Insight and Analysis on Current Affairs and Global Events

President Hamid Karzai would appear to face the unenviable task of keeping the Afghan national assembly, his ex-Mujahedeen backers and the international community on the same page; a challenge far too reminiscent of other periods in Afghanistan’s long and abrogated history.  Based on evidence provided in recent months - the rejection of the majority of Karzai’s cabinet nominees – Karzai’s running mates have become a poor insurance policy against the designs of national lawmakers. Karzai is the man in the middle, caught between entertaining those who make his candidacy viable and those who could destroy him at any moment. This is ping-pong politics in exchange for political survival.

Yet, the resounding ‘NO’ from lawmakers might turn out to be a cloud with a silver lining. Instead of shying away from its oversight responsibilities, parliament voted to hold the executive accountable; albeit to the chagrin of Karzai and his ex-Mujahedeen running mates. Significantly, parliament also endorsed the continuation of the most competent Ministers, whilst turning down nominees of questionable technical competency such as Ismael Khan for example. It was, therefore, not Karzai and his nominees who were rebuffed; it was also the incompetency of the entire political patronage system itself!

Evolving the existing system of political representation towards one that better aligns parliament, the executive and political outliers with the stabilization interests of both Afghan citizenry and the international community must remain a singular priority for 2010. Given that Karzai’s re-election was achieved in spite of the electoral process, not because of it, it is therefore also prudent to ask foundational questions about the very process of political representation itself. Instead of bringing benevolent leaders together, instead the current highly individualistic political process rather pits potential allies against each other. As a consequence, important champions of reform such as Abdullah Abdullah and Ashraf Ghani are frozen out of the political mainframe, not central to it.

The inconvenient truth is clear.  The policy of continuing to pay off ex-Mujahedeen fighters is no longer the golden ticket it was in 2001 and 2005. The selection of Karzai’s running mates not only failed to secure him an outright electoral victory, it also ushered in a widely documented process of electoral fraud and then failed to secure him parliamentary support for his cabinet anyhow. The voice of Afghan citizens is almost deafening; competency over patronage, honesty over corruption, security over insecurity and national unity over fragmentation. Ex-Mujahedeen leaders are not torchbearers lighting the way towards peace and stability, they are instead merely the Achilles’ heel. Moreover, their capacity to deliver public goods has already been put to the test, and the parliament voted a resounding ‘No’.

So how can political resilience be fostered in the Afghan context? Clearly, arguments towards a combined Presidential and Prime Ministerial system appear more compelling than ever. Such a system has enabled ethno-political accommodation to occur from the Western Balkans to Ethiopia and beyond. In the last elections, if Karzai had been afforded the luxury of choosing Abdullah Abdullah as Prime Minister, he would not only have secured broad electoral support but also accommodated any potential north-south divide issues in the process. Whilst having a competitive system is the very spirit of democratic tradition, in the Afghan context it merely led to corruption and an unacceptably weak administration.

The current political system assumes that there are viable and alternative national parties that could compete as they do in traditional two party democracies, but there are no viable national parties. It also assumes that there is a sufficient volume of technocratic Ministers capable of managing public policy in an accountable and transparent way but, in fact, the list of competent Ministers can be counted on less than two hands. The central problem remains therefore; what to do about the warlords whose continued place in Afghan political life has both become an impediment to national reconciliation and to the change that Obama’s and Brown’s administrations are so desperately seeking to deliver?

Firstly, democracy will not be built overnight and the separation of powers and the holding of elections remains highly symbolic at best in the current context; Afghanistan has yet to emerge from conflict. Secondly, promoting a government of national unity would harness the entire skill set required to secure the political, security and socio-economic transition.  The current staged political process wrongly assumes that Afghanistan has the luxury of decades of trial and error; which it does not. Thirdly, creating a Prime Ministerial position would not only centralize political expression, it would also mitigate the risk that outliers destroy the emergence of mainstream consensus; which they do. It is the Mujahedeen who have become the odd men out, and rethinking the representational process would likely deliver to the centre the very talent that Afghanistan so desperately needs to secure its own future.

