The Governator’s kingdom goes belly up

Blimey, this crisis of capitalism is going great guns, isn’t it? It’s not just high street retailers that are falling like ninepins. Entire national economies are going kablooie.

All right, the Icelanders I might have expected, what with them building up a banking sector just too big for their currency to support. Whatever about the possibility of the Vikings being fast-tracked into the EU, dumping the króna for the euro now seems inevitable, if only to get a bigger umbrella. And why not? They’ll be in the good company of the Pirate Republic of Montenegro, which also uses the euro as a parallel currency with smuggled fags, having apparently given up on the idea of minting gold doubloons and pieces of eight bearing Milo Djukanović’s likeness. They may not seem to have much in common, but two small countries with buccaneering pasts can maybe learn from each other.

Then you’ve got the poor old Isle of Man, which did its image as an offshore financial centre no good at all by putting its money in, er, Iceland. Luckily the Manxmen are still in the sterling zone and don’t have a pound of their own to support, although as sterling goes down the dunny… they may like to consider their options.

And, just as those vacant Woolworths and Zavvi outlets are going to be snapped up by healthier retailers, it’s a good time for an enterprising government to pick up a few countries on the cheap. The Russians look to have Kyrgyzstan in the bag and are the lead bidders for poor old Iceland. China, meanwhile, not content with buying up much of Africa, will be increasing its stockholding in Pakistan (Mr 10% prop.) and is even splashing the cash in the West Indies. Having been watching Hu Jintao’s state visit to west Africa, it strikes me that, if our leaders are relying on Moneygall native Barack O’Bama to bail out the failing Irish economy, it wouldn’t do any harm to discover Mr Hu’s Irish ancestry, and maybe build an ancestral home. You know, a belt-and-braces strategy.

Meanwhile stateside, I’m startled to note that California has gone bust. One is tempted to say that, if you elect as governor a B-movie actor who waves a broom around and bellows “I vill clean haus” then you’re asking for trouble, but there are broader forces than Arnold at work. I saw an article the other day, where I don’t recall, predicting that a majority of the United States had unsustainable levels of debt and may have to look at filing for bankruptcy.

This, I presume, is what President O’Bama’s bailout programme adds up to, especially in the monies being made available to the states for public works. But, aside from building tunnels to New Zealand and trying to make I-95 less of a Malthusian nightmare, there’s a basic problem in that the federal government is basically bankrupt as well, but just won’t admit it. And this is where we enter the realms of voodoo economics. What we’re going to have is Bernanke printing shitloads of dollars, and never mind that cheap money – not least Bernanke printing shitloads of dollars – played an enormous role in getting us into this crisis in the first place. And, what might provoke a cat to laughter, the British government trying to create yet more cheap money.

Yes, if there’s any major economy heading up shit creek at a rate of knots, it’s the Brits. It helps, you know, to have something fundamentally sound you can fall back on. The Chinese and Japanese and Germans have economies that make stuff – there may not be many buyers, but they do still have the capacity. The Russians have their natural resources. The Yanks, if nothing else, have a currency everybody else wants.

And what does Gordon Brown have? On Radio Galloway you often hear George growling, “Brown’s got no balls. He’s got no balls except Ed Balls.” To be honest, he ain’t got much else in the way of industrial capacity or natural resources. That’s why all you’re getting from Alistair Darling, who obviously doesn’t remember much about crisis economics from his Marxist-Leninist days, can only come out with populist gestures on bank bonuses and crackpot schemes to reflate the housing bubble.

Ye gods, it’s depressing. You would really need an Ernest Mandel to make some sense of the situation, and look at what we’ve got. Just a load of pish and vinegar.


  1. Garibaldy said,

    February 19, 2009 at 12:09 am

    Anything I can do, it seems you can do better, even down to the Arnie picture. Though I think that in fairness to Arnie, this is more his backwoodsmen’s fault than his. I have to say I’ve noticed the phrase the real economy has gone missing in action. Perhaps because, as you say, since Thatcher Britain hasn’t had one.

  2. February 19, 2009 at 12:50 am

    […] Splintered Sunrise has a post putting this story in much broader context. Possibly related posts: (automatically generated)On […]

  3. Vinny said,

    February 19, 2009 at 4:59 am

    “I saw an article the other day, where I don’t recall, predicting that a majority of the United States had unsustainable levels of debt and may have to look at filing for bankruptcy.”

  4. Simon said,

    February 19, 2009 at 10:40 am


    I’ve never felt more exhilarated!

    How amusing that the Right are so prepared and the Left so confused.

  5. Hasta siempre comandante said,

    February 19, 2009 at 12:52 pm

    California’s economy has been in trouble for a while, but it’s really in trouble now.

  6. splinteredsunrise said,

    February 19, 2009 at 12:54 pm

    It’s Arnie’s worst nightmare.

  7. Darren said,

    February 19, 2009 at 2:20 pm

    The right’s prepared?

    Pray tell.

  8. Cian said,

    February 19, 2009 at 3:18 pm

    You might be misremembering the article. A majority of State’s have unsustainable levels of debt, mainly because they’re saddled with constitutions making it very hard for them to borrow money (California’s only the most extreme example – both with the laws, and the economic collapse). It would be like saying that a majority of local council’s in the UK are bankrupt – a problem, but very different to Iceland.

  9. Cian said,

    February 19, 2009 at 3:19 pm

    Argh. Not borrow money, raise money through new taxation – and they have to maintain balanced budgets. Anti-Keynesianism, which is nice. Incidentally, isn’t California the state the neoliberals built.

  10. Mark said,

    February 19, 2009 at 4:39 pm

    ‘Yes, if there’s any major economy heading up shit creek at a rate of knots, it’s the Brits. It helps, you know, to have something fundamentally sound you can fall back on.’
    One of the few things those of us on this side of the Irish Sea still have that is ‘fundamentally sound’ is aeronautical engineering- Rolls Royce jet engines, Airbus wings etc. And of course Brits are still at the cutting edge in this niche area largely because of implicit protectionism- Germany and Japan being prohibited from replacing their bombed out aeronautical facilities at the end of WW2.
    This minor quibble aside, you’re probably right about our imminent entry onto shit creek. Jim Rodgers is far more likely to be on the money than either Broon or Darling, the deluded Presbyterian fools.

  11. splinteredsunrise said,

    February 20, 2009 at 12:21 pm

    Quite so. And that’s a very good point Cian, about the state constitutions. This would be why the federal government is having to put this package together to finance programmes at state level. Ron Paul will no doubt say it’s unconstitutional, which sort of raises the question of why the federal government can play fast and loose with strict constitutionalism but the states can’t.

  12. Cian said,

    February 20, 2009 at 3:25 pm

    According to Wikipedia: 26% of the UK economy is industry, in Germany its 29% and France its 27%. The UK figure sounds a little high (I thought it was closer to 20%), but it depends on what you count as industry. And what remains of industry in the UK is actually pretty good (well it would have to be really, given a strong pound policy, awful banking and government indifference). We’re also pretty good in service areas with strong exports (insurance, software, design and media). There’s a lot wrong with the UK economy, and I suspect it will get worse when the Tories get in, but people are massively overstating things. Also its debatable how much of an advantage a strong industrial sector is in a world with manufacturing overcapacity and weak demand – both of which seem quite likely for the foreseeable future.

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