The 20th century was a gigantic death trap for most people on the planet.

Our great-grandparents went through two world wars when countless millions were slaughtered and mankind went collectively insane. In between came the inter-war Great Depression which all but destroyed many traditional stores of value.

After all that, the population had the Cold War to put up with, and possible instant annihilation or slow death by radiation poisoning. Here in Britain, we also suffered many casualties from the Irish Troubles in the 1970s and 80s.

In the 21st century, the terrors haven’t gone away. They have re-emerged in the form of phantoms arising from surges of narrowly-based information, largely created by computer-generated mathematical models. Despite being proved wrong time and again, “following the science” is the mantra of our governing classes.

Most of our national discourse is centered on the whining, depressive voices of the new prophets of doom. Listening to technologists, scientists, politicians, pundits and economists, you would think we were passing through another Dark Age.

The more these people capture random, sometimes fictitious, information the more power they hold over us — and the more of our money they need for their endless “preventative” projects and programmes.

We’ve moved from a century of real insecurity and fear, to one where the terrors are mostly imaginary, like the absurd Mayan “prophesy” that the world will end on December 21, 2010, to the fantasies of catastrophic man-made climate change. When even the Prince of Wales claims “we have 90 days to save the world”, you know that a new psychological contagion is upon us, and spreading fast.

Cui bono — who enriches themselves by the act? Why, the very people who are shoving this stuff down our throats, of course, through rich government research grants and lucrative pundit status in the media.

Despite the self-description of “scientists”, they have a peculiar inability to see how the world really works. If the world is warming up a little — a condition usually favourable to humans — they believe it will continue to warm until we fry in our beds.

In fact, the world is always changing, sometimes on an upward curve, sometimes on a downward slope. It is constantly seeking equilibrium.

Once countervailing forces match the operative actions, stasis is achieved, before a movement back begins. Minor variations over decades do not always reflect long-cycle trends.

In the end, nothing operates outside the limits set by the natural regulating functions of the planet and the wider solar system, governed by the sun.

The fact is, we’re being manipulated by neurotic, self-serving attention-seekers with nothing better to do than to terrify children and other overheated temperaments like their own.

As I’ve said more often than I care to remember, these are the Good Times, despite the temporary economic conditions. In the north, we’re entering a balmy period of clement weather similar to the Medieval Warming Period, which lasted hundreds of years. Then, we Brits could grow wine on the Scottish borders.

In the Little Ice Age that followed, the River Thames through London froze over every winter. They were the bad times.

Sometime soon Scottish Chardonnay will be on every menu, and bourgenvillea will grow wild all along the English Riviera from Lands End to the White Cliffs of Dover.

In a century or two, another cooling period will begin and the price of fur and fuel will rise. Make no mistake, these are the good times.

The plethora of inaccurate information our finite brains are subjected to, combined with an avalanche of speculative predictions drawn from them, make it feel as if we are living through a time of constant threat and phenomenal uncertainty.

Most of that anxiety is baseless. Ninety percent of our fears never materialize. Those that do can mostly be predicted from current lifestyles or the nature of risk-taking built into our systems and operating procedures. None of them will destroy the planet.

It’s not astro science.

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In the end it played the fool with us all, and didn’t frighten the horses. That is all that can be said of Alistair Darling’s second and, let us pray, final Budget.

If the horses remain calm, we should not. Yesterday’s exercise was designed to do one thing: to conceal a massive timebomb set to detonate when the Tories have been in power for a year or two.

In a way it was a game two halves. The first was Prime Minister’s Questions in which Gordon Brown asserted again that the ongoing slump is not a conventional one, preceded by inflation, but a much more serious occurrence caused by a catastrophic drop in financial blood pressure.

However, Alistair Darling’s Budget calculations premised a normal recession in which the economy powers back to higher than trend growth within a year or two as companies rebuild their inventories and buy new machine tools. GDP will, the Chancellor asserted, grow by a sprightly 3.5pc in 2011 before gently easing back to trend. Cue gasps and catcalls from many MPs.

Slumps caused by financial collapse always take much longer to throw off, as did the Great Depression of the 1930s. This one will have a similar trajectory.

The faultline demonstrated here is not built on human error, but on Brownian calculation of advantage. Brown should have bitten his tongue at PMQs and the disparity of logic would not have been so glaringly obvious. His vanity got the better of him.

The IMF were quick to rubbish the Budget predictions of growth. Evan Davis on this morning’s Today programme practically accused the Chancellor of using a false growth figure to conceal a massive fiscal tightening from 2011 onwards. By then, the Conservatives will be in power and Labour will be screaming “Tory cuts!” from the Opposition benches.

