A spectre is haunting Europe: the spectre of capitalism. A vast and highly unstable mixture of debt — trillions of dollars of sovereign, corporate and private borrowing accumulated over decades — is strapped to the advanced Western economies like a suicide bomber’s gelignite vest.
The task facing our politicians is somehow to defuse this bomb without inadvertently triggering the sequence of defaults and bankruptcies that would set it off. No wonder they walk around the problem scratching their heads, prodding it gingerly here and there. The horrible truth is dawning that the problem may well not be technically solvable.
For the first time in my life — I am 54 — I get the sense of what it must have been like to have lived in my grandparents’ or great-grandparents’ generation: in 1913, say, or 1937. One feels a great smash coming ever closer, almost in slow-motion, and yet there seems to be nothing that can be done to avoid it. How have we got ourselves into this mess? After all, we were supposed to be living in an era of unprecedented peace and prosperity.
Communism had collapsed and the threat of nuclear annihilation had receded. Immense advances in computer technology were creating whole new economies. Vast markets were opening up in the developing world. Above all, we were supposed to have learned enough about economics to have created the necessary institutions — the World Bank, the International Monetary Fund, the G20, the OECD — to ensure we never repeated the mistakes of the Thirties.
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