Hello Readers,
Welcome to Australian Monthly News (Oz Ezine)!
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Contents
1. Today's Motivation.
2. Inspirational quote.
3. Useful Sites.
4. This week's sponsors message.
5. Editors notes.
6. Article
7. A little humour.
8. Ezineadnet advertisements.
9. Disclaimer
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1. Today's Motivation"The way a team plays as a whole determines its success.
You may have the greatest bunch of individual stars in
the world, but if they don't play together, the club
won't be worth a dime."
Babe Ruth
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2. Inspirational quote.Public opinion is a weak tyrant compared with our own
private opinion. What a man thinks of himself, that is
which determines, or rather indicates, his fate.
~ Henry David Thoreau (1817 - 1862)
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3. Today's Useful Sites.What about TOMORROW?
http://www.tomorrow.org/links.html*******************
4. This week's sponsors message.You are among the first to hear about it.. I GUARANTEE
you will be seeing this all over the place in the next
few weeks, so hurry and take a look at this:
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http://www.list-twister.com/link/smartmoney*******************
5 Editors notesHi Friends
Welcome back to Western Australia. Hope your week has been
fruitful? The worldwide recession touching you at all?
Seems like it is similar to a very slow tide that comes in
over a couple of years wetting everything and then recedes
to one day come in again. Us humans really find it hard to
accept that things have changed. Especially if it hits the
hip pocket nerve. So there has been a great deal of denial
around the world. And a great deal of imagining that it
would not affect us. That it is happening to someone else,
not me!
I can get that because I still see big momma's driving their
precious cargoes to the front door of the primary school in
great four wheel drive vehicles. Also the pundits predicting
green shoots as the tide of events reaches above their necks!
Funny how Japan has finally realised that because it doesn't
have any oil, it had better start making electric cars. And
the greener than grass people here denying nuclear power
plants while their governments continue to build coal fired
electricity generators. They scream to the rooftops we need
wind energy as the wind eases during the night!
What saddens me though, I will tell you. BHP Billiton and Rio
Tinto are merging into a mining giant. This is prophecy, but
will they not build computer operated machinery so huge that
it will gulp the side off mountains and dig holes to the bowels
of the earth to send it from our shores in mile long ships.
Till the day rapidly approaches that the hills are gone and the
holes are vast and empty. Will on that day these rapacious
creatures then just pack up and leave?
Leave the citizens of our country jammed in a thin strip around
the coastline in crowded suburbs, working for a pittance to
just exist?
I have seen over the last fifty years how in the farming
industry, farms taken over until one or two people own a whole
district and a machine does the work of hundreds of men,
machines operated by computers and the money is siphoned off
into shareholders, here and mostly overseas. While communities
and vibrant small towns shrink and die?
Governments are then called on to provide for the aging
population and to do so they implement draconian taxes,
regulations and rules until the citizens lose any vestige of
freedom they vainly imagined they once had?
Work till your 67 and what next?
Against the backdrop of rising interest rates?
I am not of the loony left, or the far right, just a bloke who
is concerned about the madly accelerating pace of life and
everything and everybody in it :-(
But back home here in old downtown Geraldton today, a huge cloud
band came across the West Coast this morning and delivered
soaking rains to the wheatbelt. Shades of old times!
Looks like being a good old normal season.
We are enjoying this winter and best wishes to our friends
in the Northern Hemisphere as you bask in the summer sunshine?
Kind regards
Stan Maley
Australia 0899652873
http://www.ozfamilyezine.com *************
6. ArticleHistory lesson for economists in thrall to Keynes
By Niall Ferguson
On Wednesday last week, yields on 10-year US Treasuries
-- generally seen as the benchmark for long-term interest
rates -- rose above 3.73 per cent. Once upon a time that
would have been considered rather low. But the financial
crisis has changed all that: at the end of last year, the
yield on the 10-year fell to 2.06 per cent. In other words,
long-term rates have risen by 167 basis points in the
space of five months. In relative terms, that represents
an 81 per cent jump.
Most commentators were unnerved by this development,
coinciding as it did with warnings about the fiscal health
of the US. For me, however, it was good news. For it
settled a rather public argument between me and the
Princeton economist Paul Krugman.
It is a brave or foolhardy man who picks a fight with
Mr Krugman, the most recent recipient of the Nobel Prize
for Economics. Yet a cat may look at a king, and sometimes
a historian can challenge an economist.
