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Friday's Top 10 with NZ Mint: Tony Maryatt's golf day; the doubling of the Wellington Council CEO's salary; The banking equity doom loop; Germany vs Greece; 'Savers will pay'; Dilbert

Friday's Top 10 with NZ Mint: Tony Maryatt's golf day; the doubling of the Wellington Council CEO's salary; The banking equity doom loop; Germany vs Greece; 'Savers will pay'; Dilbert

Here's my Top 10 links from around the Internet at 9 am in association with NZ Mint.

I welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.

I'll pop the extras into the comment stream. See all previous Top 10s here.

I'm travelling again today so Today's Top 10 will be a little slimmed down.  #8 is my must read today.

1. Time for golf anyone - The Press' Sam Sachdeva reports Christchurch CEO Tony Maryatt left a key council meeting yesterday to go and play golf.

The anger in Christchurch is boiling on this.

Something slightly feral is brewing in New Zealand on the issue of executive pay and fairness.

It might well creep up on a few people and surprise them.

It turns out Maryatt has a history of playing golf at crucial moments for Christchurch...

The chief executive's golfing habit came under fire last month, after it was revealed that he had played golf on two of the weekends he said he worked after the February 2011 earthquake.

An anonymous caller directed The Press to Marryatt's golfing records on the golf.co.nz website, which showed he had played two rounds of weekend golf at Clearwater in the nine weeks after the February 2011 quake - on April 2 and in a stableford competition on April 9.

His round on April 2 was played on the same day it was reported that council staff were fighting to prevent the city's sewerage system collapsing, blanketing the city in an "almighty stink".

2. Germany vs Greece - Ambrose Evans Pritchard at the Telegraph looks at German demands for Greece to delay its elections and appoint a government of technocrats.

 Is this really the position of the German government? Greek democracy be damned? I presume he (Germany's finance minister) has seen pictures of the blackened buildings below the Acropolis – and yes, the evidence is everywhere: a neo-classical house near my hotel at Monastiraki metro station was completely gutted, as was a building across the road. (There were four homeless sleeping in the cold alley next door, being comforted by a young volunteer.)

I presume too that Mr Schäuble has been well-briefed on the explosive political mood in Greece, so one can only view such a demarche as deliberate provocation – like the Austrian ultimatum to Serbia in 1914 (a miscalculation, as it later turned out, since "contagion" from Serbia could not be contained). "Who is Mr Schäuble to insult Greece? Who are the Dutch? Who are the Finns?" retorted President Karolous Papoulias, himself a teenage resister against the Wehrmacht in Epirus almost seventy years ago

3. Just default  - British European MP Daniel Hannan says Greece should just default.

It’s a problem common to every EU country. Because Brussels has been kind to the politicians, they genuinely struggle to see that it isn’t in the interests of their constituents.

We heard precisely the same arguments from our own political elites during the final months of ERM membership. Leaving the system, we were told, would spell ruin. In the event, our recovery began the day we left: 16 September 1992.

It’s true that Greece is in a worse position now than Britain was twenty years ago. All its futures are clouded. But reissuing the drachma at least offers the prospect of eventual growth. Remaining in the euro guarantees a generation of poverty and emigration.

4. Savers will pay - Bank of England Governor Mervyn King, who is printing money at a great rate of knots, agrees savers are seeing their savings eroded by inflatin, but it's the only way...

Sir Mervyn insisted he understood the problems facing savers, but made clear he believes he can do nothing to help.

“I have deep sympathy with those who are totally unconnected with the origins of the financial crisis who suddenly find that the returns on their savings have reached negligible levels,” he told a press conference. "These are consequences of the painful adjustment prompted by the financial crisis and the need to rebalance our economy."

The Bank could respond by increasing Bank rate from its current level of 0.5 per cent to 4 or 5 per cent, he said. But that would push up the exchange rate, depress investment and consumer spending “and we would go back into a recession.”

“All groups in society are suffering from the financial crisis,” Sir Mervyn said, insisting that there can be no special help for particular groups. “Difficult though it is, we have to make a difficult judgement about the right course of action for the economy as a whole.”

5. Not so pure - Massey water scientist Mike Joy has good old rant here about New Zealand's environmental record.

A recent peer-reviewed international study[1] compared 189 countries using seven well accepted measures of a countries environmental performance.  The report compared for each country their proportional loss of native vegetation, native habitat, the proportion of endangered species, as well as the amount of fertiliser used, marine captures, water quality and CO2 emissions.  This comparison showed that per capita we are 18th worst with regard to environmental performance in the world (i.e. 171 countries ranked higher than NZ). 

The closer you look at the figures the bad news just gets worse.  For a start we have the highest proportion of threatened species in the world, and if you take out our CO2 emissions and judge us on the other six measures then we are the 10th worst country in the world.  This CO2 result may seem surprising but this is only because the comparison didn’t include methane emissions from agriculture, only our CO2 emissions which are relatively low.

Perhaps because of our delusion about how clean and green we are we smugly look down on countries like China as environmental destroyers.  But, in reality we only rank one notch higher than China.  Of course their overall impact ranking was much worse because their population is much higher; they ranked third worst behind Brazil and the USA. When it comes to this overall impact we ranked 47th worst in the world (i.e. 142 countries ranked as better than NZ).

6. The importance of competitiveness - Bryan Gould also has a good old rant at NZHerald about our economy. Well worth a read.

More and more of our national wealth goes overseas. We have less and less control over our own economy, as the proportion we actually own diminishes. High interest rates not only inhibit domestic investment but produce an overvalued dollar that prices our goods out of international markets, including our own, and reduces our return on those goods that we do sell.

We have been travelling down this no-exit road now for nearly 30 years. Yet our policymakers still set their faces against any change of policy. We continue to assert that the only focus of macro-economic policy must be to control inflation, even though the measures we use to do so are poorly focused and slow-acting, and actually make our real problem much worse.

