The Democrats are salivating at the Mother of All Earmarks. The latest rumors I've heard have been up to 1.3 trillion dollars of government spending.

Not many people understand the economy well enough to have an opinion--just a general uneasiness. I'm uneasy AND I have an opinion--the Democrat plan is a disaster of biblical proportions, designed to produce a world-wide depression of profound depth.

There were actually three "New Deals". Hoover, like Bush, implemented aspects of the New Deal before Roosevelt came to power. Roosevelt implemented the New Deal, and then implemented it again--all without substantial effect, which is why they call it the "Great" depression. Only the complete national mobilization for the second world war finally drove down the unemployment rate (although you still couldn't buy anything...)-->

The real difference between a recession, which is a normal part of the economic cycle, and a depression, which is a collapse of the economic system, is completely a matter of government policy. The easiest way of describing a recession is a kind of economic diet--eat less and exercise more and get healthier. The junk food gets taken off the menu.

To understand what the Democrats are proposing, just watch the post-holiday commercials for magic diets that allow you to eat all the crap you normally do, skip the exercise and still lose weight. In spite of the fact that these diets simply don't work in the long term (and often, not even in the short term), doesn't dissuade people from spending billions for them, or those "bigger penis" pills for that matter.

I'll be on the lookout for sensible proposals to get the economy on track, but welfare checks and make-work programs are proven failures--not that this will dissuade Democrats ever hopeful of recreating European socialism on these shores.

H/T Ed Driscoll

..work in a nuclear power plant.

"It's safer to work in a nuclear plant than it is in real estate," says Patrick Moore, a scientist and founding member of Greenpeace who began supporting nuclear energy several years ago. He cites data from the U.S. Bureau of Labor Statistics, and notes that a Columbia University study published in 2004, which followed 54,000 nuclear-plant workers for 15 years, found that they had fewer cancers, less disease and lived longer than the average person.

It's good for the planet:

"If you honestly believe that greenhouse gas is the seminal issue of the day, as world population and economic growth continue to expand, so will the need for electric capacity," says Sheila Slocum Hollis, a partner at the Washington law firm of Duane Morris who specializes in energy law. "Whether to power electric vehicles or for general manufacturing needs, ultimately people are looking toward nuclear as the big power source."

Exelon and other operators have addressed the problem of nuclear-waste disposal with "dry-cask storage" -- high-tech sealed containers that they keep on their sites. Due to innovations like that, many of the safety concerns that arose after accidents at Three Mile Island in Pennsylvania in 1979 and Chernobyl in Ukraine (then part of the Soviet Union) in 1986 have eased.

"Nuclear power is in a renaissance," says Tom Neff, a physicist and research affiliate at MIT's Center for International Studies. In fact, 17 applicants are seeking government approval to build 26 nuclear plants, meeting a Dec. 31 deadline for federal tax credits and potentially ending a 30-year hiatus in the construction of new U.S. nuke facilities.

Convenient truth.

While in Pennsylvania recently with some dinner companions, I was asked quite frankly why I was a conservative, with the explanation that I was nothing like the conservatives this person had imagined. What he was really saying is that I was too smart, too tolerant--too "liberal" to possibly be a conservative.

It wasn't the first time someone asked me the question, and the answer is always the same--like most people, I started out liberal, and got progressively more conservative as I observed reality. I've always been interested in economics and business, and some time by my middle twenties, I was completely disillusioned with liberal economics, which weren't economics at all in my mind, but politics.

The New Deal was an economic failure, but a political success, and that my friends is what the Obama program is really all about.

But the whole idea of fixing, running, regulating, designing, or modeling an economy rests on the notion that, if the right smart guys are at the rheostats, the economy can be ordered by intelligent design. But the economy is no mechanism. There is no mission control. Government cannot swoop down like a deus ex machina to explain the inexplicable and fix the unfixable. Why? Because the knowledge required to grasp each of the billions of actions, transactions and interconnections would fry the neural circuitry of a thousand Ben Bernankes. This is what F. A. Hayek called the knowledge problem. Knowledge, Hayek reminded us, is not concentrated among a few central authorities but is dispersed around society. That's why bad unintended consequences follow government interventions like black swans.

A few economists have not succumbed to the "fix it" fixation. They know that society is not like a machine at all, but an ecosystem. Faster than you can say market fundamentalism, a Keynesian will scoff at this metaphor. But his favorite trope has helped to stagnate many an economy; making Rube Goldberg apparatuses out of means-ends networks, perversion out of productivity. As Czech President Vaclav Klaus wisely notes: "The market is indivisible; it cannot be an instrument at the hands of central planners."

