UPDATE: Canada Displays its Ignorance of Monetary History

UPDATE: Today, March 3, 2016, Canada announced that its remaining official gold holdings have been sold (except for 77 ounces), thus cementing its banana republic image, monetarily speaking.

Well, Canada is fast on its way to winning the race to the bottom, at least as far its official gold reserves are concerned. In the 1950's and 60's, Canada held about 25 million troy ounces (about 800 tonnes) of gold in its official reserves. That was more than one troy ounce per capita. Not bad! Well, not as rich as the U.S., Germany, France, Italy, and some other members of the G20 but good enough to place in the top 10 or so.

But then some strange form of enlightenment took hold in government financial corridors and by the late 1960's the selling started. But around 1986 a veritable orgy of selling commenced culminating in a descent to 1.7 tonnes this month. This places Canada in spot #99 in the world rankings between Haiti, one of the poorest nations on the planet and Albania who are #100.

The new Liberal Government in Ottawa still wants to make good on its promised "stimulative" deficit spending but Canada's economic situation has deteriorated significantly since the 2015 fall election. From a surplus position early in 2015, deficit projections for 2016 have steadily increased to $20 Billion or more. So it seems a decision was made to scrounge a few measly dollars by selling off $90 Million of Canada's remaining forlorn little stake. What a shame!
It seems that Canada has no idea of monetary history and how vital a strong gold reserve position can be in troubling financial times. In particular, nations that are rapidly expanding their world prominence are also rapidly acquiring and bolstering their official gold reserves while Canada is moving into the backwaters. Lets hope that Canada does not find itself in the throes of a financial crisis.

Imaginary Prosperity

World sentiment and confidence seemed to sag towards the end of 2015 and the trend has accelerated into early 2016 in spite of continuing comforting media headlines and words from world leaders. So what is going on?

Since the great recession (2008-2009), world leaders, the IMF and central banks have taken the road of “whatever it takes” to get the world economy moving again: 

• ·         Stimulus and bailout programs
• ·         Zero Interest Rate Policy (ZIRP)
• ·         Central Bank exchange of toxic debt for Sovereign Debt (such as US Treasuries)
• ·         Encouraging (manipulated) statistics and rosy projections
• ·         Positive propaganda

The message to markets, firms and ordinary citizens was basically “We’ve got your back”, “Fear not – spend and borrow”. And by and large, that is what most did. Money was almost free. Real estate started to move, autos were purchased, and stock markets ramped up and up. Riskier and riskier debt instruments such as “high-yield” bonds became popular. Indebtedness soared at almost all levels of society: consumers, business and government.

An examination of some of the cheer leading is most amusing: “growth”, “green shoots” and recovery are always just around the corner. Today may be a problem but tomorrow it’s going to be great. The IMF’s successive revisions are a good example.

Virtually everyone has been in the game. The worst information manipulator is likely China. Yet, by late 2015, even these statistics started to show some negative trends.

Also, there were many visible signs early on that something was very wrong, at least for those who paid attention to indicators that were difficult to manipulate. By early 2011, for example, world commodity prices were sinking. Why?

The plummeting price of oil was easy to explain away as a Saudi thing, say,  but what about rice, wheat, copper, nickel, iron, soybeans, sugar, etc? By 2013 even lumber prices had started to decline. This didn’t look like a recovering world economy at all. Yet China, while not growing at the previously torrid rates, was still supposedly exhibiting growth. Really? I was in China in the Spring of 2015 and while their achievements are amazing and construction activity was evident, the number of vacant buildings everywhere also amazed me. China is definitely slowing.

Another small matter: World trade! How come world trade volume is contracting?

 

World trade volumes started to slip in early 2015. Prices paid are even worse (lower)!

Another indicator related to World Trade is the Baltic Dry Index, a measure of world shipping demand/supply. It has reached levels below that of the “Great Recession” of 2008-2009.

 

 

 

Meanwhile consumers are getting tapped out, even at current low interest rates. Indebtedness is rising almost everywhere. 

In Canada, for example, household debt to disposable income has reached 171%.

 

In the U.S., many indicators are contradicting the Cheerleader in Chief (Obama) and the Federal Reserve chiefs. Manufacturing has been slumping and inventories have been rising, for example. 

 

 

And the much vaunted automobile sector has been spun shamelessly. But look at the U.S. Census Bureau’s own reports.