What is our real problem? It is certainly not inflation. It is that we are basically uncompetitive. We have steadfastly ignored the fact that the world has changed and that rapidly developing economies like China, India, Korea, Taiwan and Singapore are now super-competitive economic powers, determined to build on that huge advantage by holding down their exchange rates and becoming ever more competitive.

They have rapidly built the strength of their productive sectors and have earned huge trade surpluses which have allowed them to buy up the assets (including our own) that they will need for further development. Many of them already enjoy living standards better than ours and pay wages and salaries that are higher.

We, on the other hand, are arrogant (and stupid) enough to believe that competitiveness does not matter, and that we can - in defiance of economic rationality - continue to push up our exchange rate with impunity. By focusing on inflation, to the exclusion of other objectives, and using interest rates and an overvalued dollar in the attempt to control it, we make it inevitable that our lack of competitiveness gets worse.

7. Who is this guy? - Emma Beer asks this question at The Wellingtonian about Wellington's CEO Garry Poole, who earns NZ$419,230 a year but won't speak to the public. See #1 re the feral mood sweeping the nation on pay. Good.

Garry Poole earns $30,000 a year more than the Prime Minister, has been running Wellington City Council for 13 years ... and could walk along Lambton Quay unrecognised. Who is he and is he worth the money?

Tony Marryatt, the Christchurch council chief executive, has been hammered for his $538,000 pay (a $68,000 pay rise that he finally rejected after some arm-twisting) and his Kapiti equivalent, Pat Dougherty, is under fire for his $285,000 pay packet (an 18 per cent pay rise). What about Garry Poole? What does his job entail and is it worth an $8070 a week pay packet?

Despite several requests, Mr Poole declined to make any comment. He is either pathologically media-shy or extremely secure in his job. When Mr Poole became chief executive in 1998, his salary was $217,500. It has nearly doubled in 14 years. Prices have risen 39 per cent in that time.

8. The doom loop - The Bank of England's Andrew Haldane has a good piece here at the London Review of Books about equity and the banking system.

The continuing backlash against banking, as evidenced in popular protests on Wall Street and in the City of London, is a response not just to the fact that the world is poorer, as pre-crisis riches have turned to rags, but to the way these riches were privatised, while the rags are being socialised. This disparity is nothing new. Neither, in the main, is it anyone’s fault. For the most part the financial crisis was not the result of individual wickedness or folly. It is not a story of pantomime villains and village idiots. Instead the crisis reflected a failure of the entire system of financial sector governance.

9. Hemlines and markets are connected  -  CNBC reports.

10. Totally Clarke and Dawe on Australian political instability. Eggs are being broken from different ends of the egg.

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

85 Comments

I demand govt compensation for all the female teachers I had!

"A key reason boys lag behind in the classroom is revealed for the first time - female teachers.

Research shows that boys lower their sights if they think their work is going to be marked by a woman because they believe their results will be worse.

Professor Alan Smithers, a leading academic researcher, called the findings "fascinating".herald

What will the great Banks make of this?

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Thats a typo. Waylon Smithers has the problem with women.

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Perhaps Mr Schäuble is angling for a great deal on a holiday this northern summer on a Greek island...I'm sure there are many nice pleasant Greeks who would be delighted to give him a holiday to remember, for no charge!

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Sooner or later Greece will leave the Euro and default on its debt. If the present Goverment won't then the next will. In the april election (which the Gremans are trying hard to stop) the guy who stand up and say "leave the Euro" will win and be the next PM of Greece..... 

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“All groups in society are suffering from the financial crisis,” Sir Mervyn said,

Oh except bankers and bosses at the BoE....Merv is a LIAR.

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Meryn king and all Central Bankers in the West should be prosecuted for "crimes against humanity" for the serious economic loss sufferred by Humans in the west.

To say that there is nothing he can do about it is both a lie and sheer hubris. If he could just admit that he has been wrong the past 4 years and that his existing measures has failed and change course he could at least be seen as a "human". 

 

Perhaps that's why he is committing crimes againsts "humans" ?

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Only wrong for the past four years - try nine since his appointment. He could have halted the property casino at any time..

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Libertarians.

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When Greece leaves the Euro (I don't think 'if' is really the question any more) then the Drachma will immediately be devalued. If Greece announces it is planning on leaving then everyone will get their money out of Greece. Bernard has already mentioned a few times a silent run on the banks. The leadership in Greece will want to stop this run turning into a stampede (once they've got their own cash out, obviously). So the most likely scenario is that it will just happen one night and the Greeks will be told the next morning they now have the Drachma.

With the main players in Europe openly talking about a Euro without Greece, the deterioration in talks with Greece and a seriously pissed off public are we reaching that point? Could Greeks wake up on Monday to find their savings have turned into Drachma with their value halved?

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I think this is exactly what will happen.

 

It would be interesting to monitor the activity of their reserve bank/treasury for increased meetings, communications, movements of trucks, printers, changes in procedures, new storage locations for holding cash, and all those other subtle things that will preclude the reintroduction of a Drachma (non-Euro alternative).  There are many things that must happen in order to be in place before that fateful Monday, and they will happen, in secret.

 

The resulting massive devaluation of the currency will certainly help their export market.  Any savers will lose out big time of course.  Much like what happened in Argentina in 2001.

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I'm pretty confident Greece will stay with the EUR, simply so they can get shafted even more. 

"you can check in anytime you like;

but you can never leave"

 

There is nothing to say they have to leave, they can have as disorderly default as they like, and still stay.  For the 250 years on average 1 year in 6 has been in a state of default.  Govts have continued to build in structural deficits, and are consistently bankrupting the country.  There is NO accountability for politicians, serve a couple of terms, and you have guaranteed income for life.

 

Can you imagine the riots in NZ if WFF was cut, or accomodation allowance was cut?  The only difference is that the orders to cut, are comming from Germany.  Who is saying, if you want the money, you can't be full of sht, you actually have to make some changes.

