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The Forecast

The paradigm we've called Globalism is falling apart now. Followers of Tom Friedman (The Earth Is Flat) tried to put across the story that Globalism would become a permanent feature of the human condition, an idea I regarded all along as utter nonsense. Rather, Globalism was a set of transient economic relations characterized by particular conditions of a certain era (the post-WW2 cheap energy era), and that when history moved on, Globalism would dissolve. As is the case now, first in the unraveling of global financial arrangements - a terrifying matrix of irresolvable mutual obligations that are destined to be repudiated in an ugly way. Everybody owes too much money to everybody else. A worldwide game of financial musical chairs is currently eliminating various nation-players too weak to plant their asses in the diminishing chair-space. Iceland dropped out first, then Greece, then Ireland, and so it goes. Entering 2011, the trouble is that the world is out of runt countries to shove to the sidelines. There are Portugal and Belgium to go, and from these on all you've got are nations too big to fail and too broke to keep going, the most conspicuous being Spain.
The Euro took center stage in the global financial fiasco in 2010. I don't really see how that medium-of-exchange endures when so many of the exchangees are economic basket-cases beating a path back to pre-1850 modes of existence (if they're lucky). The serial bail-outs engineered by the European Central Bank have been shams based on an imaginary "fund" that really only amounts to more promises of back-stops by bankrupt countries to other bankrupt countries. In the grand gesture last fall, around the collapse of Ireland, promises were made by the ECB to give the appearance that the usual suspects (the PIIGS) would cover their quarterly debt service obligations to March of this year. No real money was involved, only assurances, which will soon be revealed as empty. Bottom-line: another graver round of debt crisis in Euro-land in the first quarter if 2011.
It can only be resolved two ways: by 1.) countries defaulting, dropping out of the Euro monetary system, returning to a currency of their own and activities that reality will admit; and 2.) Germany, France, and Holland taking the others in like poor relatives and paying their living expenses. I really don't see Number 2 working out. The voters in the bigger three economies will revolt. Of course, the Number 1 route implies the destruction of a whole bunch of European banks, perhaps all of them, and their shareholders positions, and big trouble for the wealthier Euro member countries - ultimately leading to the same place: a lower standard of living, even in Germany, for all its frugality and efficiency.
The United Kingdom is in a strange class of its own. It uses the pound sterling, not the Euro, yet the City of London (their equivalent of Wall Street) is the banking capital of Europe (and the Middle East and Africa). For a while now, the City has been the UK's sole economic generator, lately specializing in swindles and Ponzi schemes, just like America. There's not much else left in "Old Blighty," not much coal mining, or shipbuilding, or making those fabulous tin soldiers we got for Christmas in 1956. If the City goes up the spout, the UK has no economy left at all. On paper, the UK is epically insolvent and, unlike Spain with its Euros, the UK can't even hold the rest of Europe hostage. It just sinks. Living standards ...читать дальше.

Спонсор месяца - ВотИменно.Ру, первый в России безрисковый нейминг-сервис.