A SUMMARY OF THE G20 SUMMIT (OR HOW THE ANT AND GRASSHOPPER IS PLAYING OUT IN THE ECONOMIC WORLD)

For many people trying to make sense of the problems of both the Western world and in particular the Eurozone it must seem pretty easy to figure out exactly how to solve the Eurozone debt crisis, but unfortunately the inter-connected world we live in’s problems are not as easy to solve as they first appear.

Many people think that for Greece, Portugal, Spain or Italy to get back on track there should return to their standard currencies.  However for Europe this would be a disaster (if Europe only consisted of Germany and France, that is.)  France’s banks have become inexorably tied to sovereign debts around Europe that may never be able to repaid, this means that if these countries changed their currencies they may never see the money they lent repaid as their currencies inflate out of control.  

And as for the German government, they wisely or foolishly (who knows?) due to their allergic-ness to hyper-inflation (for obvious reasons) have used their influence to keep interest rates across the Eurozone low, they have also during this time, enjoyed the benefit of an extremely low valued Euro to keep the prices of their exports down.  Because of this even with the banks suffering during the credit crunch it has still been something of a boom period for Germany with there actually being a budget surplus rather than a deficit like many western economies.  But this is also why Germany, like France, cannot afford to have the Southern European States leave the Euro.  

If they did leave or there was a two-tier Euro system then Germany’s currency would, in all probability increase in value to a level that would lead to less demand for exports as they become priced out of range for many people during the down-turn across the world.  In many respects the plight of Germany and China are extremely similar as Germany has kept their currency low by being tied to the rest of Europe, while China have kept their currency low by buying a huge amounts of US bonds.  

However, as I said at the beginning of this blog, the world is interconnected and Germany’s problems now are actually quite interesting.  As one of the big players in the new Eurozone, it has fallen to them and to France (largely) to act as guarantor almost for the European Central Bank, so if Greece were to leave the Eurozone they, like France and it’s banks, would have to face the prospect of losing some of the money that they may have pledged to saving Greece through said European Central Bank, while at the same time losing exports due to an increasingly high valued Euro.

But of course as we speak Italy also now faces the prospect of being unable to pay its debt when it falls due, not due to a bloated state, comparative to some countries, but due to its having a playboy premier interested in lowering the taxes for the super-rich while doing little for the working man in the street (of course legally I am forbidden to talk about working girls because . . . )

And as for the US the only reason they also did not default on their debts recently was due to the fact that they increased their debt ceiling.  The US’s debt is the largest in the world and with it’s AAA rating cut, it will have to pay more to service that debt, BUT, it is still doing that from borrowed money as US politicians (ie Republican politicians and the right-wing press) even when they need money to solve the problems that they have from it’s own wealthy citizens insist that problems can’t be solved by having money thrown at them (yeah, that’s why on every secret millionaire show at the end, the poor people always give back the money . . . oh wait.  No they don’t, because it does solve their problems.  UNGH!)  

The US continues to borrow massively to service it’s massive debt and it doesn’t take a genius (eg . . . me!) to see that eventually the cost of borrowing to service that debt will reach the same levels as Greece or Italy without some really hard decisions being made at the top and sadly, US politicians seem to be made of the same fiscal fibre as young Mr Berlusconi.  

Which is leaving all the Western world looking at China and saying help us . . . which is allowing China to say . . . Fuck you!  And amazingly, they’re right to say that.  For decades the western businessman had turned China into the world’s factory.  Its cheap labour and lack of human rights has meant that the Western businessman have loved doing business there and have spent billions in China, which now means that surprisingly to the rest of the world that China is actually rich.  True there are storm clouds on the horizon that the Chinese government is trying to pop before they become Western style economic tsunami’s, but because they aren’t blowing all the cash they’ve got and are trying to spend where they can and be prudent the rest of the time they should survive it, but in spite of the fact that they are still in principal a communist country (No real free elections, state censorship of the media, even Google censored over there,) they have effectively won the cold war.  Now we are having to go cap in hand to them in order to get out of our economic hole that the IMF would suggest we could do if we had enough shovels (WTF???)

You see people the tale of the Grasshopper and the Ant is being played out for real in the world’s economies, and those whose wealthy have gorged on the finest things and the poor proles have gorged themselves on cheap booze and video games have reached winter without any stock and the Chinese worker Ant, who worked hard for the harsh economic weather has just slammed the door in those countries face and said “FIND YOUR OWN FUCKING SHELTER!” 

And they all lived a lot worse off . . . forever! 




And don't forget my first novel (co-wrote with Zoe Lambert) is available to download on Amazon Kindle.


Thanks for listening, and please, don't have nightmares.






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