Posted by: graemebird | July 28, 2010

Overlords Or Morons?

If you cannot believe that they can be this stupid, what other alternatives do you have?

So you don’t see anything particularly different about the banking industry? Not even the banking industry in the Northern Hemisphere? Look below at the headline and the first sentence? See if you see anything wrong with it?

Banks’ nervous wait for new global capital rules

GLENN Stevens and John Laker are flying to Switzerland this weekend to be briefed on proposed global banking capital rules……. ”

I see about five things wrong with that. Thats how it slaps ME in-the-face. Maybe if I were forced to make a list I’d come up with six, or only four things outrageous about the above statement.

“The Reserve Bank governor and the Australian Prudential Regulation Authority chief will be trying to make sure that a new ratio of capital to total assets is not set at a level that curbs normal lending for Australia’s banks.”

Now what about the above? Well admittedly this is more esoteric. Insofar as finding out what is completely fucking wrong with it! I would expect anyone to be outraged by the first statement. Naturally; I’m put briefly into homocidal-mode, by the SECOND statement. But thats because I actually am an economics sophisticate. Probably in the top five in this country. Probably in the top two. But I would expect even a mildly patriotic person to see something wrong with the headline, and with the first sentence.

“But regulators are confident that Australian banks have little to fear.

Strenuous lobbying by banks worldwide and concern about the strength of the economic recovery, particularly in Europe, have led to such a watering down of the proposals since they were first canvassed in December that some Australian regulators believe the final result may be less demanding than the standards already imposed by APRA.”

Lets go over that again and we’ll stop when the outrage starts.

“But regulators are confident that Australian banks have little to fear.

Strenuous lobbying …”

OH FOR FUCKSAKES STOP RIGHT THERE. Who are we lobbying? Whose lobbying who? Fucking motherfuckers are lolly-gagging eachother. Thats the fact of it. But look at it from your point of view, (dopey, but patriotic Australian)…. Why do we Australians need to be fucking lobbying these cunts. I mean they are morons. They are RIGHTFUL bankrupts. They are ACTUAL welfare-recipients. And you’ve got to decide for yourselves if they are merely useless, and therefore; harmless flotsam-and jetsam and white trash ………… OR ARE THEY OUR OVERLORDS?

This is not something I can decide for you. Its not something I can prove for an absolute fact! But just how far does the stupidity alibi go?

Now why do we lobby these people? Like a house-nigger, down the back, specializing in white Southern-mans blowjobs, while these white devils, abuse the house-niggers women (over or underage)…. AT WILL!!!?????

Why do we do this? What is the motive? Why go to THEM to lobby? Why not someone else?

Who are these people that we need to lobby? Why aren’t they lobbying me? Why not lobby my Mother? She’ll be happy for the visit and the attention? Do we get anything from these losers? These white trash? These thieves? No of course we don’t. But you see you don’t usually lobby people who have NOTHING to offer you? So are we lobbying for something they can give us? Or are we fucking down on our knees before our sexually spastic masters?

Now fucking Glenn Stevens. Get off your fucking knees you cunt. You look disgusting, go wash that queer-banker-jism out of your thinning hair. And when you are presentable enough to not make me want to puke, you tell us why you wasted the FUCKING COST OF A FLIGHT TO FUCKING SWITZERLAND if these cunts didn’t have anything to give in return? Who are they and why are you lobbying them you fucking pathetic man-whore?

Glenn Steven; you are no longer a man (you stupid little bitch) You are like some sort of Gimp that all these queers used to piss-on, in some decadent backstreet; Berlin circa ’48.

Are we waiting with great NERVOUSNESS on the outcome of all this lobbying (aka, bowing and scraping to welfare queens???)

No no ha ha ha. Not at all. You see I was fooling you. I was showing you an old article. Back when these two urine-soaked-gimps were nervous. Back when they needed a little golden-shower so they could shed a tear, and calm their shot-nerves.

You see little-Glenn and Johnny are BACK. Back-already. And they have hit paydirt, and have (likewise) showered US with gold.




    People ought to pay attention to what the excellence in trade-craft, in their disinformation achieves. It carves us up into “market segments” and defeats each segment in turn. Makes us vulnerable to any crowd wherein snideness replaces reason.

    They got me too and I am still not in the position to say much about it., One the 12th of June I wrote the following ……

    ….. “The placement of any object, sufficiently heavy, with a mildly concave bottom, can easily stop this leakage. So it will go on as long as the perps want to continue with it and not a moment longer…… ”

    Then I started hearing about this volcanic business. And I had to shut up. Since I’m held to a higher standard than anyone else that I talk to.

    Its hard to think of how they can be ‘gathered up’; these fellows.. Because if you get too important (to their potential exposure), they will kill a first cousin, and send you a hint.

    This is a bit of a breakthrough youtube I feel. We just have to be honest. We have to put our faith in reason. And its so valuable to have someone BE-confused, to be willing to admit it, and to lay out the information so clearly.

  2. “amazing….. Graeme is claiming that the famous Eddington observation was a waste of money and not evidence for relativity”

    But you know that yourself Jason!!!!

    You tell me how it could even POSSIBLY be evidence for relativity?

  3. Einstein proposed three tests of general relativity, subsequently called the classical tests of general relativity, in 1916:

    1) the perihelion precession of Mercury’s orbit
    2) the deflection of light by the Sun
    3) the gravitational redshift of light

    Regarding Eddington’s observations:

    The first observation of light deflection was performed by noting the change in position of stars as they passed near the Sun on the celestial sphere. The observations were performed in 1919 by Sir Arthur Eddington and his collaborators during a total solar eclipse, so that the stars near the Sun could be observed. Observations were made simultaneously in the cities of Sobral, Ceará, Brazil and in São Tomé and Príncipe on the west coast of Africa. The result was considered spectacular news and made the front page of most major newspapers. It made Einstein and his theory of general relativity world famous.

    Many experiments since then have confirmed that general relativity is correct.

  4. Right. He proposed them. They don’t logically cohere to his other claims. He already knew the outcome. Lets be frank about this.

    And none of them were evidence for his myriad propositions. All of them represented a FAILURE TO FALSIFY … and therefore a wasted research grant.

    So the test was USELESS from an evidential point fo view. It hardly matters that Popper was taken in . I was taken in also. We were all taken in.


    None of the tests confirmed his theory. All of the tests confirmed already known observations.

    What is it about Newtons theory of gravity that you find incompatible with the behavior of LIGHT?

  5. “All of the tests confirmed already known observations.”

    Johann Georg von Soldner in 1801 (published in 1804) had pointed out that Newtonian gravity predicts that starlight will bend around a massive object. The same value as Soldner’s was calculated by Einstein in 1911 based on the equivalence principle alone. However, Einstein noted in 1915 in the process of completing general relativity, that his (and thus Soldner’s) 1911-result is only half of the correct value. Einstein became the first to calculate the correct value for light bending.

    After Eddington’s observations, by the late 1960s that it was definitively shown that the amount of deflection was the full value predicted by general relativity, and not half that number that was predicted by Newtonian theory.

  6. So what? How does any of that undo anything Newton said?

    It didn’t.

    All it proves is that Einstein had already gotten hold of Soldner’s data and accommodated his model to it. This is all a slander because Newton never made wrong predictions about light. Where are they? Where are Newton’s wrong statements about the behavior of light?

    We’ve been looking at eclipses for FUCKING THOUSANDS OF YEARS.

    So Einstein knew the answer already as did Eddington.

    As I keep saying. This nonsense has no relation to the other claims of special relativity, does not prove any of them, and never was actual scientific evidence in the first place.

    This ought to be simple. This ought to be obvious.

  7. Don’t you guys know what evidence is?

    You don’t even seem to know what a prediction is!!!!

    The theory did not predict the amount of light bending. This was already known. As Ritchie admitted above. The theory did not predict Mercuries orbit. This was already known, as everyone admits.

    So what was this eclipse about? It was failure to falsify. Therefore a waste of money.

    Its just terrible when you’ve got allegedly educated people who have no idea of what constitutes evidence and what does not.




    • Tell me what Newton predicted you lying cunt. You’ve already admitted that Einstein didn’t predict any of that. You mentioned a fellow who had done the hard yards in about 1805. That is to say around 100 years earlier.








  11. Soldners Value according to Newton was 0.84”.

    1911 Einstein published a prediction of 0.83” which is basically the same especially considering the experimental errors. In 1915, before any observations of light bending, he corrected his quantification to 1.75” which is more or less double the old value.

    Measurements were found to be in accord with Einsteins 1915 prediction and were able to falsify Soldners prediction.

  12. Can anyone tell me what Newton predicted HIMSELF?

    No you cannot. And its just ridiculous. Because neither of you can see a pattern forming here.

    If you cannot see a fucking pattern forming…..

  13. Here’s a timeline of events from Newton to Einstein on the issue of bending light”

    Newton suggests the bending of light in his 1704 treatise, Opticks.

    Johann von Soldner calculates the bending of light as it passes by a massive object in 1801, taking 25 pages to do it! The calculation uses Newton’s theory of light as a stream of corpuscles






  14. Newton didn’t predict the bending of light. How could he have? He already knew that light bent.

    Are you claiming that he was ignorant of light bending? He had no such ignorance. He used to poke glass in his eyeballs to test out the spreading of the light.

    Now its true he was wrong about corpuscles. There is no such thing as photons. But so what? None of this helps special relativity along.


  15. site deity sez: Can we at least nail down what a PREDICTION is. Because you are calling things predictions when they are not so.

    Are you claiming, you fucking moron, that no-one had scrupulously investigated eclipses prior to Eddington?

    Surely you are not making such a stupid claim!!!

    Are you claiming that no-one had rigourously investigated eclipses prior to Newton? Of course not. Attempt not to be a dope. So neither of them PREDICTED light bending. They all knew and witnessed the bending of light. They don’t know what light is. They have no fucking idea. But they all knew that light bent.

    So there was no predictions. Can you at least admit that and that will be a dent in the compulsive lying.

  16. Can we nail down what a PREDICTION is? Can we get that under our belts.

    If I say “you must nail down the meaning of the word “prediction” before you continue” ….

    …. You will all run like the pathetic cowards that you are.

  17. Well how about we go about it THIS way.


    Does anyone know what a “prediction” is?

  18. Here we see the decrepitude of the parasitical classes. Dumb fucks cannot so much as figure out what a prediction is.

