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Tuesday, 29 November 2011

Is Cannabis a crop that could see Jersey blooming?

The best thing about Dr. Ron Paul is that you can follow his career and at every step of the way the message he supports is consistent. He first ran for President as the Libertarian candidate in 1988 running on the same issues, saying the same things, he was just thirty years ahead of his time. As part of the ongoing examination of the key issues on which Dr Paul is running it's time to look at some of his more radical interpretations of what liberty is.


1988: Drug addiction is an illness, not a crime.
Doctors are a protected industry.


2008: Freedom of choice


2012: Do you need the government to stop you from taking heroin?
If it were legalized today would you take it?

Prisons are flooded with drugs, if we cannot keep drugs out of prisons how can you keep drugs out of society? 70% of prisoners at HMP La Moye are drug addicts or runners, maintained at a cost of £45,000 per year. 

I undertook a survey at the last election which showed that 53% of people in Jersey were in favour of de-criminalising cannabis. When Jerry Dorey did a report for shadow scrutiny the matter was not even discussed in the States, why is it that they will not allow the debate to take place? What is it that they are afraid of?

Cannabis grown in Jersey greenhouses could bring some much needed financial assistance to the Jersey farmers, a cash crop which would attract visitors to our island and go a long way towards rebuilding our economy and standard of living. Is that not worth losing a few jobs from the police and the prison service?

Would the safety of drug users not be enhanced from the controlled supply and quality of narcotics rather than people taking risks by purchasing whatever from a street corner?

Personally I would not be interested in taking it myself, I do not think that it is beneficial, but I do not think that alcohol is either. If governments are not allowed to interrupt our freedom of thought, then why can they prevent us from an action which does not cause harm to another person's body or property.

Ron Paul would return to real money

Since 1971 government promissory notes have had a floating value, in the intervening forty years the value of $1 has decreased from 1/35th of a troy ounce of gold to just 1/1900th of a troy ounce of gold. A decrease in value of 98.15%.

The decision to break the gold standard which allowed $35 to be exchanged for one troy ounce of gold was taken by Nixon in 1971 after the cost of the Vietnam War had bankrupted the United States. Yes, the United States of America has been bankrupt longer than I have been alive and they are still denying it!

It has met its debts by employing the insidious tax on capital, inflation. Inflation is the most politically acceptable form of taxation as it is hidden from view.

The USA borrows the money with a promise to repay it a number of years later with interest payments in the interim. Of course the value of the debt at the end of the period which may be as long as thirty years is not the same as it was when it was lent. Thirty years ago the prices of goods were about 1/5th of what they are now so unless the total interest payments made over the course of those years exceed 400% the creditor, be it you or I or our pension fund will actually lose money.

People blame the previous generation for not saving enough, but when a bank manager was earning £5,000 per year who would have thought that within their lifetime the equivalent position would have attracted a £50,000 salary and how could they possibly hope to set aside enough on a £5,000 salary to maintain a £30,000 per year retirement?

The real problem is governments spending so much that they need a way to diminish the outstanding amount and that method is to de-value the debt along with our pensions, savings, salaries and yes, even benefits.

But is a return to a gold standard possible? How could it be done? Well Republican Nomination Candidate and Libertarian Ron Paul has a plan.


Monday, 28 November 2011

An End to Slavery

The time to turn my words into actions has arrived
I took the unusual step today of giving notice to all my staff. I have decided that henceforth I will not be an employer. Of course they shall all continue to work with me, but it will be on a self-employed basis, a contract between free and equal individuals rather than a master and his slaves.

At the beginnings of Capitalism most people worked on a piecework basis. For example in coal mines, miners were paid on the basis of how much coal they produced and not how many hours they worked. Fishermen I believe still work on the old basis and take a share of the catch.

This changed because the owners of the mines noticed that people were limiting production based on how much money they needed for themselves. The 'self-employed' miner working someone's mineshaft changed to become an employed miner who worked set hours. Production increased but the quality of life of the miners declined.

This was the shift from Capitalism to Corporatism.

What does this change from employee to self-employed mean?

Firstly, I shall not be acting as a tax collector for the government any more - I will deduct no social security or income tax from the payments made to them. I shall not be acting as informer for the government either I shall not be providing all manner of personal information as is currently required of me.

Secondly, they will be free to determine when they work, what they do whilst they are at work, the amount of money they earn will be of their own choosing. As free individuals they will not be bound to give periods of notice.

What they lose is - an enforced savings scheme (social security) which offers investors an atrocious return on their money. They will just have to take some responsibility for themselves and set aside some of their money for their own future. I am told that there is a 'sense of security' that employed people apparently feel about not having to worry about their next pay check. It seems to me that not only are employees worried about their next pay check, but that also there can be no real 'sense of security' other than blind faith.

From my perspective this is a 'leap of faith' a belief in my employees as intelligent, capable individuals who having tasted this greater freedom who choose to stick with it, rather than seek to return to the 'security' of being a mere employee. I want to empower these individuals to achieve what they wish to, not seek to exploit them, limit them or control their actions. I believe that by working as partners in a mutually beneficial venture we can achieve more than we do as master and slaves.

Sunday, 27 November 2011

Can this Court sit in judgement on itself?

The Royal Court Building
The Royal Court duly convened to consider my representation on Friday. The representation was a very minor part of the incompatibility between the operation of elections in Jersey and the European Convention of Human Rights; it asked the simple question, "Can this Court sit in judgement on itself?"

The answer is obviously, no. I know it, you know it and the Court knows it.

However "he will win who knows when to fight and when not to fight" and the law officers decided that the preferable option to actually answering is to prevent me from asking the question at all, they therefore gave notice of the intention to seek to strike out the representation.  Perhaps they even read my blog and followed my advice.

That would have left a potential avenue through the usual legal processes for the case to eventually be heard in a Court of Appeal and thus in a manner that would be compliant with my Convention rights.

Instead I objected to the Constitution of the Court and withdrew my representation, fighting on a battleground (or in a Court) that is not of your choosing is one of those times when not to fight.

We'll see what happens, I am assured that my concerns have been added to the pot and will be considered as part of the overall review of election legislation which is under way following the Southern case. Maybe no further action will be necessary, maybe it will, we'll wait till the Attorney General gets back from holiday to find out.

There are usually better ways to achieve one's aims that having a stand up bare knuckle fist fight.

The experience has shown how the operation of modern Courts is failing to provide people with the appropriate protection of the Law. Like any civil service department, the Courts are run primarily for the benefit of the staff and then for the most frequent users of the service, the Advocates.

"To no man shall justice be sold" is one of the reforms of Magna Carta (which Jersey appropriated as the apocryphal 'Constitutions of King John') but unfortunately the modern legal profession enjoys such a high level of protectionism, that ultimately justice only comes at a price. From a free market perspective anyone should be allowed to represent anyone. The lack of competition in the industry of legal representation is the primary factor in the outrageously high fees.

How could the Courts work without lawyers? Well quite easily actually. Special thanks to Professor Andrew Le Sueur for pointing me in the right direction.

