Wednesday, November 30, 2005

We will fight them on the lexicon, we will fight them on the soundbites, we will ...

How very Churchillian and very St. Paul of the honourable Defense Secretary Donald Rumsfeld. He has had "an epiphany" and will no longer refer to those insurgents fighting the occupation of Iraq as, well, insurgents.

Says he,
"This is a group of people who don't merit the word `insurgency,' I think," Rumsfeld said Tuesday at a Pentagon news conference. He said the thought had come to him suddenly over the Thanksgiving weekend.

"It was an epiphany. I think that you can have a legitimate insurgency in a country that has popular support and has a cohesiveness and has a legitimate gripe," he said. "These people don't have a legitimate gripe." Still, he acknowledged that his point may not be supported by the standard definition of `insurgent.' He promised to look it up.

Webster's New World College Dictionary defines the term "insurgent" as "rising up against established authority." Even Gen. Peter Pace, the chairman of the Joint Chiefs of Staff, who stood beside Rumsfeld at the news conference, found it impossible to describe the fighting in Iraq without twice using the term `insurgent.'

After the word slipped out the first time, Pace looked sheepishly at Rumsfeld and quipped apologetically, "I have to use the word `insurgent' because I can't think of a better word right now." Without missing a beat, Rumsfeld replied with a wide grin: "Enemies of the legitimate Iraqi government. How's that?"

At another point in their news conference, Rumsfeld and Pace had an unusual exchange in which Rumsfeld corrected his senior military adviser, only to have Pace gently insist that it was the defense secretary who was wrong.

A reporter asked Pace what U.S. commanders in Iraq are supposed to do if they find Iraqi forces abusing prisoners. Pace replied that if inhumane treatment is observed it is a service member's duty to stop it.

"I don't think you mean they have an obligation to physically stop it - it's to report it," Rumsfeld said, turning to Pace.

Replied the general: "If they are physically present when inhumane treatment is taking place, sir, they have an obligation to try to stop it."

Friday, November 25, 2005

Colour determinative

I noticed a police car this morning with a new and different paint job. The colour?



Thursday, November 24, 2005

Happy Thanksgiving, Australia

It's the last Thursday in November, which is when they celebrate Thanksgiving Day in the US. It is, for many, the best holiday of the year. It started in America, but Japan and Canada and other places have adopted it, too, but on different days.

What makes it special for me is that it is exactly like Christmas without either the religious component nor all the folderol of gifts and all the madness and commerciality that entails. You get your family and friends together, often for the first time since last year or longer, have a big feast of turkey and sweet potatoes and green beans and whatever you'd have at a mid-winter's Christmas feast, and lots of pumpkin pie and pecan pie and coconut cakes or whatever other sweets you'd have, and wine, and watch some darn good football (gridiron).

For those religiously inclined, thanks can be offered up to the gods. For those spiritually or otherwise inclined, you can just reflect and thank your lucky stars or other fortune. It's nonsectarian, nonsecular, with a primary focus on family, friends and communtiy. For those down on their luck, many churches and social agencies provide the feast for them, too. It's a time for peace and goodwill, fellowship and merriment.

For many years now I've thought Australia needs such a day of thanks. What got me thinking that way especially was the stupid way they try to have a "Yule" or Christmas in July. With Christmas coming in summer here, the Christmas feast Australian-style tends towards the seafood buffet with cold-cuts and bar-b-que. Australians of European background miss the tradtional baked Christmas feast, but find it too hot to prepare in the summer heat. So they try to create something like it with the winter Yuletime in July theme.

Actually, the July Yule thing was created and is being pushed by the tourist industry, trying to stoke up some business, so it hasn't really caught on as a dinky di event.
But we do have a Queen's Birthday or other such irrelevant holiday occuring sometime during the winter. How neat would it be if we dropped that and replaced it with a Day of Thanks.
A day of community and family and friends just to celebrate the joy of being. An Australian day without pollies, parades and media circuses of second-hand entertainers. A day when the recent Australians might find it appealing to break bread with, or at least reconcile with, the Original Australians, in the same way that Americans hold to the myth that the Thanksgiving tradition arose from the sharing of the harvest with the Native Americans who helped show them how to survive in the new land.

What I'd propose is we create a proper mid-winter Day of Thanks so we can rekindle those fantastic Christmas-like feasts without all the Christmas trimmings. Then, we'd have our "traditional" Australian Christmas and have our "traditional" European baked mid-winter feast, too.

If the idea appeals to you, please start to spread the word. I've sent the occasional letter to the editor, without any traction. People I've spoken to love the idea, notwithstanding the reflexive "not-another-Yank-invasion" cringe that is so typical here. But it's not my intent to make us more American. It's my intent to make us more Australian. As we've done with most other things, we can take from some of the customs of other places to enhance our own lives and create our own traditions.

If you agree, forward this to everyone on your email list, and ask them to do likewise (you can just copy this link: Maybe the idea will "snowball"!

Happy Thanksgiving from the Stew to you.

Wednesday, November 23, 2005

Crocodile tears

Ross Gittins is finally gettin' around to discussing the executive remuneration study we threw into the Stew a few days ago. And his eyes are full of crocodile tears as he goes through that croc of data.

'The survey showed that, last financial year, the average total remuneration of the chief executives of Australia's largest 300 listed companies rose by 16 per cent to $1.9 million [ and that's PER YEAR]. This was 34 times the average earnings of an adult full-time employee.

Fair enough. What else is new? Perhaps we've finally learnt to see things from the viewpoint of the much put-upon CEOs.

As Don Argus, chairman of BHP Billiton and Brambles, explained to the Review, the debate about executive pay is often unfairly simplified, ignoring the components of executive pay packages. Good point. Did you realise, for instance, that the base salary of those 300 chief executives averages less than $700,000? That's a mere 13 times more than employees' average ordinary-time earnings. And chief executives' base salaries increased by just 6 per cent - the same as the increase in employees' average earnings.

The point is that this guaranteed portion of chief executives' incomes accounted for only about 40 per cent of their total remuneration. If you set aside about 10 per cent to cover perks and other benefits, such as retention payments (money to discourage executives from leaving the company), the remaining half is "at risk".

Think of it. How would you like to have half your $1.9 million dependent on you achieving certain targets, or on the company's sharemarket performance? Talk about stress. On average, "short-term incentives" - annual bonuses - were worth about $600,000, up 22 per cent on last year. What more proof do you need that chief executives were working their butts off last year?

And if you're not convinced these bonuses were seriously "at risk" - that the performance hurdles set for chief executives were, as we say, "stretch targets" - consider the sad case of Tom Park, chief executive of PaperlinX Limited. His company's shareholder return fell by 38 per cent during the year, with the result that his bonus was just a quarter of what it could have been.

It was only $386,000 - way down on the previous year's $722,000 - leaving the poor man with a total package worth barely more than $2 million. And to think there are still a few leftie troublemakers claiming executive salaries don't reflect company performance.

Long-term incentives account for the remaining $400,000 of the average $1.9 million package, but chief executives are anxious for the public to understand that such amounts aren't received in cash. They're just an accounting estimate of the value of the benefit conferred. So that's OK.

But, just to help keep your envy at bay, let me remind you that chief executives have a lot of worries and a lot to be unhappy about. That's clear from what was said to the Review in last week's study. The remuneration consultant chappie drew attention to the growing gap between the pay of chief executives and the pay of the handful of senior executives who report directly to them, which he put at a ratio of two to one.

Imagine the trouble those "direct reports" must have, controlling their covetousness. How would you like to earn just half the $1.9 mil of the bloke only one slot above you? And how would you like to be a chief executive, worried on the one hand that you're earning too much more than your offsiders while knowing that, from the viewpoint of the country's good, you aren't earning enough?

