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October 12th, 2008

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08:43 am - War Cabinet
Here is a tough analysis by Will Hutton in the Observer (Guardian Sunday sister paper) of the current financial mess.

What needs to happen on top is an assault on the dark heart of the global financial system - the $55 trillion market in credit derivatives.... a market more than twice the size of the combined GDP of the US, Japan and the EU. Until it is cleaned up and the toxic threat it poses is removed, the pandemic will continue. Even nationalised banks, and the countries standing behind them, could be overwhelmed by the scale of the losses now emerging.

In the eighties mad radicals (like me) used to say 'Nationalise the banks'. This was thought equivalently loopy to saying 'the Ice caps are going to melt' or 'Selling off public property to pay for tax cuts might not be such a brilliant idea'.

If steps had been taken to head off these problems at that time, they could have been implemented gently, and in a controlled way. At this rate we are looking not at nationalisation of the banks but a mass mobilisation of a world economic system, of co-operating governments, imposing ultra-cautious clamps on the world economy. And once that is in place, these structures will be utilised to address the problems with climate and energy (and then food and water) that will become world crises quite soon. It will be a like a war government. And that's if we are lucky.

(4 comments | Leave a comment)


[User Picture]
Date:October 12th, 2008 09:59 am (UTC)
Oh, I think we should renationalise rail, gas, electricity and water too.

As for a war government, that would be a good idea, or at least a government on a war footing. I think we should bring back rationing, thereby incidentally slimming the nation down and saving its teeth, get a certain amount of directed labour in for spivs in non-jobs like stockbroking, increase allotments, popularise make do and mend and respond to all whines with a reproving "there is a war on, you know". As far as I can see, apart from the actual hostilities, life was more fun and more moral in the forties, and if we could have the conditions without the bombs, I'd say go for it.
[User Picture]
Date:October 12th, 2008 02:05 pm (UTC)
Yes to nationalising those; that would be a positive move in any economic circumstances. If we were very lucky that would be enough, but my feeling is that there will eventually be some sort of trans-nationalisation, which is beyond anything we've seen before. I think fuel rationing is inevitable, and food rationing and even water rationing likely. I'm not as sanguine as you about how much fun it will be.

One thing which surprises me is how quickly the people who treated the 'principles' of their economics as if they were the laws of physics have jettisoned those principles. Like less than three weeks of crisis. They never believed in it at all.
[User Picture]
Date:October 12th, 2008 07:52 pm (UTC)
One of my first published articles, in the 70s, suggested having a virtual war (...before "virtual" became a commonly used word, of course). Keynesianism seems to work best when things are being blown up rather than merely purchased, so I said it would be a good idea to rent some nice quiet real estate, draft the young men (thus creating good jobs for women and older people), and have them take apart the munitions supplied to them, which could then be shipped back to the munitions factories to be built up again.

Mind you, I wasn't thinking clearly about the amount of fossil fuel the scheme would require.
[User Picture]
Date:October 12th, 2008 08:01 pm (UTC)
Or I think of that Kurt Vonnegut story where time runs backwards and the bombs leap from the earth, rebuilding the cities as they fly upwards, and are taken home by young men in planes, and given to women in factories to pull to harmless pieces.

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