GDP result masks inflation problems

Well, the figures are in, and America's GDP rose by 0.6% in the 1st quarter of 2008 (January-March). So much for doom and gloom hey? All praise to Ben Bernanke then?

Unfortunately, the GDP figure is not adjusted for inflation. The 0.6% growth over a 3 month period represents a 0.6% growth in the amount of goods and services produced - but this figure does not take inflation into account.

Over at the St. Louis Fed, "Fred" allows us to measure how much inflation has affected the economy over the same period. This index, called "CPIAUCSL", measures inflation (seasonally adjusted) by giving it a number for every month.

So what was the inflation result over the same three month period? Well, December 2007's CPIAUCSL result was 211.680, while March 2008's result was 213.301. This indicates that inflation during this three month period increased by 0.77%.

So while the GDP numbers being crunched ended up saying the US is 0.6% "bigger", the inflation figures end up saying that this number, when adjusted for inflation, is actually a contraction.

Of course, there's more to this than meets the eye. The 4th Quarter of 2007 had GDP rise by the same amount - 0.6% - but what about the inflation figures?

Well, September 2007's CPIAUCSL result was 208.509, while December 2007's CPIAUCSL was 211.68. This indicates that inflation during this three month period increased by 1.52%.

A 0.6% increase in GDP in 4th quarter 2007 had been more than erased by an increase in prices of 1.52%.

So in terms of inflation adjusted GDP figures, it could be argued that the US has had negative growth for two quarters, thus fitting into one definition of "recession". Unemployment during this period has increased from 4.7% in September 2007 to 5.0% in December 2007 (a steady increase, commensurate with inflation of 1.52% substanitally outstripping GDP growth of 0.6%) to 5.1% in March 2008 (a slight increase, commensurate with the inflation of 0.77% slightly outstripping GDP growth of 0.6%).

Of course, there are a number of assumptions I have made here, namely that GDP figures are never inflation adjusted when they are released. I have also used seasonally adjusted inflation figures rather than the raw figures. The problem here is, of course, the measurement of a raw figure (GDP) against a seasonally adjusted figure (CPIAUCSL). If you measure the raw inflation figure (CPIAUCNS), the result ends up being a 1.67% inflation increase in the 1st quarter of 2008, and a 0.74% increase in the 4th quarter 2007 - both of which still outstrip GDP growth during those periods, and even more so than the seasonally adjusted figures I have used above.

This post is very, very wrong. See here for more details.


Ethanol blended Petrol - forget it!

From the department of well this is a surprise:
Charles Kigar doesn’t think twice when he has a choice of buying a gallon of conventional gasoline or a gallon of gas that contains ethanol at the same price.

He buys the gas without ethanol.

The reason is a simple matter of science. Conventional gas delivers more energy than a gallon that contains ethanol.

If it’s a gallon of E-10, which is a blend of 10 percent ethanol and conventional gas now widely available in the Kansas City area, there’s an energy difference of about 3.4 percent.

Now that may not seem like much when you’re topping off the tank this week. But over the course of a year of normal driving, it would take an additional 40 gallons of E-10 to go the same distance as conventional gas. If they were both priced the same, it would mean an extra $120.
Of course here in Australia the price difference is 4 cents per litre cheaper for E-10, but this may simply be due to subsidies coming into effect.

So while this subsidy may result in economically neutral or even slightly better costs of petrol for drivers, the actual energy used to make E-10 doesn't seem worth it. Regular unleaded seems a better choice.

Space 1999 - at its finest

Problems with Marketing

Which guy thought up the "iBeat blaxx"?


This photoshopped image has been shamelessly stolen from Something Awful.


PC Gaming, Recessions and Linux

I'm not a gamer - never have been. It's not that I don't enjoy playing computer games, it's just that I have never been able to afford having a PC that is powerful enough to run the latest and greatest PC games.

My son, however, has a PS2 - but the games that he likes playing are not the sort that I like playing.