Chief executive salaries in Australia are still well behind those paid in the United States. And, as Michael Chaney, president of the chief executives' union (otherwise known as the Business Council of Australia), told the Review, "if we don't offer world-class remuneration, we have to accept that there will be a much smaller pool of talent available to run our companies".

Chaney explained that chief executives' remuneration reflected a world market and the much higher level of public scrutiny they now face. "Being the CEO of a major corporation, particularly a listed corporation, is becoming a higher-risk job and that increased risk is reflected in increased remuneration." What's more, "the disclosure requirements on listed companies can lead to highly intrusive public discussion and scrutiny of individuals' remuneration".

But don't reserve all your sympathy for chief execs. Although average directors' fees have risen to about $120,000 a year, independent company directors (many of them retired chief executives) are also doing it tough. John Morschel, chairman of Rinker Group Limited, said: "No level of fees can compensate for the increase in personal liability and this factor alone is making it hard to attract the right calibre of director."

Argus, of BHP Billiton, noted that its directors had to attend seven meetings a year. If they were coming from the US, "they are not going to do that unless it's worthwhile".

Robert Savage, chairman of Perpetual Trustees Limited, told the cautionary tale of the chief executive of a large company he'd spoken to recently who had considered giving up and becoming a professional director on several boards. It just wasn't good enough. "Why would I go from the opportunity of maybe $2 million to $3 million a year with half of it being at risk," the other chap had said, "to a guarantee of half a million if I can get five company directorships - it doesn't equate."

See? It's tough at the top. But here's the amazing thing: all the chairmen told the Review they still had plenty of volunteers for the top jobs."

It's too bad Ross missed that little slight of hand that Michael Chaney tried to pull, comparing Australian executive remuneration to the "much higher paid" US executives as more evidence they are underpaid here. That's exactly the opposite of what they do when they talk about regular employees. In that case they bleat and piss on about how that same job could be had for one-tenth the cost in some foreign country like China or India.

How do they have the gall to compare their wages to higher paying countries while comparing the wages of the lower rung employees to the lower paying countries? (Don't bother; that's rhetorical.) One of these days I'm going to try to organise some thoughts around the matter of the "management class" concept broached in a prior post.

Bomb threats

"The US President, George Bush, planned to bomb the pan-Arab television broadcaster al-Jazeera, according to a British newspaper that cited a Downing Street memo marked "Top secret". The Mirror quoted an unnamed British government official as saying Mr Bush's threat was "humorous, not serious".

A source told the Mirror: "The memo is explosive and hugely damaging to Bush. "He made clear he wanted to bomb al-Jazeera in Qatar and elsewhere. Blair replied that would cause a big problem. "There's no doubt what Bush wanted to do - and no doubt Blair didn't want him to do it." Another source said: "Bush was deadly serious, as was Blair. That much is absolutely clear from the language used by both men."

The Mirror said such a strike would have been "the most spectacular foreign policy disaster since the Iraq war itself". The newspaper said that the memo "casts fresh doubt on claims that other attacks on al-Jazeera were accidents". It cited the 2001 direct hit on the channel's Kabul office.

A spokesman for Mr Blair's Downing Street office said: "We have got nothing to say about this story. We don't comment on leaked documents."

Margaret Thatcher forced Francois Mitterrand to give her the codes to disable Argentina's French-made missiles during the Falklands war by threatening to launch a nuclear warhead against Buenos Aires, according to a new book.

"Excuse me. I had a difference to settle with the Iron Lady. That Thatcher, what an impossible woman!" the president said as he arrived, more than 45 minutes late, on May 7, 1982. "With her four nuclear submarines in the south Atlantic, she's threatening to unleash an atomic weapon against Argentina if I don't provide her with the secret codes that will make the missiles we sold the Argentinians deaf and blind." Mitterrand reminded the author it was an Exocet missile that had struck HMS Sheffield. "It was fired from a Super-Etendard jet," he said. "All the materiel was French."

In words that the psychoanalyst has sworn to the publisher, Meren Sell, are genuine, the president continued: "She's livid. She blames me personally for this new Trafalgar … I was obliged to give in. She's got them now, the codes."

The root of all evil

"A third of Britons believe a woman who acts flirtatiously is partially or completely to blame for being raped, according to a new study. More than a quarter also believe a woman is at least partly responsible for being raped if she wears sexy or revealing clothing, or is drunk, the study found. One in five think a woman is partly to blame if it is known she has many sexual partners, while more than a third believe she is responsible to some degree if she has clearly failed to say "no" to the man.

In each of these scenarios a slightly greater proportion of men than women held these views - except when it came to being drunk, when it was equal. In fact more women (5pc) than men (3pc) thought a woman was "totally responsible" for being raped if she was intoxicated."

"Michelle Leslie refutes claims that wearing a Muslim headscarf during her trial was a stunt. Federation of Islamic Councils president Ameer Ali today said that if Leslie resumed work as an underwear model, she must admit that her claim that she had converted to Islam almost two years ago was a stunt. "If she wants to be a Muslim, she has to be very modest in her dress sense, modest in her language, modest in the way that she looks - everything."

"A series of soft-porn images of Ms Leslie posing for several fashion labels are likely to further generate debate over her claim to have become a recent convert to Islam. They are the types of images from which several agencies told the Herald they would discourage their models participating. In one image for Tsubi's 2004 calendar, Leslie is pictured astride a motorbike wearing a pair of derriere-baring jeans.

She posed for the current spring/summer catalogue of Sydney swimwear brand Azzollini shortly before her arrest in Bali and during the period in which she claims to have been studying Islam. She sits on a beach with her legs spread wide open before the camera."

"A village council in Pakistan has decreed that five young women should be abducted, raped or killed for refusing to honour childhood "marriages". The women, who are related, were married in absentia by a mullah in their Punjabi village to the sons of their family's enemies in 1996, when they were aged between six and 13. The marriages were part of a compensation deal ordered by the village council after one of the girls' fathers shot dead a rival. The rivals have now called in the "debt", demanding the marriages be fulfilled.

Their fathers have refused to hand them over to men they say are illiterate, leading to a resumption of the blood feud. Two of their relatives were shot recently and 20 people arrested. In addition to the sentence on the women, the council has sentenced to death Ms Niazi's father, Jehan Khan, and her uncles for failing to honour the deal. The women have said they will kill themselves if their fathers obey the council.

The Human Rights Commission of Pakistan has condemned the "barbaric custom of vani" - the tradition of handing over women to resolve disputes - and called on the President, Pervez Musharraf, to intervene.

Ms Niazi, who hopes to become an English lecturer, said: "We are proud of our father. Despite having little money, he has educated us and shown us that we must stand up in society and demand our rights." Mr Niazi, who is a government accountant, said his family had already paid blood money to the aggrieved party.

"I have refused to give into the council's request as it is un-Islamic. I cannot hand over my girls like goats to marry these illiterate boys."

"In a public address last month, Faiz is reported to have said there is a victim of rape somewhere in the world every minute, and that the woman is usually to blame. "She displayed her beauty to the entire world. She degraded herself by being an object of sexual desire and thus becoming vulnerable to a man who looks at her for gratification of his sexual urge." Faiz's comments, that women largely bear responsibility for rape if they make themselves an object of sexual desire, have upset many in a religious community that is still haunted by images and stories of Bosnian refugees being gang-raped during the recent war.

Not surprisingly, most in the Muslim community feel revulsion at his comments. Yet there has been little significant response from Muslim community leaders, when condemnation of Faiz's comments should have been swift. Like other Australians, most Muslims believe rape is a crime; that rapists should and must be punished. Women and men are subject to sexual assault regardless of what they wear. And sadly, idiots of all religious denominations sometimes claim that women could avoid being raped by dressing more modestly, but I am yet to read any scripture or learn of a religion that justifies rape.

Muslims have to speak out. We cannot afford to rely on our non-English-speaking imams and feuding leaders to make incoherent noises while we are busy getting on with our lives."

"The indigenous leader and ALP vice-president, Warren Mundine, has rebuked Aboriginal men for the horrific level of domestic violence in many communities. He said bashing women was not part of traditional Aboriginal culture, and he was tired of the excuses men made for their behaviour, including blaming alcohol, and problems at home. "I'm tired of hearing Aboriginal men say they bashed their wife because white fellows took our country," he said yesterday. "Now that really [teaches] the white fellows a lesson."

Mr Mundine said part of the problem was that violence towards women appeared to be acceptable. Referring to a barbeque he attended in Dubbo a few years ago, he said: "I was talking to some men about domestic violence and what really shocked me was they could suck a beer and eat a sausage sandwich and talk about slapping their wives and girlfriends around as if they were talking about the weather."

Women were the backbone of Aboriginal families, he said, and the communities would suffer if the women were "kicked in the guts day after day".

Irfan Yusuf, a lawyer and columnist for the Australian Islamic Review, called on imans to cease lecturing "models on what sort of dress they should wear" and instead lecture men on how they should treat women."


Alan Kohler sees a shift in the dynamics surrounding the gargantuan record-breaking US trade deficit. The thing that tipped off the change was the uncharacteristic rise in the price of gold coincident with the continuing rise in the strength of the US dollar. Historically, they tend to be inversely related.

He re
ckons petrodollars are being turned into gold. Up until recently, the story behind the ballooning trade deficit has been the "vendor financing" effect, where the Asian countries used US$ earned from selling cheap goods and labour by converting them into US treasury bonds, thus keeping long term US rates low nothwithstanding the best efforts of the Fed to raise them (see The rising Fed rates managed to strengthen the US dollar even if it had no appreciable effect (in any) on longer term rates. Kohler tips us to a change whereby that mutually beneficial financing effect is phasing out, being replaced by a more ominous petrodollar effect. This is how he tells the story:
"So what's the problem? It's that the US dollar is overvalued and the country's competitiveness has eroded to the point where the cash rate arbitrage will be pitifully inadequate to hold the currency. This has occurred because Asian central banks, led by China, have been buying US bonds at ridiculously low interest rates in order to keep their own currencies and improve their own competitive position.

US consumers and businesses have been buying their goods from - and outsourcing their services to - cheap currency countries, which has stopped what would have otherwise been a natural depreciation of the dollar. As a result, the US current account deficit is now pushing $US800 billion ($1086 billion), $US300 billion higher than when, as research house Bridgewater Associates puts it, "private sector capital gave up on the dollar in 2002". It is also the biggest financing task the world has ever known.

Meanwhile, Asian current account surpluses are declining and those of oil-exporting countries are rising. According to the ANZ Bank's Saul Eslake, current account surpluses of the Middle East have quadrupled in two years to more than $US200 billion. Russia's surplus is up to $US120 billion and even Latin America is running a surplus now because of oil from Venezuela. In fact, Australia is about the only commodity exporting nation still running a deficit (because we are bigger consumers).

Total trade surpluses of commodity exporting nations are about $US400 billion. Asian surpluses, meanwhile, have declined from $US370 billion a year to $US300 billion, so the most important financiers of America's consumption addiction are no longer the Asian countries supplying the finished goods and services acting out of self interest - what Eslake calls the greatest vendor financing scheme in history. Commodity exporters, especially oil, are taking over, and they have an entirely different set of motivations.

"Unlike the oil shocks of the past, which gave rise to the concept of the petrodollar - a recycling of windfall [sic] oil revenues into dollar-denominated assets - the current windfall [ditto] accrues to a Middle East that is much better prepared for inward re-investment.

"Take a look at year-to-date returns in the stockmarkets of the region's major oil producers - Saudi Arabia (+96 per cent), UAE (+179 per cent in Dubai and +85 per cent in Abu Dhabi), Kuwait (+84 per cent), Qatar (+77 per cent), and Bahrain (+32 per cent). Also take a look at the urban construction boom - Dubai is starting to look Singaporean in scale."

And they are investing in the other asset that is no one else's liability - gold. Certainly the Arabs are less inclined to finance American consumers than the Chinese and are more worried, as investors, about the sustainability of the US current account deficit.

American financial assets [bonds and equities] will have to be repriced eventually, either directly or through a depreciation of the currency, or both.

And while there is little doubt that we are in the midst of a "Santa Claus rally" on Wall Street or that Australian stocks are generally not expensive, the timing and force of the American reckoning will be the key to investment markets in 2006."
To the extent fewer US export dollars are going to Asian countries who turn around and reinvest them in US treasuries, there will be increased pressure on longer term rates to go up in the US, which is not stock-friendly nor real estate-friendly. To the extent the US dollar depreciates, it will have to pay more for the foreign goods it is addicted to, which is an inflation threat, and would only encourage further Fed hikes. None of which sounds very market-benign to me.

I wish I'd said that

My post about Gerard Henderson still not getting it just can't hold a literary candle to this.

And while I'm puffing up other people's blogs, let me just mention Big Gav and Davo, and drop in from time to time to see how Little Johnny is getting on.

Rate relief rally - really?

CNBC talking heads are all jumping around like kids on the last day of school. There's more and more anticipation that the Fed's rate hike trek is coming to an end, after one or two (or three?) more quarter-point hikes, taking the overnight rate to maybe 4.5%. You hear them saying that the stocks always rally at the end of a Fed rate hike.

Maybe, but I'd like someone to distinguish this hike from prior ones. My take is that longer term rates are no higher in any significant amount from when the Fed started it's multi-month hike over a year ago. My belief is that every prior rate hike regime was accompanied by rising longer term rates, and an equity relief rally makes a bit of sense in that regard, because investors tend to compare longer term returns from bonds to stock returns in deciding where to put their money.

But this time, given the failure of longer term rates to respond to the Fed hikes, you have to ask, WHAT RATE HIKE? If there hasn't been one, how can there be any "relief" rally?

This all looks to me just like a typical, canned window dressing for the turkey. And I note that all my stochastics for the Dow, Nasdaq and S&P are getting right back to the overbought levels that have seen pull-backs every time for the last few years. I have been expecting the range will be slightly stretched toward, maybe a little over, Dow 11,000, but then it's right back to the other end of the range. Nothing sustainable here from my perspective, and more than a little tricky to trade.

I sure wish I knew enough about all this stuff to be even slightly knowledgable about it. Remember, this ain't investment or trading advice.

Tuesday, November 22, 2005

He just doesn't get it

Poor old Gerard Henderson. He's John Howard's mouthpiece to the media. And he still doesn't get it.

He is just shocked - honestly, ingenuously, profoundly, stupendously shocked - at the lack of "intellectual" support for Howard's Liberal Party agenda. (See,

"What is interesting about the debates on national security and industrial relations is how few articulate commentators have been prepared to support the Howard Government on one or both issues. The vast majority of lawyers, academics, journalists and artists who have contributed to the debates have sided against Howard on both issues."

"Yeah, well, d'uh", as the kids say. "Interesting"? I'd say "telling" would be the more apt description.

The thing that had his knickers in a knot today was a speech Howard's own Immigration Minister, Amanda Vanstone, made to the Rotary Club of Adelaide a few days ago. This was the same speech that also got up the ire of Howard's media outlet, Rupert Murdoch's The Australian, in an article that called for Amanstone's resignation. That article described the speech as follows:
"In a wide-ranging speech to Adelaide Rotarians, Senator Vanstone dismissed many commonwealth security measures as essentially ineffective. "To be tactful about these things, a lot of what we do is to make people feel better as opposed to actually achieve an outcome," Senator Vanstone said. During her Adelaide speech, Senator Vanstone implied the use of plastic cutlery on planes to thwart terrorism was foolhardy.

Qantas has backed Senator Vanstone on the reintroduction of metal cutlery on planes.

Mr Bevis said Senator Vanstone's comments on wielding weapons in planes were irresponsible. "If she made comments like that getting ready to board a plane, she'd be arrested," he said."

Frankly, I'm glad to see someone in government agree with me, for a change:

Hendo just could not get his head wrapped around the shear folly of much of the terror overreaction that Vanstone sees clear as day. He wrung his hands and moaned,

"Vanstone said she thought of the wine glass example "every time" she sees "new bids for more money for the security agencies to spend on things like bollards to put at the front of Parliament House". Yet she failed to come up with any ideas as to how to protect buildings from trucks driven by suicide/homicide bombers. And she seemed unaware that her wine glass scenario, if taken seriously, provides a reason for more - not less - security. The key point in her speech - that sometimes we can get a bit cynical about the focus on terrorism - could have come from a Democrats or Greens media release."

Ah, poor, feckless Hendo. In one of his more careful distinctions without a difference, he said,

"Vanstone's speech is a throwback to the 1960s, when senior Liberals were not able to intellectually defend their government's decision.... Then, as now, the number of political conservative intellectuals was few."

His labelling of his loving conservative "intellectuals" in that quote and his derogative put down of the liberal "intellectuals" as "intellingentsia" in his prior column can be nothing more than cold war propaganda and pettyfoggery balderdash.

SSedition sucks

"Sedition laws are internationally recognised as anti-democratic laws. In the past 40 years countries that have repealed such laws include Canada, Ghana, Ireland, Kenya, New Zealand, South Africa, Taiwan, the United States and Britain.

Countries that have either updated or used sedition laws during this time include China, Cuba, Hong Kong, Malaysia, North Korea, Singapore, Syria and Zimbabwe.

Perhaps [Attorney General Philip] Ruddock should tell us which list he would like Australia to belong to.

One of the more misleading claims [of Ruddock] is that these changes follow the 1991 recommendations of the former High Court chief justice Sir Harry Gibbs.

The truth is that these proposed laws are only selectively based on those recommendations. Again, as just one example, Gibbs recommended that the unlawful associations section in existing sedition laws, including the definition of "seditious intention", should be completely repealed - not modernised."

These excerpts and more at :

Not wagging, waving

Why should I have been surprised by the following visitor, given my post yesterday, (The Rendon Group Inc)

District Of Columbia, Washington, United States, 0 returning visits
Date: 22nd November 2005
Time: 02:04:14
WebPage: Guambat Stew: Australia's ABC wagged the dog
Referring page:

Monday, November 21, 2005

Homegrown terrorist shoots 6 in US

Australia's ABC wagged the dog

But John Rendon was the Wizard of Oz, pulling the pullies, puffing the smoke, distorting the mirrors.

The following excerpts are meant only to get you to read the whole article, which you can read at

"It was damning stuff -- just the kind of evidence the Bush administration was looking for. If the charges were true, they would offer the White House a compelling reason to invade Iraq and depose Saddam. That's why the Pentagon had flown a CIA polygraph expert to Pattaya: to question al-Haideri and confirm, once and for all, that Saddam was secretly stockpiling weapons of mass destruction.

There was only one problem: It was all a lie. After a review of the sharp peaks and deep valleys on the polygraph chart, the intelligence officer concluded that al-Haideri had made up the entire story, apparently in the hopes of securing a visa.

The fabrication might have ended there, the tale of another political refugee trying to scheme his way to a better life. But just because the story wasn't true didn't mean it couldn't be put to good use. Al-Haideri, in fact, was the product of a clandestine operation -- part espionage, part PR campaign -- that had been set up and funded by the CIA and the Pentagon for the express purpose of selling the world a war. And the man who had long been in charge of the marketing was a secretive and mysterious creature of the Washington establishment named John Rendon.

The story, reinforced by [ABC reporter Paul] Moran's on-camera interview with al-Haideri on the giant Australian Broadcasting Corp., was soon being trumpeted by the White House and repeated by newspapers and television networks around the world. It was the first in a long line of hyped and fraudulent stories that would eventually propel the U.S. into a war with Iraq -- the first war based almost entirely on a covert propaganda campaign targeting the media.

By law, the Bush administration is expressly prohibited from disseminating government propaganda at home. But in an age of global communications, there is nothing to stop it from planting a phony pro-war story overseas -- knowing with certainty that it will reach American citizens almost instantly.

[At the start of the "first Gulf War":] What the Kuwaitis wanted was help in selling a war of liberation to the American government -- and the American public. Rendon proposed a massive "perception management" campaign designed to convince the world of the need to join forces to rescue Kuwait. Working through an organization called Citizens for a Free Kuwait, the Kuwaiti government in exile agreed to pay Rendon $100,000 a month for his assistance.

To coordinate the operation, Rendon opened an office in London. Once the Gulf War began, he remained extremely busy trying to prevent the American press from reporting on the dark side of the Kuwaiti government, an autocratic oil-tocracy ruled by a family of wealthy sheiks. When newspapers began reporting that many Kuwaitis were actually living it up in nightclubs in Cairo as Americans were dying in the Kuwaiti sand, the Rendon Group quickly counterattacked. Almost instantly, a wave of articles began appearing telling the story of grateful Kuwaitis mailing 20,000 personally signed valentines to American troops on the front lines, all arranged by Rendon.

When it comes to staging a war, few things are left to chance. After Iraq withdrew from Kuwait, it was Rendon's responsibility to make the victory march look like the flag-waving liberation of France after World War II. "Did you ever stop to wonder," he later remarked, "how the people of Kuwait City, after being held hostage for seven long and painful months, were able to get hand-held American -- and, for that matter, the flags of other coalition countries?" After a pause, he added, "Well, you now know the answer. That was one of my jobs then."

One of the most powerful people in Washington, Rendon is a leader in the strategic field known as "perception management," manipulating information -- and, by extension, the news media -- to achieve the desired result. His firm, the Rendon Group, has made millions off government contracts since 1991, when it was hired by the CIA to help "create the conditions for the removal of Hussein from power." Working under this extraordinary transfer of secret authority, Rendon assembled a group of anti-Saddam militants, personally gave them their name -- the Iraqi National Congress -- and served as their media guru and "senior adviser" as they set out to engineer an uprising against Saddam. It was as if President John F. Kennedy had outsourced the Bay of Pigs operation to the advertising and public-relations firm of J. Walter Thompson.

Thomas Twetten, the CIA's former deputy of operations, credits Rendon with virtually creating the INC. "The INC was clueless," he once observed. "They needed a lot of help and didn't know where to start. That is why Rendon was brought in." Acting as the group's senior adviser and aided by truckloads of CIA dollars, Rendon pulled together a wide spectrum of Iraqi dissidents and sponsored a conference in Vienna to organize them into an umbrella organization, which he dubbed the Iraqi National Congress. Then, as in Panama, his assignment was to help oust a brutal dictator and replace him with someone chosen by the CIA. "The reason they got the contract was because of what they had done in Panama -- so they were known," recalls Whitley Bruner, former chief of the CIA's station in Baghdad. This time the target was Iraqi President Saddam Hussein and the agency's successor of choice was Ahmad Chalabi, a crafty, avuncular Iraqi exile beloved by Washington's neoconservatives.

