Curtailing public services (mail service)

Chipping away at public services one item at the time….

As government is unable to expand credit markets and as most tax revenue is going towards debt service despite the lowest interest rates in history, public service must be curtailed.

Curtail enough public services (police, fire fighting, refuse disposal… health care…… pensions) in an environment where unemployment is rising at the same time that the power and business elites are implicated in scandal after scandal and you got yourself the ideal conditions for civil unrest.

http://money.cnn.com/2009/11/16/news/companies/US_postal_service/index.htm

Civil unrest means government will fall.

I know that. Some other people know that. Some politicians may know it too and of those that don’t know it, they can feel the winds of change bearing down on their little fiefdoms.

How do you prevent a total loss of power of the incumbents? You engineer a war of course and, at this rate, the next war will be a real war where Western society will be packed off to the front, civilian industry will be turned into war industry and food and energy will be rationed.

You may think I am off my rocker.

If I am right and, so far, empirical evidence tells me I am because:

The gargantuan amount of money that has been created in the past year alone has so far failed to work it’s multiplier magic on the overall economy

Graph: M1 Money Multiplier

And since the gargantuan sums that have been handed over to banks are just sitting there

FRED Graph

And because we still have significant overcapacity

Graph: Capacity Utilization: Total Industry

… and because of this…

FRED Graph

… and because of this…

FRED Graph

… and finally, in an economy that is 80% consumer based, because of this…

Graph: Personal Saving Rate

… if I am right (and the above data says I am) and we have entered a cyclical deflationary era, government won’t be able to expand credit markets no matter what it does and monetization of the debt issued by the treasury is not going to help if not to destroy the currency thus the economy.

Incidentally, considering that the Bank of International Settlements estimates global financial obligations to be worth at a minimum US$500Trillion and that world GDP was at one point hovering around US$50Trillion and that the majority of these derivatives are held by US and EU banks (and only four banks hold the lion share of the lot)… major global currencies are not going to take kindly to the moment in time when these obligations must be satisfied…

Can a Western government declare bankruptcy and, in one fell swoop, admit that, in fact, we are no better than your garden variety Mugabe?

I think not.

If any of the above indicators don’t start trending in the opposite direction we’ll have us a war by 2013/2015 latest.

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4 Responses to “Curtailing public services (mail service)”

  1. guido, part i « ducati998 Says:

    […] linked to this post a couple of days ago, but just to save you hunting for it I have relinked […]

  2. guido has an interesting, but contentious analysis « ducati998 Says:

    […] has a contentious analysis of economic data here I disagree with much of the analysis and will post a refutation probably tomorrow. In the meantime, […]

  3. ducati998 Says:

    guido,

    I have to say that I disagree with your analysis of the data, and thus many of your conclusions. I’ll have to respond in greater detail later on my blog, for time and space considerations.

    jog on
    duc

  4. David W. Lincoln Says:

    I offer this, http://www.edmontonjournal.com/energy+Depends/2230358/story.html particularly the second part as an alternative.

    As long as something is offered which is different than the status quo, a different path to that more desirable future is possible, and will be taken. For there are people ready to, at the very least, sketch a different road to the future.

    War is an ugly thing, Guido, and two uncles saw combat experience during the Second World War. They made it back, a cousin of theirs was shot down over the North Sea. So, as long as people have the courage of their convictions, and a sense of direction, they are exhibiting
    the definition of leadership laid out by Henry Kissinger in his book, “Diplomacy”.

    There is an alternative, and frankly we will have saved a lot of lives by going that route. For the case is being made for an alternative government, because those with their paws on the levers of power are
    as capable as changing direction as a leopard is capable of changing its spots.

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