Wednesday, June 16, 2010

today : I fleetingly worry about Doomsday

I don't have any access to the journalistic resources that proper journalists have. Therefore anything I say can only really be speculation. I'll leave others more expert, and paid, to do the real work. But I speculate that it would only take digging about a millimetre into the Gulf Oil disaster story to find that it all flows back to Bush and Cheney. It was their oil regulation regime that was responsible for allowing this failed well to be drilled and exploited, with 7 layers of protection against blowout ill-configured and clearly ill-scrutinised (I also imagine that plenty of the people who are now up in arms, weren't marching on the streets in objection to more jobs and wealth being created in the Gulf region because of the drilling).

Bush and Cheney were hardly known for their strict regulation of polluting industry - especially when it impacted their and their friends' bloated bank accounts. Neither were they keen on placing environmental concerns ahead of making money for their friends. Or ahead of anything, for that matter.

In the clamour to shift blame I can understand Obama wanting to heap the blame on BP, given that blaming the previous regime, even when it's legit, is a PR no-no these days. But I don't see the mainstream media looking any deeper than the one inch of oil spread on the cerulean blue waters of the Gulf as they suffer in the empty resort hotels of Pensacola beach. Of course people like Greg Palast are digging and finger pointing, but who listens to the likes of him?

On a related topic the previous administration were also so incompetent at running the economy and regulating their rich pals as they gouged fortunes from the rest of us, that we are still suffering the consequences.
In fact, I am a big believer in all systems (physical, psychological and yes, even economic) acting according to some pretty simple, overarching principles. I know that on a very localised level things can appear impossible knotty, confused, complex and apparently discrete, but Newton worked it out for physics, Freud and his post-Freudian friends worked it out for psychology. Every action has an equal and opposite reaction, or as Lacan put it - a letter always reaches its destination.

Basically, given that the entire world economic system actually collapsed, but was caught and held up by extraordinary governmental measures, still means that it collapsed. The instant attempts to ameliorate the effects worked to some extent. But like stress showing itself as IBS or a back-strain, the shocks from the collapse have likely not yet made themselves entirely known. There's only so long that Big Bad John can replace the broken pit-props until the weight of the earth buckles him into dust. I guess there are people who could predict what might happen next, but nobody really predicted anything so far. From the collapse of Madoff's (and Standford's) pyramid to the similar collapse of the Greek economy (followed by Spain, followed by Portugal, followed by Italy). It strikes me that there are faultlines all over the place in the economies of the world. Jagged edges that pre-Lehmans, could bear the pressure in a stable world. But you can actually see the ripples as ripples. The money markets fluctuating up and down at the slightest flinch of worry, the way that previously predictable measures like unemployment, inflation and confidence all seem slightly out of whack. From my layman's (see what I did there - I made a pun!) perspective it all seems rather too easy. That the unsustainability inherent in the system can be fixed with a bit of money-printing and a bail-out. You can give money to a gambler when he gets behind on the rent, but chances are it won't keep him from returning to the tables the next time he has some spare change, and eventually losing the house.

I never like to play doomsday scenario games. But I cannot help thinking that some more big money crises are headed our way. I think I said it before, but my Dad said to me today "What would happen if California tumbled into the sea?" The answer isn't just that "that'll be the day I go back to Annandale", but that the US (and world) economy might not survive in its current form. But the real risk comes not from unpredictable natural disasters, but from the fact that nobody seems to know anything. It would be quite hard to argue that governments shouldn't have intervened so massively when it looked like the whole system would fail, and it would be equally as hard to expect them to not intervene on an ongoing basis. But I just wonder how long this can keep happening.

Mixed metaphor alert! When you make a bad recipe, there is only so long that you can keep adding more ingredients to try and rescue it. Eventually you just have to admit that the original dish was inedible. Eventually, if the underlying foundation is faulty, then the building will fall down.

A couple of years on and I still don't people are being honest about the size and extent of the problems. After all it took a while for Greece's debt problems to come truly to light. There is a story I heard or read - possibly a myth - about a senior investment banker. On the Friday before Lehman's went bankrupt he knew what was coming and drove home to his family. On the way to his country pile he stopped in at the home of a local farmer and offered to buy a small flock of sheep for a wodge of cash. His logic was that when Monday came and all money in the world was worthless, then at least he would have something with which to feed his family and barter for necessities. That's how close we came. That's the edge we are pretty much still teetering along.

I don't want any more huge financial shocks. God knows my own income and lifestyle has already been impacted by things such as the hike in oil prices (I have to really be careful how much I use the car, because it costs so much to pay for petrol - my weekly food shopping bill has gone up about 15% hence even less treats and luxuries). But I fear they will inevitably happen.

No comments:

Post a Comment