Labor Day and the Leadership Crisis

Reading time: 2,685 words, 6 to 11 minutes.

This is a tribute to ordinary working people. Labor Day is an appropriate time to examine the vast gulf of understanding between ordinary working people and our so-called leadership. Events over the last five years prove without a doubt that working people have a fairly good grasp of reality whereas our leadership doesn’t have a friggin’ clue about the real world.

Let me illustrate. In 2008, I travelled to the United States for six one-week periods to train in 6 Sigma. One week a month from May to November (except August) I studied in Chicago and Miami. When ordinary working people heard my Canadian accent (yes, fellow Canadians, we DO have an accent), they poured their hearts out. They worried about the economy and their future. Taxi drivers, shuttle bus drivers, waitresses, hotel staff and bartenders had friends and relatives who were losing jobs, vehicles and homes to foreclosure. They believed their economy was in deep trouble and they were absolutely right. Every month I saw more and more ‘For Sale’ signs on homes and ‘For Lease’ signs on commercial properties.

On the last day, during our graduation and farewell dinner, I was fortunate to find myself seated next to the Chief Financial Officer (CFO) of a large corporation. After some small talk, I steered the conversation to the billions of dollars that banks were losing. The conversation, which still frightens me today, went like this:

“Oh, that’s just media sensationalism.”

“What? You mean they aren’t losing money?”

“No, that’s just monopoly money”


“That’s not real money.”

“Say, what?”

“They’re just foregoing future revenue.”

I was stunned! I couldn’t believe what I was hearing. I kept looking at him to see if he was kidding. He wasn’t! He meant it. I realized this man, an executive officer of a large corporation, did NOT have a friggin’ clue to what was happening all around him. His gardener and the taxi driver who drove him there probably had a better handle on reality than he did. That CFO might as well have been from another planet. Not long after, the corporation was in dire financial straits. That CFO is no longer with the company.

His last line ‘forgoing future revenue’ is instructive. It is financial hogwash, bullshit, empty rhetoric and complete nonsense. That ‘future revenue’ is somehow divorced from real money indicates how far removed from reality modern finance has become. Both modern economics and finance have become so arcane as to be completely useless. Economics is not rocket science; it is common sense. However, the economic crap being taught in universities is utter bullshit. The global economic mess we see unfolding is a testament to the inability of our financial leadership to foresee the financial melt-down, to prevent it, to repair it or even understand it.

It’s not just Amerikan leadership that is clueless. 2008 was the same year I asked a Canadian CFO what he thought about the LIBOR scandal. He knew nothing about LIBOR which benchmarks the very interest rates he worked with every day, let alone the scandal I briefly wrote about in LIBOR a joke – Nov. 11, 2008 . He too is no longer with that company.

Admittedly, two examples are hardly statistically representative but they are examples of the failure of leadership that has driven much of the global economy to the brink of a collapse which is still occuring. Both of these CFOs were leaders in private industry.

However, incredible as it seems, government leadership is even more incompetent. The state of California is a prime example. According to Macleans Econowatch “California likes Facebook. Well, it did when it looked like the social media giant was going to flood government coffers with desperately needed cash. When the state crunched its budget earlier this year, it took for granted that the company’s IPO in May would lead to a tax windfall as Facebook insiders cashed out. The bean counters banked on US$1.9 billion in tax revenue for the state. But then Facebook shares lost nearly half their value after the IPO. Officials now say the state may be out “hundreds of millions of dollars” as a result. [Gerold comment: the state is not “out” anything except perhaps out of its mind. You can’t be out something you never had. Only incredibly incompetent government leaders count their chickens before they hatch. Insanity is budgeting based on wishful thinking.]

“It would seem old habits die hard in the Golden State, where politicians can’t bring themselves to say no to more spending, but don’t have the money to meet those commitments. And so California spends beyond its means, and prays the manna (in this case Facebook riches) will fall from the sky.”

Lest Canadians feel too smug about this, consider that Alberta announced massive spending increases last February on the premise that oil sand tax revenues would skyrocket. More government insanity based on wishful thinking. Only a fool spends money before he has it. Macleans reports, “Officials boasted that a “gusher” of revenue from the oil sands would turn this year’s $886-million provincial deficit into a $5-billion surplus in just two years. But oil prices haven’t co-operated. Amid a commodity sell-off, they fell from US$109 in March to around US$75 in June. Though the price crept back up to US$90, that’s still nearly US$10 shy of what the province wagered it would be this year. The Fraser Institute predicts Alberta’s deficit will rise this year. The province “bet the budget on overly optimistic oil and gas prices.”

Yesterday, the Edmonton Journal reported that “If the trend continued throughout the year, the province would likely post a deficit of between $2.3 billion and $3 billion.”

