Deep State Madness (Scalia's Ghost) Ford Reshapes Asbesto Science? (Has the Crash of the Global Financial Markets Begun?) Age of Stagnation or Something Worse (NC Koch-Screwed)

Was The Office Of The Director Of National Intelligence Aware That Intelligence On The Islamic State/ISIS/ISIL Was 'Skewed'?

Putting John Paulson on AIG’s Board Is an Insult to Every Law-Abiding Citizen

Just how deep is this "Deep State?"

The Full Story of the Sirhan Sirhan Parole Hearing

You won't believe it.

I don't.

And I'm pretty sure that if we knew what the owners of this country didn't want us to know, we'd never think that the fast-tracking and signing away of the USA! USA! USA! sovereignty, which is part and parcel of all those trade pacts, was an all righty thing to do.

Not just some other sleight of hand that would just benefit the in crowd.

And on top of all that disgusting, mobbed-up history . . .

Scalia's ghost calls out for justice? (His hands folded neatly over a smooth sheet with the half-full pitcher of liquid still by his deathbed, undisturbed by investigators?)

And I never thought much of this hypocrite to start with - but the ramifications (being purposely overlooked loudly by the MSM) scream for notice.

This past Saturday at 11:00am local time, Associate Justice of the Supreme Court Antonin Scalia was found dead “lying in perfect repose” (“His hands were sort of almost folded on top of the sheets,” John B. Poindexter, the property’s owner) in his bed at Cibolo Creek Ranch in Texas. The ranch is a sprawling 30,000 acre retreat favored by the rich and famous for it’s exclusivity and privacy.

John B. Poindexter, owner of the Cibolo Creek Ranch, is a well known backer of Democratic Party candidates. He made his money as a vulture capitalist:  running leveraged buyouts of US manufacturing firms, liquidating most, keeping a few. Basically, he’s Gordon Geeko.

In 2006 he tried to buy 46,000 acres of Big Bend State park so his rich clients could enjoy the scenery without having to bother with the huddled masses being there as well. He would have got it, quietly like most of his other vulture capitalist deals, but the press got wind of it and the plan was nixed.

Antonin Scalia was an intellectual giant, it is said. He was a constitutional originalist, one who believed in taking the constitution at it’s word as opposed to trying to assign implied meanings to it’s language. He was also instrumental in the formation of the majority ruling that defined the 2nd amendment as granting individual citizens the right to own firearms for the defense of themselves and their homes. Ever since then, the “militia” argument has been dead in the water, at least as far as the courts are concerned.

. . . It’s very nice of Poindexter to inform us that there is no political angle to a bunch of substantial business people getting together with an influential Associate Justice of the Supreme Court the night of his mysterious passing. Nothing to see here. Just move along.

. . .  “No identity or clue was given that this was not another body found by hunters in the desert,” David Beebe, a justice of the peace, wrote in an email Saturday night.  

Judge Beebe said County Judge Cinderela Guevera had ultimately pronounced Justice Scalia dead by telephone and “ruled it natural causes based on credible information.” She did not respond to messages on Sunday.” New York Times  

. . . “A gray hearse arrived Saturday — a decoy, Van Etten said, to distract the news media. It wasn’t until about midnight that a van arrived to spirit the body away.  

Scalia’s body was taken by a caravan of 20 law enforcement officers three hours west to Sunset Funeral Home in El Paso, where, after the family opted against having an autopsy, it was being prepared to be flown back to Virginia, according to Chris Lujan, a funeral director manager.” LA Times  

We are being told the official cause of death was a heart attack but as of this moment, I can’t find confirmation that it’s listed that way on his death certificate and the person who at first claimed he died of a heart attack, now claims she “misspoke”  

So what was the cause of death?  

Officials have released the scene of his death and reporters are crawling all over the place down there. They even released a photo of the bed Scalia died in. It is unmade, the sheets rumpled up. A pitcher of water sits on the nightstand beside the bed.

So much for an investigation.

