FRONT PAGE CONTRIBUTOR
Staggering In Search of a Suitable Place to Die
Is Obama America's ticket to terminal Eurosclerosis?
Americans are depressed about their current economic fortunes and in many cases their personal finances. In the case of some individuals who have invested/gambled more than they could afford to lose on real estate investments, the mordant pessimism may accurately reflect reality.
However, those of us not familiar with the Fabius Maximus Blog, have not seen, felt or tasted the sense of doom that seems to permeate the air of Europe today like a dank, fetid humidity. Ambrose Evans-Pritchard of the UK Telegraph offers the following assessment of Europe’s economy.
We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars.
He hasn’t become completely deracinated. The FTSE 100, the bellwether index of the British equities market, has gone from 6,750 to 4,600 in the past 11 months. That’s a shade over 30% in less than one year. If they repeated the same performance next year, the FTSE would crater somewhere in the neighborhood of 3,200. That would destroy approximately 52% of the value for the British stock market in two scant years.
It would prove unfair and perhaps churlish to focus only on the trevails of British markets. The Germans, who crowed loudly about the end of American financial dominance just a scant few days ago, are in their own hand-basket to the inferno as well.
The DAX Index is 33% off it’s 52 week high. Extrapolated over two years, the Germans would lose 55% of their equity-based wealth in 104 weeks. And these are the very same people who declared the US market crashes as “The End of Arrogance.”
And Ambrose Evans-Pritchard voices the opinion that the German and British central bankers royally missed the ball. He states that they could have prevented carnage on paper in their respective financial markets. It seems that Germany has now decided to one-up the Yanks by going toe-to-toe and bankruptcy-for-bankruptcy with Wall Street. Pritchard describes what a popping real estate bubble looks like in The Old Country.
Germany is now in the hot seat. The collapse of a rescue deal for Hypo Real Estate on Saturday threatens a €400bn (£311bn) bankruptcy that nearly matches the Lehman Brothers debacle for sheer scale.
Chancellor Angela Merkel has been forced to pull her head out of the sand, guaranteeing all German savings, a day after she rebuked Ireland for doing much the same thing. Reality intrudes.
And it also seems that the EU has engaged in currency arbitrage against the US dollar, which was bringing the pain to the US economy. But now; that pain has returned to Europe in a manner that almost makes a plausible case for the Three-Fold Law of The Wiccan. Pritchard describes the boomerang trajectory of European Union monetary policy.
The European Central Bank – which raised rates into the teeth of the crisis in July – has played a shockingly destructive role in this enveloping slump. Its growth predictions this year have been, and still are, delusional. Neglecting its global role, it has vastly complicated the fire-fighting efforts of Washington.
It could have offered “cover” to the US Federal Reserve this spring when Ben Bernanke was forced by events to slash rates to 2pc. It could at least have signalled an end to monetary tightening. That is how an ally ought to behave.
Instead, it stuck maniacally to its Gothic script, with equally unhappy consequences for both sides of the Atlantic, as well as for China, Japan, and India. The euro rocketed yet further, which it turn set off an oil shock as crude metamorphosed into an anti-dollar with leverage.
A more practical look at this gives me the impression that the EU wanted to put a stick in the spokes of the US bicycle. They angled to make American firms and consumers face a lot of the same price barriers that EU firms face on a day-to-day basis. This was preferable in their minds to deregulating and cutting taxes. They totally walked right past the idea of letting the most brilliant European entrepreneurs figure out how to get the drop on Boeing, GE, et al. on their own.
This is because the EU behaves a lot like the current US Congress. It takes power for the sake of power and would rather live with the negative externalities of its own poor decisions than benefit from the positive externalities of decisions made by others. Both will learn the hard way how cartels both public and private end up burning in the end.
Coming from Europe, this oligarchy engaged in self-immolation comes as no surprise. As Spengler wrote of Modern Europe in the Asia Times, they are engaged in nihilism’s spasmodic end game.
They have no ambition but to die quietly, no concerns except for those amusements which might reduce boredom and anxiety en route to the grave. They have no passions except hatred born of envy. They hate America, a new kind of universality that succeeded where the old Christian empire failed. They hate Israel, which makes the Jewish people appear all the more eternal in stark contrast to Europe’s morbid temporality. They will pass out of history unmourned even by themselves.
What stuns, amazes and frightens me are the choices being made by the leadership and the electorate in our country, the United States. We’ve seen Europe go down the path of embittered moral senility with a pathetic Potemkin of false sophistication. We have our own opportunity to go down that road in America today. The tour guide is named Barack Obama, and his sales slogan is “Change You Can Believe In.”
It frightens me because Obama’s election could really amount to a massive game-changer. This game-changer would relegate America to being just another existential, post-modern, burned-out excuse of a nation. Under the leadership of a President Obama, we could become yet another worthless and risible nation staggering in search of a suitable place to die.
Cross-Posted At: THE MINORITY REPORT