Newly elected Premier Alison Redford said “she is confident her government can stick to its budget plans this year despite a dismal first quarter…” The mathematically challenged Premier is looking for $500 million in savings according to Friday’s Globe and Mail. Opposition parties are calling it the ‘Alison wonderland fudget budget’. Do politicians become incredibly stupid once elected or are they idiots to begin with?

Nor is Albert alone in counting its chickens before they hatch. Macleans continues, “The same pattern has played out across the country. Newfoundland faces a potential shortfall of hundreds of millions of dollars because oil is so far below what the government assumed it would be, while Saskatchewan just signed a deal to build a $278-million stadium in Regina, convinced that resource revenue will jump 14 per cent this year.

“It’s far easier to bet on a potential bonanza than to make tough spending decisions. It’s how politicians get voters to like them. And it’s why governments keep finding themselves in such a fiscal mess.”

The ass media would have us believe Canadian banks are solid and stable financial institutions. However, this is relative to other nation’s banks which are in far worse condition. Most Amerikan banks are still completely insolvent (although still paying CEO obscene bonuses) and are kept alive only by accounting fraud enabled by the U.S. Financial Accounting Standards Board (FASB) whose role is establishing financial accounting and reporting standards. In April, 2009 the Amerikan banksters pressured their bought-and-paid-for Congressmen to force the FASB to lower accounting standards from Mark to Market (i.e. what something is worth when sold) to Mark to Whatever-the-Banksters-Want (“Mark to Myth”). The actual Mark to Market valuation of most U.S. banks’ assets was between 5% and 30% of book value. Now they’re allowed to report 100% of book value. So Canadian banks are ‘better’ than this. Whoopee shit, Sherlock! Canadian banks are slightly better than outright crap.

Unbeknownst to most Canadians, the Canadian banks were bailed out in 2009 by us, the taxpayers – that’s you and me, Sherlock. It took the CBC in Banks got $114B from governments during recession all of three years to report this in 2012. Isn’t it nice to know the government-owned Canadian Broadcorping Castration has our backs considering that every Canadian man, woman and child coughed up $3,400 each for our unknowing generosity to help the Canadian banksters. Incidentally, that’s ten times what we donated to the auto industry. Aren’t we nice!

The Canadian Centre for Policy Alternatives (CCPA) reported that, “Canada’s banking system is often lauded for being one of the world’s safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada’s major lenders were in a far worse position during the downturn than previously believed.”

“At some point during the crisis, three of Canada’s banks — CIBC, BMO, and Scotiabank — were completely under water, with government support exceeding the market value of the company,” Macdonald said. Furthermore, the CCPA report also states that the Bank of Canada is far less transparent than even the U.S. Federal Reserve in releasing this information. “Despite Access to Information requests for the data, the Bank of Canada refuses to release it.” In fact, the Canadian information came from the U.S. Federal Reserve.

Canadians, it seems, are supposed to assume the posture below and not dare question the government.

So is there a point to this rant? I thought I’d never ask. It’s very simple. Don’t trust the government, not even the vaunted Canadian government because when the shit hits the fan, you are on your own. Obviously, governments can’t even look after themselves. So what, if anything, have you done to protect yourself? If you haven’t already begun preparations, you’re running out of time. Read my Collapse articles beginning in 2007 then read my Survival & Emergency Preparedness articles in the upper right ‘Categories’ column.

Think things are improving because the ass media isn’t telling you anything? Here’s some bad news from Macleans, August 20:

A key Purchasing Managers Index survey of large manufacturing firms in Asia, Europe and North America suggested a continued slump in the global economy.

Nervous [Canadian] retailers have launched their back-to-school sales early this year in anticipation of a weak season. Kids across the country will never forgive them.

Banks are once again offering debt-addled Canadians record-low mortgage rates. Not what Finance Minister Jim Flaherty had in mind when he tightened borrowing rules in July. [Gerold comment; terrorist banksters are our worst enemy. Always were, always will be. Their sole objective is to fleece us]

Canada’s economy grew just 0.1 per cent in May, below the already meagre 0.2 per cent that most economists had been expecting. [Gerold comment: don’t forget that GDP numbers are NOT inflation adjusted so Canada’s economy just like Amerika’s is SHRINKING when you factor in inflation.].

Tim Hortons is raising the price of sandwiches and muffins to reflect higher ingredient costs. Mercifully for double-double addicts, the price of coffee stays the same. [Gerold comment: stays the same for now. The World Bank recently announced world food prices jumped an average of 10% in July with some commodities over 50% so it won’t be long before coffee is affected.]

Confidence Crisis

There are a number of crisis brewing world-wide, few of which are reported by the ass media but the most important crisis is the Confidence Crisis that you hardly ever hear about. We have lost confidence in our leaders who failed to predict, prevent and then repair disintegrating economies and as a result, we are losing confidence in ALL the underpinnings of our economic systems which continue their slow-motion collapse.

