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The Gold Bubble

I've been wondering a bit about the state of the market for gold.  With all the people panicking about the economy and a bit of goading from right wing fear mongers there's been a rush to buy gold.  They are told that gold is a safe investment that holds it's value, etc.  The trouble is that this isn't precisely true.

Where gold is useful as an investment is a hedge against inflation.  Basically if an ounce of gold is say $1000 and the value of a dollar drops by half, the value of an ounce of gold should climb to $2000.  Gold's value in this case doesn't change, but it's price goes up relative to the dollar because of the decline in the dollar.  

The thing is, gold actually doesn't accumulate any value whatsoever.  It's not like investing in a company that can grow in the future.  Since it has less application in industrial uses it's not particularly affected by supply/demand changes due to changes in economic activity.  So all it's really useful for is insuring that the money you have today is worth the same tomorrow.  

So that brings us to the present economic situation.  The reality is that our economy's inflation rate is actually dangerously low.  While there is some debate about what an ideal rate of inflation is, historically it's tended to be around 2-3% in a healthy economy.  Right now we're below that level, which is why the gold rush makes so little sense.  In a deflationary or disinflationary (i.e. low inflation) situation gold is pretty much the last thing you'd want to own.

To illustrate how out of whack things are, take a look at this chart:

Notice that big spike in the late 70's and early 80's?  That was when we had double digit inflation in this country and so a run up in gold prices made perfect sense.  But now look at the ridiculous rise in prices since around 2004.  We've seen the price of gold go up by a factor of three in the last few years in a time of low inflation and deflation.  

Right now the Fed is contemplating printing even more money in an effort to get the economy rolling again.  That's how non-inflationary our situation is.  Now, in the long run as the Fed moves to roll back those policies there is some chance of creating some inflation, but that's probably a few years down the road.  That would be the time to invest in gold, but now that there's been such a run up in the price that it probably won't make sense even then.

A good rule of thumb I've heard about gold is that, historically, it's always been worth roughly the cost of a decent quality man's suit.  It was true back in the 1800's and it's been true through most of the last century.  But today with a price of gold up around $1300...  well let's just say that's an awfully expensive suit...

Your MP3 player is now a gateway drug...

Rant inbound...

So there's this big new craze going around about "digital drugs".  The gist of this is that you listen to an audio file and it's supposed to alter your brainwaves and, in theory, get you high.  So now there's all manner of new stories about this and how your KIDS ARE GOING TO FUCKING DIE IF THEY LISTEN TO THESE FILES!

I'm so sick of this parental freakout bullshit.  First of all note that in the video they vaguely mention physiological effects and have videos of kids acting stupid.  That's because the effects of these things are pretty minor and what you're seeing is largely placebo effect.  Kid hears that listening to some file will get them stupid high, so they listen and act stupid high.  In grade school some kids I knew heard that sage brush got you high.  Sure enough they ate some and acted high for the next hour until they all vomited.  

Pro tip: don't eat wild sage brush.

Now, what these "digital drugs" are are binaural audio files.  What happens is that if you record a tone in one frequency and play it in one ear, then play a different frequency in a different ear, your brain tries to sync the two.  This has the effect of altering your brain waves and it actually does work.  I know because I've used them!  OH NOES I'M A DIGITAL DRUGGY!  SHOOT ME IN THE HEAD BEFORE I KILL AGAIN!!!!

Oh wait, right, as it turns out the effects are little different from what you'd experience in meditation (yeah I've done that too, God help me).  The only difference is that it's a bit easier to get into a trance using the sound waves.  So if you're going to freak out about what little Johnny's mp3 player has, you'd better keep him well clear of any Buddhists.  I mean next thing you know he's trancing on a daily basis.  Soon it might lead to enlightenment and then his life will be RUINED!!!

Frankly this is all evidence of a country that's maybe just a little too safe.  We don't have real things to worry about apparently so we have to worry about a fucking mp3 file.  It's laughable.  Folks we're in two major wars, the economy is in the shitter, and what passed for health care reform isn't going to shit.  Your children are being born into a pretty fucked up planet and frankly they'd have a whole lot less reasons to get high or alter their brain waves if you'd actually try to fix the world instead.

Goldman gets away with it...

So apparently Goldman Sachs decided to settle with the government over civil fraud charges that the government was investigating.  In totaly, Goldman will pay $550 million.  Some of that money is paid to the government, and some paid to investors who got screwed.  Quoting the SEC:

"This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing," said Robert Khuzami, the SEC's enforcement director.