 Peaked in 2013!

  

But the actual situation is likely worse still because automobile inventories have been piling up.

  

Similar problems for U.S. Steel Production.

And then there are new home sales that are sputtering along but even at today’s low mortgage rates, aren’t anywhere near the rate 10 years ago:
 

 And what about the U.S. consumer? Well, there has been considerable deterioration since mid 2012, with debt to income ratios widening steadily.

Much the same has been repeated around the globe. Trillions in central bank stimulus (printing) by the likes of the Federal Reserve, The People’s Bank of China, the Bank of Japan, The Swiss National Bank, The European Central Bank and the Bank of England have kept economies sputtering along with the bulk of the money going into securities such as stock markets and bonds. It has been wonderful for the banks and financial centres such as Wall Street but not that good for the middle classes around the world.

 

Since the end of the “Quantitative Easing” stimulus period dubbed QE3, things have started to get wobbly in the stock markets again and also in lower quality (high yield) bonds. In some parts of the world, real estate prices have begun to deteriorate sharply.

 

The continuing decay in commodity prices as well as rising commercial, consumer and government debt loads have also taken their toll.What will the Debt to GDP charts look like if a world recession takes hold? Will any of this be manageable?

Let’s face it; interest rates cannot be lowered much from where they are now, though they may go a bit negative. Governments and Central Banks have almost run out of tools. Another round of distortion creating stimulus may soon be upon us in spite of clear evidence that these measures have at most kicked the problems down the road at the expense of increasing the structural problems that led to the various rounds of stimulus in the first place. We now have much bigger problems than we already had. The scary thing to me is that unlike other periods in history, the world has embarked almost in unison on a coordinated and massive mission to keep economies afloat.

When this crisis finally breaks, it won’t be an Asian crisis or a South American crisis or an emerging economies crisis, it will likely be a world-wide crisis with virtually no major pockets of strength to moderate its effects. In such a scenario, valuations in almost all asset classes including currencies, real estate, stocks, bonds and commodities will change drastically. Financial dislocations and misery will abound. Be on guard!

Central Banks and World Stock Markets

With few exceptions, the world’s stock and bond markets continue making new highs, all the while listening for the tiniest of clues that Central Banks (CB's) might be reversing gears or curtailing their apparently endless backstopping of securities.

But so far at least, any time things seem to get a little wobbly, especially after some slightly concerning remark from one or other mouthpieces of the world’s main CB's, one of their members steps up to the plate with news of new “liquidity injections” and soothing words.

But of course, propaganda notwithstanding, the underpinning economies and fiscal situations of most nations continue to deteriorate. So the pricing of securities and their actual free market values continue to diverge ever wider.

What is worse, the whole concept of risk seems to be disappearing. Take a look at sovereign bonds. It used to be that the bigger the risk that a nation could not repay its debt obligations, the higher the interest rate demanded to lend to that nation. Logical, huh? Well take a look at Spain's debt situation since 2008:

Now take a look at the yields on Spain's bonds!

Spain Government Bond 10Y Yields (courtesy of http://www.tradingeconomics.com)

So the divergence is pretty clear! Sometime in 2012, the markets began to let go of all pretense that there is any risk whatsoever in holding toxic debt, provided that CB's could be counted on to buy it up whenever things start to look dicey and real buyers had disappeared. This is the essence of "ZIRP", the so-called Zero Interest Policy espoused in one form or another by most of the world's CB's, which, in some cases has become "NIRP" or negative interest rate policy.
Of course, this engenders precisely the opposite behaviour by indebted nations to that required to reduce their reliance on borrowing. After all, if you can borrow for next to nothing, what the heck, right?

Of course, this moral hazard has spread throughout the world's economies, as subordinate interest rates for almost everything have been driven lower. Consumers continue to buy on credit, especially for big ticket items such as vehicles where interest rates are often next to zero. In the meantime, savers and pensioners are being ravaged. A yield of 2.5% on $1million in savings will only bring $25,000 annually. It's hard to live on that. And how many have saved a million, anyway?

Interestingly, when CB support becomes questionable, the markets begin to work again. Look at these charts of a selection of Government 10 Year Yields. What is the only one that makes any real market sense? Well, Greece, of course. And why? Because it is not certain whether Greece will remain a part of the EU. So in that case it could not depend on being backstopped by the European Central Bank (ECB). So Greece's bonds get priced accordingly.

