Governments have three ways to deal with debt loads of this magnitude: The first is hyperinflation designed to destroy the payoff value of the debt, second is the official repudiation of the debt or third, a combination of both options.
Attempting to hold the bankers accountable is not an option. The investment banks like Goldman Sachs and a few others have already made their money packaging and selling the debt and derivatives so they are now out of the deal. At this point, the world waits for eventual sovereign debt repudiation.
The first nations to repudiate sovereign debt will have the advantage; this is why restored nations should repudiate these debts and not burden their new national economy and citizens with this junk debt. In addition, these nations should repudiate their existing politicians and representatives, controlled by the financial elites who supported the debt accumulation; because once independence is restored there is nothing to stop politicians on the take from doing the same thing again.
European Style Secession Fever
Now, there is no question that regional secession has a bad reputation, primarily due to the bloodbath that took place in the United States from 1861 to 1865. Today, most national governments strongly oppose independence and secession because this legal and legitimate action reduces tax revenues. However, few governments would consider the deplorable Lincoln alternative of military conquest that killed almost 600,000 Americans, North and South.
Although the establishment press issues many negative news accounts about secession fever sweeping Europe, I believe this is actually a positive political development and possibly the only solution to the sovereign debt crisis. For instance:
The Return of the Venetian Republic?
Catalonia Secession From Spain
Bavaria Interested in Secession
Europe's Richer Regions Want Out
Secessionist Wave Sweeps Belgium
Flanders Wants Out of Belgium
Scotland Seals Terms of Historic Independence Vote
Some Want Out of the USA
It is time for the restoration of formerly independent countries, each with their own unique cultural and ethnic heritage, that were forced at gunpoint into larger empire states. My recommendation is to leave most of the illegitimate sovereign debt behind when they go.
Venice wants out of Italy, Catalonia out of Spain, Bavaria out of Germany, Scotland and Wales want to leave the United Kingdom, the Flemish want out of Belgium. Even Vermont and some in the South want to regain their former status as sovereign republics separate from the most debt-ridden empire in world history, the United States.
Just as important, Greece, Italy, Ireland, Spain and Portugal – and there are even demands in Germany itself – want to leave the EU and euro witches' brew created by their leaders. After all, the EU is a failure and these member nations may have to leave the European Union and restore their national currencies in order to grow their economies once again.
The Necessity of Sovereign Debt Repudiation
Once austerity measures and tax increases have bankrupted most of the private sector and the current sovereign debt crisis reaches critical mass, then every nation will repudiate most of its debts as well as renege on promised health and social benefits. Newly sovereign nations can act now to position themselves with a distinct advantage when this occurs. These nations will have been able to limit austerity measures, reduce confiscatory tax increases and safeguard their citizens' private wealth by repudiating sovereign debt. If these steps are taken immediately upon independence, they should be able to avoid the majority of economic collapse caused by the coming Western sovereign debt repudiation.
Citizens are deservedly outraged at their politicians, bankers and governments and new governments, taxing jurisdictions or political lines drawn on a map may provide some nationalist, cultural or historical benefits. But independence without repudiation will do nothing to solve the collapsing standards of living and crippling austerity measures I see in our collective future.
Most of the countries in the West will eventually default on their sovereign debts using a war or financial crisis as the excuse. Like the Reichstag fire under Hitler, the excuse can be either a manufactured black-flag event or a policy readied in advance and implemented when the right excuse comes along.
This will not happen until most middle-class wealth and benefits, including retirement and health benefits, are stolen using the twin theft traps of austerity or hyperinflation caused by the sovereign debt crisis. For once, even most government employees will be raped and pillaged, as their promised benefits will evaporate because in the future their make-work jobs alone will be enough to guarantee their votes. It isn't like most will or can work in the private sector after a lifetime of government employment.
History Shows All National Boundaries and Structures Change Over Time
All government boundaries and structures change over time. Comparing a map of early 20th century Europe, Asia or Africa with one outlining national boundaries or tax jurisdictions today makes that clear.
The same is true for governments, Russia being a case in point. It began the 20th century under a monarchy czarist government, became communist in 1917 and later returned to a similar centralized government under Putin, following the collapse of communism and the Soviet Union.
The United States fought for independence and was governed for over a decade under a confederation form of government like Switzerland until the Constitution was instituted. Then it was a decentralized republic until the Civil War when it shifted to an increasingly powerful Washington government until the early 20th century when it became an empire.
Early forms of governments began under tribal associations where chieftains led and the people followed. This was then often either supplanted or combined with religious institutional leadership to better control and manipulate the population and take their crops, wealth etc.
