“It’s the end of the world as we know it,” sang the popular musical artistes REM many years ago. And it is. REM has announced that they’re splitting up after almost a third of a century. But these days who
isn’t? The Eurozone, the world’s first geriatric boy band, is on the verge of busting apart. Chimerica (Professor Niall Ferguson’s amusing name for the Chinese-American economic partnership that started around the same time REM did) is going the way of Wham!, with Beijing figuring it’s the George Michael of the relationship and that it’s tired of wossname, the other fellow, who gets equal billing but doesn’t really do anything. The deeper problem may be that this is a double-act with two wossnames.
Still, it’s the end of the world as we know it. Headline from CNBC: “Global Meltdown: Investors Are Dumping Nearly Everything.” I assumed “Nearly Everything” was the cute name of a bankrupt, worthless, planet-saving green-jobs start-up backed by Obama bundlers and funded with a gazillion dollars of stimulus payback. But apparently it’s “Nearly Everything” in the sense of the entire global economy. Headline from The Daily Telegraph of London: “David Cameron: Euro Debt ‘Threatens
World Stability’.” But, if you’re not in the general vicinity of the world, you should be okay. Headline from The Wall Street Journal: “World Bank’s Zoellick: World In ‘Danger Zone’.” But, if you’re not in the
general vicinity of …no, wait, I did that gag with the last headline.
I mentioned in this space a few weeks ago the IMF’s calculation that China will become the planet’s leading economic power by the year 2016. And I added that, if that proves correct, it means the fellow elected next November will be the last President of the United States to preside over the world’s dominant economy. I thought that line might catch on. After all, we’re always told that every election is the most critical consequential watershed election of all time, but this one actually would be: For the first time since Grover Cleveland’s first term, America would be electing a global also-ran. But there's not a lot of sense of America's looming date with destiny in these Presidential debates. I don't mean so much from the candidates as from their media interrogators - which is more revealing of where the meter on our political conversation is likely to be during the general election. On Thursday night, there was a question on gays in the military but none on the accelerating European debt crisis. It is certainly important to establish whether a would-be president is sufficiently non-homophobic to authorize a crack team of lesbian paratroopers to rappel into the Chinese treasury, break the safe and burn all our IOUs. But the curious complacency about the bigger questions is disturbing.
Greece is reported to be within weeks if not days of default. There are two likely outcomes to this scenario: 1) Greece will default. 2) Germany and the Eurocrats will decide that default would be too embarrassing for the EU's pretentions and will throw whatever sum of money is necessary into the great sucking maw of toxic ouzo to stave it off a while longer.
But Option Two doesn't alter the underlying reality - that, if words have any meaning, Greece is insolvent, and given its rapidly aging population (100 grandparents have 42 grandchildren) is unlikely to be non-insolvent under any conceivable scenario, no matter how tightly German taxpayers are squeezed to pay for it. By the same measure, so are many other western nations.
On the other hand, attempting to postpone the Club Med welfare junkies’ rendezvous with self-extinction will destabilize internal German politics (which always adds to the gaiety of nations) and strain to breaking point what's left of the European banking system. BNP Paribas, formerly Saddam's favorite banker and Gallicly insouciant about who it climbs into bed with, was reported in recent days to be cruising the flusher sheikhdoms and emirates in search of a new sugar daddy. Delivering French banks into the hands of Islamic imperialists seems a high price to pay for bailing out Athenian deadbeats.
The question to ask is: what's holding the joint up? In the case of the global economy, the answer is: not much. The developed world's combined economic growth rate for 2012 is projected to be under two percent - and that's a best-case scenario in times that don't warrant much optimism. As its own contribution to the end of the world as we know it, the Obama Administration has just released a document called "Living Within Our Means And Investing In The Future: The President's Plan For Economic Growth And Deficit Reduction". If you're curious about the first part of the title - "Living Within Our Means" - Veronique de Rugy pointed out at National Review that under this plan debt held by the public will grow from just over 10 trillion dollars to 17.7 trillion dollars by 2021. In other words, the President's definition of "Living Within Our Means" is to burn through the equivalent of the entire German, French and British economies in new debt between now and the end of the decade. You can try this yourself next time your bank manager politely suggests you should try “living within your means”: tell him you've got an ingenious plan to get your spending under control by near doubling your present debt in the course of a mere decade. He's sure to be impressed.
As for the "Investing In The Future" part of the President's plan, that means lots more government, lots more half billion dollar payoffs to pseudo-businesses cooked up by cronies, lots more 4.8 million-dollar-per job taxpayer subsidies paid for with money borrowed from our unborn grandchildren. In a perfect snapshot of this Administration's witless banality, the President travelled last week to the Brent Spence Bridge across the Ohio River and claimed that, despite the fact that the structure connects the home states of the Republican House leader and the Republican Senate leader, the mean spirited GOP is going to kill the jobs bill and thus all prospects for a new bridge between their two states.
The bridge has nothing to do with the jobs bill. Work on a new bridge is not scheduled to begin for four years and wouldn't be completed until 2022 at the earliest. Because in the Republic at twilight you can run up another seven-and-a-half trillion dollars of new debt in less time than it takes to put up a bridge. Even as cheap political showboating the President's photo op was a pathetic joke, with the laugh on you.
If this is the best America can do, there won't be a 2022, not for the United States, or anything that would be recognizable as such. Like REM says, it’s the end of the world as we know it. And, as their split
suggests, they no longer feel fine. And nor should you.
© Mark Steyn 2011