JWG via DTN 15 January 2023 JT and Rae have been reading the tar baby saga and are trying hard…
World economy and Geopolitics
The Axis of Upheaval
By Niall Ferguson
(Foreign Policy March/April 2009) As economic calamity meets political and social turmoil, the world’s worst problems may come from countries like Somalia, Russia, and Mexico. And they’re just the beginning. [see also Yemen]
… ultimately I concluded, in The War of the World, that three factors made the location and timing of lethal organized violence more or less predictable in the last century. The first factor was ethnic disintegration: Violence was worst in areas of mounting ethnic tension. The second factor was economic volatility: The greater the magnitude of economic shocks, the more likely conflict was. And the third factor was empires in decline: When structures of imperial rule crumbled, battles for political power were most bloody.
In at least one of the world’s regions—the greater Middle East—two of these three factors have been present for some time: Ethnic conflict has been rife there for decades, and following the difficulties and disappointments in Iraq and Afghanistan, the United States already seems likely to begin winding down its quasi-imperial presence in the region. It likely still will. Now the third variable, economic volatility, has returned with a vengeance.
The Economist replies to Ambrose Evans-Pritchard
No need to head for the hills just yet
PLANT potatoes and get a gun. If you believe the doomsayers, the future in eastern Europe could hardly be bleaker. Ambrose Evans-Pritchard, the in-house Cassandra at the Daily Telegraph, forecasts “financial Götterdämmerung” if western banks that have lent €1,300bn ($1,635bn) to eastern Europe are allowed to go bust. Even sober ratings agencies like Moody’s are sounding worried.
If everyone involved acts foolishly a complete meltdown is certainly imaginable. Western-owned banks yank credit lines from their local subsidiaries, which stop lending, call in loans and go bust. To try to stop this, east European countries start the emergency nationalisation of the foreign-owned banks. As a result markets and currencies collapse, unemployment and inflation soar, democracy comes unstuck and potatoes become worth killing for. The failure of an Austrian bank in 1931 started a string of bank collapses that brought Hitler to power.
Failure to save East Europe will lead to worldwide meltdown
By Ambrose Evans-Pritchard
(The Daily Telegraph) The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.
Whether it takes months, or just weeks, the world is going to discover that Europe’s financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.