I wonder.........

[BobG]

The thought has just occurred to me, chaps, that we are just about to enter the kind of political and economic climate where a small foreign war might be a damn good idea don't y'know?

There's hundreds of precedents for it: Teddy Roosevelt to Maggie Thatcher and plenty inbetween have all found a good war to be the answer to their problems back home. Now, I'm not saying we will have a nice little war in the next year or three, but the odds on that happening must be dropping like a stone right now.

How do I get a bet on?

BobG

[Glyn_Wigley]

Got to thin out those unemployed chappies somehow!

[BobG]

Would help employment too wouldn't it? Much more politically correct than government intervention in the markets!

Bobg

[River Don]

Those Americans owe China trillions. And the Americans have just discovered at G20 that the Chinese aren't in much of a mood to try any American medicine.

I think we're entering a very dangerous period.

Meanwhile, Ireland has gone tits up. Do you think the Germans are willing to bail this one out? How about Portugal? Can the Euro survive?

[CusworthRovers]

The question is, which country can we invade to instill national pride and take away the doom and gloom of the working class.

We're not as hard as we used to be.

Ireland is too close and too bloody.
We can't really do owt in Europe for fear of the knock on effect of all the alliances.

I'm toying with either Chad, New Zealand or Peru.

I'm leaning towards Peru, as a ground to air nuclear missile always beats a pan pipe or a poisoned dart on top trumps.

[BobG]

Reckon France mesen like. Them or Italy anyway.

Bob

[River Don]

Hhhh-iran...

[Dagenham Rover]

How about Australia 95% convicts anyway  

[BillyStubbsTears]

River Don wrote:

Those Americans owe China trillions. And the Americans have just discovered at G20 that the Chinese aren't in much of a mood to try any American medicine.

I think we're entering a very dangerous period.

Meanwhile, Ireland has gone tits up. Do you think the Germans are willing to bail this one out? How about Portugal? Can the Euro survive?

Interesting times as the Chinese say.

I suspect that we are going through a convulsion of the global balance of economic power and policy - it happens after every major economic crisis.

The 30s Great Depression signalled the end of laissez faire and eventually led to the Bretton Woods system of Keynesian intervention, managed exchanged rates and interest rates. That approach gave us the most successful period of capitalism in the 20th century.

That collapsed in the 70s after America couldn't hold the line, crippled by the Vietnam War debts which led to the vicious recessions of 73-6 and 79-81. The results was the introduction of a rabidly market-led world economy, with market driven exchange rates.

We're now witnessing the end of that period, and with it the Washington Consensus, which has told the world how to run their economies for 30 years. This approach has demanded free market-led interest rates and exchange rates, fiscal deficits kept in check (apart from for America of course...), privatisation, deregulation of financial systems and lower taxes (mainly for the very wealthy).

The huge argument at the moment is that China is increasingly flexing its muscles and going against that approach. They manage their own exchange rate deliberately to keep down the cost of their exports and hence, encourage their manufacturing industry to flourish. Countries like Brazil and India which will be the next generation of economic giants anre saying, \"Why should we follow the Washington approach? It has been a disaster for the global economy. Why shouldn't we take a leaf from China's book, manage our exchange rate in our own interests, grow our own manufacturing base and let America and Europe be the markets for us?\"

The Americans desperately want these countries to become LESS successful at exporting and to open up their markets for America to be able to export to them. The alternative is a long, slow decline in American economic strength. But does America have the moral superiority to act as an example, or the economic strength to force them to follow the free market approach? THAT is the core of the global frictions at present.

I suspect that we will see emerge from this a hybrid approach, where each country jockeys to find an exchange rate that will give them an advantage without crippling others. This requires significant Govt management, and that effectively is what America is doing with QE - the result of this will be a managed devaluation of the dollar which will make American exports cheaper, but Chinese, Brazilian, Indian, British AND European exports more expensive. It's America trying to dictate to the rest of the world what the terms of the new global economy will be. Question is, what happens if China etc respond by doing the same and everyone aggressively devalues in competition. THAT is the disaster scenario - it will lead to phenomenal economic and political frictions. And then who knows where we end up? A new Cold War (or worse) would not be unimaginable in that scenario.

[Donnywolf]

BobG wrote:

Reckon France mesen like. Them or Italy anyway.

Bob

There could be problems if we fight France - not least whose turn is it for the Aircraft Carrier and would we swap by the day or by the week

Knowing them they would want it for the first year !

[River Don]

BillyStubbsTears wrote:

River Don wrote:

Those Americans owe China trillions. And the Americans have just discovered at G20 that the Chinese aren't in much of a mood to try any American medicine.

I think we're entering a very dangerous period.

Meanwhile, Ireland has gone tits up. Do you think the Germans are willing to bail this one out? How about Portugal? Can the Euro survive?

