They’re Fighting In The Streets
There’s a simple explanation for why the popular front of the 1960s gave way to a lethargic 1970s, and it is basically that the Baby Boomers who got motivated enough to go to the barricades got bought off. They got bought off with what turns out to be cheap credit, which, as it turns out has made a mountain of debt that we collectively cannot afford to repay. So, this time, it is Gen X and Gen Y taking to the streets because basically, not only can Gen X and Gen Y not pay for their debts, they feel they can’t be asked to pay for the debts of the Baby Boomers. And that, in a nutshell is how we got to the GFC and its aftermath.
When I paint this broadly, I don’t mean to say every Baby Boomer is equally to blame. It’s just that demographically speaking, this is how the financial crisis has shaken out. And the rich got richer and to add insult to injury, they got taxed less and all that went hand in hand with the buying out process. So demographically speaking, the Baby Boomers had a good ride of it, putting it all on the big demographic credit card, and the whole system was workable as long as they stayed working. However now that they’re retiring, they can’t all ride off into the sunset without paying it off. In turn, the battles they didn’t finish are now going to be fought in the streets by Gen X and Gen Y because they will say they’ll be damned if they’re going to pay for Baby Boomer debts as well as their own.
I’ve had a brief e-conversation with a friend who is in the financial sector over in Hong Kong, and he doesn’t see a bright future. He says it’s going to be a bloodbath and that it’s going to be like ‘The Rise Of The Planet Of The Apes’ except without the hairy apes. When I asked him why, he basically said that the global economy is too linked together, and there’s really no stopping the knock on effect. He says there will be riots in the streets like the one in London, the world over. We should all enjoy our lives while we can because this is all going to end in a literal bloodbath, he reckons. It seems drastic, but lately I’ve been thinking that if indeed there is more debt issued than there is money going around and accounted for, then when everybody decides to call their debts in, in one big avalanche of debts being called in, people are going to go out backwards. Worse than that, whole chunks of the economy are going to cease to function because banks are going to be forced to repossess everything, and then fire everybody in a bid to survive. Everybody will run on the banks. Whole currencies will lose value over night.
Every business would be forced to pay up, or go to the wall or get repossessed. Everybody with a mortgage? Tough, the bank’s going to seize what you have. Everybody with a credit card? The banks going to cancel it, and seize money from your savings to cover the gap. If you have savings, they’ll tax it out of your pockets because the government won’t be able to pay its debts. If you have stocks, they’ll keep going down because all those companies have some form of debt. Property bubble? Watch what happens when the whole thing starts contracting. In other words, the endgame is going to provoke a lot of anger and rioting.
They’re going to riot harder in Greece because if all those austerity cuts go ahead, they’re not going to have a country left. The government will be force to privatise everything – electricity- rail, ports, you name it. And if the so-called contagion hits Portugal and Spain, well, they’ll have to do the same, and they’re already rallying in Portugal. In New York, they’ve just arrested 700 people over demonstrations against Wall Street. It would only take a Trotsky to organise a mob like that and you have the seeds of a 1905 style revolution. Make no mistake, there will be more rioting in the streets before all of this is said and done.
But back to what some people have been telling me is this: Not even all the austerity measures are going to be enough to pay for these sovereign debts. And this means there will be a default, and when the default happens, there will be banks failing. When that happens, it might be enough to trigger the rest of the avalanche of debts being called in at once. That pain is going to go all the way around the world, and everybody is going to feel it. I’m looking at 700 arrests in New York City, and I’m thinking out loud what happens when that turns in to 7,000 and 70,000? And what happens when New York City can no longer pay their police? Will the police still turn up to arrest these people? If you were a fat cat Wall Street type, you might want to think of an exit strategy. The problem is, there’s no where on the planet you can run to. Maybe they know this already. And my friend in Hong Kong would tell you, this is all on the cards, all on the table, right now.