  19. Overlords or Morons?

    The question keeps raising its ugly head.





  22. Hebrew Science FAIL.

  23. Hey Graeme

    The free market economists at Marginal Revolution have come out for a carbon tax. Isn’t it time to revise your opinion?

    but the case for a carbon tax remains threefold:

    1. Even if we cut government spending a lot, some taxes will have to go up. This seems like the least bad tax to raise or create, since it has some chance of producing a better outcome. It’s hard to say that about most of the other potential tax boosts. I’d also cut the tax deduction for mortgage interest, of course. That too could improve the quality of outcomes.

    2. Given that American policies are contributing to a (probabilistic) climate-based “attack” on Bangladesh and numerous other countries, there is a deontological case for trying to stop that attack. It is a libertarian rights violation issue, driven by all of us in our role as consumers.

    It is a practical response — but to me a morally weak one — to argue “We Americans are the wealthiest country in the world but we’re not competent enough to stop our contribution to the problem, so we’re not going to try.” I get the logic, and I even agree with the predictive pessimism, but I’m not comfortable staying put with that as my final position.

    3. A carbon tax might lead to a new green technology, with high upfront costs and low marginal costs. Some of the rest of the world might then adopt the technology, even if those countries don’t ever adopt a carbon tax. In the short run this seems a little pie-in-the-sky, but in the longer run is it so crazy? Haven’t the Chinese adopted most of our other technological innovations?

  24. Bird, see how many Cat-A-Laxatives you can recognise in this wonderfully pointed piece. Mark Hill, Sinclair Davidson and Joe Cambria leap out. Are their others?

    “I’m as certain as the day is long that the folks on Wall Street, from the myrmidons in the trading pits to the demigods like John Thain, with his thousand-dollar trash basket, knew that they were trafficking in tainted paper. Many of them deserve to be locked up in the federal penitentiary for years on end, and they probably
    never will because president Barack Obama lacked the courage to set the dogs of justice after them and now it is too late.

    The most confused of any putative authorities are the academic economists, lost in the wilderness of their models and equations and their quaint expectations of the way things ought to go if you
    can tweak numbers. These are the people who believe with the faith of little children that if you can measure anything you can control it. They will go down in history as the greatest convocation of clowns ever assembled, surpassing all the collected alchemists, priests, and vizeers employed in the 1500 years
    following the fall of Rome.”

  25. LOL. Articulate lot, the Cat-Naps. Not.

    All these drooling mouthbreathers can do in their obsessive stalking of poor Graeme is post bumf and write the equivalent of “you poohead you” and post it on this blog.

  26. “The free market economists at Marginal Revolution have come out for a carbon tax. Isn’t it time to revise your opinion?”

    How on earth does that idiotic statement cohere? They are not free market economists. They are morons. Who are you talking about specifically? What is their case against CO2? Have they proven that extra CO2 harms agriculture and therefore starves people? Or are they going with the scientific evidence that its the restriction of CO2 that will starve people?

  27. I left a message for them Jason. I let them know I wasn’t impressed. They will of course do the Humphreys two-step where they will say that they only meant “in comparison with the cap-and-kill.”

    Which means of course that you are propagandizing. Since by your own admission this is your view too. Except you are a bullshitartist and a CO2-Bedwetter.

  28. Good Lord this is good. And its pretty much what I’ve been trying to communicate to Catallaxy for some years now. They just refuse to learn stuff:

    “…. The most confused of any putative authorities are the academic economists, lost in the wilderness of their models and equations and their quaint expectations of the way things ought to go if you can tweak numbers.

    These are the people who believe with the faith of little children that if you can measure anything you can control it.

    They will go down in history as the greatest convocation of clowns ever assembled, surpassing all the collected alchemists, priests, and vizeers employed in the 1500 years following the fall of Rome.”

    That is just marvelous. If these people at Catallaxy had any brains, honor or scholarship they would not refer to me without the words “supremely” and “vindicated” in the same sentence. But they don’t seem to care Philomena. The don’t seem to care what dopes they have been. They don’t seem to give a toss how stupid they are, so long as they are all stupid together.

  29. Graeme, what do you think of econometrics? It seems to be nonsensical gibberish to me based on a false notion of economics. Is there any place for it do you think? And if Mark Hill is any guide… it seems to have led him seriously astray.

    /I sometimes use understatement for effect.

    • Thats exactly what its been as a practice. A total ripoff with an incredible record of failure. The whole subject.

      On the other hand it may have some potential for the future. If we could get some competent people supervising the numbers-Rainmen types.

      The people with econometric and sundry quant. or model-buidling skills keep getting all the awards and the big posts at the bigshot universities. They are like blind men who can dismantle, clean and reassemble a machine-gun, but when it comes to the real world they shoot in all directions and cause a great deal of damage.

      In a better world Krugman would have been a talented young research asisstant , working at not much more than minimum wage for George Reisman. But instead Reisman, perhaps our greatest living scientist, and certainly our greatest living economist, is stuck at home looking after his ailing wife.

      It would of course be the right thing to be stuck at home in these conditions. But if you were able to supervise a research project with little Mr Bernanke and Little Mr Krugman,, and so forth, all working for about 16 bucks and hour, then this might make the obvious heartache of ones wifes misfortune a little bit easier to deal with perhaps. Or perhaps not. Perhaps it would just keep two pretty useless nutters from doing the rest of us harm, and keep one of the greatest minds of the age, in a position where he can continue to contribute.

      So everything is back to front in the economics world. And if it were set right, after the defeat of bank and government parasitism, and the wing-clipping of corporatism, then there is a chance that econometrics could in the distant future, turn out to be a viable field of endeavor.

      It would have to be in conjunction with a wider use of trend information, rather than just only economic data. It would require a more holistic approach then what is currently used, and then the pulling out of the predicted economic results at the end of the more holistic process.

      • That’s a fantastic answer, thanks.

        Um, sorry to show my ignorance but what is cybernetic economic management? And what do you think of it?

  30. Well at least we know definitely SuckPoppet is Adrien.

    He used to tell me to “get help. Seriously” just like he did you, just now. In between speculating about my sexual life and looks, i.e. sexually harassing me and telling me to suicide when I’d demolished him in argument.

    Glass Jaw Chap. Not nice.

  31. I think a lot of these guys were actually hot for you at one stage. Particularly Adrien. Claiming to you that he was just a bit too big for Asian women. It might be that the incredible fantasy they have built up is a bit more comforting then any more realistic point of view.

    • Graeme, there are multiple ways I could respond to your as per usual insightful observation.

      But in doing so I’d give away WAY too much female intelligence and information to the enemy.

      Suffice it to say that “to have the hots” for a woman implies a functioning libido and bodily apparatus that is beyond the ken or practical use of most of those poor lonely unattractive guys who cowardly cluster on the incestuous, misogynist, smelly all-male blog of Catallaxy.

  32. Actually, it’s a toss up whether SuckPoppet is Adrien or that perfect storm of a dill from Dubbo, Mark Hillbilly.

  33. Philomena matters academic are much worse than you think. For example with climate and econometric modelling, the dopes failed to take up MULTI-VALENCE-LOGIC.

    Aristotle may have invented the formal laws of logic as a way of cutting down on the clutter. The problem is he invented the formal laws of bivalent logic. And these laws dealt with absolutes. We notice a problem with philosophers generally, and with people who emphasize logic and reason particularly, to take a good idea of theirs, and run with it to ridiculous extremes. And that goes for philosophers I like and admire and not just those I think are villains. That goes for Popper and Rand as well. I can work around it with Rand, and feel happy to oppose her on the margins.

    Well anyhow the ultimate scalable alternative hit the bookstores in the nineties. And it was called MULTI-VALENCE LOGIC. But it reached the public as FUZZY LOGIC.

    You cannot do any sort of modeling without it. But guess what? No-one is doing modeling WITH-it. Its a scandal of dysfunction.

    I cannot give link an example, but back in 2003, before the climate business was proved wrong, the climate people would have all the results of these models published. Thats how confident they were.

    Well what happens with any exercise in modeling, and with most exercises in rigid logical reasoning, unmolested by the felt need for CONVERGENT evidence…… is that all the models fly off the deep end.

    So what would happen when they’d run the models is that twenty of the models would run wild all the way to Venusian conditions and five would plunge below the ice age. So since that time they’ve just massaged their models so they aren’t so dramatic in their stupidity.

    But the fact is that you cannot do any serious modeling without fuzzy logic algorithms. And yet they are not used. Since they go against the quant-Rainman mentality.

    I have waited and waited to see us applying this sort of stuff in industry. Fuzzy logic algorithms are used in Japanese cameras and video recorders. In the balancing of helicopters and things.

    But if what Soon or others understood about the free market were true, then what I’m saying would be untenable. If it works (goes the thinking) then the profit-seekers would have taken it up.

    But then Soon and the others have to learn straight-logic, prior to making judgements on the more human and nuanced results that fuzzy logic produces.

  34. Now the reason I asked you about cybernetic economic management, Graeme, is cos of these two reviews of this book. God almighty, yet ANOTHER book I’ve have to add to the pile. I’ll have to move out of my home soon. There Is No More ROOM!!

  35. It cannot be done Philomena. But then again, supposing the REDS got hold of banking. Supposing Brad Delong flew over here to help out Quiggin, and they became our new banking Czars.

    What he have here is not free enterprise. We can only say that at least it is not as bad as in the US. But the banks are fundamentally wealth destroyers right now. With Delong and Quiggin running them, its likely they would STILL be wealth destoryers but not as bad.

    So you might consider this a gain. But what we really want is 100% backed growth-deflation.

    Then for the bankers to survive they would have to be wealth-creators. Should we then make pty ltd mean 100% equity finance, for the banks to survive, they would have to be wealth creators IN SMALL BUSINESS.

    With all the small business wealth creation there would simply not be the room for the bigshots to be paying themselves these outrageous salaries.

    But most of all the narrow-minded mentality would be broken. Thats what I’m really concerned with. All of our elites have lost the ability to think in any sort of functional way. We have become top-heavy in high-paid “intellectuals” who ought to have been low-paid tradesmen’s assisstants.

    Now it might be the case that if the takeover was just of banking these people could do a lot of harm but somewhat less harm then the current dysfunction.

    If these guys tried to take the whole lot over, then thats total breakdown. Mises proved this 100 years ago. Total breakdown, wherein to survive we are either farmers, farmer-security staff, or running direct services to farmers.