Poindexter made a very interesting, cryptic statement regarding Scalia’s passing which I think deserves some attention:

“It was an honor to have had him,” he said. “He was surrounded by 35-odd admirers. He was at a beautiful location, which he remarked upon several times as being very much to his taste. He was doing what he liked to do, which was being outdoors. He had no apparent pain or distress in his death. While an absolute tragedy, it could have happened at worse places and worse circumstances than it happened here.” LA Times

What is the meaning behind this statement? When he says these were all substantial business people who were there and folks who were “admirers” of his, does that mean he hosted this meeting for Scalia with the intention of giving these business people an opportunity to meet him or to influence him? Whatever the case may be, it is apparent that the get-together was centered on Scalia himself and it seems kind of odd that his heart would just happen to give out at such a time.

We are told he was surrounded by 35-odd admirers, leading business people with a stake in several upcoming Supreme Court decisions. What he wasn’t surrounded by was his usual security detail. They had stayed home.

After Scalia’s body was discovered, the ranch alerted the U.S. Marshals Service, which is responsible for protecting the justices when they travel outside Washington, although Van Etten had not noticed them around Scalia at the ranch.

“He was very unassuming. He didn’t want his entourage of marshals to stay here with him,” Van Etten said. LA Times

So now we have an unprotected Supreme Court justice found dead under unusual circumstances, pronounced dead over the phone and who will have no autopsy before being laid to rest.

One last thing:

A map appeared to be set under a bottle of water.

“When I went to straighten his room up after he was removed this morning, I noticed he had a map of the property next to his bed,” Poindexter said. “He had obviously been looking at it before he went to bed.” LA Times

From what I understand, an unprotected Justice Scalia left the festivities of the evening early, retiring to his chambers to get some rest after meeting with these substantial business people who were there because of Scalia. They say he left their little meeting at 9pm only to be found dead of “natural causes” the next morning. The cause of death determined by someone over the phone and there will be no autopsy. The heart attack story was someone “misspeaking”. His body is “spirited” away in secret as if the press is going to do anything to it and the scene is opened up to reporters and the owner of the ranch to do with as they please almost immediately. In fact, the pitcher of water was still sitting next to the bed.

I don’t know enough about poisons to make any guesses regarding what could have been in that pitcher, if indeed foul play was involved in Scalia’s passing. But it seems to me, any powerful public figure heading down to Texas unprotected to meet with a bunch of substantial business people in a remote location who turn up dead might just trigger a little more curiosity from the authorities than Justice Scalia’s passing engendered.

Did he really die of a heart attack peacefully in his sleep, lying there as if posed to imply that was the case?

Or did he get angry at being ambushed by a bunch of neoliberal corporatists at the ranch and head off to bed expecting to leave the next day, even more dead set against whatever it was they were pushing him to do?

It’s hard too say and we will never know because as we have learned in the past, Big Business is never questioned or suspected the way any one of us are these days in the Shining City on the Hill. Especially not in Texas.

Did something nefarious happen to Justice Scalia Friday night? Who knows. We never will. What happens behind the closed doors of the captains of industry stays behind the closed doors of the captains of industry. Even if what happens, happens to Supreme Court justices, civil rights leaders and presidents. After all, we are a country of priorities, are we not?

While the MSM focuses on what Donald Trump or Marco Rubio have to say about the matter, I thought you might like to know a little more about Justice Scalia met his end. Ironically, Scalia was Italian. The first Italian to sit on the Supreme Court and this whole thing sounds a little too much like that scene from Goodfellas where Tommy gets brought out to be “made” and gets whacked in a rec room instead. Personally, I would like to know who that lawyer was who brought him out there to meet all those substantial business people without any security. Might be something interesting to know.

In the corptocracy we all live in these days, the sins of our leading business people are well known but ignored. They lobby for wars and regime change operations with indifference, they unleash weapons of economic destruction on the country at will for their own profits and ideological leanings and they sell poison to their own customers with impunity knowing full well they will never be held accountable for their actions.

Presidents are killed. Senators are killed. Activists are killed. False flags are staged. Nothing is beyond the pale for these reactionary ideologues who sense the time is now for the birth of their New World Order nation.

And as it just so happens, when President Obama chimed in on the death of Justice Scalia, he offered up a suggestion as to his replacement practically before Scalia’s body was packed up and “spirited” away in the dead of the night. Perhaps there is a clue lingering in his choice of a former Bush and Obama Justice Department appointee who was backed by none other than Ted Cruz on his last judicial nomination.

