• Keynotes

    Economic Turbulences Ahead – Are You Ready?

    Book MJ for your next event!

    Inquire today

  • Seminars & Lectures for Business Leaders

    How Macro Events Will Impact Your Business and How to Profit from Trends

    Inquire today

Sign up for our
FREE NEWSLETTER

And receive a FREE copy of
MJ Economics's "3 Biggest Mistakes Investors Should Avoid"

Email:  

Government Efficiency or Rearranging the Deck of Chairs on the Titanic

Friday, September 16th, 2011

There is not one day lately that we do not hear an angry anchorman/woman on TV or radio in Quebec (the land of the compassionates…) complaining about the problems in health care, education, infrastructures, transport, corruption, etc. On one hand, the thing that amazes me is that they complain and get into arguments with ministers and bureaucrats (they have a lot of patience to even entertain a conversation with these people) and on the other hand, they will go and advocate asking more money from the mining industry because “it’s OUR resources”. They just had an argument with a minister or bureaucrat because he was giving his usual PR spin and you want to give him more money? Does that make sense? Oh and yes, this argument that it is OUR resources. There is no “OUR” – there are only stakeholders who can profit directly: the company (what’s left), the bureaucrats/politicians who deal directly with those companies and the government apparel. Let’s do a test: if you think it’s YOURS: go and try to get a gold nugget out of those mines and see if it’s yours.

But you see, like so many people who can’t think straight about the role of the state and freedom, they still believe in the “government benevolent role”. It is just a matter of getting the bureaucracies to work better (the Toyota way in public health care!). They think it is just a question of tweaking it, hire the right people, the right leader, the right this or that. Yes, more money from the miners will shorten the waiting times in hospital and increase the number of doctors. Go on and believe that.

When you tell them that the problem is the government being in many areas where it should not be – they think you are an extremist who eat little children for breakfast. The subject of the day here in Quebec is corruption. Yes, corruption in the wonderful world of construction. You see it is very simple; corruption goes hand in hand with government interventions. No government involved in roads and infrastructures – nobody to corrupt. The report that leaked yesterday on the fact that construction and engineering firms go heavy on the extras to recycle those funds into electoral campaigns had all the commentators very excited. They are shocked and again blast ministers and bureaucrats for being such naughty people, that “something” should be done, etc. This looks strange to me because this is the equivalent of asking Al Capone why he doesn’t go and get a decent job and stop killing people. Electoral campaigns each 4-5 years are expensive you know and democracies are, like financial newsletter veteran Doug Casey likes to say, “Mob rules in sport jackets”.

Fiddling with bureaucracies is like rearranging chairs on the Titanic.

 

Category: The Welfare State   No Comments comments

The Debt Ceiling and Other Myths

Monday, August 8th, 2011

In the land of the broke, there is no shortage of surprises for people used to drink the Kool-Aid. Here are some myths around the debt ceiling saga to the market crash to the US downgrade:

1. The debt ceiling talks between the Democrats and the Republicans were never about cutting the existing budget but cutting (maybe) future spending. Will it be 1.8T$ or 1.85T$ of new money they don’t have? Yes the Tea Partiers talk about cutting the budget like you an I think about cutting a budget but then again – we are calling them the t… word.

2. The US downgrade by Standard & Poors. While pondering on this move – let’s not forget the following: the ratings agencies are under the government regulations agencies, the debtors pay for the ratings (the creditors used to pay for the ratings before the SEC came in in 1975…), they are always late to the party, since government agencies oversee the whole thing – they can change the rules for the AAA ratings in investment portfolio – AAA is the same as AA+ – there – it’s simple. When I hear the spin given by Washington on this downgrade – they might actually use it to force this “super congress” to hike taxes – what Obama did not get in the previous deal – invoking that if they don’t have a “balance approach” – the US will suffer further downgrade, blah, blah…. It is also a good excuse to launch the President’s pet program – a major public works program under the name of the National Infrastructure Bank. There would be enough in there for the unions and the bankers.

3. The market “crash” – it seems that without major support by the Fed this market is no good. That goes for the economy as well – as you can see – a slowdown in the propping up rate and everything goes! That is going to continue – up and down – because the “recovery” is not really one – it is based on funny money and more debt.

Let’s not forget Europe where the printing press is finaly on as the ECB had to step in and buy Italian and Spanish bonds to rescue the banks – euh sorry – the PIIGS.

Many of our Keynesians friends think the solution is still more printing and more borrowing and that it is not a good time to cut because the economy, you know, is too weak. It has been 70 years of this experiment and look where it got us. I was re-reading Murray Rothbard’s great book The Great Depression on his account of what really went on during those years (and the years leading to the GP) – and it is amazing – they are using the same playbook: public works agitation; hiking taxes and tariffs, fixing wages, etc. The misery lasted a decade.

 

Category: Money & Banking   No Comments comments

MJ Economics | POB 124 | Dorion | Qc | CANADA | J7V 5W1
© 2011 MJ Economics

Articles by MJ Loiselle, the MJ Economics web site and the MJ Economics Newsletter ("MJ Economics publications") are published by MJ Economics, a division of Nuno ID Inc. Information contained in MJ Economics publications is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in MJ Economics publications is not intended to constitute individual investment advice and is not designed to meet individual financial situations. The opinions expressed in MJ Economics publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and MJ Economics has no obligation to update any such information.