The Ratchet

It was possible to foresee what is still not quite here yet. It isn't a recession. It isn't a slowdown, or one of the other euphemisms. It's a previously avoidable but now practically inevitable Depression at the end of our long boom.

Journalists, bloggers, and sundry marginalised economists have been warning of trouble for quite a while. I distinctly recall walking down the high Street here a summer ago and wondering how many of the stores were going down. As I have noted a few times before, if I could see it coming, people who were paid a lot to should have as well. People who were actually listened to should have warned others, shouting from the rooftops if necessary, of the sound from over the hill.

I say that with no triumphalism. Over half a million Americans lost their jobs today, Southern Europe is in freefall, inter-bank lending is becoming cheaper because of demand falls rather than supply easing, and fairly soon we're going to see states and nations unable to pay for their borrowing.

With each new descent we are breathlessly told 'this'll do it, we're bottoming out'; but the truth is, we are barely into the abyss. Here's what is going to happen, in no particular order.

48 of the United States are going to find it incredibly difficult to maintain their spending, borrow, or raise taxes.

Consequently, they are going to try and crowd out Federal investment, which is available because the US debt ceiling was raised during the 700 billion dollar fiasco (few noticed) to nearly 12 trillion dollars. But the 700 billion that brought the debt to ten trillion has already been accompanied by another 800 billion of pledges to underwrite banks and businesses in the last days of the Bush administration.

Barack Obama seems to want to promote schemes that may cost another seven hundred billion to put shovels into the dirt within months of taking office. That doesn't leave too much to pay off state debts. Unless America or American states want to default--sooner or later-- the Americans will have to raise borrowing or print money or create some parallel gas-voucher/mefo bill type currency.

Meanwhile, Germany, and smaller states like Canada, which have run their economies reasonably well, will come under desperate pressure to bail out spendthrifts with no room to borrow or inflate themselves out of trouble. Within Canada, the Parliament has already been prorogued until nearly February, when things will start to get bad; in Germany, a bare knuckle fight seems to be shaping up beneath the surface to decide whether to do what Herbert Hoover, but for an accident of electoral timing, would have done (and what Ramsay MacDonald and Neville Chamberlain did), or what Franklin Roosevelt and Hjalmar Schact achieved. I haven't read of anyone exporting hard earned euros south, or west.

So there will be a currency crisis in Europe. This will play against a backdrop of a Chinese descent, and a world recession that will depress the price of oil yet further but also derail any oil discovery or replacement projects. India will start soaking up African and Russian commodities, but the regional imbalance will be open to severe military destabilisation. Peak oil isn't peak prices; it is massively unstable prices and a diminishing, but ultimately much more expensive flow in supply.

Sooner or later, large numbers of people will start moving in north africa and asia unable to sell to western markets, and seduced into slums by a globalisation that has radically shrunk. They will follow the gas and water pipes and the mediterranean world is going to have to work out what to do whilst gripped by its own crisis.

And then there is Britain. A country that wasted God's gift of North Sea oil on a class war in industrial cities; that massively inflated debt in a vain attempt to make everyone a parody of the indebted bourgeois and brought in immigrants to do the jobs the education system and despair displaced the native working class from doing. A country where to save has been folly, which is about to be punished by negative real interest rates, and where deceit and rip-offs have grown exponentially.

A country where politics is a shouting game between 'progressives' who want to define everyone by sex and sexual attitudes and distaste for families and religion, skin colour, personal practices like drinking, smoking or weight, and 'conservatives'. These conservatives are in truth, socially and intellectually exactly the same people. They are just differently selfish. Class beats the politics of no-difference distinction every time.

This is a country that abandoned most of the effort to make anything, and which gave itself over to a sort of aspirational treason that destroyed or overpopulated most institutions with people who had no interest in maintaining them. I have a feeling Britain is going to see the most radical adjustment of all. As, outside, South America considers debt default, the British are going to wonder why trains subsidised with four times what state companies got are running half empty and half cattle-class, and instead of moaning they are going to start invading carriages or refusing to pay inflated fares.

People are going to wonder what supermarket and store discounts are for; what a government that was only elected by two out of every ten electors, or seven out of every twenty actual voters really does. They are going to wonder why banks can gamble with savers' money, then demand subsidies, then claim droit des affaires and refuse to pass on interest rate cuts.

British people are going to wonder why their lives are made inconvenient or even criminalised by public servants who do not believe in rubbish collection whilst they pay inflated taxes so the political classes can pretend that the world is warming and that they are standing at the rhineland, warning the armies of temperature away. Almost every reputable, open, transparent scientific survey now shows a cooling world. What happens when people realise the media and political class have been lying to them? Does anyone even acknowledge so massive a deceit?

But the biggest shocks will come when people realise how much of their country was sold to a lie of lifestyle, of useless goods, of relativism, and of the grotesque cheapening of life at the hands of overworked and underfunded medics and eugenicists many of whom didn't really know what they were on about.

Mixed with the hunger and bankruptcy of a bankrupted country, some very dark energies will be released as the high streets go down. This week, a bill was passed in parliament to seize and redistribute 'dormant' bank accounts. What happens if the government amends it and takes active ones, down the line, or even a portion?

I do not pretend to know where they are going to go; but I want to use this first winter season of the New Depression to lay out where I think they should go, in the occasional article and in the Campaign for Public Ownership that I want to help get going. In a small way, I've been working on that--come and join us on facebook.

Tomorrow, and tomorrow, and tomorrow, the troubles that even the dogs in the street could feel coming will arrive. They won't stop for a long time. I do not believe, however, that even in a hollowed out culture in which the recession is starting, uniquely, amongst the middle classes, that there is not the human capital to make something worthwhile.

Pay down debt. Ignore the nonsense of the political-media class. Nurse those things that give you hope, and love, and faith, and get ready. The end of the great boom, coterminous with the end of narcissistic, modernist, new right and new left politics, is here. If we have goodwill and courtesy to those with whom we may disagree but with whom we could achieve things, we could all use the rubble to change the world.


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