Approaching The Terminal Point

Monty Pelerin / EconomicNoise.com

Two events are racing at us — an important (possibly existential) election and a fiscal cliff.

The fiscal cliff is overrated. Under normal conditions politicians always raise the debt limit. After going through a political dance, they will do what they always do. Whether they actually comply with spending restrictions is another issue. Compounding the so-called fiscal cliff issue is the tenuous condition of the country’s finances. The fiscal cliff will not kill the country although the country is dying. Markets, at their choosing, will determine when they have had enough and terminate the charade.

The election outcome compounds the fiscal cliff problem, especially if the election is close. Imagine the Bush-Gore fiasco in Florida spread across multiple states. That could paralyze politics to the point that Congress is unable to act in their typically efficient manner (a joke for those not paying attention), requiring cutbacks in government services. Even under this condition, it is nearly certain that Congress will ensure spending continues. After all, that is what they live for, and neither party wants to be responsible for Social Security checks not going out.

While these are the crises getting attention in the media, they are child’s play compared to the real dangers. Kitco lists some of these issues:

Seven things make it very different this time: (1) the USA is in a major unacknowledged depression; (2) the entire Middle East is unraveling in violence, chaos and revolution; simultaneously, (3) global bond markets are on the verge of collapse in a destruction of worldwide credit, (4) the American president and his administration have taken unusual (some would say unlawful) control of the USA courts and legislative system, lending and borrowing beyond the scope of reason, (5) an American electorate is on the verge of economic disaster with joblessness at 25% and growing worse, (6) states within the union are voting themselves sovereign status enabling them to move on politically in the face of an American dissolution and (7) the central bankers, market manipulators, market controllers and crooked politicians jockey for control while destroying their opponents.

The fiscal cliff and the political games will create a furor if they occur, but they are not terminal events. They are side issues to the real problems, symptoms of deeper and more malignant diseases. Traditional media does not cover these, possibly because they don’t understand their importance. Hence, the average citizen is clueless regarding the desperate shape the country is in.

Our condition occurs as a result of politics and government. Kitco explains what political pandering has done to the country:

What is really comes down to is this: (1) the more than 50% of Americans receiving some kind of government check for something prefer to vote for the candidate that will continue to hand out the goodies. They could care less who pays for it or whether state and national budgets are balanced…ever, (2) many of these “voters” don’t even care who dies in a war as long “their” side is the winner and retains the ultimate power. Desire is for bread and entertainment today. Who cares about tomorrow?

The corrosive nature of politics and government has destroyed the economy and the moral fiber of citizens. These issues are not insurmountable, but they are very close to being so. Their ramifications are potentially existential in nature:

the average length of life, the very time span or cycle of a nation has been proven in history to be approximately 250 years. Since the USA was born in 1776 this says we have about 14 years of life remaining for America. The way things are going we don’t doubt it.

At this point only the ignorant are not scared. Most businesses and investors know that things are awry. They may not understand the existential nature of the problem, but they are unwilling to take risks. That is why our economy languishes and every government intervention makes the problem worse rather than better.

We live in interesting, and perhaps apocalyptic, times. 

http://www.economicnoise.com (http://s.tt/1qL5w)