The bottom line is that in an attempt to rescue the banking system (remember that most CB's are run to a large degree by bankers) and the economy, central banks have created enormous investment bubbles in securities that are artificially priced on a variant of the greater fool theory, where the greater fools to whom you can pitch your investments are the CB's.

But CB's may be slowly coming to be in fear of what they have created and increasingly, concerns are being expressed that the divergences between markets and reality can not continue indefinitely.

I urge all to observe the markets carefully as the day will come when CB's can't or won't continue to madly print and buy everything in sight in an attempt to keep it all glued together. When things get unglued this time, the carnage will be much worse than anything we have seen in recent history.

China, the Dollar and Sovereign Debt

Quite a few observers are suggesting that China could/will bring the U.S. down by suddenly dumping its dollar-denominated Treasuries and Bonds, thereby creating a mass exodus from the delicately-perched $US, dramatically raising bond yields and thereby interest rates in general, resulting in a global economic crash and a “reset” in currency values and a realignment of world powers. As the second largest holder of $U.S. sovereign debt (the Federal Reserve has now moved into the #1 position), it is certainly plausible for the Chinese to do this. But in my view this scenario, at least as a deliberate action, as opposed to a reaction to some other external trigger, is extremely unlikely. Why would the Chinese rock the boat unless the perceived benefits outweighed the associated costs (such as loss of the remaining value of their $U.S. denominated paper assets, crippling of their export-oriented manufacturing base, etc.)?

However, our financial system is increasingly perched atop an unstable ledge. Interest rates are held artificially low by constant central bank backstopping of sovereign debt in an attempt to keep the economy (and banks!) from collapsing. Remember, bond yields are inversely related to bond prices! The U.S. Federal Reserve, for example is pumping at least $85 Billion a month into Treasuries, bonds and other debt instruments. The resulting super-low-interest rate environment has created a mad scramble for investments that have a higher rate of return than the 1% or 2% available from traditional “safe” investment vehicles. Middle class savers can either join this scramble into increasingly higher-risk ventures or be savaged by returns lower than inflation. Those funding their own retirements are finding that even $2 Million savings earns a paltry $40,000 in annual interest. Meanwhile, stock markets have surged to record highs and sovereign debt yields, even for Italy and Spain, have declined. All this is taking place while outstanding sovereign debt continues to accumulate. The chart below shows the deteriorating European debt situation.

 The divergence between the actual situation and the financial pricing of risk in bonds and securities is increasing. As recently as last week, S&P downgraded France's credit rating. Did this cause French bond yields to rise? Of course not. They are stuck at a nice 2.2%. In layman terms, everything is increasingly out of whack in the financial, investment and monetary world. Price discovery is dying. Manipulation of interest rates and other markets is forcing money where money shouldn't be and forcing risk to be mispriced by a large margin. New bubbles are forming.

The Chinese and most everyone else with big money on the table know this but are riding out the trend supported by ever-increasing central bank intervention variously labeled as stimulus, quantitative easing, monetary aggregate adjustment, etc. So the Chinese seem to be preparing for that day, whether they, the Chinese, or some other event triggers a run from sovereign debt and the affected currencies, say, the Euro, the British Pound, the Yen and the $US. They have been purchasing large amounts of gold and entering into increasing numbers of Renminbi/Yuan currency swaps with other nations in an apparent move to initiate the internationalization of their currency as a possible prelude to eventual reserve currency status for their currency. 

Perhaps a rapid transition in mind-set is not imminent but some unexpected trigger could cause a rush for the exits at any time. It's really a state of mind as well as a collective assessment of when the end of the rope is reached for central bank printing actions. Most folks know none of this is repayable, after all, and the wiser ones are warily eying the exit doors for signs of  mass exodus. I suspect that the Chinese are in that category. They have too much to lose to be the last ones out the door.

