How many more revelations are needed?

Three days before the Dec. 7, 1941 Japanese attack on Pearl Harbor, President Roosevelt was warned in a memo from naval intelligence that Tokyo's military and spy network was focused on Hawaii, a new and eerie reminder of FDR's failure to act on a basket load of tips that war was near.

In the newly revealed 20-page memo from FDR's declassified FBI file, the Office of Naval Intelligence on December 4 warned, "In anticipation of open conflict with this country, Japan is vigorously utilizing every available agency to secure military, naval and commercial information, paying particular attention to the West Coast, the Panama Canal and the Territory of Hawaii".

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Ask a trade unionist or fellow traveller if he has the “right” to dictate to his 20-year-old daughter whom she will marry, and he’s likely to say (firmly but perhaps regretfully) “no.”

Ask him if he can dictate to his daughter which career (if any) she will pursue, and again he’ll say “no.” It’s a democracy, after all, they’ve often alleged to me. Read more

Australian shares plunged more than 3% after sharemarkets in the US, London & Europe suffered massive falls overnight. Wall Street fell more than 4% per cent, wiping all gain from this year.

Tim Webster with Dr Chris Leithner on 2UE discussing the path ahead for the world economy and the reasons behind the problems being experienced on world financial markets.

As ABC Newsradio reports, ‘Warnings are growing about the catastrophic economic effects of countries like Greece defaulting on its debts. Overnight the Bank for International Settlements warned that Greece and other countries like it mired in debt need to increase interest rates and slash debt.

Germany has put up a lot of the funds to prop up ailing economies, but there's growing resentment about further bailouts... China is being eyed as a lender and it may well be forthcoming.’ Here, Europe correspondent Phillip Williams reports from London. Shortly after Phillip Williams report, financial analyst, Chris Leithner looks at the implications.

According to the headline in The Australian, "RBA warns many first home owners who used government grants may now be vulnerable."

But why couldn't Ric Battellino, the RBA's Deputy Governor, have warned first home buyers in 2009? Isn't it a bit late now?

Perhaps we shouldn't be too hard on him: he might actually be learning something. After all, this is the same Batellino who, in a spectacularly poorly timed speech on 12 December 2007, opined:

“Australian households are in very good shape. They are not in any way exposed or vulnerable – the structure of assets and liabilities is quite sound. There would obviously be examples of people getting themselves into financial difficulty. But fundamentally, the household sector as a whole is in very good financial shape… and there’s no hint the share market is grossly overvalued [italics added].”

In December 2007, the All Ordinaries Index averaged 6,492. Twelve months later, it averaged 3,529. Permalink

In the name of public safety, everybody at airports will be groped: the elderly, women and children.

Speaking of the “legality” of warrantless searches, judges in Indiana have “ruled that Indiana residents have no right to obstruct unlawful police incursions into their homes [italics added].” So never mind that state’s constitution, the 4th Amendment to the U.S. Constitution, the English Bill of Rights of 1688 and Magna Carta of 1215: in the name of “public policy,” the state’s agents can infringe the law “legally” and with impunity. “We believe … a right to resist an unlawful police entry into a home is against public policy and is incompatible with modern Fourth Amendment jurisprudence,” wrote Justice Steven David. Read more

A sane person might think twice before repeating a catastrophic error. But sane people are thin on the ground in the Obama administration: they’re pushing for more subprime lending.

Naturally, they don’t call it that: instead, they propose to (1) “issue home mortgages or open branches in disadvantaged areas,” and for good measure (2) attack banks because they refuse to throw good money after bad.

Common sense utterly escapes the U.S. Government: perhaps few loans are issued to people living in “disadvantaged areas” because these people will struggle to repay, and are therefore disproportionately likely to default? Has exactly this not occurred during the past decade? But no matter: Obama wants to force the banks to do it anyway.  Read more

My interest in the item below stems from the mysterious and inexplicable loans extended by the U.S. Federal Reserve in the third quarter of 2008 to several Australian banks such as the National Australia Bank and Commonwealth Bank of Australia:

Persistent Federal Reserve critic Representative Ron Paul plans to hold a hearing on the U.S. central bank's emergency loans to the branches of non-U.S. banks, his spokeswoman said on Saturday.

"I was surprised and deeply disturbed ... to learn the staggering amount of money that went to foreign banks," Paul said in a statement. "These lending activities provided no benefit to American taxpayers, the American economy, or even directly to American banks," he said. Read more

Chris Leithner runs Leithner & Associates - a private investment company based in Brisbane. Originally from Canada, Chris holds a Ph.D. from the University of Strathclyde (Glasgow, Scotland). He is also the author of The Evil Princes of Martin Place (free intro chapter here) and The Intelligent Australian Investor.

In The Evil Princes of Martin Place Chris asks: What caused the "Global Financial Crisis" (GFC)? What will be the consequences of the actions undertaken by governments to combat it?

Chris blames poor policies - in particular, the existence of legal tender laws, fractional reserve banking and central banking - as being the GFC's ultimate causes.

Steve Austin from 612 ABC Radio Queensland conducts the interview.

News Flash: a team of 35 researchers spends 3 years and a ton of $$ and "discovers" the #$%^ obvious.

