Friday, June 27, 2008

Chaos and Anarchy

Don't like Armageddon? How about Chaos and Anarchy? Because long before we get to any crazy end-times scenario, the "thin veneer of civilization" will be stretched to its breaking point and then a whole lot further.

As I've said before, we are now witnessing in real-time, the utter failure of governance at all levels. From the Federal Government to State, Local Governments, the Judiciary, Federal Reserve and all regulatory bureaucracies in-between, they have all become frozen and incapacitated by the unfolding financial crisis. These are bureaucracies that have grown increasingly incompetent over the decades and have no chance of ever becoming effective, well-run institutions.

Democracy has been totally undermined by special interest groups. On the right you have the Military Industrial Complex, the Christian Fundamentalists, Ultra-wealthy tax dodgers, and fanatical gun owners. On the left you have Gays/Lesbians, Abortion Advocates and Ambulance-chasing lawyers looking to sue anyone at the drop of the hat. Some choice.

Obama v.s. McCain? It really doesn't matter. These guys spend 80% of their time campaigning and 20% of their time pretending to make decisions and passing still more useless laws taking away yet more freedoms. Two years of making false promises followed by two years of broken commitments followed by two more years of false promises - an endless cycle of hype and deceit. None of these career politicians (Obama, McCain, Clinton etc.) have any experience actually DOING anything. They are career sales people who have never been on the hook to delivery anything of substance.

The current debate about Iraq (stay in vs. get out) is out of our hands. Historically all governments have had to make a choice between "guns and butter". The Bush Administration chose both guns and butter, which means the next administration won't have the choice of either. Again, the Chinese control U.S. fiscal and monetary policy. All signs (weak dollar, rising interest rates) indicate they are growing weary of sponsoring the U.S. fantasy. Once they pull the funding, the war will be over. Those who think we have a choice in the matter don't understand history, economics or even basic math.

The Government is thoroughly corrupt and untrustworthy. They publish a 4% inflation rate when the true inflation rate is running at close to 10%. They adjust the stated inflation rate because they don't want to pay full benefits that are indexed to the rate of inflation. Also, if they announced true inflation of 10%, that means inflation-adjusted GDP is negative! i.e. We are already in a recession and have been for many months. Thanks to understated price increases we been conned into thinking the economy is still strong.

Crime and anarchy are on the verge of exploding. The social safety net that was put in place following the Great Depression has been whittled down and dismantled. Social Security and Medicare are completely unfunded Ponzi Schemes - IOUs from one generation to the next, based on the assumption that each successive generation can support the previous one. Unfortunately the designers of these programs were not forward thinking enough to predict declining birth rates or baby booms, like the one that occurred almost immediately after the system was put in place. The irony of the situation is that the Baby Boomers need the next few generations to fund their retirement, yet the Baby Boomers have raised the most incompetent, helpless, entitled generation in the history of the planet! How can your kids fund your retirement when most of them are still living at home? Thirty-five year-olds playing with their XBoxes, wondering what they want to be when they "grow up".

Hard-core conservatives will tell us that we need to privatize Social Security i.e. put the money in the stock market. The stock market is the biggest casino in the world. When people are down on their luck, the last thing they need is to have their sole remaining safety net be subjected to the vagaries of the stock market. When the economy is down, people lose their jobs, the stock market collapses and charity dries up i.e. all income streams are 100% correlated to the downside - Does anyone get this? A public Social Security system was SUPPOSED to be non-correlated with the business cycle. Replacing a bad public system with an even worse private one, is the kind of leadership we get these days.

The fact remains that most people are in denial about the crisis unfolding all around them, because they don't want to confront the reality that our entire way of life is a consumption-oriented fantasy propagated by cheap natural resources and massive debt. Hundreds of years ago the developed nations secured early control of Third World natural resources through war, colonization/imperialism, bribery/corruption and exploitation. Now that a few of these countries (China, India) have bootstrapped themselves up to the big table, we are finding out that there just isn't enough to go around. Therefore, it's time for all of us to wake up and downsize our lifestyles to the new reality, before the new reality is rudely crammed down our throats.

As for Chaos and Anarchy, like it or not, those two features are coming soon to a neighbourhood near you, just as sure as God made little green apples and mankind made Hornady 9mm. Batten down those hatches, because here comes Katrina x 100...