The Next Financial Crisis

Many observers are predicting further banking and financial crises and collapses. Why? Well, the 2008-2009 collapse did little to cleanse the world's sovereign debt and fiscal deterioration or to correct banking and financial system excesses. We have kicked the proverbial can down the road. Beneath it all most indicators continue to atrophy. Sovereign debt keeps on rising and personal indebtedness across most countries is doing the same. The back-stops provided by the Federal Reserve, the European Central Bank, Bank of Japan and myriads of others along with increasingly ingenious albeit contrived rescue schemes have so far managed to prevent another, worse, collapse. The latest "solution" for America is in the realm of the surreal - a trillion dollar platinum coin that even the esteemed? Paul Krugman seems to endorse.
Attention of markets and the media have careened back and forth between Europe, China, Japan, the U.S., and the Middle East. Sometimes the focus is energy (as in oil), sometimes concern about the future of the EU or the breathtaking public debt in Japan or the insolvency of U.S. States or the U.S. itself. It seems that markets and media alike get tired of focusing on any one issue or part of the world for any length of time. Nothing has really changed in the European financial situation, for example. In fact everything continues to deteriorate. Yet bond yields have dropped for Spanish, Greek, Portuguese and other European debt. The focus has shifted once again away from Europe and back to the U.S., perhaps in part due to the mind-numbing pounding on the U.S.  fiscal cliff and the U.S. debt ceiling.
So, where is the next financial breakdown going to occur? Nobody knows, but I am going to focus on a potential U.S. flashpoint - U.S. Treasuries and Bonds.
In a previous post, I discussed a chart that was relevant to foreign holders of 30 Year U.S. T-bonds. The chart depicts the value of T-Bonds, corrected for the value of the US dollar, by incorporating the widely quoted U.S. dollar index. So, in other words, it shows how well a typical foreigner's investment in such bonds is doing after cashing in and converting to his home currency of Euros or Japanese Yen, or whatever. In my previous post I observed that foreign investors were doing very well indeed. But look at the chart today:

Are bondholders getting nervous? If they are and if they stampede to the exits to finally dump U.S. bonds, it will precipitate a major crisis for the U.S. and the world. The $US will go into a tailspin. The Federal Reserve will need to buy all bonds presented for redemption with freshly created dollars. Sellers will then convert their U.S. dollar proceeds into . . . what? Other currencies? Stocks? Gold, Silver? What do you think? Keep an eye on the above chart, updated by stockcharts.com once a day (evening Canada/US Eastern Time) to gauge the risk and progress of the U.S. bond bubble if indeed it becomes the flashpoint to the next financial crisis.

Eurobonds - does Gold have a role?

A politician up a tree is a very resourceful creature. Ditto for central bankers! So in this vein, yet another proposal is being trial-ballooned with the aim of saving Euroland from its debt mess while off-loading some of the responsibility from Germany who so far has stridently resisted becoming its one and only financial backstop. The idea is to attract bond purchases and at low rates (similar to Germany's but without Germany becoming the guarantor) by getting European nations to pledge their gold as collateral for these bond issues. It must have been difficult for some of these bankers, finance ministers and heads of state to admit a possible role for that "barbarous" relic, gold.
The problem is that, at current prices, the Euro nations' gold stash is worth "only" about $2.3 Trillion. That just happens to be about the size of Italy's debt alone! So, It might look like a heady sum at first but let's take a look at what the gold price would need to be to back the debt of some of the countries at the centre of the debt fiasco using each nation's stated gold reserves. I've added a few others in for comparison as well. Source data is from the World Gold Council, the World Bank and Eurostat.

From the chart it is readily apparent that gold prices would need to be between $20,000 and $100,000 per ounce to back the debt of any of these countries. Of course, some of the proposals to date suggest backing only some of each nation's debt (maybe half, say). But on the other hand, some of the gold in the reserves is likely already pledged or leased and therefore "encumbered". Nevertheless, the true scale of the problem becomes evident when even the United States with its supposedly unencumbered gargantuan holdings of  8,133 metric tons of gold would need a $60,000 price per ounce to cover its $15 Trillion debt.

Can the U.S. ever really balance its budget?

