Tuesday, January 20, 2009

Get set for depression

This is going to last years.

You know, there have been two previous major depressions since industrialisation - the first midway through the second half of the 19th century and the second coming between the wars in the 20th century. Both had three things in common.

One - each was preceded by a period of "globalisation". Two - each was preceded by an expansion of credit leading to unsustainable debt. Three - the first two happened because of a period of relatively free international trade for 20 years or so before hand.

Indeed, there have been, since industrialisation, only three occasions when "free trade" existed in any accepted sense - the two occasions mentioned above and the last 20 years or so.

Oh, I know that the economists have argued for decades about what caused the depressions and haven't been able to agree, but sometimes those immersed in the detail really can't see the wood for the trees.

I'm certainly no economist and I'm not denying that my opinion is based more on a "gut feel" than any knowledge - but, to be brutally frank, the opinions of economists haven't been worth much either in light of recent events.

What I do know, however, is that those nations which came through the last Great Depression relatively unscathed were those nations which had resisted the temptation to join the international free trade bandwagon. Only those nations with strong protectionist trade policies and a high degree of self sufficiency were able to ride out the depression with very little damage to their economy.

I still believe in capitalism, free trade and free markets as the principle mechanism for internal (national) economic policy, but remain convinced that a nation has to protect its industry, agriculture and businesses from foreign challenges otherwise that nation is going to affected strongly by a depression when it hits. And I remain convinced that depression is the inevitable consequence of international free trade.

This isn't about xenophobia, it's about being British and putting British interests first. I believe that is the right thing for a British government to do - and that a French government should put French interests above all others, a German government should do what is right for the German people and so on.

I don't believe we, as Britons, owe the world any favours regardless of any historical slight real or imagined. Nor do I believe that any other nation owes us any favours either. The only thing special about our relationship with the USA is that we both had a shared strong belief in the fundamental principles of democracy and how those should be applied. That has diminished considerably in the last 20 years thanks entirely to the fact that we, in Britain, thanks to our membership of the EU, no longer hold those principles that strongly.

The eurozone is dominated by France and Germany and now those smaller nations in the eurozone are finding out that the euro is being used to support the interests of those nations ahead of their own. I don't blame France or Germany for doing that - I would hope that we'd do the same if we were in their position (thank God we aren't!).

If I am right - and it is a big if - and we are about to enter a major depression then there are going to be some seismic shifts in geo-politics over the next ten years. The euro will be the first thing to go as smaller nations look to regain control over monetary policy. Oh, it might survive as some Franco-German currency, but other than that it is dead and buried if we enter a depression.

I also believe it will mean the end of the EU as there will be a sharp rise in nationalism and protectionism. As a nationalist and being anti-EU as I am I welcome that, but would rather we didn't have to go through a depression to achieve it. Worse still, I fear that a depression will mark a rise in extremist nationalism which is something I most certainly do not want.

The general opinion of nationalism is that you are either a civic or ethnic nationalist - but I don't think I'm either. I'm something in between - and I believe that most British/English nationalists are the same. I'm not opposed to immigration - just opposed to unrestricted immigration and multiculturalism.

I don't take the view that you can't be black or Asian and British - being British is more of a state of mind than a skin colour - but key to that state of mind is acceptance of and integration into the British culture. What I am certain of is that you can not be black, white, Asian or green with yellow spots and British if you subscribe to different, non-British cultural values. Oh, and I don't believe you can change the culture either - not substantially. As I've said before, if you try to then all you will do is create a divided nation and that will, eventually, shatter into a number of smaller nations.

Britain was always a nationalist nation up until relatively recently and we always managed to maintain that nationalism with the world renowned British qualities of tolerance and fair play. I would hope that if, as I am predicting, Europe does revert to nationalism again, we in Britain would rediscover that British nationalism and embrace it. No, it's more than a hope - I believe that our history of democracy and social conservatism will ensure that we don't become an extremist nationalist nation.

Unfortunately, most of Europe doesn't have that history of democracy and social conservatism. Many parts of Europe have a history of being extremist and reactionary which does not bode well for the future of continental Europe if - as I suspect - depression grips the world and the EU collapses.

All of this is supposing that the recession turns into depression and, personally, I can not see how that can be avoided right now. And having said all that, I still believe - even if we do manage to avoid a depression - that the EU will collapse anyway. It would just take a little longer.

These are worrying, but interesting times.

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