Posted Jun 19, 2014 by Martin Armstrong
COMMENT: Mr. Armstrong –
The Liberal majority was no surprise – they are still the best political machine in the province. They promise no deficit in 2 years – well that’s smack in the middle of 2016, so good luck with that.
What worried me was the militant advertisements by the Ontario Provincial Police Union that I heard every day on the radio commuting to and from work: they promised a breakdown of law and order in the province should the Conservatives take power and cut back on the civil services.
This brings into focus your analysis on the fall of Rome where the soldiers would rob from the citizenry to maintain their income and pensions. I expect the police unions are going to strongarm the government in the years ahead and we’ll be expected to pay.
REPLY: This unfortunately is very true. The unions have destroyed the ports of New York and Philadelphia. You just do not see ships go there any more. Unions have basically destroyed whatever they get their hands on for the days when they were needed for working conditions are gone so today it is all about just grabbing more and more money. New Jersey will have its credit rating reduced because the unions refuse to give anything back. They demand higher and higher taxes so they can live large. This is how governments implode. Their costs exceed revenue and the deflationary spiral destroys the country. Portugal was the major currency of Europe until Spain discovered the wealth in the Americas. Then Spain crashed and burned. Both countries were reduced to the third world status. This same process is underway. Going to negative interest rates is typical in these age of deflation.
Nonetheless, this phase will come to an end and volatility will rise from the ashes. Rumors of its death are greatly exaggerated to cite Mark Twain. The central banks in trying to stimulate buying in bonds will find when the trend shifts, they will be unable to sell long-term debt like they once did. This will aid the asset bubble as more and more capital flees from government.