Friday 4th October

We seem to limp from crisis to crisis.  Has the financial crash of 2008/2009 taught us nothing?   On the one hand Governments around the world are exhorting banks to build up their capital base.  No-one wants another bank to default.  And by any analysis the crash came about because the whole system became overloaded with Debt.

Money doesn’t actually exist until someone borrows it.  This is quite a hard concept to grasp, but it is true.  Central banks ‘print’ money, and allow banks to ‘borrow’ this as long as they have a plan to repay it.  This is by lending it to others, companies or banks who in turn promise to repay it.  The whole thing is built on ‘confidence’.  Even the £20 note in your pocket is an act of confidence by you, that everyone else will accept it as payment for goods or services.  But if suddenly, or even slowly, nobody really had the confidence that that £20 note was still worth £20, then we would be in trouble.

In America, the land of the brave and the free, the home of Democracy, we have an impending situation, which if unresolved will cause a far bigger crash than any seen before.  The real problem is the breakdown of Democracy itself.  We have a large section of the Republican party which simply will not accept that it lost the election for President.  They virulently hate Obama, and the very limited help he is offering to the poorest in their society.  So, even though laws have been passed, they now want them revisited or they will stop America from paying its debts.  And if that happens the whole system of confidence could collapse.

What is it that these people want?  A return to Slavery?  No Government at all, just dog eat dog?  So they are turning the screw on Obama.  All we on the sidelines can hope is that President Obama is indeed the man we believed when he was first elected.  He must stand up to these undemocratic elements, and even if that means himself acting undemocratically in order to save America, and the rest of the world by the way, so be it.