The key element of Rendon's INC operation was a worldwide media blitz designed to turn Hussein, a once dangerous but now contained regional leader, into the greatest threat to world peace. Each month, $326,000 was passed from the CIA to the Rendon Group and the INC via various front organizations. Rendon profited handsomely, receiving a "management fee" of ten percent above what it spent on the project. According to some reports, the company made nearly $100 million on the contract during the five years following the Gulf War.

Three weeks after the September 11th attacks, according to documents obtained from defense sources, the Pentagon awarded a large contract to the Rendon Group. Around the same time, Pentagon officials also set up a highly secret organization called the Office of Strategic Influence. Part of the OSI's mission was to conduct covert disinformation and deception operations -- planting false news items in the media and hiding their origins. "It's sometimes valuable from a military standpoint to be able to engage in deception with respect to future anticipated plans," Vice President Dick Cheney said in explaining the operation. Even the military's top brass found the clandestine unit unnerving. "When I get their briefings, it's scary," a senior official said at the time.

The top target that the pentagon assigned to Rendon was the Al-Jazeera television network. The contract called for the Rendon Group to undertake a massive "media mapping" campaign against the news organization, which the Pentagon considered "critical to U.S. objectives in the War on Terrorism." According to the contract, Rendon would provide a "detailed content analysis of the station's daily broadcast . . . [and] identify the biases of specific journalists and potentially obtain an understanding of their allegiances, including the possibility of specific relationships and sponsorships."

The secret targeting of foreign journalists may have had a sinister purpose. Among the missions proposed for the Pentagon's Office of Strategic Influence was one to "coerce" foreign journalists and plant false information overseas. Secret briefing papers also said the office should find ways to "punish" those who convey the "wrong message." One senior officer told CNN that the plan would "formalize government deception, dishonesty and misinformation."

According to the Pentagon documents, Rendon would use his media analysis to conduct a worldwide propaganda campaign, deploying teams of information warriors to allied nations to assist them "in developing and delivering specific messages to the local population, combatants, front-line states, the media and the international community." Among the places Rendon's info-war teams would be sent were Jakarta, Indonesia; Islamabad, Pakistan; Riyadh, Saudi Arabia; Cairo; Ankara, Turkey; and Tashkent, Uzbekistan. The teams would produce and script television news segments "built around themes and story lines supportive of U.S. policy objectives."

Never before in history had such an extensive secret network been established to shape the entire world's perception of a war. "It was not just bad intelligence -- it was an orchestrated effort," says Sam Gardner, a retired Air Force colonel who has taught strategy and military operations at the National War College. "It began before the war, was a major effort during the war and continues as post-conflict distortions."

In the first weeks following the September 11th attacks, Rendon operated at a frantic pitch. "In the early stages it was fielding every ground ball that was coming, because nobody was sure if we were ever going to be attacked again," he says. "It was 'What do you know about this, what do you know about that, what else can you get, can you talk to somebody over here?' We functioned twenty-four hours a day. We maintained situational awareness, in military terms, on all things related to terrorism. We were doing 195 newspapers and 43 countries in fourteen or fifteen languages. If you do this correctly, I can tell you what's on the evening news tonight in a country before it happens. I can give you, as a policymaker, a six-hour break on how you can affect what's going to be on the news. They'll take that in a heartbeat."

The Bush administration took everything Rendon had to offer. Between 2000 and 2004, Pentagon documents show, the Rendon Group received at least thirty-five contracts with the Defense Department, worth a total of $50 million to $100 million.

Although Moran was gone, the falsified story about weapons of mass destruction that he and Sethna had broadcast around the world lived on. Seven months earlier, as President Bush was about to argue his case for war before the U.N., the White House had given prominent billing to al-Haideri's fabricated charges. In a report ironically titled "Iraq: Denial and Deception," the administration referred to al-Haideri by name and detailed his allegations -- even though the CIA had already determined them to be lies. The report was placed on the White House Web site on September 12th, 2002, and remains there today. One version of the report even credits Miller's article for the information.

As the acknowledged general of such propaganda warfare, Rendon insists that the work he does is for the good of all Americans. "For us, it's a question of patriotism," he says. "It's not a question of politics, and that's an important distinction. I feel very strongly about that personally. If brave men and women are going to be put in harm's way, they deserve support." But in Iraq, American troops and Iraqi civilians were put in harm's way, in large part, by the false information spread by Rendon and the men he trained in information warfare. And given the rapid growth of what is known as the "security-intelligence complex" in Washington, covert perception managers are likely to play an increasingly influential role in the wars of the future.

Finally, in early 2004, more than two years after he made the dramatic allegations to Miller and Moran about Saddam's weapons of mass destruction, al-Haideri was taken back to Iraq by the CIA's Iraq Survey Group. On a wide-ranging trip through Baghdad and other key locations, al-Haideri was given the opportunity to point out exactly where Saddam's stockpiles were hidden, confirming the charges that had helped to start a war.

In the end, he could not identify a single site where illegal weapons were buried."

You really should read the whole thing.

Past perfomance is not indicative of future profits, but history is?

Another thought from John Mauldin's Frontline (, which could be titled " been up so long it looks like up so more to me", excerpts, comments, editing following.

"Based upon most forecasts of reported earnings from S&P 500 companies in 2006, the stock market is beginning to look attractive. Earnings per share ("EPS") have increased at double-digit growth rates over the past few years and are expected to tack on another strong leap in 2006. [A] valid estimate of future EPS is essential to develop a realistic view about future market direction and investment strategy.

The average nominal growth rate for EPS since 1950 is approximately 6% per year. Average rarely happens: There are significant cycles and volatile swings in earnings that average to a growth rate of 6%. For more than half of the past 55 years, EPS has changed--up or down--by more than 10%. Therefore, double-digit growth rates or declines are more often the rule than the exception. Rather than the relatively smooth growth rate that many investors expect, earnings grow for a few years at a pace that is well above the average and then slow or decline for a couple of years.

[C]orporate earnings tend to grow over time at a rate that is similar to gross domestic product ("GDP") growth. Yet the effects of business cycles and other economic factors cause earnings to be more volatile than the economy.

Currently, as reported in the Financial Times on October 22, 2005 in the lead editorial, "Corporate profits are already at a record 10.9 per cent of gross domestic product in the is hard to see how earnings can continue to grow so much faster than gross domestic product." Not only is it hard to see how profit growth will extend its current record levels, but also it is instructive to look at history to understand what may lie ahead. Figure 2 presents the average annualized rate of EPS growth over rolling three-year periods. The graph indicates that EPS has risen so significantly in the past three years that it is vulnerable to a reversal and, potentially, to a series of below-average or negative periods.

Figure 2 Rolling 3-Year EPS Growth

At all times along the cycles, investors are bombarded with messages of hope from bull market pundits. In the troughs, the message calls for a recovery--a "wise" prediction that has played-out many times in the past. Each trough in Figure 2 is followed by a solid rise toward, and then above, the average trend line. However, at the peaks, the message from pundits is likewise hopeful--it's just not wise.

The hopeful, but unrealistic, messages lead investors to expect that the future growth will occur from then current levels. This is the same irrational reasoning that leads some investors to expect average future returns regardless of the level of the market....

In this article, we have explored two different methods using lessons of history [actually, you need to see the whole article for that; this is only an excerpt]. Both methods predict S&P 500 EPS near $64 in 2008. If overall stock market P/Es can be sustained in the low 20s--relatively high by historical standards--the stock market in 2008 will be near the same level that it is today.

Investors overreact to good news and underreact to bad news on stocks they like, and do just the opposite to stocks that are out of favor. Past perception seems to dictate future performance. And it takes time to change those perceptions.

This is forcefully borne out by a study produced in 2000 by David Dreman (one of the brightest lights in investment analysis) and Eric Lufkin. The work, entitled "Investor Overreaction: Evidence That Its Basis is Psychological," is a well-written analysis of investor behavior that illustrates that perceptions are more important than the fundamentals. Let's look at that study in detail.

In any given year, there are stocks that are in favor, as evidenced by high valuations and rising prices. There are also stocks that are just the opposite. Dreman and Lufkin look at a database for 4,721 companies from 1973 through 1998. Each year, they divide the database up into five parts, or quintiles, based on the companies' perceived market valuations. They separately study price to book value (P/BV), price to cash flow (P/CF), and the traditional price to earnings (P/E). This creates three separate ways to analyze stocks by value for any given year so as to remove the bias that might occur from using just one measure of valuation.

The top and bottom quintiles become stock investment "portfolios" for all three valuation measures [they aren't interested in the 3 middle quintiles]. You might think of them as a mutual fund created to buy just these stocks. There is enough data to create 85 such portfolios or funds. The researchers then look 10 years back and five years forward for these portfolios. They first analyze these portfolios as to how they do relative to the average of all the stocks. They then analyze these portfolios in terms of five basic investment fundamentals: cash flow growth, sales growth, earnings growth, return on equity and profit margin. They do this latter test to see if you can discern a fundamental reason for the price action of the stock.

[I]nvestors tend to chase price performance [not fundamentals]. In fact, the higher the price and more rapid the movement, the more new investors there are who jump in [without due regard to the fundamentals]. Why does this "chasing the hot stock" happen? Dreman and Lufkin tell us it is because investors become overconfident that the trends of the fundamentals in the first 10 years will repeat forever, "thereby carrying the prices of stocks that appear to have the 'best' and 'worst' prospects. Investors are likely to forecast a future not very different from the recent past, i.e., continuing improving fundamentals for favorites and deteriorating fundamentals for out-of-favor issues. Such forecasts result in favorites being overpriced, while out-of-favor issues are priced at a substantial discount to the real worth. The extrapolation of past results well into the future and the high confidence in the precise forecast is one of the most common errors made in finance."

[T]he fundamentals improve quite steadily for the first 10 years for the favorite stocks in comparison to the entire universe of stocks. But the price performance rises at very high rates, far faster than the fundamentals, particularly in the latter years. It clearly accelerates. It seems the longer a stock does well, the more confident investors are that it will continue to do well and therefore they award it with higher and higher multiples. The exact opposite is true of the out-of-favor stocks.

Yet in the next five years, the hot stocks underperformed the market by -26 percent on a P/BV basis and -30 percent on a P/CF basis. The out-of-favor stocks did 33 percent and 22 percent better than the market, respectively. This is a huge reversal of trend.

What happened? Did the trends stop? Did the former outcasts finally get their act together and start to show better fundamentals than the allstars? The answer is a very curious "no." Dreman and Lufkin find that "there is no reversal in fundamentals to match the reversal in returns [price]. That is, as favored stocks go from outperforming the market, their fundamentals do not deteriorate significantly; in some case they actually improve. . . . The fundamentals of the 'worst' stocks are weaker than both those of the market and of the 'best' stocks in both periods. Although there is a major reversal in the returns [prices] to the best and worst stocks, there is no corresponding reversal in the fundamentals."

If we do not get a serious recession, it may take two recessions to bring us to the final phase of this secular bear market. That would not be unusual, as cycles average about 13 years (8 being the shortest, 17 the longest), and we are only in the fifth year of this current cycle. Nonetheless, the next recession is going to give us an excellent buying opportunity. But right now, caution should be exercised. In the coming weeks (after I finish the current series), I will be writing about a number of indicators that suggest 2006 may see a real slowdown in the US economy. Stay tuned."

Might recall:

My mate in the options market keeps up a good commentary on following the price action, since Mauldin seems to say that is what counts most - in the short term, anyway. See

Religious conviction

"In the Southern Tablelands, in the country's most secure jail, violent men with little to do and nothing to lose are turning to the Koran. Muhammad has come to monsters who may never go to a mosque. All are jailed under A1 security classifications - one below the AA rung reserved for terrorists. Housed in the High Risk Management Unit, or Super Max, at Goulburn jail, each has abandoned any notion of the Dreamtime when, spiritual Aborigines believe, the patterns and cycles of life were set.

Fernando, Priestly, Paulson and Buchanan have converted to Islam. In Super Max they bow to a fellow killer: an international fugitive, associate of terrorists and makeshift imam, Bassam Hamzy. Each has shaved his head, grown a beard, and prays to Allah loudly enough for other inmates to complain. Under the ethnic clustering ethos of NSW jails - in which Asians, Arabs and Islanders are separated - Aborigines are generally allowed to mix with other races. Their enemies are often Asian and their closest associations are with the Lebanese. At Super Max their brothers in Islam include the alleged terrorist Faheem Lodhi, triple killer Michael Kanaan, his fellow gang members and killers Rabeeh Mawas and Wassim El-Assaad, killer Mohamed Rustom and pack rapist Bilal Skaf.

About a third of the three dozen inmates in Super Max are Muslim. Kanaan and El-Assaad were criminal gang associates of Saleh Jamal, who has been convicted of subversive activity in Lebanon. The commander of security services in NSW jails, Brian Kelly, recently told Four Corners he had seen evidence of "efforts to convert inmates to Islam for probably the wrong reasons". "We haven't really had evidence for terrorist purposes in itself but when it's for the wrong reason, and when it's targeting violent people, it is a concern," he said.

The Corrective Services Commissioner, Ron Woodham, told Four Corners he was worried about Aboriginal inmates serving long sentences converting to Islam. "Some of these people, ah, convert - in their mind they convert and they convert back," he said. "But we're worried where certain prisoners that are doing very long sentences, as an example, denounce their Aboriginality for Islam. "We monitor them very closely … To us they're not terrorists in the real sense but they talk the talk. So if we had somebody who was recruiting in a prison … we keep them away from people that might be susceptible to the conversion."

"Authorities need to pay much more attention to what is happening in America's prisons. They are ripe recruiting grounds for Al Qaeda -- a fabulous way to recruit home-grown Americans into jihad against their native country.

That's why it's important to keep terrorist suspects and convicts segregated from the domestic prison population (just another good argument for keeping the Guantanamo detention facility open). And it's why America needs to start noting the content of what Islamic faith is being preached to our prison population (for more, read this in The Wall Street Journal -- "How a Muslim Chaplain Spread Extremism to an Inmate Flock: Radical New York Imam Chose Clerics for Prisons" [subscription required])."

From the blog of "Carol Platt Liebau
. . . advocating American political and religious liberty, free enterprise, limited government, military strength and traditional values."

"Evangelical Christians are moving in a big way into cash-strapped state prisons to supplement and, in some cases, replace existing chaplain services. Their work is supported by private donations and encouraged by the government's emphasis on faith-based social services. Correctional officials say they are grateful for the free or low-cost help. But many people challenge the fairness and legality of giving one religious group unusual access to prisoners.

State budget crises are forcing states to search for ways to cut prison costs. Their choices include allowing privately sponsored evangelical prison ministries to replace chaplains at lower costs or for free, dropping below the national standard of one chaplain per 500 prisoners, or replacing the paid chaplains with volunteers. Colorado recently replaced all the chaplains in its state prisons with an evangelical Christian prison ministry that offered services for free. In Texas, lawmakers cut 62 state prison chaplain positions in 2003, a 40 percent reduction. In Georgia, legislators are considering a proposal to replace state-funded chaplains with volunteers.