  36. Actually, I studied Logic at school for Year 12. And I know full-well its limitations, not least because of the dialectical materialist critique of it I studied several years later.

  37. Is econometrics fundamental to climate science modelling?

    • No but they are both dysfunctional forms of modeling. Both because they don’t currently involve fuzzy logic alogarithms, and constructing or even so much as recognizing, a valid conceptual model, to put their numbers and number-crunching too, is beyond the ken of the practitioners.

      The climate modelers take the dysfunction one step further. They merely assume that CO2 is a massive driver of climate. Thats what they ought to be finding out. But instead of finding it out (had they tried, they would by now have found out that its a feeble influence either way) they merely assume it. So the tendentiousness is programmed into the model, along with all the other things they have wrong, both in process and outcome. They have no understanding of how to even go about setting up a sophisticated model. They act as if they want to go out on stage and be Lord Lawrence Olivier, straight away, without any process. I’ve tried to talk to them about setting up a crude dummy model and slowly evolving it, they don’t know what the fuck I’m talking about.

  38. These are sci-fi writers and reviewers and they seemed to have researched and extrapolated on real history and stuff I’ve never heard or known of in relation to Soviet economic management.

    I’m going to get this book.

  39. Oh, mea culpa, I wash my mouth out with soap. The author of this book is Francis Spufford, and to refer to him as a sci-fi novelist (my least favorite fiction genre anyways) is a travesty, he’s way broader and deeper than that.

  40. Right. But it won’t be any use. It can only cause harm. I’ve not heard about the concept prior to you mentioning it to me. There can be nothing good in it.

    Cyber means man and machine joining together. But we do that in the private sector already.

    “Economic management” is a euphemism. Once you recognize the euphemism then all the hope of this eschatological-utopian resurgence breaks down. Since of course, economic management is the exercise of brute force and stealing …… where it isn’t about guiding each industry smoothly towards becoming a functioning free market industry.

    Its almost inconceivable that there could be anything worthwhile in the project.

  41. It sounds a bit like what Cambria and Soon used to get excited about a few years ago. They used to talk about the quickening or something. I cannot remember the phrase. It was about some ludicrous and explosive event horizon or big bang in economic development that could hit us at any time.

    It was all an extrapolation of “Moore’s Law”

    Quiggin would seem to have put forth a slightly less breathless and implausible idea in a big article in the Financial Review. He seemed to want to put his faith in “information. ”

    But in each case its really not worth thinking about except to stop people from getting excited and effecting their wild schemes.

    We got to take the punch bowl away from nutty ideas like this.

  42. What do you make of this statement Philomana?

    “Wow. Sure, they deserved money, and it was appalling that it happened at all, but still this seems extraordinarily generous, doesn’t it?:

    “THE family of an Aboriginal elder who died of heat stroke in the back of a prison transfer van have been awarded a $3 million ex-gratia compensation.

    The ex-gratia payment comes on top of the $200,000 interim payment they received.”

    This is how stupid they are at Catallaxy. Completely unable to extrapolate to their own situation.

  43. I haven’t seen that news. But the comment (from Catallaxy I presume) and mindset of whoever wrote that, saddens and disgusts me.

    Because rather than focussing on the $ amount payout – and we all know compensation law is arbitrary, wayward and a crock and that it rarely genuinely compensates the weakest, most vulnerable people injured by the stronger and more powerful and their practices – the untold story is that this police practice of transferring often ill or bashed Aboriginal people long distances in non-airconditioned vans is common practice.

    A common form of inhumanity in Australia today that only gets wider attention when someone dies.

    But a capacity for empathy is beyond the right-wing creeps who coldly focus only on the monetary issue in this tragedy.

    God help their families is all I can say.

  44. Graeme, what novel (non-western genre) does this clip bring to mind?

  45. Beats me. Something by Kafka? The Trial?

    • Excellent choice. My first thought was Camus or Samuel Beckett. Of course, the pickings are rich. And then there’s the playwrights and screenwriters, Ibsen or Bergman, Chekhov or …

      Existentialism and noir rock.

  46. Interview with a Catallaxian:

  47. The full stop above is indicative of the poster’s cognitive abilities and where he sits on a learning curve and is also about the approximate size of his brain. Obviously.

  48. Graeme,

    I’ve been so busy and jet lagged since I arrived home that I haven’t had time to tell you of the final day of my trip. It was a day where we revelled in the glorious sadness of departing from our mountain base and cycling back to our final destination. We awoke early to a feast of Tuscan toast rubbed with garlic and drizzled with copious olive oil. They call it Fettuna, and it is delightfully simple and delicious. On top was scrambled eggs, Tuscan style with parmesan, onion and garlic basil and parsley. Unlike the traditional anglo-saxon scrambled eggs with is thick and heavy with butter and dairy, the basil and olives made the dish buoyant and almost fruity. Since it was the last day I had two servings, and indulged in some wine as did many in our group.
    We had a hard days cycling ahead, the trip back to the airport in Pisa is 500kms but we have become stronger every day, and from our mountain base this was mostly down hill. The stronger members of our group (Who would have thought some spin classes and 6 days on a bike could have transformed me so!), were each assigned to assist one of the weaker members. I took on the poor emaciated boy who only eats at Dominos and has broken his ankle. He had been quite a strong rider before he left, but was struggling on only one good leg and no food. He didn’t know it but I had been putting olive oil into his drink bottle and I suspect that this sustained him over his last day
    The day began well we descended somewhat before crossing the Apennines. This was the hardest part, and on several hill sections I had to give the poor boy a push to maintain speed. It was an incredible journey, and was sad to have to race through the terrain at such a speed! The hill sides were dotted with Olive trees and goats. It was glorious and the thin mountain air felt ever fresher.
    However it was not a day without sadness. I have said that the olive tree sits lightly on the ground, and as we found out sometimes too lightly. In a high mountain pass in central Italy there was a tree with a poor boys name on it for indeed the Moirae did come. Sliding down the hillside an olive tree had become unsettled and its path out of this world intersected with that of the poor boy I was helping he was jettisoned out over the cliff and we watched as he raced down to eternity never to eat Dominos again.
    I was reminded of Shakespeare in Henry VI.
    What fates impose, that men must needs abide; it boots not to resist both wind and tide.
    We stopped briefly to mourn his passing, pleased that he had spent the last glorious days with us in the mountains but we had a plane to catch. Our hosts assured us they would get someone to send his body home.
    The time we had lost mourning was quickly made up as he was unfortunately the slowest amongst our number. The tour became a race with the semi-professionals forming a peloton onto which us amateurs soon gravitated. I had not done much road racing before but I surprised myself and others with my strength. As we approached the airport and our inevitable departure I broke away from the group streaking ahead much to the chagrin of the semi-professional riders!
    It was a 10 hour ride, and we were tired and we arrived in plenty of time to pack our gear and get on the plane. There’s not much more to say really except that the food on the plane was as terrible as one would expect, and after that ride I slept for almost the entire flight!

  49. Again, the total lack of empathy exhibited in the above is the central motif in what ever a Catallackian writes about, regardless of topic. It is involuntary and even unconscious I would surmise.

    The death of others is cause for commentary about the exchange of money, or derisory laughter. That’s what right-wing politics does to a certain sort of male lowlife.

    Nasty outcome for them, and anyone who has anything to do with them on a personal level, I’d wager.

    Social autism, sociopathy and narcissistic personality disorder are the taxonomical terms applicable to these under-exercised and stunted(mentally, emotionally and physically) male children.

  50. Graeme,

    The above is not me. Clearly one of the autistic Catalespians is trying to imitate me. The emotionally abusive language and complete lack of feeling for those suffering a seriously debilitating condition (autism) is a typical motif.

    We should ignore these igorant fools who waste their time writing econometric fantansies and are totally emotionally retarded.

    We passed the School, where Children strove
    At Recess—in the Ring—
    We passed the fields of Gazing Grain—
    We passed the Setting Sun—

    Or rather—He passed Us—
    The Dews drew quivering and chill—
    For only Gossamer, my Gown—
    My Tippet—only Tulle—

    We paused before a House that seemed
    A Swelling of the Ground—
    The Roof was scarcely visible—
    The Cornice—in the Ground—

    Since then—’tis Centuries—and yet
    Feels shorter than the Day
    I first surmised the Horses’ Heads
    Were toward Eternity—

  51. Several more leitmotifs of Catalaxatives again exhibited in the wrong gravatared and therefore wrong email addressed “Philomena” imposter above: unoriginality, linguistic incomprehension, psychological illiteracy and the biggy of them all the omnipresent obsession with violent death.

    What a tormented at the same time dull mental universe they must live in, Mr Bird!

  52. Graeme,

    See gain, the same cliched insults and complete lack of self awareness. They try to imitate me but they lack the emotive appeal. The cold, cold anger and hate is all that is evident above.

    Take this kiss upon the brow!
    And, in parting from you now,
    Thus much let me avow-
    You are not wrong, who deem
    That my days have been a dream;
    Yet if hope has flown away
    In a night, or in a day,
    In a vision, or in none,
    Is it therefore the less gone?
    All that we see or seem
    Is but a dream within a dream.

    I stand amid the roar
    Of a surf-tormented shore,
    And I hold within my hand
    Grains of the golden sand-
    How few! yet how they creep
    Through my fingers to the deep,
    While I weep- while I weep!
    O God! can I not grasp
    Them with a tighter clasp?
    O God! can I not save
    One from the pitiless wave?
    Is all that we see or seem
    But a dream within a dream?

  53. As the asp gathers apace
    The lonely spinster reaches for mace
    Alas she toggles too far down
    Into her dreams of the red haired clown
    Pursue pursue unto the deep
    The violet chaste red haired leap
    Doom asunders the waves ashore
    And brings the thunder to a roar
    Athwart the ocean’s witless cries
    Neath the tulips where the heron dies
    Creep catlike atop the vines
    Where fingerless hands adorn the mines

  54. Thou art the chunder in the butter
    The foam that masks the mutter
    While macaques mirthful from myrrh and truffles
    Pluck frenzied supper from bird wing ruffles
    Sayeth the ancient rime that thou art whispers
    Mock the dandy costumed lipsers
    Pray tell ye how revolveth the globe on which
    The demented doctor propels the leech

  55. As you know, Mr B, I never write poetry, though you have urged me to jointly write a ballad with you.

    And I’m not interested in doggerel and would never post the poetry of another, unattributed, as has been done upthread, even bad poetry. I’m old-fashioned like that.

