1. In ‘Atlas Shrugged’, Ayn Rand described the final stages of the breakdown of a socialised USA.
  2.  If you haven’t read the book, I heartily recommend it; it’s on my annual ‘Re-reading’ list.
  3. In ‘Blood in the Streets’ Lord Rees-Mogg and Davidson put forward a convincing argument for a denouement of the USA as the premier world power.
  4. The US is in a stagflation phase, and unless Bernanke and the Fed tread very carefully, the US economy will fall into a full blown depression brought about by a preliminary hyperinflation phase.

In the post, I’ll be examining what I consider the short-sighted policies that will exacerbate the economic difficulties. The first is Employees Free Choice Act (http://en.wikipedia.org/wiki/Employee_Free_Choice_Act). Its provisions, especially the ‘carry card’ provisions, will lead to unionization of labour.  Is that such a terrible prospect?

All I know is Australia’s economic prosperity came into its own when the Hawke-Keating Labour (Democrat equivalent) and Howard-Costello Liberal (Republican equivalent) defused the power of the Australian union movement. That took almost two decades.  The USA does not have two decades to deal with its economic woes. 

For a graphic description of the type of state the USA may ‘evolve’ into, read Atlas Shrugged: a truly frightening prospect.

The second item of news is indicative of the knee-jerk reaction of politicians. It comprises two parts:

A task force headed by the CFTC and assisted by six other agencies, including the Fed and Treasury concluded that the reason why Crude Oil prices havce spiked to $147 was ‘largely due to fundamental factors’. Despite this finding, the US Congress seems bent on exacting a price from ‘greedy speculators’. According to a report in the New York Times: “..the notion with the most political traction so far is a proposal from the Senate Democratic leadership that would restrict speculators’ role in the futures markets, apply to those restrictions to any foreign exchange open to traders in the USA….”

If implemented, what effect would the bill have? Blind Freddy would see that the business of US exchanges would pass on to foreign exchanges. This kind of woolly-headed, ostrich type thinking would result in major trading losses; come to think of it, in the long run, it will probably have the same effect on the US economy.

All in all, the signs are not favourable that the USA will work through its problems. Are we witnessing an historic transition of power much like the transition that took place at the end of World War I and completed at the end of World War II? This was  the transition from the British Empire (so extensive that ‘the sun never sets’) to USA. So now are we seeing the first signs of a transition from the USA to ….?

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