Firstly forming an argument is a fairly common skill, anyone who has been educated to degree level should be expected to be able to do so.

The Common Law, works with two simple rules: do what you say you are going to do (basis of contract law) and and it harm none do as you will (basis of criminal law) and the golden rule that no one should profit from wrongdoing. The rest is all previous decisions which have been made by Courts historically.

By comparison with what we have today, the process is far simpler, you go to court and plead your case to twelve of your peers against a person who has either caused you harm or not done what they said they were going to do and if, and only if, the twelve members of the jury unanimously agree with you then there is a restitution order made.

All Common Law Courts work by consent. If a party chooses not to abide by the decision of the Court then that person is considered 'outwith the law' or outlaw. An outlaw loses the protection of the law meaning that there is no sanction against anyone who does them harm.

There are movements throughout the Commonwealth that are seeking to 'reclaim the common law'. The British Constitution Group for example.

Jersey has it's own Common Law pioneer. You may recall that the wording of parking fines was re-written recently, well the previous link may help to explain why this occurred.

There is something in this I'm sure...

Saturday, 26 November 2011

The Role of the Media 3: Concerns for the future

One of the most unfortunate areas of the recent elections in Jersey was the lack of debate in the electoral process, this combined with a lack of qualitative analysis by the Jersey media combined to limit the ability of the Jersey electorate to make an informed vote and to effectively analyse how each candidate, if elected was likely to proceed.

The American system is substantially different; in this format the candidates take part in debates. Questions are asked of an individual candidate with any other candidate free to counter any point raised with a right of reply. This format does not allow candidates to simply say what they think the people want to hear but requires the candidate to be sufficiently informed as to counter any argument which might seek to expose weakness in their position.

You may have seen the CTV coverage in which Sir Phillip Bailhache noted that he had not even read the States Budget when asked to comment upon it.

An American Political Debate

Through the hustings process the coverage given by the Jersey Evening Post was minimal particularly for the candidates that they had not anointed as 'credible', their favourites were allowed to make the most ludicrous assertions without any challenge. The majority of the candidates replies to the one question which was reported upon was given in two lines of one column, which can never accurately convey an entire minute's answer.

I have previously looked at the role of the media in elections in the United States and in Jersey. In the United States there is an acceptance that there is a bias in the coverage humorously examined by John Stewart -


And latterly the realisation that the Liberatarian ideals do have genuine support in the nation is coming to be accepted and reported on -


At what point does a candidate become credible? Without the millions of dollars that Ron Paul has spent over the course of the campaign in paid advertising, his message would not have been heard at all.

That raises a second problem in Jersey candidates are severely limited in their spending; it is well known that in 2005 both Jim Perchard and Freddie Cohen spent far in excess of the £9,300 that was allowed to candidates in the 2011 elections.

This problem is compounded as sitting candidates can use the ongoing States meetings, (there is the question as to whether the States of Jersey should not be dissolved prior to the nomination meetings in order to comply with ECHR rights) to garner free publicity, bring propositions etc. whilst non-sitting candidates are extremely limited in what they can achieve.

There can be no doubt that elections in Jersey, at least in regard to media coverage, are neither free nor fair.

Friday, 25 November 2011

On taking Deputy Southern to Royal Court

Many people were surprised that I initiated proceedings against Deputy Southern following his failure to properly declare his criminal convictions during the nomination meeting for the position of Deputy for St Helier district two.
Deputy Southern
Authoritarian Opposition
to an already Authoritarian States

So let's be absolutely clear on the thinking... it was because it seemed to be the right thing to do at the time.

I'm sure most people don't go through life making decisions based on vague feelings of what the best course of action is, but I do and it works for me. I say this because I am not seeking to re-write history and say it was my intention all along for things to fall into place the way they have, it is just fortunate that they did.

I wrote the representation quickly and submitted it, after a great deal of fence sitting, assurances of action, and lack thereof, by the Constable of St. Helier. Then I read the law.

The law clearly states that the person presiding at the nomination meeting is required to read out the declarations. This of course means that not one person was properly nominated. In fact not one of the Members of the States of Jersey has been elected in accordance with the law since 2004.

I contacted Deputy Southern immediately and told him how to proceed with his defence, a defence he duly and successfully relied upon in Court

Whether Deputy Southern was removed from the running or not was not my primary concern. I do not consider Deputy Southern an effective States Member, nor do I agree with his political position. The role played by Deputy Southern is that of the unelectable opposition. Understand that from my perspective the government is too Authoritarian already and Deputy Southern stands for higher taxation and more government and more regulation and a more generous benefits system which in turn means more people are caught in the net of benefit dependence.

He therefore offers to the Authoritarian government an illusion of opposition, someone against whom they can claim, falsely, to be 'Right Wing' whilst at all times the growth of the government, and its spending, continues unabated and is never called into question because the alternative is even more of the same. This co-dependent relationship clearly serves the Authoritarian cause and the establishment is not so anti-Geoff as they, and he, like to make out. It is all just part of the pantomime.

The truth of this can be seen from the coverage of the case in the JEP and CTV compared with the more accurate reporting by the BBC.

His convictions were not read out properly and thus the law was broken, but that the fault lay with the Constable of St Helier and not Deputy Southern himself. Not that it mattered because the law was so badly written that there was no censure possible against Deputy Southern in any case. Perhaps the events even made the difference between Deputy Southern being elected and not... we will never know for certain.

And therein lies the point to this blog - there was no effective remedy. A salient and clear breach of the European Convention on Human Rights which has been heard in the domestic courts. A stepping stone to Strasbourg.

I followed my intuition and hindsight has proven that this was the correct course of action, even though it was not the logical course at the time.

So when I walk into Royal Court today to discover whether or not the Royal Court considers itself fit to sit in judgement over the compatibility with Convention rights of the conduct of the recent elections it makes no fundamental difference what they decide. The door to a fair hearing overseas is already open.

Thursday, 24 November 2011

There is no "Politics of the Centre"

I previously looked at how both libertarian and green politics transcend the social class based left/right political cleavage that has dominated politics for as long as universal suffrage has been in place.

Society had been developing without government intervention for many years, driven primarily by the Church (both Catholic and later Anglican) who not only drove education, provision of welfare but also industry through the monasteries.

It seems ludicrous to current thinking that the question of whether the communion given in church is actually transformed into the body of Christ or is merely symbolic could once have caused such deep divides in communities and wholesale wars across Europe, it is a matter of personal consideration and how another person perceives should be no concern of anyone else's. The idea that someone should be persecuted for their personal beliefs is abhorrent.

The religious cleavage in society is now largely consigned to history although it is noticeable for example in Northern Ireland.

The Whigs (forerunner the of modern Liberal Democrats) were the first UK party and were the party which increased over time the amount of intervention by government in individual's lives, but also advanced many libertarian causes such as universal suffrage. The Tories who adopted a laissez-faire approach or 'what will be, will be', could in some ways be perceived as more libertarian but of course they held to the strict class structures and the notion of the divine right which is most anti-libertarian.