From my standpoint, there seems to be two different sorts of gamers out there - the PC gamer (who plays shoot-em up 3D games) and console gamers (like X-Box, Playstation and Wii). It seems that the console gamers are winning - more and more people are turning to console gaming in front of their Televisions instead of sitting in front of their PCs.

Of course, there are still a huge amount of PC gamers out there - the problem is that they seem to be getting fewer. Console games seem to be getting more popular.

And this, of course, will make it harder for people to seriously consider using Microsoft Windows any more.

You see, there is a link between PC gaming and Microsoft Windows - you cannot have the latest PC game without having Windows. Linux and Mac users are automatically shut out of this process. But with the upcoming demise of Windows XP, and the major problems people are having with Windows Vista, and with a recession occurring, people will be unwilling to spend the bucks required to both have the latest and greatest games as well as having a PC system capable of running Vista properly.

And without gaming, people might as well keep using obsolete computers running older software - or obsolete computers running backwards compatible software.

And this is where Linux comes in. With people no longer willing to spend the money to upgrade their systems, and no gaming needs to speak of (the majority of PC users), switching to Linux will be a serious attraction. Combine this with the ever growing user friendliness of Ubuntu Linux, and the stage is set.

But what will the numbers be? One thing is for sure and that is that 2008 and 2009 will not see a major stampede of Windows users becoming Linux users. You're not going to see Linux suddenly command 10% or more of the PC market.

But what you will see is Linux commanding a smaller percentage of the PC market. I would guestimate that 5% of the PC market by the end of 2009 would still be wildly optimistic - yet it is entirely possible that this will occur.

Why do people have computers? A lot of people use them for internet surfing, emailing and word processing and occasionally have a need for spreadsheets. All of that can be done more than adequately with Ubuntu (or Kubuntu) currently, and with zero direct software costs. Switching over to Linux will, of course, be "costly", but once that initial learning curve has been overcome, the user is unlikely to look back.

Ubuntu, of all the Linux distributions, has the advantage of running a six-month release schedule. Ubuntu 8.4, "Hardy Heron", is about to be released. I'm still using Kubuntu 7.10, "Gutsy Gibbon", but when the new release is available I will be able to seamlessly upgrade my operating system. While Microsoft takes years to release new operating systems and releases only the occasional "patch", Ubuntu Linux users can upgrade to a new version every six months and have software upgrades (to fix bugs or security) available every week.

And, of course, Ubuntu Linux (like all Linux distributions) is free to download and distribute. Once a PC user is able to accept the one-off indirect costs of moving from Windows to Linux, the long term costs shrink considerably. I have personally saved thousands of dollars in not having to purchase new computers and new software over the last 5 years because I have been able to use Linux on obsolete PCs.


Iraq: Conservative Shame

From the department of Wartime Propaganda:
To the public, these men are members of a familiar fraternity, presented tens of thousands of times on television and radio as “military analysts” whose long service has equipped them to give authoritative and unfettered judgments about the most pressing issues of the post-Sept. 11 world.

Hidden behind that appearance of objectivity, though, is a Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration’s wartime performance, an examination by The New York Times has found.

The effort, which began with the buildup to the Iraq war and continues to this day, has sought to exploit ideological and military allegiances, and also a powerful financial dynamic: Most of the analysts have ties to military contractors vested in the very war policies they are asked to assess on air.
I can't explain how vindicated I feel about this report from the New York Times, yet I fear that this will again be ignored by those who should know better.

Essentially it goes like this - the Pentagon, under orders from the Bush administration, got together retired military experts, briefed them regularly, and then watched as they turned up as talking heads on every major news network defending what was going on in Iraq. Moreover, many of these "experts" are also board members of, and/or lobbyists for, defense contracting companies who profit from war. This is shameful, and it confirms a number of different things:

1) The Bush administration lied about the war.
2) The Bush administration let Americans and Iraqis die in order to serve their political ends.
3) The upper echelons of high ranking American servicemen are riddled with political corruption.
4) The military-industrial complex - in which industries that profit from war encourage its escalation - is real.
4) The media is not biased towards the left wing, but the right wing.
5) Conservatives swallowed this bull because they're not objective, can't think properly and suffer from cognitive dissonance.
6) Anti-war lefties who opposed the war from the very beginning and who argued that the Bush administration was orchestrating a sophisticated propaganda campaign to promote the war and lie to the American people were not crazy moonbats but actually well informed thinkers who merely reacted to the facts as they saw presented to them.
7) Pro-war conservatives will read this New York Times report and dismiss it as lies propagated by the left-wing media.

