The uneasy economic calm that has prevailed since the 2008 banking crisis is analogous to the “phoney war” of 1939-40. Like that military event, this economic one will end with a bang.
Behind governments’ routine assurances to the contrary, the reality is that the world is ex-growth, governments and economies are indebted far beyond sustainable levels, the banking system remains extraordinarily vulnerable to the next shock, and strong rallies in global bond markets are bubbles waiting for a pin.
Fundamentally, the problem is that the monetary economy has grown far beyond a scale sustainable by the underlying ‘real’ economy of energy and broader resources. The energy returns equation critical to growth in the real economy is weakening relentlessly, meaning that output is not capable of meeting the future claims embodied in the monetary system.
No-one in authority has any real idea about how to bridge the gap between the two in any way short of value-destruction on a systemic scale. Moreover, Western governments have entered into welfare spending commitments which cannot conceivably be met in the absence of robust growth.
In the absence of solutions, governments are prioritising the defence of the status quo in general, and of their own interests in particular. We are witnessing the early but unmistakable stages of an expropriation process designed to transfer private wealth to the state.It's all alarmist nonsense, of course, sure no Irish government would ever agree to confiscate people's savings...