Foresight for Forerunners

The birth of HST in Ontario has arrived. I doubt if anyone will be handing out cigars – on second thought, maybe Dalton McGuinty will. Compared to British Columbia, the first step in selling the HST to Ontarians has gone down like an Oceans 11 movie. The tax will probably have a longer life than any of us – sadly, taxes never die; and most of you will by now have received your “bribe cheque”, as many people are calling it. But I am wondering if a bribe today will quell the building anger over the next few months as people see the cost of living in Ontario go up yet again.

Brian Mulroney gave us GST. You may remember that he went from a majority government to holding his caucus meetings in a phone booth because of the hated tax. He never suspected that taxpayers were prepared to respond with such collective retaliation. He underestimated, or possibly misinterpreted just how strongly people felt about the issue even if they didn’t march in the street. It became a life lesson for every politician in Canada that we don’t always say everything we are thinking.

Although Wilmot Township’s taxpayers haven’t marched in the streets in a HST tax revolt (it just isn’t our style), I am convinced that the modest reaction to such a significant increase in taxes does not mean that we believe what we have been told about the tax. In fact, the most common response to questions about the tax is that people don’t believe the government about the personal impact of the HST. They are suspicious and cynical about the cost. They may have been reflecting on the Smart Meter Answer Book which Mr. McGuinty distributed across the province. We were told, as you may remember, that the new system was a way for us all to save money on our electric bill – NOT.  In reality, hydro prices for the same usage were increasing significantly. If you wanted to save money you would have to cook your meals and do your laundry between 9 pm and 7 am – a bit inconvenient for most of us to say the least. The “spin-doctors” where working overtime and what we were “sold” and what we got were very different.

With the G20 ending, some economists suggest that we have entered into a world-wide third depression which they are calling the Long Depression characterized by deflation and continued unemployment. Ontario’s manufacturing sector (our greatest strength) has been destroyed over the last 20 years by NAFTA and globalism in general. The challenges the province faces are of a grand scale and the remedies (if there are any) are multifaceted. Raising taxes seems like the easy way out again. But my conflict with Mr. McGuinty is that  we have been sold the HST with less than half truths; in particular, how higher taxes will increase employment and make all of Ontario more prosperous. If there was any truth to that, I would be the first to suggest doubling taxes. I understand the cynicism among taxpayers because what we are being sold and what we will get I think will be quite different.

Over the next few months the illusions about HST will fade and reality will become evident. If Mr. McGuinty has oversold his “product”  there will be a great deal of anger and possibly voter retaliation to a government which has “ zoomed” us yet again. Sadly, by then it will be too late for taxpayers. Rarely are bad taxes ever repealed even by the succeeding government. If nothing more, we will be reminded of the old adage: “if it sounds too good to be true, it probably is”.

Russian Corruption Skims Billions
Corruption is described as a disease in Russian society

Corrupt Russian officials are creaming off about $120bn (£61bn) a year – the equivalent of a third of the national budget, a senior prosecutor has said.
The country’s new President, Dmitry Medvedev, has pledged to tackle the problem – although correspondents say few expect things will change quickly. Reuters – Friday, 6 June 2008 18:12 UK

Comment
Corruption is prevalent in all levels of government and is seemingly not considered too serious a crime in North America. There is not much outrage when corruption is exposed. Corruption is more serious than the money that is lost from the public purse. When corruption becomes wide-spread the country becomes sick. The systems don’t work and there is a breakdown of society. Our reaction to corruption is a measure of the restraint and the level of integrity we demand. When there is corruption exposed we must (for the sake of the country) oppose it strongly, because it threatens the entire country. Rome wasn’t defeated, it collapsed from within. Corruption is a very real Trojan horse for America – let’s not repeat history, but learn from it.

Among the greatest threats to the US and Canada is not terrorism from the outside not terrorist from the inside but the threat of the breakdown of society through corruption.

Paul Weigel

The Story:

By Barbara Lewis
LONDON (Reuters)
Speaking about the increasing price of oil:

QUOTE: ……Investors have been drawn in by a weak U.S. currency, which has made dollar-denominated commodities relatively cheap for holders of other currencies.

Speaking to Reuters during a visit to Venezuela, OPEC Secretary General Abdullah al-Badri said the soft dollar was one of the factors that could keep pushing oil higher.

Tanker tracker Petrologistics said on Wednesday OPEC’s oil output in May had risen by 700,000 barrels per day (bpd) compared with April.

Extra OPEC crude has had little impact as the market has instead focused on short-term refinery problems, which are symptomatic of chronic underinvestment.

The Comments

It is clear from these reports that prices have NOT been established by supply and demand. Wealthy investors are using commodities as hedges against the devaluating US dollar. You can’t read that in the major media because they defend the system. They defend the system, because it is a system developed by and promoted by large corporations. In fact any questioning of the system is considered blasphemy, which is punished and that has quieted a lot of intelligent and knowledgeable people.

There has not been an increase in fuel consumption by 12% this year, nor has there been a 12% decrease in supply, so what justifies a 12% increase in the price? The Answer: nothing! The markets are not free, they are distorted significantly by speculators who know that the consumer has few if any alternatives. With the consumer up against the proverbial wall, speculators have driven the price up regardless of supply and demand ratios.

