9 Dec 2013

We're drunk

My thought for the morning is that the world is a bit like my alcoholic landlady. We're just out of an economic crisis caused by too much private debt, complex financial derivatives based on that debt, and insufficient oversight of the business dealings of large financial institutions. And, at least in the UK, we are putting in place the identical conditions. Private debt is rising, people are encouraged to take on debts they won't be able to afford when interest rates rise, complex products based on these debts are on sale, and the supervision of the finance industry is hardly any better than it was.

Having set the conditions in place we're pretending that, just like last time, economic "growth" that is resulting from this debt is somehow good news and that things are turning around. But being based on debt it's a house of cards. And with each recessions since 1973 we are more vulnerable that the previous because the debts are never quite paid back before we set off again.

So at present politicians, business people, and citizens are all saying "I'm not drinking" or "I can stop any time" or "I can handle it" or whatever and refusing to change their behaviour. At some point they'll get legless again, and fall down the stairs. But now they're older their bones are more fragile and falling means broken bones, time in hospital.

The government want us to believe in another economic miracle called Austerity. The last economic miracle resulted in a global financial crisis. Before that, every country the IMF and World Bank forced into free market policies subsequently experienced an economic crisis of massive proportions. Of course a small number of people do actually benefit from this drunk behind the wheel approach to economics. The 1% are accumulating wealth at a faster and faster rate as the 99% becomes poorer.

The trouble is that we've had all the warning signs but no one is changing their behaviour. Politicians and business people (and these two groups substantially overlap); and ordinary citizens: we're all trying to pretend that we can get back to business as usual. Economically are alcoholics that can't wait to get out of rehab and start drinking again.

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Keep is seemly & on-topic. Thanks.