ON this day 97 years ago, Germany declared war on France, dragging Ireland into a world war that had begun miles away with an assassination in Sarajevo and finished at home with a war of independence that ended British rule in Ireland. It is interesting that by 1921, “victorious” Britain would end up losing more of her land mass than “defeated” Germany. Empires were swept away, new countries created and the entire world, as Europeans knew it, was reinvented.
Looking back at the extraordinary second decade of the 20th Century, one of the most fascinating aspects of the story is just how few people saw it coming. With the benefit of hindsight, it is also fascinating to see just how wrong conventional wisdom was about the likelihood of war.
Equally noteworthy were the ultimate social implications of the catastrophe and the fact that the ‘insiders’ and the establishment in all countries tried to maintain the economic and social status quo as if the slaughter on the battlefield and its impact on the societies could be separated from the greater body politic.
For example, one of the best-selling books in Britain and Ireland in the run up to the war was ‘The Grand Illusion’ by Norman Angell.
Angell, a left-leaning English economist and journalist, argued that because the world was so tied together by international trade and finance, economic interdependency would ensure that no European power would fight another. He concluded that since it would make no financial sense to fight, no country would do so.
How wrong was that? Yet it was the prevailing wisdom of the elites — both on the left and the right — in most countries.
The financial markets, which — back then, as today — were supposed to assess future risk, hardly budged after the assassination in Sarajevo, preferring instead to dismiss it as a “typical” Balkan episode. Surely this couldn’t reverberate from there to engulf the whole continent?
In London and Dublin throughout July 1914, people went about their business as if nothing major was happening. Not until July 30, less than a week before all-out war, did the markets begin to panic.
We are now told — in Leaving Cert history at least — that the war was the inevitable consequence of the rivalry between Britain and Germany or between France and Germany. Actually, no one thought that at the time.
A shameful episode from the war, which killed, according to the National War Memorial, 49,000 Irish soldiers (a quarter of all Irishmen in uniform), was the attempt by the establishment to prevent the yearning for social change which follows such an experience.
For those of us watching the present financial crisis play itself out, the lessons from the pre-war nonchalance are well worth heeding. The idea that a crisis — any crisis — can be “contained” seems a bit naive. Also the notion that trade dependency or financial links can prevent Armageddon doesn’t seem to stand up.
Yesterday, Spain and Italy’s bond markets weakened substantially, signalling that the European crisis is about to get worse, not better.
At the moment, we have an enormous worldwide financial crisis and yet the official line is that it will be manageable. For example, the official view is that the dollar won’t collapse.
Why not? All it takes is for people to lose confidence in it as a permanent store of wealth and, like sterling, it will fall and fall and perhaps be replaced by some other currency.
Think about the expression “a sterling performance”, it is still being used to denote an exemplary, gold-plated effort, yet the once-strong currency from which the expression derives hasn’t put in a sterling performance in years. As soon as Britain became a serial debtor, sterling was done for.
The same is likely to happen to the US, but what we know from financial markets it that these events rarely happen in an orderly fashion. One day, everything is fine, if a little imbalanced. Next day, we have a panic.
Interestingly, the financial markets rarely get these things right, in the sense that liquidity can drain from a system overnight — as we saw in Ireland, Greece and Portugal. Italian and Spanish yields are now above 6pc, despite a massive bailout which was supposed to bring them down towards 2pc.
From a political and social point of view, wars are an extreme version of social upheaval. They change everything. Similarly, all dramatic changes to the social and political status quo — even recessions — tend to have a lasting impact on subsequent politics.
The British establishment believed during the war that they could preserve the class system, the empire and the like, despite the fact that they were ordering the slaughter of their own sons. This was particularly the case after 1916 when it became increasingly clear that their was no point to the war and the stalemate would simply lead to more and more killing.
GIVEN the fact that “victorious” Britain did in the end lose more post-war territory than Germany, it is clear that it was not “business as usual” and that the war threw everything into a state of flux, whereby even the people who ruled half the world couldn’t control their own backyard.
The present economic crises — globally, not just in Europe — could have similar consequences and the US may not even be able to control the value of its own currency.
Politically, with America owing China so much money and the American and European taxpayer lumbered with so much debt when both economies are not growing, something has to give. Either the citizens will pay or the financial market casino will pay.
If history is any guide, the end of this debt crisis globally will lead to the rightful humiliation of the interests of the banking system. We need the global banking system to be reined in.
Banks need to be seen as utilities that plod along making small profits in return for providing credit to the economy. For example, in a bankrupt country, why should €500,000 for running a public bank — which is little more than a safe-deposit facility backed by the Government and owned by the people — be seen as too little? Come on, this is nonsense.
In 1918, the victorious powers tried to superimpose the old economic model on the new Europe. The gold standard was reinstated and free markets were to be upheld. Added to this, Germany was punished in the traditional, “business as usual” way. Bankers and central bankers, counting German reparations, were given a primary role in the settlement. We know where this led.
We can’t return to business as usual. We must learn from this crisis, but before we do, we have to entertain the possibility that it is far from over.
The nonchalance of Norman Angell’s ‘The Grand Illusion’ should be a lesson to all of us. As this summer rolls on, the complacency of the summer of 1914 should be remembered, not because any war is coming, but because globally, yet more financial crises are brewing.
Sometimes it pays to allow ourselves to think the unthinkable.
are the Germans victims of international banking yet again?
The Germans are victims of their own and Irish stupidity.
Great stuff David.
Glad to see where you stand on the unfettered power of bankers and the banking system. Yes they need their wings clipped. Who do they think they are?
The way this debt crises is playing out reminds me more of the Balkan war of 1992-1996 than of WWI.
The way the EU reacted to the implosion of Yugoslavia was driven by domestic political agendas in Germany and other member states. The EU’s reaction was behind the curve, unhelpful and ultimately unsuccessful.
In the end it took the US, in the form of NATO to bring the war to an end by bombing the Serb capital Belgrade into submission.
In precisely the same way DMcW describes that Europeans, in hindsight, could see that WW1 was inevitable given the buildup of the British navy and German dreadnoughts and so on…. ….in precisely the same way, in future decades, everyone will understand that the advanced economies of Europe and North America began their inevitable decline after the twin zeniths of industrial civilization known as Peak Oil (2007) and the associated Peak Credit (2007). Peak Oil WAS (past tense) when the world was able to produce approx 90 million barrels oil/day, back in 2007. The demand for oil was so great that… Read more »
According to the Facebook insert on this page. 9093 people like David McW. To judge from her photo, Orla hasn’t quite made up her mind yet.
David, Banking and electricity. Both utilities. Both fundamental for economy to grow. And both available at the flick of a light switch. And credit can be flicked on and flicked off. And when its flicked off the economy closes down. The credit system is been exploited by insiders to game and rig the economy. The last 15 years proves this. The credit system has been weaponized to transfer the surplus value of the workers up the pyramid into the coffers of the ruling classes. The banking system is the weapon used to carry this out. We are witnessing it right… Read more »
David says :
Sometimes it pays to allow ourselves to think the unthinkable.
We know what that is : Moon WOBBLE 11/09/11
Powerful invocative imagery and provocative parallelisms. Don’t buy the catastrophe scenario, but then again this is one of the unlearned lessons of the article. Germany is our main benefactor and we should get used to this, as a nation and as a people. The Germans have no issue with Ireland, they just want their loans back. I, for one, as an Irishman would always want to act honourably and pay my debts. To coin a phrase, credit is currency and credibility as a nation is what we hold on loan for the good of our children. Defaulting on German-funded property… Read more »
Economic growth is over, forever!
Life will go on, but economic growth will not on a finite planet. It is over.
http://www.youtube.com/watch?v=EQqDS9wGsxQ&feature=player_embedded#at=64
Someone’s been reading “Future Babble: Why Expert Predictions Fail – And Why We Believe Them Anyway” by Dan Gardner
http://www.amazon.com/Future-Babble-Predictions-Believe-Anyway/dp/0753522365/ref=sr_1_2?ie=UTF8&qid=1312403308&sr=8-2
Who writes these headlines? “AFTER THIS CRISIS, NOTHING WILL BE THE SAME AGAIN.” That can safely be filed in the same trash bin as “THE WAR TO END ALL WARS”
After this crisis;
Water will still be wet.
Irish people will still eat potatoes and drink milk or something stronger.
Cigarettes will still cause cancer.
Poor people will still dream of becoming rich.
