WHAT FUTURE FOR DEMOCRACY?

 

The First Republic bank just failed and been gobbled up by a larger banking institution, following a sudden drop in deposits. It was the third such bankruptcy in the banking sector in the last few months, on the territory of the United States, the most powerful economic power on the planet.

We are probably not at the start of a crisis like the great financial crisis of 2008. Still, what is happening show the impact of high interest rates on the economy in general, especially for banks such as this one, but also for governments.

Our present governments have grown complacent, used to produce deficits as a matter of course, without anyone wincing, as if it is the normal thing to do, instead of producing a balanced public budget. It is not a futile matter. In fact, there is now, in front of our eyes, a growing house of cards that is waiting to fall. And fall it will, eventually. Modern representative democracy is doom to fail if things carry on in that manner.

The mountain of debts that keeps rising after decades and decades of never-ending public deficits, whether in Canada, the US or elsewhere, is a frightening monster waiting to awake and tumble upon irresponsible taxpayers expecting expensive gifts from irresponsible governments run by irresponsible political parties ready to promise anything to get elected or re-elected. Nobody is responsible for the mess, of course, since parties tend to stay in power only a few years and quickly learn to blame the other side for anything.

There is much to be worried upon, but one suspect that nothing will be done until a wall is met by everyone involved, probably with brutish force. That wall may take the shape of a debt service grown so huge, in order to cover the weight of interest upon old debts, that it draws a very large amount of public revenue, reducing dramatically the ability to cover essential services.

What can be done, apart waiting that common sense finally knocks at the door, wishing for a chance to be heard? In this regard, a troubling question must be put forward: will it be common sense, or will it be a savior proposing simple solutions to complex problems, some demagogue with a swift mouth but wrong goals?

Never forget that Adolf Hitler came in power in the wake of the economic collapse that followed the military defeat of Germany in World War One...

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https://www.economist.com/finance-and-economics/2023/05/01/first-republic-fails-and-is-snapped-up-by-jpmorgan-chase