Oil supplies have increased and consumption is at its lowest in the year, yet prices have increased dramatically. Price increases are justified by paper thin excuses over fears of supply problems. Even when those fears never materialize, the prices continues to increase and the medias continues to defend the system and its abuses. They assert that the problem is OPEC, which keeps people from pointing their finger at the real problems and demanding the government does something about them.

Governments have not protected the consumer from the abuses of the system. They have failed not because they didn’t know what was happening. The housing crisis was a disaster waiting to happen and the government did nothing. It has effectively transfered the wealth of millions of citizens to the wealthy, turning the country into a labor camp.

If the markets were truly free, then they would reflect the actual price a consumer was willing to pay for a product. The fact that this week 84% of Americans had concerns about the economy and high energy prices, indicates that the market does not reflect the consumer’s willingness to pay the price the market is dictating. Furthermore, it is not just the US which is bidding for world oil. Countries with far weaker currencies should effectively lower prices if it was market driven. The markets are far from free. They are being manipulated by speculators who are holding the entire world hostage and extorting from them their life blood.

The idea that markets can operate freely is idealism in this present world. General Motors has more revenue than the majority of countries in the world. When there are corporations with the financial capacity to dominate markets there is no hope of truly free markets. The consumer becomes the victim of extortion. In the case of food, people go hungry, become weak and sick, and even die in third world countries, because of market speculators and the irrational defense of the myth of free markets. There is something wrong with a system that can destroy lives and kill people in the name of profit?

Paul Weigel

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The Stories:

April foreclosures rise 65 percent on year:

Wed May 14, 2008 3:28pm EDT (Reuters) “The total number of U.S. properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005,” James J. Saccacio, chief executive officer of RealtyTrac, said in a statement.

In March, home foreclosure filings had risen 5 percent from February.

The surge in foreclosures indicates an increasing number of homeowners are struggling to make mortgage payments amid the worst U.S. housing market downturn since the Great Depression.

Tame April price rise eases inflation worry

The biggest story in the news today, as it has been for 5 months, is the price of oil. There has been a lot of disinformation about what is causing the rise in the price of crude. It has increased 25% in the past 4 months. Prime Minister Gordon Brown and G. W. Bush have been calling for OPEC to increase supply in a season when normal consumption is at its lowest (spring). The forecasted economic slow down is expected to further slow demand by 1.5%. As the price increases it becomes out of reach for many buyers with weaker economies and currencies, also reducing demand. OPEC continues to assert that there is adequate supply to meet demand. Saudi Arabia has even reduced supply slightly in response to the slowing demand. So why is the price of oil continuing to climb?

The daily assertions in the media about fears of disruptions in supply are misleading. The real cause of the price inflation is the weakening US dollar. Hedge funds used to take refuge in gold, silver, platinum and other metals because they offered protection against a devaluating dollar. But the large investors see oil as a better hedge against the devaluating dollar, because it is a world-wide consumable. Recently, market pundits have predicted $200. per barrel of oil, which would more than double the price in a year. That doesn’t reflect supply or demand for oil, but the lack of confidence in the US economy precipitated by the sub-prime banking scandal, massive debt and trade deficit, and a costly war.

Here is the crux of the problem. In the short term, oil provides protection from inflation (devaluation of the dollar), but in the long term the increase in the price of oil causes the cost of food and manufactured goods to increase. That is inflation. To protect against inflation investors continue to bid up the price of oil and thereby cause inflation. It becomes a destructive cycle which has the potential to bring a catastrophic world-wide economic collapse. So far there has been little leadership from governments in the west. Thailand and Indonesia have banned exports of rice in the anticipation of the coming problems. They have effectively taken themselves off the world markets. They will grow their own food and supply their own demand at prices their people can afford. Nationalism has been presented in the corporate agenda driven media as the counter-productive, small minded ideals of backward governments. However, it now will protect countries from the whims of the global investor and soften the blow of a potential world-wide financial catastrophe.

The US has been the detonator for this economic explosion but the problems in the world financial markets are equally as severe as in the US. There has been a tremendous increase in the accumulation of wealth. The imbalance this creates is like a 400 pound guy in a canoe with two 50 pound children. The markets have been destabilized by the relative size of the “players”. Greed, and fear have no conscience and the investors who “play” the markets have no moral, ethical or social responsibility. They play for today with little foresight into the implications their actions will have on tomorrow or on others.

Our relatively short experiment with globalization of world markets has put the future of the planet in the hands of people who have no intention of managing it. They neither want the job nor are capable of handling it. Their goals are incompatible with the task. Political leaders have failed to lead because their leadership has been compromised by duplicity. They know they should do something, but they are afraid to end the party. The party being, the amassing of the world’s wealth by a relative few.

The planet faces environmental, and economic problems of monumental magnitude. The resulting social upheaval could cause unimaginable human suffering and loss if there isn’t inspired leadership. The planet can not survive under the current system. It is destructive, oppressive and diabolic and if left uncontrolled will self destruct. The question is, will our leaders mitigate the suffering and loss by taking the necessary but difficult high road; or will they compromise and surrender to pressures and stand on the sidelines as the impact of their compromises ravishes the nations.

There is a new age coming, heralded and ushered in by a company of forerunners. The current pains are but the birth contractions of a new era. More on that in the coming posts.

Paul Weigel