Last week (12/28), the Financial Times announced, "China has again outshone the U.S. as the top venue for IPOs, initial public offerings." How is it that since 2008, a self-proclaimed communist country raises more capital and has more new firms going public than the great bastion of free-market capitalism, the United States?

Answer: Members of Congress have been killing the U.S. financial markets because of hubris, incompetence and a lust for power and money.

The official Washington line has been that it was "Wall Street" that caused the Great Recession. Thanks largely to the tireless efforts of a former general counsel of the Treasury, Peter Wallison, and his American Enterprise Institute colleague Edward Pinto, we now know the financial crisis would not have occurred but for government housing policy implemented principally through Fannie and Freddie and the Department of Housing and Urban Development (HUD).

And that government housing policy was created by Democrats in Congress.

The reason in a nutshell?  China's vast reserve of cheap workers in the hinterland is vanishing at a vertiginous pace.

We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so -- enough to buoy global coal, crude, and copper prices for a while -- but then it will all be over. China's demographic dividend will be exhausted.

Beijing revealed last week that the country's working age population has already begun to shrink, sooner than expected. It will soon go into "precipitous decline," according to the International Monetary Fund.

Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path.

The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice.

Less known is the parallel - and linked - labor drain in the countryside. A new IMF paper - "Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?" - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing.

The news is getting so unrelentingly good it's making me nervous.  Might as well revel in the good stuff before we talk about why.

Tuesday (5/15) was Sarah Palin Day in Nebraska.  Actually, it was Deb Fischer's day, thanks to Sarah who had endorsed her US Senate candidacy just a week before.  She was an unknown underfinanced state senator given no chance to beat two prominent statewide officials, one of whom was the darling of the GOP establishment.

Then Mama Grizzly showed up...

The news is even more enjoyable in Wisconsin, where the public unionistas and local Dems are spitting mad over the DNC (Dem national committee) refusing to waste a dime on the Walker recall....

For a really good time, though, we go to North Carolina, where an incredible litany of woes for President Evolve is erupting....

Then there's President Amateur, President Born In Kenya, and, oh, yes, President PW....

Even though some are predicting the end of the world in 2012, there is a possibility it could turn out better than 2011 (a low bar). Many people who are not part of the political class continue to advance civilization and make things better for us -- like the late Steve Jobs.

Potential good news is that not all members of the political class are unprincipled, self-serving, ignorant and shortsighted. We are seeing a growing band of smart, responsible and knowledgeable people being elected to Congress and other political bodies. One example is Rep. Paul Ryan, Wisconsin Republican, who is chairman of the House Budget Committee.

In democratic countries, many politicians get themselves elected by making promises for spending programs that the citizens cannot or are unwilling to pay for. The result is persistent deficit spending that ultimately spirals out of control. The good news is that some democratic countries have learned how to avoid the spending/deficit trap, and those countries can serve as examples for the less prudent majority. (See chart below.)

You've probably heard of the spectacular migrations of hundreds of millions of monarch butterflies, which home in on one small region of Mexico for the winter then return as far north as Canada in a flight of thousands of miles that takes more than one generation. Clearly the insects have an inherited "map" of where to go, but what compass do they use?

It seems they have at least two compasses. One is a "time-compensated sun compass," located in their antennae, which calculates bearings from the angle of the sun corrected for the time of day.

But butterflies can also use the Earth's magnetic field to navigate. The butterfly antennae contain a protein molecule called cryptochrome, which can apparently act as a magnetic compass when exposed to blue or violet light. Human beings and other mammals also have a cryptochrome in their retinas, albeit in slightly different form, but until recently it was thought not to have magnetic directional properties.

Recently Dr. Steven M. Reppert of the University of Massachusetts Medical School and his colleagues took the human version of the gene that's the recipe for cryptochrome and genetically engineered it into flies, replacing the flies' own version. They then showed that, presented with two routes in a maze, the flies could choose a magnetic direction they had been trained to associate with a sugar reward, and they did so just as well with the "human" cryptochrome as with their own.

If it is at least possible to use our cryptochrome molecules to sense direction from the Earth's magnetic field, do we?

It's early morning, but I know it's going to be a long day - and a fun one.  How so much cool stuff can get crammed into a single week, and how I can concisely fit it all into this HFR, is bewildering.  Sit back and enjoy.  Off we go.

This was a baaaaaaad-to-the-bone week for Zero and the Dems.  May 8^th was Black Tuesday for them, simply disastrous. 

In Wisconsin, the desperate last gasp of the public unions to keep their gravy train rolling went right off the rails.  Gov. Scott Walker, whom they are rabidly trying to recall, got more votes in his primary than the two main Dems got in theirs combined. 

In West Virginia, Zero lost 42% of the vote in the Democrat Presidential Primary to a fellow named Keith Judd.  Keith is not from West Virginia.  He currently lives in Texas, where he resides at the Texarkana Federal Prison as Inmate 11593-051.

In Judd's bio on VoteSmart, he lists his religion as "Rastafarian-Christian," and his mother as actress Lillian Russell, who died in 1922.  He was born in 1958.  Obviously, no West Virginian voted for this weirdo, they voted against Zero.  Why?  Because they hate his guts.  Zero is destroying their state with his religious war against coal.

Something this absurd is more than a humiliating joke upon President Gutsy Call.  It's a portent. Tens of millions of Americans in every state are West Virginians now.  They hate Zero's guts for what he has done to their country and what he has done to their lives and livelihoods.  They would vote for Keith Judd, Mickey Mouse, or a Yellow Dog before voting for him. 

Do increases in government spending increase or decrease the number of jobs?

Conventional wisdom is they will increase jobs, and a few left-wing economists, such as Paul Krugman of the New York Times, frequently are trotted out by reckless politicians and some in the news media to argue that we need more government spending in order to create jobs.

If this were true, we should be able to see it in the historical evidence, so let's look at the numbers.

Government spending grows each year, but what is relevant is whether it is increasing or decreasing as a percentage of gross domestic product (GDP) and how it relates to the percentage of the adult labor force at work. As can be seen in the chart below , since 1929 there is an inverse relationship between increasing the size of government and job creation.