The Angelus will still toll from dreary steeples throughout the land.
And so on ad infinitum.
Some people will see it as a crisis and others as an opportunity.
“Sometimes it pays to allow ourselves to think the unthinkable.” The unthinkable today is that the value of the dollar will probably soon begin to collapse…and with it the global financial house of cards will come tumbling down. How has it come to this? The financial sector is the culprit. It has by means of rampant leveraged gambling — euphemistically called investment — bankrupted the entire planet. It has erected a financial tower of Babel; an inverted pyramid of virtual capital (estimated as being at least $700 trillion and possibly as much as $1,500 trillion) tottering on the back of… Read more »
I am surprised at the demands for lifting the ceiling from the treacherous, avaricious banker class that got us here in the first place. The question I have is what kind of so-called “regulation” turns on its government master and backs such a call? It is Elderfield who should be sacked his audacity in suggesting this ceiling be lifted. Essentially Ireland’s banks are on the scale of small private banks elsewhere. There is simply no justification for paying rates a la HSBC or Barclays. The days when Irish banks deluded themselves into thinking they were on that scale are long… Read more »
I read about recessions and booms being preplanned by people like the Rothchilds who own half the world and control the world economies. I never actually believed any of the conspiracy theories. I am not so sure any more I am beginning to wonder who do we all owe the money to ? Has anyone ever told you who the creditor of the debt actually is ? Mayb they dont actually know. We are told that China has a huge portion of the worlds wealth yet their economy is slowing down. I think that it would be in everyones interest… Read more »
[…] David McWilliams – After this crisis, nothing will be the same again: If history is any guide, the end of this debt crisis globally will lead to the rightful […]
Some say the genesis of WWI was 1909, when the Brits danced in the streets after Lloyd George introduced “The People’s Budget” featuring a land tax, David. The Lords broke tradition to block the budget. But they had to do more than that, to cast doubts on the Liberal government’s loyalty, because Asquith and Lloyd George had also reduced the building of Dreadnought battleships from 6 to 4. “We want 8 and we won’t wait!” the aristocracy demanded.
The Lords didn’t want a land tax but they were raring for a war.
The Crack Was 90 in the Isle of Man.
Enough, enough enough. With respect, David shut the F**K up. Take a sabbatical please. You are a parasite feeding of the vulnerability and ignorance of the people. Week in week out you churn out this nonsense that’s lapped up by the majority of the people on here. Every few days you pull another one of these mind numbing articles from your backside and you’d think that it was write from the hand of god himself the way it’s received. You’re as reprehensible as the banking system you come from and are now so content on commentating on. “Addicted to money”… Read more »
Good morning all, A few quick points: 1) German loans and their interest are not being funded by the USC and other tax increases introduced over the past 18 months. These additional taxes are funding the Irish civil service and State which continue to run a full year deficit of €15 billion (even excluding the bank bail out monies); 2) Attacking David McWilliams for not advocating unilateral declaration of war on the Global Financial system is puerile; 3) German goodwill is not intended as charity, it is of course motivated by self interest. Let us imagine as a nation trying… Read more »
“miles away with an assassination in Sarajevo and finished at home with a war of independence that ended British rule in Ireland”- What kind of Independence did we get? We took on the same Banking system and the same Legal system(which operates within the Bar system-British Accredited Registry) as the “previous establishment” I have many friends and family living on the land known as Britain and I know that they are as ordinary and decent as anyone living on this land known as Ireland…
Another excellent thought provoking article from David. “As soon as Britain became a serial debtor, sterling was done for.” One of the fixes for the US and EU to their economic woes is QE or ‘print more money’, a euphemism for ‘print more debt’ or ‘another round for the alcoholic’. We are at the stage where alcoholics can’t find their way home. The financial, casino fiat currency capitalism fed by derivative speculation that has led us here needs root and branch reform. DmcW and others on the list, denounced by government with a tide of criticism with labels such as… Read more »
War ! What is it good for ? Absauluutely Nawtin.
And it continues.
Alas I agree David, there is a lot more yet to come. It is very hard to be optimistic and to see a way out of the current situation. Please excuse me while I put my head back in the sand!!
http://www.youtube.com/watch?v=F-QA2rkpBSY&feature=related
The root of the problem in attempting to sustain continous growth .
