Our society operates on the base of faith and trust. Lose this and we experience misery and possible anarchy.
The basis of what makes things tick is economic. If the oil of money is not in the engine it will seize up and that is precisely what’s happening. Once the money vanishes we are left with a future of damage control.
Everything else starts to fall apart without money. Taxation must rise, but the government take decreases as businesses and individuals make less profit, if they profit at all. There will be less cash available for public works and consumers have less money to spend. Even if they have money they lack the confidence to spend when there is growing doubt that they will keep their jobs. The people are suffering from an enormous confidence deficit and an almost total lack of faith in our system.
There was never a time in modern history when our banks held enough cash to meet a potential run on the bank. These institutions, even at their most prudent and solid, never held a dollar or a pound for each pound or dollar deposited with them. It was more like 10% to 15%. It all worked pretty well when no one questioned the solidity and credit worthiness of our banking giants.
Similarly governments work because of the acquiescence of a compliant and law abiding population. The deal being that we shall abide by your laws as long as we feel they’re reasonable and not too far from our notion of fairness. When laws are seen to be unfair there are many examples of the furious reaction of the people. Revolutions and civil wars have started huge bloodbaths because of perceived injustice.
Fundamental questions like this must be asked when the rulebook is being torn up and thrown away. A contemporary large-scale survey amongst young people in Germany found that this group, although largely apathetic about political parties in general, reserved their largest support for the far right. In Austria more than 30% of the general electorate now vote for the Fascist parties. The same trends are becoming evident for a growing swathe of Europe.
Over the last few days I have been conducting a straw pole. I asked an entirely unscientific group of people, here and in the USA a question. They have no link other than me as their common denominator.
The question is this: -
“If you were now to see a person come on your television and say that he is a banker, taking deposits, to be guaranteed by the government 100%, and this guarantee is backed up by a government spokesman. The banker offers a return of 7.5% per year, starting immediately. Will you invest your money with him?”
Well, what do you think?
The banker received a 100% rejection.
Not one person I questioned was prepared to invest their money with my fictitious banker.
This proves that our faith in banks and bankers has totally vanished, and it will be a very long time before it can be recaptured. There is no more important task for our leaders than to reverse this.
Monday, March 23, 2009
Sunday, March 22, 2009
WhichWayForward
There are not many aspects of the present government in the UK or the last one in the US that I agree with. In fact the list is so small and inconsequential it’s hardly worth mentioning. On the other hand I don’t disagree with everything they did nor do I think they were or are entirely evil.
The single biggest mistakes they both made was to try and make facts conform to their political theories and if not, to force a fit. As an example I am convinced that one day in Britain we will discover that virtually unrestricted immigration was a social political experiment.
Don’t get me wrong, I am virulently opposed to both the hard left and hard right, and in fact every ”ism” appalls and scares me. But I just don’t believe it could have been possible for literally millions of foreign nationals to enter this country illegally without at least the tacit connivance of those responsible for our borders.
Either these officials are criminally inept or they wanted this to happen. The results are the same and in the present economic circumstances could prove catastrophic. I say this in the knowledge that less than one hundred years ago my grandparents and their siblings arrived in this country and America, penniless refugees.
The numbers of immigrants then allowed in was in direct proportion to the needs of their new host countries. Put another way, the bargain suited both sides of the equation. It made some sense.
Now there are a huge number of new immigrants in our countries and our economies are in free fall. If the economic migrants were to simply go home there wouldn’t be a problem here, but there would be a huge problem in their countries. The new reality is that there are new camps being built in France for all the new migrants fighting to get into the UK, and the net numbers in the UK are growing so fast that the UK is forecast to overtake Germany’s population having once been far smaller.
What will happen when the indigenous population can’t get or keep jobs but the new migrants stay and prosper? This will potentially lead to problems that could lead to substantial civil strife.
America has different but related problems. Of them all I believe that the most immediate and affordable will be remaking the economic model of the USA to re-emphasize its ability to manufacture its way out of most problems when taken together with its huge capacity to export raw materials. This must be achieved and the education system re-engineered to produce what America needs so that it can compete.
The UK has to re-imagine itself and recreate its ability to deliver great products that are brilliantly designed and engineered. That was what worked in the Anglo American economic model and we simply walked away because we became besotted in making money out of thin air and betting on futures. The so called “knowledge economy” only works if you have something worth saying.
The key problems are, as ever, related to our wallets and sense of well-being. As this becomes progressively more problematic there would be a cycle of action and reaction in proportion to the desperation of the population. We could see either Fascism or Communism become a power again and with it a major, equal and opposite, probably violent reaction.
We must address educational necessities, fixing the economy and immigration as matters of equal priority. No one of these fixes is going to be sufficient, we need them all.
The single biggest mistakes they both made was to try and make facts conform to their political theories and if not, to force a fit. As an example I am convinced that one day in Britain we will discover that virtually unrestricted immigration was a social political experiment.
Don’t get me wrong, I am virulently opposed to both the hard left and hard right, and in fact every ”ism” appalls and scares me. But I just don’t believe it could have been possible for literally millions of foreign nationals to enter this country illegally without at least the tacit connivance of those responsible for our borders.
Either these officials are criminally inept or they wanted this to happen. The results are the same and in the present economic circumstances could prove catastrophic. I say this in the knowledge that less than one hundred years ago my grandparents and their siblings arrived in this country and America, penniless refugees.
The numbers of immigrants then allowed in was in direct proportion to the needs of their new host countries. Put another way, the bargain suited both sides of the equation. It made some sense.
Now there are a huge number of new immigrants in our countries and our economies are in free fall. If the economic migrants were to simply go home there wouldn’t be a problem here, but there would be a huge problem in their countries. The new reality is that there are new camps being built in France for all the new migrants fighting to get into the UK, and the net numbers in the UK are growing so fast that the UK is forecast to overtake Germany’s population having once been far smaller.
What will happen when the indigenous population can’t get or keep jobs but the new migrants stay and prosper? This will potentially lead to problems that could lead to substantial civil strife.
America has different but related problems. Of them all I believe that the most immediate and affordable will be remaking the economic model of the USA to re-emphasize its ability to manufacture its way out of most problems when taken together with its huge capacity to export raw materials. This must be achieved and the education system re-engineered to produce what America needs so that it can compete.
The UK has to re-imagine itself and recreate its ability to deliver great products that are brilliantly designed and engineered. That was what worked in the Anglo American economic model and we simply walked away because we became besotted in making money out of thin air and betting on futures. The so called “knowledge economy” only works if you have something worth saying.
The key problems are, as ever, related to our wallets and sense of well-being. As this becomes progressively more problematic there would be a cycle of action and reaction in proportion to the desperation of the population. We could see either Fascism or Communism become a power again and with it a major, equal and opposite, probably violent reaction.
We must address educational necessities, fixing the economy and immigration as matters of equal priority. No one of these fixes is going to be sufficient, we need them all.
Saturday, March 21, 2009
AnAcademicResponse
Below I reproduce a letter received from Brad, an educator in the States. It is in response to my article yesterday in this column about the way forward for our education systems.
By way of explanation I was trying to make the point that we needed the hard subjects to be taught with rigor, I was arguing against pointless creative degrees that don’t help either the students or society. I wholeheartedly support and participate in higher education for meaningful creative degrees that result in fulfillment and jobs.
There is a very real advantage in higher education for its own sake, and we should all treasure and protect it. However, to survive and prosper as successful countries in every sense, we must re-learn some very basic lessons. One of these is that we have to manufacture for ourselves, grow more and sell more. To achieve this we must educate our young to these ends; perhaps not instead of entirely, but as well as.
Now over to Brad: -
“As you can well imagine, I am on board with your column on education.
One caveat: you can't build a math/science culture by freaking out about foreign competition. There has to be a "pure" interest in science in the culture at large--as there was in physics and logic at the beginning of
this century, the space race later on, etc.
The most revolutionary ideas emerge from pure research and this is what is disappearing e.g.—the supercollider, kyboshed in Texas some years ago. Very few people could explain what that is all about; therefore, the money dries up. This was less of a problem with the moon shot. That's why the humanities are not trivial--science cannot situate itself as a narrative, metaphor or cultural vector--you need writers, thinkers, and moviemakers--but literate ones.
I'm struck in reading math bios how many got into the field because of George Gamow's "1,2,3...infinity." That little book sent a lot of
people on their way--as did science fiction, the very lucid philosophical,
Pop sci books of Einstein (Einstein and Infeld's Evolution of Physics),
Asimov, Raymond Smullyan...there's just no hook right now. The kids don't
care about outer space, which is fine and understandable, they care about inner space.
O.k., but innovations in computing require a background in
Math and mathematical logic--so the hook as to be elsewhere than
gadgets--e.g. --What exactly is a non-classical logic? Are we made of?
logic--or something else--is that "something else" writable in logic, or
does it show up as a barrier (we get knowledge of it negatively)? Why
does group theory explain so much at the level of particle physics--did
God make the world from group theory, or again, is there a "something
else" we will never get our hands on, but that keeps reinventing itself as
new paradigms? I would say there is even a mystical-religious hook
there for some--which is not a bad place for religion-- The "answers" to
these questions, open-ended as they are, are in the actual math and
science--that should be the hook.
Just putting a kid on a computer is not solving anything--though that is
much of the budget in education nowadays--building enormous computer labs.
I would slash way back on that and hire math science people at top dollar who actually know how to teach--a rare combination. Those people need a chalkboard and textbooks--that's about it really, at least in math/logic, which is the pedestal on which it all rests. Mostly they need money to make it worth their while--which will never happen as long as teacher's unions are in charge.”
By way of explanation I was trying to make the point that we needed the hard subjects to be taught with rigor, I was arguing against pointless creative degrees that don’t help either the students or society. I wholeheartedly support and participate in higher education for meaningful creative degrees that result in fulfillment and jobs.
There is a very real advantage in higher education for its own sake, and we should all treasure and protect it. However, to survive and prosper as successful countries in every sense, we must re-learn some very basic lessons. One of these is that we have to manufacture for ourselves, grow more and sell more. To achieve this we must educate our young to these ends; perhaps not instead of entirely, but as well as.
Now over to Brad: -
“As you can well imagine, I am on board with your column on education.
One caveat: you can't build a math/science culture by freaking out about foreign competition. There has to be a "pure" interest in science in the culture at large--as there was in physics and logic at the beginning of
this century, the space race later on, etc.
The most revolutionary ideas emerge from pure research and this is what is disappearing e.g.—the supercollider, kyboshed in Texas some years ago. Very few people could explain what that is all about; therefore, the money dries up. This was less of a problem with the moon shot. That's why the humanities are not trivial--science cannot situate itself as a narrative, metaphor or cultural vector--you need writers, thinkers, and moviemakers--but literate ones.
I'm struck in reading math bios how many got into the field because of George Gamow's "1,2,3...infinity." That little book sent a lot of
people on their way--as did science fiction, the very lucid philosophical,
Pop sci books of Einstein (Einstein and Infeld's Evolution of Physics),
Asimov, Raymond Smullyan...there's just no hook right now. The kids don't
care about outer space, which is fine and understandable, they care about inner space.
O.k., but innovations in computing require a background in
Math and mathematical logic--so the hook as to be elsewhere than
gadgets--e.g. --What exactly is a non-classical logic? Are we made of?
logic--or something else--is that "something else" writable in logic, or
does it show up as a barrier (we get knowledge of it negatively)? Why
does group theory explain so much at the level of particle physics--did
God make the world from group theory, or again, is there a "something
else" we will never get our hands on, but that keeps reinventing itself as
new paradigms? I would say there is even a mystical-religious hook
there for some--which is not a bad place for religion-- The "answers" to
these questions, open-ended as they are, are in the actual math and
science--that should be the hook.
Just putting a kid on a computer is not solving anything--though that is
much of the budget in education nowadays--building enormous computer labs.
I would slash way back on that and hire math science people at top dollar who actually know how to teach--a rare combination. Those people need a chalkboard and textbooks--that's about it really, at least in math/logic, which is the pedestal on which it all rests. Mostly they need money to make it worth their while--which will never happen as long as teacher's unions are in charge.”
Friday, March 20, 2009
AcademicMisconceptions
Today is one of those wonderful days when England is the greatest place in the world. The sun is shining and the world has a smile on its face. Dare I say that the winter is being replaced by the first warmer breath of a more gentle spring?
Yesterday was also fabulous but I spent the entire day in a series of meetings as Process Panel Member for two pre-validation meetings preparing new BA degrees. I mustn’t mention any details here but I do want to touch on what this means.
The English validation and external examiner systems are, if used correctly, excellent safeguards for the academic credibility of our country. Despite what you hear about our system being terrible you shouldn’t be too dismayed. Yes, there are faults, but the system is not all bad.
One of the best proofs of this is that so many other countries still envy our system of higher education. This is evidenced when they seek the services of our academics at every level and for all purposes.
Despite being constantly under funded our best universities still compare favorably with the best in the world. Our average institutions continue to be on a par with those of a similar type elsewhere and are better than most.
The poor universities in England are pretty bad if you measure them purely as academic or research institutions. But the truth is that the way we measure these places is not appropriate to their original design. They are more suited to their original vocational type qualifications created when they were still Polytechnics.
What must be understood and rectified is the most important element of the real problem. We are simply not creating enough graduates of excellence in the subject areas that will support our society in future.
We need an ever-growing cadre of engineers, mathematicians, scientists, doctors and computer designers but we lack them in sufficient numbers. This is because we have encouraged a generation of people such as unemployable ill-defined creative folks to accompany too many social scientists and psychologists. I make this statement despite the fact that I work in the creative area. As a country we will not be able to sustain so many people working in the non-productive Public sector, we can no longer afford such conceit.
Not only are we undershooting the number of people required for the essential disciplines but we are also failing to ensure that they are of top international top quality. The future graduate has to be to be able to battle with a chance of winning in the future very competitive fields they will inhabit.
The root cause of this lack of our people excelling in the right areas started in a perverse and seemingly unconnected manner. In the middle 1980’s it became acceptable for our doctrinaire educators to mislead our young children that winning and losing was finished. Competition was actively discouraged. Such positions as first or last were effectively abolished.
The results are self-evident and totally counter productive. How do you tell a student that his exam results matters when it has been drummed into him that competition is somehow evil and negative?
Similar muddled thinking and attempts at social engineering took place in the USA and the consequences in the Community College system has been progressively more dumb students.
This simply has to stop or we will be buried by more motivated and qualified graduates from the emerging powerhouse economies in such countries as India and China. All we will be qualified to do is consume the products of these countries and entertain our new masters in exchange for crumbs from their table.
Yesterday was also fabulous but I spent the entire day in a series of meetings as Process Panel Member for two pre-validation meetings preparing new BA degrees. I mustn’t mention any details here but I do want to touch on what this means.
The English validation and external examiner systems are, if used correctly, excellent safeguards for the academic credibility of our country. Despite what you hear about our system being terrible you shouldn’t be too dismayed. Yes, there are faults, but the system is not all bad.
One of the best proofs of this is that so many other countries still envy our system of higher education. This is evidenced when they seek the services of our academics at every level and for all purposes.
Despite being constantly under funded our best universities still compare favorably with the best in the world. Our average institutions continue to be on a par with those of a similar type elsewhere and are better than most.
The poor universities in England are pretty bad if you measure them purely as academic or research institutions. But the truth is that the way we measure these places is not appropriate to their original design. They are more suited to their original vocational type qualifications created when they were still Polytechnics.
What must be understood and rectified is the most important element of the real problem. We are simply not creating enough graduates of excellence in the subject areas that will support our society in future.
We need an ever-growing cadre of engineers, mathematicians, scientists, doctors and computer designers but we lack them in sufficient numbers. This is because we have encouraged a generation of people such as unemployable ill-defined creative folks to accompany too many social scientists and psychologists. I make this statement despite the fact that I work in the creative area. As a country we will not be able to sustain so many people working in the non-productive Public sector, we can no longer afford such conceit.
Not only are we undershooting the number of people required for the essential disciplines but we are also failing to ensure that they are of top international top quality. The future graduate has to be to be able to battle with a chance of winning in the future very competitive fields they will inhabit.
The root cause of this lack of our people excelling in the right areas started in a perverse and seemingly unconnected manner. In the middle 1980’s it became acceptable for our doctrinaire educators to mislead our young children that winning and losing was finished. Competition was actively discouraged. Such positions as first or last were effectively abolished.
The results are self-evident and totally counter productive. How do you tell a student that his exam results matters when it has been drummed into him that competition is somehow evil and negative?
Similar muddled thinking and attempts at social engineering took place in the USA and the consequences in the Community College system has been progressively more dumb students.
This simply has to stop or we will be buried by more motivated and qualified graduates from the emerging powerhouse economies in such countries as India and China. All we will be qualified to do is consume the products of these countries and entertain our new masters in exchange for crumbs from their table.
Wednesday, March 18, 2009
TheFutureArrives
On Friday, October 17, 2008 I wrote an article entitled, “Predicting the Future” in which I stated;
“There are certain things a shrewd columnist should never do; chief amongst them is any attempt to predict the future. This article proves that I am not very shrewd as I am going to attempt some forecasting.
We start with a relative no brainer; Obama is going to be the next President of the USA. I’m not suggesting who my preference is here, as its not relevant, me not being American and therefore unable to cast a vote.
Once Obama is elected and in office I truly hope that the security services does everything to enhance his personal safety as he is sure to be a target for every nut case on the planet, particularly American lunatics who view him as if he were the anti-Christ.
The next people likely to test Obama once he’s in the White House will be the Russians, as its almost impossible to see President Putin not seeing how far he can push the new man. The likely spot for the test will be the Crimean Peninsula of the Ukraine, in which the majority of the population is ethnically Russian but the government is Ukrainian. The situation is made more volatile by the Ukrainian government wishing to move west politically whilst the Russian fleet has its base in Sebastopol within the Ukraine. This is the Georgian scenario writ large, and is a boil waiting to burst.”
Yesterday the future arrived without many people even noticing. During a speech to his military leaders President Dmitry Medvedev on Tuesday announced a "large-scale" rearmament and renewal of Russia's nuclear arsenal, accusing NATO of pushing ahead with expansion near Russian borders.
He was addressing a meeting of Russia’s defense chiefs in Moscow, Medvedev said, "From 2011, a large-scale rearmament of the army and navy will begin,”
He went on to call for a renewal of Russia's nuclear weapons arsenal whilst claiming that NATO is continuing its push to expand the alliance's physical presence surrounding Russia's borders.
"Analysis of the military-political situation in the world shows that a serious conflict potential remains in some regions," Medvedev said.
He focused on local crises and international terrorism as security threats and added: "Attempts to expand the military infrastructure of NATO near the borders of our country are continuing. The primary task is to increase the combat readiness of our forces, first of all our strategic nuclear forces. They must be able to fulfill all tasks necessary to ensure Russia's security,"
Medvedev went on to praise Russia's military thrust into Georgia last year in defense of the rebel region of South Ossetia, he also said the conflict had shown up the military's failings.