    No, I only quote here (or recite out loud to myself or others or the animals and birds of the wild) the very best poetry from down the ages for your and my delight.

    Like this one:

    Phoebus red crashing wall of cloud
    Swim under his lid mingle
    With my hair
    Tie him so tight so he can’t tell
    Whether it’s Monday or Friday or
    What century it is whether he’s
    Read Ovid or seen him whether I
    Am his spoon his wife or
    Just some cloud creature
    Athwart the sky

    Sarah Kirsch

  56. Hey lady, you lady, cursing at your life
    You’re a discontented mother and a regimented wife
    I’ve no doubt you dream about the things you’ll never do
    But, I wish someone had talked to me
    Like I wanna talk to you…..

    Oh, I’ve been to Georgia and California and anywhere I could run
    I took the hand of a preacher man and we made love in the sun
    But I ran out of places and friendly faces because I had to be free
    I’ve been to paradise but I’ve never been to me

    Please lady, please lady, don’t just walk away
    ‘Cause I have this need to tell you why I’m all alone today
    I can see so much of me still living in your eyes
    Won’t you share a part of a weary heart that has lived million lies….

    Oh, I’ve been to Niece and the Isle of Greece while I’ve sipped champagne on a yacht
    I’ve moved like Harlow in Monte Carlo and showed ’em what I’ve got
    I’ve been undressed by kings and I’ve seen some things that a woman ain’t supposed to see
    I’ve been to paradise, but I’ve never been to me

    Hey, you know what paradise is?
    It’s a lie, a fantasy we create about people and places as we’d like them to be
    But you know what truth is?
    It’s that little baby you’re holding, it’s that man you fought with this morning
    The same one you’re going to make love with tonight
    That’s truth, that’s love……

    Sometimes I’ve been to crying for unborn children that might have made me complete
    But I took the sweet life, I never knew I’d be bitter from the sweet
    I’ve spent my life exploring the subtle whoring that costs too much to be free
    Hey lady……
    I’ve been to paradise, (I’ve been to paradise)
    But I’ve never been to me

    (I’ve been to Georgia and California, and anywhere I could run)
    I’ve been to paradise, never been to me
    (I’ve been to Neice and the isle of Greece while I’ve sipped champagne on a yacht)
    I’ve been to paradise, never been to me
    (I’ve been to cryin’ for unborn children that might have made me complete)
    I’ve been to paradise, never been to me
    (I’ve been to Georgia and California, and anywhere I could run)
    I’ve been to paradise, never been to me

  57. Gungajin, poetry liberates. Thought is also free. Who needs to travel? As Kafka wrote and I heartily agree:

    “You don’t need to leave your room. Remain sitting at your table and listen. Do not even listen, simply wait. Do not even wait, be quite still and solitary. The world will freely offer itself to you to be unmasked. It has no choice, it will roll in ecstasy at your feet.”

  58. For Graeme and Gungajin (a friend, Graeme)


  60. From elsewhere:

    “Second, let’s charge for the true costs of highways and streets and other car infrastructure in our gasoline taxes…. ”

    Putting aside the bait and switch nature, of so many proposals made by modern alleged-Pigouvians, we would need to look at how things pan out from a technical economic point of view. To do this we must differentiate from the original Pigouvian economic proposal and the modern alleged-Pigouvian mindset.

    We will call this modern mindset The “Sado-Pigouvian Mindset.” Or Sado-Pigthinking. We might call a less lunatic approach, “Technical-Pigouvian” or variants of this phraseology, not likely to be misunderstood.

    Now the above proposal is not the most offensive outright. Nor is it the most offensive from the Tech-Pig-perspective. But its still gravely wrong, and unnecessarily so, and the proposal screams out “bait and switch.” It could not be more obvious that the tech-pig-valid approach (in this regard) is to advocate a CONGESTION-tax. And no other major tax. Once you start deviating from what you’ve learnt and what you understand, its either a race to the bottom, or its the actual full-blown madness, of the advocacy of taxing a POSTIVE-EXTERNALITY.

    Now at least the higher gasoline tax proposal is only one step removed from tech-pig-correctness. But where does this utter madness of the “carbon tax” fit in?

    “Second, let’s charge for the true costs of highways and streets and other car infrastructure in our gasoline taxes….”

    Why does this not have CONGESTION-TAX written all over it? Being as we already have gasoline tax, the obvious approach is to replace all or most of it with congestion tax. Even the mean-spirited amongst us, who lack human feeling, and who are after a higher tax take, would have to agree that the problem implies only the addition of a congestion tax, to the already existing gasoline tax.

    Its not up to economists to try and nuance policy. Thats getting above your station and you only make fools of yourselves when you try it on.

    Stop trying to anticipate the politics of matters. You are economists. Tell people what you think you know. They are relying on you to be economists. They deserve better from tax-eaters than this idiocy of advocating the taxing of a positive-externality.

    This anti-CO2-scam is merely showing up who is the weak-minded amongst us. The feeble minded who can be TURNED by a lot of leftist nagging and nashing of teeth.

  61. From Elsewhere:

    Well you see how pernicious an idea this business of externalities is!! Clearly its a dangerous idea, since we’ve seen people so irresponsible in the application. No matter how sensible the Pigouvian idea seems, it does no good, if its going to awaken a bloodlust to vandalize the biosphere (and the economy) in support of a brazen racket, like the anti-CO2 campaign.

    One potential guide for the Americans, (when it comes to Pigou) is the equal protection clause. If you followed that clause, and interpreted the-clause to mean; that alleged negative externalities had to be taxed on the local or state level, (or the tax be declared unconstitutional), then a lot of this madness would be impossible. Then some sort of nuance might prevail over the lust to tax other people.

    Thereafter perhaps, the concept of taxing externalities might be applied and discussed, in a level-headed way.

    Congestion tax is user-pays anyway. It can be justified on non-Pigouvian grounds. Likewise higher royalties can be justified on non-Pigouvian grounds, as the price paid to establish property rights. Royalties could be seen as a pretty close match to a non-renewable resources tax, should Club-Of-Rome fears get the better of people.

    What I’m perplexed about is the endless sloppiness with which these Pigouvian advocates wish to recommend actually applying their ideas.

    For the moment a sort of “market socialism” may well be the best way to run the roads, until such time as the economists want to get their act together, on matters to do with non-free-hold property titles. Until they have developed the best rules for dealing with trans-spatial goods investment. Raising money via congestion tax would seem to be a very close match here.

    Raising money via gasoline tax is a far more indirect “solution”, and has to be seen as on-the-nose.

    But then using the costs of roads, as an excuse for a carbon-tax, is just so astonishingly indirect ….. well it has to be judged clearly, for the Sado-Pigouvian-lunacy, that it most surely is.

  62. Keep it up Kevin. You are doing Gods work. If Kevin, through Laurie Oakes, makes sure that Labour gets into opposition this time around, he will be doing great things for this country.

    No latte leftist who is not serious about our national security can be allowed to stay Prime Minister. Already she has sent the message that we are ready for further colonisation. Plus the continued debt she is determined to stack up itself compromises our national security. The Soviet Union and the US have both been laid low by debt and thats where Gillard wants to take us.

    This is not anti-labour talk. The labour party needs time out to sort itself out, and to cull the Prodeo types from leadership.

  63. “If you can’t be arsed to attend an NSC meeting your attendance at a digger’s funeral is nothing more than sordid lie.”

    Very true. The whole idea is to prevent the death of the digger and uphold the sovereignty and security of the country. This is not a serious national leader.

  64. The idiocy of THR, as he attempts to make excuses for Gillard (an attempt which backfires horriby).

    “Actually, ‘national security’ sounds important as a term, but in Australia, at least, is relatively trivial in reality…… ”

    Riiiigggghhhhhttt. THR then goes on to say that Afghanistan is not being undertaken for national security reasons. He doesn’t specify what reasons he thinks are the real ones.

    I would say that we are reducing our national security being there and we ought to be out. But the combination of having these people in the field and failing to take their imperiled status seriously is what is disgusting.

    Now the communist THR is not qualified to head up this nation and neither is anyone who has this fantasy that we don’t have a national security problem. But also the communist Gillard is in the same way not up to the task of heading up this country. And it is very likely that she indeed takes the same attitude as THR.

    Peace and sovereignty don’t need to be explained in this view. Apparently governments aren’t wicked grasping thieves after all, and the same government that rips organs out of its own innocent citizens and plants thousands of agents of influence in our country, is not anything to worry about in the view of the fucking moron THR.

  65. The idiot THR continues, in the context of continued injuries and deaths to our soldiers:

    “They can get the details without wasting time in meetings. Australia is hardly in the middle of the Blitz, and our reasons for war are political rather than strategic.”

    You are hardly in the middle of a blitz you shit for brains. But our guys are getting blown up, and fired upon, and they are having to kill people, some of whom they probably ought not be killing. They ought to be home defending our continent or resting, seeing their family, training new people. This sort of thing.

    This is so fucking callous and lame as an excuse by THR on behalf of Gillard. Because for starters he’s wrong about us not having a security problem. Our security problem is just fucking awesome. How do 22 million people defend an entire continent against invasion, or more immediately, subversion? Good question. Tough Gig.

    But supposing THR is right and that we ought not be in Afghanistan. Well you fucking cunt THR. Then she ought to have been at the meetings trying to figure out how to make these guys safer/and-or brings these guys home, and/or to improve her understanding of military and security matters more generally.

    But no. She is an idiot. And she probably thinks like THR does.

  66. I don’t like “fitted” sheets. I don’t remember them as a kid. I do not understand what problem there is that they are meant to solve. They are not forgiving as to the size of the bed. A slightly too-large normal sheet is fine for many sizes of bed. But the fitted sheet is to be fitted exactly. They don’t dry well on the line in the winter, when the drier is busted, since you cannot spread them out properly. I don’t see them as being any sensible sort of invention at all.

  67. Phil said: “Who needs to travel? As Kafka wrote and I heartily agree:

    “You don’t need to leave your room. …””

    With this admission, it’s even more painfully obvious to everyone except Bird that Phil’s accounts of a cycling holiday were conducted solely in the lounge room with a laptop while watching the tour de France.

  68. My God you are an idiot. Yes I read your idiotic statement at Catallaxy. What a dim bulb you are Cambria.

    Make yourself useful and give me your take on the fitted sheet controversy.

