You’re a Free Man


Alright, what’s going on around here?

After two weeks back in the country of his birth, your editor hopped off an airplane, dashed home in a taxi, showered, and is now sitting down trying to figure out what has changed in Australia since we left. For one thing, it seems warmer and the trees are budding. So is the Aussie dollar.

Today’s Daily Reckoning will be a bit of a cautious and casual affair. Jet lag is supposed to have the same effect on the human body as drinking three beers. We’re opposed to drinking and reckoning. So today’s task is to survey the territory and compare it to what we thought about while out of the country for two weeks.

The first obvious sign, when converting the currency, is that it now takes 96 U.S. cents to buy one Australian dollar. The Aussie hasn’t been this high, so to speak, since the heady days of 2008 – before the plunge. The RBA meets next week. Some of this recent strength could be traders betting on a rate rise.

Are things in Australia so awesome that the RBA is justified in moving rates higher? Well, to be honest, we don’t think the folks at the RBA – even if they were mind-reading rocket surgeons or brain scientists – know what the price of money should be. They’d like you to believe they are wise money mavens. But a bunch of charts and spreadsheets can’t disguise the fact that they’re really just guessing and hoping you take them seriously.

Still, there is probably some data set that came out in the last two weeks (like trade figures) which suggests the Aussie economy is chugging along with vigour and in danger of “overheating”. Blah blah blah. All those attempts to correlate current economic events with the case for a higher price for capital ignore the central lesson of the last ten years: central banks screwed up royally and it had real world (wealth destroying consequences) for investors.

One big question now is if they have screwed up again with reflationary interest rates that stabilised markets after the 2008 meltdown. Ben Bernanke and his global cronies probably feel pretty good about themselves at the moment, at least as far as stock prices are concerned. But at least in America, the labour market continues to tell a different story.

And then there’s gold. In U.S. dollar terms it’s telling you something. But in value terms, is it speaking the truth like an Old Testament prophet, or is it lying like a 1999 tech stock? If it’s telling you the truth, then the U.S. dollar is being exposed for the deeply flawed currency that it is. Gold at $1,300 is not the end of the gold bull market then, although it could be the end of the beginning.

If gold is lying, then its current run is a portent of things to come. But those are pretty big things. And we’re not going to go into them today. The brain is starting to fade.

But speaking of brain fades…how about a quick story about the Transportation Security Agency screeners in Baltimore? We were leaving the airport in Baltimore for Denver, fully prepared to surrender a bit of dignity in the screening process to board the plane. The Baltimore-Washington airport is especially thorough and draconian because it’s so close to DC.

As we snaked through line we noticed a giant metal and plastic cylinder making a humming noise.

“What’s that?” we asked the TSA agent.

“It’s a body scanner,” the TSA agent replied.

“Is the body scan compulsory?”

“Are you refusing the body scan sir?”


The agent than called over another agent for a “manual” inspection. Manual, having to do with the hands, meant hands on. Quite literally.

“Sir, because you have refused the body scanner I will be giving you a through manual pat down. Please spread your arms and turn around.”

“But my computer and wallet are in the x-ray machine. I won’t be able to see them if I turn around.”

“They’ll be fine sir.”

“I’m sure they will. But I won’t be able to see them if I turn my back. I would like to keep them in sight.”

“Someone in a blue shirt will be watching them. They’ll be fine.”

“I’m sure they will. I’d like to keep them in sight.”

“Fine. Step over here.” He moved the items and to where we could see them and then described what he was about to do.

“I will pat down your entire body using my gloved hands. On your legs and buttons I will lightly cup your jeans. If you prefer a private inspection one can be arranged. For your front I will be using the back of my hand to pat down the zipper area.”

Then he started. And frankly, we haven’t received that much thorough attention from a stranger in quite some time. Other passengers passed by, some averting their eyes and others grinning (either out of sympathy or lechery, it was hard to tell). It took about five minutes of careful, gentle, comprehensive molestation by a public servant.

And then at the end, apparently without any sense of irony, he finished his lingering inspection of your editor and said, “That’s it. You can go now. You’re a free man.”

Dan Dennning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.


  1. I didn’t know freedom could be detected with a pat down by a public servant. Pity I am not single, I might be tempted to go and ask a public servant if I was free (or is it easy).

    As for the AUD well I think everyone remembers what happened the last time it came off it highs in 2008, you know just before bear sterns and lehman made their little mess.

  2. I’ll being go through Baltimore in December en route to New Orleans. Will need to keep a look out for any good looking female blondes in the frisking area. Might be the holiday highlight!

  3. TSA? Thousands Standing Around.

  4. TSA? Spare a caring thought for the arguably somewhat less fortunate – How would you like to front up to the bank for a housing loan and be told you have no way of proving your income. But be getting letters from the tax office that given they figured out your line of work from your ads in the local paper, they have determined the minimum annual income on which you are required to pay tax is $XXX! :D

  5. I would have said regarding that “You are free man” comment….

    “I’m free to go, and you’re free to stay here rubbing people down all day. Hmm… maybe you’re not so free.”

    I mean the yield for these things is miniscule to non existent. They could make life a lot easier by forbidding clothes on flights. Everyone gets a gown, goes on a conveyor belt, has their clothes bag x-rayed, their anuses checked perfunctorily by a camera probe with attendant wiping it down occasionally. That should keep the skies safe.

