2015: A year of borrowed time?
Is this the year when national debt denial bites nations who have repeatedly failed to address their fiscal problems?
The start of the New Year brings hope, reflection and an opportunity to move forward.
Or, if you are a member of the political classes, a fresh new 365 day window to advance your self-interest and ignore the long-term consequences.
I really want to be upbeat cheery and optimistic. Really I do. However, as previously chronicled, nobody, barring a demented halfwit entirely bereft of any vestige of financial literacy can go about their daily business without feeling a teensy bit perturbed by debt. That vast debt is either a mountain which threatens to fall on us from a great height overwhelming society, or rise from beneath our feet creating such a vast hole that we are entirely underwhelmed. Underwhelmed into a deep abyss, that is.
Eagle-eyed readers may instantly conclude that I am inferring the political classes who ‘lead’ (ahem) the Western world are economically illiterate delusional halfwits. Well optimist that I am, I suspect they may not even be this coherent.
The ‘trollster’ classes will now be busily frothing forth with all manner of reactionary lunacy suggesting that concepts like nationalizing breathing and having a central lung which dispels enough air for all citizens will make society a better place. Yip, and North Korea is the most prosperous nation on earth. Meanwhile, government economics has resorted to a battle of wills and a sense of shared denial. On one side fusty political tribes believe in spending lots of other people’s money while occasionally paying lip service to the folks who actually create wealth. The other side doesn’t even go so far as acknowledging anybody who creates wealth. Both tribes agree on one thing: actually letting citizens decide anything is a bad move.
There has been a little window dressing and little else as the world has achieved exit velocity from the analogue and headed into digital orbit. However budget ‘management’ has remained stuck for decades at “Full Spend Ahead.”
Whether Western economies grow or not, governments have proven curiously adept at sharing the proceeds of the growth. Sharing growth when there isn’t any is pivotal to Alice in Wonderland economics. This delusional ‘jam forever’ (with a large portion of cake) approach, has been prevalent since the Second World War.
In true Orwellian fashion the propaganda ‘storm troopers’ of obfuscation continue to argue that the rich must pay their fair share while all the time failing to do the math (ultimately economic gravity is pretty simple - you balance the books and ideally save a bit for rainy days and harder times). Thus the political classes maintain their bickering charade while sacrificing their constituents’ future, leaving a future generation to eventually foot the bill.
With average debt/GDP reaching the tipping point of disaster increases with every wasted year.
Prolonged impetuous overspending means the US has already crossed the 100 percent debt/GDP ratio, joining a not so exclusive club - the “Code Red Sovereign Shambles” (“CReSS”). It’s a sort of inverse concept of the BRICs. The entire eurozone sits at over 90 percent debt/GDP despite isolated paragons of virtue such as Estonia (9 percent!), or Poland, below the ‘manageable’ threshold of 60 percent (albeit thanks to sleight of hand, or what others might call theft of private pension assets).
The worry is that the difference between the mad Bolivarian fiasco of Venezuela’s food shortages is only a relatively few degrees of freedom from the enlightened European third way toward bankruptcy.
Therefore, against a background of false austerity, Western economies trundle towards the icebergs like a flotilla of Titanics. “Fortunately,” one counterbalancing side effect of multi-generational mismanaged spending is evident: the economic boilers have been left in such disrepair most Western ships of state can barely muster half steam.
Whether it’s rocks, icebergs or creditors on the horizon, the good ship western sovereign nation boasts a panoply of deluded captains determined to steam forth straight into destruction.
When they launch fireworks in major Western cities to announce the New Year, some may feel it is mere camouflage to hide the howitzer not merely endeavoring to kick the debt can down the road but hoping to launch the can into orbit so it never comes back.
Another wasted year without sensible economic management can only further weaken the West as the world’s economic power further pivots east.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.