For weeks, I’ve been conducting my own little plebiscite on the future of the world. My proposition goes like this: There is a 25 percent chance that, within a year, there will be a global depression.
The response from a score of investors, government officials, political thinkers and friends runs the gamut.
One top money man says a 25 percent chance of a depression is too high; he put the odds at 15 or 20 percent. Another believes we face a deep global recession, not a depression. Most say it is too soon to know how the crisis will end.
The scary part is that nobody says my scenario is impossible. They all agree we’re living in very dangerous times.
I’d be delighted to be proven wrong and see a quick return to happier days. But I’ve become a Gloomy Gus based on two factors: math and human nature.
The math has to do with the mountains of debt piled up in Europe and the United States.
The human-nature part is that dealing with the math requires virtues of leadership and trust that are missing.
We need somebody somewhere who can draw the line and hold it. A leader who can say, “Enough,” with a level of credibility that begins to reverse both the financial debt and the deficit of trust.
Failing on both counts, European politicians turn to gimmicks and delays. “Merkozy”— the duo of German Chancellor Angela Merkel and French President Nicolas Sarkozy—are excellent at building drama around their frequent meetings and emerging to say they have agreed to another meeting!
Critics of their fecklessness blame it on “politics.” But what is politics other than human nature in a democracy?
Imagine you are a pensioner in Greece or a taxpayer in Germany — the sources of resistance against grand plans for a unified Europe where bureaucrats, not voters, would make the math decisions. Even if you know your pension is rich by Greek standards, would you give it up because an Austrian bureaucrat says you should?
As a German autoworker, would you pay more in already-exorbitant taxes so the Greek can keep his pension?
Because the answer is no to both questions, Europe looks like a lost cause. Standard & Poor’s seems to agree, saying it is contemplating a rating downgrade of 15 countries, including Germany and France, which would have huge impacts on banks and government bonds.
An analyst says there is now an 80 percent chance of a recession there. The 22 percent unemployment rate in Spain screams that the last one never ended.
But what starts in Europe won’t stay there, thanks to America’s twin deficits.
Our debts are not as bad as Europe’s, and we have the global currency and an economy that, though weak, is growing. Yet we, too, need a leader who can move the country toward solutions before we become a lost cause.
President Obama is making things worse. He wasted this entire year campaigning when he should have been governing. Even on Tuesday, amidst a run on Greek banks, he was in Kansas with his class-warfare pitch, arguing for more spending and more redistribution.
You would think the disaster in Europe, the model of the welfare state he craves, would give him pause. But then you would be guilty of thinking his mind is open to facts that don’t fit his ideology.
Of course, there are a few optimists out there. One foreign government official I know sees a solution to the Western Civilization debt dilemma: China. He thinks China will be the buyer of last resort and prop up the world. At what price, he doesn’t know.
That’s the optimists’ case, so I remain a confident pessimist.