ECONOMIC MELTDOWN: Only one person stands between us and planetary depression.

Posted by the Slog

Julia Gillard is the only chance we have left

When the history of Crash 2 finally gets to be written (if the mercantile model of globalism doesn’t wind up getting us all irradiated forever before anyone writes it) you can bet your sweet bippy that a lot of American neocon financial writers are going to blame the poor, Britain, and the eurozone in roughly that order. They will tell us all that Slick Willy forced the American lower classes to buy homes when they were happy renting trailers, that Britain never got real about its awful export performance, and that the eurozone was brought to its knees by Keynesian politicians with little or no commercial perspective. (In case you hadn’t noticed, Obama has had his “Things were just fine ’til Yerp screwed up” excuse tucked in his top pocket for over a year already).

So as I like to think of myself as the sort of bloke who does know what’s coming down the road – just not when – I thought that ahead of time I’d deliver a precis essay that gets a little closer to what really happened, and why….and what needs to happen next. Starting with an overview of the crooked craziness involved.
The Royal Bank of Scotland and NatWest, for example, are to pay £10 million in refunds after pocketing money belonging to 300,000 absent-minded customers who made an ATM withdrawal, but then forgot to take their cash. Most banks automatically hand back the cash to customers who forget to collect their money from automated banking machines. However, until recently RBS would wait for customers to complain before crediting their accounts with the cash.
The man in charge of RBS (a Bank owned by the British State) is Stephen Hester. The name will be familiar to you by now, being virtually synonymous with allegations of sharp practice, scams, fraud and embezzlement. He is also the man who, just before Christmas,  told his banking sector peers that the industry called ‘banking’ needed to become a byword for honesty. Clearly he is so committed to sincerity, Mr Heston believes you should be sincere at all times, even when you don’t mean it.
A short but vital stretch of water away, the eurozone banks are edging towards a union at almost exactly the same speed as those same  banks edge towards a cliff. The difference between this cliff and the US sovereign fiscal cliff is that in Europe, there is no more room for showboating, argument, debate, bollocks or brinkmanship. The ship is going over the brink, man: that’s it. This is not a disaster movie, it’s gonna happen.
Nobody knows the exact order in which the action will happen, although most of the smart money thinks that Greece, Spain and France will be heavily implicated. The reasons (in no particular order of merit or certainty, they’re all equal) are that the Greek banks have no money, but are partaking in the bond buyback despite having no money to buy with; the Spanish banks have understated just how ineluctably insolvent and generally bust they are by a factor of between 5 and 8; and the French banking system’s ability to remain upright depends almost entirely on not owning any of that debt owed by the Greek and Spanish banks. So it’s a bummer for Francois Hollande that the French banquiers own pretty much the lion’s share of it.
This would be fine if the EU was in good econ0mic shape. But very few economies are in good shape if the banks charged with keeping the system fed with risk capital are broke – or owed so much by the folks who are already broke, they daren’t lend any more money to the businesses that need it or else they the banks might go broke too. So the chances are all the businesses will go broke.
This usually happens at the end of a war in Europe. After a war, the Americans usually pile in to buy all the businesses cheap, and lend money for reconstruction. Unfortunately, in this case they did things the wrong way round: they lent the money before things went tits up, but then the Europeans f**ked everything completely by not even having a war afterwards to get back to full employment. And we didn’t, we really didn’t: I’ve studied all the history and the graphs, and throughout the entire 67 years, apart from the near-permanent unpleasantness in the Balkans, we haven’t had a major punch-up at all. Not one.
The truth is, the American banks lent money unwisely in Europe. So it’s good that (in yet another example of how American financial capitalism has learned the lessons of banking silliness from 2008) US private equity groups are using more debt to fund acquisitions today than at any time since the start of the financial crisis….the cost of drowning in debt being lower than at any time in commercial history. This is a fine strategy, up to but not including the point at which economic depression leaves companies saddled with more debt, and thus highly likely to fail. We’re fairly certain about this, given that it cost $27 trillion worldwide to get the banks back on the beach and pump the saline solution from their lungs when they did it……in 2008.
Just to show how easily this could happen, US retail stocks fell as the data overwhelmingly indicated that holiday shopping for six weeks running up to last weekend had been rather more gentle than one might expect at Christmas, when US and British consumers usually set out to bankrupt each other through the medium of present-giving. As if this wasn’t enough, Washington’s budget gridlock is raising the risk that economic growth will be hurt next year whatever any of these banking, multinational and retail clowns do, because the United States doesn’t have any money to buy stuff any more without printing it. The money I mean, not the stuff. Try to keep up, this is important.
The whole US deficit, debt, recovery, import bill, credit and buying rainbow is smudged a little here and there by the fact that unless America keeps on buying a load of stuff it can’t afford to buy, China has nobody else to sell to beyond 2.8 billion of its own people, except that they don’t have any money either. Sadly, the Beijing politburo is acutely aware that those 2.8 billion Chinese would like to have some money bigtime, and also very soon. So it’s an urgent problem with only a long-term solution, and you’re just going to have rely on my corporate experience here: this is the wrong kind of problem to have. (India is in a similar boat, the only difference being that it too has some rather disturbing bank-leverage figures. The best way to think about India, in fact, is as a sort of American China. In fact, it’s best not to think about India at all, especially as it has a devious, fanatical, and nuclear fruit-cake next to it called Pakistan.)
