Tuesday, May 31, 2011

That Slow Train Wreck ...

The slow train-wreck of the world economy is progressing like one of those Peckinpah Westerns, each step slowed, bloodied, shown close up and then again from another angle, until the mind forgets what it is watching and is fascinated just by the blood and spilling guts.

When will the bodies start falling? I figure they're already falling. But as Buzz Light-Year put it, "falling with style."

Who will hit the ground first? My bet is it's going to happen in Europe. There's no way Greece is going to pay up. Or can pay up. Nor will Ireland. These were countries where the politicians "saved the banks" by taking on their debt. The people were not consulted. Marching to some Warsong of the Valkyries sound-track the politicians pledged their people's welfare for the banks and would you know it, they ended up holding the empty kitty!

So now oridnary Europeans are facing "austerity measures" -- like doing without jobs (unemployment's over 20 per cent in important parts of Europe), public services and social security. Part of the reason they're doing it is to "Save the Euro." The Germans are fighting that battle, giving out their taxpayer's money to keep Europe with a single currency. What's the bet that the Germans will tire of that eventually and chuck it?

If Europe falls, of course, there is no saving China. Even the Brits with their multi-trillion global blackmarket funds won't be able to salvage the Kung Fu Hustle we'll have there. China, by the way, seems to be headed for a perfect storm of drought, corruption, economic mismanagement. political folly -- and a real estate bubble.

The real estate market in the country is still rising. An average home in April rose in value to 8,773 yuan ($1,351) per square meter from 8,738 ($1,345) in March. The figures are estimates, for the government scrapped its national property price index in January. The Party mandarins just couldn't take the stress of reporting it any more. Another revealing detail: according to a study released last month, 80 per cent of all home-grown millionaires in China are planning to emigrate or have already established residence abroad.

What's grimly funny about this situation is that Pakistan's political leadership has taken just this moment to voice loud faith in China's enduring support. Its Prime Minister on a visit to Beijing exclaimed that China and Pakistan were "one nation but two countries." He thought Pakistan's "Islamic socialism" was just like the free market communism of the comrades of the CCP. No doubt to celebrate the kinship, the Chinese gave Pakistan 50 fighter aircraft. Just clean gave it to them . However, it is to be delivered in a year or two. Takes time to work out the kinks in free market communism.

Meanwhile, Beijing has been vigorously denying various political messages from Islamabad about how close ties are between them. For one thing, it denied that China would consider an attack on Pakistan as on itself. Then it said there was no question of taking over Gwadar Port in Baluchistan and developing it as a naval outpost. (The port is the middle of nowhere, surrounded by an active insurrection, with no infrastructure on the landward side, so it's easy to see why.) Then the mandarins declared that the aid demanded by Pakistan as an outright grant could not be given, for such gifts were never made.

The outcome of all this is not funny at all. We should, like Kubla, hear from afar, ancestral voices propheseing war. And not that far off either.

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