Wednesday, March 25, 2009

The Empty Bank of Britain

More bad economic news this morning from the UK. As it seems that the counterparts of the US Treasury in the UK responsible for steering the British economy, have now arrived at the reality that their cupboard is bare and they cannot support more stimulus.

The Governor of the Bank of England laid bare tensions between Gordon Brown and the Treasury yesterday by warning that Britain could not afford a second economic stimulus in the Budget.

Many have cautioned our British cousins for a decade or more now, don't play the game of trying to keep pace with the Americans or it will cost you dearly. That reality burst and broke the Russians when it came to military spending and it has surely done the same now as it applies to consumer spending in the UK. The Brits have truly over leveraged themselves while trying to keep up with their American Jones' cousins.

America....the epitome of the consumer class globally, has stumbled and taken our dear cousins down the pipes with us it appears. The only difference being, that they have far less the ability to recover before scraping their knees to the bone than we do. Not that we will fair any better in the immediate interim, but probably not quite as bad.

Many in the UK have pointed twisted fingers and aimed angered assaults at American consumerism over the past decade in particular. More specifically, the past eight years, as those were the two terms of combined European and British angst against all things American as a result of the Bush presidency. But many warned then and all along since be careful of assailing the American consumer economy, for it was tied at the hip to those of the UK and Europe and Asia and the rest.

And once the jolly giant of consumerism stumbled and crashed to the ground? Was there ever any doubt that many others would be drug down with us or that the long shadow of American spending would reach out and crush those living inside the shaded bows of American economic protectionism.

From where I sit? Mervyn King and Alistair Darling and Gordon Brown had all better roll up their collective sleeves at this coming G20 meeting and pitch in to help the jolly green giant of American capitalism back to it's feet. Either that? Or they had better be prepared to spend more than quite a few bare seasons of doing without while America is left to survive or fail on it's own devices.

There are certain elements and realities that cannot be denied and must be counted on as indicators of the future for us all. Firstly, that America didn't arrive at the present economic disaster in a vacuum or in the absence of loads of friends and freeloaders along for the ride with us. Second? that if the "global economy" is to survive? Those friends and others around the globe had better begin to realize who propels the giant engine and just who's consumerism makes it go.

And the accelerator pedal of growth and survival for this planet, doesn't exist in Brussels at the EU or in New York at the United Nations or in some obscure combination of carbon credits and a third world lottery where Gulliver is wrestled to the ground and captured by farmers and pirates.

No comments: