Skip to content

Global Economic Crisis is so boring: but “TOP SECRET” ECB Report on the debt crisis is anything but boring

November 5, 2012

Dear reader, by now you will have read at least 10,000 articles discussing the debt crisis, the banking crisis, the employment crisis, and ‘Gangster Bankers’ As well, you have endured a never ending cacophony of discussion about the endless number of  fiscal cliffs challenging us. You have been overwhelmed by a steady barrage of weighty tomes offering disparate views on the miscellaneous ‘crisis du jour’ affecting our global economy and our banking system.

This surely is enough to make one’s eyes glaze over

Cyprus, the US, Japan, Portugal, Spain, the banks, this tsunami of mismanagement, corruption, denial, greed and  incompetence surely is enough to make one’s eyes glaze over. This depressing, incomprehensible, conflicting and boring reportage is what motivates one to change the channel to the latest episode of the ‘The Bachelor’ .

This will land badly

Like me, you have probably concluded that the all our assorted cliffs, crisis, corruption scandals, employment exigencies, political turmoil and general malaise will land badly with severe consequences to the global economy. {Not to mention our own pocketbook}

The smart money is betting on either, Egypt, Portugal or Japan to be the first to lead the parade of debt repudiation

Let us dispense with any more debate about our predicament. Collectively, central governments owe 51 trillion dollars . It will never be repaid; there will be a cascade of defaults by sovereign nations. [The smart money is betting on Egypt, Portugal or Japan to be the first to lead the parade of debt repudiation.]  According to most reputable Bookies, Japan with a debt of 240% of GDP is inching ahead of Egypt, whose transition from dictatorship to democracy to military rule to [fill in the blank] has left the country’s economy in ruins and would make it unlikely to service its 230 billion dollars of debt.

Only a useful idiot  or a Nobel Prize winning economist would deny

The defaults will cause chaos in the global banking system. As well, the sovereign defaults will trigger dramatic social and economic upheaval on an epic scale.   There will be no capital available for the private sector for a very long time.  To argue against these outcomes is nonsense. Only a useful idiot  or a Nobel Prize winning economist would postulate that other outcomes are possible.

I was feeling quite chipper

Dear reader, I apologize for my hardhearted interpretation of our collective economic reality. I was actually feeling quite chipper when I awoke this afternoon. It was not until I took a call from Gustavo Laframboise-Pierre, the Director of Statistical Creation, at the European Central Bank [ECB] that my mood changed. That call made me realize that presenting you with more charts and statistics to prove that there was a problem was a complete waste of time. And, according to Gustavo, time was of the essence.

I am privy to many of the internal machinations occurring not only at the ECB, but at Central banks around the world.

My relationship with Gustavo made me privy to many of the internal machinations occurring not only at the ECB, but at Central banks around the world. My special relationship with Gustavo Laframboise-Pierre was due to the fact that Gustavo had been my principal bookie until an appallingly large and bad bet by a senior member of the ECB on the outcome of the 2010 World Cup left Gustavo in the fortuitous position of accepting a high paying sinecure at the ECB to settle the debt.

Standard operating procedure

Apparently, offering high paying jobs at the ECB to their personal antagonists, whether they be pimps, bookies, loan sharks or blackmailers, was standard operating procedure when senior members of the ECB found themselves in a delicate financial or personal situation.

TOP SECRET

Dear reader, what Gustavo shared with me was nothing less than the ECB’s Top Secret report entitled: ‘Analysis of the World when the Debt Crisis Explodes.’ That this report was denoted as ‘Top Secret’ by the ECB indicated that only senior members of the ECB, their staff, their family members, selected members of the banking industry and their families, the janitorial staff at ECB headquarters, as well as the employees at a variety of FedEx print stores around the world were privy to the information in the report. Dear reader I must ask you not to share what you are about to learn with anyone. The contents of the report are disturbing.

Platinum and Lace Gentleman’s Club

“David” Gustavo began, “you will not believe the report I am looking at. What this report says is extraordinary’’.  “Gustavo, why are you reading reports? I did not think that you had actually had any responsibilities other than as the ECB’s resident wine connoisseur and as a bon vivant.”  “David”, he responded, “I wish that were true but the stress here has been so intense that most of the senior members of the ECB are in rehab. The party hosted by Sylvio Berlusconi, at the exclusive Platinum and Lace Gentleman’s Club in London after Andy Murray’s victory at Wimbledon  left most members so inebriated that it only made sense for their chauffeurs to take them directly to a clinic for treatment. The soiree at ‘Platinum’ was attended by veterans of Mr. Berlusconi’s Bunga-Bunga  parties which meant that almost all of the ECB’s senior management, visitors to London from the Federal Reserve Bank, notable political luminaries, financial pundits, and Nobel Prize winning economists were all in attendance.” This naturally meant that world’s financial elite were all in rehab trying to recover from years of overindulgence. Mr. Berlusconi’s party simply guided them up to and over their personal alcoholic cliffs. {Dear reader, if I may digress for a moment: As the nature of the Platinum and Lace Gentleman’s Club may offend some readers I have not provided the customary hyperlink. You will have to Google the club yourself to find out more. I will now get back ‘on message’.}

You have my attention

Gustavo chortled, “In fact, I am in charge of the ECB today. There is an expectation that the acting head of the ECB should read all reports.” “Alright Gustavo, you have my attention, what does the report say?”

Half a league, half a league,
Half a league onward,
All in the valley of Debt
Rode the  G-20 : with apologies to Alfred Tennyson

“David the report indicates that the last five years have been a sham. Central bankers have known all along that there is no bridge to take us over the valley of debt and into the next global economic renaissance. The report acknowledges that the glue that holds the G-20 countries together is the largesse of each central government that provides services and employment to the population. Furthermore this largesse from the central government helps dictate the behavior of provincial, state and municipal governments.” Ben Bernanke and Mario Draghi are amazed that their permanent mantra of telling the world that they will keep printing money and lending money as part of their ‘do whatever it takes’  strategy, still has people believing that all will be well and that their actually is an exit strategy.”

In simple terms Nations will come unglued

“When the debt crisis explodes and central governments are no longer able to print or borrow money this relationship will end. The central governments will no longer have a function. In simple terms the sovereign nations we recognize today will come unglued. This will inevitably lead to a fracturing of many of the G-20 countries. The report anticipates that Greece will split into three countries, Northern and Southern Italy will go their separate ways.  Catalonia will split from Spain, Scotland will say good bye to Great Britain. The list goes on forever.”

It turns out that Ontario was never that popular

Gustavo rambled on, “Quebec will bid adieu to Canada”. He chuckled a bit and said, “Not only does the report indicate that Quebec will separate from Canada but it suggest that within a month of Quebec’s separation, Canada will hold another referendum and the people of Canada will ask Ontario to leave Confederation.” [It turns out that Canadians never did like Ontario all that much.]”

 I do not believe a word of what you are saying.” Or did I?

“Gustavo, what you are suggesting is heresy. I do not believe a word of what you are saying.” Or did I? “I took a long pull from my bottle of Jack Daniels that I kept on my bedside table. “Gustavo, calm down, surely the report indicates that there is a plan to cope with this potential upheaval.”  I suggested. “David”, Gustavo moaned, “There is no plan. Every action taken by central banks over the last few years has only had the goal of delaying the inevitable.

Greece is nothing more than a test tube

Gustavo continued, “There is no money left.  Greece has been nothing more than a test tube to give other governments the opportunity to see how events will unfold once the debt crisis explodes. France, Germany Portugal, it doesn’t matter; they are all heading in the same direction as Greece. France has not balanced their budget since 1974 . France’s fate will be no different than that of Greece. We estimate that France will split into 5 countries after a nasty civil war.”

It appealed to my pretentiousness

I was getting a little nervous. I reached under my bed and was reassured to find my two emergency bottles of Jack Daniel’s were still there.  “Gustavo”, I asked, “I do not understand, we seem to have been muddling along OK, why the sudden urgency? “What is the big panic?”  “David”, he sighed, “our projections indicate that the US two party system, dominated by entrenched Republicans and Democrats will deliquesce. [Dear reader, I apologize for my pretentious inclusion of the word, deliquesce. Until I googled for a synonym for disintegration I had never heard of the word deliquesce. Once discovered I could not resist using the word as it appealed to my pompous nature.]

 

Parties representing the right, the left, the Tea Party, the Religious right, the Secularists, and the Latinos will emerge. The parties will ensure that the world’s largest economy is completely ungovernable. The gridlock will be even more intense and decidedly vicious regardless of who ends up on Pennsylvania Avenue.

‘Red States, Blue States, Spanish States?’

The hatred between the various groups will intensify to the point that the red states and blue states will begin to discuss splitting America in to three separate countries comprised of Red States, Blue States and Spanish States.” I started to relax and laugh, Gustavo’s prognostication was the dumbest, most preposterous and stupid observation I had ever heard. The empire that is the USA was a rock, a bastion of united exceptionalism, forged in steel, united by their love of their flag and their country. The USA would never disintegrate into disparate and smaller nation states. I told Gustavo that he was being absurd. “Am I David, Am I really?” he responded cryptically.

Empires can evaporate

“Our study reminded us that in 1980 the USSR   was the biggest, toughest Empire history had ever produced. No one in 1980 would have suggested that the USSR would evaporate in 10 years leaving the two Germanys reunited and create 15 new, notionally democratic countries.  We checked our history books, all empires, Roman, British, Soviet, to name a few, came to an abrupt end after a period of military over reach and political and economic hubris.

It is in the DNA of an empire to rise….and fall

The USA is not different. Their government is effectively bankrupt; their military is still a voracious money gobbling  machine that will ensure that any attempt at fiscal sanity will be unsuccessful. We project that the last dollar spent by the US government before it collapses will be spent on another aircraft carrier  in a sad attempt to ensure that they always have 10 more aircraft carriers than the rest of the world combined. Empires are not permanent David; they are temporary structures whose demise is contained in the DNA that was implanted in the Empire at its birth.” It started to dawn on me that this was serious.

I will be joining the senior members of the ECB in rehab

I reached for my secret stash and lit a giant Doobie to calm my nerves. [Dear reader, I am aware that if I am not careful I will be joining the senior members of the ECB in rehab.] I was desperate for some happy news so I suggested to Gustavo that China might save us. Gustavo groaned “David the moment Europe and The USA run out of money and are unable to buy all the gadgets and toys that China manufactures, China will endure its own economic crisis. China will begin its own evolution to become a collection of smaller nation states. There will be no more construction of the legendary and fabulously bizarre empty cities  that dot the landscape of the world’s most populous country.”

You are ‘harshing my mellow’

Without European and American consumers to purchase Chinese products, China cannot create the required 25 million new jobs per year that ensures the country’s stability. There will be political unrest and a movement for the various territories to take control of their own destiny.”  “Gustavo,” I responded angrily, “You are ‘harshing my mellow . Can you wrap this up and give me some good news?” “David”, he offered, “the good news is that the world is not coming to an end. It is evolving. What will be hard is for the world to accept change. A world dominated by an empire is not a permanent condition. In the world of globalization there is no such thing as the status quo. The world will likely evolve back into a series of city states or provinces. Trade will become less global and more local.

Nothing new, history has seen the evolution of empires many times.

The concept of passports and borders will diminish as the movement of people will mirror the movement of goods. There will be no barriers to the free movement of goods or people between various states and provinces.”  Gustavo continued, “David, what this report suggests is actually nothing new, history has seen the evolution of empires many times. It is no big deal. It just means change. Change can sometimes be difficult. It will be most difficult for the baby boomers who have benefited most from the debt binge and who will be most affected by the change.”  “So what should I do with my money Gustavo, can you suggest some good stocks to buy to profit from the change your report suggests is inevitable?”  Gustavo hesitated, “I really should not tell you David, but senior members of the ECB are moving their personal fortunes to physical gold and diamonds, as well as water and farmland.”

Map Maker, Map Maker, Make me a Map

“Please do not share this with anyone”. Gustavo pleaded, “The senior members of the ECB are also investing heavily in the creation of map making companies. With all the political change that will be forthcoming map making will be a huge growth industry.”

Brave New World

Dear reader, I took a long drag on my doobie and pondered what Gustavo was telling me. Despite the effects of the doobie and the Jack Daniels, it was clear to me that changes were coming. Every generation has had to struggle through a crisis. The Great Depression, WWI and II, famines, plagues, they have all challenged mankind. The debt crisis will be the historic challenge for the baby boom generation. The baby boomers , for better or for worse, are going to be in charge when the debt crisis reaches its climax. That much is certain. What is uncertain is whether the   baby boomers will rise to the challenge and lead the world peacefully out of the debt valley. What kind of Brave New World  will baby boomers leave to future generations?  How will the baby boomer generation be remembered?  I thanked Gustavo for the information. I thought about what he had shared with me and decided to have a nap. The crisis would have to wait.

 

Advertisements

From → Uncategorized

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: