My post entitled Bare cupboards, cranky people, which discussed the social risks of a populist backlash, whether from the left or the right, brought a protest from a reader about the Tea Party movement:
The history of the Tea Party Movement has been one of peaceful advocates of limited government and conservative fiscal policy, with little comment on social policy.
The comment sounded innocent enough, but I was horrified to hear the reaction to Palin’s Tea Party speech [emphasis mine]:
For example, there are questions we would have liked this foreign terrorist to answer because he lawyered up and invoked our U.S. Constitutional right to remain silent…Our U.S. Constitutional rights. Our rights that you sir fought and were willing to die for to protect in our Constitution. The rights that my son, as an infantryman in the United States army, is willing to die for. The protections provided—thanks to you sir—we’re going to bestow them on a terrorist who hates our Constitution and wants to destroy our Constitution and our country? This makes no sense because we have a choice in how we’re going to deal with the terrorists. We don’t have to go down that road.
Was George Washington a terrorist?
A little over two hundred years ago, His Majesty’s Government was involved in a counterinsurgency war in one of the colonies. The rebels eventually won, but not before government troops used a number of harsh tactics which the new rebel government vowed never to impose on its own citizens. The new government affirmed the principles of the writ of habeas corpus, which limits the government’s right to hold prisoners indefinitely without bringing them to the justice system, and the right to remain silent when questioned by the authorities.
The rebel government, in case you hadn’t figured it out, was the United States of America. Under the rules proposed by Palin, people like George Washington could have been labeled a terrorist and made to disappear by the government of the day.
There would have been no recourse. The government could label anyone a terrorist. There would be no checks or balances. No appeals.
Is terrorism like pornography?
At the same time, Tea Party Movement believes in limited government. Do these people really trust the federal government to do anything right? Do they trust the federal government to label someone a terrorist and not make a mistake? Are federal bureaucrats to be believed when they label something a national security matter? Before you answer those questions, remember how the federal government in the guise of the SEC mulled national security status for AIG details.
Are terrorists like pornographers? You know one when you see one?
St. Barack of Chicago disappoints
People are just getting crankier because money is getting tighter and tighter. The New Yorker article, the Populism Problem, outlines how the American electorate is just mad, but they are not sure what they want.
I wrote before that St. Barack of Chicago was likely to disappoint because expectations for this president were so high. And inevitably he has.
The divide isn’t just split along income lines, but there are generational fault lines in different countries, e.g. Canada and Greece:
And - as the youths wearing pig's head masks on the demo today were keen to point out - there are young people like them all across Southern Europe. Longer term it's a contagious youth unrest from Thessaloniki to Lisbon that Europe's leaders may have to watch out for: "The PIGS fight back," said the banners today.
Instead of a straight class divide this crisis has fueled a more complicated generational one: older workers have been poor before and, some of them will privately admit, can survive being poor again. But for those in their early 20s to see all the aspirations fostered during the noughties canceled indefinitely is a pretty hard pill to swallow.
Political extremism = Market volatility
Meanwhile, more and more states are getting into trouble, services get cut, taxes rise and the risks of populist social backlashes continue to rise. Consider this example of what happens when politics get polarized under economic stress.
Todd Harrison of Minyanville put it aptly [emphasis mine]:
David Merkel of Aleph Blog echoed similar sentiments recently, “Just be aware that sovereign volatility has negative impacts on asset prices.”
Trust, credibility and faith are integral elements of financial stability. Perception is reality. It's not what is; it's what's perceived to be. Social mood and risk appetites shape the tape. These axioms should remain on our radar as we, the people, edge ahead.