Heard on Newstalk the other day. “The main movers today were the banks in light of ongoing difficulties over the Euro. AIB down 1, to 10. BoI up 1, to 11. Permo down a half, to 5 cent. ” The humiliation of the Ballsbridge banking culture. The aristocrats of the ISEQ are much weakened. The problem is that they are still there when they should have been thrown to the wolves. Kind of disappointed that we did not see some real capitalism at work – you know the type that Dan McLaughlin advocated concerning staff working below the minimum wage… Read more »
The G20 should get its act togethter to regulate finance globally. I know there are many on this site that don’t like the idea of global governance. As corporations and banks are now global and in every country much stronger global governance and regulation is needed. Ireland is not helping here with our “race to the bottom” along with London on banking regulation to lure the global banks and our “race to the bottom” with corporation tax. Sure everyone could charge corporations 12% tax or nothing at all, the corporations would be delighted. Sure everyone could have lax regulation –… Read more »
No more national debt:
http://www.youtube.com/watch?v=eoosS9TJ0NQ&feature=uploademail
@uchrisn
re “The G20 should get its act togethter to regulate finance globally.”
Corrupt banking financiers eg Fingers/Seanie allied to corrupt and incompetent politicians is a deadly combination; and they are hell bent on hoovering out hard won democratic freedoms including the financing of public services.
In Ireland, US, the EU, politicians are puppets of global banking schemes, but the schemes no longer work.
Those behind such schemes who carry responsibility for them need to be removed.
New people with talent are required to fix the mess.
Interesting times ahead.
“From a political and social point of view, wars are an extreme version of social upheaval.” European wars, especially the First World War, could also be interpreted as attempts to offset social changes, like nearly every war, WWI was started by monarchies/elites and fought by the poor. In Tsarist Russia, the rotten house fell in after 3 years of slaughter, Austria-Hungary broke up, Germany was much reduced and humiliated, Britain’s balance sheet was severely impacted and Empire put under pressure, but was still in a commanding position, France was setback losing millions of working men, a setback it never really… Read more »
The first world war was all about gaining control of the new oil wealth , navies were already converting with huge strategic implications.
The post Napoleonic Europe of euro bond markets & the gold standard was perhaps suited to the static capital intensive coal industries of the day but once oil came on the scene the real money repositioned into a more fluid technological & capital lose period.
The first world war happened one year after the FED was created – European Gold went to New York to pay for the War.
This was not a coincidence.
FT editorial says, in effect: “Be scared. –Be very scared.”
http://on.ft.com/q5y6ah
And The Heavens Opened
Yes TOMORROW the 7th Day B4 The Full Moon and the PULL begins once more and The World will hear the Great Change commence .
Friday & Monday will see the visible impacts crack the Walls of China and the ‘Chinese Walls’ was we know them will become transparent .
The Week ahead will shorten many a holiday maker where real business matters and the fuse burns ….and burns …..and The Gods LAUGH Loud .
Just logged in and enjoyed the read both the views that are closer to my own and the challenge of those that are not.For comments such as arse licker leave it out.
David, great article again. We are now entering a phase where those US Treasury notes are about to undergo a dramatic revaluation. China is sitting of a trillion of these – that’ll put a stop to their buying power. That’ll impact raw material prices and I suspect put an accelerator on the downward drop of the litre of petril. Had China more debt or more imports, it would have been a far better position and so too would its trading partners. So, I expect with the sudden drop in energy prices, we’ll have a recovery, followed by a drop and… Read more »
As a matter of interest, I believe Ireland was sitting on 45 billion of this US Debt a year ago. This is now down to 30. In the meantime UK increased their exposure by a delta of about 100Bn. Something positive?
