October 13, 2008

Placeholder Post

Filed under: Economics, Politics, Vitiated by Ignorance — duncan @ 12:45 am

I don’t think I’m going to get a proper post up this evening, what with not knowing hardly nothing – but that won’t stop me making gloomy sounds. The synchronised plan the eurozone leaders are busy announcing obviously fails to address the fundamentals of the crisis. So does Brown’s plan, in the UK. You can’t borrow your way out of debt, as my bank manager keeps telling me. The real-economy problem is that ‘developed’ countries have been consuming resources far beyond their objective ability to appropriate them – and this appropriation has been funded by debts with the countries the resources are supposedly ‘appropriated’ from. Until that global imbalance[1] is addressed, by a massive realignment of economic and political power, things are going to be in ‘oh shit’ territory. (Things may be in ‘oh shit’ territory afterwards too, of course – but that’s a separate thing.) Sobering reading for tonight, then, is this post over at EconoSpeak.

“A change in sentiment on the dollar, if it occurs, will be sudden, unexpected and massive. An outflow of funds would stop the Fed/Treasury strategy in its tracks and mark the end of any meaningful program to restore financial markets. No one knows what the tipping point could be, or even whether the most enlightened policy can avert it.”

Since a change in sentiment on the dollar seems (to me) to be a condition of the establishment of a new global economic system, this fact doesn’t bode well. There’s no particular reason why all aspects of a structural realignment of capitalism around a geopolitical order yet to be established need to happen at the same time. It’s possible, I guess, that the current system can be shored up in the short term while longer-term adjustments… play themselves out. But since the current bailout plans seem to be a continuation, by other means, of the very economic policies and capital-movements that produced the disaster, I find it hard to believe that they’re going to solve anything. My prediction: next week will bring bad news for everyone except Fred Goodwin’s family.

More to follow sooner or later, though.

[1] Don’t really like the resonances of ‘imbalance’, which sometimes implies some sort of movement towards perfect economic equilibirum, but fuck it, the word’s still fine.

UPDATE: Hmmm. Stock markets rally, systemic collapse averted, Gordon Brown sainted, fluffy bunnies become the new global currency. I should make predictions more often.

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