Interlude

On holiday for a week. Best wishes to you all.

Aussie humour

At first I was prepared to believe that an Australian politican could be this aggressive, but despite Web-spread assurances that it's genuine, it come from this series.

Doing the rounds: explaining the world with cows

I think the main thing learned here is that, as Oscar Wilde said, when good Americans die they go to Paris.

The World Explained with Cows

DEMOCRAT You have two cows.Your neighbor has none.You feel guilty for being successful. Barbara Streisand sings for you.

REPUBLICAN You have two cows.Your neighbor has none.So?

SOCIALIST You have two cows.The government takes one and gives it to your neighbor.You form a cooperative to tell him how to manage his cow.

COMMUNIST You have two cows.The government seizes both and provides you with milk.You wait in line for hours to get it.It is expensive and sour.

CAPITALISM, AMERICAN STYLE You have two cows.You sell one, buy a bull, and build a herd of cows.

DEMOCRACY, AMERICAN STYLE You have two cows.The government taxes you to the point you have to sell both to support a man in a foreign country who has only one cow, which was a gift from your government.

BUREAUCRACY, AMERICAN STYLE You have two cows.The government takes them both, shoots one, milks the other, pays you for the milk, and then pours the milk down the drain.

AMERICAN CORPORATION You have two cows.You sell one, lease it back to yourself and do an IPO on the 2nd one.You force the two cows to produce the milk of four cows.You are surprised when one cow drops dead. You spin an announcement to the analysts stating you have down sized and are reducing expenses.Your stock's price goes up.

FRENCH CORPORATION You have two cows.You go on strike because you want three cows.You go to lunch and drink wine.Life is good.

JAPANESE CORPORATION You have two cows.You redesign them so they are one tenth the size of an ordinary cow and produce twenty times the milk. They learn to travel on unbelievably crowded trains. Most are at the top of their class at cow school.

GERMAN CORPORATION You have two cows.You engineer them so they are all blond, give excellent quality milk, and run a hundred miles an hour. Unfortunately they also demand 13 weeks of vacation per year.

ITALIAN CORPORATION You have two cows but you don't know where they are. While ambling around, you see a beautiful woman.You break for lunch.Life is good.

RUSSIAN CORPORATION You have two cows.You have some vodka.You count them and learn you have five cows.You have some more vodka.You count them again and learn you have 42 cows. The Mafia shows up and takes over however many cows you really have.

TALIBAN CORPORATION You have all the cows in Afghanistan, which are two.You don't milk them because you cannot touch any creature's private parts.Then you kill them and claim a U.S. bomb blew them up while they were in the hospital.

IRAQI CORPORATION You have two cows.They go into hiding.They send radio tapes of their mooing.

POLISH CORPORATION You have two bulls.Employees are regularly maimed and killed attempting to milk them.

FLORIDA CORPORATION You have a black cow and a brown cow.Everyone votes for the best looking one.Some of the people who like the brown one best, vote for the black one.Some people vote for both. Some people vote for neither.Some people can't figure out how to vote at all.Finally, a bunch of guys from out-of-state tell you which is the best looking cow.

CALIFORNIAN You have a cow and a bull.The bull is depressed.It has spent its life living a lie.It goes away for two weeks and comes back after a taxpayer-paid sex-change operation. You now have two cows.One makes milk; the other doesn't.You try to sell the transgender cow, but its lawyer sues you for discrimination.You lose in court.You sell the milk-generating cow to pay the damages. You now have one rich, transgender, non-milk-producing cow.You change your business to beef. PETA pickets your farm.Jesse Jackson makes a speech in your driveway.Cruz Bustamante calls for higher farm taxes to help "working cows". Hillary Clinton calls for the nationalization of 1/7 of your farm "for the children."The legislature passes a law giving your farm to Mexico.The L.A. Times quotes five anonymous cows claiming you groped their teats. You declare bankruptcy and shut down all operations and the cow starves to death.The L.A. Times' analysis shows your business failure is Bush's fault.

htp: my wife's American cousin. GOK where it started, though.

A credible, horrible warning

In a fearsome, plain-speaking guide to the long-standing debt problem, Karl Denninger explains why he believes we are now in dire crisis. If the insolvent continue to be bailed out with money that the government itself must borrow from elsewhere, the American government's own credit will be destroyed. And non-Americans are in an even worse plight, in fact may trigger the explosion:

We may be days away from an international credit incident originating outside of the United States. Foreign nations, banks, and businesses have "levered up", or taken more risk, than we have. They too have chosen to lie.

This will hammer the stockmarket:

You have already seen nearly half of your money disappear.
You could see another half disappear - within days.

This is an implication of the graph I did on Sunday (see below), looking at the Dow adjusted for CPI inflation since 1928. A return to 4,500 points would seem to be reversion to the long-term norm - but to have it happen all at once, from its peak last October, is a scary prospect.


UPDATE

Tyler concurs, with respect to the UK economy, because of our dependence on income from financial services and associated services:

"Brown's boom was built on a group of industries that are now facing an Almighty bust..."

Throw the grenade, or put it in your pocket?

I was educated in the wrong things. Karl Denninger explains - in a way I struggle to understand fully - how the US government's schemes to support the banks must ultimately be financed by Treasury bonds on such a scale as to seriously damage their credit rating and pump up interest rates to a ruinous level.

This is a consequence of avoiding taking the right action, i.e. finding out who's insolvent and letting them go bust. I still remember Henry Paulson's panicky look when Congress threw out the bailout bill the first time.

Once you've pulled the pin out of a grenade, you can throw it, or you can hang on to it. Madly, it looks as though the government is following the latter course, and hopes to be able to handle the consequences.

UPDATE

Relevant to the above is Wat's resume of public debt history in the UK since World War II, showing how important it is NOT to get into debt, to fight inflation and control the finances.

A reason not to invest in pensions?

Argentina appears to be planning to seize private pension funds. Who is to say that, in extremis, it couldn't happen here? They're already taking tax on the dividends that were tax-free until 1997.

The Great Theft begins

I comment on The Great Depression of 2006:

Once inflation gets going it'll be Alice in Wonderland, I think. Real wages have to come down in relation to earnings in competitor countries, and house prices have to come down with respect to wages.

So whatever the nominal value, I think we in the West shall see a real depreciation in both houses and the stockmarket, plus a real decline in earnings relative to both consumer prices and foreign labour.

Am I wrong?