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The day democracy died?
I wrote an entry on 2008/10/03 about the day greed won and we lost.
Now, three years on, we see something terribly rank in the world. Something that should shatter the façade of "democracy" in all our hearts.
There is a very twisted view coming from the British media that the euro is doomed and it's all going to fall apart. Having bent over backwards to reject the euro (and most things european) they would take this approach. But the problem isn't really the currency, it is one of sovereign debt and confidence.
Consider the bringing down of Iceland. Iceland had a massive amount of capital, but the numbers and reality did not match up. Investors got a jitter that should they decide to withdraw their finance from Iceland, the country would run out of actual cold hard cash long before everybody was paid. And that, pretty much, is what happened.
Fast forward a couple of years and we see similar events happening to Greece and Italy. I can only be vague here, as the story progresses faster than news reports can keep up with it, but several things have become increasingly clear:
- The economic system is based upon a shared trust, and they (banks? politicians?) were stupid enough to accept a country with a long history of financial mismanagement.
They were also stupid enough not to have considered this sort of possibility prior to it actually happening.
- Countries have greatly exposed themselves by borrowing from external sources.
- Such external sources appear to be capable of, under a thinly guised threat, weild the power to push for changes in government and internal economic policy that is detrimental to the citizens of said country.
- Because such "austerity" measures, while apparently necessary in the short term, are going to be shown in history to have been extremely damaging. But then, these external sources are more interested in reducing their own exposure than actually bringing about recovery.
- Because these external sources are A, stupid (repeatedly throwing bail outs at Greece with the current austerity measures is unlikely to be anything other than a viscious circle); and B, they're playing God with our money anyway. The combined populations of France and Germany is 144 million. If they can find a way to extract a mere €10 from us all, that's a little under 1.5 billion. Now this is a long shot from the sort of figures that the Greek bailout entails, never mind Italy, but then we know that there are other countries in the EU and governments will be looking for more than a tenner each from its citizens.
The crux of the matter, really, comes down to four questions:
Before you write me off as a crackpot, I should point out that the Italian problem was because investors got cold feet over Italian bonds as the debt came towards 120% of GDP with little economic growth. You might like to consider that American economic growth is poor, with debt hard running close to 100% GDP. Japan is running a near-astonishing 200% debt/GDP, but then it is a historically strong country - perhaps Japan's problems are more down to a depressing lack of vision in the future (what is it now, six PMs in as many years?). Any of these countries could be targets if these unknown investors decide to get rattled. And then what?
- Who exactly are these external sources?
- Who do they answer to?
- Why do they have the power to trump democrartic process?
- IF this problem can be traced back, originally, to disasterous banking practice and risks, why are we carrying the can for it?
There is a rumour that Japan is to offer a draw for 10,000 free flights to the country, in a bid to encourage tourism back to the country following the devastating tsunami and nuclear disaster. As described here, the plan has not been approved, this - if it happens - is expected to be around April 2012 (shame, too late for hanami!).
Of course I will enter! A flight to Japan, even a budget one, will cost in the order of €700. If possible (I don't know specifics yet, nobody does), I will apply for two places. I'm not sure my mother is overly keen on visiting Japan - certainly a long flight for somebody who detests air travel coupled with Japanese cuisine is hardly going to be enticing. I rather suspect she just doesn't want me coming back with my own Nodame! [picture on the left]
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Last read at 17:44 on 2020/07/07.
© 2011 Rick Murray
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