The rise of the union movement in the late 19th Century in the wake of the extension of suffrage to the working classes was at heart a Libertarian movement in that it sought greater freedoms for individual workers through collective action. Like all radical movements it has come to be part of the 'establishment', it has achieved most of the objectives it set out to and in the modern world is somewhat out of place and in many cases actually represses individual workers. Having achieved its aims it would perhaps have been better to dissolve it rather than having it corrupted as has been the case.

Welfarism likewise has progressed far beyond its original aims of providing a safety net to all from cradle to grave and has become twisted into something wholly unacceptable.

The pattern of development of philosophical advances is constantly repeated; greater knowledge leads to a demand for greater freedom and a social movement is born, the movement achieves its aims and is absorbed into the mainstream, the aims of the movement are twisted and warped to satisfy the needs of the bureaucracy, the movement itself becomes an instrument of repression.

The thing to note though is that all of the greatest advances have started off as radical theories; the bible in English, the rights of man, universal suffrage, the union movement and the welfare state. What start as radical ideas often become mainstream in time.

One of the greatest failings of the government of Jersey is the ruthless repression of any possible division in political thought. Without at least two opposing  and competing philosophies there are no fresh ideas, without any ideas there is no hope for the future. There is just stagnation and then decline.

The politics of the Centre is the politics of non-participation, maybe that is what the States of Jersey are after but that is not in the best long term interests of Jersey.

Wednesday, 23 November 2011

Enthusiasm for Scrutiny is underwhelming

Hosting a hospitality event in a distillery?
Would you let these people organise it?
The people of Jersey asked for change and whilst the council of ministers largely ignored the wishes of the people and duly elected exactly the same people back into their old positions some members did listen and the Chairs of the various scrutiny panels have now changed.

I have been told, "All States members want to be Ministers or Assistants because then they get free blackberries and their phone bills paid for, whilst Scrutiny members have to pay for their own calls". Pathetic, but probably true.

I like to look at the various panels as the effective opposition to the Minsters, now by effective opposition I mean that they are responsible for looking into the detail of propositions, identifying weaknesses and omissions and generally ensuring that any legislation arising is fit for purpose.
So:
  • Treasury and Resources is vetted by the Public Accounts Committee, 
  • Economic Development is vetted by the Economic Affairs panel
  • Home Affairs & Education, Sport & Culture is vetted by Education & Home Affairs
  • Planning and Environment is vetted by Environment
  • Housing & Social Security & Health and Social Services is vetted by Health, Social Security and Housing
  • Transport and Technical Services is vetted by Corporate Services
Which leaves one committee to organise the running of the States, Privileges and Procedures and a further Committee for Jersey Overseas Aid.

There is some disparity here and it would seem more sensible that each department be vetted by its own individual scrutiny panel.

The first thing that you notice is that the two biggest spending departments, Social Security & Health are vetted by a single panel which also oversees Housing. So entrusting this massive responsibility to the newly elected Deputy of St Peter, Kristina Moore is perhaps a sign of the relative importance of the scrutiny panels, the very issue which caused such commotion last session.

With all due respect to Miss Moore, the experience of being a journalist is hardly a qualification for vetting the most heavily over-spending departments in the States of Jersey, but I salute her courage in taking on the position when no one else stepped forward, she embodies just the 'can-do' attitude that many of her fellow members should be encouraged to follow.

Whilst wishing the best to Miss Moore, I am afraid I am fearing that Scrutiny will be ineffective once more, which raises the question of why we pay good money to operate it.

No doubt many will wonder at the decision of Deputy Tadier and his fellow progressives not to seek the Chair of the various panels, but in essence they are listening to the people of Jersey. They are not simply going to slot back into their old positions. I am sure that they will be at least as effective, if not more so, by taking a backbench approach and bringing key propositions on a wider range of issues.

In the absence of an effective means of making the voice of the people of Jersey heard in the Chamber and fulfilling the primary duty of a States Member, representing the electorate, these backbench members may be the most effective of all.

Tuesday, 22 November 2011

Sustainable economics and the free market


The issue of sustainability is one that I was introduced to by Dr. Mark Forskitt over the course of the recent Senator elections in Jersey.

A recent comment posed the question -
'Green' Conservative Logo
I am fascinated by your love in with greens. Green parties in Europe are distinctly left wing and often prop up socialist parties in government. How does that fit with libertarian right politics?
It is true and often commented that European Green parties are like water melons, green on the outside and red in the middle, because of this a lot of the 'green' literature has a distinctly left wing slant to it, however one should not throw the baby out with the bath water. Let's not forget that the Conservative party recently adopted a lot of 'green' policies and recently re-branded to reflect this new approach.

The sustainability issue is a valid one; in Jersey just take a look at our reservoirs and you begin to understand that water supply will become a major issue if the climate continues to change as it is doing and the government continues their unrelenting policy of unlimited immigration. Similarly looking at the sheer number of people in the world and the precarious nature of our food production which could be upset by something as simple as an inevitable shift in the magnetic alignment of the earth causing bee populations to decrease.

Understanding that the supply of oil is likely to become restricted and thus the price is likely to continue to rise is a consideration of the free market. I believe that necessity is the mother of invention and that when the profitability is sufficient, alternatives will be more widely used and of course when it becomes necessary who knows what future solutions will be found to meet our energy consumption. Whilst oil prices are so relatively inexpensive, dependence on oil will continue. There is the unknown of how much oil which is not 'peak oil' (where we can get at it) will be forced up through the earth to become 'peak oil' over time.

I do not consider whether the recorded temperature change around the world is part of a natural cycle of temperature variance or is as a result of the actions of humanity. But it is impossible to argue with scientific data and say that things aren't changing, irrespective of the cause of those changes.

In the development of the modelling of weather patterns it has been discovered that simply by allowing twelve known scientific equations to interact with each other given set starting data a series of data is produced that never repeats itself. Weather patterns are of course far more complex than can be defined with just twelve equations.

I see no reason why the same should not apply to temperature variations over the millions of years that the Earth has been around. To me it seems the ultimate arrogance to suggest that we either are capable of understanding such complexities or that we can control them. As a Libertarian I would further ask, why do we want to control them? I am happy knowing simply that I do not know and that I will never know what the weather is going to be.

Libertarianism itself is not a right wing philosophy, but as the 'greens' in Europe are predominantly left wing, Self-proclaimed libertarians are predominantly right wing and so the Libertarian literature has a right wing slant to it.

Fundamentally the left/right cleavage in societies is becoming less and less relevant and the Libertarian/Authoritarian cleavage is becoming the pre-eminent battleground as it becomes ever more apparent that bureaucracy and central planning is a far less effective method of driving growth in the modern world where knowledge and opportunity is more open to anyone who chooses to pursue it.

The world wide web is perhaps the greatest ever advancement for our species and all the more important because it is relatively unregulated, multi-jurisdictional and available to all. Both Libertarian and Green ideas have blossomed as they represent the genuine concerns of individuals rather than governments and the internet provides the means of exchanging these ideas around the globe.

