Global Agenda: Living the impossible

The pillars of the socioeconomic order are shaking and a large number have already collapsed.

By PINCHAS LANDAU
March 6, 2009 04:06
4 minute read.
global economy 88

global economy 88. (photo credit: )

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

"I can't believe that," said Alice. "Can't you?" the Red Queen said in a pitying tone. "Try again. Draw a long breath and shut your eyes." Alice laughed. "There's no use trying," she said, "one can't believe impossible things." "I daresay you haven't had much practice," said the Queen. "When I was your age, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast." - Alice Through the Looking Glass We live in a looking-glass world - at least from the point of view of everyone who was born or grew up in the post-World War II era. The pillars of the socioeconomic order that defined the era are shaking and a large number have already collapsed. The speed with which this is happening, at least in the economic and financial spheres, is breathtaking. What's worse, the rate of disintegration is accelerating. The inevitable consequence of this process is that it will spread to the social and political spheres, with attendant upheavals in countries and societies around the world. A simple, yet chilling, example of the extent of the upheaval that has already taken place in the way people think and speak came to my attention a few days ago. A friend sent me an item in an on-line daily investment newsletter called Daily Wealth, run by Steve Sjuggerud. The article was written by Tom Dyson. I don't know either of these gentlemen, nor indeed have I ever heard of them, so I can't say anything for or against them or the newsletter. That's why I'm using this example. An investment newsletter is, would you believe, about investments. The publisher, editor or writers may have weird or extreme ideas (some newsletters are really far out), but they have to discuss ideas that their readers can relate to. Obviously, these can cover a wide range of topics, but they must be germane to investing. One of the most basic - until recently, humdrum, if not downright boring - investment topics is government bonds. These are the bedrock of the financial system, and each government's bonds are the foundations upon which rest that country's banks, insurance companies and stock markets. That is how "the world as we knew it" worked until 2008, when that world began spiraling out of control. One year ago, the collapse of Bear Stearns moved the crumbling process of the global financial system into higher gear. Since then, pretty much everything in the system has gone haywire - including government bonds. Dyson wrote about countries going bust, meaning a situation in which a sovereign state is unable to pay the interest and capital due on its bonds. Of course, countries are not supposed to go bust, and if they do, there must be a crisis. However, for most people, a country in South America - let alone Africa - going bust is not an earthshaking event. Russia's collapse and effective bankruptcy in 1998 was earthshaking, but the speed of its subsequent recovery and return to financial grace made the panic at the time seem overdone in retrospect. In any event, even Russia is not a major economic power, despite its pretensions. Certainly, the recent spate of crises in countries such as Ukraine, Pakistan and Latvia are not the stuff of which global apocalypses are made. But the focus of discussion in investment newsletters - and even, to a frightening extent, in the mainstream media - is not on the stability or otherwise of the Ukraines and Pakistans of this world. Few people have even a speculative interest in the bonds of those countries. But virtually everyone who has any money at all, with a broker or at least in a pension fund, is invested in bonds issued by the governments of the US, Japan, UK, Germany and France. Dyson's article was about which of the US, UK and Japan were in the worst trouble and which of these countries was most likely to go bust. Far more important than his conclusions - which, obviously, represent his opinion and can be argued against - is the very fact that this is now a legitimate, necessary (sorry, make that vital) topic of discussion. In March 2009, kicking around the possibility of the US going bust is not grounds for incarceration in a loony bin, or even a basis for labeling the writer a conspiracy theorist or scaremonger. The probability that the US and UK will lose their triple-A ratings is accepted in mainstream circles; the possibility that they will go bust is regarded as remote, but is now within the parameters of normative debate. Whether Japan is in better or worse financial shape than America or Britain, and hence more or less likely to default, is a more sophisticated level of analysis. But things have reached the point where you can bring it up at the dinner table - without causing everyone else to bring up dinner. landaup@netvision.net.il

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS