No doubt you thought that the announced deficit of $454.8 billion for 2008 was bad enough. As indeed I did, and no doubt we all share the opinion that an outstanding national debt of $5.8 trillion (note that that is 5.8 thousand billion, don’t let the new word disguise the difference in size there) held by the public is a great big scary number.

But those numbers are in fact much too small. Way, way too small. For if we actually accounted for government in the same way that a company has to account for itself then the Federal deficit in the year just closing was $3 trillion. Yes, that’s 3 thousand billion dollars. In fact, the deficit was larger than the entire Federal budget outlay as a result of promises that were made for spending in the future.

What’s worse is that far from the national debt being around $5 trillion, it’s more like $50 trillion on a proper accounting basis. That is, the U.S. Government has made promises to people in the future amounting to more than the entire global output of everything in a year.

To understand the details of all of this have a look here. Jim Scrivener writes this post about this time every year, just updating the numbers but leaving the argument the same. For the argument is the same every year, just the details of the numbers change. Sadly so, for both Jim and I would much prefer that the Federal Government stop promising us all into national bankruptcy.

No, not an offer from myself, rather the latest from the slightly bizzaro world of Australian politics.

Pauline Hanson has been an on-off presence on the fringes of the political scene for some time now. She’s attempting to get elected once again but this has been slightly derailed by the publication of some photos allegedly of her taken by an alleged ex-boyfriend. The photos are not for family viewing, being of a young lady (err, actually, given the poses, perhaps “lady” is not the appropriate word) in and out of a series of lingerie.

Hanson’s defense is that, while she may superficially resemble the subject, she doesn’t know the man, the place where they were allegedly taken didn’t exist at the time they were taken, she was married at the alleged time, not a shop girl, she’s never been a shop girl and anyway, it isn’t her. Which is what leads to her offer to show her belly button to prove it isn’t her.

All rather odd I think you’ll agree, but then Australian politics has never been a place for the fainthearted. Paul Keating, the ex-Prime Minister, had a robust way with words: “We’re not interested in the views of painted, perfumed gigolos”; “if this gutless spiv, and I refer to him as a gutless spiv”; “the brain-damaged Leader of the Opposition.” These were actually said in Parliament, during debates (not as asides) and just for the avoidance of doubt amongst those who don’t speak Australian, no, these are not compliments.

Rum place, Australia.

A quite stunning point:

We need to go back only ten years, to fiscal year 1999, to reach a time when the government’s total outlays were smaller than this year’s deficit.

If I could just make a small suggestion to those who are not au fait (as I am) with the history of financial scams and frauds?

You might want to read up on Bernie Cornfeld and Investors Overseas Services. Add that to what we all have been told ad nauseam about Bernie Madoff and it’ll make this story a great deal more understandable.

Whether the story is actually true or not we’ll find out over the next few days but either way I think we’re going to hear a great deal more about Sir Allen Stanford.

Now that Tom Daschle has had to fall on his sword for his inability to understand the tax laws (to put it as kindly as one can) two minor thoughts occur.

Firstly, he paid the back taxes in order to get the job: now that he’s not getting the job, will he demand the taxes back?

OK, so that won’t happen, however amusing the thought is. Secondly, how many other senior Democrats are there out there with such problems? We’ve had three so far by my count. How about we just keep nominating people, in their hundreds and their thousands, making sure that all of them do indeed pay all their lawfully owed taxes? Soon have that budget deficit thing solved, won’t we?

The lede in a Washington Post story:

In soup kitchens, food pantries and universities across the country, activists are planting the seeds for an overhaul of the way America feeds its more than 35 million hungry people, the first major challenge to a system largely developed in the 1960s.

If we’re feeding these 35 million people then they’re not hungry are they? This should in fact read “feeds the more than 35 million people who would be hungry if we weren’t feeding them”. The actual article makes some reasonable points as well as the ritual “we need more money” claim. But while my original complaint might seem trivial there is a larger point to be made.

Uniquely amongst the industrial nations the US measures poverty by market incomes, everyone else measures it after transfers, benefits and taxes. Those numbers you see, of 12% of Americans living in poverty and so on, they are victims of the same linguistic construction as those hungry above. For the US poverty level is calculated before we take account of all the things that we do to alleviate poverty. We don’t include the EITC, Medicaid, housing vouchers, food stamps, none of the effects of these hundreds of billions of dollars that are spent are taken account of when we calculate the number in poverty.

What the number in poverty is in the US is in fact the number who would be in poverty if we weren’t spending hundreds of billions to alleviate poverty. Just as with those being fed being no longer hungry, most defined as poor in the US already get enough help that they’re not poor any more.

