It has not been a very good week. Even the world's great leaders will acknowledge that. And I think that we are in for a few more not very good weeks. It now looks as though we are in the depths of the worst financial crisis in our history. Things are so bad that it is almost impossible to judge just how bad. The numbers being mentioned associated with debts in Europe and the USA are huge; billions are being replaced with trillions and multipliers ease ever upwards. I have no confidence in the world's leaders to sort out the mess. They are overwhelmed by the chaos but will not admit that the mess is insoluble. Or at least it is insoluble as long as politicians continue flogging the same dead horse in order to avoid accepting that previous decisions were wrong. There are two overwhelming failures. [1] They failed to see the looming disaster as economies and governments were financed by ever increasing debts and there was a complete and utter failure to regulate the banks. And [2] the invention of the euro. The latter was like piling everyone into bus, setting off down the road, tying up the driver and then waiting to see how long it would be before the bus crashed.
This week there has been increasing evidence of an accelerating run on the Greek banks. The Greeks are withdrawing their money and transferring to German bonds. How this will pan out is difficult to judge. Presumably, if this continues the Greek Banks will have to be supported by the ECB which will be supported by the German government using the money invested in German binds by the Greeks!! And, in the meantime, Greece has no government. An interim government headed by a judge will lead a sort of administration until new elections are held in June. Does anyone think they will get a different result? Are Greek elections like Euro Referendums in which electorates are asked the same question over and over again until they come up with the right answer? The Greeks are protecting their cash in preparation for Greece leaving the euro-zone. And momentum is building in Spain as 16 Spanish banks have their credit ratings lowered. Interest rates on Spanish bonds are heading towards 7% which means they are on the brink.
Britain is also in a terrible position because we have too many very big banks with lots of rubbish loans piled up, hidden away, in the deepest of deep vaults in the hope that nobody will notice. If Spain, Portugal and Italy go down the tubes our banks will be near collapse. Our government is waffling on about cutting our debts but it is not. All it is doing — even if it succeeds — is slowing the rate of increase of debt. If all goes well, by 2015 the government will have increased government debt by no more than about £700,000,000,000, which is pretty impressive and scores a good 9 points on a scale of 0 to 10 on a chart of debt reduction failures. But bad as this is, Labour wants to abandon debts "reduction" and go for growth by borrowing even more. This even worse than back of fag packet economics. Soon, fag packets will be unobtainable and we will need a new work surface for dodgy estimating.
Greece and Spain have huge unemployment rates — which in each case increases the government debt burden — and queues are growing at soup kitchens. It is reminiscent of USA in the 1930s and it took a world war to cure that problem, in spite of the best efforts of FDR [President Roosevelt].
To add to my gloom, Bolton Wanderers were relegated from the Football Premier League last Sunday when they failed — as they have done so many times this season — to hang onto a lead at the end of the second half. How they will get on from here, I do not know. They have eleven players out of contract this summer, have huge debts, will need to cut their wage bill and need to find some very high quality cheap players to help escape quickly from the Championship. It is a daunting prospect! Are they up for it? I hope so.
Eric's mum is practicing making vast amounts of soup at very low cost ready for the next crisis in our economy. I don't think that the inexperienced rich boys in charge understand the concept of queuing for soup.
Unfortunately, Winston Churchill is dead.
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