The 'Sucker Punch' of the Markets

I give a good impression of being a pessimistic gloomster, often. For most of the past two years I have been warning, irrelevantly, about what would happen when trillions of dollars of bets in the pyramid that the global financial system had become met with volatile oil prices, and an unsustainable housing and credit boom. I have also noted how frequent cyclical collapses in the economy were, and how major recessions turn into depressions and deflations. I've noted how much people have been sidetracked by a cult of global warming for which there is no evidence, and have been depressed by how things like the private finance initiative and political venality have suppressed a real debate.

I've also suggested how journalists have personal reasons not to communicate the truth. It's partly a herd instinct, partly to please the people who pay them, partly because most of the professional classes seem to live a debt-driven life in denial about the most basic of truths. Occasionally, I've crossed swords with people on the blog who've given themselves over to narcissism, inconsistency, and lies (though I do not pretend to special status myself).

I also began to see the present crop of political leaders when they were younger or my contemporaries two decades ago. Their hypocrisy, selfishness, lack of moral fibre, philistinism and silliness was evident then, as was their warm embrace by party machines and their divorce from any real issue. I challenge anyone who was a student in the 1990s, or who is a member of a profession, to say that they expected anything different of this generation.

I wish that I were wrong. The trouble is--and it's seen me be wrong about swine flu recently, for example--history is sometimes a guide so long as one doesn't look to the immediate past. I'm an historian, amongst other things. I would suggest to you that those who are claiming 'prosperity is just around the corner' ought to look to 1931. Then, there were rallies in stock markets. There were 'ups' in confidence. But they were followed by a remorseless downward spiral.



We've roughly been following the path in the graph above. I was also struck by this piece by Ambrose Evans Pritchard, who is often even more 'all over the place' than I.

'V-shaped recession'? Please. That means inflation is hurtling towards us. 'Relentless decline'? I really don't want that to happen. The most realistic view that I think that I can accept is a rise in stock markets, a 'sucker punch' and then the gradual consolidation of three global countries--one debt ridden, anxious and stressed, and constantly lied to, the other self-righteous, empowered and protected. A third, of course, would be those at peace in the palm of God; but since there are no countries in heaven, they would emerge from the previous two and may even be a fetish of my own, were I bereft of Hope.

It's frustrating to watch this in the context of the mutual spiral of the west and of oil and of water and of debt together and to know that there are ways, receding as they are, in which we could have avoided and can avoid it all. Very depressing indeed. I feel like Augustine watching the fall of Rome, rather than Gibbon hoping for a rise of reason.