A Melman Minute — May 11, 2011

EDITORIAL COMMENT

While we do not normally indulge in political editorial commentary at The Melman Report, I found a recent cartoon which was published in several Canadian newspapers so offensive in nature that it called for a rebuttal. The cartoon depicted a cage with the word MINORITY posted across the top and the Conservative Party of Canada (CPC) emblem displayed on the front. The clear intent of this display was to demonstrate that the CPC was a caged animal kept locked up and under control by its minority status compared to the combined strength of the center-left to radical- left Liberal, NDP and Bloc Quebecois parties.

However, the cartoon now depicted the cage as wide open with the lock lying on the ground, obviously reflecting the new situation where the CPC won an outright majority in last weeks Canadian federal elections.

One of those newspapers carrying the cartoon was my home area Nanaimo News Bulletin and they published my following comment verbatim:

Dear Editor:

Your cartoon of May 5 showing an empty Conservative cage with the lock removed was entertaining but I believe completely erroneous in its implications. The suggestion of the cartoon, of course, was that with a clear majority, all prior restraints on the Conservative Party of Canada were removed and a potentially harmful caged animal was released to prey upon the public.

I strongly believe otherwise, and, obviously, many millions agree since during the just-concluded federal election, the Conservatives clearly out-polled the NDP, Liberals and Bloc, thus acquiring that majority.

What I expect to develop is a clear improvement in national prosperity combined with an enhancement of our individual liberty as the previously-enunciated philosophic leanings of the Prime Minister and his party begin to be reflected in the national agenda. Among these leanings are diminished governmental interference with commerce, diminished complexity of regulations, reductions in the number, size and power of federal bureaucracies all combined with lowering the complexity and impositions of national taxation.

If I was an advocate of either the federal Liberals or NDP, I would be fearful that the Conservative Party of Canada will indeed succeed in improving both freedom and prosperity and, therefore, the saleability of my party would become increasingly difficult as conditions markedly improved for the majority of Canadians.

In my opinion, shared by millions of others, what has been uncaged is not a fearful creature, but rather the opportunity to finally reduce the power and reach of the myriad of virtually uncountable, omnipotent bureaucracies that have been increasingly inflicted upon the Canadian public for the past half-century.

Yours truly,

Leonard M. Melman

If anyone doubts the severity of the damage which can be inflicted by uncountable, omnipotent bureaucracies, they should take a good, long look at the ruined status of the one-proud nation of Greece, which has been reduced to playing the role of an international beggar, and that is no exaggeration.

Thanks to unending programs proposed and enacted by those bureaucracies, with the assistance, of course, of the nations political establishment, Greece is now buried under unpayable debt and now spends its political strength going from nation to nation, agency to agency, pleading for sufficient funds to hold off any day of reckoning for as long as possible. Of course, their pleadings take the form of more loans, more debt and more conditions which must be accepted before funds can be forthcoming.

However, therein lays a problem. While the Greek government may be willing to accept conditions of austerity, the public is not. They have grown so accustomed to bloated government benefits plus bloated federal civil service hiring and salaries - all combined with low taxation - that they will not willingly accept any limitations, a fact which was supported by news that the Greek civil service has virtually shut down the country today in a general strike aimed against the imposition of any conditions whatsoever. All national rail, ferry, flight and even schools and hospital services have been reduced or suspended entirely for the day and many government offices are shut down.

Just five days earlier, on May 6, Greeks doctors marched against government austerity measures and demonstrations against similar measures have also been targeted for Portugal and Ireland.

If affected governments cannot control these strikes and demonstrations, then rescue efforts for the entire Eurocurrency market are put at risk and that could be one reason why the Euro has suddenly declined sharply in value relative the U.S. Dollar over the past few days.

Perhaps this unrest is one of the main reasons why the Euro has lost more than five percent of its value over the past few days and this decline in the Euro, suggesting growing levels of future currency uncertainties, could be one of the reasons why the sell-offs in gold and silver were reversed from Friday through yesterday although they have resumed this morning.

Two figures are worth noting at this time. As readers know, the present Treasury Statutory Debt Limit $14.294 trillion. By law, the government is not supposed to allow debt to grow in excess of that figure and yet, by the governments own official figures, the U.S. national Debt stood at $14.333 trillion, or 39 billion dollars in excess of the limit! Despite this apparent violation of law, nothing has happened! No government services have been suspended, no offices shut, no politicians sent on sabbaticals, nothing of the sort has taken place! One can only wonder, then, about the importance being placed on new national debt limitations.

The other figure shows the U.S. Balance of Trade Deficit shot up to $48.2 billion in March, the highest such number since June, 2010. This means that the flood of American currency being accumulated in foreign hands continues to mount and, at TMR, we believe that is a long term plus for the precious metals markets.

As of 9:15 AM PDT, financial markets appear to be reacting to the Eurocurrency problems by buying Greenbacks and swelling Euros in even greater amounts. This has had its effect on the world of commodity prices as they are once again falling across the board, particularly including the precious metals with gold off by about $18 to just under the $1,500 level and silver has fallen by almost $3.00 per ounce to the mid-$35 zone. Base metals are also lower and mining share indexes are in steep decline. Financial indexes in both Canada and the UASA are headed sharply lower with the TSX off by over 200 points and the Dow Industrials down by about 160.

In other markets, the US Dollar Index is stronger, crude oil is once again under $100 per barrel and interest rates markets are little changed, despite the general turmoil in other markets.

All quotes US$ unless otherwise noted.

Next Melman Minute scheduled for Friday, May 13. 2011

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