David Galland ponders over the fact that if the American Founding Fathers were alive today (espousing ideas as revolutionary as the Declaration of Independence and the Bill of Rights) they’d all be rounded up as suspected “terrorists”.
It doesn’t take rocket science to realise the world needs energy – and in increasing amounts. What’s more, our primary energy resource – oil – is certainly finite. And even if there is no general agreement as to when it will run out – it will run out in the end.
Picking where the energy profits of the future are is the business of anyone who wants to invest in energy, and this interview between two experts – Dr Marc Bustin and Marin Katusa – provides a very good introduction to the subject and looks at where profitable energy investments are likely to be found.
The Dr And the Dealman: An Energy Update
The G8 and G20 nations are meeting as I write. Already there is a difference of “opinion” between how the USA wants to manage the current economic situation compared with the EU.
The UK has highlighted this difference with its recent austerity budget – and this austerity is catching on. However, Obama is concerned that too much emphasis on deficit reduction could cause a double-dip recession.
At the root of the austerity option is the realisation that governments cannot continue to borrow money to attempt to thwart the economic downturn, and must instead trim their own cloth by cutting back public spending.
The depressing thing about this is that even with all the proposed cutting of spending and raising of taxes, the deficit may indeed be trimmed – but the debt load appears to be hanging around and even increasing.
I noted this in a previous post on the UK’s austerity budget, where I wrote: “… between 2009 and 2016, the country’s debt will rise from £619 billion to £1,316 billion”.
The important thing to note here is that while the government’s deficit is shrinking (and hopefully heading for a surplus in the end), the actual government debt is still ballooning – adding ever more expensive debt to the nation’s books.
In other words, while the deficit is being cut by all sorts of austerity measures, the debt is rising – and along with it the cost of servicing such debt – the interest on the debt. Now, what seems obvious to me is that if debt is rising, so is the cost of servicing it (especially as interest rates are bound to rise into the future), and the the drain on the nation’s finances can only get worse as more and more of the taxpayer funds are used to pay the increasingly heavy cost of debt interest payments.
In fact these interest payments could get so huge that there is no way to actually pay off the debt at all! In such a situation a country is left with an ever-growing interest bill on its debts.
I call this the debt trap. It’s a trap because there is no way out. The austerity measures being implemented by many countries now are an attempt to pull back on state spending and reduce the annual deficit. But this does not address the problem of structural debt.
Of course, if I was a banker I wouldn’t be worried at all – because what could be a better proposition than having a debtor nation in hock up to its eyeballs, paying you billions a year in interest payments?
But a debt trap is seriously bad news for the rest of us – who can only end up being squeezed to oblivion by increasingly rapacious governments, as they raise taxes and reduce services in a mad fight to stay financially “afloat”.
I have a very different take as to how this debt crisis should be played out. I don’t see why investing in governments should be risk free. All investing carries risks, and in other investment areas the investors themselves carry all the risk of loss, should the underlying investment fail.
If the stock market tanks, then investors lose. If you leverage yourself up to your eyeballs with futures, options or forex contracts – and get it wrong – then you’ll lose your shirt.
But somehow, if you lend any government money you are supposed to be protected? I don’t see the rationale – other than as a means of protecting the banking business, and anyone else involved in lending to governments.
My solution to end this debt trap is to do what any individual would do if faced with not being able to pay his debts – declare bankruptcy. This is a perfectly reasonable position to take, given the fact that taxpayers did not sign off in any personal way on the debts owed “in their name” by their respective governments. I know I have never authorised any government to borrow “in my name” and saddle me with debt interest payments sufficient to send me to my grave as a pauper.
I’d much rather see a debt default and to reset the economic situation – rather than to plunge forward into more and more debt, all the time flailing ourselves with spiked whips and wearing hair shirts of financial austerity and debt servitude.
Of course, this raises the entire issue of money as debt – as debt created out of nothing and lent into existence at interest. At its root this is surely a massive ponzi scheme and perhaps our current economic travails are designed to keep this scheme going for a little while longer.
I get to hear this comment often, that rises in the gold price represent some sort of bubble. Well Jeff Clark presents a “picture” that is worth a thousand words – and dispels the myth immediately – For The Last Time – Is Gold in a Bubble?
It’s obvious that those who take it upon themselves to “govern” us don’t want us to know stuff – especially stuff that runs counter to their own schemes and grand designs.
