Well it’s always stupid to say this is it, we’re at the moment when it all falls over, because if the last two years have proved one thing, it is that our bankers and governments will do anything no matter how insane, to keep the game going a little while longer.
But, that said, I think we are there. We are now actually and uncontestably in the double dip and its a LONG way down to the bottom this time. I personally think the downward trip will be a long one and I think the descent is going to be fairly uncontrolled. Or to put it another way, the recovery plan HAS FAILED. Not ‘going to fail’ or ‘failing’ but ‘failed’, past tense.
Today both the Libor and the Euribor spiked up. Inter-bank lending in Europe is falling apart. I suggested yeasterday that after the ‘small’ LTRO replacement, the ECB would offer more lending, hoping to address the real state of EU banking without quite so much media and market attention. And that is exaclty what has happened. More lending today, quite a LOT more, that the banks were tearing each other’s throats out to get. They are conclusively living in permanent fear. And now we know it.
At the same time, in the US, Pending Home Sales were catastrophically down – by an unbelieveable 30%. That is not just, NOT a recovery, that is a recession all on its own. How far do prices have to come down to unblock that do you think? And how long does that rate of sales push out the time it will take to sell the vast backlog of unsold and foreclosed properties? People are just not buying. Full stop. US real estate is STUFFED and so are the banks.
Sadly this news is not on its own, Unemployment in the US, which a bunch of idiots, known as economists, had ‘expected’ to decrease according to the papers, in fact increased by 20K to stand at 472K first time claiments.
I think there is now enough bad news starting to tumble and roll down the hill that the entire thing is going to move soon. I think redemptions (investors asking to have their money back) from US Mutual Funds are going to pick up pace alarmingly. The funds will either have to close the doors and not allow people out, or they are going to have to start forced sales of assets for whatever depressed price they can get, just to meet the redemptions. If they do this, those fire-sales will turbo-charge the decline in price and value of all sorts of assets.
I think this event is close.
In Europe I think a bank failure is not far off. A caja in Spain, a bank in Greece or Hungary?
Any of these would be a waterfall event. Not necessarily because any one of them would be, at least initially, huge in itslef, but because this is now about the last tatters, if not of market confidence, then of orderliness, suddenly disintegrating into panic. Panic is around in the markets, like thunder at the end of a hot and sticky day.
If I am correct then the CB’s will already be considering their options for another even greater ‘rescue’ attempt. If they try a ‘save-our-banks bail-out’, they know it will have to be much larger than the previous ones which have so obviously already failed. No one is going to be impressed with a mere Trillion. Will they? Can they? I don’t think they can. Not sustainably. But I equally think they will try, rather than admit they were criminally wrong from the start.
So the urgent question, for those of us who never agreed with their policy of banks first, women and children last, is to consider while we still have time, what are we going to do about it? Are we going to bow our heads and mutely accept whatever new burden of debt they pile upon us, or are we going to try to fight against it?
If the latter, what can we imagine doing?
"(…) while we still have time, what are we going to do about it? Are we going to bow our heads and mutely accept whatever new burden of debt they pile upon us, or are we going to try to fight against it?
If the latter, what can we imagine doing? "
This for me is the crux of the matter. Its a question that needs to be answered quickly (not too much debate or it will be too late!)
Any ideas? Creation of parallel economies? Default or refusal to pay taxes, debts or if not in debt, removal of all assets? Violent upheaval? I'm just asking, as I'm a bit stumped.
Excellent question and great post. Cheers.
So when the Riots start what and who exactly are we going to be throwing rocks at?
I know the police are going to be showered with stones and bottles, but even though I think the old bill are a bunch of arseholes, they didn't cause this mess.
I'd like to smash Robert Pestons teeth down the back of his throat. He wowed us with his Northern Rock Scoop, then towed the party line and stopped rocking the boat. So much for the impartial BBC.
Are the Rioters just going to wander round the city lobbing bricks through Bank windows?
If you are a glazier from Dagenham, the futures bright.
I think we both know it's going to take more than riots, isn't it? Civil dissobedience certainly, but much more.
We are going to have to be 'for' things as well as 'against'. The kind of change I have in mind will fail if it limited to punishing a few miscreants in the CIty. Fine as it will be to do exactly that. But if that is all we aim for we will fail and be back here in under a decade.
I firmly believe we have come to a point in the maturation of Western Culture and the ideas and beliefs which animate it, where we have to be prepared to question everything.
We have to be prepared to stand up, in a crowd of people sitting and shout 'NO'. The change we must have is of hearts and minds not just of debts and policies.
Don't get me wrong debts will have to be repudiated and wealth and power taken back. The whole smug, self -satisfied, dead-weight- class of managerial mediocrity, media crowd- controllers and political traitors have to go.
But it is not going to be enough to be willing to throw stones from with in a crowd. For the scale and profundidty of the changes we must make, that it has fallen to our generations to begin, we have to be willing to stand up and calmly walk to the front of the crowd, and stand out from them. To speak with authority and confidence to those who are looking for leadership. The rant and chant won't be enough. It is going to be up to us to inspire and convince.
Confidence in the market is ebbing away. So too is a deeper faith in the structures of authority and control in society more broadly. The tacit agreement of the people to allow themselves to be governed by the structures of power and authority, is being withdrawn. It is an almost invisible process that happens quietly in living rooms and quiet moments of dissapointment and reflection. But I think many of us can feel that it is happening around us.
Once withdrawn that quiet consent becomes a flowing, tumbling force looking for a new place to rest. Though huge and amorphous, it can move quickly and as it does so, it has the power to sweep away everything in its path, both the good and the bad.
We are entering such times I believe. We can move blindly with the flood of resentment and fear or we can create what that flood is actually looking for it in its mute and unknowing way.
http://www.latimes.com/news/local/la-me-0702-maywood-20100702,0,4516051.story
Some borough in los angeles, has totally disbanded all staff to sub-contract out things to the neighbouring borough. Very drastic
austerity from the LA Times…Just practising .
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If change is not incremental, it will be messy,but is incremental change politically at all possible ?
A Basic Income is one example . You take away most of the bureaucratic Welfare superstructure and those let go get … the Basic Income. Problem is you have the massive amounts of Housing Benefit subsidy which means you look at Rent Control which means reductions there, and then of course many people paying mortgages have less money to pay them ( no work ) and on it goes.
A nightmare .
Frog2,
You are a tecnophibian!
I actually think a Basic Income is a good an workable idea. It would do away with so much of the ebenfits beurocracy adn endless form-filling filing and checking.
I would be in favour of it. The Green Party has argued for such an idea for some years now. It looks workable to me.
As a matter of urgency we also need in this country to sort out our scientific and technological investment strategy. In my opinion it has been dominated by cretinous bureaucrats and political bunglers.
Investment might not seem like a citical crisis issue. But I think it is. This country needs to have a medium term funding of science and technology that looks to issues we WILL have to solve.
We HAVE to solve energy issues. We should be investing heavily in Fusion. It is gioing to be done. It should be UK who reaps benefits. Not buys it from others later.
Same goes for Wave/tide power. We missed out of wind power. Wave poower qwe are well placed to take a world lead. We have good projects and great people. But the present political elite will bungle this one too if we let them.
We should invest much more in, be running trials for, stem cell applications. This is medium to near term stuff. At the moment we do very little. We have to do this or the NHS is doomed. At the moment we have are in the unsustasinalbe positiion of having prolonged life, but a long dissabled life. The cost of these long incapacitated twilight lives will cripple us. Stem Cell research aims to, and will, change long lives from costly ones lived in failed health, to long lives lived healthily and productively.
A new politics has to stop treating research as something anoraks do. It needs to be part of a coherent future view. At the moment our view isn't even incoherent. It is non-existant.
I'd like to get our Eachran's ideas on Basic Income. He analyses the basics of our situation very well and I'm used to his immodesty now
I'm not a real tecnophibian, back of the envelope level only me !
A Basic Income is difficult to define for a modern society with so many privately owned services wanting your money, no matter how destitute you are.
Contrast life today with that 100 years ago and see the new places your money goes to: insurances, telephones, TV license, broadband, motoring costs, various special taxes, service contracts, etc.
Even if you can persuade people to stop purchasing trinkets and baubles, there is still the cost of modern living, looming over everything.
Perhaps 'houses for everybody' is a luxury we can no longer afford. I rather like the idea of communal housing as an alternative. It is more friendly to the environment and provides a lot of social support. Imagine communal central heating, communal garden allotments, shared kitchen facilities, a broadband room, a laundrette, etc. There would be no problem finding babysitters, the elderly people would be supported by the younger people, maintenance tasks would be undertaken by the residents …
Needless to say, in a free society, communal housing is just another option, but it should be more freely available. Let us stop multiplying planet consuming, energy hungry items by k, where k is 10s of millions.
I would really like to hear how GreatGrandDad would go about changing attitudes of a modern society.
This country has survived without a civil war for 350 years: let's hope there is a better way.
And when exactly can we expect the downward spiral of dumbness to stop ?
Oh I think we all know the answer to that one.
Can you say 'Nevermore' ?