Count yourselves lucky that you’re on the correct side of the Pond. It means that not only do you avoid having The Guardian as a major national newspaper, you also avoid living in a country whose politics is influenced by what is written in it. Polly Toynbee is the Grande Dame of a certain type of Statist left wingery (and whingery, to be honest): it often seems that in her perfect world everything would be done by Government and we’d be allowed a small allowance to buy a soda pop on the weekends. But only if we’d been good little citizens mind.

The problem is that she is, despite these odd views, influential. Despite her very odd indeed beliefs about how the world works. This is from her column of today.

The banking crisis is nowhere near over: tottering balance sheets hold 440% of UK GDP, with £30 of debt for every £1 of assets.

The assets of a bank are of course the loans that are to be paid back to them. She’s either got confused or, more worryingly, doesn’t know the difference, between a bank’s assets and a bank’s capital. What’s worse, the army of editors and sub editors that her piece must have passed through before getting printed also don’t seem to understand the error. Even after I’ve pointed it out to them.

I’m aware that varied leftish types have just taken power in the US but do look on the bright side. At least you’re not in a country where those who either read or write such alarmingly mistaken tripe in a national newspaper have any power.

Not that this is much of a surprise, but it turns out that the rich do indeed have better sex. No, it’s not just that the richer the man the more opportunity there is likely to be and anyway, the latest research shows that it’s not the rich men having the better sex. Rather, it’s the women those rich men have the sex with.

Scientists have found that the pleasure women get from making love is directly linked to the size of their partner’s bank balance. They found that the wealthier a man is, the more frequently his partner has orgasms. “Women’s orgasm frequency increases with the income of their partner,” said Dr Thomas Pollet, the Newcastle University psychologist behind the research.

The interesting thing here, at least to someone like me who is always looking for that angle, is that it doesn’t matter what the higher income is spent upon. Just a higher income, even if spent upon boys’ toys, will increase the enjoyment of my own dear wife (hey, I believe in science when it’s convenient to do so!).

Thus as and when I am to be found out in the barn scribbling away again I can, hand on heart, state that although it is indeed for that sports car that I’m earning the money, in reality, “it’s for you my dear”. Now just to raise the courage to try the argument.

Richard points to a story about Vaclav Klaus, the President of the Czech Republic and for the coming six months also the President of the European Union. I’ve always had something of a soft spot for him and that admiration has only grown upon reading this in today’s Financial Times by him:

Aggregate demand needs strengthening. One traditional way to do this is to increase government expenditures, probably in public infrastructure projects, on condition these are available. It would be much more helpful, however, to have a great reduction in all kinds of restrictions on private initiatives introduced in the last half a century during the era of the brave new world of the “social and ecological market economy”. The best thing to do now would be temporarily to weaken, if not repeal, various labour, environmental, social, health and other “standards”, because they block rational human activity more than anything else.

We can also count on the fact that the Czech government will hopefully not be the champion of global warming alarmism. The Czechs feel that freedom and prosperity are much more endangered than the climate.

I do have to declare an interest here. I’m a member of, a candidate for and a press officer for the UK Independence Party, the only in the UK arguing that we should leave the European Union altogether. So I have to admit that I’m rather predisposed to like people who go against the grain of currently fashionable European leftism.

Or, if things turn really nasty, for 2010, maybe 2011. The US will be the first of the major economies to emerge from recession*.

No, this isn’t just because the US was the first of the major economies to enter it either. There’s a lot of talk currently (and a lot of misdirected action alas and alack) about fiscal boosts, extra spending and the like. And everyone is sure that their plan will put the people back to work. But it’s one of the insights of the Austrian School of economics that there’s actually a mechanism by which new jobs are created: entrepreneurs. People setting up new businesses to try out new products, new ways of doing things.

We’ve currently a lot of people in finance, in construction, possibly also in auto making, who aren’t going to be needed or desired in those sectors for years to come, if ever. The way they’re going to get back to work (and one way we could say that a recession is over is that there’s no longer any notable unemployment) is when people figure out how to use that labor and all the other resources being freed up by not being used in finance, construction and so on. The people who will figure that out will be those entrepreneurs.

America I think has more would be entrepreneurs than any other country I’ve ever lived in. It most certainly has the finest financing mechanism for new companies, all those Angel Networks and Venture Capitalists. It also throws the fewest roadblocks in front of someone wanting to start something new and has the best system to clean up the failures (as, inevitably, most new ventures do not succeed).  It’s partly social, partly legal, partly financial and partly economic, but the US is the best place in the world for nurturing the ambitions of entrepreneurs. And since it’s going to be entrepreneurs that dig us out of this mess it’s going to be America that comes out of this mess first.

* This does depend on one proviso, that the current batch of politicians don’t repeat the darn fool sillinesses that the ones back in the 30s tried nor come up with some new lunacies all of their own.