Yes indeed the demand for the Greenback remains strong, at the moment, for a multitude of reasons. The first is that the entire global trade regime, including the terms that underpin it, was established on the back of the Second World War; a war that saw the US elevated as the next empire of choice on the back of the demise of the British Empire. Secondly, having established the terms of global trade through WTO/WCO, it financed sovereign debt through the Bretton Woods institutions and supported this with an equally victorious Anglo-US free-market economic ideology. The dollar became the fiat currency of first and last choice. The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world’s major industrial states; a fully negotiated monetary order intended to govern monetary relations among independent nation-states. Yet whilst the IMF is being reborn, as countries require fiscal support, the World Bank as the vanguard of economic ideology is in decline.

The US still retains much of its power because of the strength of its foreign policy abroad, the size of its military industrial complex and its overall economic productivity. These however are in decline, with emerging second world economies slowly chipping away at the once glorious entrepreneurial nation and the rise of Europe as a benign political force propped up on an expanded free market Europe. The rest is small stuff. The eventual decline of the US dollar will be mapped to the decline of US hegemony abroad and remaking of the IMF through G20, as the first global central bank, whilst unlikely over the short term is a medium term reality; a compromise between hegemony and shared world power. The remaking of the US is being negotiated, and if it can control the next round of scientific and technological innovation, it may still stay ahead of the game yet.

Whilst there is little doubt that world markets are beginning to stabilize, there is a common misperception that employment figures will not only level off, but progressively return to the highs of 2006. This appears unlikely and any bottoming-off may just become the new employment reference point for the future, as evidenced by advanced economies such as Germany. A further drop of 225,000 in August still has huge economic implications; long term loss in productivity, fiscal costs to increased welfare, social exclusion.

The failures in SEC oversight and supervision also relate to the close patronage system that controls Wall Street; because for some the Chinese wall simply does not exist. Unless the clientalistic relationship between the Fed, SEC, financial market and political agents working within the US Administration are addressed, new regulations will fall short or necessary market protection requirements.

See http://blogs.reuters.com/from-reuterscom/2009/09/03/the-day-ahead-friday-3/

There is little doubt that ratings agencies failed to provide investors with the level of independent oversight required. One only has to look back at the expansion and contraction of markets since the great depression to realize that valuation must be taken with a pinch of salt. Yet the problem is not easy to fix as markets deal in minutes, newspapers deal in daily news and politicians deal within fiscal years and electoral cycle. Who is thinking about long term values? Who would pay for it if they did? How would the decline of empires be costed into such a framework? Surely Buffet’s dumping of less than 2 per cent of his holdings in Moody’s was intended as a professional slight rather than a risk management strategy, We all need change, we all need more sustainable values and we all need ratings agencies that are not in bed with those making deals in the financial industry. Perhaps highly regulated not-for-profit agencies would fill the current void in independent valuation.

See http://blogs.reuters.com/reuters-dealzone/2009/09/04/did-the-oracle-just-blink/

What you gain on the swings you are inevitably going to loose on the roundabouts. Yet for some reason the US Government thinks that its total wealth is more than the sum of its many parts; the people. It is simply not possible to continue to borrow, insure and guarantee in the real world from monopoly money; it does not add because the basis for paper money lies in its correlation with actual value in the real economy. That is where the problem starts, because it no longer does. Even though it says in God we Trust on the back of the US Dollar; God is not paying for this, people are. Other major banks will doubtless be forced into liquidation, because the houses, hotels and cars bought on the monopoly board during the 1990s and since the unhappy millennium unfolded were not actually affordable in the real world. If mortgaging the future to pay for the present was the beginning of the problem, and the old swings and roundabouts adage has merit, then pay back is going to be a hitch!

