We are headed for the final catastrophic countdown, some pundits tell us. Others say that the latest "coordinated" bargains – mainly in currency "swaps" – offered by central banks around the globe will do the trick: they will enable the banks to deal with each other again economically and confidently. They will also help to save the Euro and the European Community.
If they don't – if we have another collapse of the severity and complexity of 2008, we are warned that the entire global financial system could break down; and our political and economic leaders would be unable to do very much, if anything, about it. They might well, indeed, be paralysed by fear and a basic lack of understanding of what the crisis is all about.
There is very real justification for these concerns. Today's crisis has been approaching for more than a quarter century. It is not a routine, manageable cyclical affair but a more fundamental crisis that some claim, tends to strike the global economy every forty to fifty years.
Accompanying this longer-term crisis is the pathetic inability of our political, economic and financial leaders to act effectively. They meet and talk. They make claims they cannot sustain. Governments are changed but the new leaders are as ineffective as the old.
That was the way it ran in the 1930s; that is the way it is today.
Fear almost always drives our leaders on. If fear is not on the agenda, it is always sitting at the table. Fear thumps at the heart of our policymakers. Fear sickens the guts of all of them – and most of us - everywhere.
When fear is the driving force, leadership lags behind or acts in desperation.
That is particularly the case at this late stage when everything conventional has been tried several times already and has failed. What is left except panic?
We must bear in mind that it is fear of a BANK collapse that preoccupies our leaders. Fear was centred publicly on American banks in 2008; more recently and especially right now, it is centred on European banks. The magnitude of the crisis has, if anything, increased in the three years between. All banks virtually everywhere are exposed in greater or lesser degree.
It is a fear that, in policy and practice, has compelled unique privileges for the biggest and normally richest banks. Unemployment of the masses can be borne; austerity for the already impoverished is seen to be necessary and unavoidable; but failure to "rescue" the banks, especially those too big to fail, would be intolerable. It conjures up the ultimate nightmares.
So governments, international institutions and the very rich demand cuts in the incomes and pensions of the relatively and absolutely poor in their societies while central banks propose some further easing of "credit" for the banks.
This is designed to increase their "liquidity" – that is, the money they have at their disposal - and the "confidence" they have crucially in each other.
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