The Rossis didn’t make it! The Blue Panda has failed!
In today’s Markets and Money we learn the fate of our intrepid Italians, fleeing to Switzerland with a box of loot in the boot.
It’s a case of life imitating the Australian Wealth Gameplan. Reuter’s reports that an Italian grocer and his daughter were arrested at the Swiss-Italian border after attempting to smuggle 50 kilos worth of 18-carat gold bars out of Italy. The $2.5 million worth of gold was found in a hidden compartment under one car’s seats. Authorities said the man was acting suspiciously and would not say where the gold came from.
This is a real-life version of a fictional event we staged a few months ago to illustrate what happens when capital controls are put in place as money dies. When people lose confidence in money, they take what they can and run. Our story involved a small Italian family by the name of Rossi.
The Rossis weren’t smuggling gold. They were trying to survive an ‘exchange event’. That’s an event where one currency replaces another and your savings are forcibly converted at a fixed exchange rate into the new currency, usually at a rate that results in the loss of purchasing power. A few months ago we speculated that people in southern Europe might begin moving their money north in attempt to avoid just such an event – unless they were stopped at the border.
There’s no fool-proof defence against such events. Owning precious metals might help, although they can be confiscated or declared illegal. Having bank accounts in multiple countries can help too, although this is getting harder and less realistic for most people. Converting wealth into cash and tangible goods that have exchange value is probably the only real alternative.
Is it really that bad? Isn’t hoarding canned goods and vodka for nut jobs and Americans? Well, maybe. But it’s a strange world we live in. And we happen to be both (a nut job and an American). You can imagine what our cupboard is like.
Speaking of paranoia, did we go too far yesterday in suggesting yesterday that armed drones may soon patrol civilian airspace in the Western world? Maybe not. In the United States – the land of the free and the home of the brave – the Federal Aviation Administration has approved 300 separate permits for the experimental use of drones in civilian air space within the continental United States.
Drones are actually unmanned aerial vehicles (UAVs). Most UAVs are remotely piloted by an actual human being, although the era of drones that can fly autonomously according to software and on-board guidance systems is fast approaching. In the US, an example of the FAA’s test program is a Texas county that spent $300,000 on a 22.6 kg ShadowHawk helicopter drone for the local SWAT team. The drone comes armed with a 40mm grenade launcher and a 12 gauge shotgun.
We live in a world where the President of the United States (a former professor of Constitutional Law) personally reviews and approves hit lists of suspected terrorists (including American citizens) – compiled in God knows what way – targeted for extrajudicial execution. And the sad part is that it’s getting worse.
Why not just upload a list of would-be or suspected terrorist and criminals to drones loitering at 35,000 feet over major cities. The drones could have the GPS information stored in your cell-phone so they can locate you and…you know…keep an eye on you, just to make sure you’re not up to anything improper. And if you are…you’ll get a hell-fire missile right up your tail pipe.
Yep, that’s rather dystopian. But it’s time to consider the possibility that the insolvency of the Welfare State, along with the developments in drones and technology, may lead to a stronger, more draconian, more suppressive state. One would hope not. But one shouldn’t self-deceive either.
for Markets and Money
From the Archives…
The Disconnect Between US Household Wealth and GDP Growth
2012-06-15 – Bill Bonner
Playing The Financial Markets – The Greatest Game of All
2012-06-14 – Greg Canavan
The RBA’s Mortgage Market Denial
2012-06-13 – Dan Denning
Spanish “Assistance” or “Bailout”
2012-06-12 – Satyajit Das
Priming Your Investment Returns
2012-06-11 – Nick Hubble