The comments came despite an apparent thawing of US-Russian relations since the inauguration of President Barack Obama in January. But this is the first test by the big beasts of the new President’s resolve.
“There are certain things a shrewd columnist should never do; chief amongst them is any attempt to predict the future. This article proves that I am not very shrewd as I am going to attempt some forecasting.
We start with a relative no brainer; Obama is going to be the next President of the USA. I’m not suggesting who my preference is here, as its not relevant, me not being American and therefore unable to cast a vote.
Once Obama is elected and in office I truly hope that the security services does everything to enhance his personal safety as he is sure to be a target for every nut case on the planet, particularly American lunatics who view him as if he were the anti-Christ.
The next people likely to test Obama once he’s in the White House will be the Russians, as its almost impossible to see President Putin not seeing how far he can push the new man. The likely spot for the test will be the Crimean Peninsula of the Ukraine, in which the majority of the population is ethnically Russian but the government is Ukrainian. The situation is made more volatile by the Ukrainian government wishing to move west politically whilst the Russian fleet has its base in Sebastopol within the Ukraine. This is the Georgian scenario writ large, and is a boil waiting to burst.”
Yesterday the future arrived without many people even noticing. During a speech to his military leaders President Dmitry Medvedev on Tuesday announced a "large-scale" rearmament and renewal of Russia's nuclear arsenal, accusing NATO of pushing ahead with expansion near Russian borders.
He was addressing a meeting of Russia’s defense chiefs in Moscow, Medvedev said, "From 2011, a large-scale rearmament of the army and navy will begin,”
He went on to call for a renewal of Russia's nuclear weapons arsenal whilst claiming that NATO is continuing its push to expand the alliance's physical presence surrounding Russia's borders.
"Analysis of the military-political situation in the world shows that a serious conflict potential remains in some regions," Medvedev said.
He focused on local crises and international terrorism as security threats and added: "Attempts to expand the military infrastructure of NATO near the borders of our country are continuing. The primary task is to increase the combat readiness of our forces, first of all our strategic nuclear forces. They must be able to fulfill all tasks necessary to ensure Russia's security,"
Medvedev went on to praise Russia's military thrust into Georgia last year in defense of the rebel region of South Ossetia, he also said the conflict had shown up the military's failings.
The comments came despite an apparent thawing of US-Russian relations since the inauguration of President Barack Obama in January. But this is the first test by the big beasts of the new President’s resolve.
Tuesday, March 17, 2009
NannyState
We return to one of my pet peeves, the Nanny State. In Britain almost every aspect of our lives is now considered fair game for our political masters.
Not satisfied with taxes, both visible and invisible, too numerous to mention, they now feel quite entitled to tell us what we should eat, how much, when to exercise, what our kids should eat at school, how much alcohol we should consume, how to sift our garbage, what type of cars to drive. In fact the list is endless.
If you go to the cinema in time for the advertising most of it features the things you should or shouldn’t do. Today I went to the movies and there were slots to tell you to conduct safe sex, another to remind you to drive slowly, and yet another to watch out for motorcyclists. This was in addition to the material extolling the virtue of continuing education and surely it can’t be long before they tell us to love our mothers!
Our government is now in the habit of floating some of their more outlandish ideas in advance to the media and then, dependant on the public reaction will decide whether to move forward with the plan.
Over the last weekend the Health gurus floated the idea of creating a minimum price for each unit of alcohol, thus eliminating cheap drink presently available from the supermarkets. The argument for doing this is to reduce the amount of ill health suffered and bad behavior perpetrated by those ignorant enough to over consume the demon booze.
Personally I consume virtually no alcohol so this doesn’t directly affect me, but it isn’t right for the government to use a tax to force anyone to drink less. It is not the government’s business to tell me how to live my life unless what I am doing directly and negatively affects someone else. Politicians should not, must not presume that they know what’s best for the individuals of our country.
Perhaps if the politicians were super efficient and morally and physically superior they could lead by example. But the sad truth is that they are now seen to be useless managers, inept at finance, are mean spirited, pompous and many of them are greedy and corrupt. Secretly many of them smoke, and the majority certainly doesn’t bear close physical examination.
It’s time our politicians concentrated on their jobs and left our lives to us.
Not satisfied with taxes, both visible and invisible, too numerous to mention, they now feel quite entitled to tell us what we should eat, how much, when to exercise, what our kids should eat at school, how much alcohol we should consume, how to sift our garbage, what type of cars to drive. In fact the list is endless.
If you go to the cinema in time for the advertising most of it features the things you should or shouldn’t do. Today I went to the movies and there were slots to tell you to conduct safe sex, another to remind you to drive slowly, and yet another to watch out for motorcyclists. This was in addition to the material extolling the virtue of continuing education and surely it can’t be long before they tell us to love our mothers!
Our government is now in the habit of floating some of their more outlandish ideas in advance to the media and then, dependant on the public reaction will decide whether to move forward with the plan.
Over the last weekend the Health gurus floated the idea of creating a minimum price for each unit of alcohol, thus eliminating cheap drink presently available from the supermarkets. The argument for doing this is to reduce the amount of ill health suffered and bad behavior perpetrated by those ignorant enough to over consume the demon booze.
Personally I consume virtually no alcohol so this doesn’t directly affect me, but it isn’t right for the government to use a tax to force anyone to drink less. It is not the government’s business to tell me how to live my life unless what I am doing directly and negatively affects someone else. Politicians should not, must not presume that they know what’s best for the individuals of our country.
Perhaps if the politicians were super efficient and morally and physically superior they could lead by example. But the sad truth is that they are now seen to be useless managers, inept at finance, are mean spirited, pompous and many of them are greedy and corrupt. Secretly many of them smoke, and the majority certainly doesn’t bear close physical examination.
It’s time our politicians concentrated on their jobs and left our lives to us.
Monday, March 16, 2009
NotSoSuperPower
I’m sorry, see Gordon Brown, it isn’t so hard to say those words. I am sorry not to have posted an article for a couple of days, thus breaking my own first article of electronic faith, to always be current and relevant. This is achieved by responding quickly to events.
This response is precisely what our political leaders were trying to achieve in the G20 summit rehearsal when the finance ministers got together in the UK over the last few days.
The problem for both the British and American Finance Ministers are that their voices, usually so loud and well received, are now being argued with or straight out ignored. The financial masters of the governmental universe are suddenly mere mortals. The ultimate Superpower, the USA, doesn’t know how to react to being just another country in trouble.
Larry Summers, the head of the White House’s National Economic Council informed the rest of the countries that America expected them all to agree to the stimulus package worth about 2% of their national income. He patronizingly informed them that he looked forward to their compliance during the G20 meetings in Sussex.
Summers is a man well known for his abrasiveness and he is unpopular in the other capitals which he has visits. The first to publicly voice his criticism of Summers position is the head of the Eurogroup, Jean-Claude Juncker. He said that the US idea is, “not to our liking, Europe is not prepared to pile deficit on deficit.”
Perhaps more shocking is the fact that Germany and France, not so friendly lately, put aside their own scraps to combine in their rejection of American ideas.
Even Britain, normally a knee jerk ally of American plans, has become more cautious in its approach as its levels of public debt are already almost beyond measure.
More worrying still for America is that China is getting angry and impatient with America. Almost openly adopting the tone of an angry creditor the Chinese Premier Wen Jiabao stated, “We have made a huge amount of loans to the UK. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried.” And this is the bit that should really be of concern to the once all powerful American government who he told, “to honor its words, stay a creditable nation and ensure the safety of Chinese assets.”
Remember China already has about $1 trillion, or half, of its entire foreign currency reserves held in US government debt. Shortly China will also have almost no option but to swallow whole the vast majority of the next $1.7 trillion of American bonds that it will be selling to finance America’s spending plans.
