>No cover version tonight. I’ll post a few videos of the remarkable Rory Gallagher.
Rory Gallagher (born Liam Rory Gallagher, 2 March, 1948– died 14 June, 1995) was an Irish blues/rock guitarist. Born in Ballyshannon, County Donegal, Ireland, he grew up in Cork City in the south of the country. He is best known for his solo albums, and for his tenure in the band Taste during the late 1960s. A multi-instrumentalist who gained a reputation as a gifted and charismatic live performer, Rory Gallagher’s albums have sold in excess of 30 million copies worldwide.
>Gerard Jackson’s latest commentary on the Australian economy and the Rudd government’s unbelievable mismanagement of the global financial crisis is a good place to start today’s post.
The economic commentary swirling around Rudd’s budget reveals how bad economic thinking is in Australia. What none of our so-called pundits have grasped is that government spending in the form of borrowing from the public is never stimulatory — and it certainly is not Keynesian. When the government borrows from A to put B to work it is not expanding aggregate demand but merely transferring purchasing power from one person to another. A economic fundamental fact that every classical economist fully understood.
The Keynesian approach consists of monetary expansion to fund deficits and government borrowing. In case you are wondering, this is called inflation. Unlike Rudd and Treasury head Ken Henry the devious Mr Keynes knew exactly what he was about. He also understood the inherent inflationary danger of such a policy. This is why in in 1937 he publicly called on the British government to end new public works projects, warning it against the inflationary effects of any “general stimulus” even though unemployment stood at 12.5 per cent. (T. W. Hutchison, Keynes v. the ‘Keynesians’…?, The Institute for Economic Affairs, 1977, p. 11).
What we need to look at is the money supply. A vital factor in the economy’s behaviour that our all-knowing economic commentariat keep overlooking. (This lot even manage to talk about the Reserve’s monetary policy without ever referring to the money supply). Reserve figures show that since last September all measures of inflation have been falling. They also show that the prices of materials used in manufacturing started to drop in the same month and that the CPI flattened out at the same time. Therefore it should be no surprise to see that GDP also started to slow in September and has obviously continued to do so.
…Allow me to once again repeat a basic economic fact: entrepreneurship drives an economy and savings fuel it. Savings are what produces capital accumulation, otherwise called economic growth. The idea that GDP and growing productivity always indicate growth is a grave error. A situation can actually emerge where GDP and productivity continue to rise even as the capital stock is consumed and heavy unemployment continues to burden the economy. This is what happened in the US during the Great Depression. For example, from 1929 to 1936 labour productivity rose by 25 per cent.
Jackon’s basic economic fact – entrepreneurship drives an economy and savings fuel it – should be taught in school so that the next generation can aspire to become entrepreneurs, as well as focus on saving for the future rather than spending now and paying (more) later.
In 50 years’ time those societies that have enabled their people to look after themselves will have advanced past those who ensure their people are reliant on government doing things for them.
In 1964 Donald Horne released The Lucky Country, a book about how lucky Australia has been to have, as the Wikipedia page describes, “…natural resources, weather, history, distance from problems elsewhere in the world, and other sorts of prosperity.”
As Horne put it, “Australia is a lucky country, run by second-rate people who share its luck.”
It’s hard to argue that we are lucky to have so many natural advantages over the rest of the world. It’s unfortunate that from time to time we end up with second rate governments and, in the case of the current one, third rate.
The Rudd government’s predicted public debt is $300 billion, which is about $380 billion lower than when they came to office in 2007 due to the surplus built up by the previous government.
If you want to get a sense of how lucky we are then check out the following:
The itty bitty decrease on the right hand side is Australia.
There’s no doubt that things are going to get much worse in the world before things get better.
However, there’s also no doubt that the policies of the Rudd government are going to make Australia’s recovery slower and more painful than they would otherwise be.
The same goes for the US where Obama’s policy of bailing out failed states could lead to the country losing its AAA credit rating.
Ditto Great Britain.
It’s unfortunate that at a time of global financial crisis that we have such incompetents as Obama, Brown and Rudd.
>Computer teacher Tim Lambert has a history of beclowning himself when it comes to analysing those things he disagrees with.