Interesting times as the Chinese say.

I suspect that we are going through a convulsion of the global balance of economic power and policy - it happens after every major economic crisis.

The 30s Great Depression signalled the end of laissez faire and eventually led to the Bretton Woods system of Keynesian intervention, managed exchanged rates and interest rates. That approach gave us the most successful period of capitalism in the 20th century.

That collapsed in the 70s after America couldn't hold the line, crippled by the Vietnam War debts which led to the vicious recessions of 73-6 and 79-81. The results was the introduction of a rabidly market-led world economy, with market driven exchange rates.

We're now witnessing the end of that period, and with it the Washington Consensus, which has told the world how to run their economies for 30 years. This approach has demanded free market-led interest rates and exchange rates, fiscal deficits kept in check (apart from for America of course...), privatisation, deregulation of financial systems and lower taxes (mainly for the very wealthy).

The huge argument at the moment is that China is increasingly flexing its muscles and going against that approach. They manage their own exchange rate deliberately to keep down the cost of their exports and hence, encourage their manufacturing industry to flourish. Countries like Brazil and India which will be the next generation of economic giants anre saying, \"Why should we follow the Washington approach? It has been a disaster for the global economy. Why shouldn't we take a leaf from China's book, manage our exchange rate in our own interests, grow our own manufacturing base and let America and Europe be the markets for us?\"

The Americans desperately want these countries to become LESS successful at exporting and to open up their markets for America to be able to export to them. The alternative is a long, slow decline in American economic strength. But does America have the moral superiority to act as an example, or the economic strength to force them to follow the free market approach? THAT is the core of the global frictions at present.

I suspect that we will see emerge from this a hybrid approach, where each country jockeys to find an exchange rate that will give them an advantage without crippling others. This requires significant Govt management, and that effectively is what America is doing with QE - the result of this will be a managed devaluation of the dollar which will make American exports cheaper, but Chinese, Brazilian, Indian, British AND European exports more expensive. It's America trying to dictate to the rest of the world what the terms of the new global economy will be. Question is, what happens if China etc respond by doing the same and everyone aggressively devalues in competition. THAT is the disaster scenario - it will lead to phenomenal economic and political frictions. And then who knows where we end up? A new Cold War (or worse) would not be unimaginable in that scenario.

QE isn't without risk either, there are some similarities between Americas position now and the conditions that existed in the Weimar Republic. Bernanke reckons he can control inflation and manage it to a level he wants but once it gets going it's a difficult beast to control.

Interesting times indeed.

[Snods Shinpad 2]

Iceland?

Those puffins have been eating into our cod quota, unpunished, for far too long.

[BobG]

Tell you of a cracking book to read in the current circumstances: 'The Rise and Fall of the Great Powers' by Paul Kennedy. Unwin 1988. Not good reading if you are an American. But uncannily prescient and a wonderful, informative read.

And speaking personally, I think we're in for at least 10 years of economic, and therefore potentially political, turmoil right around the world. As Billy says, when an economic system collapses, as our current one is doing right now, the struggle towards a new one is never easy. and this time the Americans are going to find it much, much harder to have things their own way.

Just imagine the impact that a world oil shortage, for whatever reason, will have! That's a cause for war all by itself. Neither the US not Europe could stand such a shortage. But they wouldn't be unopposed this time if they choose to find a way to control the Middle East. Wonder if that's why the YAnks have so assiduously stayed in bed with Israel despite the all too obvious shortcomings of that particular nation? The second land 'aircraft carrier' perhaps?

BobG

[River Don]

BobG wrote:

Tell you of a cracking book to read in the current circumstances: 'The Rise and Fall of the Great Powers' by Paul Kennedy. Unwin 1988. Not good reading if you are an American. But uncannily prescient and a wonderful, informative read.

And speaking personally, I think we're in for at least 10 years of economic, and therefore potentially political, turmoil right around the world. As Billy says, when an economic system collapses, as our current one is doing right now, the struggle towards a new one is never easy. and this time the Americans are going to find it much, much harder to have things their own way.

Just imagine the impact that a world oil shortage, for whatever reason, will have! That's a cause for war all by itself. Neither the US not Europe could stand such a shortage. But they wouldn't be unopposed this time if they choose to find a way to control the Middle East. Wonder if that's why the YAnks have so assiduously stayed in bed with Israel despite the all too obvious shortcomings of that particular nation? The second land 'aircraft carrier' perhaps?

BobG

My bet is oil will prove to be a big problem, with the world demanding so much of the stuff, there's a danger every time a recovery really gets underway the price will spike and choke it off. Our economic theories have been based on the idea the natural rescources are limitless, getting used to a world of increasing scarcity will be difficult to say the least.