The country will eventually emerge from the dark night it is about to enter, of that I have no real doubt. Nevertheless, I am both saddened and angered at all the lives about to be destroyed by ignorance, arrogance and criminal self-interest.

Richard Posner does an excellent job of describing the economic mess were in, and why traditional measures of economic stimulus likely won't work. More importantly though, he examines the Obama program--asking the important questions.

There are three basic questions to ask about the program. The first is whether it is necessary, the second whether it has the right structure, and the third whether it is the right size.

His answer to the first question doesn't really give my any comfort though.

Ben Bernanke, the chairman of the Federal Reserve Board and the leading economic student of the Great Depression of the 1930s, is a conservative economist. Conservatives don't like huge deficit-spending programs, or at least the public-works and transfer-payment components of them, which increase government involvement in and control over the economy. Bernanke supports the program, after having failed to avert a depression by means of monetary policy alone. Almost the entire economics profession converted--virtually overnight--from being Milton Friedman monetarists (Friedman believed that only bad monetary policy could turn a recession into a depression) to being John Maynard Keynes deficit spenders.

Yeah, that much is obvious, but in rhetorical terms, this isn't an argument, its an appeal to authority--smart guys think this is the right way to go. The irony here is that Posner is one of these smart guys, and he's relying on the other smart guys to provide his own comfort on the question.

I am not happy.

On the other hand, he does offer opinions on why he favors some proposals and disfavors others.

Programs to transfer wealth are very difficult to abolish, because interest groups form about them. The problem is somewhat less serious with public-works programs, especially road-building and other infrastructure projects, and especially those infrastructure projects that were planned or begun by states or municipalities and interrupted or deferred because of the fall in tax revenues resulting from the depression. The federal government can finance these projects until the depression is over, and then the states can continue them with its own tax money.

Posner's explanation of why he opposes wealth transfer is a bit cryptic, but essentially his criticism is that its inflationary. It moves the economy from a diversified structure, to a far more simpler one, directly more money to fewer suppliers. It would be as if we had wallets full of cash, and all the grocery store had to sell was Clamato juice, and not enough of it--the price would eventually become ridiculous.

Everybody likes the infrastructure idea, but there are many problems with it as well. Major projects take years to plan and license, and there is no indication of how many ready-to-go infrastructure projects there are available to stimulate economic activity. Its also a fact of life that building roads, bridges, etc... is hugely energy intensive. We can expect the demand for oil to spike seriously, even as Pelosi and her merry band of idiots attempt to close ANWR permanently to energy development.

Posner suggests that doing it "well" might not matter, because its the fact that somebody is spending money that counts, but he doesn't sound convinced.

Properly structured, a Keynesian program can help to check a downward economic spiral. With monetary policy apparently inadequate to avert a downward spiral big enough to trigger deflation, there may be no good alternative to such a program.

That sounds suspiciously like, "Do you have a better idea?"

In my view, it sounds like all the big economic brains are seriously out of their depth, and hedging their bets by opting into a consensus--there is protection in the herd. Ironically, this is precisely what got us into trouble in Iraq--listening to a bunch of herd animals in the officer corps. Bush tapped Petraeus, Roosevelt tapped Eisenhower--neither a herd animal, and both men ultimately the right choices to deal with ambiguous circumstances.

Obama has neither the education or experience to understand the economy and even be remotely capable of recognizing a truly good idea. In fairness, McCain wouldn't have been any better. It seems to me that we need a brainstorm outside of the halls of Congress if we have any hope of avoiding another Great Depression.

A stimulus package may be a lifeline for the nation's economy, but it could be a death sentence for a lot of cows.

Lawmakers are looking for ways to use the forthcoming stimulus bill to help dairy farmers, and the number one priority is to dampen milk supplies and prop up prices. Translation: reduce the nation's dairy herd.

Is the dairy industry really the economic linch pin that is going to rebuild the economy?

Nah, I didn't think so.

An industry that features a very high degree of automation and low wages with an economic bailout designed to raise consumer prices for the commodity.

Geniuses.

The news of Circuit City's dissolution might lead you to think you could pick up a sweet deal on a flat screen, but if CompUSA's closing was any indication, shoppers will be disappointed.

The liquidators are in the business of extracting as much value as possible from the inventory, which means minimal discounts except on the crap that nobody wants.

I recalled that Hillary Clinton weighed in on Circuit City's layoffs last year, and unlike so much else of what she said--its still up on her site.

This story, by way of Ed Driscoll, caught my attention.

I started blogging five years ago. It was news and political stuff, which I still do today. I had no educational background for it - just passion. I love it - it’s my writing fetish. I do it for pleasure more than profit.

At the time I began, my dearest friend in the world was an unemployed journalist. She had done the “necessary” years of university to give her some kind of paper that said she had the “right” to report the news. Yet, she remained unemployed.

Out of my exuberance, I suggested she start a blog to help get her name known in the right circles. Her reply? “I’m a journalist. I don’t write about the news for free!”

Fast forward five years. Today I will be lunching with the editor of the National Post, one of Canada’s two national newspapers. Next week I will be a pundit once more on the Michael Coren Show.

And my friend? She gave up and now works in a bookstore, stocking shelves.

Ayn Rand stuff.

Mitt Romney at the GOP conference in Virginia. In part:

Predictions that we are almost out of the woods, based on the length of prior recessions, are wishful thinking. Americans have lost some 11 trillion dollars in net worth. That translates into about 400 billion dollars less annual consumer spending in the economy.

There’s something else people don’t talk much about: The pool of investment capital—all the money available for new investments, business start-ups, business expansions, capital expenditures, and new hiring. The size of that pool has shrunk by trillions of dollars. This was a huge loss in value, and the effect could be felt for years—in businesses that don’t start up or grow, in jobs that don’t get created.

Given these extraordinary conditions, I am convinced that a stimulus is needed. [snip]

Fifth, we must begin to recover from the enormous losses in the capital investment pool. And the surest, most obvious way to get that done is to send a clear signal that there will be no tax increases on investment and capital gains. The 2001 and 2003 tax cuts should be extended permanently, or at least temporarily.

And finally, let’s exercise restraint in the size of the stimulus package. Without restraint, it may grow as the days go by. Last year, with the economy already faltering, I proposed a stimulus of 233 billion dollars. The Washington Post said, and I quote: “Romney’s plan is way too big.” So what critique do they have for the size of the Democrat’s package? I’m afraid they’ve caught a bad case of liberal laryngitis. It’s everywhere these days.

In the final analysis, we know that only the private sector—entrepreneurs and businesses large and small—can create the millions of jobs our country needs. The invisible hand of the market always moves faster and better than the heavy hand of government.

The difference between us and the Democrats is this: they want to stimulate the government, and we want to stimulate the economy.

The Wall Street Journal has published an excellent editorial today outlining exactly how the New Deal prolonged and worsened the Great Depression. Authors Cole and Ohanian write clearly and concisely about how each step that the government took deepened the mire of the market just when it should have, left to its own devices, corrected itself.

The main lesson we have learned from the New Deal is that wholesale government intervention can -- and does -- deliver the most unintended of consequences. This was true in the 1930s, when artificially high wages and prices kept us depressed for more than a decade, it was true in the 1970s when price controls were used to combat inflation but just produced shortages. It is true today, when poorly designed regulation produced a banking system that took on too much risk.

I laughed when I saw on Drudge that Mark Sanford had immortalised the Obama Government Stimulus Bill as "the savior-based economy." How true. When a future "The Forgotten Man" comes to be written, that will be the title.

I hadn't heard of the South Carolina governor until recently, but I was impressed by this video which I'll link to as I can't embed it.

I'm a regular reader of Gary Becker and Richard Posner's blog. Becker is a a Nobel Laureate, but he got his for his professional work, not his political connections. Freakonomics is essentially a field he pioneered--the intersection of behavior and economics.

In today's Wallstreet Journal he analyzes the effect the stimulus. Money quote.

In fact, much of the proposed spending would be in sectors and on programs where the government would mainly have to draw resources away from other uses. This type of spending includes adding broadband to rural areas, spending more on health coverage, encouraging scientific innovations, developing renewable energy, as well as many other things.

As President Barack Obama recently said, "This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education." Such spending may encourage long-term growth, but it will have little short-term effect on GDP.

So our conclusion is that the net stimulus to short-term GDP will not be zero, and will be positive, but the stimulus is likely to be modest in magnitude. Some economists have assumed that every $1 billion spent by the government through the stimulus package would raise short-term GDP by $1.5 billion. Or, in economics jargon, that the multiplier is 1.5.

That seems too optimistic given the nature of the spending programs being proposed. We believe a multiplier well below one seems much more likely.

Let me translate.

Click to enlarge-->

I don't know what I could add to this.

Its a pretty good illustration of how utterly ridiculous it is for Obama to compare Bush's deficits to his own.

Wal-Mart has been one of the bright spots in the recession. After being the target of union agitation for years, now they're getting some good press. The Washington Post cites their health care plan as one to emulate. And Chicago, which bowed to union pressure a few years ago to keep them out of town, will perhaps be more welcoming this time to Wal-Mart jobs.

The G7 finance potentates met to discuss the "severe economic downturn". The usual statements about how its going to take "time" and how they are "working" on it. No one who knows anything is seriously buying this nonsense.

