Canada's Woes
Part IV
Philippe Bérubé
This will be my last editorial for a while. I have read such good pieces on the
topic our North American deficit ridden and fiat-money driven societies lately that there is not much for me to add. I hope you will have the chance to read many of them too. Reading the "Privateer" newsletter's February issue along with abstracts of the recent U.S. and Canadian budget offerings pushed me into this. It will also serve as a reply to those unconditional Bush financial and foreign policy apologists who called me every name in the book for being rather unsupportive of Canada's war effort in Afghanistan. They should read a book or two on the banking cartel before determining in advance for us which type of intervention we are ready for. The world has become a much (much) different place than in 1914 or 1939. It is true that Canada has historically chosen to rely on America for military protection, but there are more intelligent ways Canada can help the U.S. prosper (aside from weak military support). A suggestion was investment in a tighter but efficient (fluid) border and a better justice/immigration system in Canada. This was reflected in our small Canadian budget (an extra 6,5% of total government spending went to police, intelligence, tighter immigration control, civil protection, military, air travel security and fluidity at the U.S.-Canada border). Is that the best solution to our common problem ? Not really. Our 1000 "green men" sent to Afghanistan also seem like a useless contribution compared to what the can U.S. can contribute with their huge defense budget allocations.
And what a contribution they made. The U.S. has now a $US 379 billion defense budget (up an extra $48 billion). This should in principle make the Canadians grateful that our brother to the south is defending our continent and values so well. The problem is that this money is not taken (like Canada) from the budget surplus (see tables 1 and 2*). This military buildup will require $US 80 billion in deficit to carry it. With the Damocles sword of a U.S. dollar collapse becoming a reality since the 2000 NASDAQ fallout, an escalation of war in other countries of the "axis of evil" could only lead to even more economic instability in North America. One of the great pieces I read this week warned us that all azimuth warfare was often a last ditch effort of an hegemonic country to hold on to its fiat money driven economy and military strength. I think the U.S. and it's closest ally, Canada, fit the description perfectly. The combined effect of corruption and lack of morality in the high political circles and business community (i.e. then Enron scandal) is its biggest warning sign and shows us one thing: that even with escalation of war, the U.S. (and Canada) cannot escape the financial turmoil ahead. Whether you are for or against fighting terrorism is not even the question. The point is THERE IS NO REAL MONEY TO FIGHT WITH and there is no chance in hell a war against the 5 or 8 countries of the "axis of evil" will give us the economic benefits experienced in the aftermath of World War II.
Table 1: Canada Finance Department previsions in $ CDN Billions
* With an economic growth of about 3%, it predicts a $1.5 billion surplus/emergency fund.
** With an economic growth of about 3%, it predicts a $ 2.0 billion surplus/emergency fund.
*** With an economic growth of about 3%, it predicts a $2.5 billion surplus/emergency fund.
Table 2: Projected percentage of the Canadian GNP:
The Canadian Prime minister and half the people in this country aren't wrongly apprehensive in going to Iraq to expand the war and I agree. Our brave men and women in the Canadian military are misjudged and their profession is not respected is a fact. It is also obvious that it needs more a lot more funding to operate properly. But so much money is needed to revamp the military (for instance, our archaic sea-kings, inadequate troop carriers, etc.), that it is clear to most experts here that the money of our much smaller budget (compared to U.S budget) cannot suffice and would be of better help elsewhere. Just last Saturday "Le Devoir" quoted a Canadian Army Lieutenant stating that the current inadequate military allocations of the forces combined with their new high demands for 2002 would stick out like a sore thumb in the next budget (they will require much more budget to operate properly). I guess the U.S. Office of Strategic influence wasn't the only body planting stories in the past weeks, because Table 2 of our finance department's provisions clearly indicate that Canada should barely break in the next few fiscal years with a 1.5 to 2.5 emergency fund projected for national emergencies and a 2 to 3% growth.
