The advance of totalitarian ideals continues

In a well-publicised and suspiciously originated piece of research conducted on behalf of MiniJust, doubt is thrown on the "efficient" working of juries. Far better, you may think, ladies and gentlemen of the jury, to leave it all to us and not worry your pretty little heads about it.

Meanwhile, the case against Cossor Ali, in which she is being tried for not acting as a police informer against her husband (despite not knowing exactly what he was going to do), continues.

Also, support for killing the terminally ill grows, according to a poll conducted by YouGov, perhaps not entirely coincidentally well-timed to announce its results just before well-loved author Terry Pratchett was permitted to use his fame and the (exceptionally-well-publicised this year) platform of the BBC's annual Richard Dimbleby Lecture to air his euthanistic views. YouGov is not, officially, a politically-sponsored organisation, but was founded in May 2000 by Stephan Shakespeare (ne Kukowski), a former Socialist Worker and Conservative Party candidate who owns some prominent political websites including ConservativeHome. He may not be directly controlled by any party (though how far do they differ these days?), but oh, for his contacts book!

An old Nazi writes:

"What is all this nonsense of wives not reporting their criminal husbands? In my day, children could inform on their parents, and quite right, too. I trust the Cossor Ali case will set a valuable precedent.

"It is refreshing to see that after the unpleasantness of the late 1930s and early 1940s, and the vilification of us and our ideas in the decades since then, the principles of right-thinking people are finally being rediscovered and properly valued. Gratifyingly, British political parties have been drawing together for decades, forming a consensus on which the New Society can be built. Once the people have asserted their power to deal with all the fleas that multiply on their backs and weaken them, we shall become clean and healthy again.

"A vital first step was the establishment of the right to make the problem of inconvenient children go away. Some 7 million such problems have been solved in the UK since 1968, the overwhelming majority on legal ground C ("The continuance of the pregnancy would involve risk, greater than if the pregnancy were terminated, of injury to the physical or mental health of the pregnant woman"). You will note, of course, that the "injury" does not have to be grave, and can therefore be interpreted to mean as little as a mild social or financial embarrassment.

"The killing of unborn cripples is covered by ground E, and I see that a fruitful extension of this principle has been called for by doctors as lately as 2006, so that newborns may be included in your cost-effective program. Quite rightly, these doctors draw attention to the interests of the family as a whole, and this offers a promising route to including the needs of society at large, especially when so many families are supported by public funds.

"Crime is another kind of disorder in which society most definitely has an interest, and Freakonomics author Steven Levitt famously argued that abortion has been a great boon in this regard. There are those who say his research is fatally flawed, but even if the details are wrong, surely he was on the right lines. The poor are a great burden, and their lives are so messy.

"But you cannot always tell in advance when someone will turn out to be one of Life's failed experiments. Once we have established postnatal abortion, pre-decline "mercy killings" and the execution by thirst of those in a persistent vegetative state, we should be in a position to reformulate the fundamental principles on which society operates.

"How much longer, for example, must felons be spared - so weakly, so expensively, so anomalously - their worthless and destructive lives? Why should the guilty not share the fate of the troublesome innocents you dispatch in such numbers? This is so illogical of you British; but then, my people used to proud of their ability to think. As Menzel said, "Das sinnige deutsche Volk liebt es zu denken und zu dichten, und zum Schreiben hat es immer Zeit." Only connect, ja?

"Before that becomes possible, (and now, it seems, may be the time) we will have to address the unreliability of courts, juries and the appeals system. I confidently expect the evolution of a form of Volksgerichthof in due course, though before that you may need to reeducate public opinion. Perhaps a first step would be revisionist histories on TV to neutralize the pernicious legacies of Magna Carta, 1688, Common Law, natural justice, equity etc. All this blether about historical rights causes nothing but delay and frustration, and comes from undesirable elements of the community. If the people come together, guided by prominent figures and facilitated by mass communication, and shout long and loudly enough, all such divisive opposition will vanish. We live and work today for a bright, efficient, socially harmonious tomorrow, not for a superstitious and contradictory past."

China extending secret support for USA

Reportedly, China has radically reduced its holdings of US Treasury securities; actually, the truth may be exactly the opposite - see my post on the Broad Oak Blog.

China NOT withdrawing support from the US?

UPDATE (28 Feb): another theory (which I heard on Max Keiser's site yesterday) is that China spent the money on buying IMF gold instead, though that doesn't explain the surge in buying from the UK. We'll see next month whether China resumes its support for Treasuries.
______________________________________________"Foreign demand for US Treasury securities falls by record amount as China reduces holdings"
... That's the AP news story as relayed by the Drudge Report. But is all as it seems?

Looking at the data published by the US Treasury, China's holdings dropped by $34.2 billion between November and December 2009; but at the same time, the UK's holdings increased by $24.9 billion, and Hong Kong's increased by $6.7 billion. (The AP reporter quotes a total drop in foreign holdings of $53 billion that month , but that's for T-bills alone, NOT Treasury securities as a whole, which ROSE by $16.9 billion.)

Back in January 2009, Brad Setser analysed purchases of US Treasuries and Agencies, and concluded that the UK (and, to a lesser extent, Hong Kong) was making proxy purchases on behalf of China.

Here is the picture of US Treasury holdings by Japan, China and the UK between Dec 2008 and Dec 2009 (figures are in billions of US dollars):


Now, here is the same information, but aggregating holdings by China and the UK:



... both have risen by 23% over the 13 months to the end of 2009 - like two horses under one yoke. (Total foreign holdings of US Treasury securities increased by 17%).
Far from "China's pulling out", the story might be read as "All hands to the pump, or we'll all sink".
UPDATE: Jake at Econompic concurs.
SECOND UPDATE: It seems one of POTUS' interns is also interested in this issue, to judge by a fleeting visit to this blog:
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Should a bomb-plotter's wife turn supergrass?

Liquid bomb plot wife Cossor Ali 'did not warn police'

This is a tricky one for libertarians and all others who no longer have a naive trust in the State. Should a wife be expected to act as an informer against her husband?

I thought that under English law, a wife is not a compellable witness against her husband in most criminal cases, although a change in the law of Scotland was proposed in 2006. If she cannot be forced to testify against him, why should she be expected to act as a spy or agente provocateuse?

Is this another way in which the State can use a hard case to make a bad law? Is this part of a general modern assault on the natural law of family, so that the State (and, eventually, the Party) will reign supreme in all things?

Swindon twins with Disney

I hear via Classic FM that Disneyworld Florida have twinned with Swindon. Would that be because the Council takes the mickey and the inhabitants are goofy?

It's Inevitable

There was an interesting social science paper a few years ago.

Subjects were given a skills test. Without knowing the results, they were asked to evaluate their own performance. They were then shown someone else's test, and asked to re-evaluate.

The consistent result was that the worst performers consistently evaluated themselves as much better than average, and even upped that evaluation when shown the other paper. The complete opposite was true for the over-achievers.

US students have close to the worst performance in mathematics in the industrialized world, yet rate themselves as 'A'. The South Koreans, who are the best, rate themselves as 'C'.

My own experience with students and faculty supports this. Poor students usually assume that they are doing well. The most educated of my colleagues are hesitant outside their areas of expertise.

That feeling of inadequacy of the best and brightest drives them to excellence. I always think of M.C.Escher, and his quote that 'I wish I could draw better'. Many other famous scientists and artists expressed similar sentiments, and produced wonders.

The fact that our brains appear to be hard-wired to equate confidence with leadership means that we are much more likely to pick our managers and politicians on the basis of self-assurance, rather than ability. This is supported by other studies, showing that taller and better-looking people earn more money and are promoted more often.

This habit of choosing confident 'feel-good' individuals over hesitant problem-solvers goes a long way to explain why US voters overwhelmingly rejected President Carter in favour of Ronald Reagan.

Optimistic pessimism, investor realism

We are in a phase previously seen in the early 80s and early 90s, where commentators and politicians are on the look-out for "green shoots". The 0.1% growth in British GDP for the last quarter is hailed as the official end to the recession, ignoring the painful fact that for 2009 as a whole the economy has suffered a major contraction. That fraction of a percent quoted is so slim as to invite re-examination, and doubtless once one's factored-in margins of error in definition and reporting it might not even be a positive figure after all.

Reported marginal increases in turnover glosses over the fact that companies have been selling off surplus stock at discounted prices, so the profit per unit of production has decreased. Sooner or later, a fall in profits per share will press the markets down again, prompting further layoffs and site closures. This will hit commercial property rents and valuations; and with more unemployed, consumers' mood will become yet more cautious. The cost of the health and welfare system will fall more heavily on a reduced workforce and business base, leading to further pressure to cut costs and maybe move production abroad. That's not just industrial production: with lightspeed communications systems and millions of well-educated, English-speaking people in overseas labour forces, white-collar workers should not imagine that they are safe, and that it is only blue-collar workers and menial employees who must worry about their jobs.

Something must give, and the public sector and the welfare system are in the firing line. However, it is a moot question whether politicians in our democratic systems are able to make tough enough decisions, fast enough. They will look for some other way out, and many will cheer them on- we're already seeing calls for monetary reflation, as though more of the same will cure us.

My self-imposed brief is not to play Cassandra, but to stop my clients and my readers being suckered in the last money grab before the economies restructure. I note that Money Week has finally come round to my view:


Where should you place what little money you have?

Jeff Clark, of Casey Research, says: "We currently recommend our subscribers keep 1/3 of their assets in cash, 1/3 in physical gold, and 1/3 in other investments, including top-notch gold proxies and stocks."
The emphasis on physical gold is significant, because there's much more being traded in promises than can be delivered - if everyone demanded sight of their gold, there'd have to be a sort of pass-the-parcel game for all the contracts to be fulfilled. For the first time in many years, central banks have become net buyers of gold, and China has declared her intention to increase her own stocks from 1,000 tones to 6 or 10 times that in the next decade (China is now the world's largest producer of newly mined gold). There's also a scare story doing the rounds, about some (how many?) bullion bars being nothing more than tungsten coated with a thickish layer of gold; and US Congressman Ron Paul may yet succeed in his campaign for a full audit of the Federal Reserve, which might reveal, among other things, just how little gold is still in the Fed's vaults. It's true that gold has risen very sharply in price over the last few years, and is now above its long-run average in real terms, but that's not surprising at a time of growing unease and distrust of the money system and government in general. Whether the price will explode as some of the gold bugs say, is another matter. Gold is a small market and the speculators are playing in it with cheap borrowed money. (UPDATE: see this article on how gold has changed its behaviour and is now going up and down like other investments - a sign, perhaps, that the speculators are now running the show in gold.)
My approach is to make a distinction between investment and speculation. Investment, I'd suggest, is putting your money where it will grow largely in line with the overall growth of the economy; speculation is trying to achieve more, which must be at someone else's expense. The latter is therefore a gamble, and gamblers often lose.
You should also review your money objectives in the light of your personal circumstances and goals. Do you need to gamble? Remember that there are still fairly secure ways to protect yourself against inflation or default - various National Savings products in the UK, and Treasury products in the US.
I've suggested many times that we will eventually see a much deeper decline in the stockmarket - maybe 4,000 on the Dow and 2,000 on the FTSE - though when, who knows? Given my belief that we are in a "secular" (long-lasting) bear market, then clearly I think that at any point, there is a greater chance that stocks will go down than that they will rise. The odds are against us, and I think that will be true for the next 5 - 10 years. Gamblers will be looking for short-term recoveries, but you may have heard of the formerly big-time successful gambler (can't remember his name) who ended up selling his binoculars for one last bet at the track.
My view is ultimately hopeful, otherwise I shouldn't have bothered relaunching my brokerage this year. If you want a more spine-tingling view, here's an example - but that plays to an unrealistic, dramatic melancholy tendency in us. Even Hitler and his henchcreatures couldn't take the whole of the German people with them into Götterdämmerung. The United States has 300 million people, vast land not fully and efficiently used, mineral and energy resources, a huge and diverse skills base, and the light of freedom in its mind. There may well be uncomfortable change, but you'll never be shoving the bears out of caves to scratch a shivery living in the wilderness.

I'm more worried about my own country, Britain; but at least we don't have bears.

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