  69. Most of the population wouldn’t have a problem with fitted sheets, unless you were a moron trying to fit a db size sheet onto a QS bed, is that your problem Bird?

    You probably think that fitted sheets were invented by a commie fascist jew gook lying cunt, aided by the evil of fractional reserve. Am I close Bird?

  70. Right. But what are the compensatory benefits of the fitted sheet? The less masculine of the Catallaxy crowd appear to find benefit in them. But they won’t say exactly what that benefit is.

  71. The fitted sheet, from my point of view, came in from the supply side. I haven’t bought these things since well before I was married. But when I did buy them it was only through lack of choice in the shops involved. So I don’t really know when it came in. Birdlab says he’s always had fitted sheets. I suspect he lies about everything.

    When I was just at the Novotel in Bangkok, they didn’t have fitted sheets there. I don’t remember encountering them in any Hotel I’ve been to. Could it be that they are a bit of a time-waster, when it comes to making beds on an industrial scale?

  72. “Gillard can speak for herself. In any event, Australia does not have any security problem, much less an ‘awesome’ one.”

    What a complete fuckwit. Where do you start with someone as dense as this? The reason we haven’t been invaded, shit-for-brains, is that people less mentally retarded then yourself, THR, have put massive time, effort, and funds into making sure that we would not be invaded.

    Just get it through your thick head that you are a fucking dumb cunt, and that there is no chance of you ever understanding concepts of national security. Get it through that fucking intellectually handicapped “mind” of yours, that the reasons we weren’t invaded, despite awesome security challenges, is because people did not see matters the way that you do.

    What are you doing here Cambria? Sort this fucking retard out. What a fucking moron. How is this fellow’s understanding of world history and international relations? What a fucking dill.

    And there is a chance, that Gillard thinks just like him. Or why would she not attend the meetings, and get there early every time? She probably DOES think like THR. We must assume that she does. So she cannot be allowed to stay PM, every day she is in the job is a risk. A risk from the point of view of not sending the right signals to bigshots overseas. The inability to set the right posture. To show the right fortitude. This is dangerous. Once the sense of deterrence is breached, it can be very hard to get that sense back again, and stay out of trouble, both at the same time.

  73. What a moron. 22 million people. A very tough neighborhood to our North. And we have to somehow secure the entire continent. So what does THR think about this very difficult security challenge?

    “In any event, Australia does not have any security problem, much less an ‘awesome’ one.””

    So 22 million people. 22 million people in a multi-racial community mind you. A whole continent to protect from attacks on our sovereignty and standing.


    Now the point is Gillard may well think the same way. She too may well have this truncated view of statecraft, defense, and international relations that THR has. AND SHE PROBABLY DOES.

    Its one thing for Ron Paul to talk in this way. His contrary has trillions of accumulated investment in defense, and they could quite ably retreat to be a large Switzerland as Ron would have it.

    We have to be so much more hardheaded. Since our security task is so much more difficult.

  74. The posture the great theorist of Statecraft (THR) hopes we project towards Beijing and Jakarta:

    “That’s about it. It’s nonsense to think a PM is required to micromanage defence. Attendance at meetings is a waste of time if the same info can be gleaned from minutes or a memo.”

    Swell. Next time they want to take our guys from Rio Tinto hostage, and as well club to death an entire Australian family, shall we suppose they will look at Gillard and Labour and feel discouraged in this sort of “message sending”?

  75. I take a different point of view of course. I think that all MP’s would ideally be learning about defense all the time. I think the PM ought to be a defense expert (which is why I would have been fine with a Beazely-lead government. Actually I would have been happy with that huge ex-taxi-driver a PM as well. Robert Ray.

    In a time when our own governments are getting to be so full-blown in their thieving it can be hard to remember that for smaller powers, it is foreign governments that are to be feared. As almost every year of history prior to American hegemony shows us.

    Generally speaking a middle power is happy and free only when it is powerfully strong and in a state of readiness …. and yet at peace.

    Here we are not particularly strong, and yet we have sent a lot of our people to war. The wrong combination entire.

  76. The sixth largest country in the world. 7,686,850 square kilometres of territory. A coastline 25,765 kilometres long. Thousands of Chinese agents already in place. Only 22 million people in population.

    THR: NO SECURITY PROBLEM AT ALL. Much less an awesome one.

    Well you see what happens when you lie all the time. Your brain turns to mush.

  77. THR is saying that we are only in Afghanistan to help the Americans out?

    Well surely that shows a severe security problem does it not? Are we helping them out, nine years on, because we DON’T have awesome security issues? More coastline per head of population than nearly any other buggers and thousands of foreign agents already dug in?

    And so seeing as our superpower partner is now scuttling itself, this implies that in their absence our security problems must be dire indeed!!!

    Or else why are we in Afghanistan nine years on? And again, if there is no reason to be there, then Gillard, not going to these meetings, and getting ammunition, in order to secure the home-coming of our boys and girls is callous beyond imagination. Did she not show up at some of the funerals?

    So yes, we have to assume that she is in contempt of the people who defend this continent, whether they do so by the direct powers of their assumed lethality, or whether they do so as a bargaining chip to buy off our stronger ally.

    Yes we have to assume that THR’s attitude is likely to be representative as something quite close to Gillard’s own views on these matters; Deeply callous and deeply ignorant. Ignorant of history, human relations, and pretty much anything which would give Gillard (or THR) an understanding of how matters may unfold, should the American power begin to fade from our region, which it is likely to begin to do very soon. And then what if another of our citizens is taken hostage? Another of our families is beaten to death? Just look the other way and say: “You cannot prove anything.” And bow to Chinese wishes on everything. This is no way to maintain our sovereignty. We are already to a point where few people will even so much as mention that perhaps we ought be sending some of the agents home.

  78. Mr Bird, how best can we address Australia’s massive security issues?

    I think a three point program is in order:

    1. Relocate all major cities inland. Harden up the soft and fatty interior of the country by way of internal migration.

    2. Expel all Chinese/Russian/Danish agents of influence, especially when they are corrupting the once-noble profession of economics (like SOON). Mass-sack/execute the public service. In the case of Chinese/Russian/Danish public servants, drag their corpses through the streets on your car/chariot.

    3. Abolish fractional reserve banking, that original sin, both morally and economically speaking.

    I look forward to reading your thoughts on these matters, comrade Bird.

  79. We had plenty of provocations, during this last governments term, whereby we could have used these putupons, to put every known agent on a time-limit.

    When a provocation, like hostage-taking goes down … then we ask ourselves one question …. Which government backs down.

    We would have needed an endless stream of retaliatory measures, as well as massive non-defense spending cuts, to have been victorious on these matters. It cannot be an easy thing to chastise Beijing and get her to back down. Instead we sold more of our mining properties to her. In other words WE BACKED DOWN.

    It depends whose willpower is greater, us or the Chinese. Its a contest of Wills. Now in a contest of wills, I don’t know how I or anyone else would go. But you’ve got to line up these potential diplomatic actions in advance, to take advantage of put-upons when they arise.

    I’m not saying I could get everything I wanted out of the Chinese. You have to have the country behind you. But the very preparation to bring down the slipper on these assholes would probably convince them not to kidnap our fellas again for awhile, nor to bludgeon our families to death.

    So yeah I cannot spell out what will go down in a diplomatic battle. I can only say that if it was me, should these guys try anything on, I would use it to put all known agents on a time limit, prior to the rest of the shoes from my caterpillar landing on these fuckers.

    In the end what you want is communists in high places having to go through a period of SELF-CRITICISM. Try saying self-criticism with an angry and urgent Chinese accent and you will know what I’m getting at.

  80. Try saying self-criticism with an angry and urgent Chinese accent and you will know what I’m getting at.

    I will.


  81. GMB – THR’s “nonchalant” position on security matters is actually a textbook Leftist Reversal. If you ask him his position on the Cuban or Venezuelan national security committees, he becomes a paranoid, tinfoil-clad security obsessive. Even opposition newspapers need to be shut down on national security grounds. You’ll find a similar Leftist Reversal on the right to strike – it’s an unnecessary indulgence in Cuba as you might have guessed.

    So when you are dealing with the Left on national security, it’s always worth asking “Who, Whom?”. Their answers are often revealing.

  82. It reminds me of something that I said to a Muslim acquaintance about seven years ago. “You don’t want peace. You just want your side to win.” This is invariably the case. Its wrong to assume that the other fellow wants peace. Usually he doesn’t.

    In THR’s case, if you could be sure he wasn’t merely parroting, you could probably safely take him out the back and shoot him for treason.

    Already we are locked into this position of fear where no-one can see their way clear to sending the agents home. To allow matters to get to this position foreordains a future where we are either a Vassal state or worse, or we successfully repel an armed invasion. We ought to start preparing for the latter asap. Because having a population already locked into that car-in-headlights psychology, doesn’t speak very well for our future.

    I found that it was a strategic win for Beijing to so much as allow the opponents to even use the word “spy” in this context. That way agent SOON will agree that we can send them home. But only should we catch them red-handed “spying.” And convict them in a court of law for “spying.” Then the next thing is people say things like “We don’t have anything worth spying on” which kind of makes one wonder why Beijing would have so many of their people on the payroll over here.

    It just appalling. Next they’ll be calling us ‘South Seas Lebanese.’ Its like we’ve got our own Hezbollah stationed here. Its like we are already dominated by China in the way that Lebanon is pushed around by Iran and Syria. Only if it was Iran running forward defense in this way, In Australia, we might well summon the moxie to send the agents home.

    In peace talks Nixon strangely agreed to leave thousands of Viet Cong in South Vietnam. How the combined forces of leftist persuasion managed to convince him to allow such a strategic defeat, is anyone’s guess. The leftist opinion-shapers seem to be able to control what is embarrassing to object to. The Americans had basically won. But then they lost. Having what amounted to Chinese forward positioning couldn’t have been helpful on this occasion either. It appears impossible to get people to rule things out on first principles. They aren’t content to do things on first principles and want you to spell out exactly what each agent is doing, and to prove how you know this beyond all doubt.

    Naturally this requirement is always impossible. It would mean giving up your own sources for starters. So the argument simply cannot be won with these people, hence the need to send agents home on first principles. People seem to either have the mind for matters strategic, or they appear intellectually handicapped by the absence of any strategic sense.