Monday, 21 November 2011

A Libertarian as the Republican Presidential Candidate?

The 2012 US presidential election could be the most important thing that happens next year. The Libertarian movement is gathering momentum worldwide - in the UK the UK Independence Party are surging in the polls, even Jersey had its first Libertarian candidate in this recent election. The US has had Libertarian candidates since 1988 and Ron Paul, the candidate then is now challenging for the Republication nomination.

It is interesting to note that many of those who are part of the Occupy Wall Street movement are not Socialists, but Libertarians and Greens, they are opposing Corporatism, not Capitalism. Particularly the 'special interest' lobbying that goes on with 'campaign funds' being passed by the corporations to politicians, no doubt so that they can do their research and see their way to vote in a particular manner. "If nothing else, Obama has shown us just how corrupt politics are.”

The US presidential elections have been going on for some six months already and have a long way to go yet but the first actual vote will take place in Iowa on January 3rd 2012 the first contest in the decision of whom will challenge Barack Obama for the presidency.
Romney came 2nd in the 2008 campaign
and has largely kept his head down in this campaign

The Republican (more commonly known as the Grand Old Party or GOP) establishment have their anointed candidate in Mitt Romney a centre right social conservative who finished second in the 2008 campaign and then duly threw his support behind John McCain the person duly nominated.

He has pretty much standard views and is running a typical politician's campaign designed not to lose votes without actually saying very much in particular. Some of the regular readers of this blog will be interested to note that Romney is the one candidate who has broken with the Republican Party's climate change denial position.

The other main candidate is Texas Congressman Ron Paul who I have previously written about in regard to how the treatment of Paul by the media is a perfect example of such organisations conspiring to unduly influence elections.  Well he is now even getting coverage in the British press so the US press must now be asking themselves, "Where did you go wrong?"

Paul has been the driver of the philosophical
and economic debates during the election
He is the father of the Libertarian movement. He has some views which are non-mainstream; return all active US troops to home soil, balanced government expenditure and the paying down of debt, decriminalisation of all drugs including heroin, ending central planning by federal departments and returning power to the individual states. Radical, yes. But they are also viable solutions to America's woes which no other candidate is offering.

His most controversial assertion, one which I happen to agree with, is that the USA invites terrorist attacks by invading nations. That the bombing of the world trade centre was a result of US foreign policy.

The trouble with Paul is that he is critical of the 'establishment', but he is right. In a previous post I discussed how to tell which party you would vote for and the first question was, 'Do you understand Civics and Economics?' - those who do are backing Paul. It is of course dangerous to be right when the government is wrong.

There are many other candidates, most of whom have been flashes in the pan, announcing, garnering interest and then falling away including Bachmann, Perry & Cain. The latest flash in the pan is Gingrich. They talk the Libertarian talk but they do not stand up to scrutiny, they are weak in debates and 'flip-flop' (adjust their policies to the immediate audience).

Paul on the other hand has been saying the same thing for 42 years and his voting record backs up his statements. That is the danger, a man who if elected will stick to his principles, will not be subject to 'special interests' or 'funding' but will fulfil the role with honesty and integrity, serving the best interests of all the people.

However the vote goes in Iowa on the 3rd January 2012 those who vote for Paul do so knowing exactly what they are voting for.

Sunday, 20 November 2011

The end of the financial system IS nigh

What is really going on and when did it happen?
Do you want to know?
I'm going to try to bring together all the economics posts of the last month and try to paint the picture of what is actually happening. Before you read on I remind you that ignorance is bliss.

On the 27th October I postulated that the collapse of Dexia bank was just the first in a series of dominoes which would fall, well we now see the systemic collapse continuing throughout western governments and banks.


The death of the monetary system has its main motive in the refusal of governments either to manage finances responsibly or to repay debt in the usual manner. Debt grows faster than the economies.

The plan is to swindle via the hidden inflation tax in return. Greece and now Italy have tumbled because they are locked in a single currency and cannot unilaterally devalue.

The creditors (the people who own the bonds) are not involved in the important decisions to debase the currency. Those decisions are made unilaterally by the debtors (the nations which issue the bonds). A run on the US Treasury Bonds is occurring by angry foreign creditors. With no security investors simply move their money somewhere else.

The federal reserve was hit with withdrawals of $83.3 billion on November 2nd, the largest withdrawals coming from its deposit accounts. This single day removal was the largest since February 2009. The common practice is to avert a government debt default by making the public pay for debt reduction in basic price inflation.
98 bailed out US Banks are on the verge of collapse
but the crisis will hit the European Union first.


The current financial crisis cannot no be remedied, only patched over. Vast inflation is the only politically viable method of repudiating these unmanageable obligations. The US Consumer Price Inflation runs at 11.1% in the honest broker Shadow Government Statistics calculation (which calculates inflation on the same statistical method as was used in the 1980's), which is painful enough.

The bond exodus is complemented by significant removal of depository funds from the major banks in the 'Move Your Money' movement. Despite pleading by the big US banks for customers not to extract their money, impressively 650 thousand customers moved a total $4.5 billion dollars out of the big banks. The damage done is 10x to 20x, due to fractional banking practices. The funds went into smaller banks and credit unions in October. Jersey's government will only allow the 100 biggest banks globally to operate here, meaning that there is no safe place for local people to deposit their currency.

What an incredible whirlwind of crisis from seven foul winds around the globe but mostly from Europe, which is far from its climax in crisis. Three steps will lead to full blown eruption, the first Italy with rising bond yields and a bank run, the second Spain with rising bond yields and admission that banks are far more insolvent than recognized, and third the failure of all three largest French banks as the principal swine creditor.

Watch as Paris becomes the appointed leader of the PIIGS nations (Portgual, Ireland, Italy, Greece, Spain). The common link across the Atlantic pond is derivative corruption. The Europeans attempt to redefine a debt default, while Americans resort to old fashioned missing funds, breaching the sacred segregated client fund directive. $600 million in clients money is missing from MF Global in the wake of its $39 billion bankruptcy filing.

JP Morgan used its MF Global patsy to anchor derivative trades, that just happened to be long sovereign debt in Europe. The MF Global vanished funds will eventually be measured over $3 billion.

Seven banks, including Jersey's biggest taxpayer the Royal Bank of Scotland, face litigation for failing to advise large pension funds of the true extent of MF Global's $6.3 billion bet on European sovereign debt.

GOLD IS YOUR SAVIOUR
Gold smells the destruction of the monetary and banking systems, aggravated by Western recession. Gold smells new application of debt to repair old failed debt structures, where central bankers chase their tails. Gold smells the vast reconstruction project for the giant Western banks, not too big to die of internal rot, only too big to let fail by a gavel. The twisted bizarre attempt to control commodity prices by presiding over a series of negligent policies is coming to an end.

G-20 SUGGESTION LEGITIMIZES GOLD
The G-20 group actually suggested that Germany donate a block of gold reserves for European banking system stability, in a fortification of the stability fund. Obviously the Germans refused, bemused. The German nation has been the ox & yoke to pull the Southern European cart for a decade, but no more. Look for the PIIGS nations instead to forfeit their central bank gold in the next several months, part of the Chinese discounted purchase of sovereign bonds.

