Ambrose Evans-Pritchard sees the 'end-of-the-world-as-we-know-it' and
doesn't like what he sees one little bit. He seea buraucracy
stifling all enterprise and wonders almost as an aside "Does the UK
still have a blocking minority under EU voting rules to stop a blitz
of directives that could shut down half the activities of the City?
I doubt it." For make no mistake about it, Brussels does not like
the City one little bit and the sooner it can make it toe the neo-
socialist corporate line the better they will be pleased.
A.E-P. prefers the "enlightened "socialism" of Barack Obama any day
over the Hegelian broth nearing the boil in Europe". I hope he's
right for Janet Daly in the same issue of the paper reminds us that
the USA seems "about to choose as president the most inexperienced,
untried, and unknowable (because there is so little to know)
candidate who has ever run for that office at a time of
unquantifiable international risk and unprecedented eeconomic
instability."
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TELEGRAPH 3.11.08
Revenge of the Left across the world
Whatever the exact result of the US elections tomorrow, we must
assume that the whole governing machinery of Washington and the state
capitols will soon be hostile to laissez-faire thinking.
By Ambrose Evans-Pritchard
It is not just that the Democrats will win a crushing victory in both
houses of Congress, perhaps reaching the 60-seat Senate threshold
that lets them steam-roll legislation. It is also that the incoming
class of 2008 is of a new creed. Many no longer believe - or actively
reject - the free trade and free market catechisms.
As commentator Markos Moulitsas put it in Newsweek: "The big question
is, will Democrats nationwide simply 'win' the night-or will they
deliver an electoral drubbing so thorough that it signals the utter
rejection of conservative ideology and kills the notion that America
is a 'center-right' country?" he said.
No matter that statist policies were responsible for this global
crisis in the first place. It was Western governments that set
interest rates too low for too long, encouraging us all to abuse credit.
It was Eastern governments that held down their currencies to pursue
mercantilist trade advantage, thereby accumulating vast foreign
reserves that had to be recycled. Hence the bond bubble. This is the
deformed creature known as Bretton Woods II. Protectionist Democrats
are right to complain that the game is rigged. Free trade? Laugh on.
But at this point I have given up hoping that we will draw the right
conclusions from this crisis. The universal verdict is that
capitalism has run amok.
In any case the damage caused as credit retrenchment squeezes real
industry is likely to be so great that Barack Obama may have to
pursue unthinkable policies, just as Franklin Roosevelt had to ditch
campaign orthodoxies and go truly radical after his landslide victory
in 1932. Indeed, Mr Obama - if he wins - may have to start by
nationalizing the US car industry.
For those who missed it, I recommend Edward Stourton's BBC interview
with Eric Hobsbawm, the doyen of Marxist history.
"This is the dramatic equivalent of the collapse of the Soviet Union:
we now know that an era has ended," said Mr Hobsbawm, still lucid at 91.
"It is certainly greatest crisis of capitalism since the 1930s. As
Marx and Schumpeter foresaw, globalization not only destroys
heritage, but is incredibly unstable. It operates through a series of
crises.
"There'll be a much greater role for the state, one way or another.
We've already got the state as lender of last resort, we might well
return to idea of the state as employer of last resort, which is what
it was under FDR. It'll be something which orients, and even directs
the private economy," he said.
Dismiss this as the wishful thinking of an old Marxist if you want,
but I suspect his views may be closer to the truth than the
complacent assumptions so prevalent in the City.
To those who still think that business can go on as normal now that
EU taxpayers have had to rescue the financial system, I can only say:
what will happen to London if EU exchange controls are imposed, or if
leverage is restricted by draconian laws - as demanded by the German,
Dutch, and Nordic Left?
Does the UK still have a blocking minority under EU voting rules to
stop a blitz of directives that could shut down half the activities
of the City - or the 'Casino' as they say in Brussels? I doubt it.
Who thinks that the three key Commission posts - single market,
competition, and trade - will still be held by free marketeers when
the new team comes in next year?
In Germany, Oskar Lafontaine's Linke party now has 23pc support in
Saarland on a Marxist pledge to nationalize banks and utilities.
Needless to say, the Social Democrats (SPD) are shifting hard Left to
protect their flank.
"The rule of the radical market ideology that began with Margaret
Thatcher and Ronald Reagan has ended with a loud bang," said Frank-
Walter Steinmeier, Germany's foreign minister and SPD candidate for
chancellor next year.
"We need a comprehensive new start, so we can reestablish our society
on fresh foundations. People create value, not locusts," he said.
['locusts" in Germany is the word used for 'hedge funds' -cs]
France has its own Gaullist version on this, seizing on the crisis to
launch the most far-reaching strategy of state intervention since the
1970s.
"Laissez-faire, c'est fini," said President Nicolas Sarkozy. "We will
intervene massively whenever a strategic enterprise needs our money."
Such language can now be heard daily across Europe. It can only
intensify as the fall-out from the EU's ?1.8bn trillion (£1.4
trillion) bank rescue becomes clearer, and as Europe's élites
discover that their own banks are the most leveraged in the world and
have played their own Wagnerian part in Götterdammerung.
European and UK banks are five times more exposed to emerging markets
than US banks. They alone hold the collective time-bomb of $1.6
trillion (£990bn) in hard currency loans to Eastern Europe - now
starting to detonate in Hungary, Ukraine, Romania, and even Russia.
At some point, Europe's political class will face the awful truth
that their own credit bubbles are just as bad - and perhaps worse -
than the excesses of US sub-prime property. As that occurs, the shock
will move by degrees from revulsion to political rage.
Professor Hobsbawm, who spent his youth watching Hitler's rise in
Berlin, has a warning for those who think this will help the Left in
any recognizable form. "In the 1930s, the net political effect of the
Depression was to enormously strengthen the Right," he said.
America was the great exception, as it may prove to be again. I for
one will take the enlightened "socialism" of Barack Obama any day
over the Hegelian broth nearing the boil in Europe..
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