  83. Look at this fucking liar:

    “They’re professional volunteers. Withdraw them from combat tomorrow, and nobody will change their vote. Not that their presence in Afghanistan has anything whatsoever to do with Australia’s ‘security’.”

    But by his own admission he claims that we are doing it for the Americans. Not for some Swedish women’s tennis club, but for the Americans. For the ally who spends a trillion a year on defense and who could effortlessly expel any non-nuclear Armada trying to take on Australia.

    The compulsive liar cannot get his story straight. I argue we ought to pull out of Afghanistan, and use the resources liberated to bolster our own strength. But thats not what he’s saying. The natural traitor is playing a double game.

    And we have to assume Gillard thinks in similar ways.

  84. Bloody hell. Alexander Downer spilling the beans just when we need Kevin Rudd the most. Just when Kevin Rudd (aka supergrass) is coming good and doing the right thing by his abused and vandalised nation ……… Out comes Downer blowing Rudds cover.

  85. More irrational idiocy from THR:

    “What rubbish. The ADF is basically a multi-billion dollar form of military Keynesianism. I’ve known individuals who’ve worked for the ADF, and the political correctness at play is precisely the one that involves collaboration between government funders and private parasites. This is in the context of Australia having absolutely no immediate threats to its security.”

    Irrational idiocy since without the ADF and the US alliance security threats would be more or less immediate.

    This is where we have to assume Gillard is at. Like THR we would have to assume the idiocy of not appreciating the enormous efforts and hard work necessary to stop people from invading, intimidating, committing acts of terrorism, piracy, or hostage-taking.

    This is not the sort of idiocy THR is likely to be cured of in a hurry. Nor is it the sort of idiocy we can expect Gillard to “grow out of” on the job.

  86. Graeme, there are very few genuine anti-war activitists. Even the paleo-conservative crowd at are basically pro-Putin. Almost all people have an agenda and it usually entails supporting their tribe, however defined. When you meet a Muslim anti-war activist, you can be assured that they have no problem with Islamic imperialism; for the same reason, almost all Leftist anti-war activists would have endorsed the Communist invasion of South Korea.

    I will allow for the existence of dupes and useful idiots though.

  87. Graeme – I wouldn’t throw around accusations of idiocy unless you have evidence that THR is not intelligent. The fact is that he supports a specific agenda with strategic clarity and consistency. This agenda is, put simply, the destruction of property rights and the collectivisation of private capital. All policies and proposals are therefore assessed on the basis of whether they contribute to or erode property rights.

  88. I prefer to call such people idiots liars and traitors, and leave it for others to figure out which characteristic we are talking about.

  89. You’ll enjoy this Graeme. Awesome writing too.

  90. Yeah its a great article for sure. And it all rings entirely true. Of course his new startup would have more of a chance, should his old employer die, and not be sucking up all the resources.

    Banking was so insular that the guys on the 34th floor were marrying girls from the 36th. This fellow captures that feel of it.

  91. Further thoughts on this article: It hardly seems like a den of wealth-creation does it; this milieu he is describing.

    Wealth-creation in finance is all about making a loan to buy capital goods to increase cash-flow. By its nature banking ought to be a local business, where the main requirement of the banker is his ability to judge business proposals, and even more importantly; character.

    Where does this all fit into the picture painted by the article? It doesn’t fit in at all.

    We see here also that the sort of capital development needed at the bottom levels of society is all but incompatible with an income tax, where the tax free threshold is not high enough to shield most of society from its effects. Since once you’ve borrowed, to pay back the money, you will have to earn more income and that will throw you into paying more income tax. So you will be hit with interest AND extra tax.

    Also from the supply side one ought notice that banking for wealth-creation, is really incompatible with any monetary situation other than growth-deflation. An inflationary environment will have the bankers cutting corners and sending money to real estate flipping, or to whatever bubble is running at the time.

    We need to get rid of most of these government departments, and most of the family income support, and substitute instead high tax free thresholds and growth-deflation. That way the local 100% banks will funnel money to authentic wealth creation at the lower levels of society.

    We also want to take a page out of the Thai business creation book. In Thailand you can create a new business on the footpath with extremely low startup costs. This is to be encouraged. It will bring down commercial rent prices, and the cost of prepared food at retail. The costs of other retail goods as well.

    When I was staying at my brother-in-law’s condominium, across from the marvelous-looking Bangkok University……..

    ……. I would wander down to the main road in the mornings to get breakfast. An incredibly wide array of astonishingly cheap dishes were available. But what I liked most was this speciality drink that one fellow would prepare. He used canned carnation creamy milk of some sort. Coconut juice. Pieces of fruit and some sliced coconut as well as ice.

    Ice is ubiquitous in Thailand. That people now have fridges hasn’t dented the early morning delivery of ice produced on an industrial scale. Ice is cheap even in terms of the Thai price level.

    So he would make this creamy juice drink by grinding up all this stuff together. He took up probably less than a square metre of footpath. He only seemed to make one drink. And the equipment and supplies he needed to start up this business was minimal.

    So many Thais are working for themselves in these small businesses. Another brother-in-law was running a shop out of his house. He would open at 6.00am and close at 9.00 pm or so. But if he wanted to get anything done away from the house, there was always someone else to mind the store. So me and him and a friend could bugger off on a couple of motorbikes to visit some mountain, or caves, or hot springs.

    In Bangkok a friend of my wife, got sick of her job and was attempting to start up a coffee-vending outfit from out of her front porch. But she would leave her new fledgling business just to drive us around to different places.

    There is not enough of this going on in Australia. And the fact of it leaves too many of us in the proletarian stream, bidding lower level wages down.

    Our wages have stagnated. Now part of this was due to the breaking of union power with workchoices and so forth. And this was necessary to bring typical unemployment down from high single digits to mid-single digits.

    But part of it is also this dysfunction in banking, monetary policy, business regulation, and taxation … part of this is also this myriad dysfunction we have, that is preventing capital goods flowing into the hands of these tiny businesses at the lower economic levels of society.

    Quite naturally these inbuilt disadvantages to lower socioeconomic capital accumulation are twinned with the ugly phenomenon of big-shot executives essentially voting themselves higher and higher salaries such that now these salaries are at obscene levels. They can do this with impunity chiefly because they face very little in the way of competition from below.


  92. Peope are still making the mistake of seeing the GFC in terms of a collapse of the values of actual houses.

    Now, there’s a tawdry false dichotomy meme that has tragically infected bthe globe’s talking heads, academics, scribblers, culture warriors of all stripes that the GFC was caused by either:

    1. The insistence of successive US presidents to force main street banks , Fannie Mae/Mac, S&L’s, commercial banks, and so on provide more mortgage funds for folks lower down the scale.

    2.The Evil ‘Neoliberalism’ and its De-regulation

    And there is no doubt that legislation such as Carter’s Community Reinvestment Act (CRA) (1977). In 1999. Clinton made banks covered by the CRA increase the ratio of these sub-prime loans on their balance sheets (another impetus for CDOs). Finally, in 2007, Bush did some stuff also.

    Ultimately, this explanation is bollocks. Not only were the number of mortgages affected a tiiny percentage of CDOs, but it was supply factors that excited folks right along the value chain, not successive politically-motivated Administration fiat.

    like NINJA loans, which did not require Mr and Mrs Solice to pay a dime 2 years, during which time, they could sell the house, and make a tidy profit in such a booming market. Heaps of folks did flip houses like this, and made a killing. Who wins here, and what does it have to do with synthetic swaps, and the GFC?

    But when the music stopped, millions were without chairs. Suddenly, the evil twin of the NINJA-type loans kicked in.

    Conclusion: It was the synthetics MBS CDSs wot done it.

    Once the physical residential mortgage market was close to saturation – and even before – the whole value chain – at least from the bundlers of debt obligations, especially residential mortgages (but also car loans, commercial property mortgages, college loans) and their customers up (basically IBs, hedge-funds, and their unwitting putative customers, including mutual funds, such as super funds) wanted more and more. So what the geniuses – JPM, GS, etc. – did was essentially set up a shadow mortgage-backed securities market.

    At first, I wondered how could they do this, given that all the derivatives and swaps were OTC? Then I noticed that there a few organizations that did keep track of each CDO issue.

    Of course, the one player who was able to obtain a great deal more data about these otherwise concealed, behind closed doors, not required to be disclosed on balance sheets, or anywhere in a company’s reports (thank you Bill Clinton. NOT!) was the giant octopus Goldman Sachs.

    There is no question that GS has been, and perhaps still, an amazing institutions, with more geniuses than probably all but a few others on earth. It is also blessed with some of the most aggressive, bullying, competitive money-hungry constellations of DNA that ever walked the planet. Killer combo!

    Despite the sad ramblings of Krugma, Kwig’n etc. the theoreticxal foundations and empirical identification of the EMH are still robust (more so in its weak and semi-strong forms). However from the early noughties on, the pricing of derivative products became increasingly uninformed. Why?

    Because the explosion in these securitized mortages, and the flogging of tranches of CDOs was all done away from not only open exchanges, such as the trading floor of the Chicago Board of Trade, Eurex, the Korea Exchange, LIFFE, Hong Kong Exchanges and Clearing, the ASX, and so on, where not only is every trade and its price instantaneously displayed electronically, for all to see, but the exchanges act as a clearing-house for the trade, thus guarantee full performance of the trade, should things go tits-up for one of the parties. Further, the net positions of individual traders, banks, IBs, hedge-funds etc. are marked-to-market daily, with margin calls from the exchange promptly demanded if things start going too far south.

    Role of governments

    1. Explosion in state-mandated/encouraged super contributions, 401(k)s, and so on, with most of the monthly contributions going to a mutual fund, super/pension fund, who subsequently had billions of dollars in cash, which they had to invest somewhere to make sure they got annual returns with a decent spread above Treasuries to keep the punters happy, and not choofing off to some other mutual.

    2. Traditional futures and options markets for primary products – pork bellies, ornage juice, wheat, wool – and minerals/energy – oil, gold,

    3. There were three major pushes to regulate OTC trades, both during the Clinton adminstrations in 1994 and 1998, and 2000, which were rebuffed both times by Clinton. He “came out” and said he made a mistake in 2000.

    4. But the very interesting Fannie Mae/Mac stat that gets little or no airplay, is that as of May, 2010, Asian investors, funds, banks, blah still hold $800 BILLION in securities issued by Fannie and Maccaie mainly Japan and China; another $100 BILLION in Europe/UK; another $75 BILLION in Russia; and another undisclosed fortune with mddle eastern sovereign funds.