Later with the rise of the Roman republic and its transition under Caesar into a worldwide empire in the West, government ruled with some degree of benefit for the populations. Following the fall of the Roman Empire in the West, once again chieftains, who eventually became royalty and monarchs, ruled alongside the Church for centuries until the Protestant Reformation developed with help from the Gutenberg printing press. Then the Catholic and Protestant churches ruled in conjunction with monarchy and the divine right of kings. The Protestant movement split into many Churches and religious institutions, some in support of government and others in opposition.
At first, wealthy and educated people began to rightly clamor for a parliament and for a say in their government. This citizen input really improved government and for the first time made it accountable to the people – at least those educated and with property. This was probably a time of the best government in the West.
Parliamentary democracy grew in popularity along with the growth of money, trading and banking. Central banking actually began in Venice and broader forms of democracy were added so that wealthy banking families could rule behind the scenes under the cover of mob-rule styled democracy. As the power of monarchy and the Church weakened, democracy evolved into mob rule of the masses and politicians were forced to borrow and go into massive debt in order to stay in power by promising more than the government could provide. This in turn has led to the sovereign debt crisis the West is facing today.
This has now turned into an austerity and sovereign debt crisis, and people rightly long for a return to local accountability and leadership under their smaller and culturally distinct governments. The result is a growing secession movement toward regional, independent governments and away from the new but distant supranational governments like the European Union. This is good news for liberty and prosperity but bad news for the power elites wanting to control wealth and people across the Western world.
Following are a few thoughts on home rule, secession and the restoration of independent nations:
Follow the New Guard Rather Than the Old Elites
New nations today are usually the return to nation status of a country or region forced by previous military force or non-elective actions to join a union such as the EU. Supporters and advocates should follow the real independence leaders and parties rather than any "Johnny-come-lately," old-guard political hacks or existing parties who see their power and control challenged. Beware existing political elites who often will do anything to maintain their power base and financial incentives, even for a time becoming "patriots."
Repudiate Much of the Existing Sovereign Debt
Remember, all sovereign debt principal and interest/debt servicing accumulated over the last couple of decades are just a giant Ponzi scheme, run for the benefit of the banks selling the debt and the politicians using borrowed funds to buy votes and temporary political support. This is a most cruel and illegitimate type of generational theft and debt whereby politicians, banks and voters of one generation actually work together to better their situation at the expense of future generations.
Sadly, majorities in the West have chosen to steal from their children and grandchildren in order to live it up today. Instead of creating a legacy of wealth for their posterity, too many of this generation have stolen and squandered the economic future and prosperity of the next generations.
Create An Independent Currency
Why should a shadowy, central banking cartel have the sole, very lucrative franchise in each nation to create the fiat paper money supply out of nothing, thus enriching themselves and their backers at the expense of each nation and citizens? Central banks, if they exist at all, should be loyal and accountable to the nation in which they are domiciled and operate under close audit and supervision by the government and the people in each national jurisdiction. Of course, each nation should decide whether to offer fiat currency, a commodity-backed currency or currency competition including private alternatives.
Learn From Switzerland, the Only Successful Political Structure in the 20th CenturyEach new and restored nation must, of course, meet the unique needs and demands of its population but why duplicate failure with the same politicians that earlier led that nation to ruin and bankruptcy? Although there are exceptions, the replacement of national government politicians with local or regional government politicians who formerly supported the federal structure – or in the case of the EU, supra-national government structure – accomplishes little of substance.
I consider Switzerland, with its decentralized confederation form of government held in check by its citizens through the political rights of referendum and initiative, to be the best government solution for prosperity and liberty. This is ultimately the reason Switzerland did not join the EU and why this nation with few natural resources is the economic success story of the world.
Therefore, to the coming restored nations of Europe, I wish you well in your attempt to break away from powerful interests and foreign central governments that have forced their control and authority over you. May you succeed in the restoration of a legitimate local and historical government that hopefully will avoid the mismanagement of your economy, exploitation of your resources and destruction of your heritage, culture and prosperity.
As you undertake this endeavor, keep this in mind: All government bureaucracies grow until contained, taxes rise until curtailed and politicians borrow and seek power until thrown out of office. A limited confederation style of government is the best way to ensure that power and authority remain with the citizens instead of the powerful interests that always seek to corrupt and take over government to benefit themselves over the citizenry.
Hopefully, all formerly independent nations and free people are able to peacefully withdraw from the larger nation-states with restored sovereignty, increased freedom and a limited, confederation form of government. They can thereby set a political and economic example for other nations in the EU and elsewhere that smaller, regionalized government is far superior to large, inefficient nation-states.
Remember, smaller is always better when talking about the size and extent of government.