“The statement ticks all the right boxes, but as expected does not go beyond generic statements of principle and commitments that we have heard before,” said Marco Annunziata, chief economist at Unicredit MIB in London. “The commitment to act in a coordinated way flies in the face of the rather uncoordinated approach that followed similar commitments last October.”

It ironic that some people have been calling this the collapse of the Capitalist system, when its really the collapse of the socialist system. Socialism has been masquerading as a viable economic alternative to free market capitalism for decades, but when it really comes down to it, it exists as a parasitical dynamic--redistributing wealth from the free-market sectors of their economy to the unproductive political economies like unions, government employees, state enterprises, etc...

Now free market capitalism is in traction, and the socialists are front and center--expected to pick up the slack with socialist enterprise. Except that there is no such thing. The only available tactic is to stall, and hope capitalism start feeling better and then claim credit for socialism when and if things start improving.

We are now in a game of chicken. The Europeans are looking to the U.S. to pull them out of the death spiral, and Obama is hoping that lower oil prices and whatever gas remains in the private economy can save his ass before the Congressional elections next year. If not, then socialism faces another twenty years in the wilderness as the generic ballot is already showing signs will happen.

Per the NY Times. Gawker comes up with some suggestions. In their comments, some suggest journalism.

That might be an improvement at the Gray Lady, but how long before they officially go bankrupt? At least the retrained journos would have some new humility. One would hope.

Of course this sounds like a lunatic idea. And isn't their Ivy League education good for anything else? They need retraining? Finally, as Kevin Hassett noted in Bloomberg, these guys are narcissists. Good luck with that.

Mark adds: I owe my devotees a comment on my NY Times stock plug. I got in at $5.14 as announced at the time, still felt good when it went to $8 and got out at $6.70 on a trailing stop. I'm certainly bullish this brand at these record lows of $3.75. All it takes is the defenestration of one man - Pinch Sulzberger.

As the Dow Jones Index approaches decade lows. I'd say we're moving thru Capitulation to Despair. The markets are realising that the US is now run by quacks and scoundrels, who prescribe poison for medicine. Worse the quacks and scoundrels won't go away for 4 years, maybe 8 years, maybe 12 years. Then it may be too late. There is a moral component to government. This lot don't have it, so why should politics be self-correcting ? The liberals can now fix the census, fix citizenship, fix electoral rolls, fix freedom of speech, fix the media and fix the courts. If politics no longer self-corrects, why should markets ? 'Return to the mean' isn't guaranteed. Maybe that's a sign of Despair.

When you tune down the bombast, Jim Cramer is not only a very smart guy, but an extremely forthright one.

Which puts him on the Obama enemies list. That seems to be a trend these days--the White House spokesfool identifies the critic by name and accuses them--them!--of not doing their homework.

Cramer responds and it is good.

"What you're doing is buying into the notion that if we just print some more money that we don't have and send it to different states, we'll create jobs," he said. "If that's the case, why isn't Zimbabwe a rich place?"

Here's an averagely repulsive piece of sociology:

"Within her base, I think this will just increase sympathy and support," said Gary Alan Fine, a Northwestern University professor of sociology who studies political reputations. "It will make her seem more like a person who has to confront the challenges of life, and this is one of them. If you're a fundamentalist or a devout Christian, you don't believe you're living in a world without sin, you don't believe people don't make mistakes."
And for those who love to hate Palin, this is another arrow in their quiver.

"It just adds a kind of frisson of joy, a little pleasure," Fine posited. "It confirms the kind of Beverly Hillbillies aspect, the lower-middle-class qualities that people saw in Sarah Palin."

The deep reason that oil production has not peaked is that technology has not peaked. It's not just a matter of cutting edge techniques in applied geoscience or directional drilling or high pressure, high temperature operations. With experience costs can be cut dramatically with slimmer engineering and less 'gold-plating'. For example deepwater expro has much further to go, not least in the Western Hemisphere in both the US and non-US Gulf of Mexico and the Santos Basin off Brazil. As well as the giant Tupi and Jupiter finds, today comes news of another "very huge" result on an Exxon operated well. Add the untapped potential on the Alaskan North Slope, offshore California and offshore Florida. Then add the gargantuan shale oil deposits onshore the USA and Canada. Then add middle distillate synthesis of natural gas to very pure heating oil and kero. Natural gas is already available in giga-gargantuan quantities. It's a logistics play more than an an expro play.

Peak oil is a completely bogus argument for wrecking landscapes with windfarms and destroying the Amazon forest for corn-for-ethanol production. Of course by the time Exxon hits first production in Brazil, its many billions of annual corporation tax may be paid to the Swiss government rather than the USSA government. Does anybody on Planet Obama get it that oil exploration and production in the USA is stimulative? So is building nuclear power stations. When we're borrowing from our children for present spending, shouldn't the spending be on capital projects to benefit the economy which they will inherit, rather than bullshit boondoggles for teachers' unions, Acorn and the other jackal packs that make up the Democratic interest groups gorging on America for as long as China will lend more money?

Trivia: Where was the first discovery of a giant oil field? 'Giant' means > 500 million barrels. Answer - offshore NW Peru. How come? Because The geographic setting for much of the world's oil is the palaeo-deltas of giant river systems like the Mississippi, the Rhine, the Tigris/Euphrates and the Amazon. "The Proto-Amazon delta flowed westwards into the Pacific, before the Andean uplift in the late Tertiary." Stick that in your pipe and fractionate it.

FT:

Construction of western Europe's tallest building will begin in London today amid the gloomiest market for commercial building in decades, thanks to backing from a group of Qatari banks.

Designed by Renzo Piano, the Shard of Glass will tower 1,016ft above London Bridge station and stand nearly three times as high as St Paul's Cathedral.

The Russia Tower project, the competition for tallest building in 'Europe', is frozen, likely cancelled. London will certainly recover thanks to its diverse advantages, such as distance from capricious dictators, but Moscow is a bigger risk.

A deeper risk than the economic cycle is 'What is the point of commercial office space anyway?' Virtual office space is cheaper, more malleable, more interconnected, cuts out commuting ('Man was born free but everywhere is in trains'), and is in some ways more 'present', meaning communication is simpler and more configurable. The argument about energy revolves around questions like 'Is it green?', 'Should we live sparser lives?', ' Will oil run out?', and so on, but the issue may simply become moot by adopting the virtual office as the norm. Half our journeys would vanish, both local commutes and long-distance business travel. If a flat-screen isn't 'present' enough, well just beam me up in 3d and I'll join you round a virtual conference table in a virtual corporate HQ.

This morning the UK gilt auction failed. That means there weren't enough bids to cover the amount the government wants to borrow. Actually the situation in America is worse since we'll get a centre-right government within 2 years, but the malign dunces who run your government will be in power for at least 4, maybe 6, 8, 12 years longer what with Acorn and the growth of the state-dependent electorate. The UK has better democratic accountability for its Chief Executive. Our press are not lapdogs and Gordon Brown has to hear the charges against him face to face in public. Imagine Barack Obama in this video instead of Gordon Brown:

Daniel Hannan is a journalist and blogger as well as a Member of the European Parliament. This is a strange world; the same Daniel Hannan who stripped the PM's flesh off his bones and pecked his eyes out in the clip above, this same avenging carrion crow, won't disown Obama yet for the weakest, drippiest reasons:

So, have I changed my mind? Well, I won't deny that Obama has done plenty of irritating things, ranging from the idiotic stimulus package to the way he dissed the Prime Minister (yes, I know the man's a clot, Mr President, but he's our clot; and, tired as you may have been, I suspect the Royal Marines in their Forward Operating Bases in Helmand, fighting a war that few of your allies will touch, are pretty drowsy too).

On the other hand, the US remains more popular than it has been for years, and Obama's own approval ratings, though fallen, are well above the vote he received in November.

Update: Daniel Hannan's reaction to the reaction to his speech to Gordon Brown.

Real politics:


Engrossing stuff, but Hannan misreads Obama's effect on America's brand. The multi-racial President as talisman stuff is fluff. Putin, Khameini, Chavez don't make decisions on that. Obama's brand is weakness and inexperience. There's real doubt whether he's Presidential timber at all. Hannan's right that the Obama victory is forcing the GOP to re-think the fundamentals - boy, do they need to - and the amazing thing is that Hannan, despite being ignored by the BBC and the rest, now has an influence on that. Isn't the internet wonderful?

Bonus track - "Please defect":

In the last few days the yield on US government debt has risen dramatically. Lenders are reluctant. Today the decline in the value of the dollar accelerates as gold, oil and Sterling surge up. The US has 4-8-12 more years of Harvard Law School economics to endure, whereas the UK government will be replaced within a year by the Conservatives. So while the credit agencies put the UK on credit watch with negative implications but re-affirm the US as triple-A, the markets realize that in the UK there's hope for change whereas in the US there's Hope and Change. Some difference.

I've queried America's credit worthiness for a while, eg "A trillion here, a trillion there..." , but I'm not as polite as the Chinese:

Another global financial crisis triggered by a loss of confidence in the dollar may be inevitable unless the U.S. saves more, said Yu Yongding, a former Chinese central bank adviser.

