Economic Worst Is Yet to Come

I have here, ladies and gentlemen, a jar of dots. Now you see me pouring them on the table. Here they are: Campbell fibbing about the HST. Stock market scams. Bailouts of "investment" companies. The BP oil spill. Riots in Greece. The demonstrations at the G8 and G20 meetings in Toronto.

Now let's see if any of these dots can be connected.

Gordon (Pinocchio) Campbell not only unable to see a recession coming, he fibbed about the deficit in the May 2009 election, then strained credulity some more about the Harmonized Sales Tax (HST), bringing 700,000 people to sign a petition against it. He has placed the burden for his appalling lack of business acumen on lower income British Columbians.

Not only have there been stock market scams all over the world, not only has Washington and London had to bail out failed financial houses, but these houses have immediately gone back to their old tricks of paying huge bonuses, now using taxpayers money to do so.

In Greece we've seen a fiscal nightmare spawning riots which has brought the very continuation of the E.U. into question.

How much of the recent Toronto demonstrations were due to "anarchists" as claimed by the police and how much on genuine anger I can't say, but I do say that there was huge popular anger involved.

All of these issues have this in common: gross negligence of government has placed a new and often unbearable burden on the less fortunate. Instead of taxing the investment industry's transactions, which would raise billions of dollars with little pain, these issues have all been met by pledges to cut deficits, thus reduce social services and bring unfair taxes to be borne disproportionately by the less well off. The citizens who made the least contribution to the national debt must take the burden of cures proposed. In all the jurisdictions involved, there has been an absence of regulation and no meaningful enforcement.

The consequences of this gross negligence have been little short of catastrophic. It's not just the unfair taxation and unemployment/underemployment that has provoked near revolutions, but it is also the quality of employment. Perhaps the most gut-wrenching of economic consequences is the near or actual collapse of pension plans. Not long ago I was hired to do a speech at a union conference. When those making the decisions remembered that the purpose of the convention was to deal with a bankrupt pension fund it was clear that they couldn't afford my modest fee.

Why are they surprised?

There is, I think, a little-discussed common factor also involved, namely how could so many countries not see the recession coming? If my wife and I, with no economic expertise, saw the obvious danger signals and took action, why couldn't governments do the same? Didn't government regulators have economists? How could so many enormous companies, household names, be bankrupt with no one in the U.S. government knowing it? How could huge banks go broke in the midst of the longest bull bear market in history with no one knowing?

The fiscal catastrophes in New York, London and several E.U. nations seemed to happen overnight -- how could that be possible?

In British Columbia the main question is hard to ask because the consequences of ignorance are so breathtaking. How can the B.C. budget deficit suddenly go from under $700 million during the May 2009 election campaign to nearly $3 billion a few weeks after the Liberals were safely back in office?

Great Britain refused a majority to either major party and now reels under the cure for its ills proposed by the new Chancellor of the Exchequer.

Angela Merkel, prime minister of Germany, is on the brink of resignation in large part due to the collapse of the Greek government and collapses about to happen in Spain, Italy and Ireland.

President Obama, who engineered huge bailouts for U.S. companies, is now being pilloried for these efforts.

Here in B.C. the governing party is hugely unpopular and may be falling apart. On and on it goes; from tiny Iceland to giant America, people are livid.

What fueled G20 protesters

That takes us to Toronto and the two big international conferences, the G8 and the G20, and the demonstrations. Leaving aside the anarchists the police see as the problem, the fact is that enormous crowds demonstrated a discontent amounting to hatred of the governments represented.

There is a common factor -- governments have failed to monitor and regulate properly and they've lied through their teeth either overtly or by silent cover-ups, which had the effect, deliberate or not, of cosseting and covering up of criminal economic activity. Institutions held in high regard for their honesty and steadfastness have been stealing from shareholders and the public and have imploded. Icons like Alan Greenspan, once seen as souls of fiscal probity and infallible judgment, have been shown to be damned fools. Business and corporate emperors all over the western world have been exposed as having no clothes.

As I see it, folks, the dots connect.

The same tummy that told me to get the hell out of the stock market tells me that the worst is yet to come.