Monday 7 January 2013

Change, Society and the Credit Crunch


I recently fell into the 1992 film with Mel Gibson, Forever Young. The film is about a guy, who is deep-frozen in 1939, waking up 50 years later as a couple of kids pilfer with the power supply to his long forgotten cryogenic coffin. In real life there are many people who pay for this delusionary “treatment” in the hope that future medical research can cure them from whatever fatal illness they carry in their body.

The major fallacy in this hope is not even the fact that their cells explode and are destroyed by the freezing process. The real rub is: will there be stability and continuity in society for even the foreseeable future – let alone the required 50, 100 or 200 years ahead? Or will the object of their efforts drown in war, broken energy supplies or something else?

I think I can say with 100% security:They have wasted their money.

This brought me to think about where else we make this mistake: that life will just go on and on and that the changes we experience will be manageable and arrive piece-meal, giving us plenty of time to adjust. In other words, how many years will pass between major societal discontinuity points?
West European people being up to 67 years old have lived through the longest period of stability ever experienced by anyone. Until recently this part of the world has had a voice with a lot of weight, i.e. “we write the history”, as we were the winners of WWII.

But even within the W. European borders there has been massive change, in some cases for the better, in other cases containing the seeds of massive disasters – we just forget. Spain and Portugal shook off their dictators. We (almost) got rid of 3 rather terrible ideologies: Fascism, Nazism and Communism.
Unfortunately we imported a fourth, a desert culture that preaches as much hate to people of a different belief as the old monsters. The European Union was established, as it grew out of the Coal and Steel Union, an attempt to establish free trade coalitions and the idea that the EU could create long term peace in a historically war torn Europe. (I shall deal with that fallacy at a later time). The technologies developed during WWII have been refined into peace technologies, applied in medicine, physics, electronics, communication and general infrastructure. This has created rich and prospering societies that seem to have become immune to the danger signals.

European overseas colonies became autonomous in the 1940s-70s, leading to mass immigration into Europe. Poverty and wars elsewhere send more people on a migration path, changing populations and religious demography beyond recognition. The effect is dramatic, as the original populations are forced to rethink or even abandon (change) their 1000 year old cultures while trying to accommodate the incoming hordes.

Two major political parties in Sweden, a country of ca. 9mill inhabitants, are now suggesting a complete opening of the borders, expecting a population growth through immigration to 40mill. They are obviously totally blind for the fact that Sweden has moved from being one of the richest states in Europe to a level, where social costs has eroded this position dramatically and immigrant criminality is rampant.
Then imagine free growth from 9mill. to 40mill. - uncontrolled!
The European Union has become a federal state, where laws are made centrally, while the national state concept actively is being discouraged. Greece, Italy, Spain, Portugal and Ireland are basically bankrupt, only kept afloat by the other EU members, the ECB and the IMF. As this happens without a well structured plan to bring their economies back on track, it can only get worse.

At the borders of Western Europe change becomes more violent: in Yugoslavia KZ-camps and ethnic cleansing as bad as seen in Nazi Germany could be experienced during the war of the 1990s, when new countries were established. East Germany (DDR) collapsed in 1989 as did the Berlin wall resulting in a united Germany, which again has become a European economic superpower. The Warsaw pact countries switched side to NATO and many joined the EU. In 1991 Ukraine became an autonomous country for the first time since Volodymir and Jaroslav in the 11th and 12th Century and immediately collapsed economically, even twice, within 5 years. For the populations of these countries such changes have been massive both culturally and economically, as national assets and personal fortunes came, went or changed hand.
And now the world has become global.

The clerical regime in Iran and the continued attempt by the Arabs to throw Israel into the Mediterranean must range top on the danger list, when we look at potential time bombs under world peace. Next time around it will not be as easy for Israel to repel an Arabic attack. The danger of a nuclear war has moved several paces closer.

But how do we assess the jihadist Islamisation of the world and the fact that one of the world’s richest countries, Qatar, has embarked on a major shopping spree for European brands? With increased economic influence it will be much easier for them to support the accelerating implementation of Islam. It already happens. Secular dictatorships in North Africa and Syria are now being replaced by Salafists and the Muslim Brotherhood with Sunni/Shia infights and persecution of Christians as a result. Yet, we still look at Islam as a religion. It is not. It is a culture, a thoroughly different lifestyle that clashes violently with classic Western European values. It is very sad to see how easily we denounced these values, including the right to thinking, believing and speaking freely, just to accommodate a culture that so far is in the minority.

Or what will be the consequence of the march of the Chinese world-wide as they take over Old Europe’s manufacturing role and access to raw materials?

There are many more examples of dramatic change and the trouble is, that we look at it as step-change and not as discontinuity jumps. It is the “Boiling Frog Syndrome” again. We are caught asleep and our traditional piece-meal reactions to change only make things worse, as we let it happen as if life will go on as before.
It won’t.