It’s “very natural” for the world to be concerned about the U.S. government’s spending and planned record fiscal deficit, Yu said in e-mailed comments yesterday relating to a visit to Beijing by U.S. Treasury Secretary Timothy Geithner.

The Obama administration aims to reduce the fiscal deficit to “roughly” 3 percent of gross domestic product from a projected 12.9 percent this year, Geithner reaffirmed today. The treasury secretary added that China’s investments in U.S. financial assets are very safe, and that the Obama administration is committed to a strong dollar.

It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”

The deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion shortfall, according to the Congressional Budget Office.

A letter to the WSJ editor illustrating Europe's "free" health care:

Regarding "Mrs. Pelosi's VAT" (Review & Outlook, Oct. 8): Several years ago when our children were very young, my wife and I hosted a different European au pair each year for six years. During the course of their stay in America, each au pair proudly commented that in their respective European country medical care was free.

When their time with us came to an end, each au pair went to the Mall of America and purchased several pairs of jeans, as well as other clothes, before returning home. At the time, jeans cost between $15 and $30 each. I asked these young women why they were buying so many jeans before returning to their country. With some astonishment at my lack of understanding, they explained that the same jeans in their country retailed for between $80 and $100. The price differential, of course, was due to the value-added tax and the higher costs of doing business in European welfare states.

I thought to myself, "Ah, but your medical care is "free."

Mark Douglass

Minneapolis

The US Geological Survey has re-assessed Venezuela's recoverable oil reserves in the Orinoco Belt. Apparently they're twice as high as we thought and total more than Saudi Arabia. This is heavy oil that's expensive to produce and treat, but so what? Orinoco oil has much better recovery rates than Canadian heavy oil which is flowing profitably, it's shallow, it's onshore and the USGS review uses current technology and geo-knowledge. At the present price of $75/barrel it's highly economic. If prices drop to make it uneconomic, then by definition we have plenty of oil anyway and the lower prices tend to incentivise cheaper processes. Such vast reserves in America's backyard can be added to Canada, Brazil and the terrific potential for deep drilling in the Gulf of Mexico + other dramatic oil and gas discoveries in recent years. You could cut the USGS figure by 2/3 and still have ABUNDANCE.

So what could go wrong? There's Chavez, there's Latin-American disfunctional nationalism like Mexico's woeful underperformance since nationalising it's oil industry in 1938, or the Church of Anthropogenic Global Warming might proscribe heavy oil or just oil in general, above all there's the stupidity and cowardice of the Harvard Faculty Club junta in America.

Meanwhile Iran's nukes are imminent and Venezuela would be the ideal first stop to proliferate and test American will. While Obama is preening about his base's right to 'health care' and abjectly begging China and Russia for sanctions on Iran and N.Korea as a fig leaf for an actual defence policy, the world's political tectonic plates are shifting. There's an earthquake coming and America's unpreparedness and lack of spine will kill a lot of people. What will happen when Chavez announces he has a nuke and Obama had better shape up? Will the Director of National Intelligence go 'Duh!' and smack his forehead? 'We'll do better next time.' Odd's bodikins, what a shower of fuckwits!

Anyway price and politics will determine feasibility of extraction...just like on the Alaskan North Slope....and remember, 'peak oil = peak technology'.

The squillion dollar stimulus is Obama's sophomoric tribute to Keynes. The Obamans are so incompetent that much of it won't get spent, yet much will get squandered on Democrat-friendly bullshit. When you think that 40% of the Federal budget is borrowed money, it's like watching the biggest binge in history....big government, big wages, big pensions, big public employee voting bloc, big vampire squid on the face of America, big hangover; same in Britain. Keynes was a great thinker.....he was also wrong as this video proves:

Oh well, I may as well add a clip of one of Hayek's followers. This is from her last speech in the House of Commons. She'd been betrayed by her own party after leading it to 3 successive General Election victories and turning Britain from a dosshouse into a powerhouse. But in defeat she was clad in truth:
UPDATE:

Thatcher's biggest mark domestically came in economic policy, when she rejected the ideas of the Keynesian social democratic consensus which had informed policy since 1945 in favour of monetarism, inspired by Milton Friedman and FA Hayek. The papers reveal little about the opposition to these heterodox views from the Treasury and other civil servants. Just two weeks after the general election, she was writing to Hayek: "I am very proud to have learnt so much from you over the past few years. […] As one of your keenest supporters, I am determined that we should succeed. If we do so, your contribution to our ultimate victory will have been immense."

About 60 percent of the fourth quarter's growth resulted from a sharp slowdown in the reduction of inventories as firms began to rebuild stockpiles depleted by the recession.