A stark lesson?  Really?  Consider that Goldman made just shy of $3.5 billion in profit in the first quarter of this year.  So that's what, 15% or so of their profits for a single quarter?  Not to mention the fact that everybody working at Goldman is still getting their same fat bonuses.  So what lesson did they actually learn here?

The lesson they learned is that you should commit fraud.  If you commit fraud you make a lot of money and then if the government catches you you settle in court for some fraction of the profits you made.  You're not going to jail, and you're still getting a big fat paycheck.  So why wouldn't you?
So today we have a featured quote from a Microsoft Exec: 

"It looks like the iPhone 4 might be their Vista, and I'm okay with that," said Kevin Turner, Microsoft's chief operating officer, in a keynote speech at Microsoft's Worldwide Partner Conference (WPC), which runs through Thursday in Washington, D.C.

This, of course, following hot on the heels of Consumer Reports saying you shouldn't get an iPhone 4.  It seems that the iPhone 4 is a terrible defective piece of junk and Apple is DOOOOOMED!!!!

Taking a step back from the media and PR hype machine, consider that the iPhone 4's defect is actually quite minor.  Apple decided to move the antenna of the phone to the outside in an effort to improve overall signal quality.  This is especially critical given how much AT&T's network sucks.  In so doing they created an unexpected problem.  

The problem is that if you touch the phone in a specific place you'll find that your signal degrades because you're actually shorting out the antenna with your hand.  Now, the effect of this varies from person to person depending on the actual conductivity of your skin.  Presumably the problem would be worse if you were sweaty, etc. 

What Consumer Reports doesn't mention though is that overall signal performance on the phone is better than on pervious iterations of the iPhone.  It's merely in that specific circumstance that it's a problem and you can readily avoid the problem by using a case or applying a small piece of scotch tape to the phone to put a resistor between your hand and the metal of the antenna.  

I have the iPhone 4 and I totally love it.  It's substantially faster than my previous iPhone and I get much better signal overall.  Yes, I use a case, but it cost me $10 or so and Apple didn't see a dime of that money.  Big deal!  Recall for me how I could pay $10 and completely fix everything that was wrong in Vista and then we can begin having a chat with the aforementioned MS exec.

Look, I've got issues with Apple and I don't think they've handled this situation in the best way.  However, treating this as some kind of major disaster for them is just silly.  The iPhone 4 is still flying off the shelves and rightfully so as it's a damn nice phone.  Any of those folks who bought an iPhone 4 and decided that this antenna thing is too much of a defect for them can just return the phone.  It has a 30 day return policy, so what's the big fuss about.

Oh and also, I'd like to point out that Consumer Reports said that the iPhone 4 was the best smart phone on the market in their review of it.  So what does it say about their rigorous testing methodology that they have to go back and retract that because of this antenna problem.  Seems to me that if the antenna problem was such a big deal they'd have noticed it in their original review of the phone.  They'd have been talking about signal issues compared to the 3GS, etc.  But funny enough they didn't.  Maybe that's because it's not actually a big deal.


When will Apple get sued?

Here we have yet another example of Apple making very stupid choices about the content people can get on their iPhones and iPads:

Apple not only censored an iPad app based on Ulysses, it blacked out multiple panels in another graphic novel for the iPad based on Oscar Wilde's The Importance of Being Earnest. The app's apparent sin: images of two men kissing.

Getting past the obvious wrongness of this move, I do wonder if perhaps Apple is setting themselves up for a lawsuit.  The thing is, if Apple let anybody do anything with their iPhones and iPads, then it would put the responsibility on the end user to decide what they were seeing and not seeing.  More specifically, it would put the burden on parents to choose what their children were allowed to see and not see.  Given that purchasing on the iPad or iPhone requires a credit card and the average 12 year old doesn't have one, I don't think that's a big problem.

However, with Apple stepping in and actively acting as a content censor, I would argue they are increasing their liability.  Now if little Johnny gets to see some boobies, then Apple can be blamed for not doing the job they implied they were doing through all of these efforts.  If, on the other hand, Apple took a hands off approach, then they'd have no responsibility for what was being done.