Have we learnt anything from all this and from the past?
Public amnesia is rife, so quite frankly, I doubt it.

Does change (=improvement) mean that we are now able to do things better, more efficiently?

Not if you look at the UK’s National Health Service, which is a shambles, or the Falklands. We would not be able to defend these islands against an aggressor today, 30 years after we threw the Argentineans out.

More pertinently, are we in better control of our finances today? Have we learnt from disasters within living memory?
Definitely not.

Labour brought the UK to its knees economically through 13 years resource squandering, so that we now owe close to 10 times the value of our economy and the public debt stands at £1.5 Trillion – whatever that means!! The Conservatives are not improving anything despite firm claims. In fact borrowing is going up.

In the 1970s inflation was close to 30%. We seemed to get this under control and we have tried to alleviate the indebtedness and cost of loans for our businesses by holding the interest rate at 0.5% at the Bank of England. Our loans from the ECB and the IMF are just manageable – if we stay at an AAA credit rating.
The problem is that it has been too cheap to borrow money – and we did.

But what now if the interest rate goes up?

If I remember correctly, England was bankrupt after WWII and in the 70s under Callaghan, who had to ask the IMF to bail us out. Loans were charged at 18% interest, property was repossessed and the mood in the country was very pessimistic.
It happened again in 1987, when interest rates went from 9% to 15% and back to 12% in a day, showing that we really understood what was going on. Or?

And now a new financial crisis has played havoc with us for almost 5 years.
It happens again and again, but this time it is dangerous and hard to get out.

The government now guarantees everyone that their bank deposits up to £80,000 are safe. Not much of a consolation if you have a couple of million in the bank and it crashes. Could that happen?
Yes it could.
Do I have to guess that assets/ investments are leaving the country?

Remember Northern Rock in 2008 with queues outside the bank of people who wanted to withdraw their money. How could the Government guarantee your money, if the state’s debt is of dinosaurian proportions and interest rates went up?
Exactly – they couldn’t.

Since the credit crunch began, our economy has balanced on a knife’s edge and it is getting sharper and sharper. In my opinion there is a 99% chance that it will get worse. David Cameron is lying through his teeth, when he says that everything has improved and that the debt has been brought down by 25%. Eh? While increasing borrowing?

If Greece and Spain collapse, the shockwaves will be immense.
The question is then: what will the government do?

If the past is anything to go by – and I am not an economist – I think the state will take over and control every penny you own, try to withdraw, your pension payment, your investments and some foreign financiers will be called in to save the shreds.
Qatar? At what cost?

So, is there no way out?

There always is – and one way is a total collapse of the economy, as the past has shown us (Germany in the 1920s, USA in the 1930s), followed by rebuilding. This is probably the least preferable and most painful method.
But we can minimise the pain for a while – and perhaps long term, if we are willing to wait 25 years – which we may have to!
Stop our membership of the European Union circus!

This would be a sound alternative.

It will save us £55mill a day and take us out of the ridiculous tariff system the EU imposes on its members. A renewed free trade with e.g. the Commonwealth would be an immediate boon. Since Britain joined the EU, Commonwealth trade has become a trickle. This is an obvious place to start.

It would also bring law-making and administration back where it belongs and we would be free to design our own saving plank. Norway, Switzerland and Lichtenstein have shown that you may have all the benefits of the European Economic Community with economic growth at the same time as having the freedom of self-determination. It would give us the option to define our own way back to prosperity without disadvantages.

I think Britain’s exit from the EU will happen! Over 60% of the UK population is against the EU as a federal state, which is committed to the elimination of the national state, while running a gravy train for a select few and increasing its own power. EMPs receive Euro 12,000/month. It costs £600Bill/year to keep it running and the trade benefit - according to EU's own accounts - hover around "120Bill. If that doesn't say it all.
A plebiscite within the next 2 years is an absolute must, before things become totally uncontrollable.
As a result, the EU will break up - and not even the dirty trick with repeating the plebiscite to change the result, like in Holland and Ireland about the Lisbon Treaty, will help.

It is interesting to see how all the big-wigs with their snout in the jam-jar are now warning the UK: don't leave the EU. EMP and Commissioners, as they will lose millions when this dinosaur breaks up; the USA, because the 'special' friendship provides the Americans with a lot of inside knowledge and access; and all the misinformed, because they think the UK will lose access to a market of 500 mill. customers. Rubbish. Did Norway and Switzerland lose access? NO!!!!
The UK will become rich again.

Baroso, Schulz and van Rompuy will have to seek proper work and all the organisations that receive big handouts, keeping them in-line, as well as the money grabbing, un-elected commissioners, may have to find more productive ways to generate an income.

This would be a very desirable side effect of a collapsed EU.
Because collapse it will.

And then you will know what societal change is!!
.

No comments: