Thinking About Technocracy

Where to from here?

Some thoughts on the Economic Storm

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I’ve tried to not write of late. Tried. It isn’t easy. You’ve got be made of reasonably stern stuff if your inclination is to face the world with a keyboard during times like these.  So why not write?  For one, I’m not that informed.  Sadly, neither is anyone else.  Anyone who tells you she/he is in a position to call the cards is a liar or worse.  Second, I think there is enough commentary.  What we need now is calm analysis, policy ideas, and planning.

Eastern Europe is disintegrating.  That’s the immediate crisis.  With it goes the banking systems of Western Europe…especially Austria, England, Belgium and the Netherlands.  wipe out those banking systems and the Euro starts to collapse.  If the Euro goes South, recovery in the US becomes all the harder.  People are still generally expecting the US to lead out of this nightmare.  Hard to see it, but that is the expectation.

I have heard informally things are particularly bad for the UK if Eastern Europe burns.  It looks like it might.  Latvia, Estonia, the Ukraine, Hungary, Romania and Serbia look particularly bad.  All are volatile…all rest close to a corrupt and foreign currency rich Russia.  It’s a lot of sparks next to a pile of dynamite.

The IMF and ECB need to focus on that problem set first.  Summer is coming and the priority is food and enough energy to survive next winter.  Second, there has to be a plan for getting manufacturing off its back.  That’s going to entail more government debt…has to.  There is no other short-term way, and there isn’t a long term without a short term.

Governments are going into survival mode.  They need time for something positive to happen.  What that might be, I cannot say.  But they need time…at least 9 months…probably 15 months.   Without that much time, a series of cascading collapses continues the current run.  Time is needed to start laying out enough policy to get something going.  Time can only be bought with government debt and currencies that are worth something.  On the other side, the resource rich countries and the wealthy of the East are going to have to be debt buyers.  I don’t see another way.

If we choose market collapse in the hope of some market-driven recovery, it will end violently in ways we don’t now comprehend.  One could imagine serious civil wars in Mexico, Russia, Venezuela and in Eastern Europe…or starvations/deflations that erase a generation and allow corruption to take hold in places it is in retreat.  It’s all about time right now.  Time to stabilize through micro-reorganizations, new visions, new parties, something.

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Written by ryanlanham

March 3, 2009 at 1:32 am

Posted in Crises

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