At a time when the Western world is poised at the edge of disaster and should be trying to heal its broken currency system, we wake up this morning to find that the stress of it all is causing at least four bitter quarrels within and between the major nations (and maybe a fifth one that’s still being kept under wraps):
1. German Finance Minister Schauble is telling US Treasury Secretary Geithner to mend America’s own economic problems before interfering with Eurozone’s.
2. Chancellor Merkel’s Coalition government in Germany faces defeat. Several of her own party are threatening to resign over the matter of the proposed Euro backstop fund.
3. President Sarkozy has lost his majority in the French Senate and thus his hitherto credibility in speaking for France or the Eurozone.
4. In Italy, Prime Minister Berlusconi and his Finance Minister Tremonti are at dagger-point as to what austerity measures should be adopted — and, indeed, which of them should keep his job.
And what is the fifth one?
5. It is being rumoured in blogland that, in America, President Obama has so little grasp of America’s economic situation that the country is really being led by Treasury Secretary Geithner and the Fed Chairman Bernanke (both, of course, unelected).
So what will happen if and when the Crash comes? My guess is that, initially, the politicians will make themselves scarce. The only example that comes to my mind is the chaos that occurred in 1972 when the oil monopoly countries (OPEC) suddenly reduced supplies and simultaneously raised the price four times. In England there was an immediate need for drastic petrol and diesel rationing. This was when our civil service should have moved smoothly into action. But it didn’t. It didn’t have the knowledge of how our fuel system actually operated. What happened was that the top people at British Petroleum invited the top people from the other three or four major oil corporations to their penthouse offices, together with top government officials as note-takers. Between them, the majors organized an emergency system and the civil servants then hurried away to carry out their end of it.
If the present dollar-euro predicament turns into a major Crash — as many knowledgeable spokespeople (including big investors) are forecasting — which would inevitably involve China and much of the rest of the world, it will be devastating to billions of people within days or weeks as supply lines start to seize up. What will happen in my view is that the major transnational corporations, ranging from food production and supply through to energy through to communications will hasten to assume command of an emergency procedure. Maybe a score or so of the very largest would be involved in a first phase whereby they’d divide into crucial economic sectors and then other smaller corporations would be invited in as infills, and then supplier businesses and so on. By this time I’m assuming that the existing national currency systems within and between governments would be in great danger of breaking down. To keep at least a rudimentary economic system going initially and prevent their customers actually starving, the corporations would have to devise a brand new rationing system — namely money — for use between themselves. Otherwise, national currencies would be so haywire that they couldn’t operate. And then, of course, the corporation would have to extend it to their billions of vital customers. (And, of course, some of them own the biggest printing presses in the world, so this would be no problem.)
By this time, the various national civil services (with politicians trailing behind them when it become safe) would start to integrate with the corporations’ procedures just as mentioned above during the ’72 Oil Crisis. Some might think that the corporations would want to exclude them in order to increase their economic power as normality returned. But that’s paranoiac. Why should they? This would entail an entirely different ball game of infinitely greater stress and complexity than their own operations. Besides they, quite as much as the least individual in any civilization, still need an objective system of laws and justice and they need secular governments for this.
But if, in fact, transnational corporations had managed to devise an emergency money system, then they are going to leave one residue behind them. The emergency system is going to have to persist for a long time to come for at least months, if not years, even if, for reasons of amour propre, civil servants and politicians begin reviving their own currencies in parallel in order to get their own systems into gear again and to raise taxes. A rate of exchange would arise between each of the 200-odd national currencies and the emergency world currency. America, presumably still viable (after all, it has numerous shale gas basins!), would have to give up its pretensions of the dollar remaining as the predominant world reserve currency. It (and the newly split-up European countries) would have to agree with what China, Russia, India, Brazil and other emergent countries have been calling for for years. The corporations’ emergency world currency could at least be symbolic, if not exactly a prototype, of what is needed.
There’s hope for us yet. But, as always in human affairs, it takes a crisis to bring about major change. Thus it might need a world-wide economic crash to bring about a world-wide currency that can serve as the stable reference for any other currencies that different cultures would still like to retain.