There’s not much love lost in politics, but some personnel would be jailed for that under less liberal regimes. One incident caught my eye. As Darling read out the numbers for public borrowing for this year and next, £175 billion, and £173bn — the highest in history and more than all years added together since 1694 — Gordon Brown was laughing.

Was it because he had made history at last? Or maybe because he believes he has scuppered the next Conservative period in office, setting depth charges to explode year after year.

Whatever the reason, it revealed Mr Hyde in full swing and convinces many of us that Dr Jekyll was a figment of our imagination.

As if aware of the skullduggery that had just been played out, David Cameron put up a spirited and angry response to the Budget speech. It was the performance of the day and contrasted markedly with Darling’s leaden oratory — if it can be called that.

Many of us waited for the scorn to be poured all over the new 50p tax rate for high-end earners, the very people who create our wealth and divert their surplus funds into investments. It didn’t come.

One can imagine the delight of low-tax regimes (so-called havens) at the lip-smacking prospect of all those City types heading their way after this Budget-for-Bennites.

This was another Brownian trap for the Tories. How he must be chortling with glee, like Billy Bunter on receipt of his long-awaited postal order and the prospect of a big bag of cream buns.

Thankfully, David Cameron and George Osborne live in the real world.

John Evans
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Gordon Brown’s new back-to-the-future idea is to introduce “old fashioned banking” again to the High Street. After all, banks lend out other people’s money, so should be careful where they put it.

He will “ban” 100 percent mortgages, make borrowers save up their deposits, and force them to meet “old fashioned” bank managers, who will get to know them like GPs did in the days of Doctor Finlay’s Casebook. Ahh, the past is so reassuring, isn’t it?

But Chancellors of the Exchequer also spend and allocate other people’s money. Shouldn’t they be tightening up their rules of tax and spend in the vast public sector? And shouldn’t State benefits be handed out sparingly to those who truly need them? Isn’t it also imperative that no-one should be given a public job unless they are urgently needed on the front line and well qualified for the task?

Brown didn’t begin to address that problem. Bankers will be sent for re-education by Captain Mainwaring characters, but the good old “public realm” will just carry on as before, squandering other people’s money.

Isn’t this just another sneaky way of blaming the banks rather than himself?

Labour MP, Chris Mullin, in a new book* writes: “The trail leads back to Gordon — but if it all goes wrong he’ll be nowhere to be seen.”

* A View From The Foothills

Do you ever have “There is a God!” moments? I had one last week.

I was walking down a narrow pavement alongside a completely empty road, when the tinkling of a bicycle bell assailed my ears from behind. One of those aggressive two-wheel types was attempting to force me to stand aside on a pedestrian walkway.

I won’t go into how irritating these people are, fury is not a pleasant subject to write about. However, whatever allows these oiks to ride along pavements should be repealed by the next Conservative Government.

Naturally, I ignored him — it’s always a he. He rang the bell again. I sauntered on. Again he tried, before snorting and turning onto the road. As he passed he gave me a backward glance of total exasperation.

My returned stare must have unsettled him. He wobbled, desperately corrected his trajectory, hit the curb, and fell off.

I walked past with a beatific smile of satisfaction.

There is a God!

Like everyone else I’ve been trying to make sense of the causes of this world depression. I’ve pieced together bits that have appeared here over the past few months in the hope they make a coherent and plausible case for what went wrong.

In the beginning
1. In 1977, President Carter pushed through an Act forcing banks to give mortgages to sub-prime borrowers.
2. In 1999, President Clinton signed off the repeal of the Glass-Steagall Act, which separated commercial banks from investment banking.
3. Clinton also encouraged the securitization of morgage debts into Collateralized Debt Obligations by Bears Stearns. Astonishingly, they were given Triple A investment status by the involvement of government-backed Freddie Mac. Thus, potentially toxic assets were bundled up and sold off to the world’s banking system.

Note: these are both Presidents of the left.

Reinforcing causes
Fed Chairman, Alan Greenspan kept interest rates too low for too long because he believed “downturns will happen and can be cleaned up afterwards”. Meanwhile, just enjoy the white-knuckle ride.

In the benign conditions created by Greenspan and his student Gordon “No more boom and bust” Brown, high leverage (debt) was seen as a one-way bet for financiers and private-equity outfits, some of dubious provenance.

A system of shadow banking was set up outside the regulatory framework which passed debt around between different institutions, hedge funds and capital markets, creating more money than the original debt. The normal effect of a burgeoning money supply is inflation, which eventually squeezes out any asset bubbles that form along the way.

However China simultaneously introduced a massive deflationary element into the mix. Trillions of dollars of very cheap goods poured out of the country to soak up the growing money mountains of the developed world.