Evangelical prison ministries say that they are answering Jesus' call to visit the imprisoned and recognizing the power of faith to transform troubled inmates into productive citizens. But critics say evangelicals have a conflict: Their faith tells them to win converts, but the law requires prisons - and those who work there - to respect and even encourage the inmates' own religious beliefs, whatever they are. Some inmates, professional chaplains and non-Christian religious leaders accuse evangelical Christians of barring prisoner access to non-evangelical ministers and of forcing inmates to endure evangelizing. Some prison programs grant special privileges for those who profess Christian beliefs."

"Ramadan challenges inmates, prisons as Islam spreads"

"Pollsmoor Prison is the largest prison in the Western Cape Province of South Africa. It is not just one prison but five on one huge site housing some 8,000 inmates and employing over 1,000 staff. It's claim to fame is that it held Nelson Mandela in the years before his release and subsequent election as President. A large number of the prisoners are awaiting trial and a huge amount of the crime is drug/gang-related. The spiritual hunger in the prison is palpable from the first moment that you step inside - and indeed is the reason why Vic was so attracted to getting involved at the prison.

Transformation Pollsmoor represents a group of mainly full-time Christian workers at Pollsmoor Prison who are passionate about spreading the Good News of Jesus Christ to a prison population who have often grown up not just with material and emotional poverty but, worst of all, suffer from severe spiritual malnourishment. Most of our work is concentrated in the Medium A Juvenile Prison which houses 2,000 youngsters between the ages of 18 and 21, three-quarters of whom are awaiting trial. Every day we are seeing God's Word change lives through the power of the Holy Spirit through a mixture of daily devotions, Bible studies, special programmes and one-to-one counselling. We have seen hardened gangsters and murderers tranformed into kind-hearted and loving disciples of Jesus, excited and inspired to go and share what they have discovered with other prisoners. It can be difficult to imagine them doing the crimes for which they were imprisoned, so complete is God's transformation!

There are not many full-time Christian workers from outside compared to the number of inmates, but we see that God is raising up evangelists and teachers from within. The prison authorities have been very supportive in helping us to create rooms (cells of up to 60 prisoners) which can be used solely to house and disciple Christian converts as well as allowing us to take inmates with us around the prison to act as peer-group evangelists."

"Michelle Leslie refutes claims that wearing a Muslim headscarf during her trial was a stunt. Federation of Islamic Councils president Ameer Ali today said that if Leslie resumed work as an underwear model, she must admit that her claim that she had converted to Islam almost two years ago was a stunt. "If she wants to be a Muslim, she has to be very modest in her dress sense, modest in her language, modest in the way that she looks - everything."

Leslie, who, during her trial, teamed a Muslim headdress with modest clothing, drew anger at the weekend when she left Indonesia wearing skin tight jeans and a singlet top that showed part of her midriff. Today, Leslie family spokesman Sean Mulcahy said the model meant no disrespect by her outfit. He said she continued to follow her own version of Islam. "She is Muslim, she didn't wear anything yesterday to be disrespectful to anyone," Mr Mulcahy said. "She was a Muslim when she was doing catwalk stuff, so I don't think the fact that she did wear a hijab at times ... conflicts with her belief. "She has her own firm belief of her religion and she practises it as she sees fit."

" A job recently became available for someone willing and able to teach construction skills to inmates at the Bradford County Correc­tional Facility in northeastern Pennsyl­vania. Applicants had to be general contractors familiar with the ins and outs of the building trade, such as estimating jobs and procuring supplies; they also had to be capable of supervising a crew of up to 10 men.

There was one more requirement: Anyone interested in the job had to be a Christian willing to share his or her faith if the opportunity to save a soul arose. Leading workers in prayer would also be an important part of the job. How did a religious requirement like that get affixed to a job funded with taxpayer dollars? Blame it on President George W. Bush.

Since Bush unveiled his “faith-based” initiative shortly after taking office in 2001, federal agencies, as well as state and local governments, have been prodded to dole out tax funds to religious organizations. A variety of social-service programs, including programs aimed at substance abusers, young people, elderly Americans and prison inmates and others in need of government aid have been especially targeted.

In Bradford County, a rural enclave with a population of about 62,000, the new faith-based approach translated into a contract diverting a combination of local, state and federal funds to an evangelical Christian group called The Firm Foundation to run vocational programs at the local jail. No other programs are offered. If you’re an inmate and want to learn a marketable skill to turn your life around after release, Firm Foundation is the only game in town."

Friday, November 18, 2005

In a word ...

The Top Politically Correct Words for 2005

"Acts of God" top the Global Language Monitor's PQ (Political-sensitivity Quotient) Index of the Top Political Buzzwords for the Third Quarter, including four of the Top Five: Hurricane Katrina, Climate Change, H5N1 Bird Flu, and Global Warming.

Hurricane Disaster Buzzword Explainer

Top 10 Most Confusing High Tech Buzzwords


Yeah, but that was S-O-O October

The Aussie markets are right back up within cooey of the all-time highs, when many analysts were saying the prices were unjustifiable: This time it'll be different, neh?

Who's buttering your "bread"?

"Baby boomers aged 55 years and over will be able to sacrifice 100 per cent of their salary into their superannuation fund and gain windfall tax benefits under a tax minimisation scheme allowed by the departing tax commissioner, Michael Carmody.

The financial planning industry has been lobbying the tax office for months to have the scheme allowed."

Looks like those greedy me generation boomers are getting another big free kick-along from society, right? After all, here's the government giving away tax avoiding breaks to them and all they have to do is "wash" (not launder) their money through their retirement account/superannuation funds.

Looks are deceiving. What is really happening is that they are being led to the milking shed, where the funds managers will churn that milk into their own butter, creaming off the largest part of the benefits. It's a device meant to assure that the boomers do not use their funds for personal or family pleasure, and particularly to make sure the funds do not get "frittered away" in other asset classes or pursuits, like education, health, art, travel, charity, etc. It's a big sump to collect all that money and turn it over to the stock and money management industry. Its a carefully designed plot to part you from your money; to place it in the hands of "managers" who are more interested in managing their own affairs than yours. It is, after all, big business.

The guy who really put the whole consumer/retail funds management notion on the financial landscape, Jack Bogle, has been on a one-man campaign to education investors about this rip-off by the "management class" of modern large corporations and the funds management industry.

"Mr Bogle was addressing the Association of Superannuation Funds of Australia's annual conference via satellite link on Friday. During the address he launched a stinging attack on the "agents of ownership" - corporate and investment fund managers.

Bogle's latest book, The Battle for the Soul of Capitalism, identifies three trends changing the nature of capitalism, which he expounded on at the conference.

He said there has been a "pathological mutation of capitalism". The old style of "owners' capitalism - maximising returns for owners" - had been superseded by managers manipulating financial results to boost their own wealth. He said the excessive manipulations behind many of the recent corporate collapses were driven by a hunger or greed for executive remuneration based on overstated earnings.

He said chief executive remuneration in the US had grown from 42 times the salary of the average worker in 1980 to 386 times in 2004, on the rationale that chief executives had succeeded in building wealth. [See]

While earnings were forecast to grow annually by an average 11.4 per cent between 1980 and 2005, these managers delivered annual growth of only 6 per cent. "If they failed to create value there must be another reason for their outlandish remuneration," he said. "One good reason was that the owners didn't seem to care."

Mr Bogle said greedy managers were helped by the replacement of individual share owners with institutional investors. "These institutions are failing to honour the responsibilities of ownership," he said. With a few exceptions, institutions had failed to take an active interest in corporate affairs and were often guilty of putting their own interests before those of investors.

He said the third trend, the increasing focus on short-term gains, had shifted the focus from the intrinsic value of companies and allowed manipulations to go unchecked. "During recent years investors have paid a high price for the shift to speculation," he said."