 

Two sides to everything, and there is a lot more to it, but at the end of the day I believe they will stay.

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#4 makes sense, in an ugly kind of way.  The "Spenders" got us into this mess, quite clearly they can't get us out.  It's going to have to be the "Savers" who save the day!

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 5) PM – stop your “Patchwork Economy” - have a NZvision.

 

With a low population, remote and isolated on several Islands, New Zealand could be the economic model of the world, generating a sustainable, competitive and diverse economy. But our politicians say no with stupid, megalomaniac economic ambitions destroying our environment, soil, air, water and the public health costing billions. A nation wihtout a clear economic strategy - running into massive trouble under the leadership of PM Key.

  

http://definingnz.com/our-natural-capital-is-in-overdraft/

 

Good morning next generation !

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#5 "At present any economic gain is considered a great thing regardless of the losses inflicted on the environment or society; neither of which are counted or even mentioned.  To have a future economically or otherwise, we must grow-up as a nation and begin to take into account the losses inflicted on our natural capital."

So true. If you had a business where the turnover (GDP) kept growing but you were making less profit (standard of living including environment) you'd be wise to stop and ask what the point was to be working harder and harder for no extra benefit or worse going backwards. "Growth" without profit is pointless.

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BBC Panorama Doco on homeless America

http://www.youtube.com/watch?v=73UBl68icjw

Really liked the No1- Golf story- you could not make it up

 

 

 

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“All groups in society are suffering from the financial crisis,” Sir Mervyn said, insisting that there can be no special help for particular groups. 

hmmm.. seems to me there is special help for particular groups...  Savers are the sacrifical lambs....  next on the block will be the middle class and ordinary workers as taxes go up ...and standard of living gets squeezed.

Sir Mervyn is full of.....

It is 4 yrs on since the GFC....  none of the worlds Central Banks policies have achieved anything..apart from delaying the inevitable.

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Savers, depends on your point of view with regard to cash. If you are like me then with a depression and deflation coming then a saver with money is going to see gains that are tax free as each $ buys more every day and that will be un-taxable, hahaha IRD.......Debtors will be screwed over of course...

"All groups" well thats bull....  when you earn a good wage with a fair disposable income and retail prices are stagnant or declining then you are better off or at least even every day.  Ppl with little or no disposable income are way worse off.....

Central banks policies, not really true, despite the Pollies incompetance they have averted a depression and teh huge resulting un-employemnt....

"inevitable" I see a depression / collapse as inevitable but probably for different reasons to yourself....at least I assume this is what you see?

So for me peak oil will cause a decades long depression as we are forced to live with a lot less energy....Im not sure that's something you consider?

regards

 

 

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Steven please, prices are increasing everyday.  Central Bankers are making sure we don't have deflation.  This is why they Ease/Print/issue more currency at no cost.  If central banks were not printing then you could rightly make the case for deflation.  As it stands, every monetary aggregate is expanding.

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What its looks like to me is you are gambling that we cant get deflation....and your "put" is gold buyng as you see substantial inflation ahead.  Ultimately, I really dont care...I am not gambling either way so either way isnt going to kill me more than the other.....so I am not blinkered, I believe you are...

I mean who are you trying to convince? yourself taht you are not being silly?  but as always you are an adult, make your own decision and live with it.

CBs, well they are trying to ensure we do not have deflation, they are also trying to stimulate growth and failing....that should be a warning to anyone....they cant get growth....some areas they have growth, the financial sector which produces nothing but for an overall 2% growth/inflation that means some areas and that leaves main street has to deflate, so thats eaither wage cuts or wage loss............

"monetary aggregate" again its effect is contensious....you are simply saying if its expanding this equals inflation...this is arguable, and recent current experience suggests this isnt the case....

"In addition those economists seeing the central bank's control over the money supply as feeble, they also say that there are two weak links between the growth of the money supply and the inflation rate: first, an increase in the money supply, unless trapped in the financial system as excess reserves, can cause a sustained increase in real production instead of inflation in the aftermath of a recession, when many resources are underutilized. Second, if the velocity of money, i.e., the ratio between nominal GDP and money supply, changes, an increase in the money supply could have either no effect, an exaggerated effect, or an unpredictable effect on the growth of nominal GDP.

http://en.wikipedia.org/wiki/Money_supply

From what we can see today it appears to be "no effect"

What you appear to be missing is the effects of demand. So to get inflation there has to be printing and there also has to be demand and I think increasing demand as well as substantial printing....if that isnt there....minor printing will have no effect....and after 3+ years that seems to be the case.

Place your bets, spin the wheel.

regards

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Inflation is a monetary phenomenon, do you understand the significance of that?  Monetary aggregates expanding, is inflation, it is not contentious.  What current experience is this not the case?  When M3 contracted we had deflation, it is expanding, at a faster rate then GDP, and the CPI.  That money is going somewhere, fixating on the CPI is misleading, as inflation can be more visible in other areas, a current example is Auckland housing.

Stagflation, inflation during a recession or period on little to zero growth.  Recessions and depressions are not by definition deflationary.

I am I trying to convince anyone?  No merely challenging your ideology and having a debate.  It's one of the best ways to learn.  I have looked into what would cause a major deflationary event, and can't see how that could occur with all the qualitative and quantitative easing occuring around the globe. 

CB's are ensuring we do not have deflation, and are trying to stimulate growth, and are not exactly failing, we are having growth, slow yes, but growth nonetheless.  Will they stop trying?  What else can they do, they can't sit by and watch their assets deflate, as the world descends into another Great Depression, they have to do something, and they only have one tool ctrl+P.

Maybe it looks to you as if anyone who advocates physical assets is gambling on gold.  Things with intrinsic value, retain purchasing power regardless of monetary phenomenon.  How this is gambling I have yet to understand.  This is savings, in a world where it is govt policy to debase fiat currency.

