This is how you Fix Politics

I recently wrote a post, ‘Are We Responsible Enough to Govern Ourselves?‘. In it, I make the argument that the answer is no. If you disagree with that, I would love to hear why.

At the end of that post, I postulated a few points on how we can fix politics so that we may avoid the destructive nature of it. Here I will expand on those, and correct my shortcomings in writing it hastily the first time.

Let’s get started.

Career Politicians

The career politician is a virus in the democratic system. A career politicians major concern is to get re-elected. Thus their every decision, policy and recommendation are acted upon in regard to their re-election chances and not to the people’s or nations benefit.

As a result of this, they are beholden to the people for the choices they make. The people, like most democratic people everywhere, are usually not well-versed enough in all matters of running a society, hence the need for a democracy in the first place, to elect others to do what need be done.

Continue reading “This is how you Fix Politics”

Are We Responsible Enough to Govern Ourselves?

I want to talk about responsibility. Personal as well as social responsibility.

Let’s talk about social responsibility. The majority of us are part of society. We enter into a social contract with our fellow citizens and our government to give up some of our liberties in exchange for certain conveniences. For example, we allow the government to tax us in exchange for them to build infrastructure such as roads, communication and utilities that we can use. We expect them to pass laws, regulations and statutes that will protect us from others who would do us harm, and to look out for our best interests on the international stage.

Has anyone ever heard of the Bystander Effect?

Continue reading “Are We Responsible Enough to Govern Ourselves?”

Why Doesn’t Ron Paul Get Any Love?

It’s fascinating watching the american media covering the Presidential race. Well, not so much fascinating as mind-blowing as its so blatantly obvious that the media is pulling their own agenda in regards to whom are eligible as the next candidates. As such, a candidate like Ron Paul gets next to no coverage whatsoever.

I believe the reason is, is that Ron Paul threatens the establishment. As is plainly obvious, the corporations of America have taken controlled of its government, and the way they did it was not hard at all. Bribery is legal, campaign donations are legal, and only come if the candidate or party they donate to propagate their viewpoints. This upper level of society has in a way usurped power from the democracy. Such as the military industrial complex, that FDR warned Americans about 50 years ago, that thrives on perpetual war. They will fight tooth and nail before any troops are ever called home. They make too much money from death and destruction to care about spending trillions of dollars that America doesn’t have. Like the food giants who make it ever difficult for small farmers to get their products to market, and use dangerous chemicals to streamline the food production system that threaten the lives of millions. Ron Paul threatens everything that doesn’t make sense, and that is why he gets no coverage at all.

Ron Paul’s mission is to cut the waste out of government. He wants to bring the troops home from Afghanistan and Iraq, and the 250,000 other troops stationed around the world for no reason. This costs a huge amount of money, and is no longer required. He wants to cut down on the size of the government, to only its essential functions and leave the rest to the private sector.

In a way, I understand why these corporations act the way they do. They act only in their own self-interest. Much as we all would. We act and do the things we do so that we can have a paycheck, food and a home etc. Except in their case, they are beholden to shareholders who demand more money than the last quarter. We, as humans always want more, and bigger or both. Notice how we keep building bigger cities, and taller buildings decade after decade, we are all over-compensating for something. Now, while I understand it, I don’t excuse it. They need to wake up and smell the roses and adhere to the will of the people as you are supposed to in a democracy.But through the continued lobbying of politicians and their parties, they continue to get what they want and will continue to do so until people wake up and have their voices drown out the donations of corporations, which is a very tall order.

Ron Paul is the one contender who has never changed his viewpoints for the sake of an audience. He doesn’t try to sugarcoat his message or dumb it down. He says what he believes in, and he says exactly what he will do once he’s in office. He’s not afraid to discuss any topic and give his own take on it. Agree with him, or disagree with him, it doesn’t matter. That’s the way a politician should act. That’s whats been missing from government for so long. I can’t ever remember a time (but I am only 26) where a politician was so candid, honest and even ready to admit his shortcomings.

Just read this open letter that Ron Paul wrote himself, and see for yourself how different a politician this man is from the rest of the crowd. Then check out the funny video of the Daily Shows take on the media ignoring Ron Paul.

I am inspired by the Occupy Wall St movement that has cropped up while I have written this blog post. I only hope that it doesn’t get hijacked by other parties with their own interests at heart, much like the tea party was in its infancy a few years ago. The founder of the tea party disavowed the party saying that it had been hijacked, read the following quote:

“It began as a movement to take back the United States from corrupt politicians. The Tea Party movement has been hijacked by Republicans and is now all about guns, gods and gays. Karl Denninger of The Market Ticker was one of the original founders of the Tea Party and calls the direction of the group an absolute joke.” – Karl Denninger

What does the future hold? Does Ron Paul stand a chance, or will a dim-witted talking points politician again take the reins of the Presidency, and democracy wither away ever more? I would like to hear other people’s opinion on this, leave a comment and lets gets a good discussion going.

Until next week.

Debt Crisis 101

Lets imagine a 18 yr old rich college kid. His parents have tons of money, they send him to an Ivy league college with a credit card. He spends his college years buying everything he wants, big screen tv’s, nice furniture and having big parties and his parents pay for all of it, no questions asked.

4 years later, he graduates college and becomes some apprentice lawyer, not making much money at the beginning. He has his own credit card now, and is on his own. What do you think his spending habits are going to be like? I think we all realise that most young kids would continue their spending habits as before, and rack up a bit of debt. Hell, adults do it now; its called ‘Keeping up with the Jones’. So our college kid racks up a bit of debt, and because he wants to seem independent and wants to show his parents he can take care of himself without their help, so he makes the minimum payments each month.