“One possible contender to replace Justice Antonin Scalia on the U.S. Supreme Court is an Indian-American appeals court judge, Sri Srinivasan,who has pro-business credentials and a stellar resume.”…

“In private practice, prior to his appointment to the appeals court, Srinivasan successfully represented former Enron Corp CEO Jeff Skilling in a Supreme Court case.“…

“Srinivasan also represented Exxon Mobil Corp in a lawsuit alleging human rights abuses in Indonesia, and mining giant Rio Tinto in a similar case about its activities in Papua New Guinea.” Reuters

Don't miss the Comments which tie a lot of these loose ends up in almost too neat a package.


Before the really bad news . . .

Very bad news:

Ford Spent $40 Million to Reshape Asbestos Science

Stung by lawsuits, the automaker hired consultants to change the narrative on the risks of asbestos brakes  

In 2001, toxicologist Dennis Paustenbach got a phone call from a lawyer for Ford Motor Company.

The lawyer, Darrell Grams, explained that Ford had been losing lawsuits filed by former auto mechanics alleging asbestos in brakes had given them mesothelioma, an aggressive cancer virtually always tied to asbestos exposure. Grams asked Paustenbach, then a vice president with the consulting firm Exponent, if he had any interest in studying the disease’s possible association with brake work. A meeting cemented the deal.

Paustenbach, a prolific author of scientific papers who’d worked with Grams on Dow Corning’s defense against silicone breast-implant illness claims, had barely looked at asbestos to that point. “I really started to get serious about studying asbestos after I met Mr. Grams, that’s for sure,” Paustenbach testified in a sworn deposition in June 2015. Before that, he said, the topic “wasn’t that interesting to me.”

Thus began a relationship that, according to recent depositions, has enriched Exponent by $18.2 million and brought another $21 million to Cardno ChemRisk, a similar firm Paustenbach founded in 1985, left and restarted in 2003. All told, testimony shows, Ford has spent nearly $40 million funding journal articles and expert testimony concluding there is no evidence brake mechanics are at increased risk of developing mesothelioma. This finding, repeated countless times in courtrooms and law offices over the past 15 years, is an attempt at scientific misdirection aimed at extricating Ford from lawsuits, critics say.

“They’ve published a lot, but they’ve really produced no new science,” said John Dement, a professor in Duke University’s Division of Occupational and Environmental Medicine and an asbestos researcher for more than four decades. “Fifteen years ago, I thought the issue of asbestos risk assessment was pretty much defined. All they’ve accomplished is to try to generate doubt where, really, little doubt existed.”

And North Carolina's reigning Rethuglicans have also worked that nonscientific magic at the home of the Research Triangle:

Less than a month after a federal agency rejected the route of an interstate gas pipeline for wanting to cut through two national forests, the company returned with a longer route that put more landowners at risk of having land seized through eminent domain.

“There is no good place to put this thing,” said Ernie Reed, president of Wild Virginia, in an interview with "ThinkProgress."

The Atlantic Coast Pipeline, unveiled in 2014, would transport 1.5 billion cubic feet of natural gas per day. If approved by the Federal Energy Regulatory Commission, the builders would seize any land necessary via eminent domain to build an interstate line that would carry gas from the Marcellus Shale basin — one of the largest natural gas reservoirs in the world — to supply power stations in Virginia and North Carolina.

The companies involved were told last month to amend the existing proposed route as it lacked “minimum requirements” to safeguard both the Monongahela and the George Washington national forests. After that, the companies announced they had come up with an alternative path that is about 30 miles longer than the original 550-mile route. It would affect more landowners than before, but avoid sensitive wildlife.

The Atlantic Coast Pipeline is one of four other similar projects proposed by different companies — which include the Appalachian Connector and the Mountain Valley Pipeline. All these projects threaten wildlife, environmentalists say. For its part, Dominion said the alternate route was selected to avoid Cheat Mountain and Shenandoah Mountain, as the U.S. Forest Service wanted, because of sensitive species inhabiting those areas.

“The route will reduce total mileage in the national forests by more than one third, from 28.8 miles to 18.5 miles,” Dominion said.

. . . “Eminent Domain is typically a tool for government to take private property for public use. There are some real issue that come up when you have a private company, a private for profit company like Dominion, that [seize] it for private gains,” she said. 