If you like I am blinkered, who isn't?  I see no evidence of deflation, with the exception of TV's etc using hedonistic accounting.  Where are the falling prices?  Money is falling in value every day.  It's not houses or gold or oil or cheese that are going up in value, it's money that is losing value.

 

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Just for the record - in my opinion I think you are both partly correct.

If steven believes in peak oil, I don't see how he believes the oid price will come down though (deflation)? I mean oil is more likely to go up and up and with it drag the price of everything up with it (food, transport, plastics, and anything with any of those components) - that's strongly inflationary.

CBs are there to help the banks and as deflation kills banks they will not let that take hold and they will print trillions and trillions. In a major deflationary event gold goes up as people pull cash out of the failing banking system while they still can - as the banks are collapsing. So in major inflation and major deflation gold is more likely infact to go up, and it's the only asset to do that that I know of - an example of that is the mining shares during the great depression - while the stock market went down 90% gold miners on average increased around 4000% (40x) - (and I might add - at a time when gold itself was made illegal for citizens to own of the largest and richest economy in the world). I think steven you need to rethink your info a bit. 

In an inflationary or deflationary depression the last thing you want to be in is cash in the bank - either way you will seriously loose everything. The FED - now the largest holder of US government debt, - has even stated outright they will not allow a failed bond option (and of course they will not - I mean as long as they want to divert a worldwide collapse they won't - what else can they do? they will monetise not just the deficit but the entire debt if necessary, they don't say that of course as it's all a confidence game) - which means printing to infinity and beyond to hold interest rates low. Or you could believe that the US government will actually close its deficit? I think Don Brash has more chance being the leader of the Greens personally... Obama did promise to halve the deficit by the end of his first term of course ... urrrr... what? Liar.

What we will eventually get is an inflationary depression followed by a deflationary depression, then a real recovery. That's because people will eventually dump the paper stuff and then hoard the real money - out of fear. These are early days yet... inflation in the US is only just creeping into double digits...

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Iagree...  Oil will be be a cost push inflationary  force.. in the background.

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What do posters think of linking public pay rates to the minimum wage? I was speculating setting the Prime minister's pay at, say, 11X the minimum wage. Put the head of TVNZ at, say, 10X the minimum wage. Pay nurses, say, 3X minimum wage etc. 

Then, if the head of NVNZ gets paid $1,000,000 pa, the minimum wage automatically becomes $100,000 pa. If the Powers That Be want a minimum wage of $28,080 pa (40 hours per week at $13.50 per hour), then they have to drop the head of TVNZ to $280,800 pa. It simply links all of our public pay rates together and gives consequences to actions. 

The problem I see is that the PTB agonize over raising the minimum wage by 50cents, but give themselves a $68,000 raise at the drop of a hat. I fully recognize that some people deserve to be paid more than others, but struggle to imagine that any human being in public "service" is worth more than 10 times more than a school leaver.

The 11 times minimum wage for the "top" public salary paid is just a random number- I would love to hear others thoughts on pay ratios.

I read a USA study that found that as people's incomes rose, their happiness increased. BUT this correlation was only true up to $80,000 pa. After $80,000 pa, increased income did not further increase happiness. 

I just saw an interview with Fred Allen- a NZ hero. Great Kiwis have not been motivated by pay packets, but by service and vision. I think that when we hire people that are motivated ONLY by high pay packets, we end up attracting the worst sort of people. 

I thought of instigating a petition???? 

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This has been tried in the 80's and our government broke the memorandum within a decade. Going back to that simply won't happen because it never does without a crisis, it is against the rules if you like. So you have to start thinking about when you are prepared to take affirmative action to address the imbalance, keeping in mind the longer you leave it the worse the imbalance will get. Talking about it is like pissing into the wind, you feel relieved because you have got it out, but now that is replaced by anger because your trousers are covered in urine. And further talking isn't going to change the fact that you have urine on your trousers, they need a good wash for that.

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Its an interesting idea Learn....   When a 50c minimum is reluctantly granted the argument is that it costs the whole economy cos it get applied to lots of workers, but that the $68k increase is a one-off, but thats a fallacy cos now that one ceo got a $68k bump now they ALL need it or they walk (so they say) . Thus the damage of high executive rates are just as widespread as boosting minimum wages.

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That would perhaps give an incentive to push the minimum wage up just a tad, don't you think?

"Let me see, I think this country needs a minimum wage of, well, at least $100 an hour, doesn't it?" Possibly politicians might not be entirely responsible there. I guess it could be linked to the median wage though.

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All Public sector wages, paid for with borrowing, or tax dollars (or asset sales) NEED to be linked to the average wage.  This is absolutly corrupt.  Public sector wages are nearly double private sector wages.  We have to sell our power stations to pay these bloated salaries, while the working class is getting starved.  These arrogant buggers don't even give a stuff about the exchange rate which may help save a few jobs, or the fact that they are leading us to a future of debt slavery peonage. 

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Imall for it provided a CEO's salary is also linked to say the average of his employees wage....and that includes where ever his company manufacturers....

;]

regards

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O/T I know, but here Steven is the info on NZ electricity demand you have been seeking. I found it quite by accident this morning.

In its 2011 energy outlook, the Economic Development Ministry said growth in demand for electricity had slowed to 0.3 per cent a year, from 2.2 per cent between 1992 and 2005.

http://www.stuff.co.nz/marlborough-express/news/6435518/Wind-farm-on-hol  

Price increases in the pipeline are likely to further hobble demand and on top of that there is still cheaper base load geothermal which can be developed.

From the above link.

Mr Loe said the economic downturn, the Canterbury earthquake, efficiency improvements and more easily tapped potential in geothermal power meant there was no immediate demand for more wind generation.