Personally my take is that Apple should have a very simple policy.  Apps get rated as mature or not to help parents decide what is okay for their children.  Any app that rates itself as mature can have any content it wants to.  Now the obvious issue here is that depending on how you define mature, an app may or may not qualify.  So, to tie back to this example, does a cartoon featuring men kissing get labeled mature?  I would think not, but at least you can choose to rate your app as mature and simply bypass any issues.  So at least this gives you freedom to publish your content even if you disagree with Apple's specific definition of mature.

Harry Reid on Israel:

"Israel is one of our strongest and most important allies, and the United States stands firmly with Israel at this critical time."

"I deeply regret the loss of life in the flotilla incident, including the death of an American citizen."

"Israel has an obligation to protect its citizens and therefore has a clear right under international law to prevent weapons from getting in the hands of terrorists determined to target them. Israel indicated it was willing to put in place a process to ensure that legitimate humanitarian relief reached Gaza. Unfortunately this offer was rejected."

"Israel has pledged to carry out a transparent and thorough investigation of this incident, and I look forward to its findings."

Are you shitting me?  Why should we trust Israel to carry out an transparent and thorough investigation?  This endless kowtowing by our government to Israel is making me sick.  Don't these people realize they aren't doing Israel any favors here?  Of course they don't actually give a shit about Israel.  What they give a shit about is a vocal right-wing minority in this country that takes anything but blind obedience to Israeli's right wing as some kind of anti-semitic promise to destroy Israel.  

I've long thought Harry Reid was a clown, but man he really pulled out the floppy shoes and bulbous nose on this one.

Israel: getting worse...

So today I find out that apparently there was an american citizen on board the flotilla that was executed by the Israelis.  He was shot once in the chest and four times in the head at close range.  That's awfully hard to do without intending to do so.   

Now, you might think that he grabbed a gun and was shooting at the Israelis and so they took the action that was necessary.  Nope, NONE of the Israelis were shot.  Not a single graze wound even.  Why?  Because the activists were merely disarming the soldiers, taking the guns and throwing them overboard.  They did not shoot anybody.  

The people on the ships reported that they were getting live fire from the Israelis and that's what lead to them picking up various bars, knives, plates, and whatever the hell else they could find.  Of course Israel disputes that, but then if Israel is in the right, they could show us the rest of the video that they have, right?  

Oh wait, they aren't.  Wonder why...

Oh and it sounds like sometime today an Irish flagged ship is going to try to run the blockade as well.  Let's see if Israel has learned anything from this.

Israel is still wrong...

Over the past few days I've been following the analysis of what happened with the flotilla incident in Israel.  Those defending Israel seem to have three primary arguments that they use to suggest Israel is in the right here:
  1. The flotilla was a deliberate provocation by groups aligned with Hamas and other anti-Israeli organizations
  2. The blockade is in place as a legitimate issue of protecting the national security of Israel
  3. The flotilla was offered the opportunity to dock in Israel and have any goods inspected and delivered to the Gaza strip.  The flotilla was only attacked after they refused this out.  
What they do not tell you is the following:
  1. The blockade does not merely ban weapons.  It doesn't even limit the ban to dual-use goods that might be turned into some kind of improvised weaponry.  Instead the blockade is a form of collective punishment on the palestinians.  It bans things like fabrics, certain spices, toys, etc.  It seems that there's at least some economic reasoning behind the blockade forcing Gazans to buy finished goods from Israel.  For example, it forbids fabric, but doesn't forbid clothing.  
  2. The blockade has limited the food supplies into the territories to below subsistence levels
  3. That shipments that go through the inspection process are often held for extended periods of time.  There are examples of food stuffs, theoretically permitted under the blockade, simply being left to rot in the inspection terminals rather than being delivered.
So was this a deliberate provocation? Absolutely.  It is civil disobedience.  You can question the motives of some of those involved in the flotilla as being anti-israeli, but the reality is that the blockade is illegal and immoral.  Had the flotilla merely complied with the demands of Israel and docked, most, if not all of the goods would have been blocked.  They were carrying things like toys and wheelchairs.  Yes, toys are banned.

So the flotilla intended to breach the blockade and either force Israel to back down or provoke an incident that would turn world opinion more strongly against Israel.  The theory being that, in the long run, Israel would be forced to remove the ban or, at the least, reform it's implementation.

Israel is absolutely in the wrong here.  If Israel had implemented a blockade that was solely focussed on weapons and perhaps some dual-use materials, then their blockade would be reasonable.  It would permit the palestinians to maintain  a basic standard of living, rebuild, and perhaps create an economy that was no longer dependent on Israel.  

