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June 15, 2020

A Rock and A Hard Place


This is where Trump finds himself today. To send in the troops or not.

Let’s back up a bit first to see why this is such a conundrum.

The first thing that I note is the fact that the most pervasive rioting and lawlessness is overwhelmingly in the states “governed” – and I use that word very loosely, by people that call themselves liberals which itself is odd because when I look up the word it says this means a moral and political philosophy of liberty, and describes these people as those in support of equality before the law, and in support of free markets, limited government and freedom of speech and thought. Sounds like I’m definitely a liberal. Where do I sign up?

But like so many things these days words get distorted because as I’ve been saying for at least 3 years now the greatest risk to western democracies is not going to come from the far right but from the far left. And here we are. In any event these “liberal leaders” – who Americans call Democrats were a few weeks ago having people arrested for leaving their homes and not “social distancing” while suggesting that everyone absolutely must hide in their homes until Bill Gates has some goofy drug which he’s been trialing on African and Indian kids (killing hundreds) to plunge into your arms. Mandatory of course. Then in an about turn that would give the Rock whiplash these leaders figured out that this virus is a sneaky bastard and while we all knew that it didn’t lurk in supermarkets but was deadly at the beach and in parks, it is also completely harmless in large crowds provided they’re rioting.

And so they’ve been encouraging “protests” while ignoring and downplaying the absolute pha-king mayhem unleashed by thugs bussed in to loot and destroy.

So from Trumps perspective his job is to look out for the citizens wellbeing. Given that these lefty states are in chaos you’d think this would be swinging more voters right than left. Letting them eat their own cooking makes some sense. On the other hand all those voters within those states…and others in Republican states are looking at this and no doubt thinking to themselves hang on a second our country is on fire…literally, and wasn’t this the dude we voted in as leader of the country? Finding him MIA while their cities burn, there’s bound to be a certain amount of WTF taking place.

Why?

This begs the question. Why has Trump refused to send in the military? My guess is he realises it’s a trap. Send in the military and he risks them not complying and instead using that very order to say. “See we told you he’s a ruthless dictator hell bent on firing on his own citizens”. And it’d probably work too. He’d be marched out of office by the military themselves and the radical left would have gained control of not only the military but the courts too and this may still happen. All cards are on the table. Certainly law and order are now being made by either self proclaimed warlords or by twitter mobs who denounce anyone that disagrees with them only to find the spineless masses concede to their demands for fear of being labeled “racist”.  So yeah all cards are on the table.
One thing is for sure if the left gains control, watch out because if it’s authoritarian rule you’re concerned about then you’re in for a true nightmare.

Speaking of nightmares. Right now we’re seeing a wholesale capitulation to the mob.

This from the Minneapolis city council who just voted to abolish the police in favour of “community policing” something that nobody including them really knows what that entails.
  1. Decades of police reform efforts have proved that the Minneapolis Police Department cannot be reformed, and will never be accountable for its actions.
  2. We are here today to begin the process of ending the Minneapolis Police Department and creating new transformative model for cultivating safety in Minneapolis.
  3. We recognize that we don’t have all the answers about what a police-free future looks like, but our community does. We’re committing to engaging with every willing community member in the City of Minneapolis over the next year to identify what safety looks like for you.
  4. We’ll be taking intermediate steps towards ending the MPD through the budget process and other policy and budget decisions over the coming weeks and months.

So it seems we’ve leapt from one absolutely disastrous social experiment – locking down and destroying economies for a virus that is significantly less deadly than driving your car – to this. Mob rule where looting and mayhem are righteous and defending oneself is “white privilege” and hence “racist”. Mao himself would be impressed.

Ironically if the left gains control the very first thing they’ll likely do is to deploy the military onto the streets. That’s how dictatorial regimes work…and make no mistake the far left is no less dangerous than those who followed Hitler or Stalin or Mao.

The entire “Defund the police” narrative is not what folks think it is. Not that folks are thinking much right now because much of the western world has descended rapidly into mob rule. What you’ll get is not some libertarian, less taxation, more freedom scheme. It will be the polar opposite if these folks get into power. It will be absolutely authoritarian in nature and followed by a redistribution of wealth that will be as swift and vicious as it is breathtaking.

Regardless of who’s in power for the time being the lawlessness will continue. Of that I’m 100% sure. Why?

Simple math. Many states in the US were essentially bankrupt before the virus hysteria and subsequent lockdowns. These destroyed many businesses anyway. Those left standing just got torched and looted. The states themselves now have a tax base that’s some percentage of its former self. Less not more. So they’ll have far less money for policing anyway. That’s how economics works.

So cities are going to descend into fiefdoms where warlords take over. Watch!

And the “legal justice system” that is implemented here will make the police brutality of yesteryear look positively pedestrian.

This will no doubt pressure Trump to bring about law and order, which means the military. And if he does so he risks either being disobeyed by the military (the left’s tentacles run deep) and being ousted.

Financial implications.

The social contract between citizens and their government surely involves security of persons and property. So when thugs burn and loot businesses, assault and murder citizens in broad daylight with impunity, and take over cities, as has just happened in Seattle where downtown Seattle is now a warzone currently controlled by ANTIFA (yes really) then your social contract isn’t worth the paper it’s written on. It’s each to his own and defend what you can…and if you can’t it’s not yours. Animal farm stuff.

What happens to tax revenues then?

They collapse.

What supports the bond market of any sovereign state?

Tax revenues.

Here’s the US 10yr note.






Still pricing deflation which is a strange thing. I’ve actually never seen a country entering a civil war ending in deflation. But then again the disconnect between main street and wall street has long been a poster child of FED policy. Ironically it’s created such enormous inequality and asset price distortions that civil unrest really shouldn’t have been a surprise.

What else? Aside from gun stocks…which will remain in a bull market there is one asset that really has barely moved…compared to where it is going to go.







Courtesy of Chris at Capitalist Exploits (Author Archive Here)     


The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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