To my mind, people who still support the Iraq War are not only morally vacant, but intellectually vapid as well. They do not deserve respect or the time of day. They have descended into the valley of flat-earthers, and UFOlogists, but are more of a danger to society than these goons ever will be. In a sense, Iraq war supporters give flat-earthers and UFO goons a bad name.


This photoshopped image has been shamelessly stolen from Something Awful.

Credit Crisis - Third Wave about to hit?

Calculated Risk has the lowdown here. Basically the problem is "commercial paper" and the spread between high and low quality versions of it.

So far we've had two major market "corrections" in the last 12 months, both matching increases in the spread of commercial paper. A third one has just recently developed, which means that there is a chance that another market correction is probably due, with the resultant actions by the Fed to try to calm everything down.

I won't claim this as a prediction simply because CR are the ones making it. I just happen to believe them.

Where the wind blows

From the department of the market speaks:
Legendary Texas oil man T Boone Pickens has gone green with a plan to spend $US10 billion ($10.7 billion) to build the world's biggest wind farm. But he's not doing it out of generosity - he expects to turn a buck.

The Southern octogenarian's plans are as big as the Texas prairie, where he lives on a ranch with his horses, and entail fundamentally reworking how Americans use energy.

Next month, Pickens' company, Mesa Power, will begin buying land and ordering 2700 wind turbines that will eventually generate 4000 megawatts of electricity. This is the equivalent of building two commercial scale nuclear power plants and enough power for about 1 million homes.

"These are substantial," said Mr Pickens, speaking to students at Georgetown University yesterday. "They're big."


This photoshopped image has been shamelessly stolen from Something Awful.


This photoshopped image has been shamelessly stolen from Something Awful.


America - where evil deeds protect good people?

The only thing necessary for the triumph [of evil] is for good men to do nothing.
Unless, of course, the good man resorts to evil deeds in response to evil:
In dozens of top-secret talks and meetings in the White House, the most senior Bush administration officials discussed and approved specific details of how high-value al Qaeda suspects would be interrogated by the Central Intelligence Agency, sources tell ABC News.

The so-called Principals who participated in the meetings also approved the use of "combined" interrogation techniques -- using different techniques during interrogations, instead of using one method at a time -- on terrorist suspects who proved difficult to break, sources said.

Highly placed sources said a handful of top advisers signed off on how the CIA would interrogate top al Qaeda suspects -- whether they would be slapped, pushed, deprived of sleep or subjected to simulated drowning, called waterboarding.

The high-level discussions about these "enhanced interrogation techniques" were so detailed, these sources said, some of the interrogation sessions were almost choreographed -- down to the number of times CIA agents could use a specific tactic.

The advisers were members of the National Security Council's Principals Committee, a select group of senior officials who met frequently to advise President Bush on issues of national security policy.

At the time, the Principals Committee included Vice President Cheney, former National Security Advisor Condoleezza Rice, Defense Secretary Donald Rumsfeld and Secretary of State Colin Powell, as well as CIA Director George Tenet and Attorney General John Ashcroft.
In the past 12 months my stance against the Bush administration has not so much softened as it has not been discussed. Most of my anti-Bush, anti-Iraq War statements at this blog occurred in 2005 and 2006. Since the middle of 2007, I have focused mainly upon economic issues, probably because it was a developing area (and still is) and is more interesting.

