John Maynard Keynes was one of the very few not to celebrate after the Treaty of Versailles was signed. Famously, he opined that the Prime Ministers, Presidents and Generals had just signed on for the next ‘world war’. He was, of course, entirely correct. The post-war inflation in Germany was largely the result of the onerous reparations the Treaty laid on the losing side; they made Hitler’s bully party attractive to the German electorate, and the Second World War was soon underway.
The buy-out sweetheart deal for the New York bank and investment brokers will be the Versailles of the next Great Depression. The banker collapse was a tremble in the earth’s crust, a warning signal that there is a real earthquake coming. And what did we do? Nothing but paper the tremor over. There has been no reduction in currency betting, no Tobin Tax, no banker’s reserve funds established, nothing to stop the merger manias and false wealth accumulations. Nothing in short to change anything and the next time the crash comes and it will, it will be much more brutal because this bail out and the trillion dollar military adventures have created an international indebtedness that will prevent another bail out. The system will just crash.
It gets worse. The ‘stimulus’ funding associated with this bail out around the world has not been used to bring about a more sustainable local and world infrastructure. We’re still standing on the end of the oil plank. The entire economy is more dependent on oil than it ever has been. People need their cars more than ever because cities have continued to sprawl and sprawl needs oil and cars, like the human needs oxygen.
The Treaty of Versailles was the great chance the world had at the end of the ‘war to end all wars’ to re-write the map for the 20th century away from the old toxic national animosities and create new, healing conditions for a more co-operative, conciliatory international environment. Instead Versailles took that chance to heal and split the moment with an axe burying it with a Treaty that sealed in steel the idea – ‘you are the bad guys (Germany and allies) and ‘we’re the good guys’. (U.K./U.S. and allies); and it spawned a hundred years of ugliness – starting with the Turkish/Greek war. The Nazis. The Second War. The Korean. The Israel/Palestine conflict right up to day.
The New York bail out will be remembered the same way. It was the great chance the nations of the world had to re-write the economic and environmental conditions which spawned the recession, the housing meltdown, the pension and wage declines. Instead governments chose to spend trillions propping up the very system that caused the recession and then did nothing to change those conditions. Countries like Canada led the way in making sure that no new banker’s reserve tax was instituted, that nothing changed.
But there is no such thing as ‘no change’. The concept is foreign to all physics and philosophy. The only thing constant is change, and change will happen. It will just be more explosive, more destructive, and more difficult when it comes.
photo by Robert Campbell
7 comments
Clive…You’re blogging now buddy…you can use hyperlinks..it’s great!
John Maynard Keynes = http://en.wikipedia.org/wiki/John_Maynard_Keynes
PC
As editor of the site I take your point about linking — and if the copy any of our contributors turn in refers to specific online resources, like an article in a newspaper, or a photo essay on Flickr — of course we will link to it. But for historic personages, names of countries, ideas already well-established in the public domain (and John Maynard Keynes might be the most famous economist of the 20th century), I think it would be patronizing to everyone involved to start relentlessly linking every proper name or term to Wikipedia. If we started going down that road for the post in question, where would we stop? Tobin Tax? Treaty of Versailles? First World War? Germany? The reader has Wikipedia just as well as we do, if they really need to do some background.
I do wonder how many people still don’t yet have a grounding in Keynes and his work and why they matter today.
It’s about time someone looked at the problems created by the “stimulus program” with a cold, historic eye. This time the collection of failures which led to the collapse of 2008 will not be swept under the rug with impunity. The stimulus system is a bag of smoke. The Financial operators had and do not have any clothes. I look forward to reading more from Clive.
Excellent Article. That’s what Paul Krugman says. Both of you are dead right. Paul Krugman – economist at Princeton and a Nobel Prize winner for economics, writes on Monday and Friday in the opinion pages of the New York Times and daily at different times on his blog, The Conscience of a Liberal, available on the same pages.
Next to Spacing Montreal, Paul is my necessary daily reading.
a good article, but i think it has a bias. as a montrealer, i have to say ottawa is the definition of the bubble (albeit very educated and smart one) formed by a non money making town — without tax dollars it doesnt exist. and thus, remains a town more steeped in theory and policy, rather than the gritty and sometimes ugly task of generating dollars.
“bubble” has a different meaning in discussions about economics.
What you say about government wonks is true no matter where we put them.. governement exists only to redistribute part of our wealth, not to make money.
Generating dollars was (and will be) precisely the context and purpose of the Wall Street meltdown. And the US government’s enormous deficits.