Instead Israel has decided to collectively punish the palestinians.  Was it wrong for them to fire rockets into Israel?  Yes.  Was it wrong for them to kidnap an Israeli soldier?  Yes.  But those were the acts of a few and now the entire population of Gaza is being punished.  Furthermore, while the punishment might make Israel feel better in some fashion, it is only going to further radicalize people.  They will not hold Hamas responsible for this, but instead it will be Israel.  That will only lead to more violence down the road.

Obama needs to come out and make a forceful statement condemning Israel on this matter and demand that they either reform the blockade or eliminate it entirely.  Israel needs to do the right thing and make those changes before Obama even bothers to say anything.  

Further flotillas are under way and it is my hope that Israel does the right thing and backs off.  If they do not, I hope the international community does the right thing and punishes Israel.  Sanctions, and a withdrawal of economic aid would be a good start.  It's time that we started using some sticks with Israel instead of constantly being their patsy while they violate human rights with impunity.  

In the end such punishments would benefit Israel.  It is like a parent disciplining a child who misbehaves (and I think inferring that Israel is being childish is totally apt here).  You can either take the pain now and do what is needed to teach them a lesson or you can let the bad behavior continue unabated.  In the end it is Israel that will suffer the consequences and so any such actions are ultimately in their best interest.


If you hadn't heard, a flotilla of activists attempted to breach the Israeli blockade of Gaza with medical supplies, etc.  The Israeli military intervened and killed a number of people, turning back the flotilla.  Here's a video of the soldiers attempting to board one of the flotilla boats:

Now, clearly the soldiers are not in a position to defend themselves as they are coming down the rope and the people on the flotilla attack them with whatever they had handy.  The soldiers, though vulnerable on the rope, are armed.  It does not appear that the activists had any genuine armaments, but rather they concocted weaponry on the spot to defend themselves.  

There's been an attempt by Israel to blame the activists on the flotilla for initiating violence.  This is, in a word, ridiculous.  The ships is being boarded by the Israeli military IN INTERNATIONAL WATERS.  The activists have no idea whether the soldiers intended to use force and their only moment of advantage against ARMED SOLDIERS was as those soldiers were repelling.  Once you've got several Israeli commandos on the boat with guns, then they are in control of the situation.  So the people on the flotilla acted to repel boarders with the means they had at hand.

Israel fucked up in a big big way here and I can only hope that the rest of the world will take action to end the blockade of Gaza in response.  Of course our government, sold out to the Israeli lobbyists, isn't going to do damn thing.  Turkey has suggested they will send an armed escort in the future and my hope would be that Israel will do the right thing and back down.  If not, it's worth noting that Turkey is a member of Nato and, in theory, they could demand the involvement of other NATO forces.  That's unlikely but it would be a hell of a test for the alliance for sure.

I have long said that there are no saints on either side of this conflict, but Israel, having the superior military force is under some obligation to use that force sparingly.  They are under an obligation to consider human rights and they would do well by themselves to do what they can to respect the lives of these people even if those in opposition to them choose not to.  Yet what we've seen in the last few years is a growing apparent lack of interest in trying to find a moral high ground and find a peaceful way out of the situation.  It is my belief that the long term consequences of this will be most drastically felt by the Israelis themselves if they do not find a better way.

My expectation is that Israel will back down and find a way to let such flotillas to come into Gaza peacefully.  In that case, those who died on this flotilla can at least be said to have made a worthwhile sacrifice.  It will mean that future shipments of aid will get through.  Had they yielded to the soldiers and not fought them, then they would have surely been turned back and nothing would have changed.

If Israel does not yield then they deserve what they get.  Blockading humanitarian aid is criminal and should be condemned as such.  If Israel wants to pick a war with a NATO member over this, then they are fools.  Even if Turkey doesn't invoke it's NATO alliance privilege here, it is a fair bet that an active fire fight between Israel and Turkey would not bode well for Israel in the long run.  Israel can get away with attacking a pariah state like Syria, but going against Turkey would force their one ally on the planet, the US, to pull support.  No good would come of that.

In reading further, international maritime laws apparently establish that a ship can be boarded in international waters provided that it is intent on breaking through a blockade established in your nation's waters.  Obviously that's the case here.  I don't believe that really changes anything except for the caps lock on my initial statement :)

Final Thoughts on LOST

If you follow LOST and haven't watched the finale, then you should probably not read further.

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Canyon Man



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