Failure of Transparency

U.S. President Barack Obama made great noises during his campaign for the presidency about a new era of transparency in Government. It was part of the 'change' which he offered in his rhetoric; it, apparently, was attractive to the American citizenry, as Mr. Obama was elected to the presidency.

As we are cynics, we are not particularly surprised that President Obama's promises of transparency had strings attached. The latest example is his abrupt about-face regarding photographic evidence of torture at various American prisons in Iraq. According to American Civil Liberties Union executive director Anthony D. Romero, the 2,000+ images show “it is no longer tenable to blame abuse on a few bad apples. These were [torture] policies set at the highest level.”

The reasons given in the article for the about-face are perhaps understandable, but we have to question the logic: is the cure for previous excessive secrecy additional excessive secrecy? This action by the President flies in the face of his campaign promises.

There have been other problems with 'transparency' recently: what sort of 'investments' the Treasury Department and Federal Reserve System are making; why the discussion of a national health plan requires a secret session of the Senate - among others.

A healthy economy requires an open society. We support the ideal to which the 'transparenncy' rhetoric alludes. But, unfortunately we expect that further back-pedalling will come in the future, and we wonder when the supporters of the President will finally realise the big, ugly truth:

They have been conned.

The Era of Peak Scam

It seems that not a day goes by we don't read about some juicy new financial scandal. The latest is the embezzlement of billions from funds earmarked to help 'rebuild' Iraq. The total cost to the American Citizenry may never be known, but as the article from The Independent notes, it's probably bigger than Bernard Madoff's $50 billion Ponzi scheme.

As we've remarked before, the 2007 Depression is an out-of-control freight train, hellbent on crushing anything and everything that doesn't get out of its way. At the same time, the still-present squeeze of Peak Oil (indeed, Peak Just-About-Everything) is working its own magic on the world economy. Together, these trends are forcing the world economy to continually shrink; one can see the effects of this shrinking in the entire world, from China to Canada.

With this world-wide crush ongoing, it will be very difficult for viable, legitimate businesses to survive. However, the crush will be even harder on the many, many scams of the world. Bernard Madoff was a smooth operator... but he was only the weakest hand in a whole world filled with smarter, bigger operators. The Galbraith Financial Principle comes into play at this point: the biggest and smartest fall last.

Scams, by their very nature, are unproductive and wasteful, and exist by leaching off of productive, honest endeavours. Time will tell if we are correct, but we suspect that the world has seen Peak Scam. Never again will the world enjoy such a perfect collaboration of cheap, widely available energy, and the impossibly loose financial environment of the past eighty years or so. There's a tonne of fat in the world economy, but that fat is being worked out... viciously.