This story is in one respect hilarious -- but in another is a pathetic indictment of contemporary academics. Permalink

Does the Bankruptcy of Mainstream Economics Beget the Bankruptcy of States?

The Daily Reckoning reports:

This year, 44 of America’s united states will deliver a combined 2012 budget shortfall of approximately $125 billion. They are broke, in other words, and determinedly bureaucratizing themselves ever closer to outright insolvency…the financial equivalent of the dinosaurs’ tar pit.

By way of honoring their commitment to financial evolution – that is, by rendering themselves extinct so that newer, more adaptive and innovative concepts of trade and freedom can take their place – we featured a handful of these states during recent Daily Reckoning musings.

First, in last weekend’s edition, we narrowed the field to ten finalists – California, Connecticut, Illinois, Louisiana, Massachusetts, Mississippi, New Jersey, New York, Ohio and Wisconsin.

Then, on Monday and Tuesday, we awarded special mentions to Connecticut and New Jersey for their commitment to wasteful state government spending. Next, we bestowed first and second runners-up honors on California and Massachusetts, respectively. Read more

A good and very readable article about the utter stupidity -- and dare I say it, destructiveness -- of Keynesian economics.  Permalink

The Evil Princes now ranks #4 on Amazon.com's list of books categorised under the heading "Austrian Economics".

It's also in position #15 on the "financial crisis" list, and #13 in the "economic history" list.

If you haven't bought your copy yet, buy several and push it further up these lists... Permalink

According to the Australian Bureau of Statistics and its sockpuppets in the mainstream media, the rate of unemployment in Australia is 5%.

According to the survey research of Roy Morgan Research - one of the biggest and longest-established private sector research firms in Oz - however, "1.6 million (13.6%) Australians are Unemployed or Underemployed".

Obviously, Roy Morgan is wrong because (i) our Dear Leaders are omniscient and (ii) they would NEVER EVER gild the lily... Permalink

I’ve long suspected that the people who design the front page of The Australian have a wicked sense of humour, and today’s (10 March) front page once again confirms that suspicion. The second paragraph of 'We’re with you, Gillard tells US' proclaims “the Prime Minister this morning threw herself fully behind US President Barack Obama's Afghanistan strategy, saying the two nations were inextricably linked by shared values and common aims.”  Read more

Chris Leithner on 612 ABC Brisbane discussing in the first ten minutes: "Quantitative Easing" and what it means; Printing Money out of thin air; Failure of Keynesian Economics; Way to Prosperity: Through savings and production, not debt and consumption; Laws of Economics.

In July, Irish banks – without exception – passed the “stress tests” imposed upon them by European governments and regulators. A mere four months later, these very same banks have brought the Irish Republic to its knees; and a report overnight from Reuters quotes the head of its central bank: “as far as [the Irish government] is concerned, they’re [all] up for sale.”

1. Is it possible that the European (and, by implication, American, Australian, et al.) “stress tests” were and are utterly bogus, and thus can't and won’t prevent “sound” banks from hitting the wall? Today, Bank of Ireland claims a core Tier 1 ratio of about 8% (as, indeed, did Washington Mutual on the day it shut its doors), yet the market refuses to lend to it. Greek, Portuguese and some Spanish banks (Spain’s biggest, Santander, boasts a Tier 1 cap ratio of ca. 8.5%) have similarly found themselves shut out of private-sector funding markets.

2. Is it possible that Basle III (never mind I and II) are pointless irrelevancies that can't and won’t shield banks from failure? During the past several years, Australian banks have passed three “stress tests” conducted by APRA, and all presently boast (quite literally!) Tier 1 cap ratios of ca. 8-9%.

3. If (from the point of view of soundness) passing a stress test means nothing, and if Tier 1 cap ratios mean nothing, then can somebody please explain to me why Australian banks are allegedly invulnerable? (Note: invocation of the phrases “Wayne Swan/RBA/Treasury vehemently insist they’re sound” and “S&P says they’re sound” doesn’t count as evidence.) Read more

From 612 ABC Radio with Steve Austin:

To avoid financial catastrophe, banks have to pass what's called a 'stress test' in order to demonstrate they can sustain their loan activities - unlike what's currently happening to the banks in Ireland....But wait a minute. They all passed their stress tests. What's going on? Chris Leithner investigates.

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“The most important Republican for those of us in the financial world is Ron Paul.” So says John Taylor, chief investment officer of FX Concepts, “the world’s largest currency hedge fund.”

More specifically,

“Although we have heard much from this group about spending cuts, the most important Republican for those of us in the financial world is Ron Paul, who heads the committee that oversees the Fed. His extremely restrictive view of permissible Fed activities will make it extremely unlikely that a QE3 or another innovative program will be in the wings when QE2 expires in June." Read more

Interest rates go up again, but if we'd saved before going into debt, we wouldn't worry about interest rate movements - so why have we stopped saving and prefer going into debt on credit? Steve Austin is talking with Chris Leithner on 612 ABC Radio.

Chris Leithner is interviewed by Steve Austin from 612 ABC Brisbane about interest rates, central planning, the IMF, democracy, debtors and savers in Australia.

Politicians told us that government intervention in markets helped stave off recession.