Centralization is a benefit only sometimes - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 28 November 2012
Centralization is a benefit only sometimes A  A  A

Delray Beach, Florida

Breathe in...breathe out.

Control things...then things get out of control.

Centralize...and then watch what you put together break apart.

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Yes, dear reader, we are tapping into the deepest currents of nature. There, the tides rush back and forth, in and out...and there ain't nuthin' you can do to stop it.

America succeeded largely because it was a single, centralized nation...one of the largest, richest landmasses in the world...populated by one people. No trade barriers kept the Indianans from selling to the Texans. No immigration police kept the Vermonters from moving to Florida. And no language barrier kept the Californians from sharing their latest fashions with the New Yorkers.

But centralization is only a benefit some of the time...not all of the time. Now, the big ship of state is loaded to the gunwhales with debt, financial obligations and delusions of imperial grandeur.

The weight of all that debt was elucidated for us in the pages of yesterday's Wall Street Journal. Unfortunately, we threw away the paper before boarding the plane for Florida. But we remember the story. And if we're off by a trillion or two...so what? It won't make any difference.

You might remember, for example, the deficit for this year is said to be $1.1 trillion. That's the number reported in the press. But the real number is much higher. The real deficit, including the deferred expenses inherent in Medicaid and Social Security and so forth, is over $7 trillion.

And the real debt is usually misreported too. It's not $16 trillion - roughly equal to GDP. It's more like $70 trillion...5 times GDP. And even if you took 100% of all the income earned by America's taxpayers...it still wouldn't be enough to pay these debts and obligations.

Nobody talks about it. Nobody wants to think about it. Because the nation is going broke...and the only way to avoid it is to prune those spending programs heavily. We're not talking about paltry 'fiscal cliff' cutbacks...or sequesters. We're talking real chainsaw cuts!

What politician wants to mention that? And what clever state wants to stay on this sinking ship?

Cometh the problem....cometh the solution. Everybody's talking secession. The Scots and the Catalans are already voting on it. Many of them want out. And here comes the Great State of Texas, formerly the Republic of Texas...getting the itch too:

    With Stickers, a Petition and Even a Middle Name, Secession Fever Hits Texas

    HOUSTON - In the weeks since President Obama's re-election, Republicans around the country have been wondering how to proceed. Some conservatives in Texas have been asking a far more pointed question: how to secede.

    Secession fever has struck parts of Texas, which Mitt Romney won by nearly 1.3 million votes.

    Sales of bumper stickers reanding "Secede" - one for $2, or three for $5 - have increased at TexasSecede.com. In East Texas, a Republican official sent out an e-mail newsletter saying it was time for Texas and Vermont to each "go her own way in peace" and sign a free-trade agreement among the states.

    A petition calling for secession that was filed by a Texas man on a White House Web site has received tens of thousands of signatures, and the Obama administration must now issue a response. And Larry Scott Kilgore, a perennial Republican candidate from Arlington, a Dallas suburb, announced that he was running for governor in 2014 and would legally change his name to Larry Secede Kilgore, with Secede in capital letters. As his Web page, secedekilgore.com, puts it: "Secession! All other issues can be dealt with later."

    "Our economy is about 30 percent larger than that of Australia," said Mr. Kilgore, 48, a telecommunications contractor. "Australia can survive on their own, and I don't think we'll have any problem at all surviving on our own in Texas."

    Few of the public calls for secession have addressed the messy details, like what would happen to the state's many federal courthouses, prisons, military bases and parklands. No one has said what would become of Kevin Patteson, the director of the state's Office of State-Federal Relations, and no one has asked the Texas residents who received tens of millions of dollars in federal aid after destructive wildfires last year for their thoughts on the subject.

    But all the secession talk has intrigued liberals as well. Caleb M. of Austin started his own petition on the White House Web site. He asked the federal government to allow Austin to withdraw from Texas and remain part of the United States, "in the event that Texas is successful in the current bid to secede." It had more than 8,000 signatures as of Friday.
In the words of our friend Nicholas Taleb, central governments have become 'fragile.' Even as small storm could sink Greece...France...or the US.

And why should Texas go down with the ship?

Who owes the debt? The central government. Who made the promises and borrowed the money? The feds. Whose government is run by the zombies, for the zombies and of the zombies? That's right...Washington's government.

So, it makes sense to give the feds the heave ho. Texas would be better off on its own.

We're planning on starting our own secession movement in Maryland. The Old Line State failed to secede in the War Between the States. Taking a middle road of neutrality. This time, we're hoping Maryland will correct its error.

Free Maryland!

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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