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More efficent appliances must be a leading cause of NZ's near static electricity consumption.

http://media.nzherald.co.nz/webcontent/document/pdf/20127/Power.pdf

Interesting article here

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10786428

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There are signs that there is a bit of growth momentum in the US economy - just in the last few months - despite the fact that the Eurozone is falling into recession. What is interesting is that in the last few months Brent oil is also up $10 to nearly $120 (you can forget about the WTI oil price measure, its an anomaly at $100 compared to other global reference crudes - although its also been rising). So despite the fact that the Eurozone (plus Canada, plus Japan) which together make up 30% of global GDP are in recession, the slightest sign of US recovery puts oil up nearly 10%. Keep in mind each 30c rise/gallon in petrol in the US (and its up nearly 50c from its lows of last year) subtracts $80B in spending from the US consumer in extra fuel costs. So wait and watch while any nascent US recovery is choked off by the rise in the price of oil.

http://www.eia.gov/petroleum/gasdiesel/

The same thing happened end of 2010/beginning of 2011 when it looked as though the US economy was gaining traction - up oil rose to $120 and the US economy again rapidly lost steam.

This is peak oil in action and yet none of the mainstream economists are talking about it. Its now become a negative feedback loop. Each time growth gets going it sends up the demand for oil, the price lifts and growth is choked off..........for a simple concept its staggering that they just dont get it.

Now imagine if the Eurozone was magically transformed out of recession - why then oil would just as magically be transformed to $140 a barrel and back down it would all come crashing down.

Those technofixes better come damn quickly as I dont think the financial system can take another cycle of oil induced recession...........

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The latter portion of your post is describing the 'bumpy plateau' idea you find in Peal Oil literature... where the economy see-saws up and down, but the overall trend is to the downside as the supply of liquid energy contracts.

 

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In particular transport energy, rather than liquid (I prefer to say transport because it focuses your thought on why liquid is so important)...yes.....the big worry is the initial thought was we would get a noticable peak of a short duration and then a drop off, say about 2 to 4% per year.  Instead we have managed a 6 year plateau, trouble is from the graphs I have seen of  similar peak events/effects when you come of that plateau the drop is way bigger as you fall back to the trend line....so it could be say 10% per annum.....dunno how big but considerably bigger than 2 or 4% seems very likely....

I play a game called minecraft witha mod called buildcraft...which has oil as a resource in it....trouble is you have to go further and further to find oil...and you need better and better technology to find it as close as possible as distance costs to transport....the parallels with real life are shall we say interesting...

the key thing for sure is when the refinery is dry all your automated building grinds to a halt very quickly....you are left holding a pick again....but the easy stuff is long gone.......

A very interesting game.

regards

 

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I haven't played Mincraft, but it strikes me that a great number of simulation games have at their core the concept of exponential growth coupled to a finite size world.  It's a pity more people don't see the connection with real life.

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Technology is the answer.  If we weren't so broke, and focused on maximising profits there would be no problems.  We have the resources, and the technology, what we dont have is the monetary incentives to make things viable.  This is not about govts not spending enough, its the way society works.  You can't make the descision to change technology, untill the old technology becomes too expensive.

How much fuel would we save if we made all the roads straight, and tunneled through the hills instead of driving over them?  Why would you do that when it is cheaper to drive over them?

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Skudiv - count the whole lot. Those tunnels take energy to construct. So would the roads. A crude cost-benefit analysis is done with those projects now, but not factoring in the fact that cars won't be using them in less than 20 years. Nor that there will be an availability issue with reseal bitumen....

 

And be careful about technology - it can only make things more efficient, which as I've pointed out, can only raise whatever it is from wherever it is, to somewhere shy of 100%.  And every % gets harder to attain.

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That was one example of how the economic model fails.  We are always going to need transportation.  Straight roads would give massive savings and efficiencies.  Some of our railway tunnels are 100 years old, and still going fine.  Even if we went back to horse and cart straight roads and tunnels would deliver gains for long after you or I are dead.  Only 12% of the energy that is extracted as oil actually makes its way into kinitec energy in a car.  So you can look at where 88% of the energy is going and find efficiencies there.

 

Wireless electricity has been around for about 100 years, and has been used to power boats and cars.  Technology can create efficiencies, but it can also create new ways of doing things.

 

OT do you have a lawn.  After wasting another hour mowing my lawn, and having confirmed that the shortest definition of evil is waste.  I was curious.  Personally when I build, I am not going to have a lawn.

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this is where you are wrong....totally wrong...you do not understand at all...

1) Our world economy requires 2.5% more energy to grow at 4% every year....

2) Expotential growth, (roughly) every 17 years the economy doubles (70/4=17)......every 25 years the energy needed doubles....do you really think we can go from 85mbpd to 170mpd in 25 years?

3) We are at our about peak oil now.....so the flow will never get any bigger....not consistantly as in 2) but it gets worse, so in a peak we will start to drop down the other side, so the minimum suggested drop per year is 2% and to behonest i think thats amazing of we can only drop at 2%, I think its 4% plus.

4) Turn that 4% less energy per annum into loser GDP per annum....so anout 7% less GDP per annum....

and you think we will be all right?

oh dear....

and thatsts just the geological limitations...

5) every indebted country is banking on 4 to 5% growth per annum to get it out of the deep doo doo.....consider that it is promising the voters and the bond holders this...and it cannot deliver....it is impossible.

6) Monetary incentives are a joke, thats robbing peter to pay paul...or as PDK says shuffling deckchairs on the titanic...

7) Too expensive, in that t\you are correct, mostly...The last Labour govn was putting in a requirement for biodiesel of 2% (I think it was) this would have encouraged renewable technologies in an essentail product.

8) Scale and time....as in too expensive, well there are two aspects once you get to too expensive it takes years to put alternatives in palce, say 3 for those tallow to bio-deseil plants....so for 3 years we over pay...what do youthink happens to the economy that is eenrgy constrained in that time? it goes into recession...atx take drops, un-employment rises...etc etc....

So with planning and moving quite a lot of pain could have been avoided...

Straight roads etc, indeed, for 70 years energy has been cheap so not just roads but everything we do is based on bountiful and cheap energy...that was the first 1/2 of the age of oil...the next half will be very rough.

regards

 

 

 

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Let's see who is totally wrong shall we?

