Davos 2009: Gordon Brown calls for global co-operation to beat economic slump : "This is the first financial crisis of the global age. And there is no clear map that has been set out from past experience to deal with it."
What does he mean? We have had recessions before, recessions which have been international in scope. Globalisation means that this recession is more global than in history, but is this all he means, or is Gordon betraying an unspoken worry that the present disease in the global banking system that goes further than this? A disease that has never been seen before?
If so, he is talking about the derivatives which have multiplied the amount of debt in the financial system by orders of magnitude. Nobody, not even George Soros, understands the damn things, because they are absurd, and it is impossible to determine a value for them. They are a huge known unknown infesting the accounts of any banks that have dabbled in investment banking. The derivatives market, or at least part of it, is a huge Ponzi scheme, which flourished when the market was growing, and now the market is collapsing, they are collapsing in on it, like a jerry-built house filled with rotting flesh collapsing in an earth tremor onto the owner and his family. Our political and economic masters who sang the praises of Globalization (US sp.) have ended up waltzing the world economy into the biggest confidence trick in history.
Maybe the financial system will recover in due course. Or maybe the derivatives will get into the financial bloodstream and cause financial septicaemia. Gangrene may set in. Amputations may result.
Maybe we will have to radically redesign the financial system from scratch.
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