. . . Those meetings will be new opportunities for the company to appease concerns and entice residents’ support by noting the project could inject an annual average of $456.3 million into the economy of the West Virginia, Virginia, and North Carolina, while creating nearly 3,000 jobs in the region from 2014 to 2019.

. . . Those benefits, if fully materialized, come with environmental and societal costs however, which some locals are not willing to accept as they prefer divesting from fossil fuels that exacerbate climate change.

_ _ _ _ _ _ _

Has the Crash of the Global Financial Markets Begun?

Posted on February 15, 2016 by Yves Smith

By T. Sabri Öncü (sabri.oncu@gmail.com), a financial economist based in Istanbul, Turkey. Original article published on February 13, 2016 in the "Indian Journal Economic and Political Weekly"

Even as some insist that the global economy is in “secular stagnation,” the facts suggest that we may be entering the “worst” depression in history. The global markets have been on a slippery slope since the summer of 2007, and things have only been getting worse in 2016. The picture looks dismal, no matter which theoretical lens one uses. (This article was written on 5 February before last week’s tumble in global and Indian markets.)

As the following quotation from Bradford DeLong’s 8 January 2016 "Huffington Post" article demonstrates, one of the ongoing debates among economists of many tribes is whether the period that began in the summer of 2007 will be called the “Greatest Depression” or the “Longest Depression” by future economic historians.

Unless something big and constructive in the way of global economic policy is done soon, we will have to change Stiglitz’s first name to ‘Cassandra’ — the Trojan prophet princess who was always wise and always correct, yet cursed by the god Apollo to be always ignored. Future economic historians may not call the period that began in 2007 the ‘Greatest Depression.’ But as of now, it is highly and increasingly probable that they will call it the ‘Longest Depression’.

I offer “Worst Depression” as the third alternative and leave it to future economic historians to call the period that began in 2007 whatever they want. However, some sort of consensus is emerging as the reconciliation prize of this debate. It is that the period that began in the summer of 2007 is some sort of depression, despite Lawrence Summers still calling it secular stagnation.

Market Crash

A second and more heated ongoing debate is whether the global financial markets will crash or not. Of course, there are even those who claim that the global financial markets have crashed already, but we are the minority these days. Apparently to some, an evaporating $14.4 trillion in the world equity markets from its peak of $73.1 trillion on 14 June 2015 to $58.7 trillion on 31 January 2016 does not count as a market crash.

And there are some minor debates even among those of us who claim that the crash has already occurred. The minor debates are about when exactly the crash started:  the third quarter of 2014, or the second quarter of 2015, or the third quarter of 2015, or with the turn of 2016 and the like. I must confess, however, that I appear to be the only one who claims that the crash started in the third quarter of 2014, at least to my knowledge.

But, what did happen in the third quarter of 2014?

On 18 September 2014, the US market index (Standard & Poor’s 500 or S&P 500) peaked and stayed more or less at the same level the next day. It started to decline after 19 September and bottomed on 15 October 2014. The total decline from 19 September to 15 October was about 7.4%, falling short of 10% to qualify as a market correction.

Quantitative Easing Stops

After the fact, many explanations can be and were offered such as concerns about the absence of aggregate demand in the world, the possibility of the Federal Reserve or Fed (the US central bank) raising the interest rates, lower than expected inflation in China, and other such explanations. Ongoing in the background, however, was the Fed’s winding down of the bond purchases in its third bond-buying programme, also known as Quantitative Easing 3 (QE3). This winding down of the QE3 started in February 2014 and ended on 29 October 2014 (I had discussed QEs in an earlier column in EPW (10 October 2015)).

With the benefit of hindsight, I can now say that the real reason for this 7.4% decline from 19 September to 15 October 2014 was the 17 September press release of the minutes of the meeting of the Fed on 16–17 September. The minutes announced that the Fed officials had decided to reduce the bond purchases to $15 billion a month and agreed to end the QE programme after their 28–29 October meeting if the economy continued to improve as expected.