Effectively China is now America’s paymaster every bit as much as the IMF props up some of the broken economies of the busted countries in Africa. New US Treasury Secretary Geithner didn’t understand this. During his confirmation hearings the Secretary accused the Chinese of currency manipulation as if America could do something about this. Clearly he was factually correct as the Chinese were bringing down the value of their currency to suit their own economic needs. But new realities dictate a healthy respect for America’s enlightened self-interest.
Suddenly Geithner has “got it” as he talks up the burgeoning friendship between China and America. But in real terms, China is the big butch guy and America is the coy girl about to be deflowered. All we can hope for is that both sides will enjoy their get together when it gets horizontal.
Similarly America and Europe are both renouncing their monopoly of appointment power at the IMF. All of this is a huge reality check for the new world order in which the weaknesses of American and European economies is resulting in a readjustment Eastwards of the levers of political power. Some of America’s leaders haven’t understood this message but other will, including President Obama.
No one can know the results of this tectonic shift of powers, which will become self-evident over the coming year. All we can know is that it will be a very different world.
This response is precisely what our political leaders were trying to achieve in the G20 summit rehearsal when the finance ministers got together in the UK over the last few days.
The problem for both the British and American Finance Ministers are that their voices, usually so loud and well received, are now being argued with or straight out ignored. The financial masters of the governmental universe are suddenly mere mortals. The ultimate Superpower, the USA, doesn’t know how to react to being just another country in trouble.
Larry Summers, the head of the White House’s National Economic Council informed the rest of the countries that America expected them all to agree to the stimulus package worth about 2% of their national income. He patronizingly informed them that he looked forward to their compliance during the G20 meetings in Sussex.
Summers is a man well known for his abrasiveness and he is unpopular in the other capitals which he has visits. The first to publicly voice his criticism of Summers position is the head of the Eurogroup, Jean-Claude Juncker. He said that the US idea is, “not to our liking, Europe is not prepared to pile deficit on deficit.”
Perhaps more shocking is the fact that Germany and France, not so friendly lately, put aside their own scraps to combine in their rejection of American ideas.
Even Britain, normally a knee jerk ally of American plans, has become more cautious in its approach as its levels of public debt are already almost beyond measure.
More worrying still for America is that China is getting angry and impatient with America. Almost openly adopting the tone of an angry creditor the Chinese Premier Wen Jiabao stated, “We have made a huge amount of loans to the UK. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried.” And this is the bit that should really be of concern to the once all powerful American government who he told, “to honor its words, stay a creditable nation and ensure the safety of Chinese assets.”
Remember China already has about $1 trillion, or half, of its entire foreign currency reserves held in US government debt. Shortly China will also have almost no option but to swallow whole the vast majority of the next $1.7 trillion of American bonds that it will be selling to finance America’s spending plans.
Effectively China is now America’s paymaster every bit as much as the IMF props up some of the broken economies of the busted countries in Africa. New US Treasury Secretary Geithner didn’t understand this. During his confirmation hearings the Secretary accused the Chinese of currency manipulation as if America could do something about this. Clearly he was factually correct as the Chinese were bringing down the value of their currency to suit their own economic needs. But new realities dictate a healthy respect for America’s enlightened self-interest.
Suddenly Geithner has “got it” as he talks up the burgeoning friendship between China and America. But in real terms, China is the big butch guy and America is the coy girl about to be deflowered. All we can hope for is that both sides will enjoy their get together when it gets horizontal.
Similarly America and Europe are both renouncing their monopoly of appointment power at the IMF. All of this is a huge reality check for the new world order in which the weaknesses of American and European economies is resulting in a readjustment Eastwards of the levers of political power. Some of America’s leaders haven’t understood this message but other will, including President Obama.
No one can know the results of this tectonic shift of powers, which will become self-evident over the coming year. All we can know is that it will be a very different world.
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