Every once in a while, I visit the US Debt Clock Site to get a handle on the current U.S. fiscal and general financial situation. An interesting exercise is to see what kind of cuts would be necessary to achieve a balanced budget, that is, to reduce the deficit to zero and thereby to stop adding to the national debt every year. Well, we have to come up with more than $1,300 Billion in cuts. Gee, lots of ways to go about this but one combination is to eliminate defense altogether (scuttle the ships, close all the bases, send the soldiers home without pay or pensions, abrogate all military supply contracts, etc., and pray for peace - this saves $700B), then eliminate all federal pensions (too bad, folks - just sink or swim- this saves another $214B), then also eliminate all income security programs - too bad for all you unemployed folks! - this saves another $407B). That was easy, eh? Well, of course, politically, this is not doable! Furthermore, such cuts would devastate the economy, and with it, tax revenues, so you would need to cut much more than this to compensate. You see where I'm going.
Ok, let's try another angle - we'll just raise income taxes and do some minor expenditure cutting. So, if we doubled everyone's income taxes and eliminated all federal pensions, that might almost also do it, but whoops, since nobody has any money to spend, the economy would tank and therefore incomes and tax revenues would be affected, so we would need to raise taxes far more and/or cut more programs. H'mmm, nothing seems to work here, right?
Did you see the Congressional Super-Committee at work? Boy, did they ever agree on cuts, huh? Well, now you know why. It isn't doable, not politically, anyway. Not likely possible socially, either. Americans would be torching Capitol Hill, the White House, etc. So what do you think the U.S. will do/are doing? There is only one answer, and it is not a real solution but it kicks the can down the road, albeit at an even higher price down that road. The U.S., as well as most other western nations will simply continue to print ever vaster sums of money to make up for fiscal shortfalls. The likes of the Federal Reserve, the European Central Bank (ECB) and the Bank of Japan will just keep buying up more of their governments' IOU's (bonds and bills and other clever securities). This will happen under various guises such as QE1, 2,3,4, . . n, Operation Twist, "liquidity injections", whatever. The middle class will will get poorer and poorer and most will not understand why. The printing will continue until folks recognize that their currencies are being destroyed and enough folks lose their confidence in it, that a wholesale dumping of currency gets underway. Too bad the fiscal redress was not seriously attempted 20 to 30 years ago, when some of the measures needed might, while painful, still have been politically and socially doable given a committed President and Congress. But are the politicians wholly to blame for what has happened? No, I don't think so. After all, did voters elect politicians with "responsible" platforms or those that promised combinations of government programs and tax structures that were way too good to be true? As the old saying goes - It's hard to cheat an honest man".

Why do Nations Borrow ?

As the world gets increasingly mired in debt, Every day I listen to economists, talking heads as well as regular folks using terms such as "excessive debt", "manageable debt", "excellent (or poor) debt to GDP ratio", "low deficit", manageable deficit", etc. Debt and deficits may or may not be manageable but it is a slippery slope at best. Shakespeare had it right in Hamlet: "Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry." When individuals enter into significant debt, it is usually to borrow money for a major purchase, such as a home with the idea of repaying this debt over one's working life. Many people, maybe most, especially in the past, have done exactly that. In addition, they have usually saved some money along the way and managed to leave something for their children. Individuals normally don't have chronic deficits because this would mean that such an individual was adding to his outstanding debt every year, rather than paying off the debt. This wouldn't make sense and would lead to bankruptcy. So, do individuals need to borrow in the first place? Well, maybe not, but if the idea is to acquire something like a home early on in one's career, or to start a business, this can make sense, provided that the repayment terms are not too onerous relative to one's earnings and spending habits and of course, that the loan is repaid.

But why would nations ever need to borrow, especially chronically (i.e. run deficits)? Since a nation is a very large collection of individuals, it would seem that whatever expenditures governments contemplate should be paid for by passing the hat around, usually in the form of taxes and duties. If you need to spend more, tax more. Why would any nation ever want to borrow money so future taxpayers would be on the hook? And why would you borrow chronically? Will it be easier to pay those taxes tomorrow than today? Do nations around the world expect some big infusion of money down the road from the equivalent of rich old aunt Millie passing away? Let's face it. Short of possibly having to repel an invading force where the very existence of a nation is at stake, sovereign borrowing just does not make any sense. What's worse, future interest payments will only serve to reduce the outlays available to provide citizens with government services. No, in fact, nations should purposefully run small surpluses for that rainy day to defray the unusually high costs of repelling aggressors or to deal with natural or man-made disasters.

