5-7-2012
We are either insiders or outsiders. Insiders have done well over the last thirty years. Outsiders have not seen a real increase in personal wages in thirty years and household income has increased only because the “nuclear” family self-destructed and two-earner families became the common solution to inflation, evaporating company retirement plans, skyrocketing education costs and healthcare costs increasing three times faster than personal incomes
You need only to take a moment to inflation-adjust your net worth and compare 2012 to 2002 and 1992 to validate this trend. But, since 1992, our government and our Federal Reserve have made it increasingly impossible to perform this simple exercise as they have ever more frequently found ways to officially understate inflation, overstate growth and overstate employment, both in numbers of Americans employed and how much each job pays. The money supply is no longer honestly reported and $16T in loans to foreign nations and foreign banks have been created at the push of a button with nobody the wiser.
We take inordinate amounts of time and media bandwidth to vet democrats and republicans, conservatives and liberals. We know that all politicians are crooks and thieves…except for our own. Most politicians don’t even claim a party affiliation in their ad campaigns.
Our representatives battle over debt ceilings, pipelines, gunrunning, job creation and spending.
Yet, it is often virtually unanimous when voting to abridge our constitutional rights. The first, second and tenth amendments are the most frequent targets but it is still early. Why don’t we ask why our senate can agree 97-3 to anything, as they just did with a bill last week that significantly restricts our ability to assemble and protest or a bill that cedes more control over the Internet to our government? Personal freedoms and liberties have been under assault since before the Patriot Act but the pace is quickening.
Don’t we remember that the Patriot Act was to be used only to prosecute terrorists but now its provisions are common tool used to prosecute virtually any crime?
This, however, should not be a surprise. Liberties must be curtailed as our finances become more uncontrollable. The Senate has not passed a budget in more than three years. Our national debt will have ballooned to nearly $17T by the 2012 election, up from $10T just four years earlier. Unemployment and underemployment have not been higher since the Great Depression. The percentage of Americans who pay no federal income taxes has never been higher. Fifty million Americans are on food stamps, one sixth of our country. It has been more than ten years since we have had so few Americans in the workforce. Manufacturing represents less than 9% of our total economy. Our trade deficit is near record highs. And taxes are scheduled for one of the largest increases in our history on January 1, 2013, just two months after our election. Let’s also not forget the incalculable fiscal and human costs of Obamacare.
If elections truly reflect the will of the voters, this weekend, 52% of voters in France elected a new president, Francois Hollande. Most notable is that President-elect Hollande does not support the EU’s proposed austerity for high debt countries, such as France. He is a “pro-growth” candidate…but who isn’t? It is how you pursue that growth that is critical and Francois is a high tax, government growth socialist.
Some of his proposals include raising the minimum wage, hiring 60,000 more teachers, and lowering the retirement age from 62 to 60. He also promised to raise taxes on big corporations and those making more than $1m euros per year. It sounds so familiar.
And so it begins. Not surprisingly, Greece is about to follow the same path. This weekend, the Greek election resulted in the party that structured the bailout and the austerity plan coming in third place while the anti-austerity party took second and a “conservative” party coming in first. This means that austerity is out in both Greece and France. This is devastating to the Euro.
In Germany, Angela Merkel’s party has suffered significant losses in parts of the country further complicating any real hopes for a solution to the problems of the EU.
At least for France and Greece, the answer is clear. This will become a huge drag on the Euro and any hopes for a true EU debt rescue plan. The EU is even more fragile now. China should be very concerned about its largest trading partner and we should be concerned about China. Yet, rest assured, that no matter who wins our election this fall, central bankers and politicians here will follow the very same path.
As has been said many times, central bankers and politicians have one thing in common. They both want to keep their jobs. To do so, they will use the only real tools they have. Bankers will print and politicians will spend. All central bankers and all politicians will retreat to their comfort zones.
Rest in comfort knowing that our deficits are not under control, we are in a negative real growth mode and that QEIII will soon ride to the rescue. And it will only be a sign of things to come. American’s will not embrace austerity. The long anticipated and discussed civil disobedience is near. Black military helicopters over our cities are now reported in the nightly news. They are no longer a punch line to a bad joke. Our laws are changing at an accelerating pace and personal freedom and rights are being trumped by faceless regulators and their cancer-like regulations.
Surprising no one, the news reports that many wealthy French now seek to move their assets and even their citizenships to countries other than France, due to the expected confiscatory taxes. I expect other citizens of other countries to follow. I expect that many of our listeners and readers have considered this and more than a few are probably executing their plans now.
Of critical importance is the fact that you will not hear this discussed in open forums. Much the same way that a bullion owner will not discuss how they store their bullion, no one will discuss what their personal strategies will be. By the time that these strategies become widely discussed, the regulations will be in place to severely limit your options. Time is not our friend.
Ask yourself just one question. Why are laws passed, with nearly unanimous consent, laws that significantly restrict our liberties and freedom, while virtually all other bills stall? Is it possible that our government knows that the debt is unmanageable, that the dollar is being intentionally debased and that America has real enemies that need not fire a shot to bring us to our knees? Is it possible that there will not be a 2012 election?
Part Two of this series is coming…