The current recession is not only forcing the re-calibration of global capital relations it is also shaping the political leadership in many strategically important countries too. The impact on foreign relations and geopolitical alignment may in some cases be profound with new political leaders firmly embracing a protectionist economic stance, in favor of workers over capital, and social equity over growth. What will be the cost, where will the changes occur? Will the nation state’s role be reasserted?

The historic win of Hatoyama’s Democratic Party in Japan not only breaks a deadlock in parliament but will also deliver a new government focused on addressing the weaknesses of the failing Japanese economy and its impact on social equity. The selection of the new finance minister will be key. With China’s growing economic footprint within the region it will be impossible for Japan to maintain it unboundedly pro-Anglo-US foreign policy, forged on the back of Japan’s failures in the Second World War. If the main driver of future growth is on your doorstep, then smart political leaders will begin to emerge to cash in on the potential gains of such an alignment. With it, will come new capital relations and as a result - perhaps a more balanced foreign policy too - at least from a regional perspective. Hatoyama has already suggested such an outcome. Once stronger economic relations with China have been forged - over time - Japan is increasingly likely to be caught between US and Chinese political-economy interests; and Japanese politicians will doubtless pander to such realities.

Change is also taking place between the US and China. The failing US economy - following an aggressive and expensive foreign policy towards its periphery since 2001 - has not only guaranteed the end of a period of unrivaled US hegemony but is leading to ideological compromises to occur too. Changes in health care at home and increasingly pro-Chinese foreign policy abroad are reflective of the failures of the current (perhaps hardline) economic ideology, and the realization that if one can not contain China, then one must engage it. This signals the end of former US Ambassador Khalizad’s policy of congagement (balanced containment and engagement) thereby acknowledging that the projection of US power in the East is in decline, and South Korea may become the only vanguard in years to come - with India and potentially Pakistan as a last frontier.

For capitalists the cost of recession will be ideology. Political leaders will go for the base over ideology and nationalism and perhaps socialism will be the outcome in many cases. The economic ideology of South America is already reflective of such a reality. Changes in political leadership in countries such as Fiji should also not go unnoticed given that much of the pacific rim could find itself forced to make difficult socio-economic compromises over the near to medium term.

Will the impact of recession also affect global trade regimes, with protection of the nation state placed above free markets given the risks that such a position might have, during a period of unprecedented economic contraction?

Will the recession, with the affect on the real economy only beginning to emerge, increase awareness of the failures of the current economic ideology? If so, what will be the impact for the US on main street, Wall Street and Global Street?

Toxicity is the degree to which a substance (such as nuclear wast, alcohol, drugs, derivatives etc.) is able to damage an exposed organism; in this case consumers of financial products. However, that high street Banks themselves have now become active producers of toxic waste beggers belief, as does the notion that having caused the crisis in the first place such waste is now on special offer to bankers carrying Geiger counters and wearing 12 inch leaded gloves! Of course if enough ecstasy has been consumed prior to purchase then even the most unattractive proposition can become quite desirable, certainly given the right backing from the Fed. I had once considered banking a science rather than an art form, although as I read the many excellent comments provided here I realise that over the past 18 months it has rapidly evolved to the lofty heights of moral philosophy. It is therefore better to study existentialism as an entry point into a career into financial management than the rather outmoded MBA approach whose teaching frankly no longer cut the mustard!

Created on the 1st of May 1707, as the once largest empire in history and the first industrial state, the United Kingdom of Great Britain has certainly been an important player in world affairs. That all Time Zones start in Greenwich London need not be lost on anyone! With inventions such as the first computer, first combustion engine and train, the first TV, the birth of modern empiricism, the theory of evolution, penicillin, the structure of DNA, football, Rugby, Cricket, Tennis and Billiards, Rolls Royce and Land Rover, William Shakespeare, many countries, the World Wide Web, the Beatles and Rolling Stones, the jet engine, the laws of motion and illumination of gravity; all countries have been touched by the scientific, economic, military and philosophical imagination that is the UK.

