Saturday, October 23, 2010

A Political Nexus

Let me start out saying I am not sure this blog title is a correct label for the discussion.  The readers of this blog have had many off-blog discussion threads lately about a cross-section of hot topics e.g. AGW, health care, social security, US deficit, Tea Party, etc. 

Those discussions have taken the typical left-right, point-counterpoint, data vs emotion form of argument most of the time.  Very seldom is anyone's mind actually changed by the discussions in spite of each persons conviction in their "rightness" and no matter what manner of convincing argument or data set they present.

In a previous post Sojka's Call: Democracy vs States Rights we discussed Spiral Dynamics and its relation to the current discussion.  A video of Wilbur was recently posted on a subject called Divine Pride.  Check the link to read the introduction and watch.  While I am having a little problem with his use of the term pride, I believe the concept he discusses is valid.

Where am I going with this?  Previous discussions usually just get all of us to state our own point usually in more and more emphatic ways.  We get more data or get more mad and use more capital letters and more bold letters and if we are actually talking start to raise our voice and take the Bill O'Reilly shout-them-down method maybe. 

Wilbur is proposing something different.  I am proposing something different. 

One of Sojkascall loyal readers always talks of a middle approach as the right way.  In a sense he is right but not exactly.  The real path is a holistic path.  We need to find the mind-set to look at the whole. 

What do you think?  Are we ready for this?  Please post your comment.

Saturday, October 16, 2010

1914 All Over Again?

I am reposting this Tom Coumans article from the Daily Reckoning. The new war???

1914 All Over Again?
By Ton Coumans

I am not one for art, statues or monuments. Most of these objects fail to touch me but every now and then I bump into something that sticks in my mind. Last summer I was drawn to the monument in the picture below, which stands on a square in Nevers - a beautiful city on the river Loire in France. I spent quite a long time studying it and I eventually took some pictures that, for some reason, I regularly review at home.
                                                            WWI Statue in France

You will have recognized that this is a monument commemorating the tribulations of the First World War. There is a lot of symbolism in the statue but it is the French soldier's sorrowful stare that won't let me go. What trauma has he lived through? France eventually battled its way to an armistice (not victory) in 1918 after having incurred 1.7 million dead (one in 28 of the population) and over 4 million wounded. Everyone will see something different, but for me this monument is whispering; my God, what have we done?

The uncanny thing is that before the outbreak of World War I, most Europeans expected the future to provide an endless stream of good fortunes, to the point of being bored by the prospect. In fact many soldiers such as the one represented by the statue, just four years earlier, were swept up by the bizarre spirit of 1914 that took hold of the peoples of Europe.

The "Spirit of 1914" which seems to have infected the passions of most of the European populations is described as a reckless urge for adventurism under the flag of nationalism. Young men in all countries volunteered to leave their prosperous lives behind and take up a fight with their European neighbors. It is difficult to comprehend the spirit of 1914. All those men lusting for adventure and the glory of battle and no one was sensing danger.

There were only a handful of people, too few to sway the opinion, that realized what lay ahead. A useless and long-forgotten quote by one of them reads: "If the scientific nations of Europe were to wage war on one another they would be thoroughly sick of it before it was finished". That quote is by Sir Winston Churchill who at the time was 37 years old and First Lord of the Admiralty. He had seen the power of artillery and machine guns in the Sudan and the Boer War and repeatedly warned against armed conflict in Europe, to no avail.

Europe had been at peace for 40 years and the millions of men that charged off to battle had no way of being able to imagine what war would be like, until they found themselves mugged by reality and stuck in the horrors of trench warfare "In Flanders Fields". That was obviously not where they had wanted the free market to take them, as Bill Bonner might assess. Nemesis, the Goddess of divine retribution, had finally found a way to sink her teeth into Europe, having waited patiently in the background during the 40 years of the Belle Epoch.

The question now is, do we stand at a similar point in history where we expect the future to provide expanding, effortless wealth, and have we been swept up by the spirit of 2006; flipping houses and living high on mortgage equity withdraws and debt? Does Nemesis have a special surprise for us and what could that be? We are in a global de- leveraging process, which is painful, but is it, in itself, truly destructive? I contend that if we are to "fall deep" there will need to be some kind of major breakdown of cooperation or even "conflict amongst peoples" resulting in a major lose-lose event that sinks the physical economy. What could that be?