Now after a payment or two, he might think his debts are under control and that he’s proved to his parents that he’s financially capable. Then goes on another spending spree to celebrate. Same process, he might make the minimum payments again, or get a second credit card and pay off the first credit card. Rinse and repeat. Eventually, his initial debts which are accruing interest each month, will no longer be affordable and he won’t be able to make those minimum payments, or he might not be able to get a third credit card due to bad credit. He is not yet making enough money and might not for a year or two, but he’s confident that one day he will so there’s no immediate problem. Imagine that…

Now look at American and European governments, and ask yourself what’s different. Seriously, there is very little difference in how the way fiscal responsibility works. In order to lend to governments, investors which are usually other countries, central banks or big institutional investors need some assurance they can get their capital back with interest also. If there is no assurance, people will stop lending to them.

The credit crisis was of course, the precursor to this debt crisis. As during the credit crisis, all that toxic debt carried by private companies (debt which was subsided by government) was going to sink these too big too fail companies, so the governments just bought it all up and carried it onto their books, increasing their debt portfolio dramatically.

But, these countries governments were swimming in debt to begin with and already running deficits every month and every year, and of course paying the minimum repayments on their interest and paying off existing debt with new debt. At the previous levels however, it was manageable and there was no cause for immediate concern. Then started all the constant stimulus and bailouts, the governments continued to accrue ever more debt. When they couldn’t sell enough debt, they just printed it. Even money printed out of nowhere is loaned at interest from a private central bank to its government. Right now at the fed, between 0 – 0.25% and in the EU, at 1.5% and that extra money inflates the currency robbing people who save their money of purchasing power.

So with all this extra debt streaming in, the already running deficits that governments are running and you begin to see how similar it is to that college kid. Eventually, they will not be able to repay even the minimum repayments and then what happens?

This moment is happening soon. Japan is at 200% debt to GDP ratio, the USA is around 100% and climbing each month, some of the European ratios are over 100%. What’s going to happen when these governments can’t pay back their debt? That will be a major strike in the confidence of the global economic system, where trillions of dollars of government debt are held around the world in pensions and other benefits.

Trillions upon trillions of dollars are invested in these government debt traps, and the global economy is going to sink. That capital needs somewhere to go, and when it doesn’t have any place, bad things are going to happen, and a lot of it will disappear.

I’m sure that politicians know this, they have legions of economists and other smart people working for them, there is no way for them not to know. Yet, because the Global financial system is based on confidence, no politician can tackle any of these problems for the following reasons:

Reason 1:

They will immediately be voted out of office by an electorate that refuses cuts. People know cuts have to be made, but no one can touch their entitlements, so of course nothing gets cut. There goes the myth of politicians being public servants. The majority are in it for themselves and nothing more.

Reason 2:

Their comrades won’t support them for fear of their electorate voting them out of office. Again, politicians are self-serving.

Reason 3:

The global economy, and all the stock markets in it is based on confidence. A company can have great financials , P/E and other good financial indicators but still have a poor stock price, or it can be the other way around. Think Enron, Lehman brothers before they collapsed. Stock earnings and prices are based on future expected growth, so today matters less than tomorrow. The same goes on an international basis and for fiat currencies. The value of a dollar today is based on future value it can bring, and next years expected tax revenue to repay that borrowed dollar with a wee bit of interest.

I think this exposes a fundamental flaw in fiat currencies, confidence is essentially a zero sum game. There are very few things that we can remain confident in being consistent over a long span of time. The moon, sun and stars, coming and goings of the seasons, our need of food and water, and the resources that power our civilisations. What else can you say with absolute confidence will be around for all time?

So when confidence disappears, and the biggest economies are unable to borrow enough money to fund themselves and their entitlement programs, what’s going to happen? I’m not looking forward to that day. Look what happened in 2008. Lehman Brothers, which insures America’s mortgages, went belly up. The global economy was bought to its knees, because all the fancy shmancy derivative packages they sold couldn’t cover the payouts when growth in the housing market stopped. The governments picked up all that debt, so what happens when the government stops being able to absorb that toxic debt, as they call it. The stock markets are going to tank everywhere. Even though stock markets aren’t a real world functional aspect of economies, and they are casino’s basically that are better traversed with human psychology than P / E and other financial jargon, they represent everything on the economic stage.

Politicians have shown us repeatedly that they will do everything to keep the status quo going. History is full of examples. Thus, we can almost be assured that no course of action will be taken to prevent until its too late to do anything, not that they have many options at this point, short of politician genocide.

At the end of the day though, it’s not the government’s fault alone. while they bear some of the blame in this circle of madness. We are equally to blame for allowing them to do as they please. The way our democracies are structured, it’s a recipe for corruption and disaster. Politicians are an extension of the society which they represent. They are paid too much, get freebies others slave for, are put on a pedestal, are allowed to receive bribes in the form of lobbying and are rewarded by the masses for saying what they want to hear, instead of the hard truth they should hear. Thus at the end of the day, the types of people who are attracted to these positions tend to more leeches than public servants, tend to paint rosy pictures where there aren’t any roses and aren’t afraid to lie for the perceived ‘public good’.

All lies eventually come out, it is inevitable. Lying for the sake of short them stability forsakes the longer term viewpoint. This is what our civilisation is transforming into. Short term capitalism, never thinking more than a quarter or two ahead. Long term economics be damned. Such a shame.