But this recent revelation - quoted above - reminds me of the anger I still hold against the Bush administration for destroying America's reputation around the world. The fact is that the Bush administration - and Bush himself - approved the use of torture of terrorist suspects. Abu Ghraib was not some anomoly, it was the natural result of things. Stories we have heard of torture at other places, like Bagram, Guantanamo Bay and the roving CIA torture cells that walk into other countries and violate their sovereign laws by kidnapping people and taking them to places where they can be tortured for information - they are true. These stories have moved from rumours to substantiated rumours and have now gone onto documentable fact signed and sealed by those at the top of the US Administration.

Add to this the flimsy basis upon which the Iraq war was founded upon - with the deaths of over 4000 US Servicemen and probably over one million Iraqis since 2003 - and the situation seems very clear.

I'm exceptionally annoyed that impeachment of Bush and Cheney was never seriously considered. It speaks volumes of America's seriously skewed priorities that one President's lies to protect adultery was grounds for the first and only impeachment trial of the 20th century while the invasion and conquest of another nation (which was unconstitutional in the first place) that results in the deaths of over one million people, the economic and social ruin of tens of millions of others did not so much as get looked at in Congress.

Bush, Cheney and his gang may not escape impeachment, but it is in the interests of American and the entire world for these people to be tried as war criminals, with immunity granted to those in the lower echelons so that they may testify about what they saw and heard - these lower echelons being those who actually created the procedures and participated in them.

But, then again, I wouldn't hold any hopes high for such a process to happen. If only Bush, post-president, were kidnapped and extraordinarily rendered to Europe to face the International Criminal Court - that would be justice.

In order for evil to triumph, it is not just necessary for good people to do nothing... it is also for evil people to get into positions of power and abuse them in the name of good.

And to think that Bush - and Ashcroft - publicly declare faith in Christ. Abomination.

PS - Thanks to Tom Hinkle for setting me off on this.

This photoshopped image has been shamelessly stolen from Something Awful.


Hubble bubble, Oil's in Trouble

From the department of confusion:
Oil was little changed in New York after touching a record $112.21 a barrel yesterday following an unexpected decline in U.S. crude supplies.

The 3.1 million-barrel drop in crude-oil stockpiles reported by the Energy Department sent the price up as much as 3.4 percent yesterday. Gasoline futures jumped as much as 2.6 percent to their highest ever.
What's going on? Last month America's crude oil supplies increased as demand fell. Here's what Economy.com had to say:
Crude oil inventories fell sharply by 3.2 million barrels for the week ending April 4, according to the Energy Information Administration, compared with expectations of a 2.2 million barrel buildup. Gasoline inventories fell by 3.4 million barrels, below expectations of a 2.5 million barrel decline. Distillate supplies fell by an outsized 3.7 million barrels, below the expected 1.4 million barrel decline. Refinery operating capacity rose to 83.0%. This report is very bullish and could push crude to new all-time highs.
Love that last line - who says economics isn't based on emotions? However, the fly in the ointment, the bear in the room, the imperial stormtrooper in the public toilet, are these graphs from The Oil Drum:

What this shows is just how busy US refineries are. Notice anything about the big black line? That's 2008. It shows that, on average, US refineries are not as busy as they were anytime in the last 5 years. Now, have a look at this graph:

Again, the big black line is 2008. So while crude oil inventories are pretty much equivalent to the 5 year average, the inventories have dropped considerably since 2006 and 2007.

So, on the one hand, refineries are not as busy as they once were, while inventories have dropped in the last 2 years.

When prices of any commodity - any good or service - goes beyond what the market wishes to pay then the result is "demand destruction". Higher oil prices have led Americans to begin consuming less oil - yet the price of oil has spiked to its highest level yet on yesterday's inventory result: $112 per barrel.

One theory is that the market has gone all screwy and doesn't know whether down is up. While that may seem like a good explanation, I think supply is the issue.

Yes, Americans are using less oil - the refineries have slowed somewhat because demand for gasoline, heating oil and other liquid products has dropped. But it also seems as though supply has fallen too, that while inventories are close to their five year average, they have also plummeted considerably in the last 2 years.

So what happens if the supply of oil drops more than demand drops? More idle refineries, lower oil stocks and higher oil prices. Sounds like what is happening here.

And why is supply dropping? Probably because we've peaked.