As evidence that the funds managers will churn your savings from milk into butter, Al Gore (yes, that Al Gore), who was also a speaker at the same conference as Bogle, said,"Seven years ago... the average holding period for US stocks was seven years. Today the average mutual fund turns over its entire portfolio every 11 months."
The thing to note is that there are heaps of ways for funds managers to make money off that churn, almost all of it legal (e.g., and
""If you're getting in and out of a stock every few months, you're not investing, you're speculating," he says. Gore says this has created a marketplace where corporate managers are afraid to make decisions for the long-term future of their companies.

He cited a US study where chief executives were asked if they would make an investment that provided long-term returns but risked them not meeting their short-term profit targets. Four out of five executives said they would not make the investment.

"This emphasis on the extreme short-term horizon works against the best interests of shareholders, the sustainability of the profits of the company, the environment in which it operates, and the values that it should be following," Gore says. He says remuneration systems built around short-term results (both for fund managers and corporate executives) exacerbate the problem.

"[Even if] the investment community is enthralled by churning, that doesn't mean it's right," Gore told ASFA. "And it's especially wrong if it's done by bodies that have a fiduciary duty to manage assets according to the long-term needs of their investors.""

Ludwig and his family hunted

Excerpted from (context changed around a bit, so read the story for the full, contextual report):

“Until four days ago, he was an 18-year-old young man, not unlike any other 18-year-old man here in Lancaster County.

Police said the Bordens disapproved of their younger (14-year-old) daughter dating Ludwig and had called him to their home around 7 a.m. Sunday to discuss the situation, after learning she had been out all night with him. Neighbors said when Ludwig arrived, Michael Borden told him to leave a red duffel bag he was carrying outside. At the end of the discussion, around 8 a.m., the Borden’s 15-year-old daughter, Katelyn, told police she saw Ludwig pull out a handgun and shoot her father. Katelyn Borden ran for cover, police said, but heard a second shot. Police found the bodies of Michael and Cathryn Borden, both 50. Both had been shot once in the head.

David G. Ludwig obviously had access to guns. More than 50 weapons — including three assault rifles, plus numerous shotguns, handguns, rifles, scopes and bullets — were confiscated from the Ludwig home. Among the list of guns listed in the court document were three AR-15 rifles, commonly known as assault rifles, which are the civilian version of the U.S. military-issued weapons. Many of the weapons were handguns, according to the list, including several .22 caliber and .38 caliber Smith & Wesson handguns, several 9 mm Ruger pistols, a Taurus .357 caliber and a Glock .45 caliber handgun.

Friends have said that Ludwig and his family hunted.

Ludwig lived with his parents, who police said have been extremely cooperative with the investigation. Ludwig’s parents, Gregory and Jane, issued a statement Wednesday, asking for prayers and apologizing for the incident."

UPDATE: Some interesting tho speculative and maybe untrue? and I have to say pretty rough stuff appearing at Don't go there if you don't want to be offended.

Thursday, November 17, 2005

Keep It Secret Sam

"The FBI came calling in Windsor, Conn., this summer with a document marked for delivery by hand. On Matianuk Avenue, across from the tennis courts, two special agents found their man. They gave George Christian the letter, which warned him to tell no one, ever, what it said.

Under the shield and stars of the FBI crest, the letter directed Christian to surrender "all subscriber information, billing information and access logs of any person" who used a specific computer at a library branch some distance away. Christian, who manages digital records for three dozen Connecticut libraries, said in an affidavit that he configures his system for privacy. But the vendors of the software he operates said their databases can reveal the Web sites that visitors browse, the e-mail accounts they open and the books they borrow.

The Connecticut case affords a rare glimpse of an exponentially growing practice of domestic surveillance under the USA Patriot Act, which marked its fourth anniversary on Oct. 26. "National security letters," created in the 1970s for espionage and terrorism investigations, originated as narrow exceptions in consumer privacy law, enabling the FBI to review in secret the customer records of suspected foreign agents. The Patriot Act, and Bush administration guidelines for its use, transformed those letters by permitting clandestine scrutiny of U.S. residents and visitors who are not alleged to be terrorists or spies.

The FBI now issues more than 30,000 national security letters a year.... Issued by FBI field supervisors, national security letters do not need the imprimatur of a prosecutor, grand jury or judge. They receive no review after the fact by the Justice Department or Congress. The executive branch maintains only statistics, which are incomplete and confined to classified reports. The Bush administration defeated legislation and a lawsuit to require a public accounting, and has offered no example in which the use of a national security letter helped disrupt a terrorist plot.

The burgeoning use of national security letters coincides with an unannounced decision to deposit all the information they yield into government data banks -- and to share those private records widely, in the federal government and beyond.

National security letters offer a case study of the impact of the Patriot Act outside the spotlight of political debate. Drafted in haste after the Sept. 11, 2001, attacks, the law's 132 pages wrought scores of changes in the landscape of intelligence and law enforcement. Many received far more attention than the amendments to a seemingly pedestrian power to review "transactional records." But few if any other provisions touch as many ordinary Americans without their knowledge.

Senior FBI officials acknowledged in interviews that the proliferation of national security letters results primarily from the bureau's new authority to collect intimate facts about people who are not suspected of any wrongdoing.

The House and Senate have voted to make noncompliance with a national security letter a criminal offense. The House would also impose a prison term for breach of secrecy."

Read all about it - I'm sure John Howard has - at

More Sony baloney

" NEW YORK (AFX) - Sony BMG said it is recalling millions of music CDs with controversial copy protection software that experts said could expose personal computers to viruses and hackers. Sony BMG, one of the world's biggest music companies, said it was ending the use of the software provided by a third-party vendor and allowing consumers who purchased CDs to exchange them for similar items without the software.

'The software also secretly communicates with Sony's servers and can be used to send information back to the users' media player programs.'

Sony BMG officials could not be reached for additional comment, but the New York Times reported that some two million CDs with the copy protection had been sold out of some five million shipped to retailers."

Did you read anything in that which said they were changing the abusive and unconscionable EULA?

Of gooses and ganders

The Australian Financial Review reported yesterday that average Executive remuneration has risen 16% in the last year for the listed ASX top 300 companies. Today it reports the ABS wages report showed average worker salaries are up 4.2% in the year, the highest growth since the survey began 8 years ago. Australia used to pride itself on being a nation of egalitarian battlers. With growth rates like that, the middle class country will be polarized as the working rich and the working poor. Maybe the "Fair" industrial relations reforms will fix that....?

Prior posts:

Wednesday, November 16, 2005

That's bigger than I woulda thunk

It is the ninth largest country in the world.

It "has the 10th highest number of horses in the world".

"We are not ashamed to say that the U.S. has strategic interests in the region," [U.S.] Deputy Assistant Secretary of State Matthew Bryza told the [U.S.] Chamber [of Commerce]. These interests were not just military, he said: America also had an interest in ... fossil fuels and in promoting democracy in the region.

"The presence of the U.S. armed forces in this region is in no way a demonstration of our dominance, and this is in no way a repeat of great games of the 18th and 19th centuries,", according to General John Abizaid, Chief of U.S. Central Command (CENTCOM).

"According to a report by the Unocal Corporation, one of America’s leading oil companies, “total oil reserves in the ... area could amount to over seventy billion barrels. Some estimates even reach two hundred billion barrels. In 1995, the region produced only 870,000 barrels a day. By 2010, western companies could push production up to around 4.5 million barrels a day; an increase of more than 500% in only fifteen years.” This is a serious amount, even when compared to the unrivalled oil power of Saudi Arabia, which has reserves approaching 260 billion barrels: double that of their closest competitor, Iran, which has ‘only’ 133 billion."

That's fowl

"The United States is the world's largest producer and exporter of poultry meat, with chicken, turkey and duck production valued at about $23 billion annually."