History resumes

I remember the nineties fondly. They were the years before housing bubbles. The years when cricket still had meaning and moustaches were not yet the gimmick of some new age fad. The years when talent still determined who became famous. And the years when the singularity of American might gave the world a moral centre, however flawed.

Indeed, I recall the nineties as a kind of pinnacle in Hegelian history; when  the dialectical advance of civilisation had some real hope of permanency. Francis Fukuyama took the spirit to its logical extreme in his work. And Bill Clinton seemed to embody this spirit in foreign policies aimed at liberating people from oppression and suffering in lands barbarous and far flung.

Of course, this was all dreadfully naive. But not contradictory. Hegelian history is the process of thesis, antithesis, synthesis. It is not without conflict. It is conflict, but aimed at civilised progress.

One gets the feeling today that that moment has passed and we are staring at a much less reassuring future, the lineaments of which are apparent in the events unfolding before us and in their coverage.

Greed is the motif of the age and provided Japan does not suffer a radiation catastrophe, global markets will begin to look through the tragedy (as Wall St clearly did last night). Global central banks will breath a sigh of relief because commodities are correcting very nicely, taking pressure off input costs and inflation everywhere. Like the Fed last night, the RBA here, and others to follow, they will ease up on tightening.

Oil too will ease over coming weeks (remember, I said “ease”) . The Arab Spring is whithering as a wintery blast emanates from the West. Washington, Brussels and London are not going to embroil themselves in the folly of foreign wars. Their rhetoric of assistance to the Arab revolutionaries is for the people at home, not the Arabs themselves. It is a political device aimed at covering the amorality of international diplomacy, nothing more.

Bahrain is set to be violently suppressed, but that’s ok because it’s not about democracy of self-determination. It’s about a blood feud between Shiites and Sunnis. Didn’t you know?

The great Libyan tyrant, Muamar Gaddafi is going to prevail. And the West will take his oil just as it did before, even as it blusters about sanctions.

In Europe, Ireland looks to hold all the aces. The EU will have to capitulate, and soon, to a new deal on generous terms. That this is being negotiated whilst Portugal burns is no problem, at least not for Ireland. A Portugese bailout is coming in short order too. The Franko/German austerity axis is defeated.

And poor Japan, its suffering so terrible and so public, is going to boom out of this calamity. Reconstruction will be huge. A quiet transformation in its energy supply alone will be an enormous undertaking. It’s debt problems will be irrelevant. This is war and the regular rules of finance will be suspended. As the surge of patriotic energy coming out of the disaster gathers, it is possible that Japan may even be able to restructure its debt for the better.

The unsavoury scurrying of nuclear apologists that has dominated media comment for the past several days will be seen as a public relations disaster in retrospect. Without even the decency to wait until we understood how many Japanese have been killed and maimed by fallout has, to my mind, been one of the worst publicity campaigns in living memory. You can forget nuclear power in Australia. The Japan disaster has killed it and the apologists are just dancing on the grave. Someone should call Ziggy and give him the news.

The Chinese, on the other hand, won’t stop for a second. Neither will the Indians. Though one has to put a serious question over whether or not the latter will now receive Australian uranium any time soon.

And that is where we come full circle. As long as the Fukushima reactors don’t melt, and render the Japanese capital uninhabitable for 600 years, we’ll be back to the full-bore commodities-competing supercycle of last week before you know it. Only now it will be bigger still, fired by a Japanese reconstruction hungry for steel, cement, oil, coal and gas.

A mad dash for commodities looms. A dash that will have none of the order of the nineties. None of the ballast at the centre. None of the progress that I miss.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. The situation at Fukushima reactor is heading toward something very nasty, and a lot of older nuclear power plants using the same design will be taken offline in the next few years. That means an increase in consumption of oil, gas, or coal.

    The reactors containing the spent fuel turn out to be more of a problem. Each of them contains like 10 tonnes of radioative water. If they blow up, it will spew radioactive steams all over Japan, Korea and China. Worse, water have to be pumped to keep it cool, so it will CONTINUE to produce radioactive steam for weeks to months.

    Imagine the BP oil well, except with radioactive material. This is about as bad as it can get.

  2. Lordy, moustache!

    As I see it, this crisis pretty much guarantees QE3, which means equities, commodities, and AUD to the moon!

  3. Japan will also be rebuilding and increasing actual wealth as opposed to creating growth figures. Looking at you, China.

  4. Pure speculation. The areas of Japan affected by the tsunami and the earthquakes are largely in terminal decline economically and geographically. Many of the towns and villages wiped out will not be rebuilt. It makes as much sense as ghost cities in China. Of course, basic infrastructure such as roads, trains, and ports will need to be functioning.

  5. With all due respect, Mav, Gittins! is very late to this party. And I can hardly be sanctioned for being overly bullish, given I’ve led Gittins! on the issue by two years or so. Though one thing I am grateful for is the use of the exclamation mark. Soon we may be able to drop the “Gittins” part altogether.

  6. A future without progress – Hegelian progress – history as progress, unfolding freedom thanks to the guiding hand of reason.

    The scenario you describe is both appalling and frightening in where it leads. Rampant unrestrained unreasoned race for growth and financial gain at whatever cost. Prolongation of rule by the financial elites. Serfdom and servitude of the remainder. Destruction of the global environment. The turning of the eye to conflict and terror imposed on the unfortunate in lands without oil. Starvation engineered to profit the few.

    Moderation and reason temper the craven pursuit of financial excess and unremitting power. Moderation and reason both increasingly rare and in danger of extinction.

    “Greed is the motif of the age…” And may well be to undoing of the age. Marc Faber’s hellish prediction may prove to be correct: eventually all will collapse and the world will descend into war.

    Pulitzer Prize winning journalist, Chris Hedges:
    http://www.truthdig.com/report/item/this_time_were_taking_the_whole_planet_with_us_20110307/

    (even at this moment, with the situation in Japan looking increasingly devastating… the markets rally and move on…there’s money to be made!)
    http://theeconomiccollapseblog.com/archives/14-reasons-why-the-economic-collapse-of-japan-has-begun

  7. “I remember the nineties fondly. They were the years before housing bubbles. The years when cricket still had meaning and moustaches were not yet the gimmick of some new age fad.”

    That was the seventies, not the nineties!

  8. H&H – I reckon your best entry since joining McBuzz. Really enjoy your foreign policy big picture stuff more than minutae dissections of banking. Got me fond for the 90s too.

    And keep hammering !. Very anti arrogant baby boomers at the moment. Interesting to see his article in teh ‘society and culture’ section in the link above, rather than Business.

  9. H&H, nice article. I too have fond memories of the 90’s.

    Unfortunately I believe that, regardless of whether or not Japan suffers wide spread radioactive fallout, the world will move onwards to this ever more important goal of making money.

    What I wonder is, at what point did money become the objective rather than the medium of personal fulfilment and satisfaction?

    Did the financial elites who drive this global economy of ours decide that, if we are going to hell in a hand basket anyway, we may as well take as big a chunk of it as possible with us, or is it simply the unintended consequences of the capitalist system’s natural tendency to ever improving its own unsustainable efficiency?

    Who knows what the future may hold, but I’d wager a bet that it won’t look anything like the calm and pedestrian pace of the 90’s or any other decade prior…