New Zealand Cricket

With the recent retirement of Stephen Fleming as New Zealand's highest run scorer, now is a good time to examine the history of "The Black Caps".

Fleming's record is interesting because, although he has managed to score 7172 Test runs, he has done so at the rather lowish average of 40.06. Yet Fleming is one of only a few New Zealand batsmen to average in the 40s. A cursory look at the records table shows that the majority of long-term New Zealand batsmen average in the 30s. Of those who have made 3000 or more runs for New Zealand, only Fleming and Martin Crowe average above 40.

New Zealand's bowling records are dominated by Sir Richard Hadlee, whose 431 wickets at 22.29 dwarf Daniel Vettori's 2nd place figures of 244 wickets at 34.49. In fact, of all the New Zealand bowlers to take 100 or more test wickets, only four - Hadlee, Cairns, Collinge and Taylor - have done so at an average of less than 30.

New Zealand's test history reflects this lack of quality. Only Sri Lanka (5-9), Zimbabwe (0-7) and Bangladesh (0-6) have lost more matches against New Zealand than they have won. Surprisingly, the record between New Zealand and West Indies is almost neck-and-neck, but with West Indies leading 10 victories to New Zealand's 9. Against all other Test nations, however, New Zealand has struggled throughout its history to be competitive.

But why has New Zealand failed to be competitive? Well, for starters, New Zealand is a small nation. There are 4.2 million people in New Zealand today, which means that the playing infrastructure is smaller than most other Test playing nations. Let's compare nation sizes to New Zealand:

England - 60.6 million (population of U.K.)
Australia - 21.3 million
West Indies - 5.75 million (encompasses many island nations)
South Africa - 48.6 million
India - 1120 million
Pakistan - 169.3 million
Sri Lanka - 19.7 million
Zimbabwe - 13 million
Bangladesh - 150.5 million

One way to compare New Zealand cricket is to compare it with an Australian state. The best comparison is therefore Queensland, which has about the same population as New Zealand. So what happens when you compare Queensland cricket to New Zealand cricket?

The first thing to remove from the equation is "imported" Queenslanders. Thus any comparison needs to remove long-term players like Allan Border, Greg Chappell and Kepler Wessels, while also ignoring shorter-term ones like Viv Richards, Graeme Hick and Ian Botham. New Zealand has had its share of imports as well, but these basically include Dipak Patel and Roger Twose, hardly players who set New Zealand cricket on fire.

Let's start with batsmen:

Top 10 NZ batsmen (runs scored)
SP Fleming 7172 @ 40.06
MD Crowe 5444 @ 45.36
JG Wright 5334 @ 37.82
NJ Astle 4702 @ 37.02
BE Congdon 3448 @ 32.22
JR Reid 3428 @ 33.28
CL Cairns 3320 @ 33.53
Sir RJ Hadlee 3124 @ 27.16
CD McMillan 3116 @ 38.46
GM Turner 2991 @ 44.64

Top Queensland batsmen (runs scored)
ML Hayden 8242 @ 53.51
IA Healy 4356 @ 27.39
PJP Burge 2290 @ 38.16
GM Ritchie 1690 @ 35.20
KD Mackay 1507 @ 33.48
A Symonds 1031 @ 41.24
* S Law

As you can see, NZ has not produced any batsman that averages over 50 while Queensland, with Matthew Hayden, has. However, it is important also to note that, apart from Hayden, Queensland have not produced any other top-class bastman. Symonds may end up scoring more runs at a good average as time goes by, but that's a work in progress.

One name that I placed on the list is that of Stuart Law. Just as people will always be left wondering how far Martin Crowe could have gone had he not been subject to injury, people will also wonder how many runs Stuart Law could have scored had he been a regular in the Australian side.

The reason why there aren't too many Queenslanders on that list is simple - those who didn't perform (and there were many) were eventually dropped for a player from another state. The best the state had to offer in its history, apart from Hayden, was Burge, Ritchie and "Slasher" Mackay - players who, on statistics alone, are about the same quality as those who played for New Zealand.