Changes to inventories added 3.4 percentage points to the fourth-quarter growth, the Commerce Department said in its report Friday. Excluding inventories, the economy would have grown at a 2.2 percent clip, the government said. That's an improvement from 1.5 percent in the third quarter.

Translation: You're not getting a job anytime soon.

I suspect a great many Americans won't understand this--how can the GDP increase at such an impressive rate, and unemployment go up?

You can thank automation for that. I just visited a rather large power plant near Houston with four gas turbine generators producing a lot of megawatts of electricity and steam for a neighboring chemical plant. There were no more than 30 people on site. There is virtually no relationship between increased production and head count in modern industrial manufacturing plants.

There is surprising uniformity of occupations between industries, since specific functions can still only be performed by human beings. The job with the highest number of openings?

Janitors.

Hey--its a job right? Of course most people want high-paying, interesting work, so we are confronted by the question--how do we create more of those jobs?

Ah! There's the rub. Those higher paying jobs are created in greater numbers by small businesses with new ideas, and thus potential for windfall profits, than from any other source--by a large margin. Having been involved with a lot of start-ups over my career, I can attest to the fact that virtually every new company creates an immediate opening for someone with a marketing background and an engineer--often several in each class.

Now consider the nature of the so-called stimulus from the Obama administration, which isn't all that different from the 2nd term stimulus plan of the Bush administration. Does it stimulate the creation of more new businesses?

Nah. Employed people get 60-80 bucks a month to help with the cell phone bill.

It doesn't take genius to understand that if you want to stimulate job growth, you have to stimulate the job creators, which means making it a lot easier for people with time, ideas and money to invest to actually start new businesses that hire new employees.

In 1996, two PhD students started a company with a little over one million dollars in investment. That company was Google, which thirteen years later, has more than 10,000 employees worldwide.

Ask yourself the question--do you think the Democrats economic stimulus is going to produce the next Google?

Me neither.

There it is again. Another news report on the economy that prefaces the news with the word 'unexpected'.

WASHINGTON (Dow Jones)--The U.S. unemployment rate unexpectedly declined in January, but the economy continued to shed jobs and revisions painted a bleaker picture for 2009, casting doubt over the labor market's strength

Almost at the same instance, the erstwhile Goldman-Sachs (now just Goldman) had this to say about the umemployment figures.

Goldman is known for changing its estimates within 24 hours of an NFP number. Today, there is no change, and it stays at -25,000, coupled with an estimation of the unemployment rate at 10.1%.

So what's going on here?

Screwing around with unemployment statistics is a time-honored practice--for Democrat administrations.

Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.

The Clinton administration also reduced monthly household sampling from 60,000 to about 50,000, eliminating significant surveying in the inner cities. Despite claims of corrective statistical adjustments, reported unemployment among people of color declined sharply, and the piggybacked poverty survey showed a remarkable reversal in decades of worsening poverty trends.

Somehow, the Clinton administration successfully set into motion reestablishing the full 60,000 survey for the benefit of the current Bush administration's monthly household survey.

I'm not saying this is happening now, and in any event, no one would tell us until it was politically safe to do so (and then the story would be buried as irrelevant).

I'm going to make a prediction though--the media will very soon, start reporting the payroll survey rather than the household survey. Why? A million census workers will be going to work in the next few weeks, and their payroll is going to have the 'right' effect on the job numbers. Obama will hold a press conference and announce the government hyper-spending is working--the economy is turning around! Of course, when the census is completed, those people will be out of a job, and the numbers will revert to a more normative characterization of what's happening in the economy.

As for this latest report on the household survey, it's interesting that even though its a poll, its not reported the way polls traditionally are--with a statement of confidence level (i.e. 95%) and a margin of error. For a sample the size described by the Bureau of Labor Statistics, the confidence level would normally be around 98% and the margin of error about +/- 0.25%. The implications of that are sobering for those that are hoping that things are turning around--the change is within the margin of error, and Goldman is probably right--we still have 10.1% unemployment.

If Obama had been a cleverer politician like Tony Blair, say, then liberalism would persist maybe to the point of killing its host. In Britain the 'Conservative', David Cameron, will probably be PM by May. He sees himself as the heir to Blair. He personifies the triumph of liberalism. He is a soi-disant conservative who buys into the liberal theology of EU membership, Warmism, imposed 'diversity', nationalised health and most of the other bollocks. Cameron probably doesn't believe that stuff any more than he believed the conservatism he used to espouse. He just thinks he's more likely to get elected by the BBC/Guardian brainwashed swing voter. Meanwhile many ideological conservatives are likely to vote for the UK Independence Party (UKIP), both from principle and in dreams of a hung Parliament where call-me-Dave is dragged to a populist anti-EU stance.