In doing so, the G-20 Ministers actually legitimized Gold as the premier asset. The fund seeks EUR 1 trillion but in reality needs EUR 3 trillion, possibly supplied via leverage. The recipient of the alleged transfer would be the most insolvent of global hedge funds, the European Central Bank. Germany will no longer sacrifice Euros at the foot of any PIIGS altar, plainly stated.

GOLD PROPAGANDA & REALITY
The CME has advised that 1.42 million ounces of registered COMEX silver inventory is unavailable for delivery due to MF Global bankruptcy, as well as 16,645 registered ounces of gold also unavailable for delivery. That is a lot of bullion in breach of contract. The lawyers will be busy, as questions of COMEX integrity are addressed. As the grandiose destinations become clear for vast new monetary creation, the Gold & Silver prices will run higher.

The big immediate questions center on how much dithering the banker elite that run our governments will permit with malignant motive before the decisions are made, and how much economic deterioration will be permitted to contain commodity prices before the decisions are made. The destinations are bank bailouts for toxic sovereign bonds, recapitalization of the big Western banks, coverage of new USGovt debt, and economic stimulus. A few $trillion will be needed. The delay in reckoning is laden with frustration, but the day of $2000 is coming. It is something the bankers cannot stop. They are so busy kicking cans down the road, they do not see the Rotweillers and Dobermans sniffing their trails.

The biggest and most important danger signal for complete eruption of the European financial crisis is the Italian sovereign bond. Their yield surpassed the 7% mark to sound great alarms, completing a forecast over the last several months. This level is the recognized crisis signal, the call to stern reaction. The next PIIGS domino is soon to fall, for certain to take down Spanish Govt Bonds also. The new Draghi Euro Central Bank must cover the debt or watch the European Monetary Union crumble. If the crumble happens upon inaction, expect 20 Lehman events with numerous bank failures, starting with France.


The conflagration would extend to London and New York. The Italian Govt rollover of debt is in big trouble, as over EUR 360 billion (=US$490 bn) of debt must be refinanced before end 2012. Recall comments made a year ago. The prevailing opinion was that Italy had favorable debt ratios, like cumulative debt to GDP, like annual deficit to total budget. The objection was that ratios mattered little, when the required debt volume to finance was too large in a crisis filled bond market. The forecast was for Italy to erupt along with Spain eventually. That viewpoint has turned out to be correct.

Barclays has declared that Italy is finished futou. When Italy erupts, it will spread to Spain first, and then quickly to France as its primary creditor. The nation of Spain is not in the news much, but it will be next year, just like Italy with the same type of problems, but compounded by a bigger housing bust.

An invisible bank run is occurring in Italy. Their banks are trapped, attempting to de-leverage on a perilous tightrope forced by tightened bank reserve requirements. They have developed a big dependence on Euro Central Bank funds. They borrowed EUR 111.3 billion (=US$152 bn) from the central bank at the end of October, up from EUR 104.7 billion in September and a smaller EUR 41.3 billion in June, as per Bank of Italy data. That is dangerous dependence that cannot be sustained.

The Italian & Spanish Bovt Bonds are in big trouble, but the lurking story is how France will soon join the PIIGS as the ignominious leader. The main event upcoming is the sudden failure of all three of France's big banks

COUP DE GRACE IN FRANCE
The European banking system is toppling. It cannot be stopped. Great controversy will result. Most large banks are posting huge losses from greek exposure. The next round of losses from the other PIIGS nations will be an order of magnitude larger.

The extreme breakdown will occur when the big French banks go bust. The French banks bear the largest load for Italian Govt debt, more than double the German load and almost half the entire European load. France is tied with the lethal umbilical cord from Italy. Its own severe budget cuts and tax hikes assure a worse outcome for their standard bearer banks. They have three times as much debt with Italian companies, versus Italian Govt debt. As the Italian Economy slides rapidly into recession, a considerable portion of the nearly $400 billion in total debt exposure will go rotten. One can see that Italy is Greece times seven.

The Spanish Govt Bond is the fuse that lights the Semex behind the French bank failures. Their bond yields surged past 6% as the contagion spreads. The Euro Central Bank is reported to be actively purchasing sovereign bond from both countries, to stem the crisis. Their efforts are futile, since private bank sales rise to supply the central bank at the window. After the official purchases, the private banks are highly reluctant to purchase anew, since that bond market has been badly tainted.


When Societe Generale, BNP Paribas, and Credit Agricole all go bust in a sudden burst wave of insolvency, illiquidity, and recorded losses to their artificially lifted balance sheets, the game is truly over. Then and only then, the great reconstruction of the European banking system will begin, complete with $3 trillion in freshly printed money.


The Gold market comprehends this fact, and anticipates it fully, with patience. The French government bond yield is yet another dangerous fuse being lit.

Saturday, 19 November 2011

Government does not solve problems, it creates them

Central banks have been attempting to drive down interest rates by purchasing long-term treasury debt and selling short-term debt. This is just the latest instance of a central bank desperately flailing around doing something, merely for the sake of doing something. Central Banks still do not understand-- or admit-- that the central banks themselves caused the financial crisis by driving interest rates too low and relentlessly expanding the money supply. Any action on their part will just exacerbate the problem.

A one hundred trillion Zimbabwe dollar note
how long until we see the same in US dollars?
The decision by the ECB to print more Euros under pressure from France is just the latest in a long list of examples.

Markets, however, understand that the central banks have failed and have no clue what they are doing. This is why markets are in a tailspin. Stock, bonds, and commodities drop in price while the financial press wondered whether this worldwide sell-off meant that the entire system was collapsing. Not since 2008 had there been such a dramatic drop across so many different sectors of the market.

Because of continued rising inflation and central bank suppression of interest rates, investing in traditional safe havens such as savings accounts, mutual funds, and Treasury bonds has become unprofitable. Lots of money is moving through the system seeking a return on investments or at least some measure of safety, as increasingly desperate investors move their funds around in search of long-term profits and stability.

Until the Central Banks stop their monetary intervention and allows interest rates to be set by the free market, investors will move their money in a volatile manner. They will invest in commodities and stocks while prices swing upwards, but will flee to bonds and cash at the first sign of a downturn.

The uncertainty caused by Central Banks does help some people – professional traders for example. Increased volatility and huge price swings mean more opportunities for profit, as sophisticated electronic trading programs can buy and sell huge positions within a fraction of a second of a major market movement.

But small businessmen are misled by the artificially low interest rates into making unwise investments, and those whose jobs vanish when the latest bubble pops, suffer.

Without the knowledge or ability to move with the markets or diversify overseas, average people see their savings stagnate or depreciate-- along with their hopes and dreams for a better tomorrow.

The only way to return to a sound economy is for Central Banks to cease and desist their monetary manipulation and allow interest rates to be determined by markets, just as the price of goods, services, and labour should be determined by markets.