For example, he denies there’s a UN ban on DDT and, anyway, even if there isn’t then mosquitoes are resistant to it so there’s no point using it.
Facts, you see, are not one of Lambert’s strong points.
DDT is listed as a persistent organic pollutant by the UN and if a country wants WHO funding then they can only get it if they don’t use DDT.
Lambert does not believe this is the case. One of my close relatives was directly involved in the issue, working in Africa and representing the UN. What he told me, and showed me, proves Lambert and other DDT detractors dead wrong. When my relative retires from working and is not subject to the blowback of disclosure then I’ll give the details.
Anyhow, Lambert has undertaken to critique Ian Plimer’s new book, Heaven and Earth, subjecting it to exactly the sort of scrutiny they should be undertaking on anything produced by Hansen, the Hokey Stick team, Lonnie Thompson and the rest of the useless scientists that support the IPCC’s ridiculous position on global warming.
Sales of Heaven and Earth
Reaction to Ashley’s review of Plimer
An astronomer reviews Ian Plimer’s book
The Australian’s War on Science 38: more denial from Ian Plimer
Ian Plimer ‘can not recall’ where his graph came from
Plimer does the Gish gallop
Ian Plimer and the health effects of mercury poisoning from land mines
The science is missing from Ian Plimer’s “Heaven and Earth”
The fact that the left has reacted so violently, and irrationally, to the success of Heaven and Earth demonstrates how worried they are that the so called science supporting their position is about to be exposed for the sham it is.
Lambert is a self professed computer expert and I have no doubt he has a fair bit of skill in that area.
Why doesn’t he analyse how climate models are created and why they have a zero percent successful forecasting rate?
That would be the intellectually honest thing to do if he really wanted to make a contribution.
>Gerard Brookes has been knocking it out of the park lately in his critique of the reckless spending of both the Australian and US governments.
The only outcome can be reduced living standards into the future.
There is no other outcome possible.
In an effort to avert the nonexistent danger of another Great Depression the Labor Government has decided to spend like a squad of drunken Obama’s. The real increase in government spending for this financial year and the next will be in the region of 18 per cent, with outlays running at about 29 per cent of GDP for this year. This lot is beginning to make the feckless Whitlam and Cairns — the latter being Whitlam’s cretinous Treasurer — look like a pair of pikers.
Unlike some commentators I haven’t bothered to wade through that monstrosity called the budget because most of it doesn’t matter. For example, revenue and growth figures are utterly worthless. You would be better off reading tea leaves. One thing and one thing only matters here: sound economic principles. In this respect the budget — like the great majority of budgets everywhere — is a disgrace, just like most of our economic commentary.
It is being argued that this spending is basic Keynesian counter-cyclical fiscal policy and is necessary to keep unemployment below the 10 per cent level. For Swan this is a sacred duty and one that extends to eliminating long-term unemployment. As part of this duty he and Rudd plan to ruthlessly raid Australians’ superannuation funds in an effort to offset part of their $58 billion deficit. This is what they call responsible fiscal management. The rest of us call it stealing. Not only does this proposed act of grand larceny reveal an absence of anything resembling ethics it also exposes their total economic illiteracy.
Allow me to return to my basic premise that what really matters are sound economic principles. For starters, the financial crisis is not a crisis of capitalism but of dangerous economic fallacies that central banks have been indulging in and which their staff learnt from their economics lecturers, not all of whom were Keynesians. These banks caused the world’s money supply to explode by massively expanding credit. Much of this credit eventually turned up as “idle deposits” which were then immediately labelled by central bankers, treasury official and the usual band of useless economic commentators as “surplus saving”.
It would have been obvious anyone actually versed in monetary economics and the history of economic thought that these so-called surplus savings were — like “excess investment” — a symptom of inflation. Let me put it this way, when savings exceed investment it is inflation. And that is exactly what we got on global scale.
Irrespective of what our economic pundits say Australia was fully embroiled in this world-wide lunacy. For example, from March 1996 — when Howard was elected — to last October currency rose by 129 per cent, bank deposits by 201 per cent and M1 by 185 per cent. It was this reckless monetary expansion that fuelled the boom and the government’s surplus, not decent economic management. Booms, which are never good things, always come to an end. This brings us back to sound economic thinking.
