Teasing a Storm

In Britain, a general election is going on. This competition has the flavour of a sort of superior audition for regional manager of a delusional homecare store, set around with shoplifters, in front of customers who have not had the kitchens they ordered flat-packed several years ago. The mood is resigned, bored and indifferent. Members of the media class are talking witlessly to each other, as usual, and, where anyone has any economic perspective at all, people are declaring as in a dream that the economy is located in some sluggish twilight recovery in which, occasionally, claims emerge that halving the deficit or lowering the size of government here or there will do anything about the debt crisis that is gathering.

Deficits, of course, are not debts, though I notice that all the British candidates, and many of the American ones, are acting more or less as if they were. It takes effort to cut deficits, but it can be done. It's easy to promise to lower them. One spends less or taxes more. However, debt is poison when held at inflated levels. Any deficits grow them. They lead to currency falls, higher taxes or inflation. Beyond a limit of around 120 % pf GDP or so, they lead to bankruptcy.

Britain, Spain, Italy, Greece, Ireland, Portugal, and, bizarrely, Germany, are now operating near their tolerances for debt. Many of those states have hidden the true size of what they own through various public accounting techniques. These debts would destabilise the economy and guarantee trouble in any world. I think, however, that you don't have to have the Venerable Bede's ability with riddles to see what could very shortly burst over our heads.

Firstly, Greece is a problem for Britain because British banks, as with Iceland, are over-involved with it. It is a basket case and always was and our banks always have been greedy and stupid. The two are a match rivalled only by Sin and Death, or possibly a sort of cut-rate Gog and Magog. Lear's daughters are Charlie's angels compared to them. Greece should never have been let into the EU, and especially the eurozone on the terms on which it entered and British Banks are a menace to any idea of civilisation or democracy and always have been.

But the quiet air is thick with the sound of other Europeans shuffling backward from Greece as the markets line up their shot. They are, barring a miracle, going to slip into default fairly soon and our banks are going to be stung.

Greece is also, unlike Dubai and the UAE, a sizeable town on the road to Byzantium; which is to say, the small places fall first, then the bigger ones, then the forces that would bankrupt states can head for Britain and Spain, then America is open. That's the significance of that place for you, if you are reading my words from some fastness on the Plains.

The Big One is more vulnerable if Greece falls. More importantly, a Greek fall would also start a process whereby Britain and America could be brought face to face with their debt, in operations centred on London markets, within weeks. When the British are very likely to have no government, or an inexperienced one with a small majority, that is serious. When the Chinese are preparing to 'sterilise' their surpluses, by floating the renmimbi (which everyone fears because Asian and western investors could then dump the dollar and use the Chinese currency), serious warning bells should be ringing.

In a few short weeks, events could come together that might begin a test of where the breaking point of our societies is. I think that governments, if they are alive to this, must be working to forestall it. Somewhere, an ultima-ratio plan, of simply suspending and rescheduling sovereign debt in the former G-8 must be being prepared. It would involve the first forced bank holidays of this generation, and a debt jubilee of a sort that could only mean chaos.

I hope that I am wrong and that the general air of recovery that people who don't look at these things have about them is symptomatic of an actual passage away from the depths of the past few years. But, well, it is April. Spring, Hares, false summers, misplaced and half-remembered TS Eliot quotes about cruelty, and fools are the order of the day. This is a month of hope and disillusion.

A remarkable false recovery appears to be underway in the USA, despite huge falls in the workforce, a fourteen trillion dollar debt, and no obvious means of sustaining the recovery. The atmosphere in Europe is, frankly, mad. Britain has given up thinking about anything as political leaders pretend to care about what journalists and other politicians think--having given up on the population ages ago.

Something, I'm sure, is brewing. Remember this, and feel free to throw it back at me in the next nine months or so if I am wrong- Greece leads to default which leads to debt which leads to rescheduling which prompts or is accompanied by the emergence of a long-mooted and probably long-planned Chinese float. We are skirting the edges of a perfect storm, teasing it almost, and there is only one way for that process to end--barring a miracle. You cannot tease a storm.

Comments

PJMULVEY said…
Martin....in furious agreement and the crazy component about this mess is that it appears to be orchestrated. Having all governments failing (remember the bank crisis - too big to fail!) allows the one-worlders and plutocracy to have The Crisis that allows for their perfect solution - global government with one ruling bureaucracy and one currency. Their argument will be the inefficiency and incompetency of national/local governments can only be solved with global government. Never mind that they were the ones who engineered the mess.........but Martin despite all of this the average Brit or American is more concerned about celebrity, sport, fashion, etc. The last two generations or so have been dumbed down by the educational system, anesthetized by elective warfare and propagandized by the oligarchic media. History (and Providence) has produced leaders - Charles Martel, Charlemagne, Jan Sobieski and others who have appeared when all appeared lost - we desperately need one today to rally the opposition before it is too late.

Popular Posts