Everything Central Banks are doing by pumping money into the economy benefits only the insolvent, too-big-to-fail banks. Low interest rates encourage consumers to take on more debt, meaning more profits for the banks issuing those loans.

Jersey's future economic well being we are told is dependent on a rise in the interest rate, our government is ignoring economic reality the truth is that interest rates will not be raised until at least 2013, if ever.

Japan has been trapped in a 0% interest rate corner for 20 years now. Once interest rates hit 0% they never come back, so the government must change direction. Unless it can find a way to change the laws of economics, to remain on its current course the only option is to pilfer more and more wealth from the residents of Jersey.

The amount of tax our government pickpockets will either have to rise further or the government will finally need to comprehend what an expenditure cut is – an actual drop in the amount of money spent.

We have all had to accept expenditure cuts as the government has continued to steal ever more of our hard earned money. We are taxed enough already.

It is this government theft that is causing so many people to need ‘assistance’ – ‘assistance’ which robs us of our liberty and transfers power and control to government.

Friday, 18 November 2011

Same circus, same clowns...

Philip Ozouf offered a mea culpa for his recent behaviour.
 He promised to be a good boy if  the States let him stay on.
CTV said he was just 'misunderstood'
provoking a reaction in the Chamber.
"The high contacting parties undertake to hold free elections at reasonable intervals, under conditions which will ensure the free expression of the opinion of the people in the choice of legislature." Extract from the European Convention on Human Rights.

Freedom of expression of the opinion of the people is inconceivable without  the assistance of a plurality of parties (Yumak & Sadak v Turkey).

Clearly the elections gave the public no clear choice in the composition of the legislature, there was no attempt to ask the public who should be in charge of each department, we get what we are given and we have to just lump it.

If anyone ever takes a case under Article 3 of Protocol 1 of the Convention to the Court then it is impossible to tell what they will do with our little effort but if the results from yesterday are anything to go by then there is a clear incompatibility in the operation of our legislature with our convention rights.

There was a clear message from the people of Jersey that they wanted change, but this has been ignored.

A couple of days ago I raised the issue of the inability of the Chief Minister to select his own Ministers.

Things kicked off on Thursday morning with the election of the Treasury Minister. The Chief Minister had identified Senator Le Marquand as his preferred candidate. Three other chose to allow their name to go forward, Senator Alan Breckon, Deputy John Le Fondre and the incumbent Senator Ozouf were the selected candidates.

The twitterati were in fine form on the day. For me there was not a candidate who properly embraced the ideals of minimal government and was prepared to outline a series of genuine cuts (not just cuts in proposed increases). None of them identified the need to reduce taxation. I have come to accept that I am just not going to be represented in the States.

In the first round Senator Ozouf nearly attained the required 26 votes falling two short, with Le Marquand on 11, Le Fondre on 10 and Alan Breckon 6.

The second round saw Ozouf's vote fall to 22, Le Marquand on 16 and Le Fondre on 13. Perhaps there was some tactical voting going on here to ensure that it would not be a Le Fondre/ Ozouf run off. Le Fondre has the requisite skills and experience to be the money man and has a reputation as a fine finance manager in that he will query every penny spent.

In the final round the result was 26-24 in favour of Ozouf.

Sadly we will never know how the voting went as Ministers are elected under secret ballot, perhaps the recent change to the election of Chief Minister to keep a record of the vote could be extended to the ministerial elections in three years time?

Thursday, 17 November 2011

"Eliminate competing technologies" - Sure & Airtel

Gigabit Jersey launched a limited trial to residents of Castle Quay early in 2011.

It is absurd for Airtel and Sure to suggest
that we should not have a fibre optic cable network.
Just so they can eliminate competing technologies?
Philip Ozouf  and Freddie Cohen were sold on the idea during a recent visit to Mumbai, India and both were committed to utilising public money to support its introduction to Jersey.

It has become one of the flagship programs of the Jersey government but I am not convinced that it is a wise use of public money.

Jersey Telecoms is a private company which is owned by its shareholders, is run by directors for the exclusive benefit of those shareholders. Now 51% of the shares happen to be owned by the States of Jersey but that does not mean it is a public body by any means, nor that it should be given any special favours by the government.

Jersey Telecoms should be run by the directors, without the interference of government, with the sole duty to ensure the future profitability of the company.

I do not make any value judgement as to whether the investment in a fibre optic network is sound or unsound, I do not have sufficient information, but it seems to me that if this is going to guarantee the future profitability of the company and ensure a return for the shareholders then this is an avenue that the director's should be exploring, without any recourse to the States. No company polls its shareholders on executive decisions.

The directors, if on balance they believe this is the best decision for the future of the company, should be seeking to raise funds from private sources, not public sources. The funding of £40 million should readily be raised given the profitability and assets of the company. Or they should be made to pay commercial rates of interest on the loan from the public.

Sure (Cable & Wireless) and Airtel-Vodaphone are both opposing the deal. There opposition is of course somewhat of an act of self-interest as they would prefer Jersey residents to use mobile technology for internet access.

As both are licensed mobile network operators I cannot see what right they have to prevent Jersey Telecoms from implementing a fibre optic underground network, it would seem patently absurd to rely on only one form of technology. That is an unnatural obstruction to the operation of a free market in one of the most important industrial sectors.

It may be that in the interests of a level playing field the mobile part of Jersey Telecoms business be spun off as a separate entity and not be allowed to cross sell mobile and land-based services. But to deprive Jersey of a fibre optic network and enforce the use of mobile networks would simply be a short-sighted and unfortunate decision.

Wednesday, 16 November 2011

The battle to be Jersey's third figurehead

Sir Phillip Bailhache and Ian Gorst
I like Ian Gorst, he is a most amiable person. I must admit that it has come as a shock to see him elected as Chief Minister. I even had to re-write the blog post!

Fundamentally neither candidate met my primary criteria - a basic understanding of economics. Nick Palmer on his blog expresses similar concerns. I'm afraid that like it or not the economic reality is going to come home and it is going to hit hard.

For far too long the entire western world has been spending beyond its means, driven by the demands of the electorate to provide ever more extravagant public services coupled with the natural and inevitable inefficiency of bureaucracy. Jersey is perhaps the worst culprit for this, but we have had unusually high revenues which have masked the problem until now.

Sir Phillip was right about one point which you may have missed during the hustings - he accurately points out that the inability of the Chief Minister to appoint his 'team' of Ministers does limit the ability of the Chief Minister to effectively put his manifesto into place.

Frank Walker
The power of patronage that the Prime Minister of the UK holds, that is the ability to hire and fire ministers, does ensure a certain degree of restraint on individual ministers ensuring that the Cabinet works as a team. As a result the role of Chief Minister to date has been that of a non-entity and the Council of Ministers is necessarily less effective at implementing a policy program than it might be. I make no value judgement as to whether that is a good or a bad thing.

Frank Walker spent his time travelling the globe signing agreements such as an historic, but seemingly pointless, 'arms limitation treaty with Uzbekistan'. His biggest 'success' was signing away Jersey's independence with an official agreement which grants the UK the right, in no uncertain terms, to enforce legislation on us albeit only after a period of due consultation, (the electors of Jersey of course know that consultation really means - they will listen and then completely ignore what we have to say, we enjoy public consultations on a regular basis already).