Every boom creates distortions. When the boom busts these extortions are revealed as idle capital and rising unemployment. Moreover, before the bust makes itself fully felt it first emerges in manufacturing. I spent ages pointing out that Australian manufacturing was contracting and that this was evidence that the boom was coming to an end which meant that it was only a matter of time before the rest of the economy was hit and the rate of unemployment rose. The likes of Terry McCrann disagreed, writing nonsense about a “dual economy”. Well, I was right and they were wrong. (And yes, I am one of those people who will tell you “I told you so”).
The first thing to note is that there is nothing Keynesian about Rudd’s spending binge. Nor can it halt a real rise in unemployment. This is not what Keynes was about. When Keynes spoke of deficits and borrowing he didn’t mean that the government should borrow a pound from Fred the butcher to put Bill the bricklayer to work. This would be nothing but a transfer of purchasing power from one person to another via the government.
The essence of Keynesianism is that the central bank should expand the money supply. Even our economic pundits should be able to see that running down the surplus adds nothing to the quantity of money. Moreover, any stimulatory effects will be very short-lived. Unfortunately our economic Solons cannot even work that one out. Government borrowing for the sake of keeping people off the dole is self-destructive. It increases the national debt without providing a genuine net return to the country.
In a free market the emergence of a large pool of unemployed after a bust is always a temporary phenomenon so long as governments allow labour markets to clear. (This is a fundamental economic fact that Australia’s so-called free market economists failed miserably to convey to both the public and to politicians, partly because the don’t understand it themselves). Nevertheless, the government insists on running up a massive deficit which is bound to eventually raise interest rates and crowd out genuine productivity-raising investment.
In a pathetic and thoroughly immoral attempt to lessen the impact of their own profligacy Rudd and Swan are targeting pension funds. Now pension funds are savings. Without savings capital accumulation is not possible. It therefore follows that taxing these funds amounts to taxing future living standards. The same goes for venture capital and capital gains. Once again, it is entrepreneurship that drives an economy and savings that fuel it, not politicians and bureaucrats.
Ultimately the government will have to turn to the Reserve to pump up the money supply to increase what Keynesians call demand and what real economists call inflation. But using inflation to escape a recession is like trying to cure a drug addict by pumping him full of cocaine. The sad truth is that no one in our think tanks, the Reserve or the Treasury have any genuine understanding of the dangerous economic forces that are now at work. And this is why they keep getting it wrong. No wonder they are afraid of an open debate.
Economic blatherers on the left are blathering on like professional blatherers about how saving jobs has to be the government’s top priority.
It’s drivel, of course, because they’re the wrong jobs and need to be washed out of the system.
That’s what a recession does.
Australia has much more pain to come directly because of the policies of this government, the worst in Australia’s history.
The US is going to be stuffed for more than a decade as a result of what Mr Obama as done…
>Notre Dame giving time to President Obama is like the Simon Wiesenthal Center giving time to David Irving.
In this embrace of competing ideologies Notre Dame will soon find that they’re in a death embrace with a Black Widow they can’t win.
>“Get It On” (retitled “Bang a Gong (Get It On)” in the U.S.) was the second UK number one song for the British rock group T. Rex. It was released from their best-known album, Electric Warrior.
While it only spent four weeks at the top in the UK, starting July 24, 1971 (“Hot Love” was number one for six weeks from March-May), it was the group’s biggest hit overall, selling nearly a million copies in the UK. It peaked on the U.S. Billboard Hot 100 at number ten in January 1972, becoming the band’s only major U.S. hit. The song reached #12 in Canada in March 1972.
The Hollywood and Vine version has had less than 200 views on Youtube but it’s actually a pretty good version and the girls have really good voices.
Bang A Gong (Get It On) – Terrific live version
Power Station – what was Robert Palmer (R.I.P.) thinking?
Hollywood & Vine – not bad at all
>The history of Australian politics is that Labor gives us deficits and Liberals pay it off.
Not too different to the rest of the world in which the left insists on spending the next generation’s wealth to pay for supposedly progressive policies in the here and now.
It’s completely immoral, of course.
After the budget was released the other day the shadow treasurer, Joe Hockey, released a short video showing the reality of Labor’s past, as well as uncomfortable truth about Rudd’s budget.