Standing up to the Gods of Olympos

Atlas, the central motif of "Atlas Shrugged", was one of the Titans, beings who ruled the universe before the Gods of Olympos challenged their power and overthrew them. Most of the Titans were exiled , but Atlas was condemned to support Ouranos (the Sky) forever.

The new Olympians in Washington, D.C. (along with many of the old Olympians in capitals everywhere) have decided to unleash the thunderbolts of State power on the economy, and pile on unprecedented amounts of spending and regulations to enforce their will (and control is really what this theater is all about). While there is a recognition that this is a terrible long term disaster for the people and institutions of the United States (and thus the world), grass roots opposition has yet to gain any organization or momentum sufficient to stop or derail the efforts of the current government. Rather than a race of Titans bestriding the Universe, the American people are still fragmented and reeling from the rather abrupt changes happening all around.

From our side of the border, we are looking at something resembling the event horizon of a black hole. The projected American deficit for this year will be 1.75 trillion. Canada's GDP is only 1.3 trillion in USD. In other words, the USA deficit for just 2009 will be greater than Canada’s GDP. (HT to Celestial Junk for these figures).

Canadians will have to start making plans now on how to deal with the import of inflation as the Obama Administration frantically devalues American currency to deal with these massive debts. Given 82% of our exports go to the United States, our customers will be paying us in script or worse, and also purchasing our energy and other resources with devalued currency as well.

We will also have to look at the eventuality of the United States defaulting on their obligations. I believe the trigger will be a wave of bankruptcies sweeping civic governments which are overextended in terms of their public service wage and benefit packages. Several States will be next (California, followed by New York), and this will trigger a chain reaction of public service and union pension defaults as the rest of the financial system is subjected to an even greater shock than the sub prime crisis. Depending on how this times out, the paradox may be the destruction of trillions of dollars of paper wealth in chain reaction defaults just "might" cancel out the inflationary impulses of the stimulus package and US budget. Any "soft landing" scenario relies on an improbable coincidence of timing and scale (i.e the amount of wealth destroyed equals the amount of paper the Treasury is pumping out).

Of course there are still more time bombs ahead, as Social Security, Medicare and Medicaid (along with any presumptive nationalized American health care system) are revealed to be the Ponzi schemes they are, and trillions of dollars of "entitlements" cannot be honoured and vanish from the economy. None of these scenarios even begin to take into account any sort of taxpayer revolt, where Atlas finally shakes off the burdens that the Olympians have piled upon him.

At any rate there will be tough sledding ahead.

Our one potential Canadian trump card, should the government be able to play it, is to make massive cuts to spending and taxes and create a North American tax haven. With the promise of a safe and secure haven and reward for hard work and effort, millions of skilled workers and members of the American investor class can be tempted to come to Canada. The same incentives will also apply to native born Canadians, who can take advantage of them to revitalize our economy and institutions. The influx of human and capital resources will energize the Canadian economy, and of course incoming American's, with their relatively large families, will also reset our demographics and prevent Canada from following Europe in the demographic meltdown predicted by Mark Styen.

How we can make this happen is the question that we all need to ask. Most readers of this blog will recognize there is a very large and vocal segment in our society which will follow the O-bots off the cliff willingly, and a powerful political class willing to pander to these voters. If Atlas is to stand up in Canada and shake off the imposed burdens of our own intrusive political looter class; our own self styled "Olympians", we need to work to make it happen.

I don't have the answer of how to make this happen, but together we might come up with one.

Freedom is a self help project