"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." (1)Whilst not entirely apt, I think that the idea carries over to this well. This leads neatly into the current state of the panic that is driving countries to act in unison. There is this from the IMF Chief Economist, reported in the Times:
'“Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.” Countries would need to take further measures, including interest rate cuts and steps to bolster the banks. 'And the result of this panic can be found in another Times article:
'THE government will launch the biggest rescue of Britain’s high-street banks tomorrow when the UK’s four biggest institutions ask for a £35 billion financial lifeline. The unprecedented move will make the government the biggest shareholder in at least two banks'As the conspiracy theorists have correctly identified, there is the G7 agreement that there will coordinated action, and it is looking ever more likely that the action of the UK government will be a template for the actions of other governments. I will not rehash all the latest news on the crisis from around the world, as I think the IMF Chief Economist has neatly summarised the situation, and the rest is a matter of detail. Meanwhile, one of the interesting outcomes is that several commentators have noted that this crisis and the international grandstanding have been helpful for Gordon Brown. In the US, the lame duck presidency of Gerorge Bush is now probably beyond any such boost.
The question is whether any of this supports the idea that all of this was a conspiracy? If we view the records of those who would have to be 'in' on the conspiracy the records do not inspire much confidence in their ability to manage something so complex (and fiendish?). However, a more valid point to make is that, if we trace the underlying causes of the current crisis, as I have done on this blog (see here for an introduction) it is apparent that nobody in their right mind would have engineered this crisis. In particular, in the case of the Western world, they would have had to not only have planned the financial crisis, but also accepted as a price the loss of power and long term economic decline for the West. This is not a scenario that would appeal to conspirators, who I am guessing would seek to enhance their power overall. After all, far better to have control over an uber-powerful state than a diminished one. If they were that 'cunning' and powerful, I am sure they would have engineered a far better outcome.
Whilst it is always very exciting to imagine smoke filled rooms (think of the X-Files), filled with old guys plotting an planning their evil schemes, there really is no need for such a scenario. Stupidity, wishful thinking, herd thinking, and all of the other foibles and weaknesses to which humans are so prone are more than sufficient to explain the origins of this crisis. For the conspiracy theorists out there, sorry to disappoint, and I am sure that I will lose readers for saying this, but there has been no conspiracy. The only exception in all of this may well be China, which I believe has deliberately sought to gain economic power through whatever means, fair or foul (see post here which discusses the subject).
On the other hand I do believe that the new concentrations of power going to the state are a matter for genuine concern, as is the idea of world leaders and central bankers trying to co-ordinate the world economy. For the former, it will certainly give the state too much power, and for the latter, it should be remembered that these are largely the people that presided over the build up to this mess. However, all of the grand plans for the nationalisation of financial systems rest on the idea that the Western economies are going to be able to continue to borrow their way out of trouble, and I have often expressed my reservations about how long this can continue. There have been stories circulating in the news of other organisations going cap in hand to governments for bailouts, and it is impossible to see how governments can, through borrowing, support this level of damage.
Overall, my largest concern is that government intervention in the markets is a large part of the cause of this crisis. In regulating the banks, they allowed everyone to become complacent about the operations of the banks. For those who are not regular readers, and have been hearing endlessly about lax regulation, you will need to read my post here. Essentially, in trying to regulate away the risk of bank failure, governments have set up a system in which failure is likely to be catastrophic. An occasional bank failure serves to remind us all that the banking system needs careful attention. On top of this the poor measures of GDP, the misuse of interest rates, and many other factors suggest that governments are a large part of the problem (I discuss some of these problems here)
As such, based on the record of governments, my worry has consistently been that governments will do more harm than good, and governments acting in concert is therefore an even more worrying development.
I think that I will leave it there for the moment. It will be interesting to see what events the start of the week will bring. How will the concerted action be enacted, and will it create a momentary calm, or will the storm continue unabated? If it is calm, it will simply be the eye of the hurricane, and the full force of the storm will resume in time.....
(1) Adam Smith., The Wealth of Nations, Book V, Chapter I, Part III, Article III
As a note, have others seen the conspiracy theory predicting the 'Amero' (I think) as a replacement for the $US. I have seen it referenced a couple of times, but would like to get a good reference on what it is all about. It is more than likely as unfounded as the other conspiracy theories, but I try to keep an open mind. As such, if you have one, I would appreciate you posting a link in the comments.
Note 2: For some reason something went wrong with the formatting on the blog - thus the changes. For a little while, about an hour or two, the home page was not showing correctly. Apologies if you found it with this problem.....
Note 3: I have had a long comment from an anonymous poster (see below). He apologises for a long comment. However, there is no need to apologise as I welcome all comments. Another poster comments that they had problem leaving a comment. I am not sure why this would be the case, but my editorial policy on comments are that they are all posted, provided that they do not use abusive language or spam the blog. To date (happily) I have not encountered either of these problems, so have published all comments. As such, I am not sure what prevented the publishing of the first post from the commentator, but would assure those who wish to comment and disagree with me that their comments will be published (within the limitations I have just mentioned). In the meantime (for the commentator who had a problem) please accept my apologies that you had a problem in getting your comment published, and I hope that you will accept my assurance that this was not due to my editing it out. As a final note, one commentator posted a link which was somehow chopped. The link is as below:
Note 4: Yet more glitches here. I have just noted that the home page is showing zero comments on the post, despite there being several comments. However, if you click on the comments link below, the comments are there. I have also checked in other parts of the blog, and the comments are fine. Please accept my apologies for all of these problems, and I will try to work out what is going on. I am hoping that the problems are just with this post (though I can see no reason why this would be the case).
Note 5: I have viewed the link provided on the Amero, and dug around a little bit, including viewing the blog of Hal Turner. The first point of note is that the only evidence provided is a coin which he claims is the Amero (having a coin made I would guess is not very difficult). No other evidence. The next point is that he is a white supremecist, and that gives me cause to doubt his motivations. I followed some of the links, and none of it was backed by evidence. However, the one thing that I believe is correct is that there is likely to be a $US collapse, but that is a different thing from saying that the 'Amero conspiracy' is real, or something that has been planned. In short, I have seen nothing to persuade me of a plot. As such, I invite any hard evidence (leaked documents verified as genuine by a reputable source etc.) to support the Amero conspiracy.