    5. The Greenspan put – artificially low interests to satisfy political needs following the tech-wreck created a mad scramble not only for yield, but capital investment opportunities. Step up the ginormous virgin of US residential mortgages, whose securitization hymen was still in tact.

    Residential mortgages had considerably higher coupons than bonds, but most uniquely the quality that most set off the scramble. They were backed by assets long thought to be ‘safe as houses.’

    Anyways, they set up these swaps, but not based on any physical tranche they had invested in, based on a real CDO, made up of real people’s real mortgages. Rather, these new swaps were based on a real CDO that some IB did bundle up, and investors who do hold those physical bonds on their balance sheets, known as reference entities. These new-style mortgage-backed credit default swaps were based on the ups and downs of SOMEBODY ELSE’S tranches of CDOs were thus known as synthetics.

    Theoretically, presumably 120 different synthetic mortgaged-backed credit default swaps could all be traded with the same single physical CDO, being the ‘reference entity’ for all 120.

    Now, given that the protection seller – of not only those trading CDS in the physical CDO market, but also the other 120 synthetic deals – must pay the buyer the full par value of the underlying, should a “credit event” be triggered, that means that 121 investors would have to pony up the full par value of the ONE CDO that defaulted or invoked a “credit event.”

    That would mean that when Obama mandated the FHFA to assume ‘custodianship’ of Fannie Mae in 2008, this would fit the definition of a “credit event” on not only every single mortgage-backed CDO that Fannie Mae had bundled up, and sold off in tranches, and subsequently ‘swapped’ by innumerable ‘sophisticated investors.’ No doubt heaps of these swaps were for ordinary legitimate reasons. Thus, every single long position in the swap would have to pay the shorter, the entire par value.

    But at least the shorter had actually purchased the physical CDO tranche in the first place, and so the long-guy would get this asset (even though – at least for now – it was worth shit, but might regain its value, and probably would, IF he had enough funds to see him through that long. In this case, the US federal gov’t DID NOT have the funds, but knew where to get it –selling more US-government bonds, and er, er, putting 456,098,344,776,476 trees worth of paper into this li’l here printing press, fill it with another fuel to print for ever, push the pedal to the mettle, and how presto, GFC gone.

    But what did they do with all these greenbacks? Well, they bought a tonne of the CDOs stuffed with fraudulent swathes of toxic, fraudulently, rated way above its risk. Through the Federal Reserve Banks, the cash was wheelbarrowed over to the Fed.

    BUT what about all those synthetic mortgage-backed CDS’?

    The terms of these swap contracts were the same as those on the physical market. Thus, the same “credit event” affected the 120 synthetic trades (assumed in the example above). All 120 of those who were long on the swap, had to pony up the ENTIRE par value!!! As the swaps were only ever made wrt the ‘reference entity’ the shorter never had to actually shell out the dough to buy the physical asset in the first place.

    So when Fannie Mae went tits up, 120 shorters – a la Paulson and the likes of Magnetra – received (or at least were entitled to receive from the long party) the FULL par value, just as the 1 guy in the paragraph above had. This is no different that playing Black Jack at a casino, and more likely, playing the pokeys at the local RSL.

    So one these ‘credit events’ – and over the past few years, the definition of said events became increasingly generous – became more and more frequent – system-wide, there was only ever ONE physical tranche of the much larger Fannie Mae (for example) originated CDO.

    This meant that 121 guys in the system had to lose the entire par value, while only ONE guy out of that 121 gets the original asset in exchange. Ergo, 121 guys RECEIVE the full par value, while only ONE guy out of that 121 had to transfer (swap) the real actual physical CDO tranche, as he was the only 1 out of the 121, who ever bought one!.

    This means that system wide, a huge number of folks are suddenly – and immediately – liable for billions, with not once cent of asset, except the measly premiums they had been receiving from the shorter over perhaps only 12 months or so.

    With such a GINORMOUS sudden demand to pay the par value of all these long positions on synthetics shadows of non-existent assets trade, it was as inevitable that the holders of these these long positions were going to quickly becomes entwined thus escalating those guys liability. So, Lehman Brothers, you are the weakest link. Goodbye.

    All those with short positions on the other side of the swap with AIG, for example, were obliged to pay AIG a monthly/quarterly premium (valued as a spread against the original price when the swap trade was made).

    In other words just like you insure your car by paying a small premium to the insurance company either every month until you decide to get rid of that car OR you prang it.

    Now, the insurance company gets all this liquid cash every month, and theoretically it gets it for nothing. But of course, the insurance company doesn’t get free money, because ‘chances’ are you will prang your car (perhaps many times) before you get rid of it and buy a new one. Theoretically, judiciously chosen and professionally risk-rated bundled up securities, especially housing-backed mortgages, should be just as safe for the insurance companies – like AIG – as insuring the physical houses themselves. Whenever, somebody defaulted on their housing mortgage, the insurance company would just take possession of the house, and sell it on. Depending on the housing market at that time, It might take a small hit, or make a huge profit.

    But AIG wasn’t going long actual houses or the mortgages being paid by Mr. am Ms Flyover State. They weren’t even buying chunks of hundreds or thousands of those mortgages all bundled up, securitized, and divided into slices (tranches). They were buying nothing but the right to receive the exact small premiums that folks in the real CDO markets were paying to the shorters.

    But wait, the shorters in the physical CDO market have actually bought a physical bond/tranche, which it can sell or give to the guy who is long. But the guy who is short is owed the fulkl par value, which had been determined at the time the swap was first entered into when the mortgage market was hot, and thus so were MBS CDOs, CDS, and even the synthetics.

    So, this long guy receives his due physical tranche/bond from the guy short on the other side of the swap. But hey, guess what? That tranche/bond is only worth 60% of its par value, or in the case of the Goldman Sachs/Paulson Abacus swaps, a whopping TWO percent of the par value. In other words, the long has just lost 98% of what he paid for the physical/tranche.

    But what about these guys who built synthetics and swapped them with reference to some physical CDO, for example, say the GS Abacus CDO above? Theoretically, as per the example above, there might be 120 additional swap deals out there all referenced to this ONE Abacus bundle.

    AIG was going long on these synthetic CDOs and thus making a killing in the good times, because it received all those premiums, and never had to pony up for CDO issues that went tits-up, because the US housing market was so strong. Now, it seems these guys, these insurance salespeople – usually stuffed with actuaries, hardly Gordon Gecko types – either simply did not realize their MB-CDS involved neither a physical tranche of a CDO, nor a physical mortgage, nor a physical house. How could they not know this!!!???

    The only other explanation is that they had such confidence in the AA-AAA ratings that Moody/S&P/blah were giving the bundled mortgages (CDOs), so thought their swap positions were safe as houses.

    If this was AIG thinking, there is nothing suss about that. After all, the entire bond market has relied on ratings from folks at Moody’s and other for yonks.

    In other words, AIG thought that if things went tits up, it would have to pay out the agreed par value for which the CDO was insured BUT, in return AIG would receive either the physical bonds/tranched and/or the actual real mortgages of real houses, which it could hand on to, and perhaps in a few years make a killing. But the computer said no, because AIG received three-fucks of fuck all, but had to pay every single hedge-fund, mutual fund, investor who was short the swap the FULL par value of the GS Abacus-derived cash-flow at the original par value.

    The centre cannot hold. Things Fall Apart.

    How did this happen? One way was that many of the physical bundles of real mortgages, increasingly had really bad shit stuffed into them, which were not reflected in a lower credit rating for the CDO over all. But who did this “stuffing?” The popular press has been haranguing GS, and the like.

    Thing is, GS was mostly a middle-man, a broker, who received a fee/commission for arranging the CDO, for some investor or t’other. Thus, when GS and the IBs were acting in this capacity, it was no different that when they organize an equity raising or bond issue for General Motors; but instead of equity shares or bonds in a car company, investors were buying a slice of bundled up residential housing mortgages, from which they would receive quarterly cash payments via Mr. and Mrs Flyover paying their monthly housing mortgage.

    GS raises the finance, its boffins do all the structuring, GS underwrites the issue (and probably gets a few other IBs as co or subsidiary underwriters to spread the risk), then they hit the phones and the private jets to sell the entire CDO bundle.

    There are two remaining suspects:

    1. The rating agencies were off their tits when they did the math on the putative bundle of eleventy-four mortgages that made up the CDO that GS et al, would then sell. OR, they were negligent in doing so.

    My theory is this:

    The ratings agencies, increasingly from the early noughties, knew damn well the CDOs they were rating were increasingly stuffed with junk – mortgages taken out by unemployed Latinos, who has been swindled by unscrupulous mortgage-brokers that they had really neat mortgage products.

    But why were these poor people with bad credit, and sometimes no job, let alone a brass razoo for a deposit on a house, even if was in Detroit!

    A: The mortgage-brokers could be so pushy, because once the IBs had cottoned-on that residential mortgages was one ginormous market whose securitization potential has been ignored, within months their boffins had perfected the CDOs, and with their huge and octopus-like distribution channels, they could get rid of them, without Mr and Mrs Solice’s hacienda in suburban Houston, ever darkening the IBs balance sheets.

    Thus the mortgage brokers (who make their living from commissions on house sales) started getting pressure from the mortgage-writers – high street banks, credit unions, etc. to turn up the heat and get them more mortgages, because Wells Fargo, Citibank, etc. now had a never-ending seamless pipeline to the Fannie Mae, Fannie Mac, and the IBs, who couldn’t get enough of these mortgages to bundle, and on-sell to their clients (particularly clients who like cash flow, rather than capital growth), who would hold them as high-yielding bonds: pension funds, mutual funds, super funds, and the whole array of folks who invest in stuff, basically, not only in the US, but across the entire globe.

    Basically, for nearly a decade hald the globe’s CO2 emmissions came from private jets filled with 28 year old fixed income and derivatives salespeople from JP Morgan and Goldman Sachs lapping the globe dropping tones of these ticking securities of mass destruction on to suckers from the Greek government to Edinburgh.

    So far, we have no synthetics being put together, and traded. So where is the ticking bomb at this stage?

    A: The lowly mortgage-broker. Huh? As the mortgage underwriters – folks once step up from the mortgage-broker in the CDO food chain – became under pressure from folks further up the chain – JPM, GS, who themselves were coming under pressure, not only their typical clients – the mutual funds – but incxreasingly hedge funds, whose private ownership gave them even disclosure exemptions, and opportunities for secret plots, ploys, and trades.

