The Slog’s predecessor nby opined at the end of last year that the world financial, economic and cultural crisis was about 25-30% over. At some time during the next nine months, we will be seriously into the middle segment of this unfolding change from one way of life to another. I have no more idea whether the process will peak later this year, halfway through 2011, or by the end of 2012, because I can no more predict the exact catalysts (and the exact responses to them) than anyone else can. Further, the 2007-8 crisis taught me that predicting speed of progress once the train leaves the tracks is a mug’s game.
All one can do is point out – again – the obvious reasons why we must endure more culture shock:
* The gold, the power and the impetus is heading East
* Western capitalism can only keep going by everyone spending more than they earn
* Leading G20 politicians are in denial about the system’s structural dysfunction
* A tiny minority of madmen remain convinced that they and they alone deserve to have all the cash and usurp all the power
* The financing of business is overdependent on Bourse insanity.
* EU implosion, Russian instability, Chinese ambitions and an energy crisis have all arrived at the same moment
* Nobody is even thinking about fiscal and banking reform -let alone planning and implementing it
* A combination of media avarice, educational dumbing down, and lost civic values is creating feral citizens at all levels of Western and African society
So as a rest from marvelling at the tall but shaky edifice that is our political Ivory Tower, here are some of the latest railroad signal-boxes pointing in the wrong direction:
Lenders in Arizona, California, Minnesota and Florida were closed by regulators, with the Federal Deposit Insurance Corporation (FDIC) named receiver – bringing this year’s total bank failures to 68. U.S. banks are collapsing amid losses on residential and commercial real estate loans, and the FDIC’s list of “problem” lenders is the longest since 1992, at 702.
As Greek deficit contagion officially spread to Spain and Portugal, the Euro lost 4.8% in five trading days. Jolted into action by the sliding currency and soaring bond yields in Portugal and Spain, leaders of the 16 euro countries worked all weekend on an emergency ‘backstop’ fund. ECB chief Jean-Claude Trichet, having effectively underwritten Greek bonds, is (surprise, surprise) now under pressure from Iberian banks to do the same there.
The Europe 600 index dropped 8.3% this week. The FTSE dropped 500 points over the same period, and the Dow 800 points. Gold – the ultimate barometer of fear – zoomed back up to over $1200 an ounce.
Bloomberg quotes ‘a senior UK official’ this morning saying that “Britain won’t contribute to the fund aimed at euro countries that essentially duplicates the work of the International Monetary Fund”. This is weasel stuff: it’s no longer about the IMF, because the new plan now is for the EU to launch a war-chest without the IMF: and Britain will have to pay for this….which will drag us down with the Euro.
This last point is a killer from the UK perspective. We can’t afford to get involved in this, because we’re drowning too. As today’s earlier post suggests, neither media nor negotiators have spotted that, outside in the real world, the British people just got volunteered to join in a bailout process of which they may later be luckless beneficiaries of too little too late.