Terry Le Sueur
Terry Le Sueur well, what did he really achieve during his tenure? I can't think of anything...

I see Sir Phillip Bailhache as the ideal figurehead. You cannot deny the aura of dignity and respect he exudes. He has had many years of listening to lawyers and States Members speak an awful lot of repetitive, meaningless drivel to justify high fees or their place in the States. Sounds like the perfect Chair of the council of ministers.

I did not want to see him elected at all you must understand. I consider his decision to run 'ill advised' and it will cause a constitutional crisis before too long, but having been duly sworn in well, I think the States have made the wrong choice. It is not that unusual for me to be in the minority of course.

The 'consensus' of which Ian Gorst speaks is a phenomenon of UK politics too... consensus usually arises at times of great uncertainty and/or economic hardship. In the 1920's power was shared between all three major parties, in the 1970's and again currently.

Gorst did not spell out as clear a vision as Sir Phillip in his election speech, I recognised much of it from the hustings, it was a politician's speech which was aimed more at not losing votes than offering something that people could vote for.

Neither candidate grappled with what I perceive to be the fundamental issue... implementing the sort of spending cuts which are going on around Europe, lowering taxes and thereby boosting the local economy, which is choking under regulation and taxation.

So we move on to the appointment of Ministers where the real interest lies; will Gorst get his team or will the States elect a few alternates instead?

What will be the fate of the newly elected Deputies who voted for the wrong man? Deputy J.P.G. Baker; Deputy J.H. Young; Deputy S.J. Pinel; Deputy J.M. Le Bailly; Deputy S.G. Luce; Deputy R.G. Bryans; Deputy K.L. Moore. Interesting the only newly elected Deputy who voted for Gorst was Richard Rondel.

Tuesday, 15 November 2011

Jersey is heavily invested in the bond 'bubble'

Jersey is heavily exposed to the bond market according to Senator Ozouf, the paltry 9.17% return on Jersey's fund of funds, which would have been 30%+ had the fund simply bought gold instead, is riding the largest bubble in history - government bonds or sovereign debt.

Capital is seeking security in bonds
But bonds are not particularly secure
One nation after another crashes
Jersey's reserves are in that market
Jersey has about £1.3 billion which would meet government expenditure for about two years, but this includes the social security and employee pension funds.

Imagine this scenario: A major government has been forever borrowing from Peter to pay Paul, never lifting a finger to cut its deficits. 

Suddenly, global investors pull the plug: They dump the government's bonds like a hot potato. They drive bond prices into the gutter. And they make it impossible for the government to borrow another cent without paying sky-high, budget-busting interest rates.

To persuade investors to resume buying its bonds, the government is eventually forced to pass Draconian austerity measures — mass layoffs of police and other public employees ... deep cuts in pensions and health benefits ... plus tax hikes across the board.

Result: Mass protests, riots, and national strikes ... another big blow to the economy ... a new exodus by investors ... and louder demands for even greater cutbacks or taxes.

Sound familiar? It should — because that's precisely what we've just witnessed in Greece. Meanwhile, Italy is heading down the same path, passing draconian austerity measures just this weekend.

Sure, global investors rejoiced. But even while Rome was performing emergency surgery, the European debt cancer had metastasized to an even larger economy — France, the next likely victim of the debt contagion.

Suddenly, French bonds had plunged; and suddenly, the interest premium the French government would have to pay for 10-year money (compared to the German government) had surged to 168 basis points (1.68 percentage points). What's worse, the cost of insuring French government debt against default had also gone through the roof.

To help understand exactly what this means, let's say you've been buying French government bonds for yield and safety. To protect yourself against a future default, you can buy insurance in the form of a "credit default swap."

As with any insurance, if the risk of failure is low, your premium cost will be low; if the risk surges, your cost will surge. And that's precisely what we've just seen happen with the default insurance premiums on French government bonds:
Right now, to insure $10 million in 5-year French government bonds against default, you'll have to pay $203,001 in yearly premiums. That's DOUBLE the peak level during the debt crisis of 2009 and TRIPLE the peak of 2008!

How bad is that? For the answer, look at Greece and consider these facts ...

Fact #1. Three years ago, around the time when the Greek debt crisis first burst onto the scene, if you wanted to buy the equivalent insurance to cover a Greek default, you would pay only $174,761 (the exact cost of a 5-year Greek credit default swap on November 19, 2008, according to Bloomberg data.)

That's $28,240 LESS than what investors are paying for French default protection today!

In other words, according to the market for default insurance, French bonds today are RISKIER than Greek bonds were at the onset of the Greek debt crisis!

Taken in isolation, are French government finances really weaker today than Greece's were three years ago? Perhaps not. But its banks are far weaker. And so Europe as a whole! Therefore, the markets see these new risks as important factors that dramatically increase the threat to investors in French bonds.

Fact #2. S&P, Moody's and Fitch are apparently ignoring these new risks, choosing to grade the French government as if it were an island onto itself.

Result: They still give France a triple-A rating today, far higher than the single-A rating (or lower) which they gave Greece three years ago.

In sum ...
• The markets say French debt is RISKIER today than Greek debt was three years ago. But ...
• The major rating agencies say French debt is far SAFER today than Greek debt was three years ago.

Who's right? The markets or the rating agencies? That leads me to ...

Fact #3. In its Moody's Analytics of October 6, 2011, Moody's graphically admits that, when it came to evaluating the true risk of Greek debt, the markets were right and Moody's was wrong.

The chart clearly shows that the true rating of Greek bonds — as implied by their market price and the cost of default insurance — fell a lot sooner and a lot lower than Moody's rating.

In other words, Moody's grossly and consistently overstated the safety of Greek bonds. It wasn't until Greece was on the brink of near certain default that Moody's eventually caught up to the market reality.

But for investors, that was far, FAR too late. Banks and individuals who relied on the S&P, Moody's and Fitch ratings lost hundreds of billions of dollars.

Are the rating agencies making the same mistake with France? For the answer, consider ...

Fact #4. Last week, S&P sent a notice to its private subscribers stating that its AAA rating of France was on the chopping block; that a downgrade was in the works. France reacted with great outrage. And, surprisingly, S&P responded by sheepishly stating that the message was an "accident."

But no matter who or what pressed the wrong buttons, where there's smoke there's fire. And given the clear market signal that risk on French debt is surging, the true outrage is that S&P is still telling the public it's not preparing to downgrade France.

Fact #5. S&P, Moody's and Fitch accept large yearly fees from debt issuers in order to assign them credit ratings. Bluntly speaking, their ratings are bought and paid for by the very same institutions they're rating.

If they downgrade countries like France, they must also downgrade banks and other on-the-brink institutions that depend on those countries for bailouts. But those institutions are some of their best customers, paying them the biggest fees!

This is an egregious conflict of interest and helps explain WHY they're so reluctant to downgrade countries like Greece or France, delaying the appropriate action for months or even years.