Anyhoot Obama's move to control the last remaining facets of free enterprise has provoked America's immune system to produce antibodies sufficient to fight the underlying sickness. And it only took 12 months. That says America's immune system is in good shape and that says America has the best political culture providing it's sufficiently provoked and providing there exists the internet. Indeed the internet may be as big factor in America's recovery as Obama's provocations. I've been saying for a while "Better Obamanism then renaissance than McCainism then decline."

What this rant is rambling up to is that America will boom in the near future. The strongest indicator of health is how a body deals with sickness and these 12 months show that America is the healthiest kid on the block. Try hosting a Tea Party in China. So roll up, roll up, fill your boots with the Dow Jones Index at 10,000!

I read this observation by Helen Smith the other day.

I'm here in DC on business and everywhere I look, fat cat government workers and others are partying in local restaurants and bars, and the hotels are booked solid, apparently with conferences. Too bad Las Vegas isn't doing this well. No recession here in DC.

The Marie Antoinette dynamic is simmering there, just below the surface, masked by so much dissatisfaction with the rest of the Obama's Marxist Revolution, but its every bit as explosive as mucking around with people's health-care--perhaps more so. Class warfare is the gift that keeps on giving, and Big Government Liberals are heading for a political lynching. In my state, where three term Senator Bob Bennett is in a battle for reelection, the perception of him as having 'gone Washington' is as much a problem as all the other hits on him combined.

Harry Reid is in far, far, far worse shape, in fact he should probably just resign his seat now and stay in Maryland. Nevada is not a safe place for him these days.

The employment department’s published jobless rate doesn’t include discouraged workers who’ve stopped hunting for jobs, and it doesn’t count underemployed Nevadans who’d like to work full-time but can find only part-time jobs.

If you factor in the discouraged and the underemployed, Nevada had a 12-month average of 15.2 percent joblessness in the second quarter. McDonald said he suspects the rate is even higher now — perhaps nearly double the stated unemployment rate, and certainly close to 20 percent.

Probably nearer to 25%. Its the worst economy since the WWII, and what's Reid and the gang doing? Wasting 18 months of a fruitless and ill-considered health-care jihad.

Only Rhode Island and Michigan are worse, although not much worse.

Better hope that Andrew Breitbart doesn't start filming the good times in the D.C. area. The next march on Washington might be with pitchforks and torches.

Red out, black in:

In Freakonomics, a popular treatment of economics (something we need far more of...), a case study of a Israeli day care yields unexpected results.

The day care facility decides to deal with the problem of parents late to pick up their children with a fine, assuming that creating a financial penalty would rationally reduce the objectionable behavior. Yet over the next few weeks, parental tardiness tripled.

Realizing their mistake, the fine was withdrawn, but the tardiness continued at the new, higher level than it had previously. The reasons parents made the effort to be on-time to pick up their children were a matter of social conscience embedded within the common culture--the perception that inconveniencing another, in this case the day care worker, was a boorish thing to do. Once an economic value was attached, the social dynamic changed. In one sense, the old joke became a reality--we've already established the fact that you're a whore, now we're just negotiating price...

This article in the Washington Post, made me wonder if we're not seeing a similar cultural transition, one that may prove durable for at least a generation or more.

"We're going to see much lower consumption going forward," said Dean Baker, co-director of the Center for Economic and Policy Research. He blames diminished spending on the drop in housing prices. "People who thought they had equity in their homes have seen it disappear," he said.

The longest and deepest recession since the Great Depression has exacted a punishing toll that continues nearly a year after the economy started growing again. Hardest hit are the 9.7 percent of workers who have been out of a job for an average of nearly six months. Many Americans are delaying retirement and others have lower expectations for their children's futures, the Pew poll found.

The depression--and let's be honest, the use of the word "recession" simply doesn't apply after two years with the prospect of several more years of economic distress awaiting us--has destroyed the easy assumptions about the future that the vast majority of Americans have operated under since the 1950s. Easy credit, job security, guaranteed pensions and peer pressure to keep up with the rate of irrational consumption.

Its scaring the hell out of people who have never contemplated any other way of life, and like my cat who once got his tail caught in a door slammed shut by the wind, you never look at doors the same way ever again.

My children are young adults, and its interesting to see how their behavior and expectations have changed. Cash is king, and no one uses a credit card unless they can pay the balance almost immediately. The economy, and a kind of generational consensus has done what I couldn't accomplish with years of finger-wagging and pleas for financial wisdom.

I frankly see this as a positive development, although along the lines of not drinking because your father was an alcoholic. I suspect that a culture that understands the need for financial conservatism creates a much more stable economy in the long-term.

Now if we can just get the federal government to lay off the bottle...