The New Political Crisis - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 29 December 2012
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- By Asad Dossani, Author, The Lucrative Derivative Report


Asad Dossani
A few years ago, the world faced a global financial crisis . The crisis was a result of banks and other financial institutions taking on too much risk and too much leverage. Most countries experienced recessions or slowdowns in growth due to this crisis.

As we head into 2013, the nature of the crisis has changed completely. No longer are we worried about the solvency of banks, or the high levels of risk exposure of financial institutions. Today's crisis is a political crisis instead. Around the world, the economic problems facing countries are a result of political problems.

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In the US, the fiscal cliff has been created by lawmakers unwilling to work with one another to determine fiscal policy. In Europe, governments are faced with the task of implementing austerity measures to fix their ballooning deficits and debt levels. In India, a lack of government action in pursuing economic reforms is hurting confidence and growth.

The biggest threat to economies around the world is now political. From an investment perspective, this creates a problem. Over the next year, it is far more likely that market movements will be driven by what happens on the political front, rather than economic factors. Political actions are more difficult to predict. Actions are not necessarily logical and voters are easily swayed by what politicians do.

In some sense, this is a crisis of democratic governments. For years, democracy has been viewed as the path to economic success. Today, the excessive bickering between political parties and governmental inaction are the reasons why we have economic problems in the first place.

All political parties have a mission to do what is best for the country. Ultimately, voters and the population respect leaders who follow this philosophy. It is no surprise that most people have an extremely unfavorable view of politicians. As long as we have a political crisis on our hands, this is unlikely to change.

The only thing worse than a crisis is a manufactured crisis. And right now around the world, we are manufacturing crises everywhere. The good news is that we can end this crisis whenever we want. We just need to work together, and work in the best interest of the country as a whole.

is a financial analyst and columnist. He actively trades his own and others' funds, investing primarily in currency, commodity, and stock index derivative products. Prior to this, he worked at Deutsche Bank as an analyst in the FX derivatives team. He is a graduate of the London School of Economics. Asad is a keen observer of macroeconomic trends and their effects on global financial markets. He is deeply passionate about educating investors, and encouraging individuals to take part in and profit from financial markets. To put it colloquially, he wishes to take Wall Street products and turn them into Main Street profits!

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3 Responses to "The New Political Crisis"

Deepak Nagda

Dec 31, 2012

"All political parties have a mission to do what is best for the country." Now that's a laugh, at least in the Indian context, where most parties do not even pretend to say that. Most Indians have their loyalties cut out: self, family, clan, caste, state and FINALLY if at all, the country. The politicos in India will do the minimum they need to do to stay in power, which is something they want for enriching themselves,.

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SIVARAMAKRISHNAN

Dec 30, 2012

True. The manufactured economic crisis is the resultant of selfish motives and interests of the politicians. Every Country needs a strong and selfless service government and right now the impression that the people have on politics and politicians is more individualistic performance rather than a collective performance.

As long as paper currency is in force and the world not dependent on natural resources like Gold and Silver as transactions and compensations for all its requirements, the economic crisis can only be a manufactured one by the politicians due to poor money management of the economic advisory council of each and every country.

The crisis becomes worse when the management loses all its moral values due to gluttony and what we need is a fasting to balance it, as you rightly said in one of your previous article.

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PLR

Dec 30, 2012

It is a factual observation that the present day problems are connected with the ills of progress of
democracy. World concluded that Democracy is the most
needed form of governance. As you observe it has the
greatest disadvantage with the development of rulers in political,economics and moral development .
People have come to the streets when Life itself is in
danger, doubtful of the existance of family as UNIT.
Poor are getting poorer. Innocents are driven more to
innocence. Power is being transferred to fewer and fewer
so also wealth. The only way LEADERS can rise to power and hold is by polarising people. They can, then only,
implement policies.,

Your observations cover wider range of failure of
democracy as a tool. It is no more viable.

PLR

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