Everything, and I mean EVERYTHING is based on confidence. Money is just toilet paper without confidence that the person you hand it to will accept 3 ¢ worth of paper and ink as having a higher value. Investors are fleeing the stock markets because they have lost confidence as a result of banksters front-running, high-frequency trading, insider information, fraud and corruption that leaders REFUSE to prosecute as government regulators turn a blind eye.

According to Martin Armstrong, the banksters have NEVER in history foreseen an economic crisis. “They have always just turned to government, scared the hell out of them, and then held out their hands.” As far back as the 1930s the banksters sold small denomination foreign sovereign debt to the public and watched them all default just as they do today. Amerika has now reached unbelievable levels of confidence-destroying corruption with the Congress inspired Savings & Loan scandal and the banksters’ attempted manipulation of Treasury auctions. The banksters were caught off guard by Latin American defaults, numerous Argentina defaults, Mexico and Russia. We’ve seen the collapse of Long Term Capital Management, the Dot.bomb boom and bust, the U.S. ‘07 mortgage crisis plus the daylight robbery of MF Global investors’ capital which to this day remains unprosecuted because John Corzine is Obama’s buddy. And, the list goes on and on with each crisis cracking the wall of confidence and with trusted leadership conspicuous by its absence.

Five years ago, in Crash of 2007 – Economics 101 I wrote, “Every day more holes in the financial system are uncovered causing more panic in the financial world. Expect to hear many soothing words from politicians and the media. They will try to downplay the problem to avoid panic. However, the longer it takes, the harder it will crash and the more pieces we’ll have to pick up. We will be watching this slow-motion train wreck for many years.”

Adding insult to injury, Macleans’ September 10, 2012 article titled “The fear bubble” says it’s all YOUR fault. “Four years after a major banking crisis rocked global finance, the economy seems stuck in a permanent state of pessimism and panic.” No shit, Sherlock! Now they’re blaming the victim! Not once in the four-page article does it mention loss of confidence as the prime reason for this economic melt-down and the cause of our current state of pessimism and fear.

Ordinary people like us – the ‘retail trade’ or what banksters call the “dumb money” have been burned too often and left the stock markets. Many are in now bonds which is becoming another bubble (BEWARE!) Stock trading volume is thinning so there’s nobody left to fleece. Louis Moore Bacon the head of the hedge fund Moore Capital is offering to refund $2 billion to his investors because he says the markets have been too “manipulated by fear”. Say what? “Manipulated by fear” means ordinary investors are too smart to continue getting scammed by a corrupt system.

Macleans says, “Four years after a major banking crisis rocked global finance, the economy seems stuck in a permanent state of pessimism and panic.” Nice try Macleans! That’s two different statements separated by a comma. They’re both true yet neither has anything to do with the another. Pessimism and panic are caused by many factors and the bank crisis was just one of them, not the sole cause as Macleans tries to make us believe. Lack of confidence in our leadership is the MAIN cause of our pessimism and panic. Our pathologically greedy elites, our incredibly incompetent governments and our insane debt-based financial system are destroying our economy and THAT’S what’s causing pessimism and panic. Terribly sorry you elites but ordinary people aren’t stupid enough to march in front of the firing squad.

Here’s another nail in the elite’s coffin. Bank of Canada governor Mark Carney (a Goldman Sachs alumnus) is berating businesses for sitting on cash instead of risking it and scolding consumers for paying down debt instead of spending. Yet, he doesn’t exactly inspire confidence in Canada’s economy by holding interest rates near zero for years – a tactic usually reserved for major depressions and NOT what you’d expect if the Canadian economy were strong. You don’t need to be a rocket scientist to smell this bullshit.

The Daily Bell has long held that the internet is the modern equivalent of the Gutenberg press. The internet is now heralding a new Reformation making it more and more difficult for the elites to promote their self-serving propaganda. Ordinary people are weaning themselves off the lame scream media and getting informed by alternate news and blogs like this one whose readership keeps growing. More ordinary people are becoming aware and getting prepared.

On Labor Day I say HOORAY for the ordinary working people and to hell with those sociopathic elites!

September 2, 2012

[Posted in both Collapse 2012 and News & Views]

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About gerold

I have a bit of financial experience having invested in stocks in the 1960s & 70s, commodities in the 80s & commercial real estate in the 90s (I sold in 2005.) I'm back in stocks. I am appalled at our rapidly deteriorating global condition so I've written articles for family, friends & colleagues since 2007; warning them and doing my best to explain what's happening, what we can expect in the future and what you can do to prepare and mitigate the worst of the economic, social, political and nuclear fallout. As a public service in 2010 I decided to create a blog accessible to a larger number of people because I believe that knowledge not shared is wasted.
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2 Responses to Labor Day and the Leadership Crisis

  1. clyde says:

    We need a Scott Walker in every Province esp Ontario to kick the Public sector unions in the teeth

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