that, I’m going to dash for the day. As always, thank you for reading … 

David Galland
Managing Director
Casey Research

Reposted by permission from Casey Research.
Subscribe to their Daily Dispatch to get intelligent commentary
like this in your inbox every day.

NOT PJ: Mozart for your Mall

_BernardDarntonBernard Darnton's column this week is a Requiem for journalism.

* * * *

Mozart prevents crime, claimed Monday’s Press, which is just as well because ticketing people for driving at 55 does no such thing.

The claim is that since starting to play Mozart from speakers in City Mall (a pedestrianised Christchurch street) the crime rate has been slashed. The number of thefts and other offences is reported to have gone from 35 per week in October 2008 to zero for the same “typical” week in October 2010. There is even helpful bar graph showing a green line (with “35” written above it) next to no bar whatsoever (with “0” written where the bar would have been) so you can marvel at how different the two numbers are. Now that’s sciencey.

City Mall is a nice place to sit in the sun at lunchtime and read a book. The gentle strains of Mozart add something to the pleasure, as does the not being stabbed. The only thing that spoils it is the Music to Bang Hoes By blaring out of Glassons.

Mozart is an extremely powerful deterrent to violent crime. Two weeks ago, presumably during an atypical week, a man with a tyre iron began haranguing another man about staying away from his daughter. As soon as the argument got loud enough to drown out the Mozart, violence erupted. Fortunately, Mozart also heightens concentration and allows you to work faster. Once the four Police cars had gone back to their real task of ticketing alacritous drivers, the people mopping up the blood were able to do so with a spring in their step.

Mozart also allegedly increases your IQ. About twenty years ago a research paper showed that listening to Mozart temporarily increased subjects’ performance in a spatial-temporal reasoning test. This caused a flurry of popular books with more pages than content although, to meet the target market, the message had to be dumbed down to “Mozart makes you smarter.”

CDs like Mozart for your Mind flooded the market. Everyone instantly got smarter at which point they all realised that the research said no such thing and the industry disappeared in a puff of contradiction.

Less well known is Mozart’s ability to break down sewage. The Treuenbrietzen sewage treatment plant in Germany plays Mozart to assist in the breakdown of all the crap that flows through it. It makes me wonder whether moving the Press’s headline writers to their new building further away from City Mall is a good idea.

* * * *

* * He’s not PJ O’Rourke, but he’s not bad either.  Read Bernard Darnton’s NOT PJ
column here every Thursday, barring drinking accidents. * *

Greens are seeing the error of their ways

Socialist_Wildlife_thumb[1] The floodgates are opening. Authoritarian environmentalists are beginning to realise they’ve scaremongered in haste, and are now repenting at leisure.

On Britain’s Channel 4 recently, a whole parade of greens showed up to pour their hearts out and tell viewers What the Green Movement Got Wrong.

Perhaps the most interesting thing about this programme is that it was made at all [says Charles Moore]. It shows how the Green monolith has cracked. For many years, Channel 4 would not have dared devote an hour to the errors of environmentalism; or, if it had done so, it would have wrapped it in the cordon sanitaire always put round anything considered Right-wing, stating that this was a "provocative" and "personal" view.
    This was no such programme. Instead, it was a platform for every sinner that repenteth. Former hippy Greens, directors of Greenpeace, the chairmen of the Copenhagen Climate Council and the like, queued up to admit error. Their reasons for doing so were interesting. None of them repudiated all their previous ideas. All continue to believe that there are serious environmental threats to the welfare of life on earth and most seem to be devoting their lives to addressing them. But, as one put it, environmentalists over the past 40 years have "failed to achieve Job One, which was to protect the planet."
    At least three central reasons were identified
Misanthropy. According to a veteran American Green, Stewart Brand, too many Greens believe "Nature good – humans not so good"…
Exaggeration. If you say that the end of the world is nigh all the time, people start to disbelieve you…
Damage. The most powerful part of the programme was that arguing that the Green obsession with banning and preventing things has done actual harm…

All points we’ve made often here at NOT PC .

Out of all this breast-beating came hope. The rueful campaigners of yesteryear now see science and technology as their friend.

More so even than the author of the article, Charles Moore, whose “conservatism” leads him to believe there’s necessarily “a conflict between economic growth and the environment which will never go away.” Not so. Especially once one realises that the whole point of economic activity is improving the human environment—which at this stage of history has never been better. Nonetheless,

If the drift of this programme is correct, the consequences for politics will be large. All the main political parties have chosen to put their eggs in the frail, Fairtrade, hand-weaved basket of Greenery, imposing rising levies to develop "renewable" sources of power which cannot do the job demanded of them. The basket is starting to break.

Ben Pile argues in "What the greens really got wrong" that the greens on the show proffered only a half-recantation, that they still take for granted the limits set by Malthus (“the Malthusians’ focus on finiteness explains firstly why they are always wrong about everything; secondly why they are so misanthropic; and thirdly why they put forward such illiberal proposals, dressed up, of course, in [PC] language”) but that their reasons for repenting—even partially—are profound nonetheless.

Although it is interesting to see one-time activists reflecting in this way, the reformulation of environmentalism doesn’t really address the problems with its initial perspective. The arguments in the film don’t form a criticism of environmentalism as an instance of the politics of fear, but merely moderate some of its excesses. There is an interesting discussion about the shortcomings of the precautionary principle, and the film’s participants are far more circumspect about risk from certain technologies than they have been in the past.
    But these risks are merely seen in contrast to the ultimate catastrophe: climate change. Technologies are not considered in terms of their potential for humans, but are embraced reluctantly as solutions to climate change. Genetically modified (GM) food is sold seemingly only on the basis that it is a means to begrudgingly feed the poor. The limitations of the catastrophic narrative still are such that they constrain discussion about progress beyond subsistence…
    What [thinking environmentalists have] realised, and [the moonbats have] not, is that ‘sceptics’ did not undermine the environmentalists’ cause. Environmentalists were their own worst enemy. They have alienated the rest of society by their own uncompromising and misanthropic outlook. The challenge for the new environmentalists is to emerge from this crisis of their own making into an era of growing scepticism, while keeping an eye on the consequences of their arguments. But without the precautionary principle, alarmism, doom and catastrophe, and premature claims to scientific certainty, what is environmentalism?

That’s a good question for you.


Wednesday, 10 November 2010

Pakuranga Renovation – Organon Architecture [updated]

Boyes-Sketch_Plan_003-02 Here’s an interesting project I’ve been working on recently—renovation designs for an existing house in Pakuranga—making a ‘full house’ out of one that presently closes itself off to its site, and opening it out to light, to sun and to the entire site and beyond.Boyes-Sketch_Plan_003-Structure01 In essence, it involves the surgical insertion of a new steel and concrete upper floor over an existing one-storey, flat-roofed house (above), to add extra accommodation, and give a new double-height lounge (below).

Boyes-Sketch_Plan_003-Lounge It’s been fun to work on. And should be great to live in.

(Cross-posted at the Organon Architecture Blog)