A month ago Mr Krugman and I sat on a panel convened
in New York to discuss the financial crisis. I made the
point that "the running of massive fiscal deficits in
excess of 12 per cent of gross domestic product this
year, and the issuance therefore of vast quantities of
freshly-minted bonds" was likely to push long-term
interest rates up, at a time when the Federal Reserve
aims at keeping them down. I predicted a "painful
tug-of-war between our monetary policy and our fiscal
policy, as the markets realise just what a vast quantity
of bonds are going to have to be absorbed by the
financial system this year".
De haut en bas came the patronising response: I
belonged to a "Dark Age" of economics. It was "really sad"
that my knowledge of the dismal science had not even got
up to 1937 (the year after Keynes's General Theory was
published), much less its zenith in 2005 (the year
Mr Krugman's macro-economics textbook appeared). Did I
not grasp that the key to the crisis was "a vast excess
of desired savings over willing investment"? "We have a
global savings glut," explained Mr Krugman, "which is
why there is, in fact, no upward pressure on interest
rates."
Now, I do not need lessons about the General Theory.
But I think perhaps Mr Krugman would benefit from a
refresher course about that work's historical context.
Having reissued his book The Return of Depression Economics,
he clearly has an interest in representing the current
crisis as a repeat of the 1930s. But it is not. US real
GDP is forecast by the International Monetary Fund to
fall by 2.8 per cent this year and to stagnate next year.
This is a far cry from the early 1930s, when real output
collapsed by 30 per cent. So far this is a big recession,
comparable in scale with 1973-1975. Nor has globalisation
collapsed the way it did in the 1930s.
Credit for averting a second Great Depression should
principally go to Fed chairman Ben Bernanke, whose
knowledge of the early 1930s banking crisis is second
to none, and whose double dose of near-zero short-term
rates and quantitative easing -- a doubling of the Fed's
balance sheet since September -- has averted a pandemic
of bank failures. No doubt, too, the $787bn stimulus
package is also boosting US GDP this quarter.
But the stimulus package only accounts for a part of
the massive deficit the US federal government is
projected to run this year. Borrowing is forecast to
be $1,840bn -- equivalent to around half of all federal
outlays and 13 per cent of GDP. A deficit this size
has not been seen in the US since the second world war.
A further $10,000bn will need to be borrowed in the
decade ahead, according to the Congressional Budget
Office. Even if the White House's over-optimistic
growth forecasts are correct, that will still take
the gross federal debt above 100 per cent of GDP by
2017. And this ignores the vast off-balance-sheet
liabilities of the Medicare and Social Security systems.
It is hardly surprising, then, that the bond market
is quailing. For only on Planet Econ-101 (the standard
macroeconomics course drummed into every US
undergraduate) could such a tidal wave of debt issuance
exert "no upward pressure on interest rates".
Of course, Mr Krugman knew what I meant. "The only thing
that might drive up interest rates," he acknowledged
during our debate, "is that people may grow dubious
about the financial solvency of governments." Might?
May? The fact is that people -- not least the Chinese
government -- are already distinctly dubious. They
understand that US fiscal policy implies big purchases
of government bonds by the Fed this year, since neither
foreign nor private domestic purchases will suffice
to fund the deficit. This policy is known as printing
money and it is what many governments tried in the
1970s, with inflationary consequences you do not need
to be a historian to recall.
No doubt there are powerful deflationary headwinds
blowing in the other direction today. There is surplus
capacity in world manufacturing. But the price of key
commodities has surged since February. Monetary
expansion in the US, where M2 is growing at an annual
rate of 9 per cent, well above its post-1960 average,
seems likely to lead to inflation if not this year, then
next. In the words of the Chinese central bank's latest
quarterly report: "A policy mistake ... may bring
inflation risks to the whole world."
The policy mistake has already been made -- to adopt
the fiscal policy of a world war to fight a recession.
In the absence of credible commitments to end the
chronic US structural deficit, there will be further
upward pressure on interest rates, despite the glut of
global savings. It was Keynes who noted that "even the
most practical man of affairs is usually in the thrall
of the ideas of some long-dead economist". Today the
long-dead economist is Keynes, and it is professors of
economics, not practical men, who are in thrall to his
ideas.
The writer is Laurence A. Tisch professor of history
at Harvard University and author of The Ascent of Money
(Penguin)
The source of this article is
John F. Mauldin
mailto:johnmauldin@investorsinsight.comInvestors, please visit;
www.investorsinsight.com *******************
7. A little humour.A man watching a football match on TV kept switching channels
to a raunchy movie featuring a lusty couple.
"I dont know whether to watch them or the game," he told his
wife.
"For heavans sake watch them," said his wife. "You already
know how to play football!"
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