Having A Good Time?

Whilst we have been having our home made fun in the UK there has been another festival going on.  It was a Festival of Economics, which is possibly a contradiction in terms, but if anyone can have a Festival, then why not economists?

If only just for the hell of it.  One addition to the joys of the occasion, apart from the games of Blind Man’s Buff, was a number of remarks made by George Soros, who is always interesting to listen to, albeit with care.

This has been reported widely as saying that the EU has three months to sort out the Euro problems or else.  The question in my mind is whether he is an optimist in thinking that there is that much time, or a pessimist.  Time will tell.

For those interested the link is below and the long article needs careful reading because he is saying a lot more than that.

http://www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/

Possibly too long for those bloggers with little time to spare and it is difficult to summarise simply.  He has his own vision of the nature of complexity and how economic and financial systems function. 

His view is that the perspectives and assumptions of most economists are essentially flawed and that the systems have a changing life of their own.  It is the lurches and issues that arise are not predictable and the politics is usually well behind the game.

This leads him to the current crisis in Europe, its causes and what might or might not be done.  The upshot of this discussion is that in the political and analytical confusion since 2008 the situation is worsening and time is about to run out.

He calls the EU a “fantastic object”, meaning as in “fantasy” and not “great” or “wonderful”.  The issue is maintaining the fantasy to keep the EU in being and how Germany might go about it.  It entails radical change.

What the powers at the centre think and propose is a source of major speculation around the web.  One possible approach is a coalescence of the key powers into a much fuller political, financial and economic union. 

This could mean a smaller EU and those outside the Eurozone would be excluded.  In short the UK could be on its way out of Europe or relegated to second or third tier status quite soon, referendum or no referendum and it could happen very quickly. 

But summer is coming, after the Jubilee, there is the European Cup and then weeks of Olympics to distract us.  There was a time in London when Society had The Season and the social and other obligations took priority over other matters. 

Looking back at those times it is amazing just how many crises went badly wrong in those summers when diaries were filled with social imperatives, especially in the Queen-Empress Victoria Diamond Jubilee year of 1897.

In 1897 a war broke out between Turkey and Greece, problems in the Sudan were mounting, there was an uprising on the North West Frontier by Afghanistan, there was plague and famine in India, problems with the rupee meant devaluation of the incomes of those living there and things were going out of control in South Africa leading to The Boer War.

At home, the Great Agricultural Depression was beginning to affect all classes of society in the country areas across the Atlantic Isles and loosening the grip of the Aristocracy and Landed Gentry in politics and government.

Kaiser Wilhelm II of Germany began to shift his foreign policy from entente with Britain to détente in spite of or perhaps because of his close family connections.  His witnessing of the 1897 Jubilee probably sharpened his appetite for a bigger share of the world’s power and wealth.

What are we in for during the coming months is a Parliament that is absent most of the time with a government also missing a lot of the action whilst it quietly or not so quietly implodes.  In any case its capability to have any impact is in serious doubt.

The US is bedevilled by a difficult election campaign.  Quite how this will run and what effect there will be on events elsewhere is anybody’s guess.  If Soros is right it will be a bad business.  If he is wrong it could be worse.