Apparently, it took two days for readers of the minutes to digest the information and the slide started a day after 19 September to continue until 15 October. Then, on 16 October 2014, James Bullard, the President of the Federal Reserve Bank of St Louis, came out and said that the Fed may want to extend its bond-buying programme beyond October to keep its policy options open, given falling US inflation expectations. This calmed fears and the market resumed its upward trend for a while with ups and downs, of course. Had he not done that, would the market have continued sliding down? Who knows?

Then came the second quarter of 2015.

The slide of Chinese stocks began on 12 June 2015. From 12 June to 24 August 2015, the Shanghai Composite Index lost 38% of its value while the world equity market capitalisation declined by about $10 trillion. This was an unquestionable crash that started in the second quarter and ended in the third quarter.

Then, in the third quarter of 2015, came the Chinese yuan devaluation of 11 August 2015.

The People’s Bank of China shocked the markets on 11 August with the yuan’s biggest one-day devaluation in 20 years, lowering its daily mid-point trading price to 1.87% less against the dollar. The devaluation continued until 13 August, totalling a 3% decline of the yuan against the dollar in three days. This sent shockwaves through the financial markets, taking stocks and Asian currencies down with it.

Shortly after, on 18 August 2015, the Shanghai Composite index started crashing again, but this time taking the US equity indexes down with it. From 17 August to 25 August 2015 it crashed about 25%, and individual crashes on 24 August and 25 August were about 9% and 7% respectively. Meanwhile in the US, the S&P 500 fell by 11.2% from 17 August to 25 August 2015, with the largest decline on 24 August. This is now among the “Black Mondays” of history, and some even call 25 August 2015 “Black Tuesday.”

After this, many interventions by the world’s major central banks and others took place, and the markets started to move up happily ever after. Well, not quite. With ups and downs, but up on the average until the turn of the year.

An important event before the turn of the year took place on 16 December 2015. Finally, on that day, the Fed did what it had been advertising at least since the summer of 2013: it raised its policy rate — the Fed Funds Target Rate — by 25 basis points. This was the first Fed rate hike in over nine years. The markets took notice, but then it was the holiday season, so nothing serious happened until the turn of the year.

Latest Slide

Then 2016 arrived and the markets opened on 4 January 2016.

Since then the equity markets have been in turmoil. Between 29 December 2015 and 20 January 2016, the S&P 500 has declined by about 11% (a warranted correction) and the world equity market capitalisation dropped by about $7 trillion. After 20 January 2016 and up to 5 February, the markets have recovered some, but up and down daily swings of significant sizes continue to occur.

Here are a few events since the beginning of 2016:

(i) Rumours that the Italian banking system might collapse.
(ii) Rumours that Deutsche Bank could become the next Lehman Brothers.
(iii) Chinese economy is facing a mountain of bad loans that could exceed $5 trillion.
(iv) The negative interest rate programme in Japan.
(v) The 10 Year US Treasury Rate is going below 1.80%, and moving up and down wildly.
(vi) Oil price has gone below $30 per barrel, and has moved up and down wildly.
(vii) Gold price has gone above $1,155 per troy ounce, and has moved up and down wildly.
(viii) The Baltic Dry Index, a measure of the health of world trade, crashed below 300 for the first time in its entire history.

These should be enough. I guess you get the picture.

Let me now throw in some terminology. Marxian “over-accumulation,” “overproduction,” and “underconsumption” crises theories, Keynesian theory of “lack of aggregate demand,” “financial instability hypothesis” of Minsky, “debt deflation theory of depressions” by Irving Fisher, Steve Keen’s “excessive private debts,” Michael Hudson’s “debts that cannot be paid will not be,” and the like. No matter which theory you use to look at the picture, your conclusion will be the same.

Whether it is the “longest” or the “greatest,” the world has been in depression since the summer of 2007. And the global market crash is already underway.

On 29 January 2016, the Guardian asked a number of economists whether the gyrating financial markets are facing a global meltdown. One of the economists was the former Greek Finance Minister Yanis Varoufakis. He concluded his response as follows. “Should we be afraid? Yes. Is it inevitable that a new 2008 is coming? In political economics, nothing is inevitable.”

I respectfully disagree.

_ _ _ _ _ _ _

Age of Stagnation or Something Worse?

Posted on February 14, 2016

by Yves Smith

Yves here. If you’ve read Das regularly, one of the characteristics of his writing is wry detachment. The shift to a sense of foreboding is a big departure.

