It’s been all quiet on the financial crisis front lately. Eye of the storm?
Notes Chris Martenson over at Zero Hedge:
There are two entirely, completely, utterly different narratives at play here. One of them is that the economy is recovering, policies are working, and the vaunted consumer is either back in the game or close to it. The other is that the world is saturated with debt, there’s no realistic or practical model of growth that could promise its repayment, and the level of austerity required to balance the books is so far beyond the political will of the Western powers that it borders on fantasy to ponder that outcome.
If we believe the first story, we play the game and continue to store all of our wealth in fiat money. If we believe the second, we take our money out of the system and place it into ‘hard’ assets like gold and silver because the most likely event is a massive financial-currency-debt crisis.
The IMF, the World Bank, the BIS, and numerous other institutions with access to $2 calculators have finally arrived at the conclusion that there’s still ‘too much debt’ and that it cannot all be paid back. And they are now alert to the idea that the predicament only has two outcomes: either the living standards of over-indebted countries will be allowed to fall, or the global fiat regime will suffer a catastrophic failure.
How will this all play out? Well, that’s behind Martenson’s pay wall.
No matter. I was thinking about all this just this morning. I have it figured. Don’t worry.
Martenson’s ok, but I think he poses a bit of a false dichotomy. Which countries, for example, are “over-indebted”?
All of them.
Whose standard of living must be allowed to fall? Most regular people have already been financially raped and discarded like yesterday’s trash and are just waiting for the guillotine’s blade to fall on them. As someone I know often says: you can’t fall off the floor.
So whose standard of living remains vulnerable, then?
Easy. The elites, who still have one. In every country, not just the “over-indebted” ones. This is not a fight over which country takes a loss; this is a fight over which of the elites will fall out of favor or be tossed under the bus by the other elites. So they’re all a bit panicky right now. No one knows who is going to turn on the other. The triggering event hasn’t occurred yet.
One thing about 21st century elites: they are government men. They draw their economic bounty from the government, either directly or indirectly.
Some of them – the banksters, for example – are careful to make sure that their hand is in the pocket of the federal governments – you know, the ones that cannot possibly run out of “money” because they have the power to just make money up whenever they feel like it.
But others among them have made the mistake of sticking their hands primarily in the coffers of state governments, and these governments do not have the money power that federal governments have.
I’ll make an educated guess. It will be a state government default in the United States that will trigger the next round of financial panic. Bernanke has said that he won’t bail out the state governments. Banks only, in other words.
Yet, how can that be? In fact, why haven’t any states defaulted already? Are they being propped up on the sly, and Bernanke’s comment was just disinformation? Maybe. And if that comes out, mebbe then we have our trigger.