Behold The New Dark Ages
Nearly four years ago, I wrote,
"The spectre of austerity measures, wages and prices controls, restricted working weeks and gas rationing, is floating above the American economy, an elephant in the room that the White House and Congress refuse to acknowledge. It is in possibly the deepest trouble it’s been in since the Wall Street Crash, a fully avoidable crisis into which its custodians have sleepwalked because of their refusal to face basic economic realities. The malaise of the Carter years happened in a very much smaller economic environment than the Bush one; the Bush malaise in on a truly global scale. When it all falls down, 1929 will look like a picnic."
Lehman Bros. collapsed this morning. The picnic is just getting under way. Lehman Bros. was the first course. Others will follow.
The historians of the future might one day marvel at the lightning speed with which Robert Mugabe embraced a rapprochement with Morgan Tsvangirai and the Movement for Democratic Change; as far as I can see, nobody seems to have asked the question whether Mugabe's Chinese backers have decided that their money might be better spent elsewhere, leaving Mugabe with no option but to adopt a more Western-donor-friendly domestic policy.
Whatevr the reasoning, Mugabe will probably be gone in no more than a year, a victim of Tocqueville's assertion that authoritarian governments are at their most vulnerable when they attempt to reform. Zimbabwean glasnost will have the same outcome as Soviet glasnost, with hunger fuelling the reform process ever on.
This may be the only good thing to come out of the current crisis. With the greatest of respect to him, I disagree with the blogging Catholic Laban Tall's analysis that this crisis might only result in a correction back to the banking practices of 35 years ago. Unfortunately, it's far worse than that; over the past 35 years, capital has achieved such a freedom of movement that, for all practical purposes, it became independent of state power. Perhaps this is another meaning of 'globalisation'. Defining 'globalisation' can be a hit-or-miss business; I know at least five different definitions of what the phenomenon actually is, provided by Paul Krugman, Niall Ferguson, Stephen Roach, John Gray and Will Hutton & Anthony Giddens. Hopefully history will prove that the globalisation of finance was a policy, not a process; at least people will then have someone to blame. Whenever state power has impinged upon financial power, it has done so in such a way that capital's interest has never been significantly harmed. Like all human entities conscious of their own power and not subject to any restraint, those who wielded financial power inevitably abused it. The losses arising from the collapse of a bank of Lehman's size will be catastrophic; but the world's financial system is so minutely interconnected that we will all be paying for many years to come. This is all the fault of a small group of people.
In the United Kingdom, we have been fed economic lies for many years. Stagflation has been in the works for years, and no action has been taken to stop it. Native workers have been displaced as a consequence of policies for which nobody ever voted. The aggressive de-industrialisation of our economy has caused our government to spread lies and canards about 'skills', and the country's lack thereof. All of these were symptoms that the economy had been failing for many years before the credit crunch finally bit; and it's my belief that everything I have narrated was either engineered or was allowed to happen in order to help keep afloat the fragile house of cards which is the so-called 'global economy'. Because of the internationalist ideology they and their associates espoused, keeping the global economy afloat became the primary policy aim of those in charge of the British government. This was not the job they were elected to do.
My gut feeling is that the change in living standards that we face is so profound that we are standing on the precipice of a new Dark Ages. The outcome will not be pretty - let us hope we all survive.