February 19 2010: A thousand miles behind

– And people wonder why I’ve moved to New Zealand and write a Blog.   Jeez.

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Ilargi: When on any given morning you see consecutive headlines that read

  1. “US bank lending falls at the fastest rate in history”,
  2. “Lending to British businesses falls at record pace”,
  3. “UK mortgage lending falls to 10-year low “,
  4. ”Shock as British deficit equals that of Greece” and
  5. “Britain posts first deficit for January since records began”

is your first thought that the economic recovery is nicely on pace? If so, perhaps a Tiger Woods press-op is more your thing.

How about we add this one:

    “Fed raises interest rate on emergency loans to banks”

Think perhaps that would switch on the light?

See, what those headlines tell us is that the spigots on the private sector are not just closed, they’re still tightening ever more. While at the same time, government debt keeps rising. There can be only one conclusion. The only thing that lets our economies continue to exude a semblance of normality is the dwindling rests of our own remaining wealth, and we are not only not adding any, we are spending what is left, and fast. Our governments, eager to stay in power and remain wealthy, keep us thinking we’re doing just fine, borrow enormous amounts of money in world markets that is not used for any sort of recovery, but instead to pay for the debts of a small group of people who gained access to our full faith and credit by buying the representatives we elect.

And once the Federal Reserve starts raising interest rates, while simultaneously drawing down its purchases of Treasuries and mortgage-backed securities, we will come to understand that we have been living in a soapbubble of our own making, built at the expense of many trillions of dollars and that this bubble is about to pop. That is true in the US as it is in the UK, and all the attention presently squandered on Greece and Ireland is but a trick to make us look the other way for a little bit longer, until everything of value has been stripped from around us and we can wake up one day to find all support and stimulus measures vanished into thin air, a bad moon rising, and a cold wind blowing through the cracks of our unheated MacMansions, with no gas stations able to supply us with the fuel to get out and get away.


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