The deflationary effect masked the inflation embedded in the Western economic boom, allowing it to last much longer than normal and storing up more problems as time passed.

On the ground, it seemed as if the good times would go on forever. A classic psychological contagion set in among politicians, financial markets and the ordinary public. No-one could lose was the signal, everyone was a winner, even the poorest with no income, no job and no assets.

The Endgame
When sub-prime borrowers in America started defaulting on their loans, as they were bound to at some point, bankers found it impossible to trace the indebtedness through the system because of the sliced and diced nature of the securities that now concealed them.

These assets were effectively worthless as they could not be valued. The whole planet was suddenly stripped of value. There were no hooks left to store capital and savings, except gold and flighty commodity markets. Meltdown time had arrived.

The growing realization that banks all over the world held these poisonous assets, effectively closed down the inter-bank lending markets. Banks no longer trusted any other not to fail and default on their loans. The Credit Crunch was born.

The rule of Up-To-A-Pointism suggests: “If something works, it only works up to a point. Thereafter it yields diminishing returns, followed by negative consequences. Government intervention is like that, as are free markets. Both have a limited bandwidth within which they operate well.”

Let us hope that the new financial system that emerges takes note of this simple rule.

Prediction
The world will now skate helter-skelter in the opposite direction. The pendulum of opinion will overshoot the mark and overregulate financial markets, thus breaching the Up-To-A-Pointism rule.

Something akin to a 1970s situation will be created as legislators try to close off all exits. The result will be a stifling, sealed commercial environment with few incentives for innovation and hard work.

It will take another “liberalization” package of measures a few decades down the line to set off another period of prosperity, leading to another bust.

Plus ca change …

I’ve just watched the seventh of eight episodes of Channel 4′s patchy series, Christianity. It was presented by Professor Colin Blakemore of Oxford University, a colleague of Richard Dawkins — author of The God Delusion — and a fellow believer in the new religion of Scientism.

So far, only three of the programmes have stood out: Howard Jacobson’s, Michael Portillo’s, and Rageh Omaar’s thoughtfully fair view of the relationship between the West’s religion and Islam.

As an Idealist in philosophical terms, I’ve not got a lot in common with Blakemore’s viewpoint, however, he put his case engagingly and intelligently.

One highlight for me was the comparison of a cathedral with the Large Hadron Collider at CERN on the Swiss/French border. This chilling aggregation of metal, electric wiring and brutalist architecture seemed straight out of the Nazi manual of “How To Subdue Human Values By Gigantism and Intimidation”.

Next up: Cherie Blair. What are we to make of that?

Quote of the Week

This is rather a good description of New Labour philosophy:

“The idiot who praises, with enthusiastic tone,
All centuries but this, and every country but his own.
W. S. Gilbert, The Mikado

John Evans

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As a person without any debts, and four bank accounts coloured black, I awoke yesterday morning to find the country’s National Debt at £2 trillion ($3tr) and more. That represents more than £60,000 ($86,000) and rising per household. It dwarfs Britain’s annual national income of £1.4 trillion, and doesn’t include other off-balance-sheet liabilities.

Since I am a genuine citizen of the United Kingdom, I am liable for that sum, and probably more from people who can’t or won’t pay, and from more recent arrivistes who decide to desert the heavily listing vessel.

I won’t get an invoice in the post: “For gross mismangement of the economy by Gordon Brown”. That would be too candid and straightforward.

Instead, I’ll find almost every public and private bill will rise, while any receipts will fall and services diminish. Prices in the shops will also start to balloon in a year or two and will remain high for decades to come.

Thus, this debt-free individual, who earns his own living, with savings in the bank and other less liquid assets, will suffer the consequences of others’ malpractice through substantial impoverishment.

Almost everyone in the country will be on a similar path, except those with institutional parachutes to comfort, like politicians, top bankers, and the upper reaches of the Civil Service who caused the problem at source. In modern Britain the buck only stops when it nestles in the pockets of the guilty.

The principal culprit, as almost everyone now realizes despite his increasingly-pathetic attempts at shovelling it off onto others, is Gordon Brown, the man who ran the Treasury with an iron fist from 1997 to 2008 and has been British Prime Minister since then.

In France, within almost living memory, he would have faced the guillotine. In Britain, more likely disgraced and forced into a humbling exile. Even now, he can be impeached by a much-abused nation. Why is this not being discussed?

The other big number this week is 219. Not so significant, you might imagine until you add “billion” on the end. £219 billion ($311bn) is Brown’s yearly overspending in real terms, i.e. above inflation. (From Bankrupt Britain by City fund manager, Malcolm Offord.)

