The liberal-to-Left British journalist Paul Mason made quite a stir at the weekend with his piece, ‘Has the economic Armageddon already begun?’ Paul (left) has a tendency to be late for every party, and then when he gets there to wonder who’s giving it. His book about post-Capitalism is selling well, I understand. But his brush-strokes are too sweeping, and he is catching up with the Wave, not riding it.
Crash2 was a certainty within three months of 2008’s near-Domesday relief setting in. From that moment on, bankers, bureaucrats and legislators started using their muscle to stop every reform, filibuster every attempt at regulation, and fix every market sector in order to give an utterly false impression of what’s been going on. The spineless political response to this has enabled socialist writers like Paul Mason to claim that capitalism is the endemic problem….and of course, people like him have the answer.
In reality, he’s way behind the music; the belief in neoliberalism aka greed and its mad nephew monetarism has taken hold among a majority of the intelligentsia – along with most of the smuggies benefitting from it at the next level down. The outcome has been a banking sector far too interconnected, and engaging in inter-bank trading that is as pointless as it is dangerous. Alongside that, the infectious leprosy of globalism has produced bourses throughout the world that must constantly gnash their teeth about everything from Chinese output and Australian mining to EU borrowing, ClubMed austerity, American debt, the Brics, Russian oil dependence and Singaporean property prices.
Nothing and nobody can now contain the growing cracks in the dam, but the dam itself is not capitalism: it is globalist monopolism and shadow banking insanity exacerbated by rigid monetarism. It is the end (at last) of the Thatcher-Reagan illusion of lower taxes, deregulation and reduced wage costs producing the Golden Age of Wealth trickling down….to which There Is No Alternative. Self-serving sociopathic laissez-faire is the creaking foundation here, not capitalism.
In almost exactly 40 years to the day, the West has gone full circle from being under the cosh of greedy trade unions and over-expectant Welfare entitlement to living under the jackboot of greedy bankers, media megalomaniacs and tax-evading global corporations who have bought the political class lock stock and barrel.
What comes next is anyone’s guess, but it better not be socialism. Been there, done that, got the teeshirt, had the Slade Union concrete dropped on my car etc etc. We need another idea – not journalists who are on the wrong page and peddling old ones.
The myth of globalist growth needs to be dumped forthwith. So too the ridiculous idea that people being forced to work for less can fuel consumption growth where margins are supposed to increase alongside volume. We need to scale capitalism down, take the power of money out of politics, switch the emphasis back to SMEs as the drivers of real progress and real jobs with real wages, and reduce our investment dependency on bourses.
But my fear for nearly two years now has been that the rising waters behind the dam are being supplied by such a hugely complex series of rivers and streams, when it breaks nobody will really have a clue what the causes were and why it all needs to change….and worst of all, legislators will use the resultant confusion and mayhem to clamp down on liberal democracy as we know it. As Brits who are awake know, Theresa May is already drilling down into the detail of that one, and the London Mayor has his crowd-control fencing and hoses at the ready.
The dam and rivers analogy itself falls down because the domino effect is missing. The aggregation result is real enough – as is the water rising with most people unaware of it – but the dominoes of banking and global interconnectedness are also at the core of what’s wrong. The process is not difficult to spot…on a daily, nay – hourly – basis.
For example, there’s a good piece by the Wall Street Wolf this morning about Sovereign Wealth Funds. They’re mainly Arab derived, and have been a way to invest the huge surpluses of the good ol’ days. Lots of other investors and institutions invest in packaged versions of them because confidence attracts wealth, and vice versa.
But now the bad new days are here: oil has been over-supplied for reasons ranging from commodity war to sheer stupidity, and demand for it is falling. It’s price has halved. Funds are being pulled out of investments to make up the oil-producer shortfall. As we saw last week, funds under investment per se are falling: now Wealth fund management outfits are going to struggle. And die. Domino 1.
Arabs previously with tons of money were also huge investors in US Debt. Chinese governments also did the same when they had huge investment inflows and massive export incomes. Now the first is disappearing and the second is collapsing. This means a falling market for US debt. Domino 2.
The word on the Street is that Deutsche Bank in particular (and others) are hugely exposed to this sea-change. And obviously, specialist firms like Blackrock and State Street are in very deep poo as their fees start to wane. Domino 3.
It’s not rocket science, is it? But when what’s happening (and it’s been happening for five years Paul – roughly since the time you were telling us about Ed Miliband’s ‘political brain calculating what kind of alliances he has to build, and going into a holding pattern until the dust settles’) can only end one way, somehow the soi-disant economists of the world seem unwilling to recognise inevitability.
The model is not just broken, it’s on fire. One day fairly soon (as yet unspecified) it will burn the house down. Until then, I’m feeling better employed writing about other stuff – cultural and attitudinal – that has always been the wonky-wood foundation of this, Our House. What I describe above – ‘Self-serving sociopathic laissez-faire is the creaking foundation here, not capitalism’ – is itself only a reflection of how families, education and Big State thinking have failed. The malignancy is decivilisation.