Wednesday, April 1, 2009

Dear Sweet Baby Jesus

Has everybody gone crazy? Perhaps mama Merkel can use the G-20 as a way to give us a detailed description of the nether reaches of her colon, which she most certainly has a fine, unimpeded view of:

In last week's FT interview with Angela Merkel, the German chancellor said that: "The German economy is very reliant on exports, and this is not something you can change in two years." Moreover, "It is not something we even want to change." To paraphrase: "The rest of the world needs to find a way of absorbing our excess supply, but sustainably, please." Yet what happens if that cannot be achieved for the excess potential supply of all surplus countries together? In 2007, the three countries ran current account surpluses of $835bn (€629bn, £585bn). Logically, counterpart deficit countries must spend that much more than their incomes. Yet today deficit countries have run out of willing and creditworthy private borrowers.

There's so many different ways to go about tackling the problems that have lead to this crisis, but all of them involve admitting that there are problems. Unfortunately, every democracy is broken in the same fundamental way, with only minor and relatively cosmetic differences, so there is actually no possible way to adequately reform the financial system because it would involve reforming the entire corrupt edifice of democracy. So meanwhile, we should expect another patch-up job, which will last until people simply stop trusting their government completely, and first the US and then everybody else sinks into default and paper money becomes meaningless

The world economy cannot be safely balanced by encouraging a relatively small number of countries to spend themselves into bankruptcy.

Luckily, I think that the adrenaline rush of staring at a global depression might be enough for them to patch things up for at least several years, which gives us all a chance to seek fertile soil and sources of fresh water.

UPDATE: Gillian Tett says similar things in today's FT.

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