Discussion of the state of the world
More and more I am shaking my head in absolute bewilderment at the current state of the world.
When all these G8, G10, G20.....Occupy Movement protesters started their protests I had absolutely no empathy for their cause. Sure there is a discrepancy between rich and poor, that's why they are descriptive nouns for pete's sake. But then, as time has moved forward and I am watching in absolute shock and awe at the current implosion of the EU, I am starting to think, maybe there is something to what they are saying.
I mean, here is a continent that as little as ten years ago the fear was that they were going to outstrip North American (more specifically the US) as the financial and business global powerhouse, and now, here they are less than a simple generation later, and we are worried about counties collapsing financially.
From what I have heard the issue is simple greed and all the negative aspects of capitalism gone wrong. The various counties were allowed to borrow against collateral, or their GNP, that they simply didn't have in order that they could establish and maintain an apparent standard that would allow them to function within the EU.
The last time that I was in Europe there were no borders, but if you were to drive from Belgium to France you still knew that you were in a different country. Just look at the price tags on products. Big drop once you went into northern France which was all due to government subsidies on agricultural products that allowed the French farmer to be competative. Great government pension plans; wonderful unemployment plans, etc, etc. Same thing in Portugal, Ireland, Spain and Greece. Everything being propped up by the individual governments and everything riding on a steadily increasing debt load that the major financial institutions were happy to advance.
When I was in university I took an economics course as one of my electives. In that course I wrote a paper on modern feudalism which was moderately well received by the prof - I got a B as I recall. In essence I harkened back to the days of political feudalism which, as you may remember, was a political system whereby the overlords basically owned everything and graciously allowed the feudal serfs to work their land in return for their right to keep some of the produce for themselves. The serfs were bound to the overlord and would simply never get out from under them. Sound familiar? Today as individuals we live in under a system of economic feudalism. The banks simply couldn't be happier than they would be if each and every one of us carried such a large amount of loaned capital that we had to go to work every day just to service the debt load. They don't care if we ever pay the debt back as long as we keep paying the interest. In the case of individuals the banks never really trust us so they always maintain enough collateral on our loans that if we default they simply repossess. That's what went wrong recently with the situation in the US. The value of the homes that they leant the money for was not enough to cover the principal so the banks began to take a lot of losses which is why they were happy to encourage the government to step in to support the home owner. That would mean that the happy homeowner would be able to carry on paying the interest and the banks would be back in the black again. Problem was that by that point many of the homeowners were out of work or had simply decamped and left and let the banks foreclose.
In the case of countries it wasn't so simple. What kind of collateral could a nation offer to support the loans that they were making? How often have we heard the statement, "The only way that this could fail would be if the country fails!" Well all too often lately it looks like that has happened. Take the current bailout package for Greece; does anyone really think that this is going to resolve the problem? It's like giving an alcoholic more booze to calm him down! I have heard many experts state that this is only delaying the inevitable.
For us here in Canada it's like watching a car wreck a half mile ahead of you on the highway and trying to slow down yourself. You are still left wondering if the pileup is going to reach back as far as you. You can't back up because there are others behind you. All you can do is watch like a deer in the headlights as crunch, crunch, crunch - the disaster is getting closer.......