Fact #6. Weiss Ratings, give France a C (approximately the equivalent of a BBB+ by S&P). Unlike S&P, Moody's or Fitch, they never accept a dime from debt issuers for their ratings. They have no conflicts of interest. And they never delay downgrades for financial or political reasons.

One reason France still gets a unanimous triple-A from S&P, Moody's and Fitch is because the rating agencies are afraid to rock the boat. The rating agencies know that, without the triple-A ratings, France would be disqualified from contributing to the European bailout fund and the entire European rescue plan would fall apart.

They also know that, in that scenario, their very best customers — the banks that pay them huge fees for their ratings — would collapse. And they know their own revenues would plunge in the resulting chaos.

Weiss Ratings base grades strictly on the facts, and those facts say that France fully merits its C rating:
  • France, along with Germany, is the keeper of all their deadbeat brothers and sick sisters — not only in the euro zone, but also in Eastern Europe. 
  • France's banks hold the bulk of the bad government debts. 
  • France's treasury is now burdened with the bailouts for both the wayward banks and the sickly governments. 
  • And France also has a big pile of government debts of its own to refinance.
One more key point: Unlike the triple-A of most rating agencies, Weiss Ratings C rating for France IS in sync with the rising cost of default insurance on French debt. 

Fact #7. The Greek debt crisis has shaken the global marketplace to its foundations. But the French economy is over EIGHT times larger than Greece's. So its debt problems are likely to have at least eight times greater impact on global financial markets than Greece has had.

Meanwhile, speculation continues to grow that Germany will exit the Euro and re-launch the Deutsche Mark at 1.95 DEM to 1.00 EUR (the level at which they went in).

Listening closely to what is being said by Angel Merckel and the German finance minister they are refusing to rule out ANY solution and are looking at ALL possible outcomes. The bailout is more about protecting domestic German banks (who have been the greatest beneficiary of the Euro experiment) and other European nations are stepping in to do the same.

They have ruled out the issuance of a European bond and refused to turn on the printing presses and have the European Central Bank print its way out of trouble. The concern of the Germans is for price stability and when questioned about Germany coming out of the Euro, the finance minister did not simply state, "Don't be ridiculous", instead he spent six minutes explaining to the German people that price stability would be more easily achieved in the Euro rather than returning to the Deutschemark.

It has been carefully explained to the German people that any cheque being written is not to sovereign nations, but to domestic banks to protect the domestic taxpayer.

The preparations for a German exit are being made, the Euro has one more sovereign debt crisis left. Let's hope the new social security minister adjusts the investment strategy accordingly.

Monday, 14 November 2011

The Business of Government

Amid the din of economic nonsense being bandied about since 2008, there has been the persistent refrain that the States should be run more like a business. If only more business people were in charge to wield their business acumen, we would have this country in shape in no time. But is that a good solution?

Businesses seek primarily to increase their revenues and profits. Government revenue depends on taxes. Government accumulates taxmoney by squeezing it out of people's productive earnings with threats of audits, fines and imprisonment. Our government already collects roughly £600 million annually from the productive taxpayers of Jersey. We hardly need to increase our government's revenues like a private business.

According to Marvel Comics The Taxman is the
"Collector for the City's most ruthless protection racket.
A man who delights in squeezing his victims dry!"
Businesses sell products or services to voluntary buyers, always looking to increase their market share as much as possible. But what is the government's product or service? Rules, regulations, bureaucracy, paperwork, red tape, hoops to jump through, uneven protection and security, coercion and compliance through force and confiscation of assets, and of course a vast welfare system. Do we need more of these government services? Hardly. In fact, we have far too many of these destructive things already.

What we need is more freedom. Freedom is the simple ability of people to live their lives as they see fit without government coercion, provided they do not initiate force or fraud against others. What we really need is a less coercive government, not more revenues.

Government needs to stop seeing itself as a growth industry, and realize that the true function of government is to protect liberty. The States certainly has expanded and grown and accumulated a great deal of the people's capital for itself, but this has been at the expense of our island's prosperity. This trend needs to be reversed.

We don't need yet another "jobs" program to supposedly put the people back to work. Politicians need to realize that, aside from the outright hiring people, government does not create jobs. The only thing government does is hinder job creation by getting in the way and consuming otherwise private resources. Therefore, the most useful thing government can do for long term unemployment is to "liquidate" much of what government does in the first place.

Businesses create jobs. Government is not a business. We don't need more stimulus or phony jobs. We don't need more revenue - £600 million is plenty to fund the government annually. What we do need is a wholesale rejection of government as a central economic planner.

Sunday, 13 November 2011

How to tell which party you would vote for

Having committed to myself that I will write one post per day I have been trawling the Jersey blogs for inspiration. So far I have written the blog up till Tuesday so let's hope my predictive abilities hold true and the candidate I think will be Chief Minister does indeed succeed.

I came across an old entry on crapaudpinion on "progressives" working together, or rather not. An excellent assessment of how the egos of the people often get in the way of forming a united front.

This flowchart just about sums the election up.
Swap Republican for Le Gresley, Democrat for Bailhache,
Libertarian for Pearce and Green for Forskitt
Now I was never in the JDA, the trouble is that there was never very much 'party' about it. There were too many people who wanted to be leader is how it seemed to me.

Working together means that some times things are not going to go your exact way. You have to put together a cohesive package of policies which a group of people can support, not just one person.

The 'establishment' has a cohesive package of policies and so can make vague statements of general intent without actually committing to anything, as the Civil Service duly reports their policies for them and as 'independents' States Members can align or distance themselves from each policy as they see fit, as they think will get them the most votes or otherwise serve their personal interests.

What the 'progressives' require is an alternate think-tank to produce ideas which can be floated, and once the reaction of the public has been gauged, 'progressive' States members can either take them up or not. But what is not required in the think-tank is leaders or egos.

A proper party structure is composed of individuals - setting up a political party is best done without any existing States Members and probably without anyone who hopes to be elected in the foreseeable future.

I also found this on Stuart Syvret's blog:

"Before you dismiss Darius Pearce, consider a few facts. Yes, his politics are those of market conservatism , which are not my politics. But - in what is a huge advantage over most of the other candidates, he is - as you say - 'self-declared' about his politics. There is a very refreshing honesty and transparency with Mr. Pearce".

Getting people to vote in Jersey is hard enough
but expecting them to make a considered vote
when the media only gives one side of an argument?
Sadly obfuscation and ambiguity seem to be the more effective campaign strategy, but it just isn't my nature. Nor is it beneficial to be less than totally straight with your customers, so businessmen often struggle in politics.

My major frustration is that Jersey electors are not given both sides of the argument by the media; there is no considered debate, no government assertion is ever challenged. There is no chance of an informed vote unless each elector goes to some considerable effort.

Criticism of electors who would vote for a candidate because they 'knocked on my door', 'are female' or 'are from a good Jersey family' is fair ONLY if evidence is available upon which they can make an informed choice. In Jersey it is not, so who, or what, is going to fill the void?