Category: Uncategorized

Has the Fed succeeded?

The Z1 report for Q2 2012 is less disastrous than most of the recent reports.  But the financial powers that be are still having to paper over the gap in private credit with federal credit.  Here is the quarterly change in credit outstanding in the various sectors.

  • +0.36% Household
  • +1.08% Financial
  • +0.99% Corporate
  • +1.83% Federal
  • -0.34% State and Local
  • +0.82% Total

So private credit is growing again, but $198.2 of the $447.3 billion increase in total credit was federal.  And at 0.8 percent, total credit growth was still well short of the 2.4 percent average quarterly increase prior to 2008.  Conclusion: this was probably the last minor hurrah before the decline begins again in Q3.

So much for Friedman

Ben Bernanke abandons the economic theory of monetary supremacy:

Bernanke also said then that the Fed could not solve the economy’s problems alone.
“If the fiscal cliff isn’t addressed, as I’ve said, I don’t think our tools are strong enough to offset the effects of a major fiscal shock, so we’d have to think about what to do in that contingency,” he said at a news conference last Thursday following a meeting of Fed policymakers. “It’s really important for the fiscal policymakers to, you know, work together to try and find a solution for that.”

Translation: We’ve been trying for four years to fix this thing and it isn’t working.  QE3 is just another band-aid that can’t even staunch the bleeding anymore, forget healing the wound.  We need you guys to step up to the plate and spend, spend, spend in order to buy us more time to pick up hard assets before the final collapse.

Blind faith in science

Despite philosophy’s failure to do so, some are still fantasizing about Science finally killing God:

Physicists have observed that many of the physical constants that
define our universe, from the mass of the electron to the density of
dark energy, are eerily perfect for supporting life. Alter one of these
constants by a hair, and the universe becomes  unrecognizable. “For
example, if the mass of the neutron were a bit larger (in comparison to
the mass of the proton) than its actual value, hydrogen would not fuse
into deuterium and conventional stars would be impossible,” Carroll
said. And thus, so would life as we know it.

Theologians often seize upon the so-called “fine-tuning” of the
physical constants as evidence that God must have had a hand in them; it
seems he chose the constants just for us. But contemporary physics
explains our seemingly supernatural good luck in a different way.

Some versions of quantum gravity theory, including string theory, predict that our life-giving universe is but one of an infinite number of
universes that altogether make up the multiverse. Among these infinite
universes, the full range of values of all the physical constants are
represented, and only some of the universes have values for the
constants that enable the formation of stars, planets and life as we
know it. We find ourselves in one of the lucky universes (because where
else?).

Some theologians counter that it is far simpler to invoke God than to
postulate the existence of infinitely many universes in order to explain
our universe’s life-giving perfection. To them, Carroll retorts that
the multiverse wasn’t postulated as a complicated way to explain
fine-tuning. On the contrary, it follows as a natural consequence of our
best, most elegant theories.

While it may be true that the multiverse wasn’t originally postulated as a way to explain fine-tuning, there is no question that is the primary way in which it is utilized now.  It borders on the dishonest to pretend otherwise.  The logical irony, of course, is that multiverse theory itself suggests that even if we happen to inhabit a godless universe, there must be other universes in which gods exist.  And then, there is no logical reason to assume that a Creator God which created one universe did not create more universes.  Multiverse theory is not a means of deprecating God, it is merely a means of defending godlessness against the powerful assault of the anthropic principle.

When one contemplate these matters, one quickly realizes that most scientists would do well to stick to science.  Because as both philosophers and theologians, they tend to be remarkably incompetent.

Antarctic expansion

I give it ten years before we start hearing the usual suspects going on about the New Ice Age:

Antarctic sea ice set another record this past week, with the most amount of ice ever recorded on day 256 of the calendar year (September 12 of this leap year).

Of course, the solutions to stopping the New Ice Age will be exactly the same solutions presented to stop the Great Global Inferno.

Death of a gamer

One of the murdered diplomats was a respected EVE player:

On Tuesday, Sean Smith, a Foreign Service Information Management Officer assigned to the American consulate in Benghazi, Libya, typed a message to the director of his online gaming guild: ”Assuming we don’t die tonight. We saw one of our ‘police’ that guard the compound taking pictures.” The consulate was under siege, and within hours, a mob would attack, killing Smith along with three others, including the U.S. ambassador.

In his professional and personal life, Smith was a husband and father of two, an Air Force veteran, and a 10-year veteran of the Foreign Service who had served in Baghdad, Pretoria, Montreal and The Hague. But when gaming with EVE Online guild Goonswarm, he was a popular figure known as “Vile Rat,” and alternately as “Vilerat” while volunteering as a moderator at the internet community Something Awful. Smith’s death was confirmed on Wednesday morning by the State Department and reported widely in the news media. But the first people to report Smith’s death were his friends. Their reaction was shock and mourning.