 

1980 US oil consumption 17M/bp day (US EIA)

1980 US GDP US$ 2.8 Trillion

1980 US Real GDP US$ 5.8 Trillion

 

2010 US oil consumption 19.1M/bp day (US EIA)

2010 US GDP US$ 14.5 Trillion

2011 US Real GDP US$ 13.1 Trillion

 

Percentage increase in US oil consumption between  1980 – 2010, 12.4%

Percentage increase in US economy (GDP) between  1980 – 2010, 518%

Percentage increase in US economy (Real GDP) between 1980 – 2010, 226%

 

You can’t argue with the maths!

While the intelligent and thoughtful reader of this site requires no explanation about the above, the same however cannot be said of Steven or PDK, or the other Green crackpots that infest this site.

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Insightful observation there David B.

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US petrol prices hit all time record for this time of year - forecast to hit new overall record high in April:

http://www.cnbc.com/id/46439046

Now when the US economy gets into trouble (again) off the back of this (in a few months time) just repeat after me  - 'its OK because a technofix is just around the corner'.

Its OK. It will be OK. Really.

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andyh, they are not high enough to hurt and they are keeping gas and electricity prices low. Fuel prices in California are still pretty good at $3.63 a gallon. Its the unemployment thats hurting in the States.

http://www.californiagasprices.com/

 

Having the reserve currency gives you some advantages.

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Yes andrew clearly you are right that US petrol prices hitting a record for this time of year (and heading for an all time record in April) cannot possibly be hurting. In fact its probably a good thing having all that potential money that could have been spent on other stuff being sucked out of the US economy to be spent on rising petrol prices. Yes indeed.

When the US economy has taken the hit (by June/July) from this please feel free to come back and tell me they are not high enough to hurt..........

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Skudiv/DavidB - but total nonsense.

 

GDP, as I've stated here many times, is total nonsense. Sure, it's a measure of something, but not of anything real.

 

Growth PA, has to factor in the real remainder of available inputs, and the percentage of same removed in the current year. It also has to factor in the increasing need for maintenance due to decay (erosion, fatigue, rot, rust) and the real effort needed to deal with pollution. In other words, real growth needs real resources, has a real decay factor, and creates real impacts.

 

The difference shows up when we look at Chch - in reality, it will take years to get back to where they were, and until they do, I say they aren't  'growing'. In GDP terms, however, it's a bonanza. Hard to see how getting back to where you were is 'growing'.

 

GDP also counts me selling to you selling to me selling to you selling to me, an idea. If you want to count such esoteria, you could probably trum up 1,000,000 %, why stop at 500?  But it's not a real measure of growth.

 

http://www.theoildrum.com/node/8615

 

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Bigger picture what PDK and I report/say is right, simple....., that is, Peak oil is here peak demand is not, and the only way to ration is based on price.

Im not sure what you are arguing here, except trying to prove the info wrong, which in a bigger picture it simply is not.

To start with the imperitive in that video is the price of petrol will go to $5USD a US gallon in a very short time frame...and we get to listen to US oil blame the Administration..I am so not surprised....expect congresional hearings with these guys hauled in front inside 2 years....lots of whinning and lots of pointing at obama,,,oh they vote republican dont they....

You know I actual hope Obama looses, I think he's better than anything the Republicans have but they are a bunch of extremists intent on fiddling while rome burns and the ppl want that. So for me experience is the best educator when faced with stupidity....so go Newt...

Next lets see the URL on your data, for instance,

are you inflation adjusting?

Lets look at what has increased...also 2.5% to 4% holds very well for a global rule of thumb...not per country..but lets look at the oil...To start with a bpd needs no inflaton adjusting, GDP does...

There is oil consumption and oil consumption....so if the US used to import all its crude and refine it onshore, now I believe this inst the case....ditto ethanol, in 1980 it didnt exists, today its a noticable % of "oil consumption"

"Energy consumption has increased at a faster rate than energy production over the last fifty years in the U.S.(when they were roughly equal). This difference is now largely met through imports."

GDP, how much of it is producing a good these days and financial slight of hand?  quite a %, in the UK its something like 20% I believe....it could be similar in teh USA...

So do apples with apples.

regards

 

 

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1980 US oil consumption 17M/bp day (US EIA)

2010 US oil consumption 19.1M/bp day (US EIA)

That is indeed interesting.  On average a growth rate of 0.04% p/a.

Regarding the GDP, I wouldn't pay too much attention to that as a measure.  Have you seen how it's calculated?  For example, when the government borrows money to buy bombs to drop on other countries, this actually increases GDP.

Slightly off topic, but has anyone come up with a better way of measuring how well an economy is doing?

I'm not expert on the matter, but since 1980 hasn't Japan been a significant producer of cars in USA (resulting in a drop (?) in production in the US).  Then the IT sector which was tiny in 1980 compared to today - that doesn't use much oil directly (electronics manufacture in the US has declined, moving off shore).  The finance sector has grown - another area that doesn't require much in the way of oil.

 

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No I never claimed things would be fine, in the abstract I don't care.  My family will be fine, and thats about the limitations of my sphere of influence.  Govt incentives are part of the economic model, which has and will continue to fail us.  Where are the Tesla's, Einstein's or Eddison's?  They are working in more profitable fields of finance, or medicine, making treatments, not cures.  Treatments are far more profitable then cures.  Everything is done for profit, which is holding back technology that would make things better for humanity.  How come my 20 year old phone has outlasted 3 modern phones, same with my TV vs Freeview/DVD player etc.  Technology isn't being used effictively, it is only being used for the next quarters earnings update.  Technology is the answer, what we lack is scientific planning, and forward thinking.  Technology could have the global population living a better life, if it was free of the economic model.

 

I'm not obsessed with GDP growth, it's far more expensive to grow then it is to prosper.  It's all related, economics, cheap energy, debt, and the reason I say there is no hope, is because the whole system is FUBAR. 