By Satyajit Das, a former banker and author whose latest book, The Age of Stagnation, is now available. The following is an edited excerpt from Age of Stagnation (published with the permission of Prometheus Books)

If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only . . . wishful thinking to begin, and in the end, despair.  C.S. Lewis

The world is entering a period of stagnation, the new mediocre. The end of growth and fragile, volatile economic conditions are now the sometimes silent background to all social and political debates. For individuals, this is about the destruction of human hopes and dreams.

One Offs

For most of human history, as Thomas Hobbes recognised, life has been ‘solitary, poor, nasty, brutish, and short’. The fortunate coincidence of factors that drove the unprecedented improvement in living standards following the Industrial Revolution, and especially in the period after World War II, may have been unique, an historical aberration. Now, different influences threaten to halt further increases, and even reverse the gains.

Since the early 1980s, economic activity and growth have been increasingly driven by financialisation – the replacement of industrial activity with financial trading and increased levels of borrowing to finance consumption and investment. By 2007, US$5 of new debt was necessary to create an additional US$1 of American economic activity, a fivefold increase from the 1950s. Debt levels had risen beyond the repayment capacity of borrowers, triggering the 2008 crisis and the Great Recession that followed. But the world shows little sign of shaking off its addiction to borrowing. Ever-increasing amounts of debt now act as a brake on growth.

Growth in international trade and capital flows is slowing. Emerging markets that have benefited from and, in recent times, supported growth are slowing.

Rising inequality and economic exclusion also impacts negatively upon activity.

Financial problems are compounded by lower population growth and ageing populations; slower increases in productivity and innovation; looming shortages of critical resources, such as water, food and energy; and manmade climate change and extreme weather conditions.

The world requires an additional 64 billion cubic metres of water a year, equivalent to the annual water flow through Germany’s Rhine River. Agronomists estimate that production will need to increase by 60–100 percent by 2050 to feed the population of the world. While the world’s supply of energy will not be exhausted any time soon, the human race is on track to exhaust the energy content of hundreds of millions years’ worth of sunlight stored in the form of coal, oil and natural gas in a few hundred years. 10 tons of pre-historic buried plant and organic matter converted by pressure and heat over millennia was needed to create a single gallon (4.5 litres) of gasoline.

Europe is currently struggling to deal with a few million refugees fleeing conflicts in the Middle East. How will the world deal with hundreds of millions of people at risk of displacement as a resulting of rising sea levels?

Extend and Pretend

The official response to the 2008 crisis was a policy of ‘extend and pretend’, whereby authorities chose to ignore the underlying problem, cover it up, or devise deferral strategies to ‘kick the can down the road’. The assumption was that government spending, lower interest rates, and the supply of liquidity or cash to money markets would create growth. It would also increase inflation to help reduce the level of debt, by decreasing its value.

It was the grifter’s long con, a confidence trick with a potentially large payoff but difficult to pull off. Houses prices and stock markets have risen, but growth, employment, income and investment have barely recovered to pre-crisis levels in most advanced economies. Inflation for the most part remains stubbornly low.

In countries that have ‘recovered’, financial markets are, in many cases, at or above pre-crisis prices. But conditions in the real economy have not returned to normal. Must-have latest electronic gadgets cannot obscure the fact that living standards for most people are stagnant. Job insecurity has risen. Wages are static, where they are not falling. Accepted perquisites of life in developed countries, such as education, houses, health services, aged care, savings and retirement, are increasingly unattainable.

In more severely affected countries, conditions are worse. Despite talk of a return to growth, the Greek economy has shrunk by a quarter. Spending by Greeks has fallen by 40 percent, reflecting reduced wages and pensions. Reported unemployment is 26 percent of the labour force. Youth unemployment is over 50 percent. One commentator observed that the government could save money on education, as it was unnecessary to prepare people for jobs that did not exist.

Future generations may have fewer opportunities and lower living standards than their parents. A 2013 Pew Research Centre survey conducted in thirty-nine countries asked whether people believed that their children would enjoy better living standards: 33 percent of Americans believed so, as did 28 percent of Germans, 17 percent of British and 14 percent of Italians. Just 9 percent of French people thought their children would be better off than previous generations.

