New Rome

People must again learn to work instead of living on public assistance

Cicero of Rome said in 55 BC that the budget should be balanced, the treasury should be refilled, “the public debt should be reduced, that arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, or Rome will become bankrupt. People must again learn to work instead of living on public assistance.”

What Cicero said 2070 years ago is as true today as it was then, in fact even more so. But afflicted by the hegemony drive, humanity hasn’t learned. So after colonising and plundering other lands and enriching itself for a while, the hubris and awakening of the colonised causes every hegemon to decline – Greece, Roman, Muslim, Mongolian, European… Today there are many hegemons – one can say many a ‘New Rome’ – the USA and the European Union being prime.

Europe, after conquering and enslaving people the world over and settling many continents after virtually liquidating their native populations, is now suffering from such acute hubris that its member states cannot see that they have indebted themselves into decline. So has the USA for the last 70 years. Instead, America is comforting its with ownership of the most advanced weaponry, the global reserve currency and the world’s largest knowledge bank but is so blinded by the headlights of the juggernaut of historical forces that will soon be upon them that it cannot see what the future holds for it and the hapless world. The majority of the poor world is indebted to near obliteration.

Last week Greece defaulted on debt servicing to the IMF, the first time for an ‘advanced’ country ever. Today there will be a referendum on whether to accept or reject the EU’s bailout proposals that Greek Prime Minister Alexis Tsipras calls “humiliating”. Actually, the referendum is a bit meaningless for the EU’s bailout proposals are already off the table since Greece walked away and the IMF cannot do anything since Greek’s default. What happens after the referendum?

A ‘No’ vote would essentially mean ‘No’ to the Euro. I think that both the Greek government and the EU will try their best that Greece stays in the Eurozone so a new round of negotiations could commence. But their failure would eventually lead to ‘Grexit’ – Greece’s exit from the Eurozone – and if they are not careful, from the EU itself. The Drachma – or even IOUs for a time – will become the Greek currency and harder times for the Greeks will follow for some time. However, they will again be on the road to fighting for their independence and self-reliance. The Mother of Democracy should know that independence and sovereignty come at a price.

A ‘Yes’ vote will mean accepting the bailout conditions thus indebting and enslaving Greece further after new elections. The crisis will deepen and they be will back on the negotiating table soon, but in greater desperation. Greece has a history of military coups – the ‘Colonels Regime’ comes to mind – and if it comes to the State falling apart with its people without basic needs for survival we may yet see another coup. Not that it is any solution either. The colonels left Greece in a mess of another kind. But coups, as I have said many times, are part of the political and societal evolutionary process. And so the juggernaut moves on, States change, people change, philosophies and ideologies change, political, economic, judicial and educational systems change. Change is the only constant. Greek assets abroad being seized by creditors is not high on the list of possibilities yet, not if they want it to remain in the Eurozone and the EU.

I’m no soothsayer but Greece’s exit from the Euro would strengthen the dollar and help the US, but for a time. It could lead to higher oil prices

I’m no soothsayer but Greece’s exit from the Euro would strengthen the dollar and help the US, but for a time. It could lead to higher oil prices that will put shale oil back into the market but would also let Russia off the hook. However, if America is not careful it could lead to its own economic implosion for its own public debt that is more than its GDP may become unmanageable since a large part of its debt is to other countries, especially China. Then a bigger global economic recession than in 2008 – perhaps even leading to depression – could ensue, no bank will be remain “too big to fall”, and the political, economic, military and even geographic map of the world could change – it’s started changing already.

Obviously China will move in to fill the breach and take full advantage. The China-led Asian Infrastructure Investment Bank (AIIB) with many countries that matter as partners including America’s European allies has already been launched and could in time replace America’s Bretton Woods institutions.

Greece is not the only country in trouble. Puerto Rico, part of the ‘American Commonwealth’, is also on the skids due to unmanageable indebtedness at 73 per cent of GDP. The problem is that the US has large exposure there. Portugal, Spain and Italy are under debt and austerity pressure and France is not looking too healthy either. So the game is on.

Last Wednesday the Greek prime minister made too late what appeared to be conciliatory but contradictory statements, saying that he would ask for an Economic Stability Mechanism (ESM) and later even accepting the earlier EU bailout proposals with all its difficult austerity conditions that he had walked away from only a few days earlier. But he also knew that once he had walked away from the EU’s bailout conditions and defaulted, the proposals were no longer on offer while the ESM was no longer possible. Neither could the IMF come to his rescue after default, only after the referendum. He even exhorted the Greeks to vote ‘No’. I think it was not fright that caused Tsipras to look as if he was taking a U-turn; instead he was being too clever by half trying to fit the shoe on the EU and IMF’s foot so that it would seem that they were spurning his overtures ‘at the last minute’ and no one, least of all the Greek people and opposition parties, should blame him. They even think, as the Greek game-theorist finance minister says, that after a ‘No’ vote they will be able to negotiate a better deal. Let’s see.

