Thursday, December 8, 2011

The Euromess

As many regular readers of this space will know, I am pessimistic about the future of the world economic order.  On the one hand I find it so consuming and critical that I daily both consciously and subconsciously search for clues to the path forward.  On the other hand I realize it is an esoteric topic to many, such that I have (largely) banished it to the column at right.  Yet those who know me personally know that I am a natural-born optimist.  I am an early riser, anxious to greet each day, happy with my lot in life, one of the luckiest guys alive.  Sure, I'm cautious, but I don't believe my caution has been misplaced over the years, nor that it indicates some innate, repressed pessimism within.  So why am I worried about Europe?  Quite simply it is because what happens economically there could have a devastating effect on us here in North America.  Markets, banking systems, and money flows are globally interconnected these days, and governments on both sides of the Atlantic are deeply in hock.  So vastly indebted are they (we) that I fear economic sleight-of-hand by central bankers advised by the Goldman Sachs of the world has run its pitiful course.  The only answers now to the economic mess we find ourselves in are political, and there are two major problems with that as I see it.  First, at the national level, politicians will resist the tough austerity measures needed because a) politicians think only of getting re-elected, and b) routinely mouth partisan dogma.  Second, internationally, the world is still as divided and fiercely nationalistic as ever.  In other words, we are dealing with a modern, complex, international economic problem via an archaic, political system rife with provincialism, mistrust, and ancient rivalries.  The inevitable result: economic collapse.  Today and tomorrow in Europe, meetings are being held that can either "kick the can down the road" (to use an over-used expression) or almost immediately plunge us into a worldwide depression.  I don't know which I prefer, but the longer we try to fix debt with ever more debt the worse the day of reckoning will be.  Fasten your seat belts.
Post Script:  On Saturday I'm going to break with my promise to be "always brief" to bring you an exceptionally sage view of the world by a twenty-something.  Read it.