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i dont think technology is the whole answer, as the underlying real problem is really a moral one... its not just about economics...

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Absolutely economist – best comment among many above (David B.???)  - before the world succeed and establishes a new course, philosophical - not monetary, political or economic questions need to be ask.

 

This sentence becomes increasingly important even for New Zealand:

Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.

 

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yes and when those who vote for a living rather than work for a living reach such numbers as to sway elections the solution will not be found in the political domain... so people will again learn the hard way...

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Is US demand up?  its quite possible that the US isnt recovering and that the price rise is due to demand from India and China rising....probable IMHO.

I found this sober watching...

http://www.youtube.com/watch?v=dO9GxdMEGME&feature=player_embedded

regards

 

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Great video/debate. Well worth the watch if you can handle its implications.

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Yes, essential watching.

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Well it seems a few are starting to understand:

Forget Europe, Oil a Bigger Threat to Asia’s Growth: Economist

http://www.cnbc.com/id/46423707

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Hmm. Councils do need some sort of reform.

Overpaid (by two to four times it would seem).

Too big to function.

No pressure to be financially responsible.

No negative feedback (I cannot choose what I buy - I must pay the same as everyone else for the services they provide, whereas with most things I can choose to consume less and pay less).

Having said that the people that work for the council get a lot of quite unreasonable flak from the likes of myself.

Why does The Council stir up such emotions?

 

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 Tony Maryatt sound like a real arrogant w#####, and makes a good case for bringing back the Stocks.  This is the same guy who got a pay raise greater then what an average Kiwi earns in a year (for doing actual hard work), then had the audacity to say he earned it, and had never worked so hard in his life. 

 

He should be kicked out, before more money is wasted on him.  Obviously he doesn't give a #### about serving the community.  All he wants is to wallow in the public trough.

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Maybe I'm in the minority but I feel a bit sorry for the guy. He did take annual leave to play this golf game. It doesn't sound like he has played that many games over the last year, maybe he really has been working weekends. He certainly has the toughest job of all the council CEOs. People have got frustrated about the slow progress and they are looking for someone to blame. Maybe senior council employees are over-paid but that is surely the fault of who does the hiring? 

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According to him he earned it, and it was his right.  He seems to disagree with the concept of blaming those who hired him.  Working weekends comes with the territory when you're the boss, when SHTF you have to be on the ball with your finger on the pulse.

Regardless public servants are just that, not Lords.  What kind of society do we have when we give greater gains to those at the top, while taking more from those at the bottom to pay for it?  Not a very nice one, and I refuse to accept that this is acceptable behaviour.  The majority accepted it through ignorance, now they have knowlege they are rightly outraged that they are participating in it.

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Ihttp://tvnz.co.nz/breakfast-news/council-boss-under-fire-over-golf-day-video-4728131

 

The above link features Rev Mike Coleman of Wecan on Breakfast this morning 17/02/12.

 

I attended the council meeting and one deputation involved a poor lady who has been financially crippled by our council. She has been paying 60% rates on an uninhabitable house with no services. She is one of many who is now forced to default.

 

Mr Marryatt said, bluntly, it was up to the Earthquake Minister Gerry Brownlee ti fix it before shortly afterwards leaving for golf.

 

There is a total vacuous disconnect at Council here in Christchurch.

There is no rebuild period.

 

Bruce Zhao.

Rate payer chch

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$5USD a US gallon this winter?

http://www.youtube.com/watch?v=dO9GxdMEGME&feature=player_embedded

sobering

regards

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http://www.oil-price.net/

 

will – huuu - schshchsky:

 

http://www.youtube.com/watch?v=lLYjbCInpss

 

…and listen what they say – wow!

 

The times comes – when some commuters spend more to drive to work, then they earn a day.

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Sobering indeed, Dr. Tadeus Patzek spoke very well. Looks like we're in for an interesting next few years. I found it funny hearing the differing views of Dr. Patzek (scientist/engineer) vs Hofmeister (non-scientist/engineer). People need a reality check exactly like the one Dr. Patzek gives in this video.

Great stuff!

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In the current worldwide environment, I rather classify this aa a great video:  http://www.youtube.com/watch?v=EQqDS9wGsxQ

 

The two guys in the video are representing just more of the same:

Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail

 

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and just in case bloggers havent seen this  Kunst ditty --   "Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail"  !!!!
 

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kind of sums up the zeitgiest IMO.

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#1 Tony Maryatt. Be interesting to see how this plays out. A directly comparable situation occurred in Melbourne during the Black Saturday Bushfires. The Commissioner of the Victorian Police was the responsible office for co-ordinating all the associated emergency bodies involved, Victorian Police, SES (State Emergency Services) CES (Country Emergency Services) MFB (Metropolitan Fire Board) CFA (Country Fire Authority). Temperatures were predicted to hit 47 degrees celsius that day. It was known days in advance. At 9:00 am, on the day, the commissioner of police Ms Christine Nixon attended a hair dressing appointment. At 6:00 pm that night she left the Emergency Control Centre to attend a dinner at a restaurant with her husband and several friends. 300 people died that day. The press hounded her. She resigned 6 months later.

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Not even remotely similar,

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I AM VERY SORRY TO HAVE TO SAY THIS ...... but I dont see how any Public Servant can earn $420 000 a year from ratepayers for the following reasons 

1) They are not held accountable , ever,  because almost all council decisions are made by committees , so he/ she  has no accoutability . They make no decisions other than when to have coffee or go for a piss 

2) He/ she has no business risk whatsoever , so whatever decision they make , if its wrong,  ratepayers pay for the cock-up. Unlike in business they get fired or the business is liquidated .

3) This is Gilt edged low risk watertight job from whai he cannot get fired. The job is not worth $100k per annum .