The Pakistanis are staying well out of all this sh*t, as are the Japanese. Apart from doing its best in concert with the Chinese to start a thermo-nuclear war between them, Tokyo is too immersed in its own mess to worry a lot about anyone else’s. So too is the Middle East, where everything completely sh*t about the world – American oil mania, British poodleism, European thumb-twiddling, looney Islam, WOMD spin, Recep Erdogun, Russian energy blackmail, and Arabian aspirations to wipe Israel from the planet – are in place to produce total mayhem in Syria – and even greater intransigence in Iran.
In short, the Indians, Pakistanis, Arabs and Japanese are all distracted right now. So that leaves only Australia.
Unfortunately, Australia needs the Chinese to keep on making and selling stuff, because without that happening, the Aussies will pretty soon have some of the biggest mountain ranges in the world, and unique ones too in that they’ll consist of iron, gold, copper, aluminium and coal…all of which nobody wants. The upside of this is that maybe the miners will stop running Australia. The bad news is that this is the last link in the globalist ankle-chain, and everyone in the world apart from around 14,000 politicians is going to be out of work unless someone can cut the chain.
Either Australia comes up with an idea, or we’re all broke.
In particular, the Aussies will have to use some of that legendary Digger diplomatic sensitivity to persuade their client the Chinese People’s Republic to shape up, or step up, or loosen up, or shut up, or something. Only Julia Gillard can save the World economy now. Well that’s not strictly true: the Chinese just might listen to the North Koreans. So as a go-between, we can have the most badly dressed, tediously voiced and biggest bummed woman anywhere around the Pacific Rim (that’s enough smirking thank you). Or we can have an immortal lunatic who’s Dad spent most if his declining years in his underwear. Choice can be a tyranny, and this is one of those occasions when it’s a sort of tyrannically forced choice between the lesser of two levels of potential failure. But myself, I’d go for La Gillard.
I think there are various strategies that the adorable Julia could adopt. A good start might be to send the Beijing leadership to sleep, they being old and she having a voice perfectly modulated to induce catatonic boredom. But the chink (sorry) in this armour is that we need the Chinese to do something, not drop off. In which case, if the objective is to startle them into action, then recent performances by the Aussie Prime Minister suggest that she may be just the Sheila for the job.
“My dear remaining fellow Australians, the end of the world is coming,” the Australian premier said in a recent broadcast, going on to list the key dangers as flesh-eating zombies, demonic hell-beasts, and K-Pop….the last being a reference to contemporary Korean music. She then went on to show a video to make her point, which was actually a gag about the Mayan end of the world. So clearly, when she puts her mind such as it is to a problem, she has the startle factor. Maybe, however, it’s too close to the bamboozle factor if you’re talking to the militarist authoritarian communist psychographic.
But don’t be dismayed: perseverance is the mother of most terrible ideas, and there is something about Ms Gillard to suggest that she’d know exactly how to go to work on the Beijing leadership: she’s just as ethically bereft and devious as they are. This came to light recently along with allegations relating to her legal career in the 1990s. It now seems pretty clear that she helped set up a slush fund for her then boyfriend, Bruce Wilson, an official with the Australian Workers’ Union. The evidence is very red-handed in nature, but Julia adopted the Jeremy Hunt defence by vigorously denying any impropriety. You see, if you vigorously deny impropriety, even though the landscape is strewn with myriad examples of your impropriety, it’s usually enough to damp things down these days. But to be on the safe side, Gillard used the time-honoured weapon of mass distraction by accusing the Opposition Leader in Parliament of being a misogynistic pig. She entered the chamber with hand-scribbled sexist quotes attributed over the years to the man concerned, Tony Abbott, and the fifteen minutes of invective that followed went into Australian political history as “the misogyny speech”. Not, you will observe, the “I wasn’t sleazy with my Union boss lover” speech.
So my thought it this: Julia flies to the Chinese capital, lulls the geriatrics and younger army hotheads into a false sense of security, startles them with false distractions about a new US secret weapon that eats flesh and turns everyone over 50 into a Zombie, and then plays the ace up her ill-fitting sleeve by agreeing to let every poor Chinese worker have a month’s free holiday in Australia. Not only would this get them out of Beijing’s face, it would also reduce the Chinese population by at least 50% once the venomous snakes, man-eating crocs, and 37,000 varieties of deadly spider had done their work.
Thus, those Chinese not fed to the Aussie wildlife would be better fed (and get higher wages) while China would wind up with a shortage of labour. These factors would push wages up and exports down – thereby slashing the US deficit and allowing unemployed eurozone victims to go and work in China. That in turn would give the eurozone full employment, revive ClubMed, and at last make the EU worth being a part of. Only then would the British Establishment decide to pull out, forcing British industry to focus on the rest of Abroad – and actually start making some profitably manufactured things to pay off the National Debt. The final happy by-product of Julianomics could well be a Washington with less debt becoming far less dependent on the media, banking and multinational gnomes…..thereafter growing some balls, and forcing the members of that Triad Gang to go before Grand Juries, lend money to entrepreneurs, invest in new products and pay some taxes.
The only thing necessary for the triumph of evil is for good men to do nothing. The only thing available for the avoidance of global meltdown is for Julia Gillard to do something. This could be a game changer.
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