I am gradually coming to the conclusion that with no solution in sight its best to let decline continue worldwide because society has a way of finding solutions through the evolutionary process. Even though it is natural, the evolutionary process is not necessarily painless; though it finds solutions to problems and saves societies it does not necessarily save States.

Either way, even though the IMF and EU are raising voices that negotiations can continue after the referendum, it would be a Herculean task to prevent Greece’s eventual exit from the Euro and the EU: eventual exit is more likely than not. Greece has already defaulted and the forces of history are crunching inexorably on. Greece’s example could become contagious at least in the Eurozone if Greece outside the Euro and/or the EU ends up doing less badly than it has been inside. If the contagion causes a domino effect other countries with the same indebtedness problems – Portugal, Spain, Italy – could follow Greece. France too is in trouble. If Britain votes for exit from the EU next year or the one after, the European Dream is done. I always thought that the euro without a political and fiscal union was a bad idea, a mouse trying to punch above its weight and taking on the most powerful country in history. This latest third dream of German hegemony over Europe will be all but done.

Actually, New Rome and all other mini hegemons are not independent either; they too are at the mercy of their banks and banksters whether central, public or private

A ‘smart’ creature called an ‘economist’, a technician who negates common sense, said that there was no harm in taking as much debt as you like as long as you can service it. Ergo: all States work for New Rome spending their hard earned revenues to regularly pay New Rome’s official, semi-official, multilateral and private banks and banksters. The world has come to this and calls it ‘progress’. Actually, New Rome and all other mini hegemons are not independent either; they too are at the mercy of their banks and banksters whether central, public or private.

The New Rome is America. Without loans that they call “assistance”, the most hypocritical misnomer, many countries rich and poor would be well on the way towards development instead of writhing in the chains of debt and rampant poverty, victims of neo-colonialism, being dictated to by their ‘kind’ assisters, the new slave drivers of the New Rome that has created many weapons of hegemony like multilateral donor agencies under the guise of being assisters and helpers. The European Union is Mini Rome. The fatherless Euro is now tottering and the EU is leaning like the Tower of Pisa.

I would go so far as to say that the global decline has accelerated and if New Rome is not careful there could be a global financial crisis in the next two to three years that will make October 2008 look like a dress rehearsal. I had written an article way back in July 2008: ‘The Coming Global Financial Crisis’. Those few who didn’t think that I was mad finally decided that, “Humayun has finally gone round the bend.” Perhaps they will throw me in the loony bin now, but I am in a loony bin anyway because the world has become a loony bin.

So while we are lost in the minutiae of the Greek crisis that could either spell the end of the euro or at least turn it into a worthless currency, we should remember that other States will start buying dollars, putting more pressure on it. The dollar would become dearer causing exchange rates and prices to climb worldwide. Interest rates could rise to attract dollar deposits. Incomes won’t rise at the same rate, of course, people will become poorer in real terms and hunger and poverty will increase in developed and developing countries and many bubbles would burst again.

What happens after that I don’t know, but I do know that China could fill the currency credibility breach either with its own currency or with a new Global Reserve Currency that it has been working on for some years in tandem with New Rome I’m sure. China cannot let its largest markets collapse else it could collapse. But that would make the US dollar ordinary. The world is in for a rollercoaster ride like never before, but the rail could fall off the tracks or the tracks collapse. Wisdom of the Cicero kind is the need of the hour but today wisdom lacks entirely.

Let me conclude with what I recently read written behind a rickshaw:

“Lehar samandar say utthti hai, kinaron say nahin; Manzil himmat say miltey hai, saharon say nahin.”

Meaning: “The wave rises from the sea, not the shore; destinations are found with courage, not crutches.” There is a lesson here too. “Rediscover the courage to eat bread from your own fields, drink water from your own wells, not banquets made and paid for by others, wine from the wine lake of Europe.” When there’s no such thing as a free lunch, best to make your own.

By the time you read this I should be in London to be with my wife and checking out on “assorted daughters and nieces” as my friend AA Gill once wrote in The Sunday Times when he ran into me outside Fortnum and Mason. And Maverick the Monkey has decided to accompany me. Let’s see what new wisdom he finds there.