October 25, 2013

By Derek On October 24, 2013 Under Uncategorized


“Everyone likes a clown but nobody will lend him any money.”  – Anonymous

The US, to the embarrassment of us who live here and to the concern of everyone else, narrowly avoided a voluntary sovereign default last week. The impact on markets of this clown show was very short term and as I expected, no default occurred. However, it is worth looking at the issues behind this extraordinary and to some, bewildering turn of events as it has had and may continue to have an insidious influence on world growth and confidence.

Angry white men

The root cause of the incredible divisions apparent in today’s United States, as always, are economic at source. A growing chunk of the population, mainly rural white men over the age of 45, are seeing a formerly high standard of living falling and armed only with deer rifles and outdated skill sets, that is not going to change. Up to one fifth of Americans “identify” with the Tea Party Movement. This is a grassroots, decentralized crusade which votes Republican and which frames the US Constitution and the concept of “The Founding Fathers” in almost religious overtones, fervently worshipping both in stolid ignorance. Sarah Palin is quite rightly the proper face of the Tea Party, amply demonstrating her grasp of the facts in a now infamous television interview. While spouting off about “The Founding Fathers” Ms. Palin was asked to name her favorite “Founding Father.” She hemmed and hawed but finally could not think of a single one. George Washington? Thomas Jefferson? Ben Franklin? Never heard of them.

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