This week the world inched fatefully closer to economic apocalypse. All week, the world’s markets have been jumping up and down like a pile driver operated by a speed freak. Of course there’s no way of telling if or when a total cataclysmic crash might take place, but it’s clear that we can no longer discount the possibility. When markets crashed in 2008, much of the world was caught off guard as almost nobody (in the mainstream) dared predict it. If another crash comes now, it may well be (in part) because everyone is expecting it. Doom and gloom prophecies which were once limited to the “fringes” of anarchists, conspiracy theorists and peak-oilers, are now front and centre in much of the business press.

Many people are very angry, especially at Standard & Poor’s for sparking the sell-off by downgrading America’s credit rating. There’s even talk of official inquiries. And while I have no love for S&P, I have to say I’m not convinced. Obama may insist that America is “really” worthy of a AAA rating, but is it? The financial leaders of the US are now learning what it’s like for the rest of us. Credit ratings are set in arbitrary ways by unaccountable institutions, and aren’t always fair. They can destroy your ability to get out of a bad spot, and there’s rarely much you can do about it. Why is a downgrade such a frightening notion? Because for a few decades now, America has run a hefty trade deficit with the rest of the world, and their main export has been money. Their size, might and various post-war treaties granted their dollars special status as a de-facto global currency. If the value of US dollars or bonds comes into question, so does the global economy.

This notion has come up a few times in the last decade, with the most common “solution” involving replacing it with the Euro. This is no longer an option – America may have a bit of a debt crisis on its hands, but the EU now has half a dozen. Nor would Chinese money be a solution, given their current inflation crisis. The ugly truth is that we are now all too integrated for a purely regional crisis.

The other convenient demon for the recent sell-off would be the debt ceiling debate amongst America’s Government. There’s no doubting that this spectacle was shameful, childish and unbelievably irresponsible. Spending two weeks threatening a nation and the globe that you’ll default on your debts over petty policy disputes virtually guarantees that somebody’s going to declare you a “credit risk”. Some have gone so far as to call it a “the Tea Party Downgrade”, though there’s more than enough blame to go around. What the Tea Party did was prove their unparalleled ability as a vocal minority to push this brinksmanship even further to suit their own twisted beliefs. If the recent Wisconsin protests were a demonstration of how little popular support they actually have, the debt ceiling row was a show of how much influence they hold among policymakers.

With the G7 pledging to preserve ‘liquidity’ and the Fed promising not to raise ultra-low interest rates for at least another two years, there’s little doubt that bailouts are still on the agenda. Have we learned nothing from the last three years? Using public money to prop up private failures has only made the situation far worse, engendering “austerity” measures we clearly can’t afford, and generating no end of civil strife.

It’s time to be honest – there is no easy answer here. Speculators, hedge fund traders or irresponsible bankers might not have helped, but this crisis runs much deeper. The fact that the Tea Party or Greek Parliament can bring us this close to a meltdown only goes to show how much pressure is building.

What will come of all this? Consistent market failures demand a system change or face collapse. People have been predicting the collapse of capitalism since at least the time of Marx, and we haven’t seen it yet. Markets have imploded many times, but in the end there’s still governments to bail them out. After the last time, the word “socialism” was thrown around often, but no real spreading of wealth or sharing of resources took place. The largest corporations are now more profitable and consolidated than ever. What’s evolving in America is much like China – a wholesale breakdown of the (thin) boundaries between businesses and government – threatening rise of a more blatant type of technocratic rule. How far would those with power go to keep it? As far as they feel they need to.

If we can’t start talking seriously about alternatives now, then when?

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