4) There is no commercial urgency in their job whatsoever. Simple things take years to happen or get done  . In the private sector there is urgency to almost all decisions , we need to pay wages at the end of the week , do tax returns and pay them , pay interest on borrowings and keep the doors open and the business going . There is no fallback on ratepayers for bad decisions and we need to make decisions  and get things done , or we go bust.

5) Recession .... what recession? No recession here in this recession- proof job. They  get pay increses way ahead of inflation and municpal rates and taxes go up at %  way in excess of inflation ( Auckland rates now up 8% YOY)  

6) Someone anylising exactly what these overpaid Public Sector managers  do all day would be horrified at the time wasting inefficient series of useless uproductive meetings , tea and coffee drinking and networking BS 

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No CEO either then.

regards

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The Marryatt raise issue is serving us well by being so grotesque its shaken us out of the apathy that allowed monstrously bloated public sector pay increases. $68k pay increase - madness. Lets open his diary for the last few months and see what he has actually been doing in real life to consider he deserved such largesse from already stressed Canterbury ratepayers.  

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An easy-to-read explanation in the Guardian about the Black-Scholes equation which is used to price derivatives: http://www.guardian.co.uk/science/2012/feb/12/black-scholes-equation-credit-crunch. As they point out, it's fatally flawed because it assumes that market volatility does not change and a Gaussian (normal, i.e no black swans) distribution.

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The failure of Scholes-Black Formula was the primary cause of the implosion of LTCM which in turn began the first of the TBTF events on Greenspans watch

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Warren Buffet saw the innacuracy with black scholes for different reasons.  Using a simple test of extending it out for 100 years.  Which is why he sold billions of dollars of puts on the worlds global indexes.  Most of them expire this decade.

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Christchurch has a skill shortage of 2

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 Dr. Lacy Hunt, the chief economist of Hoisington Investment Management. 

 

http://globaleconomicanalysis.blogspot.co.nz/2012/02/face-music-road-ba…

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“Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield, 2 weeks before his assassination.

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Er Bernard,Tony Marryat took Annual leave to play golf re your opening article.Whats wrong with that?

 

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Today, the US total debt rose by $32 billion touching on a new record high of $15.392 trillion. As a reminder this is just the beginning: as we noted yesterday, according to the president's own budget total US debt is now expected to surpasses the greatest and final debt ceiling of $16.4 trillion just around September, and likely sooner with the addition of the $160 billion in additional debt needed to fund the extension of the Bush temporary yet perpetual tax cut through the end of 2012. So while we know that total debt to GDP is already over 100% and unlikely to ever decline back to double digits, thus putting into question the marginal utility of debt to generate further economic growth, another just as important question is what is the incremental utility of tax revenue relative to debt issuance, i.e., is America now issuing more debt than it is collecting from tax revenues: a step which would further cement its status as a banana debt republic. The chart below should provide some comfort in that regard. In fiscal 2012, starting October 31 through today, the US has collected $677.6 billion in withholdings taxes, while issuing $601 billion in debt over the same period of time. In other words, for now at least tax revenues are running 12% above debt issuance. Alas, considering that according to the president's own budget there is another $1 trillion in debt issuance over the next seven and a half months, we have a very distinct feeling the red line will cross the blue line yet again, and quite soon at that. Naturally, a logical question arises: why not just do away with taxes entirely and have all US capital needs be debt funded? After all, all that "saved or created" tax money would be used to buy bonds or better yet, iBonds, or something just as silly. And the USD would never, ever, lose its status as reserve currency...

http://www.zerohedge.com/news/us-debt-hits-new-record-fiscal-2012-tax-revenues-are-10-higher-debt-issuance

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While Greece and Europe continue sinking ever deeper into the colonial quicksand of Pax Goldmania, Iceland, which blew up, pushed its banks into bankruptcy, and arrested its corrupt bankers, is well on its way to being the world's only normal country.

  • ICELAND RATINGS RAISED TO INVESTMENT GRADE BY FITCH
  • FITCH UPGRADES ICELAND TO 'BBB-'; STABLE OUTLOOK
  • FITCH DOES NOT EXPECT ICELAND TO SLIP BACK INTO RECESSION
  • FITCH SAYS ICELAND GOVERNMENT DEBT PEAKED AT 100% OF GDP IN '11

Too bad the Goldman colony of Greece (and soon everyone else - thank you first lien "bailout" debt) will not see headlines such as these written about it any time in the next century.

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Yes, simple lesson in what can be done if you have your own currency to devalue and a public that has the balls to tell the wealthy (mainly UK and Dutch funds in this case) where they can stick their gambling debts.

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First class BS in Bloomberg here:

"An improvement in the labor market and increased hours worked may help deliver the income gains needed to encourage Americans to boost spending. A lack of inflation gives Federal Reserve policy makers room to keep interest rates low through 2014 to ensure the expansion endures a global slowdown."

http://www.bloomberg.com/news/2012-02-17/index-of-leading-economic-indicators-in-u-s-climbs-0-4-in-expansion-sign.html

Harrrrrrrrrrrrhaahaaahaaaaaaa....never ending drivel promising recovery from death.

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http://www.reuters.com/article/2012/02/17/us-usa-bonds-forgery-idUSTRE81G11620120217

Bernanke promises to print new ones to replace those confiscated by the Italian police...by mistake!

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Let's get back to Poole and his wallowing in the pig trough in wgtn....he is one of countless shiney bums across the nation who have devoted their working lives to working on their CVs and their salaries...the whole system is a pus oozing festering ulcer on the rate payers and guess what...the govt couldn't give a hoot.

You peasants exist to feed their addiction to your wealth. Welcome to idiotland.

 

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I have been thinking about the concept of "public service", and public servants. A public servant should serve their community.

 

Once a journalist accompanied Mother Teresa as she made her rounds of the dying. One of the lepers had a wound that oozed decay. Mother Teresa calmly washed the wound, all the while speaking softly to the man.

After Mother Teresa finished and they were walking away, the journalist said, "I wouldn't do that for all the gold in the world."

Mother Teresa replied, "Neither would I."

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