Double Dip Economies and Riots

We have been told by the government that there is no connection between the continued collapse of our economy this week and the riots and looting that have taken place in many cities.  They are right in some ways, it has been a wave of copycat vandalism and crime marshalled by the use of social network sites and Blackberry messaging. But there is also a common factor between the two events, lets call it wealth and inequality.

For at least the last twenty years western economies have been running on fiscal deficits and have used their democratic stability and the fact that they host most international institutions to create a credit rating which belies the harsh economic facts of their static economies and mounting trade deficits.  The workshops of Asia have provided not only cheap consumer goods for the west but also created the surpluses to bail out the western economies which are heavily in debt.  The tide is beginning to turn and the low tide economies like Greece, Ireland and Portugal are already drowning in debt.  The newly developed economies are taking off and beginning to spend some of their wealth, the call for a new global currency to replace the dollar will continue and the euro is no longer a contender.

Meanwhile in England the vast distortion in wealth started under Thatcher, encouraged by Blair and tolerated by Brown has created a nation where conspicuous consumption lives cheek by jowl with poverty of opportunity and, increasingly, real financial poverty.  The desire by people to have a greater stake in the national prosperity that surrounds them in affluent lifestyles and consumer goods stems from the same aspirations and greed that flatlining developed nations like the UK seek to achieve by tapping into global wealth creation.  Credit debt is both local and global.