"Crisis? What crisis?"

The ineffable words of 'Jim' Callaghan back in the '70s just before the IMF sent the brokers men in to take over the wreck of the British economy.  In retrospect, that was a mere ripple compared to the financial tsunami which is thundering towards us.  If anyone tells you they have the answer they are either a fool or a liar.  If it's a politician then he will be wearing both hats simultaneously.  The eventual outcomes are impossible to forecast but there will definitely be some exceedingly nasty surprises.  Here are a few things to watch as the maelstrom swirls about you.

The EU in general, and the Euro in particular, will come under intense strain.  This is the sort of test that is long overdue.  Will national governments pool their resources, and thus, their sovereignty, in order to deal with the crisis; or will they simply leave the sinking ship rowing away in their own national lifeboats?  Personally, I hope the latter because I have an intense dislike of the whole European project but I fear the former because politicians are usually cowardly and will huddle together in difficult times, not so much for safety but to ensure that the blame is spread all around!  Even so, the question then arises as to whether or not their electorates will stand for it? Do we wish to pay to support Greek Banks, for example?

Internally, the strains will be even more enormous.  Unemployment will rocket to levels not seen for decades.  Welfare budgets will simply be unaffordable on the generous terms now available as the tax income drops.  This will cause severe stress and strain in our main cities with immigrants being the target of an angry indigent population.  All sorts of 'nasties' will appear from the woodwork to take advantage of this situation - and they will not all be from the extreme Right.  The armed services will face cut-backs and a withdrawal from all overseas locations, including Afghanistan, will almost certainly take place.  The NHS will be sold off piecemeal by a desperate government unable to fund it.

Internationally, the outcomes are very difficult to foresee. The good news, in a way, is that the price of oil and gas will drop like a stone - $30 a barrel was mentioned today - which will give Putin and his cronies a badly needed lesson in economics, that is, that the weight differential between buyer and seller is never static, it shifts constantly, sometimes to the advantage of one but then back again to the other.  Both Russia and China have populations who have tasted the pleasures of affluence but shortly they will see these golden prizes snatched away from them as the world economy slows down.  How will they re-act?  More to the point, how will their governments re-act in order to divert the anger of their disappointed peoples?

The key question, the absolutely critical question, is 'Whither the USA'?  The 'Curse of Duff' - I tipped him to win - has fallen upon the McCain campaign and it looks as though it will be an Obama presidency.  The fact that he is profoundly ignorant may not be quite the drawback it seems because in this situation everyone is ignorant!  His test will be decided by how quickly he learns, but for sure, he will make some colossal mistakes to begin with.  We must all hope that he is intelligent enough to allow the socialist orthodoxies to be stripped off him by experience "until in God's good time, the New World, with all its [economic] power and might, steps forth [yet again!] to the rescue and the liberation of the old".

Er, have a nice day!

Comments

[fallenmonk]

McCain finished at or near the bottom of his class at the Naval Academy plus he was only there by virtue of his father.
Obama finished high in his class at Harvard and was editor of the Harvard Law Review.
I going to play it safe and go with the smart one.

[David Duff]

Churchill was a hoplessly bad scholar at Harrow and barely managed to pass the entry exam to Sandhurst. Never mix up academic with intelligent, 'FM'!