Well, in fact, I think most of us know why nations borrow. It is human nature combined with politics. Politicians love to bribe the citizenry with their own or future taxpayers' money. And citizens? For the most part, they love to bribed. They vote for a better today, for their pet projects, etc. Tomorrow's pain is something that can be set aside for . . . tomorrow.  Unfortunately, history demonstrates that with time, borrowing costs mount and lenders become scarce, leading to debt crises. Then central banks are urged to print some of the shortfalls. This process is often disguised to reduce the rate at which confidence is eroding. We engage in stimulus, quantitative easing, blah, blah, blah. Eventually, as confidence erodes even more, increasingly massive printing becomes the only short-term measure available to avoid banking and institutional failures and finally city, state and sovereign failures. Unfortunately, history also shows that such a remedy eventually destroys that nation's currency in addition to that nation ultimately succumbing economically. If a minor currency is destroyed in this way, that country's transactions and trade can be substituted in some other currency, such as the $US. However, should that currency be the world's principal reserve currency . . .

U.S. Debt Farce

It's sad to watch the U.S. debt talks. The wrangling is bad enough but the really sad part, in my view,  is that virtually nobody in the halls of power is ready to propose actually balancing the budget right now! Not tomorrow, the next year, in the next 10 years - but right now. America and most other nation seem incapable of doing what every parent or credit counselor would tell his 21-year old who was spending way beyond his means - cut up the credit cards, cut back on the spending and work harder to pay off the debts you should not have acquired in the first place. Americans have been living beyond their means for decades now. After all, that's what running a deficit is. Every deficit adds to the existing debt or national mortgage. What a concept! A growing mortgage! It's entirely nonsensical but nations the world over have bought into this as a new normal, a kind of global financial insanity whereby even known economists with many degrees and awards spout such gibberish as "manageable deficits". State/provincial governments as well as municipalities have also fallen victim to the disease. No, the talks on raising the debt limit in the U.S. are really pretty well a side-show. It's just arguing about how far to kick the can down the road before doing it all over again. In any event, in the case of the U.S., it should be renamed the "Printing Limit" because no one is willing or able to lend the U.S. that kind of money any more. As has increasingly been the case in the last few years, the Federal Reserve simply prints up what the Treasury needs and couldn't borrow through new bond issues. Sad, very, very sad to see how a once proud and independent country is becoming a deadbeat.

Is Greece the next Lehman?

Is Greece the next Lehman? Well, there are many who are suggesting a comparison, including me, but I'll just point to some published thoughts.

European & U.S. Printing Spurs the Precious Metals

Recent events in Europe and the U.S. continue to support the thesis that governments simply don't have the stomach to take the actions necessary to bring spending in line with income. Whether it be in good times or bad, "now" never seems to be the "right" time to cut spending, raise taxes and balance the budget. So the can gets kicked down the road again. Mind you, this can is growing bigger by the day. In the meantime, since solely borrowing is no longer an option, governments are resorting to ever increasing levels of QE (Quantitative Easing), or printing to make up the budgetary and bailout-induced shortfalls. The precious metals markets see this and react by moving higher as increasing numbers of citizens become uneasy about the future of their national currencies. This is particularly so in countries such as Germany whose citizens still remind themselves of the carnage wrought by the hyperinflation and total destruction of their precious Marks during the Weimar Republic days. So, Gold and Silver have now moved to new highs against most major currencies. Below is a chart of Gold versus the $US.

Bernanke: United States on Brink of Financial Disaster

Federal Reserve Chairman Ben Bernanke made an interesting speech yesterday which got very little attention from the mainstream media. CNN reported a pretty sanitized version. The Times of India was a little more direct. But the EconomicPolicyJournal Blog and other sources cut to the chase and give many more direct quotes. Pretty scary when you read some of Ben`s assessments. Not that we haven't heard a lot of this before, it`s just that the Fed Chairman is now saying it :-)

Predatory Financing

The signs of predatory financing continue to show up everywhere. Greece and Goldman Sachs is but one example.
To see how deep the tentacles have reached, take a look at this story by Matt Taibbi entitled "Looting Main Street" which takes a look at the shocking financial story of Jefferson County, Alabama.

Predatory bankers notwithstanding, corrupt and short-term oriented politicians and financial administrators need to be actively complicit to make these schemes fly. So, really, I believe that we are looking at a culture of irresponsibility, greed, corruption, complacency and wishful thinking that has crept in over many years. No one wants to face the music and accept the consequences of past errors in judgment - not national governments, not state or provincial governments, not city administrations or individuals in most cases, for that matter. Instead, everyone is looking for ingenious schemes to put off the day of reckoning with even greater long term consequences.