  6. The perfunctory camera probes “with attendant wiping it down occasionally” – Not good enough sadly Ben. That hardly equates to a full body cavity search at all? :)

  7. The simple answer is to just get passengers to turn up 48 hours before their flight, during which time they remain under observation to ensure that while they eat and drink normally, they pass no bodily fluids, after which they are asked to jump naked off a 6 foot high bench to see what falls out? :D

  8. S’nothin’. The airlinelike searches required for the effing ferries to see the Statue of Liberty should be enough to turn any Aussie considering a NY holiday right off. Hours queueing to see an overrated American icon? Never again. The comment ‘Only in America’ was never more applicable!

    During the last five years it has been almost amusing to see my blond wife singled out repeatedly throughout Europe and North America for full body searches by black women. A throwback to the Baader Meinhof daze, or Bin Laden’s Revenge? ;)

    Bill’s Florida adventures may have added another airport to our 2011 trip.
    Goldilocks will probably score the full frisk again… but who knows…
    I may just get lucky. :D

  9. “I may just get lucky” – I heard on the grapevine that Sarina Williams is thinking of chucking in tennis for a government job Biker, so it is just possible that you might? Oh Yessie indeedie! :D

  10. Mate, yer always good fer a giggle!~ :D

    Annual rental figures today for our two locations: +6.7% and +4.4%.
    Tends to reaffirm our post-FHOG theory, if compared to the +9.5% highs of past years… .

    The 6.7% was a minor surprise, but that location is just playing catch-up. Incomes are $10K less per annum and unemployment is higher, but there’s an immense housing shortage looming. We stopped building there five years ago. Clearly lack of supply is driving rents up.

    Sales prices in both areas are up close to 15%. It’s tempting to fly a kite, but 2011 looks so promising that we think we’ll just sit it out… .

  11. comment by Davo on 3 August 2010:

    I decided to do some research on my suburb here in Brisbane using information. They provide details of sales going back 2 years, and it’s interesting (to me anyway) to see what happened during the GFC.

    Not exactly the same as the “refind” link but I knew I had seen something like it earlier on this site Ned….

    September 29, 2010

    The share of debt-free households fell to its lowest level in nine years, the Melbourne Institute said last week. The percentage of Australian households carrying no debt dropped to 36.2 in the September quarter from 40.2 in the June quarter, the lowest level since 2001.

    Total household debt in Australia was at an all-time high of $1.26 trillion in July, after years in which consumers borrowed heavily to finance their purchases and upgrades of houses.

    September 29, 2010
  13. There ya are… he’s talking to me again! :D : D :D !!!!!~

    * Giggle *

  14. 1:00 am… and Shoes is touting figures showing Aussies’ confidence in their economy is higher than ever… . Classic bear-dump-in-the-woods… ;)

  15. “he’s talking to me again” – It’s always good to see mates talking even if they do have a few little differences along the way. :)

    Thanks for the link Shoes. I’ll check it out. Brisbane house prices seem to be ‘challenged’ right now is about my kindest assessment!

    You’re more positive overall than me I think Biker. And know you’re housing market way better after years of research and involvement than I can realistically hope too.

    You’re probably more negative in some ways maybe Shoes? But not too worried as you figure you can trade reasonably happily regardless of what happens.

    Me, I just try to recognise my limitations and weaknesses I hope? And figure if, given those, I can come out the end of this (whenever that might be?) not having lost much more than 20%, I’ll say that was pretty good. For me! ;)

    For now I’m holding OK is about all I can say. And in the interim, I do enjoy a good laugh as it’s unfolding! :D

  16. “you’re housing market” => “your housing market”

    And Goodnight to all! :)

  17. Comment by Ned S on 29 September 2010:
    You’re probably more negative in some ways maybe Shoes? But not too worried as you figure you can trade reasonably happily regardless of what happens.

    I am actually quite positive for the future… There is a storm but sunshine will return..

    September 29, 2010
  18. I think we all need to read Anita Shreve’s “Where or When” to see where the US was in the early nineties; to see how devastated, economically, America was, at that time. It must have seemed that financial security would never return… that the darkness of repossession would never end.

    The story concludes with a storm, but Shoes “Why?” pretty much sums it up.

  19. Ned and Shoes,
    To gain access to reports, you need to pay $5 subscription fee. Has information on every property in QLD and some other states, so not entirely appropriate for those outside the “smart state”, or should that be “smarting state” with Anna in charge.

    Glad you mentioned the hassle with going to the Statue Of Liberty. Think we’ll just jump on the Staten Island ferry for the drive by view.


  20. “Think we’ll just jump on the Staten Island ferry for the drive by view.”

    A good choice, Davo. The incredible line-up (kilometres, maybe) which ended with an alarmingly time-consuming, detailed search, wasn’t worth the trip. Recall having to secrete a Leatherman* in a hedge during the queueing, once we realised how prescriptive the security check was.

    If we’d been tipped off about the issue, we’d never have bothered.

    You’re probably well aware that most of NY’s little stores screaming electrical and photographic ‘bargains’ deliver no such thing. I priced a set of iHome speakers for our laptop/iPods at numerous stores, then picked up the identical items at Macy’s for a third the best price. (And they threw in a free New Yorker umbrella!!~)

    Another tip: Buy your ‘The New York Pass’, with the gold chip, direct from the shop, not a street vendor, or the internet (as we did, dammit!) Both promised savings. It’s actually cheaper direct from the shop!

    Enjoy a large paper bag full of cherries as you trek between attractions.
    (Salivating as I type… .)

    * Later retrieved. Didn’t need _that_ extra hassle.


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