The Drowning Pool
News that that a swarm of termites deep inside the British banking
system have been fiddling the interbank interest rates (LIBOR) for
years in order to systematically vacuum a few billion pence off the
exchange floors for themselves is the latest blow to the credibility of
the global money system - and probably a fine overture to a looming
climactic implosion of the gigantic, creaking, smoldering, reeking,
duck-taped edifice of broken promises, booby-trapped hedge obligations,
counterparty follies, central bank euchres, sovereign flim-flams, and
countless chicanes too various, dark, and deep to smoke out. Next,
we'll probably hear that Lloyd Blankfein over at Goldman Sachs has been
tinkering with the rotation of the earth in order to gain a few
micro-milliseconds of advantage in his firm's high frequency trading
rackets. After all, back in 2008 Lloyd himself claimed to be "doing
God's work."
In short, world banking is now hopelessly
pranged, and I am not at all sure the project of civilization (modern
edition) can continue by other means. The impairments of capital
formation are now so profound that no one and nothing can be trusted.
Not only are all bets off, but nobody will want to make any new bets -
and by that I mean venture to invest accumulated wealth (capital) in
some useful project designed to sustain human well-being. What remains
is just the desperate hoarding of whatever remains in assets
uncontaminated by the pledges of others to pony up.
All
this points to a dangerous new period of political history, a deadly
Hobbesian scramble to evade the falling timber in a burning house as
the rudiments of a worldwide social contract go up in flames. Such is
the importance of legitimacy: the basic condition for governance,
especially among supposedly free people. You can meddle in a lot of
distributory issues - who gets what - but when you mess with the most
basic operations of money to the extent that no one is sure what it's
really worth, or what it represents, then you are deeply undermining
society. This is now the condition that is set to blow up republics.
Reality dislikes fraud and accounting tricks. Reality is serious
about settling scores. Reality eventually intervenes and puts an end to
monkey business. What will it be this time?
Europe and
America have been buying a month here, a month there (of a fragile,
continuing status quo) on the installment plan. That's what QE, TARPs,
LTRO, EFSF, Operation Twist, et cetera, are all about. Think of them as
multi-billion dollar (euro) fire extinguishers bought on credit cards.
Europe is now completely out of credit to buy more fire fighting
equipment. For months now it has been down to whether Germany intends
to keep supporting Spain, Italy, Greece, Portugal, Ireland, the French
banks (and a few stray forgotten places between the backwaters of the
Danube and the Gulf of Finland) without any say in how they manage
their allowance. Much as Germany enjoyed the Ponzi heyday of the Euro
zone, a big "tilt" sign now flashes ominously over the continent,
signaling game over. All fall down. Everybody gets real poor real fast.
M. Hollandaise over in Paris has already sealed his fate with his
stupid plan to return to "go" on the Ponzi game-board. Merkel's
tattered scarecrow of a coalition will blow away in the next national
election. The Club Med countries will soon boil up in street-fighting,
Holland and Finland will drink themselves to death, and across the
channel outsider Britain will fizzle away to a burnt bowl of
mulligatawny. That's what the end of the summer looks like to me.
Over here, in this sorry-ass edition of America, the election will
look more and more like a World Wrestling Federation staged dumb-show
between two catamite hostages of a foul corporate oligarchy. Imagine
that horse's ass Mitt Romney spending the next four months denouncing
Obama-care, modeled on his own health care reform in Massachusetts,
while Obama pretends he has a grip on an economy where the rule of law
is absent due to Obama's own omissions and negligence.
And if you can't stand that spectacle, just look around at America
itself: a wasteland of futile motoring and discount shopping populated
by depressed, overfed clowns bedizened with sinister tattoos,
pretending to be Star Warriors. No nation ever seen in human history
ever laid such a disappointing egg. Only to have it fry on the sidewalk.