The costs, however, of the 1st and 2nd World Wars alongside the contraction of colonial interests from 25 per cent of the World’s territory have seen a sizeable decline in the UK’s global influence. The current economic crisis that threatens to bedevil the UK economy could push a once great country and its close ally, the United States of America, towards ever greater contraction; the geopolitical impact of which is profound.

Moreover, with the simultaneous rise of the Second World, a resurgent Russia, powerful China and India, and Middle Eastern oil likely to flow east not west, the future for the UK will depend heavily on its ability to continue to punch well above its weight, through academic and intellectual excellence. The UK will also need to depend heavily on more subliminal forms of international influence such as through financial market and their regulation, in international security and stabilisation efforts and by benefiting from its pivotal position betwixt the US and Europe. That the current approach to solving the world’s financial crisis came out of 10 Downing Street also needs to be recognised. But these are easy gains, and the fight to remain influential will require the visionary commitment of all elements of UK society, backed up by a firm belief that, in the words of Charles Darwin, adaptation is a vital skill to ensure the survival of the fittest.

But what are the national security implications of the current crisis, what is the UK’s risks exposure, and what can be done to put the UK in a secure position to meet the challenges of the future?

As the crisis in Afghanistan highlights, failures in a single country can have profound effects for a complete alignment of UK allied states. It has never been more important to be victorious there, to consolidate stable relations from Afghanistan, south to Pakistan, to India and beyond. Failure to solve Afghanistan and Pakistan will open the doors to the warm trading oceans of the south to China in particular, which will have ramifications for Iran and eventually Israel too. That China has signed a new deal with Pakistan in relation to nuclear power highlights how vulnerable this pivotal geo-axis is for wider stability.

The Anglo petroleum industry will also struggle to maintain influence with major exporters of gas likely to gain pakiheavy wins in a world rightly fixated with solving climate change. The new Gas OPEC being formed by Russia, Iran and Syria being a case in point. Moreover, given European dependency on Russian gas, it is easy to see why Europe reacted mildly to recent events in Georgia. With the need to combat climate change, a switch in Europe and the US to alternative fuels and green collar workers will guarantee that the strong post Second World War relationship with parts of the Middle East is likely to change, with Chinese and Asian markets not the west becoming primary consumers of black gold!

In antagonism to South American perception of being abused by US trading relations, and an ever stronger relationship between China and South American and Cuban interest groups, the US will have to look increasingly west and east. As the rising Second World currently embraces a mixed economic (perhaps Keynesian) ideology, increased protectionism is sadly re-emerging as I write. That said, capitalism is not yet dead, and it simply cannot die, but we do need to find a new model of capital accumulation that is more just and obviously more stable too!

Economic downturn in Japan also deserves attention over the medium term. A weak Japan will undoubtedly have to strengthen its relations with China, a swing which risks taking it backwards, not forwards, in time. The wealth and stability of Japan and South Korea are, therefore, important to the current strategic alliance between the west and parts of the east.

With the US and Australia, close relations with the Pacific are going to remain important for decades to come and providing support to states that risk becoming politically fractious seems logical, again for both parties.

With the Thatcherite out-sourcing of industrial production to the East and, more recently, corporate outsourcing of services too, what is that the UK is actually producing other than banking, the premiership, great pubs and fish and chips? Moreover, the steady brain drain has also not helped either, nor has the excessive tax burden on the middle classes, nor has the bad weather and rain coats. Further if old allies are forced (for reasons of economic survival) into new relations with states that we do not see eye to eye with, our influence through proxies may also begin to rapidly decline.

Africa is, of course, where the new game is at, because instead of outsourcing services to countries that can one day out-compete you, outsourcing in Africa and the labour pool of the next century, could solve African poverty and create a new emerging market in the process. The natural resource base in Africa is one of the last great resources, and its sustained management will, therefore, be vital for all concerned.

OK - so what can be done - at home and abroad?

The UK needs to use this moment to re-invest its industrial cutting edge, to determine the technological foundations for the coming century, at home and abroad. It needs to invest in alternative thinking a.s.a.p.

There is an urgent need, given massive concerns in relation to energy and food security, to rapidly reduce our dependence on external markets for basic resources. This will lead to changes in land use and to public investment to re-invigorate land that has gone out of production in recent years.

In the area of international finance and banking, with all markets being down, now is perhaps a time to buy heavy stakes in the emerging markets of the future, amongst which India, parts of Asia and Africa are key.

Through the United Nations, to limit the impact of climate change, and with new carbon-footprint free technology to export, pressing an environmental compliance agenda through the UN, WTO and WCO will be vital to gain a competitive edge.

With regards to Africa the UK, like France, need to work hard to guarantee that US intervention through USAFRICOM fosters increased stability and greater prosperity on both sides, both ways. In countries such as Sudan, where the country could be split in a 2011 referendum, this will lead to a North-South Korea scenario in Africa, the implications of which would be destabilizing. Now is perhaps not the time to block exports of African primary production from accessing European markets, free trade with Africa will be beneficial on both sides.

India and Pakistan must remain solid allies and we perhaps need to refocus our ODA budgets to countries that remain pivotal to both our interests. The borders between Pakistan and India must come down, Kashmir must no longer be an excuse for political settlement, and the Pakistan Military State needs to be transformed into a strong economic ally too, with a smaller and less politically powerful army and ISI to boot!

In the areas of international relations, fast tracking a number of strategic new entrants as permanent members of the UN Security is entirely logical, given the increased influence of the Shanghai Cooperation Organisation amongst others, and will contribute towards greater resilience. Bring major changes to the roles and functions of the World Bank and IMF will also be vital, as will changes to NATO, away from the war on terror which had its roots in another objective.

With regards to economic policy the UK government will need to firmly embrace (early-on) a pro-intervention Keynesian economic policy, perhaps taking a firm position in certain economic sub-sectors, with a long term vision in mind. Not ideal, but in the absence of an alternative, mitigating the risks that while economic meltdown continues UK companies and equity markets are simply bought out by the sovereign wealth funds, which are not purely private equity, for example.

In the areas of strategic mineral acquisition, now is not the time for fallout between Australian BHP Billiton and UK owned Rio Tinto. We have more to lose divided than gained apart. Control of world mineral resources, the price of which beyond the recession will continue to climb, will be an important part of renewal.

The gold standard, which once created a currency of relatively stable value, has been absent for many decades. Monetary policy and federal reserves have done little to help and calls from many countries for the creation of a diversified currency and financial system and a fair and just financial order that is not dependent on the United States will only grow day by day. A news system, based on a stable global standard, needs to emerge whether pegged to the bimetallic system of gold and silver or to some other stable globally traded commodity.

The US will need to radically mend bridges with Europe, of that there is no doubt. Embracing the Kyoto agreement and the emergence of a transformation leader and more cohesive NATO will be vital. The renewal of the world financial system will perhaps be a forerunner of wider collaboration in industrial development, finance and regional stabilisation.

The War of Terror has created more terrorist cells than ever existed prior to 2001 although the bombings in the US and Spain, and the wars in Afghanistan and Iraq, also lead to a major re-positioning of military muscle globally, at a particular moment in history. A recent RAND report asserted that the best way to tackle terrorism is through police forces and intelligence services, not B52s and Apaches. Moreover with weapons of mass destruction now including financial markets, whose impact are both wider and deeper, the enemy in this case is not so easily put behind bars!

The costs of welfare provision in the UK, the costs of healthcare, of maintaining public services, of mobilising revenue, call for affirmative action. The serendipitous loss of citizen data information paves the way for a clearer understanding of what UK citizenship will be composed of, for want of a better word. I can see a time when all UK citizens are taxed on global earnings too, perhaps within the 3-5 years ahead. But if the middle classes, who pay for the welfare system as well as the costs of servicing the interests of state, continue to be burdened, the latent intellectual talent required to reinvigorate the UK will likely remain stifled. The redistribution of national wealth in favour of champions of reform, not consumers of welfare, is vital. With pensions being lost too, perhaps the age of retirement will also need to increase, perhaps to 70 years of age or perhaps beyond!

Anyhow, after an impassioned Olympic performance, and a great start to the World Cup qualifications (albeit due to a brilliant Italian coach), and in advance of the London games in 2012, our political leadership is going to have to make bold decisions early on, lest the tide of history sees the lights forever dimmed in Blighty.

Of course, even if some degree of protectionism is still required, an ideology related to individual freedoms and limited government must remain the cornerstone of emerging policy, unless the tyranny of the establishment undermines the emergence of a creative future. In the run up to the US elections, and with rumours flying everywhere of possible renewed terrorist attacks, lets hope that peaceful and libertarian solutions not war prevail.

Market Meltdown and Mayhem: What is at Stake?
The ripple effect of the ‘global’ financial crisis will likely erode the shores of once affluent economies for decades to come. Furthermore, it is going to take a lot more than a Keynesian sleight of hand to correct two decades of easy money, poor oversight and weak market self-regulation. But what is really going on? Is this caused by the credit crunch, who is to blame and what if anything can be done?

The current situation is, I believe, not really caused by the credit crunch at all. This is surely the effect of other causes. Massive over-leveraging, gargantuan over-valuation of assets, excessive spending and a culture of financial risk taking all within a remarkably unregulated market place are surely more logical candidates! The causes, because they are deep rooted and structural will, therefore, take many years of radical reform to correct.

The long term implications of the current crisis are quite profound on three fronts. Firstly, the impact on the long term structure of capital markets. Secondly, the likely effects on long run economic growth forecasts and thirdly, on the shape and trajectory of international relations too - much to the chagrin of US and UK political leadership. Furthermore, with the middle classes taking the lion’s ’share’ of the hit as bourses threaten to gravitate ever closer towards ground zero, the once heavily invested middle-classes will be reluctant to engage in potentially risky private equity deals and corporations may have to rely on governments as bankers of first rather than last resort.

The global financial system prevalent throughout the 1990s and throughout much the early millennium is of course a direct manifestation of the structure of capital accumulation itself, and of the social structures that it relies upon. It is, therefore, not just credit markets but the entire economic ideology which is the very root of the problem. Evidence for this simple deduction can be seen by the burgeoning income disparity (within and across countries) and the rapid return to Keynesian economics to ward off the wicked witches of financial discontent.

The bailing out of private equity markets whose traders and brokers have, if you listen to the television and read the newspapers, been somewhat cavalier about asset valuation, its packaging and global re-sale has ushered in a return to protectionist policies that were radically done away with during the Reagan and Thatcherite era! What is different now though is that the US and UK once outsourced industrial production to China and India, but this time Indian companies are beginning to outsource their industrial production to countries such as the UK; Abbey Works in Wales is now owned by Tata Steel; a case in point.

Whether the crisis emanated from the United States as claimed by Gordon Brown or not, no market has remained untouched, and losses are being felt evenly across every corner of the globe. The source of the problem, therefore, is not so easily confined to the US alone. It is rather a collective failure to adequately regulate an economic ideology that we have all contributed to, albeit to differing degrees.. Moreover, anybody who has borrowed excessive levels of finance over and above their means simply cannot be immune from criticism. As a result, and reflected in the global downturn, this situation is no longer a US or European crisis - it is a universal crisis. It is what HIV is to health and although there is no long-term cure, for now, we will just have to keep on taking the medicine.

That the profit-seeking interests of credit-rating agencies, when combined with the equally un-tethered profit-seeking interests of investment bankers (who love leverage) are combined, as Warren Buffet famously asserted with regard to derivatives, ‘financial weapons of mass destruction’ are born. That the period of easy money started with the oversight of Alan Greenspan in 1995 need not go un-noticed and his voice has been surprisingly silent in the aftermath of such widespread destruction. It is, therefore, not the mistakes of Paulson and the like that have got us to this point, it is the work of many, in all countries now affected by the financial crisis.

Of course, if the leverage ratio (total assets divided by stockholders equity) of firms such as Lehman Brothers was at 30.7:1, then it is of little surprise that when there are US$500 million of defaults, the house of cards comes tumbling down. Lehman once boasted having ‘a culture of risk management at every level of the firm’. Yet as we now know, Lehman’s like others were not just gambling with their own money they were of course gambling with ours. Moreover, even though the full price tag of such malpractice has yet to hit the fan, the current age of complex financial products which are highly ’securitised’, ‘futured’ and ‘derived’, only makes understanding who owns what, at what price, and in a falling market almost impossible to decipher. In all likelihood, the US$700 billion bail-out, different but similar to that in Europe, will be the thin end of a heavily overleveraged wedge.

Yet, if the truth be told it is in fact not only the greed and poor financial decision making of CEOs that brought us to this juncture, it is also the greed and poor financial decision-making of each and every person who has lived radically beyond their means. None of us is immune. In 2007, when the camels back finally broke, I was shortlisted as an executive for a well know German bank who offered a base salary of US$500,000, with a bonus guarantee of US$500,000 and then a share in the upside. I thought the wages absurd, but would I have signed if offered? OK, back to the story.

Providing 100 per cent mortgages to the unemployed is foolhardy at best! But, if in order to buy a house or use a car people need to go into debt while it means that individuals, families and now entire economies are living well beyond their natural productive value, it also means that the costs of these basic resources are also hugely overvalued. This crisis is, therefore, about the right-sizing of assets and bringing value back in line with actual national product. Moreover, as financial services are a supply and demand partnership, a contractual relationship between two risk-taking free agents, we all clearly need to accept blame in some shape or form for partaking.

The current meltdown signifies the end of a particularly unsustainable form of capitalist accumulation whose ideology was the first casualty of the securitisation crisis that started at the end of the second quarter in 2007. Patients with cancer can still carry on daily business, but as the illness deepens, there comes a pivotal moment when complete metastasis kicks in! Radiotherapy (like state bail outs) buy time, we know that, but it does not remove the causes of cancer. A radical change in lifestyle and diet is usually what the doctor orders!

Of course, because there is no supra-national global financial watchdog (the IMF is as out of step with the crisis as the average hockey mum!) each country is now on its own, hatching bail plans to keep market liquidity flowing, trying desperately to reassure petrified private equity markets that this is little more than a temporary blip. As the UK, with some justification, buys shares in our banks, with the hope that tax payers will gain in the upside, in so doing we also cement a new kind of public-private partnership that will forever change the face of the financial services industry.

With CEO’s pay capped, dividends questioned and rights-issues contested the highly motivated profit seeking individual needs to ply their skills (urgently) in another industry. Saving the environment, solving poverty and making conservation both sexy and profitable is the new leadership we now need.

The winners in this situation will be those individuals, families and countries who have lived within their means, who run surpluses, who are self-sustaining, who can export skills and goods. The US, like parts of Europe in particular, are running increasingly unsustainable budget and trade deficits and with global military deployments to maintain in Iraq, Afghanistan, South Korea and Japan, former Eastern Europe and now Africa, economic contraction will only make the task of stabilising the periphery more challenging than ever!

Of course, if in the process, rising Second World economies are also taking major positions in US and European equity markets, they also stand to gain heavily in any eventual upside too – which is of course fair enough and all above board. But with many financial market specialists quitting the US and Europe in favour of the warm trading winds of the Middle East and Asia, the balance of global economic power is surely shifting like quick-sand as I write. Economies are falling into recession by the hour, but this is not new and history stops for nobody. New partnerships are created, some rekindled and others die; the process of renewal moves on.

I just better hope that in the process our leaders are smart enough to make sure that the next generation of financial products has its value firmly rooted in what is good for us all long term not what makes a quick buck over the short.