The Deadly Cure

Authorities have been increasingly forced to resort to untested policies including QE forever and negative interest rates. It was an attempt to buy time, to let economies achieve a self-sustaining recovery, as they had done before. Unfortunately the policies have not succeeded. The expensively purchased time has been wasted. The necessary changes have not been made.

There are toxic side effects. Global debt has increased, not decreased, in response to low rates and government spending. Banks, considered dangerously large after the events of 2008, have increased in size and market power since then. In the US the six largest banks now control nearly 70 percent of all the assets in the US financial system, having increased their share by around 40 percent.

Individual countries have sought to export their troubles, abandoning international cooperation for beggar-thy-neighbour strategies. Destructive retaliation, in the form of tit-for-tat interest rate cuts, currency wars, and restrictions on trade, limits the ability of any nation to gain a decisive advantage.

The policies have also set the stage for a new financial crisis. Easy money has artificially boosted prices of financial assets beyond their real value. A significant amount of this capital has flowed into and destabilised emerging markets. Addicted to government and central bank support, the world economy may not be able to survive without low rates and excessive liquidity.

Authorities increasingly find themselves trapped, with little room for manoeuvre and unable to discontinue support for the economy. Central bankers know, even if they are unwilling to publicly acknowledge it, that their tools are inadequate or exhausted, now possessing the potency of shamanic rain dances. More than two decades of trying similar measures in Japan highlight their ineffectiveness in avoiding stagnation.

Heart of the Matter

Conscious that the social compact requires growth and prosperity, politicians, irrespective of ideology, are unwilling to openly discuss the real issues. They claim crisis fatigue, arguing that the problems are too far into the future to require immediate action. Fearing electoral oblivion, they have succumbed to populist demands for faux certainty and placebo policies. But in so doing they are merely piling up the problems.

Policymakers interrogate their models and torture data, failing to grasp that ‘many of the things you can count don’t count [while] many of the things you can’t count really count’. The possibility of a historical shift does not inform current thinking.

It is not in the interest of bankers and financial advisers to tell their clients about the real outlook. Bad news is bad for business. The media and commentariat, for the most part, accentuate the positive. Facts, they argue, are too depressing. The priority is to maintain the appearance of normality, to engender confidence.

Ordinary people refuse to acknowledge that maybe you cannot have it all. But there is increasingly a visceral unease about the present and a fear of the future. Everyone senses that the ultimate cost of the inevitable adjustments will be large. It is not simply the threat of economic hardship; it is fear of a loss of dignity and pride. It is a pervasive sense of powerlessness.

For the moment, the world hopes for the best of times but is afraid of the worst. People everywhere resemble Dory, the Royal Blue Tang fish in the animated film Finding Nemo. Suffering from short-term memory loss, she just tells herself to keep on swimming. Her direction is entirely random and without purpose.

Reckoning Postponed

The world has postponed, indefinitely, dealing decisively with the challenges, choosing instead to risk stagnation or collapse. But reality cannot be deferred forever. Kicking the can down the road only shifts the responsibility for dealing with it onto others, especially future generations.

A slow, controlled correction of the financial, economic, resource and environmental excesses now would be serious but manageable. If changes are not made, then the forced correction will be dramatic and violent, with unknown consequences.

During the last half-century each successive economic crisis has increased in severity, requiring progressively larger measures to ameliorate its effects. Over time, the policies have distorted the economy. The effectiveness of instruments has diminished. With public finances weakened and interest rates at historic lows, there is now little room for manoeuvre. Geo-political risks have risen. Trust and faith in institutions and policy makers has weakened.

Economic problems are feeding social and political discontent, opening the way for extremism. In the Great Depression the fear and disaffection of ordinary people who had lost their jobs and savings gave rise to fascism. Writing of the period, historian A.J.P. Taylor noted: ‘[the] middle class, everywhere the pillar of stability and respectability . . . was now utterly destroyed . . . they became resentful . . . violent and irresponsible . . . ready to follow the first demagogic saviour . . .’

The new crisis that is now approaching or may already be with us will be like a virulent infection attacking a body whose immune system is already compromised.

As Robert Louis Stevenson knew, sooner or later we all have to sit down to a banquet of consequences.