1930s: Back To The Future?
London, UK - 17th June 2012, 9:45 GMT
Dear ATCA Open & Philanthropia Friends
[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]
The fateful day of elections in Greece on 17th June has now arrived. The impact of this Greek ballot will be felt around the world. Beware the rise of political extremism. More than two thousand years ago, Plato -- the influential Greek philosopher -- said, “Dictatorship naturally arises out of democracy, and the most aggravated form of tyranny and slavery out of the most extreme liberty.” Europe's fast-escalating crisis is now more dangerous than Lehman's collapse in 2008, threatening to tip the world into a 1930s-style Second Great Depression unless global leaders work together to take dramatic action. There were several noteworthy events in Europe in the 1930s including the start of the Second World War, but contrary to present German concerns and oft-repeated rhetoric, hyperinflation wasn't one of them. The truth is that hyperinflation occurred in Germany during the Weimar Republic between June 1921 and January 1924 whereas the death of democracy and the rise of totalitarianism occurred almost a decade later in 1933. The roots of the chaos of the 1930s, including the collapse of democracy across most of the European continent, and the rise of political extremism can be traced back to a number of causes, but one must not underestimate the consequences of the collapse of Creditanstalt bank in Vienna in 1931, founded by the Rothschilds. It has been said that this event resulted in a global financial crisis and ultimately thousands of bank failures during the Great Depression. In the aftermath of Creditanstalt, the stock market crash of 1932 was the worst in the 20th century and not the one in 1929. Has the Creditanstalt moment arrived for Europe once again, triggered by the Grexit, sovereign default and subsequent bank failures as confidence ebbs and contagion spreads to Spain, Italy and even France? At its root, the present Eurozone crisis is a banking crisis masquerading as a debt crisis which has more to do with the solvency of banks than their access to liquidity. This is why the trillion plus euro liquidity operations of the ECB have not helped to halt the crisis. The run on banks and flight of capital away from peripheral Eurozone countries in tens of billions of euros on a weekly basis is to do with the loss of trust and confidence and unsatisfactory political leadership. No amount of capital controls, border controls or bank freezes are going to halt these chain-reactions, they may exacerbate them. By holding on to a vision of Europe that has proven unviable, Europe’s centrist politicians and elite bureaucrats are endangering the idea of a unified Europe itself. They have stuck for far too long to an intermediate muddling path that is getting more and more unstable and beset by tensions. What are the devastating potential consequences of the Eurozone's collapse and rupture of the European union? The nightmare scenario in 2012 would also be a 1930s-style victory for political extremism. Let us not forget that Fascism, Nazism, and communism in the 1930s were children of a backlash against globalisation that had been building since the end of the nineteenth century. Extremism fed on the anxieties of groups that felt disenfranchised and threatened by out-of-control market forces and cosmopolitan fat cats. Sound familiar? Are we going back to the future of the 1930s? The Eurozone crisis is now at its worst point with Spain and Italy’s borrowing rates becoming steadily unsustainable as they creep ever closer to 7% and reach the point of no return. The euro can't survive in its present form and it will have to be reformed drastically. The European project and the eurozone have now set the terms of national and international debates to such an extent that, with the eurozone in tatters, the governing elites’ legitimacy will receive an even more serious and devastating blow. As Mark Twain said, "History doesn't repeat itself, it rhymes!" Let us hope it doesn't rhyme too much with the 1930s, otherwise we all know what happened in 1939. Perhaps the 24/7 digital interconnectivity of the world on this occasion will help to chart a more benign trajectory. Let us jointly pray for that!
1930s Montage
[STOPS]
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[ENDS]
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