“My people, I have greivous [sic] news. Vile Rat has been confirmed to be KIA in Benghazi; his family has been informed and the news is likely to break out on the wire services soon,” wrote Goonswarm director Alex Gianturco in a message mirrored to Something Awful at 11:21 EST. “Needless to say, we are in shock, have no words, and have nothing but sympathy for his family and children. I have known Vile Rat since 2006, he was one of the oldest of old-guard goons and one of the best and most effective diplomats this game has ever seen.”

According to his friends, Smith had emerged as a key leader for the community, and was known as a senior guild diplomat who helped engineer the destruction of Goonswarm’s chief rival, the Band of Brothers. He let his guildmates design his tattoo. On Wednesday, Gianturco posted an obituary for his friend of more than six years. “He was on jabber when it happened, that’s the most fucked up thing,” Gianturco wrote. “In Baghdad the same kind of thing happened – incoming sirens, he’d vanish, we’d freak out and he’d come back ok after a bit. This time he said ‘FUCK’ and ‘GUNFIRE’ and then disconnected and never returned.”

In addition to bringing this a little closer to home for everyone who has belonged to an online guild, Vile Rat’s death tends to belie the ridiulous “da masses wuz mad about da movie” narrative being pushed by the Obama administration in a feeble attempt to absolve itself of any responsibility for the deaths of the diplomats. The fact that their own guards was seen taking pictures of the compound before the attack tends to indicate that the attack was a planned and purposeful operation.

Free trade and war

Yet another pillar in the free trade theory appears to be on the verge of falling:

China declares economic war on Japan

China is trying to hurt Japan economically, to gain leverage in its campaign to take control of the Senkaku/Diaoyu islands. In the 2010 confrontations, China took revenge on Japan by terminating shipments of rare earth minerals, needed for manufacturing of many of Japan’s electronic products. In the current confrontation, the Beijing government is encouraging the Chinese people to demonstrate and protest against Japanese businesses in China. The government urged protesters not to use violence, but that part of the message is clearly not getting through. Protesters torched a Panasonic factory and Toyota dealership, looted and ransacked Japanese department stores and supermarkets in several cities. China’s National Tourism Administration ordered travel companies last week to cancel tours to Japan over the weeklong National Day holiday in early October. AP and Bloomberg

Chinese Communist Party urges punitive sanctions against Japan

The Chinese Communist Party (CCP) is urging strong punitive sanctions against Japan, for its “well-orchestrated plan” to take control of the Senkaku/Diaoyu islands, according to the CCP’s official newspaper:

“The “nationalization” of the Diaoyu Islands by Japan after “purchasing” them from a “private owner” is ridiculous and cannot change the fact that they are Chinese territory. … China should take strong countermeasures, especially economic sanctions, to respond to Japan’s provocations. Military consideration, however, should be the last choice.

The United States has frequently used Article XXI Security Exceptions of the WTO (taken from the earlier General Agreement on Tariffs and Trade) to impose economic sanctions on other countries. The security exception clause says a country cannot be stopped from taking any action it considers necessary to protect its security interests. That means a country can impose sanctions on enterprises, financial institutions, organizations and even other countries’ central and local governments. Taking a cue from the US’ practice, China can use the security exception clause to reduce the export of some important materials to Japan.

China didn’t announce any sanctions against the Philippines in April, but it froze banana imports from that country in response to Manila’s aggressive attitude in the Huangyan Island dispute. Though the economic countermeasure forced the Philippines on the back foot, it also harmed the interests of some Chinese enterprises.

So it is important for China to devise a sanction plan against Japan that would cause minimum loss to Chinese enterprises.

The US’ capability to impose economic sanctions on other countries is based on its economic strength, huge share in global trade, financial institutions and global intelligence network. China, too, has the capability to impose sanctions on other countries now that it is the second largest economy, has the largest foreign reserves, and is the largest exporter and second largest importer.

An analysis of Sino-Japanese economic interdependence shows that Japan’s economy will suffer severely if China were to impose sanctions on it. China’s loss would be relatively less. … So it’s clear that China can deal a heavy blow to the Japanese economy without hurting itself too much by resorting to sanctions.

Apart from its reliance on China, Japan has been suffering from other economic ills. First, Japan’s massive government debt is increasing substantially. … Third, Japan’s fiscal deterioration is likely to continue. There are enough indications that Japan’s economic growth in 2013 will slow down or slip into another recession. The irreversible trend of long-term economic downturn, combined with Japan’s aging population, will eat into the country’s household savings, and the declining purchasing power of the Japanese will increase Japan’s fiscal debt. …

But instead of blindly boycotting Japanese goods, China should work out a comprehensive plan which should include imposition of sanctions and taking precautionary measures against any Japanese retaliation. China should also have several rounds of policies ready to undermine the Japanese economy at the least cost of Chinese enterprises.

Furthermore, in case Chinese enterprises suffer because of the sanctions, the Chinese government should be prepared to compensate them. And once China imposes sanctions on Japan, the government should ensure that all enterprises in the country, domestic and foreign, obey the rules.”

