Saturday, 14 January 2012

Save The Warhorse Of World Trade

Around the web there is talk of the present situation as a form of “trade war” that is new to us and which is not fully understood. Certainly, politicians of many nations, anxious to place the blame on other people in other places are claiming that they and their economies are under attack.

There are some basic problems with this. One is what kind of war is it? Is it one where the Barbarians are at the gate or others of that kind? Or is it a modern kind of war which involves a mix of technology, diverse powers and a ruthless approach to the elimination of the enemy.

With the film “Warhorse” on release there is the temptation for me to see it in terms of the First World War. When the play was on at the “National”, at first I wasn’t interested but was urged by others to go.

At the performance I found myself next to an old soldier who had been with the Household Cavalry and I had had my moments with one cavalry regiment or another. We both found it an absorbing and moving performance. I am hoping that someone will buy me the DVD of the film.

But to return to the current financial wars, what is clear is that many, locked in the theories and assumptions of the past do not understand what is happening and what has happened in the last decade or two in global finance.

The down grading of national debt announced this weekend with more to follow in other spheres is seen as an attack when it is a simple admission of the reality that governments have lost control of the rate of interest systems.

We have had all the palaver of one central bank or another holding interest rates “low” when in fact the real markets have rates that are very different and tell a different tales. The resulting distortions are a barrage on real business.

There is the assumption that governments allied to their central banks and the banks within their jurisdictions can control the key supply of money and its major flows. It is clear that they cannot. With all the new monetary devices and so many of the big financial banks and houses off shore this control is wholly lost.

Then there is the question of taxing and spending. With industrial scale tax avoidance taking out revenues from the rich and spending locked into social security, subsidising some things but not others and declaring big prestige projects that will never ever yield any return on capital employed then this in turn is beyond control.

Also out there on the web are those pointing out that in the EU in particular, as well as in other countries the extent and depth of regulation creates a major obstacle to controlling spending or indeed being able to reduce much those areas affected. “Hanging on the old barbed wire” so to say.

In the Western Front of the First World War you were in one set of trenches or another, or worse still stranded in the fog of No Man’s Land, pocked by deep shell holes many of which might contain lethal gas and at the mercy of what ever was going on.

What financial trade war do we have at the moment in WW1 terms? Is it a Retreat From Mons? Is it a Battle of the Somme? Is it one of the Battles of Ypres or is a Kaiserschlacht?

To me increasingly it looks like we are stuck in the No Mans Land of the Third Battle of Ypres, better known as Passchendaele and the war horses have long gone.

No comments:

Post a Comment