It’s not good economics, but multiply that figure by 10 and you get a rough approximation of the new National Debt.

The pity of it is, the money was wasted. Almost no improvements are discernible in public services over the period while most have gone downhill, the result of politburo-style management and misuse of public funds at every level, much of it from incompetence, the rest from jobs-for-the-tribe. Snouts in the trough doesn’t begin to cover it.

Once again a Labour Government will leave office having wrecked the country.

* In 1929 we had the British version of the Great Depression to look forward to.
* In the late 1940s it was by restricting markets from operating at all while Germany and Japan freed up their workforces and built the foundations for their current strength.
* In the 1970s, Britain was placed at the mercy of the IMF, followed by the Winter of Discontent.
* This time, the nation has been hollowed out, its vital wealth-creating engine crushed. A decade of its earnings simply squandered on a whimsical mountain of public services that struggle to operate on any level.

It didn’t help that this time Labour was given three Parliaments to wreak its usual havoc. How did that happen? By guile, neglecting the truth, cooking the books, making false claims about almost everything … and getting away with it thanks to friends in the media who complacently turned blind eyes to the accumulating shambles.

Will Brown be impeached, do you suppose?

Do elephants ski?

John Evans

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Watching Prime Minister’s Questions on Wednesday reminded me of what Swiss philosopher and psychologist, Carl Gustav Jung thought: “Only 200 people really understand what the world is, and how it works.”

Plainly, none of them has made it into the House of Commons.

Reading about the cash-for-legislation gravy train in the House of Lords last week — mainly among appointed Labour members — it seems that the luminaries are sparsely represented on the red benches too.

Next up were the “show trials” of our top bankers before the Treasury Select Committee in Portcullis House. I failed to spot a single member of the illustrious order among the grovelling and shamefaced money men.

A day later, during Prime Minister Gordon Brown’s grilling by Heads of Select Committees, it was apparent that our PM is far from understanding how banks work, let alone the planet. As a “saviour of the world” he cuts a droopy figure.

Are we in Britain unusual in having no-one from the great 200 among our leaders and shakers, or is this state of affairs evenly spread across the global political and financial elites?

Alas, I have to report, I truly think it is. Nobody who knows what the world is, and how it works would feel comfortable in the spheres of politics and banking. And yet these trades are vital to our civilization and way of life. Are we doing something wrong?

I’ve come to the conclusion that the overwhelming majority of people are programmed to operate within a rather narrow band of experience — even the high-flyers among us. Once activity breaches the limits of that band, whether above or below, they are like fish without water, humans without oxygen. They rapidly lose all sense of reality.

No-one can really be trusted to behave well in the wider interest when events are excessively good or painfully bad. Unfortunately, we are moving rapidly from the former to the latter condition, where we will be no better served than we were in the wild, expansionary phase.

Whereas in the growth period we could at least fend for ourselves, we are now dependent on other people to lift us out of the communal mess. Many of our fellows will be in thrall to people they never intended to imbue with such power over them.

Already the bogey of fascism is being held up to make us feel more at ease in the Marxist version of human life, which has never failed to destroy the human spirit and snuff out any light on the horizon.

So where are Jung’s 200 outstanding ones?

Perhaps they are Nobel Prize winners. Joseph Stiglitz, a Nobel laureate in economics, thinks Britain should default on all its bank liabilities, as Iceland has done.

Since British bank debt far and away exceeds our annual income as a nation, that would not only make us a pariah State never to be trusted again, it would also plunge international finance into an unstoppable economic ice age.

Paul Krugman, a recent economics Nobel laureate, who once praised Gordon Brown in the New York Times as “the man who saved the world”, now writes, “this looks an awful lot like the beginning of the second Great Depression”.

That has been apparent for quite some time. Even depression guru Ben Bernanke at the Fed is struggling to hold the line, while keeping the printing of money in reserve. His British counterpart, Mervyn King, is treading water too. The ECB chief, Jean-Claude Trichet, is behind the curve on rates as well as on “quantitative easing”, which the Germans are determined to oppose.

All are waiting for the “tipping point” when it will probably be too late to act effectively.

It’s almost as if this were meant to happen, with the key players frozen at their desks. The world may have to go through this calamity to purge the vast excesses of the past.

In Jung’s late memoirs, Memories, Dreams, Reflections, he presents a view of the world at variance with both scientific and popular opinion. As a psychologist, he knew the power of mentality, and how a belief system can become embedded in the collective unconscious, for good or bad. “Psychological contagion” was one of his more powerful phrases.

Those few who really understand what the world is and how it works, may be standing aside and bowing to the inevitable.

In the end, there’s no difference between down and up. They just taste different.

John Evans

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