Today’s bad decisions will become tomorrow’s disasters
The extrapolation from yesterday’s financial and business news is unavoidable: Big Swinging Dicks remain apart from the rest of humanity. Their perception of sustainable reality simply isn’t ours.
BP’s $16bn share swap with Russian group Rosneft sees the Kremlin becoming the single largest shareholder in the company. Anyone who imagines such a massive holding by Russians to be anything other than toxic must be mad. The American media and Washington political set (having damned BP with their hair-trigger tactics) immediately jumped on the deal as evidence of British crypto-Communist perfidy.
As the latest EU crisis summit got under way, Germany restated its opposition to increases in the €440 billion bailout fund, pushing instead for a plan that won’t unfairly tax its citizens – and also won’t do anything to mollify the increasingly cynical markets.
Meanwhile, the Dubai World $24.9 billion debt restructuring got the thumbs up from the chief executive officer of Moelis & Co., one of the advisers on the deal. “It’s a template for how to get a complicated consensual restructuring done,” Kenneth Moelis said in an interview in Dubai yesterday…without using that other parallel, ‘a recipe for disaster’.
In an unrelated incident, the advantages of global interdependence were pointed up as Oil prices skidded to near $91 a barrel on Monday. Some of you may be justifiably wondering why – given a global recession – the price went up in the first place. But just to confuse you further, the euro fell to $1.3271 from $1.3385 because crude, which is bought and sold in dollars, is more expensive for investors holding the European common currency.
And finally, Salavatore Ferragamo, the Italian-owned maker of shoes and accessories, increased sales by more than 25% in 2010. In fact across the US, very expensive fashion goods were up 13% – according to Bloomberg. Thirty years ago I bought my first wife a Ferragamo scarf, and the cost more or less emptied my bank account at the time. In the Sunday Times last weekend, one article referred to ‘the sound of bonus-filled wallets flapping open’.
Money and power change people far more than most observers realise. Once you have one of them, the other often follows by default. And ever afterwards, you will develop (of fall for) any theory – no matter how daft – explaining that not only do you need all of it, but that you must continue having more and more of it for the good of civilisation: even that it helps you “to do God’s work”, as Lloyd Blankfein infamously asserted.
You will also, on a near-daily basis, explain away the idiocies of any system delivering the power and the money. You’ll ignore safety precautions, get caught, and get out of jail by taking Mafia money. You’ll stand firm against markets without whom you wouldn’t have anything firm upon which to stand. You’ll chuck money into a fiery furnace, and explain it away as consensual restructuring. You’ll swap currencies in order to buy something that nobody wants. And you’ll blaze a trail through every upmarket Mall in the land, unconcerned that you are one in a hundred – and the other ninety-nine citizens have paid a fortune in taxes to support that retail therapy addiction.
Milt Friedman is revered by the 1%, because he said you have to have very, very rich people, otherwise you’ll be Communist within a generation. Last week, Bob Diamond said the time for banker remorse was over, but he felt no remorse anyway. The Republican Party fought hard to extend tax-cuts given to the top-end shopaholics, but then allowed Obama to extend the US deficit still further. David Cameron caved in to the City, and later explained his cowardice as a form of economic common sense.
Almost everyone on the planet assumes globalism is the future – despite the fact that globalised banking and interconnected currency/commodity calls ensure that another crash and protectionist tension are almost certain to occur. The EU has proposed some banking reforms, but they won’t be enacted for years. The US has effectively done nothing. Glass-Steagall remains history – a risk-fixated investment banker is now the head of a large UK retail bank.
Australia depends on a continued Chinese manufacturing boom, America depends on inderstanding Chinese debt-holders, China depends on the US and EU continuing to prosper, and Brazil depends on all of them. This is such an obvious traffic accident waiting to happen, it seems inconceivable at times that expressing opposition to monopolism in general and globalism in particular renders the critic mad in the eyes of the majority.
But that’s what happens when people have to believe – everything can be explained away: spending when you’re underwater, putting a value of $50,000 on a meaningless piece of paper, making more and more by using stuff we have less and less of, exporting crap that has to be recycled within six months, buying junk in order to cause inflation, buying a joke currency in order to support export targets, and yes – even giving 85% of the NHS budget to GPs while hospitals are starved of funds and their Trusts are in debt.
When Albert Einstein arrived in Princeton in 1941, he was shown his office and asked what else he might want. “Could I have a bigger waste-paper basket please” he said “to house all my mistakes”.
Even masters of the universe make mistakes. And every day this credit-based, banking dominated globalist lunatic asylum continues unchanged, we are heading more and more certainly for the awful consequences of its grave, hubris-fuelled errors.
UPDATE: 11.40 am GMT from the Washington Post: ‘Researchers have identified financial ties in particular as responsible for the “fast and furious” spread of crisis from one country to another. Trading activity between countries, however, can propagate economic sickness more slowly….’
The Slog 