Sark meets Merk Sark: We need one sheet fits all Merk: The PIIGS drag us all down Sark: Its time for abattoir and cut em loose Merk: Those stupid Irish they guarantee Anglo and all their banks without letting us know. They’ve huge fiscal deficit, still the dopes add all banking debt to sovereign debt. Then they borrow from us to buy all their toxic property, they were trying to use our money to buy everywhere, UK, USA, Europe. Stupid Trichet didn’t bat an eye. Sark: Don’t blame Trichet, its those stupid officials in head in sand Dept Finance who… Read more »
Shortly after we realized that Ireland was the classic case of fubar, we now find that Italy is much, much, more fubar; the ECB is obliged to throw up its hands in despair and admit that Ireland isn’t such a bad case after all, rewarding our puny efforts with today’s purchases of Irish bonds. So: where is our revered European Central Bank in the midst of all this? Is its Great Steward Jean-Claude Trichet on the beach of some ritzy private island somewhere? Well no, he isn’t actually. He’s at his desk, is old Tricky. M.Trichet has no need of… Read more »
And The Heavens Opened
This Show is Still At Full Speed Do Not Dispair There is Lots More To Come Stay Tuned .
People are ready to cast out of office the traitors who have gone along with raping the sovereignty and real wealth of our nations. Passing Glass-Steagall in the US will issue the bankruptcy papers to all those who are already bankrupt –the ECB. Wall St. City of London et alm by refusing to bailout the banksters gambling debts. The debt ceiling farce terrified the US Congress into giving up the power of Congress and the famous constitutional separation of powers, but the markets they were so scared of crashed anyway. Across the world the Indignant ones are gathering. On August… Read more »
Now for a clear solution watch:
http://www.larouchepac.com/node/19001
I digress: Good song from the Caribbean – Brown Skin…
http://www.youtube.com/watch?v=XRqVpUxOjTg
Colm, how you like that one?
The “markets” used to be primarily equity markets and, as far as debt is concerned, corporate and municipal + sovereign bonds. All very clear. There were also commodities and future markets, not very complicated. Now the markets are primarily debt markets, but not in the form of corporate bonds, municipal bonds, and sovereign bonds. Today’s markets are based on complex bonds/debts based on mathematical models of cash flows, leaving the so-called “investment banks” free to multiple debt way beyond the combined GDPs of all nations. The US has become completely dependent of jobs in the financial sector. None of this… Read more »
Bear in mind that the US Federal Reserve Bank (central bank) has distributed over $14 trillion to banks worldwide. This figure is from an official audit conducted by an accounting branch of the US government.
What has been the effect? Who knows?
Another positive development for surviving disaster are fake IDs from China. With these easy to obtain, excellent quality fake IDs you can walk away from your present life, get passports, start anew, etc.
http://abcnews.go.com/WNT/video/fake-ids-china-14243926
S&P has downgraded US to AA+
Welcome to the world debt lifting championships:
PIIGS already eliminated
Italy/France/Spain up next week
US, a previous favorite for winner coming under pressure
A certain unknown and highly reclusive contender, Mr RotChild expected to make a late run to scoop the title, but will take a loss.
Merkel and Wren back from holidays, Titanic Kenny on a holiday cruise?
World markets in turmoil:
http://www.ft.com/home/europe
Stage One G20 or G7 should convene a global bankruptcy hearing to resolve the debt crisis, decide on what can/should be paid as part of a global bankruptcy settlement ; Stage Two, a renewed Glass Steagal with lending rules eliminating casino debt capitalism and currency flotations based on debt; Stage Three, movement towards a properly regulated world currency with elimination of private banking at its core and the establishment of global financial banking rules; Stage Four, elimination of private banks with a world currency supported by a new public banking model, ‘nb state owned banks’ http://www.banknd.nd.gov/; Stage 5, the creation… Read more »
The stage is now virtually set for the next World War and the Tea Party are just the people to get it going. You may well laugh at the notion but stop for a moment and look at where things stand. 1)The imminent demise of the Obama administration. 2)The rapid rise in Christian Fundamentalist Organisations (ie The Tea Party) 3)The imminent death of Capitalism 4)The fact that China owns the globe 5)The utter absence of leadership in the Western Hemisphere. The trigger happy Tea Party with its extreme right stance that is void of intelligent and coherent policies, will at… Read more »
@Adam Byrne,
I came across this blog over a couple of years ago when one of my family starting to mention this David McWilliams guy. I visit Ireland once a month as our Group headquarters is based there, although I’ve lived now for almost thirteen years in Italy.
Interesting, while not 100% certain at the beginning, now I am more than happy with my decision not to comment on this blog here anymore, for many reasons, but one being the observation that ultra radical right wing cult propaganda posted on this blog goes unnoticed, is not commented on, and not for the first time I might add.
Thanks for hospitality.
Bye.