Can this current U.S. foreign policy be viable in the long term for the States and Canada? Sorry, but I cannot write three editorials in a row begging for nations to keep a balanced budget, praise the merits of a gold-backed currency and sober financial practices and agree at the same time Canada or the U.S. should go back into massive deficit to support a war that will be completely unsustainable if the market crash predicted by many of us occurs. The entire "axis of evil" policy approval is a deathtrap for all U.S. patriots fighting to keep their hard earned freedoms. The sight of U.S. citizens trampling their brilliant constitution by declaring war not strictly on al-Queda but on all countries that "harbor" terrorists would certainly make George Washington spin in his grave. He would also be appalled at Bush calling for a U.S. 10 billion fund to be established so he does not have to ask congress every time he wants to fight and at seeing the total income of his country at 8 trillion while its citizens/businesses/ owe 15, perhaps $US 30 trillion in outstanding debt. So in summary, this so-called "Patriot" Act (not unlike Canada's C-42 bill) pushing for massive spending and deficits is pure Orwellien double-speak for "driving the U.S. faster towards to the inevitable economic collapse".
Being at war with al-Queda, responsible for the horrible attacks is fine and dandy but war against global terrorism ? As seen in this recent issue of "The Privateer" I would have the same reaction the newsletter evokes from people in Britain, France, Germany and Italy being in their shoes: "So are we. We have been for decades, with the IRA, Bader Mindhof, Corsicans, Basques, Algerians, Red Brigade, etc." Terrorism is only new to continental U.S. and Canada. We're in it together, but at the same time, we cannot gasp in surprise to see the U.S. reaction labeled as "immature" elsewhere in the world and that Canada shouldn't automatically go along with every foreign policy plan the U.S. devises. Unilateral war against Iraq may seem like a good idea now, but think about it: if our economies collapse, like many on this site predict, will Europe back the war effort in it if we bring their economies down ? I doubt it. Certainly Russia and China won't.
It seems indeed that a lot of highly educated people, especially bull market apologists, are so blinded by the banking cartel's tactics and hooked on Kaynes' doctrine like heroin that they fail the see the foolishness associated with their advice (keep on buying and holding) instead of favouring the much safer shelter of gold/silver coins/bullion/stocks as "life savings" insurance. Even the CNBC coverage of the last edition of the notorious "Technology Timeline" emanating from the BTExact Institute is misleading (if you don't read the last few pages of the report) in making us think that the upcoming technological advancements will not only maintain our current standard of living in the 21st century, but also better it. As an afterthought, there it is in the "that could happen almost anytime" category, listed under "Earliest possible occurrence A.D. 2000": "U.S. Economy fails or collapse of the dollar", "Global economic collapse causes mass starvation and conflict", "International financial collapse" and "Stock market crash". Warning will alas not stop the borrowing frenzy (I hear the home building index is up in Canada). People always get that much needed aversion for credit when it's to late. It's hard to believe we accept this hidden tax called inflation and the real cost of what government expenses and growth require when the arguments against them become so obvious. When we see the now climbing (at 843 million a day) U.S. deficit and the growth of its government, we cannot help being alarmed.
In conclusion, I would not worry too much about those false leads emanating from Germany last week to the effect that the might "initiate" gold sales in the future. Pretty soon, even the most "Wag-the-dog"-like disinformation aiming at price manipulation will not be able to stop the spectacular ascent of the "barbaric" metal**.
Philippe Bérubé, M.A. Political Science
Ottawa, Canada
epb1886@hotmail.com
*Regarding the tables included with this article: I am open for discussion on how it can be feasible for a country like Canada and its "welfare-state" system to keep on paying its external debt with even "this" optimistic forecast.
**And yet another afterthought: If you are a young professional in their twenties please do not listen to all those financial advisors who tell you to invest massively in RRSPs. Elementary western philosophy teaches us that : "Tomorrow's reality may not be today's" and was it ever true in the case of precious metals vs. other speculative investments. Research carefully before investing (form your own opinion) and handle your own business.
On n'est jamais aussi bien servi que par soi-même.
27 February 2002
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