In late 1979, with the public service unions on strike and with the national debt spiraling out of control, Britain began to resemble a toilet. Prime Minister Jim Callaghan returned from a ‘summit’ in Guadeloupe (they never seem to hold summits in Rotherham or Detroit). The Sun, one of Britain’s Murdoch tabloid newspapers, famed for their restraint and balance as well as the correct use of the telephone, suggested to sun-tanned Jim on his return that there might be just ever such a teeny tad of a problem. “Well”, Jim thundered, “that’s a judgment that you are making. I promise you that if you look at it from outside, and perhaps you’re taking rather a parochial view at the moment, I don’t think that other people in the world would share the view that there is mounting chaos.” Next morning The Sun ran the now infamous headline, “Crisis? What Crisis?” Enter Margaret Thatcher stage right!
What crisis indeed. Thanks to utter political ineptitude by those we collectively employ to lead the mortgage crisis, banking crisis, sovereign and debt crisis, and probably climate change as well, have now merged into what looks like the great mega-collapse of the twenty-first century. Thought you had savings? Thought you had a pension? No, if you are a western European you will soon be offered the compulsory ‘chance’ to ‘invest’ in stellar sun-drenched opportunities in Italy, Greece, Spain via the new Euro-Debt. Not only will you have miraculously acquired this debt ‘opportunity’ but you will be reassured to know that your former savings will be administered by the incredibly open, honest and efficient European Onion. If you are American, leave now. You are about to discover true cost of pork in DC and it ain’t cheap.
So, where are our collective ‘leaders’ (I used the word advisedly because ‘leading’ they ain’t). Well, David Cameron is on holiday in Tuscany. Good idea! Italy is cheap at the moment and probably will be for the next millennium or so. He did at least have a chat with the Governor of the Bank-rupt of England, which did huge amounts to calm the ‘markets’. Meanwhile, his buddy, President Barack Obama has taken decisive action to reduce America’s debt, but not until after he has been re-elected in 2012. Well, this seems fair enough. By then in addition to America losing its triple AAA credit rating, the Dollar will no longer be the world’s reserve currency and the global financial structure will have collapsed. That will teach the Chinese a lesson they will never forget.
The good news is that the French and Italians have taken decisive action by together calling an emergency meeting of the finance ministers of the G7. The words ‘deckchairs’ and ‘Titanic’ come to mind. France has of course called the meeting because the French always like meetings. Italy has called the meeting because having cooked the book for years they are about to be found out and want to get their denials in first. So, how can we help the French and the Italians save the planet?
First, the G7 should consider its membership and turn itself into a consolidated debt. The Group of Seven today comprises the world’s leading seven debts; Britain (utterly broke but pretending not to be by talking loudly at others and showing the world a stiff upper lip), Canada (a mythical land somewhere near America which has huge natural resources, no people and therefore little value), France (soon-to-be broke but with big ideas they are keen for the Germans to pay for), Germany (not broke but terminally selfish and determined not to pay for the French, Italians and the rest of the southern Onionistas), Italy (don’t even go there), Japan (destroyed by an earthquake and broke beyond repair), and, of course, the United States (the richest, biggest and most powerful debt on the planet). Noticeable by their absence are the Indians (noticeably not broke and being paid for by the British aid budget. This is OK because the British Government is using its debt to fund everybody else but the British these days) and the Chinese (very noticeably not broke and buying everybody else’s debt so that they can still afford to attend G7 meetings).
Second, the so-called ‘market-movers’ should be shot. Did we really defeat communism to create this morally, politically and financially bankrupt chaos? Now, I am no Socialist – heaven forbid, but is the future of the world and its seven or so billion inhabitants really dependent upon a small bunch of headless and heartless chickens who apparently panic every time Mrs Ohio maxes out her credit card? Abolutism leads to mayhem – be it over-mighty states or under-regulated markets. Indeed, markets by their very nature exaggerate extremes – both positive and negative – because they screw the rest of us simply by moving the markets. Some form of control has to be re-asserted by states to prevent the currency speculators switching from one market to another to trigger runs on currencies. The so-called ‘money men’ should be left in no doubt that if they continue to threaten the financial futures of millions through short-term speculation they too will face consequences.
Third, political leaders of the greatly indebted and the greatly owed must agree a proper plan. They must now move decisively to put their financial houses in order even if this takes years and even if it means southern Europeans paying their taxes and working a little harder. Even working a bit would help. China can no longer be permitted to keep the Yuan artificially low simply to entrap others in debt. The West must together to get its debt under control.
Above all, it is time for the real political leaders to get off their well-upholstered back-sides in their well-upholstered villas to demonstrate a collective will to deal once and for all with what is now meltdown financial contagion.
Fail and the ensuing disaster would not only destroy bank accounts. This is the stuff world wars are made of.
We do not need G7s or G20s, just G bloody do something! Crisis? What crisis?
Professor Julian Lindley-French, a member of the Atlantic Council Strategic Advisor’s Group, is Special Professor of Strategic Studies, University of Leiden, Netherlands and Associate Fellow of the Royal Institute of International Affairs, London. This essay first appeared on his personal blog,Lindley-French’s Blog Blast.