Of course there is another name that could be put on the Queensland list - Martin Love. Again, who knows how many runs he could've scored if given the chance?

Given these differing variables, it is probably correct to say that New Zealand has produced batsmen of around the same quality as those produced by Queensland. Now, what about bowlers?

Top 10 NZ Bowlers (wickets taken)
Sir RJ Hadlee 431 @ 22.29
DL Vettori 244 @ 34.49
CL Cairns 218 @ 29.40
DK Morrison 160 @ 34.68
CS Martin 136 @ 32.66
BL Cairns 130 @ 32.92
EJ Chatfield 123 @ 32.17
RO Collinge 116 @ 29.25
BR Taylor 111 @ 26.60
JG Bracewell 102 @ 35.81

Top Queensland bowlers (wickets taken)
CJ McDermott 291 @ 28.63
MS Kasprowicz 113 @ 32.88
G Dymock 78 @ 27.12
AJ Bichel 58 @ 32.24
CG Rackemann 39 @ 29.15

Hadlee dominates, of course. No Queensland bowler has ever had a Test cricket career even nearly as good as Hadlee. McDermott is Queensland's most successful Test bowler, but you can quite easily compare his figures to those of CL Cairns, Collinge and Taylor. Kasprowicz is Queensland's second most successful bowler, yet his career can be compared to that of Chatfield and Morrison.

So, when we compare these two places, what do we see?

1. One world-class player in each.
2. Three batsmen averaging in the 40s or above in each.
3. Three bowlers averaging below 30 in each.

In other words, Queensland and New Zealand are probably comparable in terms of the quality of players they have produced throughout history. However, there are some major differences:

1. Cricket in New Zealand is best played in a 4 month "window" in Summertime. Cricket in Queensland can be played at any time of the year.
2. Sport in New Zealand is dominated by Rugby Union, whose season encompasses 10 months of the year. Queenslanders love their winter sport, but are not dominated by any single code.
3. New Zealand has six first class teams drawing players from a population of 4.2 million. Queensland has the same population, but has only one first class team.

Given these drawbacks, the only reasonable conclusion to come to is that New Zealand has done very well in producing the players that it has, and that it is probably better in nurturing talent than Queensland, and is able to get the most out of the players they have.

In short, New Zealand may never produce a world-class Test team, but what it has produced throughout its history is pretty good, especially when taking into account its small population and other drawbacks.


US Unemployment ticks up to 5.1%

The power of lies

From the department of ignorance and arrogance:
Ten percent of American voters believe Sen. Barack Obama is Muslim, despite the presidential candidate's frequent descriptions of his Christian faith and a high-profile flap over his former pastor.

The finding was contained in survey results released by the non-partisan Pew Research Center for the People & the Press.

While a majority — 53% — identify Obama as a Christian, 16% of conservative Republicans, 16% of white evangelical Protestants and 19% of rural Americans believe the Illinois senator is Muslim.

About a third of Americans said they don't know what Obama's religious beliefs are, and 9% of that group said it's because they've heard different information about his faith.

Confusion over the candidate's religion crosses party lines.

Fourteen percent of all Republicans, 10% of Democrats and 8% of independents think he's Muslim, according to the survey.


Cricket in New York

From the department of gobsmacked:
Cricket was carried across the world by the British Empire, but never caught on in the United States, where it is most popular among immigrants from nations like India, Pakistan and Jamaica that were once ruled by Britain. Most of the city’s adult and high school players are immigrants from South Asia and the Caribbean, or their children.

Parks on the edges of the city — Van Cortlandt, Soundview and Ferry Point in the Bronx; Canarsie Beach in Brooklyn; and Baisley Pond in Queens — are filled with cricket players on summer weekends, their crisp white uniforms presenting a vivid contrast on the grass fields. Some 650 adults play in the city’s six leagues.

Linux at 2%

Will 2008 be the year of Linux? Of course not. And neither will 2009. Nevertheless, Linux usage seems to be growing. According to W3 counter, 2.01% of PCs have Linux installed.

Why not try it on your PC? I use Kubuntu.