China and Japan have only been trading since diplomatic ties were normalized in 1972; China became Japan’s largest trading partner in 2004. A war between two of the world’s largest economies would permanently shatter the oft-heard argument that trade eliminates the possibility of war. It’s an argument that should always have been dubious, however, as England’s many wars against the various principalities in India and the USA’s Middle East wars have all followed the inception of large-scale trade with the region.

Once more, we see that free trade delivers precisely the opposite of what it promises. And, as Generational Dynamics adroitly points out, trade actually expands the range of warfare as well as providing an economic weapon that can be wielded against the trading partner. Even when trade is not a cause of the war, it provides a means of fighting it.

Lest anyone think I am setting up a strawman here, consider this article by a free trade advocate at the Mises Institute: “The Classical Liberals of the nineteenth century were certain that the end of the old Mercantilist system–with its government control of trade and commerce, its bounties (subsidies) and prohibitions on exports and imports–would open wide vistas for improving the material conditions of man through the internationalization of the system of division of labor. They also believed that the elimination of barriers to trade and the free intercourse among men would help to significantly reduce if not end the causes of war among nations.”

A classic gaffe

Mitt Romney commits a classic gaffe by inadvertently stating the obvious:

US Republican presidential candidate Mitt Romney questioned the feasibility of the establishment of a Palestinian state in the West Bank, according to video footage published Tuesday by US magazine Mother Jones.

“I’m torn by two perspectives in this regard,” Romney said at a $50,000-per-plate fundraising dinner on May 17. “One is the one which I’ve had for some time, which is that the Palestinians have no interest whatsoever in establishing peace, and that the pathway to peace is almost unthinkable to accomplish.”

Considering that the Begin-Sadat accord was nearly 40 years ago and there is still no peace in sight, I think that’s a safe conclusion. Of course, why should the Palestinians be interested in peace until they get their land back? Israel has a right to the land by right of conquest, but that very right means that they will likely have to fight to hold it.

Manchuria redux

I think Japan will find it considerably harder to take China if there is a round two:

The Middle East has been a tinderbox for decades. But there’s a problem with our intervention in Afghanistan in particular, and that is the fact that both Pakistan and India, not far away, have nuclear weapons. India is reasonably stable but Pakistan is another matter entirely, and the last thing we need is for a conflict to spread into that country.

The worst of the unrest, however, isn’t there and isn’t being widely-reported. It’s in China.

China and Japan have had a long-running territorial dispute over some a handful of islands. Over the weekend what had been a simmering issue turned into a real problem with Chinese rising up and doing something extraordinary: They are demanding WAR with Japan.

These are not just people waving signs either. They are burning Japanese-linked stores and factories, from sushi places to car dealers. Automobile owners are being ejected from their vehicles on a forcible basis and their cars destroyed. And while I’m sure some official agitation is involved this appears to have caught a number of people by surprise, including officials from Japan and the United States.

It is really remarkable how clearly socionomics predicts these things. Not the specifics, but the generalities. I mean, who would have ever imagined that war between China and Japan could be a genuine possibility in the next ten years? The drums of war are beating and one can hear them nearly everywhere. We’ve all forgotten the Japanese occupation of the 1930s, but it is very clear that the Chinese haven’t.

Most food allergies are fake

Science says either the parents are lying or the little brats are faking it:

Researchers from the University of Portsmouth (U.K.) have discovered the reason why food allergies have increased in recent years: hypochondria. It turns out that four out of five kids who believes he or she is allergic to a food, isn’t. The researchers surveyed over 1,500 children, along with their parents, about food allergies and intolerances. Then they tested those who reported problems, both with skin fold tests and by feeding them the offending food. The results were completely unexpected….

About 12% of children claimed to have adverse reactions to a food, with peanuts, dairy products, wheat, and fish the most common. Only 2.3% actually had a problem, some with merely an “intolerance,” and some with an actual allergy.

This doesn’t surprise me in the slightest. I’ve noticed that most children whose parents say they have food allergies are obnoxious, spoiled little brats who whine about everything and are allergic to the notion that they are not the center of the universe

That wonderful immigrant food

This may be an effective counterpoint to the clueless wonders who, in response to all the government spending, crime, and declining property values, rhapsodize about the great [fill-in-the-blank] restaurants now contributing to the community by expanding their culinary options:

An undercover investigation has revealed a shocking trade in illegal ‘bush meat’ at a London market – including the sale of dead rats for human consumption. Charred sheep skins, another favourite in west Africa known as ‘smokies’, are also being sold by butchers at the Ridley Road market in Dalson, east London. A BBC investigation using hidden cameras uncovered at least six butchers selling the illegal meats, breaking UK food safety laws….

One Hackney butcher sold a researcher some of the illicit meat and said: ‘Don’t tell anyone, otherwise there will be trouble.’ Two African food stores were selling the grasscutter rats, described as having been imported from Ghana.

If moving to a first-world country can’t break some people of their habit of eating rats, how can anyone give any credibility to the idea that a simple change in geographic location is going to change literally everything about their cultural values and societal traditions?