Yesterday I wrote to you about the silly headline in The Age newspaper. It was this:
“Queensland rebuilding will boost GDP”
Look, we love it when we see this kind of nonsense written. Simply because it gives us an excuse to again read Frederic Bastiat’s, “That Which is Seen, and That Which is Not Seen”.
You can click here to read it for yourself.
I won’t reprint it because you should read the entire essay. But in a nutshell, it’s economic nonsense to suggest that a flood will be beneficial to an economy.
Only an economic ignoramus would argue such a thing. Floods destroy things. Floods make no distinction between the destruction of brand new goods and goods that are due for replacement.
The last time we brought up this subject we were told it is good for the economy because money comes into Australia from insurance companies. That this money hasn’t been taken from elsewhere in the economy.
Rubbish.
To borrow from the title of Bastiat’s essay, it only considers that which is seen but not that which is not seen.
Even so KPMG chief executive Michael Andrew is quoted in The Age article:
“This will release a lot of cash from insurance company balance sheets, many of which aren’t in Australia. Many are reinsured offshore in Europe or the US, so the extent to which they have to fund loss-of-profit claims, a lot of money potentially flows into Australia.”
It’s the idea that Australia is getting a free lunch from the insurance companies.
The fact is, Mr. Andrew couldn’t be more wrong if he tried. But let’s run through the argument in more detail…
Think about it, how do insurance companies raise money? They charge premiums. Premiums paid for by Queenslanders and others.
Now, how does an insurance company pay for the claims made by policyholders? It covers the costs from its reserves but would also issue bonds to investors which it will then repay over time from insurance premiums.
Here’s the problem for the insurance company. Aside from the big payouts such as the Queensland floods, or the Christchurch earthquake, the insurance companies also need to pay out other everyday claims.
So, the insurance company will need to rebuild its cash reserves.
How will it do that?
Simple, it’ll need to increase insurance premiums.
And who pays for the insurance premiums? Individuals and businesses. In other words, money that would otherwise have been spent elsewhere or saved will be now spent on increased insurance costs.
Yes, some industries may benefit as claimants buy another item of furniture to replace the item that was destroyed. But it is at the expense of say, the clothing store where someone may have spent money but they are no longer able to do so because of the increased insurance premium.
But what about this idea that foreigners are actually funding the rebuilding as the cash flows in from overseas.
While that may be true, it ignores the attitude of those overseas investors. If a reinsurance company has to fork out more money than expected to pay for a major incident then it will naturally demand an increased return or premium before it invests more money.
That means the Australian insurance firm paying a higher rate on the bonds it issues or on the reinsurance policies. And that means passing on higher premiums to policyholders.
In economics there’s no such thing as a free lunch. If something is destroyed and needs replacing then there will be a cost to replace it. That cost will either be a direct or indirect cost.
Think about it this way. If there really wasn’t a cost, then why wouldn’t you just crash your car and write it off at every opportunity? I mean, that’s the logic Mr. Andrew is using.
The reason you don’t write your car off is because you know there will be a cost to you in the form of an increased insurance premium when you get your next car.
There is no difference between this example and the costs of the Queensland floods. To the Australian economy as a whole, and to anyone who holds any kind of insurance policy there will be a cost.
Claiming that foreigners will pay for the flood damage without any impact on Australians is just another childlike example of the Australian mainstream falsely believing that ‘Australia is different.’
One day they’ll get it through their thick skulls that Australia isn’t different. Australia has benefited from an extraordinary boom in the resources industry which has helped prop up the entire economy.
When that boom stops, the Australian economy will suffer. Only then will the mainstream numpties realize that the Australian economy is no different to anywhere else.
Kris Sayce
Editor
Money Morning
Monday: You’ve got your eye on a stock – but you’re not sure if it’s the right time to buy it… You’re holding another stock that just went up – or down – significantly… but you don’t know whether it’s time to sell… The solution to both of these dilemmas will become a lot clearer once you’ve watched this video (turn on your speakers). Click here for more…
Tuesday: No wonder Diggers & Drillers editor Dr. Alex Cowie looked jolly as he bounded into the office this morning. The “Stock Doc” has been long coal stocks since March last year. Click here for more…
Wednesday: We see the lazy Aussie retailers have launched a media campaign. They were clearly influenced by the success of the miners’ campaign against the Resources Super Profits Tax (RSPT). Except they forgot one very important thing… Click here for more…
Thursday: But speaking of non-robust and flaky, much to our surprise we received a reply to our Freedom of Information (FoI) request from the Reserve Bank of Australia (RBA). Click here for more…
Friday: This ‘George Soros tipoff’ could make you 226% to 389% in 24 months. (Just don’t share it with anyone else). Click here for the most intriguing stock story of 2011. Click here for more
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cb @ 94 –
In a later video he explains how the elitists are split into two basic factions – the Rothschilds + the Royal families and the Zionists who he thinks are at odds with each other.
Does this seem valid in your oppinion?
I notice that Hufschmid is suggesting completely the opposite line to Piper in sense, in that he claims the Zionist criminal network are largely to blame and that the Zionists were directly involved with the world wars, whereas Piper blames it on the Jewish population as a whole and claims that the Jews had nothing to do with the world wars.
Nathaniel is similar to Piper, but seems to alternate between blaming the Jews, Zionist Jews and Talmudic Jews.
I tend to differ as to this being a quibble over a finer point, especially with Piper who has provided no explanation and no sources about his assertions that the Jews were not a factor in the wars and some of his other claims.
