The New World Economy

Financial meltdown is occurring

Financial meltdown is occurring. This is not scaremongering, this is happening around our heads right here, right now. Banks are going bankrupt. Prices are rising, jobs are being lost, people are losing their homes. The figures we know are just the tip of the iceberg. And just because it is happening slowly, with politicians and commentators debating whether it really is as bad as all that, doesn’t mean it’s not happening.

Alistair Darling the Chancellor, the man in charge of the UK economy, said “these are the worst economic conditions for 60 years.” Why would a man in charge of keeping confidence in the world’s Financial Capital, London go and say such a panic inciting thing like that? 60 years ago, there was food rationing, people were starving in the UK, people were entitled to one cup of flour, a spoon of sugar, and a slice of bacon each day.

To look around Great Britain today, you would think that Alistair Darling was making a ridiculous joke, in bad taste considering what the post war generation had available to them. There is wealth, there are huge supermarkets filled with variety, as well as quantity of food, there are jobs, and there are warm centrally heated houses.

But Darling wasn’t speaking of now, of the visible. Darling was talking about what is unseen, like a cobra beneath the night sheets. Just what is there lurking in the shadows to make the man in charge of the worlds most vibrant economy shudder and throw out warning signals? It’s like he’s insuring himself against what’s inevitably going to happen, trying to give a little cover for when the questions come home asking “why didn’t you warn us?” So he can sleep safer in the knowledge that he did warn but people did nothing to try and avert. Is Darling playing the doctor warning the obese that they are in for some health problems in the not too distant future? This is what it sounds like.

Some of the sources of the problems are easy to discern, some of them are complex, and even economists are debating amongst themselves. But whatever the actual reasons, the recession of all recessions is on its way, like a storm surge far out to sea, with the first waves already beginning to splash in the faces of the coastal dwellers.

Economies are not based on the gold standard. This is one of the reasons for the huge wealth wastage. If money is not really based on anything more than paper, there are implications. People and especially lenders and bankers are unaware of its true value. Part of the problem of the American credit crisis was this fact. It mirrors, Rome’s melting down of its gold and silver only to mix in ever increasing amounts of worthless copper and other cheap metals in their money supply during the years when their military and conquests were costing them more than the sum of their empire. Money that is based on debt rather than real wealth is worthless.