In the run up to WWI, an influential book was written by General Von Bernhardi titled Germany and the next War. The book manifests Germany's frustration and militancy. Von Bernhardi proclaims that, with her scientific and intellectual achievements, Germany should have a more prominent role in world affairs, more colonial trophies with access to petroleum reserves. Germany's GDP had passed that of Great Britain and France and they now wanted more respect. France and Great Britain were maneuvering as best they could to keep Germany (a perceived threat) out of the game. Bernhardi's book also argues that war was not only a justifiable means to achieve that goal but even an obligation of Germany's leadership.

And now in 2009 we witness the wide distribution of a book titled Unhappy China, which expresses China's frustrations with their current position. The similarity in tone is uncanny. China is on its way to become the second economy of the world, yet China is not "embraced" as a member of the G8 and has almost no influence in the IMF and World Bank. China is frustrated with the West's meddling in internal affairs and with the humiliation endured by the Olympic torch run that was, in their perception, disgraced by demonstrations.

All the maneuvering by the West now is to keep China out of the game and treat them as a potential threat. Does this have automatic conflict baked into it? All out "kinetic" war does not seem realistic and more something of the past century. We have since organized the UN Security Counsel to regulate conflicts involving the use of force. But do we have adequate global institutions for monetary policy? I judge that today every government and their symbiotic Central Bank feels they have the right and obligation to use monetary policy to the advantage of their own short-sighted wealth preservation and power games. Could the conflict of the twenty-first century revolve around currency wars? Should we rephrase Churchill's warning to state, "If the financially developed nations of the world were to wage a war of competitive currency devaluation on one another, they would be thoroughly sick of it before it was finished". Could competitive currency devaluation be the bear market surprise mechanism that pits countries and peoples against one another?

The First World War is remembered for the senseless slaughter of trench warfare. Will this period be remembered for disruptive impoverishment of currency warfare? It does seem to have the potential to breed distrust and breakdown cooperation between the nations. It also has a runaway nature since it invites tit for tat exchanges. It is inherently instable because the currency that moves first and fast could have the advantage. But does it have the destructive power to sink our global physical economy? Let's hope that some years from now we will not find ourselves sorrowfully staring at the horizon and whispering; my God, what have we done.


Ton Coumans
for The Daily Reckoning

Sunday, October 3, 2010

Radical Change

In some personal discussion threads about the Tea Party and US government corruption and the current military entanglements we find ourselves in my personal philosophy of the proper role of government has been severely questioned by my friends and myself. In thinking about this problem and reading up on history of our founding fathers and their intent as codified in the Constitution, various economic theories, and using must plain common sense many things are starting to become clear.

My whole philosophy of what gov't should/shouldn't be is evolving radically right now. I have realized that as long as massive money and resources are concentrated for use by an entity (US Gov't in this case) it will be misused.

1. Our military is being misused.
2. Our treasury is being misused.

If they are radically smaller than they are today the level of possible misuse is reduced the same. What does that mean?

- a radically smaller military that is not capable of foreign intervention. If it is capable of being used that way it is certain that sooner of later it will be misused for that purpose.

- a treasury with vastly reduced tax receipts and a gov't with vastly reduced responsibilities. Again, if there is much less money there to start with, there is much less to be misused, stolen, etc.

What would be the outcomes?

- Federal Government assistance programs would be eliminated and become the responsibility of state and local governments to the extent they want/need to provide them.
- Our armed forces would be reduced to about 20% of the size they are today. The military would patrol our own waters, air space, and land. We would eliminate all foreign bases and all foreign aid.

I believe that once people realized they were responsible for themselves they would take on a completely different approach to life. They would embrace life for all it was worth much more seriously than today because in a real sense their life and their loved ones' lives depended on it. That would mean much more personal responsibility and much more personal liberty.

In my mind, any other approach to fixing the corruption in our gov't is doomed to failure. As long as power (through money and military) is concentrated in one area (Wash DC) it will be misused. I believe it has always been corrupt and the amount of corruption is equal to the size of the entity. Since the US gov't is now the biggest it has ever been in history we are seeing the largest amount of corruption ever.