    What’s this got to do with mortgage broker?

    Basically, from the mid-90s on, they were given the green light to lend even further down market.

    Policy implication: (From a non accountant). Every liability – present, future, potential – must be matched by a REAL asset SOMEWHERE in the global income statement.

    My Own Political Stance (MOPS): The creators and players of synthetic CDS have gone so far beyond what is acceptable, even within my own somewhat libertarian/laissez faire commercial ethics, these bankers and hedge-fund managers MUST pay with money (their own, not just the shareholders) and their liberty. Their bonuses and assets must be clawed-back, even if a constitutional amendment is necessary.

    Wall Street and banking in general are far, far, far too important to liberal societies. The loss of confidence and trust among hoi polloi is more than just their chutzpah.

    String the bastards up, and let us celebrate as they swing!

    And my god, don’t we ADORE the Magnetar Trade? Buy the shitty equity tranches of CDO to keep the CDO market afloat, use the subsequent cash to short the same CDO through a CD SWAP, collection the whole par value when the CDO inevitably goes tits up.

    As a result lots of IBs and hedge funds simply stuffed really shitty mortgages into the bundle, which none of the investors knew about. Why didn’t the investors do what I would do instinctively, and run a ruler over every single mortgage, even if only getting an analyst to check the spreadsheet? Not enough time? Trusted the IBs/hedgefunds, and rating agencies?

    Fund managers, etc. should be sued, impoverished, jailed, hung, drawn, and quartered as well, for being too DUMB to understand the products, and doing the appropriate ethical and prudent, and fund member interests by steering clear of that of which they were ignorant. To the gallows!

    Fucking fools if that was the case. They deserve to be poor

    Conclusion: It was the synthetics MBS CDSs wot done it.

  93. “Peope are still making the mistake of seeing the GFC in terms of a collapse of the values of actual houses.”

    Ridiculous isn’t it. We are always having to subsidise or bail out the bankers. Yet these morons act as if its always the first time and oh so unexpected. But generic occurrences require more generic explanations than what Sinclair is capable of. Obviously the regulations of the day are going to interact with fractional reserve to give us the basic nature of the current fuckup. There is no problem there.

    But what of the bailout in 1982? What of all the American bailouts between 1982 and 2008? This one was more out in the open. More brazen then the other bailouts and subsidies. But it wasn’t different or differently caused.

    The regulations of the day help determine the idiosyncratic nature of each bailout. But the cause is always the same.

    Bubbles are affected by the regulations and conditions in place when the new money is created. But the new money is the other half of every bubble. When the new money comes out it must seek out investments in things that are somewhat limited in supply to create the new bubble. But this doesn’t mean that fractional reserve isn’t one half of the problem in each and every last bubble and subsequent bank bailout.

    I just wish people like Sinclair would either learn the history of it or stay silent. Anyone who thinks that the whole problem was lending to poor people really has no idea of the history of bank crises. In fact the poor people were pretty critical to the game these bankers were playing. They were the last palookas around who the house-flippers could offload their hot potatoes onto. Once you had offloaded assets onto poor people, there is really no-one left to play the game of musical chairs with.

  94. The house prices in Hong Kong collapsed by about 70% as well. But there was no big problem, since these houses weren’t bought with huge amounts of debt.

  95. The thing is the whole industry was regulated to the tune of thousands of pages of legislation. The trouble is that every new law Congress/Parliament passes, the main effect is merely to change incentives.

    On this point at least your fractional reserve obsession is central.

    If these instruments had been treated like every other – full accounting, etc. the GFC would not have happened, coz the OTC market would have been open to shareholder scrutiny

  96. Subprime mortgages only accounted for 10-15% of US residential mortgages. By the way, before Bush jnr, they never amounted to anymore than 8%!

    The sythetics market was nearly 10 times the size of the ENTIRE residential mortgage market and thus 100 to 150 times bigger than the subprime market.

    There was no one else to sell mortgages to.

  97. “Policy implication: (From a non accountant). Every liability – present, future, potential – must be matched by a REAL asset SOMEWHERE in the global income statement.”

    Thats not a bad idea if you are willing to tolerate the current system. If you are going to tolerate-but-regulate. Financial assets ought to be based on real assets. Shares in a real company, or a piece of a real asset. Basing assets on someone elses obligations is probably a hazardous deal.

    My view is a little different. The entire derivatives market was set to be wiped out in 2008. They fundamentally failed the market test. We are stuck with them because we didn’t allow them to die. And the people who hawked them ought to have found their true place down at the local centrelink.

    The whole idea is to move to 100% backing, freeze gross domestic revenue, remove any bank subsidies, and just watch all these pretenders die. We missed out on watching all these loonies die in 2008. We must revisit the death of these organisations. Else they will be a parasitical force upon us for decades to come.

  98. “The sythetics market was nearly 10 times the size of the ENTIRE residential mortgage market and thus 100 to 150 times bigger than the subprime market.”

    Exactly. Notice the driving forces behind the bailout, and the people who benefited from the bailout were the synthetics providers. Since if any one of these providers went down all of them would go down. They hedge their bets and contain their losses IF AND ONLY IF the people on the other side of their bets pay up.

    If even one of them fails they all would have gone down with liabilities that would have been essentially infinite. It would have been a beautiful thing.

    You’ve formed a sensible view somewhat close to where the authentic expert Nassim Taleb is at. He would do things approximately your way. My reforms would be somewhat more radical. I don’t want to be walking around breathing the same air as these bludgers. So I would go to 100% backing in cash, and all other real entities, and just watch all the bigshots sink or swim.

  99. Graeme I hadn’t really given my solutions more than about 10 minutes thought as I banged this out. But I think I make clear that I do emphasize the gallows over the legislature. 😉

    I am not an economist so have no idea who Nassim Taleb is. He is not one of these Kwig’n types I hope. If so, it shall be pistols at dawn my dear fellow! 🙂

  100. He’s easy to find on youtube. He’s really pissed off with these guys. So he’s good to listen to.

    On a broad level I appraise the situation in the following way:

    There are two types of speculation. Negative inventories speculation, and positive inventories speculation. The latter is socially beneficial, the former is socially harmful. Synthetics help the negative inventories speculator get away with what they are doing. And the synthetics providers are themselves backed by the taxpayer and the printing press.

    So the whole system is fundamentally dysfunctional. I would have to say I do disagree with you on the efficient markets theory. I would find it hard to imagine a more inefficient market then the market we now have. To claim that the market is efficient would imply there is no room for improvement. My claim would be that there is massive upside improvement possible. And we ought to get on with improving matters, rather than accept this happy-talk that the market is already efficient.

  101. Hey Graeme, did you really read that entire rant I posted and not think it was nonsense? I’m not educated or involved in any of this stuff, but REALLY wanted to try and understand all the complex connections and history because I just KNEW that everything I was reading about this “GFC” was so off base, but I had no idea where that feeling came from.

    Working this stuff out it really helped me that I presumed I was clueless, so just asked myself the most basic baby questions possible, and worked up from there.

    Of course it helps if one’s education DOES equip one to critique Black and Scholes mathematically, coz when I got to the Gaussian copula and discovered how endemic and totemic it was a pricing calculator, I just went “faaaarrrkkk” no wonder this al happened.

  102. I have a follow-up rant, which I’m half way through on how Excel bears a great deal of responsibility. It might be over-reaching, but its fun.

  103. Its all pretty sound. I suppose it comes across a little like a laundry list. But its pretty right. You want to look at past banking crises to pull out whats similar about them all.

    The main reason this one is so much worse than most others, apart from all the hype, is the Keynesian response to this one. Its the Keynesian response that has caused the massive economic damage.

  104. When the banks are all set up to be taken down there is always a specific trip-wire. The banking system could just as easily have tripped up on commercial real estate, or on some other part of their business. But the real issue is that the whole system was inherently unsound. So those who are blaming some small regulations that funneled a bit of this loot towards families with darker than the normal skin, are kind of missing the point.

    Its true that the specific tripwire that lead to the crisis came at the housing collapse part of the beast. But this is a problem for the banking industry, taken as a whole, because of its general unsoundness, with its derivatives being the key factor for why they had to act so immorally and with such desperation.

    Whereas for the rest of us, it was the fact that fractional reserve was pyramided out at maybe 40 t0 1. This is why we had to move. Because aggregate demand was due to implode.

    Had we simply taken care of the fractional reserve end of it, the derivatives loading would have meant we could have appreciated the collapse of a lot of these bigshots, in comfort and safety.

  105. They’re real Sons of Bitches, aren’t they. Stupid Fucking Cunts.

  106. it’s bad enough that they’re fractional reservists, fake RPH

  107. “Um yeah sure Gra Gra. One of Australia’s best modeller’s is a clueless chump…..”

    Yes he is a chump Mark. And modeling is a pretty hopeless skill where economic policy is concerned.

    Well I suppose it would be NICE if it were applied well. McKibbon is a clueless chump in economics since he endorsed fiscal deficits as a way of coping with recessions. Doesn’t matter how much he knows about computer modeling. He doesn’t understand economics if thats his view.

  108. Oh my goodness. The idiocy and economics-ignorance from Mark Hill never takes a break:

    “Garfield was a loon. How on earth could you manipulate the classical gold standard?

    Agricultural cycles dominated economic cycles then.”

    What a fucking moron. No Mark. Fractional reserve has been the cause of banking panics and the business cycle. Just the same in the 19th century as now. We know about this. We have all the information going back a thousand years to show this.

  109. Mark Hill writes like a B-Grade robot losing electrical power. I bet he thinks you can model the development of a human being from birth to death and predict exactly what will happen to it regardless of external factors such as where it is born, the food it eats, the family it is born into, the education it receives the state of its health. His sort of economics is voodoo humbug in the service of corrupt elites and their self-serving orthodoxy.

    Massive fail to that jerk-off.

  110. Mark Hill always writes, and presumably thinks, like a dud B-grade robot losing electrical power.

    I bet he even thinks you can model the development of all human beings from birth to death and predict exactly what will happen to them in the absence of any other knowledge such as about country of birth, state of health, diet, education, family, political environment, or even in what century they’re born.

    Far from being scientific his brand of “economics” is voodoo humbug that exists simply to serve the interests of corrupt ruling classes and their self-serving orthodoxy.

    Massive fail.

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