I’m not sure why most of us put up with this crap, but we do.
Reminds me of watching a movie in Malaysia last year. The movie was rated R18 (for 18 years old and over). It was called “Lust, Caution” – a film from China set in pre-communist Shanghai. After sitting through it, I wondered why it had an R18 certificate – seeing as I could not discern anything warranting such a rating.
It was only after the movie, when I read a few reviews online, that I realised various scenes had been cut – sex scenes. I had been cheated! Of course, I wasn’t surprised because Malaysia is an Islamic country and censorship of “words” and “scenes” is rife.
But seriously, what made me angry was the idea behind censorship – that someone, somewhere is watching such movies and making decisions as to what other people should be allowed to watch. It wasn’t enough to restrict the film to over-18 year olds, but adding insult to injury, to remove the very scenes that perhaps suggested an over 18 rating in the first place!
Of course censorship of sex is one thing – and not my main concern. What is much more disturbing is censorship of information that our “leaders” don’t want us to know. We see this in any war. As soon as war breaks out, the media blackout follows – like night follows day. And soon we are watching “managed” news – news that has been filtered via the censor. For as they say, “truth is the first casualty of war”.
We saw this again recently, when Israeli commandos attacked the aid flotilla on its way to Gaza. I knew what to expect, and sure enough it happened. Even before landing on board the aid ships all communications had been blocked – so no one could actually report what was happening. Then, once aboard, the commandos literally stole all the passengers mobile phones, cameras and computers (and they still haven’t been returned) – in order to ensure no images of what was happening got out.
The next stage of this news management was to issue the “sanitised” version – those pictures doctored and altered by the aggressors.
Typical stuff. Always happens. Always will.
But once in a while, someone comes along – like Julian Assange of WikiLeaks who is what is termed a “whistleblower” – someone who takes a serious interest in exposing the information our leaders would prefer we didn’t know.
In an different way, General McChrystal has fallen on his sword for speaking out of turn – for letting slip the mantle of “certainty” and “agreement” that governments like to impose on their various agendas.
You see, the war in Afghanistan is going badly. In fact it’s a mess. But no government can admit it. And no one is allowed to suggest otherwise, especially someone from within government (military).
Whistleblowing is the cardinal sin.
Butler Shaffer has some interesting things to say about this in his article: Making it McChrystal Clear
P.S. As an interesting aside to the McChrystal affair, I recommend reading Paul Craig Robert’s commentary – Is Petraeus McChrystal’s Replacement or Obama’s?
Alex Daley explains how because the governments of the world have expended all their anti-recession “weapons” there’s nothing left for the next chapter in: We Cannot Afford to Double Dip
For years I have said that there are two government monopolies need to be ended – if we ever expect to achieve freedom. These two monopolies are education and money.
Money, as we currently know it, is paper stuff printed by the state (or by state proxies) which we are forced to use by legal tender laws. It’s this banking and money system that is being “tested” globally right now as sovereign indebtedness and paper money debauchery are threatening to bring us all down.
One way to get out of this quagmire would be to abolish legal tender laws and allow people to use the money they “want” to use – the money that the market decides is best.
And what money would that be? Gold.
In fact the move to gold as money is already well under way – as indicated in this excellent essay by Paul Nathan – Gold: The “New” Money
Yesterday the UK’s Chancellor of the Exchequer – George Osborne – delivered the budget – a serious attempt to come to grips with the UK’s financial problems. That is, as serious as can be expected in a democracy where most voters are of the socialist persuasion.
I watched the speech live on BBC, and have to admit it was an impressive feat of “balancing” – trying to make the necessary cuts without killing the economy. Of course, it’s all based on various predictions and assumptions – most of which will likely not come to pass.
One interesting fact though was that even with this “austerity” and the trimming of billions of pounds from the governments deficit, the country will still go further into debt. In fact, between 2009 and 2016, the country’s debt will rise from £619 billion to £1,316 billion. So you can imagine how bad it would be if such an “austerity” budget were not introduced at all!
However, what makes this budget even more interesting is how it breaks with the “spend-like-crazy” policies of the USA – where there is no talk of trimming back the state, rather of more quantitive easing, more bail-outs and more stimulus. All nicely consistent with Keynesian doctrine of course.
So now you have the UK (and most of Europe) following a different path – using a tougher “cure”. It will be an interesting experiment – to see which medicine is more effective. And it may put to rest Keynesian nonsense once and for all.