I am starting to notice that if you accuse the Jewish population as a whole, then it is far easier to label you as anti-semitic, or to play the hate card, which seems to be the direction Piper is pushing his listeners, so I am skeptical that this is incidental.
Hufschmid on the other hand points us towards anyone who is involved in the Zionist criminal network whether they are Jewish or not and says that what we should be doing is getting the names and addresses of anyone who is part of the network and then handing it into the police. This seems a more rational and sensible approach to me.
The two suspicious things about Hufschmid is that his half-sister is married to one of Rupert Murdoch’s sons and that he has had TV appearances. He claims the Murdoch connection is a coincidence, whereas in the Penn & Teller show he seems to be telling the truth, but was framed to look like a tin foil hat wearing oddball.
He claims he was deliberately setup, the question is was he innocent or a willing participant ?
Penn & Teller – 9/11 Conspiracy Theories
http://www.youtube.com/watch?v=kcrF346sS_I
DC – Yes, sure. Piper is targeting Jewish influence and power in general, so that one is pretty clear. Does Hufschmid want to focus on Zionism as a sick ideology, zionist criminals, or criminal activitiy in general and without naming them in terms of their ethnicity or loyalties, or is he working in an undefined, nebulous soup that tries to fragment and undermine the efforts of AFP through the likes of Piper and The Ugly Truth?
cb – It may be both.
He does call out some names and identify the names of individuals and organisations, more than I’ve seen Piper do so far at least, but upon digging deeper still, I am becoming convinced Hufschmid too is a rat.
Apparently for many years he supported the work of Journalist Christerfer Bollyn, but it seems they have had a falling out. It is a long and complex relationship, but Bollyn claims that Hufschmid started writing disinformation about him and his family and started behaving erratically.
Here is an open letter Bollyn writes to Hufschmid:
http://www.rumormillnews.com/cgi-bin/archive.cgi?read=108221
Bollyn states:
1. You have spread false news.
2. You have damaged my business and reputation by spreading false news.
3. You engage in baseless allegations against serious 9-11 researchers, like Dr. Steven E. Jones, and others.
4. You use violent and hateful language.
I have also found disinformation on Hufschmid’s website myself, for instance in several places he claims that Zionist Jews were responsible for the world war. In one place he references to a page that is exclusively dedicated to the history of Israel, that is supposed to explain it, but I can find no such explanation.
In fact I find just the opposite, he claims that so many documents were faked in WWI that no one knows what the Zionist involvement in WWI was and in WWII it seems that Hitler hated Jews and did his best to undermine them. While he does claim that the Zionists profited from Hitler, there is no indication that they were responsible, in his very own account of history.
This seems like deliberately planted disinformation. I’d guess he never expected anyone to take the time to read it.
So given the Murdoch connection, the statement from Bollyn and the apparent disinformation I’ve seen for myslef, I’m now guessing that Hufschmid was deliberately planted by Zionsists to undermine the truth movement. He was probably chosen for his odd-ball personality.
This is interesting, Bollyn accuses Hufschmid as well as Piper of being two of the most persistent and vicious detractors he knows.
Eric Hufschmid and Rupert Murdoch – Agents of Deception
http://www.bollyn.com/index.php#article_12469
To understand why Michael Piper spends so much time slandering me, one need only understand that he works for Mark B. Lane, the Jewish Zionist lawyer who owns the assets of the Liberty Lobby and American Free Press. Lane is responsible for instigating the mass killing at Jonestown by increasing the level of fear in Jim Jones, seen here on the left shortly before he gave the order for the massacre.
Lane is an old Army intelligence/C.I.A. agent who began his career in occupied Germany at the end of the war in 1945. Lane earned some $5 million in legal fees representing the Liberty Lobby, and when Willis Carto nearly bankrupted the lobby in 1993 Mark Lane had plenty of cash to take over its assets.
Lane is the intelligence agent who gives Piper his marching orders and provides him with his license to lie. The whole thing is a C.I.A. disinformation and controlled opposition operation, very similar to the National Zeitung in Germany. For decades the erstwhile Spotlight had a monopoly on the so-called “patriot” press.
So I guess the question is now, are Hufschmid and Piper really both agents that are discrediting Bollyn or are Hufschmid and Bollyn both lying to discredit Piper, or are all three agents?
I’m not sure if this is a smear against Hufschmid and Bollyn, but it seems to document extensive disinfo put out by both of them, which would suggest that they are both deliberately trying to discredit AFP. I will look into Piper and AFP and see if I can fnd some dirt from other sources.
http://www.takeourworldback.com/bollynhufschmidmurdoch.htm#hufschmidZundelZionistAgent
Yes, DC. As I said, I took two sniffs at H and he smelt like a rat to me. I don’t know anything about Bollyn. who is he and what is his line?
I don’t know Bollyn well, but he was working extensively with Hufschmid for many years. The link I posted suggests that they are both compulsive liars and continual propogators of disinfo.
He also used to work for AFP but was fired.
I’m trying to determine the authenticity of takeourworldback.com
Here is an interesting link from take our world back, this information suggests that Jewish and Zionist forces did indeed support Hitler financially because it furthered their Israel agenda. I understand correctly, this would contradict Piper’s claim that Hitler was not funded by the Jews.
A Comprehensive History of Zionist Crimes
http://www.takeourworldback.com/zionistcrimes.htm
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