Are we into hard times?

Are we into hard times? The question is asked more and more frequently and more and more insistently.

The short answer is yes. The slightly longer answer is that we are doing our best to ensure that the times will get harder still and that they will last longer than we should ever have allowed them to endure.

There is some question about the starting date of the collapse of what future historians may identify as the most brazenly corrupt domestic and global financial system we have ever known.

Racket would be a fairer word than “system” and some observers see its collapse as having started with Bear Stearns. That was about three years ago. Alternatively, it may be seen to have begun only with the collapse of Lehman Brothers, nearly two years ago.

Either is a considerable length of time. It is inordinately long and dangerous when the issues - domestic and global - are potentially of such a catastrophic nature as we now know them to be.

Moreover, we have had, within the last 100 years the clearest evidence of what economic and financial collapse can mean.

Apart from the impact on virtually every kind of business enterprise, the impact in political and strategic terms can be horrendous.

We pretend sometimes that we pay attention to what happened between 1929 and 1945. At least one of those currently in charge of one of the most authoritative and respected of our public financial institutions has been proclaimed an "expert" on that period of the Great Depression.

That makes it all the more surprising that we have done so little to pull ourselves back from the abyss since Bear Stearns or Lehman Brothers.

Admittedly, there have been great flurries of activity at times. Panic has often been in the air in the highest policymaking circles. There has also been a massive outpouring of money, bigger than has anything ever contrived before.

For some time past, some of the most powerful in our economies and political and strategic communities have been telling us that we are on "The Road to Recovery". The major domestic and global media repeat the theme endlessly. Almost every piece of data is interpreted to confirm "recovery" or, if the data is not as encouraging as they wish, to be only a "blip" or "glitch".

This is despite almost all of the data being fraudulent in some degree. That includes what used to be the most revered statistics. The United States does not have 9.7 per cent unemployment. Everyone and, most importantly, the unemployed know that joblessness is 20 per cent and more. They know it is growing not receding.

The figures vary for other economies but lead to the same conclusions: we are not on "The Road to Recovery" and we are as fraudulent in claiming we are as we were three years and more ago in propagating the myth that the financial fraud of that time eliminated risk and would make us all rich.

In saying this, we must interpolate that there are some economies which have thrived not only during the financial mania before Bear Stearns and Lehman Brothers but even in the widespread economic and financial collapse since.

For China, India and some others, any "collapse" has so far been modest.

Those economies have been dedicated throughout to real investment, real productivity and real production. They have continued to acknowledge the obvious truth that real wealth and higher real current incomes derive from real production of goods and services, not from shadow financial paper and brazen gambling on Wall Street.

But those realities have not been acknowledged by the developed countries of the West.

They have changed nothing fundamental in the economies and financial systems that caused their collapse. Instead they have embraced in panic or with gross, often criminal negligence policies whose main purpose has been to shore up failed economic and financial institutions.

The bankers including those "too big to fail" seemed briefly contrite but are now back in positions of power. They exploit the “new” system in the same old ways or better. Their rewards are obscene. Those who are, for the most part, innocent of blame suffer the "hard times".

They are not suffering alone. They have tens of millions of companions. However, they really have no one to go effectively into battle for them.

During the Great Depression, a multitude of political, economic and social movements attended to the interests of virtually every sector of Western communities. To the Left were the trade unions, socialist and communist parties, Douglas Credit and International Workers of the World. There were Fabians and Labour Parties; and, of course there were parties of the Right.

Especially since 1990, parties of the Left have collapsed with the demise of the Soviet Union. Few effective trade unions now distinguish major Western economies and little effective protection exists for that middle class which once formed the backbone of Western communities.

Centre and right-wing parties occupy the parliamentary benches. Although we have an awesomely powerful Wall Street, no one waves a banner for the little guy or the men and women in the middle.

We don't think the great media corporations are too big to fail; but with corporation money, they play the bankers' game. They sing the Wall-Street arias. During the Great Depression, the promise was that "prosperity is just around the corner". Today the media tell us that we're on the "Road to Recovery."

Most of the most influential media seem intent on re-installing the exploiters and corrupters of our financial and economic system. Those who devised and utilised ever more creative derivatives, hedge funds, Credit Default Swaps and the rest pretended to have no idea what they did. They did not know what menace they represented. Certainly, they meant no harm.

We have done nothing effective to reform, regulate or even moderate the systems which brought us to the edge of the abyss. Most of us who are not blinded by the media and policymakers who have been bought by the moneymen know that even a small push will now tip us over the edge.

Certainly, sovereign debt could tip us over. Here our policymakers show a total lack of resource. The working and middle classes are being forced to suffer the cruel injustice of "hard times" for which they have little or no responsibility.

We might recall that the Great Depression did not deliver its most intense miseries immediately after the Great Crash of 1929. For most countries, those miseries arrived only two or three years later, after those who govern our destinies had skilfully turned bad into worse. In Australia, as one example, the deepest depression hit only in 1931 and later. Sovereign debt emerged as a major source of misery.

In order to resolve the problems of debt, especially to overseas creditors, the Federal Government brought all the State Premiers together to agree on the Premiers’ Plan. That Plan cut public spending to the bone, whether on infrastructure, education, pensions, social welfare or whatever. It suspended new recruitment to public services, cut public-service salaries heavily and banned paid overtime.

Creditors in the City of London and the Bank of England wanted more. They couldn't pay their own debts and wanted those who owed them money to do "the right thing". The Labor Premier of New South Wales, Jack Lang, wouldn’t do "the right thing". The State Governor appointed by London sacked him. A more “co-operative” Premier replaced him.

The Premiers' Plan was a disaster for almost everyone. With it, the deepest of the miseries of the Australian citizens began. The country became less able to grow and pay its debts. Its miseries culminated in World War II with Australian youth staving off Japanese invasion in the Battle of the Coral Sea, on the Kokoda Track and at Milne Bay.

Many countries paid an even more terrible price for the failure of economic and financial policies in the 1930s.

Now the scenario is being played out again.

Greece has been obliged to adopt a "Premiers' Plan". Iceland was forced to agree to pay its creditors in the City of London and The Netherlands. There has been very little organised opposition effective enough to frame a more just "settlement" in either case.

The ordinary citizen in Greece or Iceland has been no more responsible for its country’s financial disaster than the average citizen in the United States was for the Ponzi fraud of Bernard Madoff.

However, the ordinary citizen must pay up. If they do not, they will be denied credit by the Eurozone, the IMF and the mighty men of finance. They will be left to rot in a wilderness to which no banker will be prepared to extend either his credit or his questionable "charity".

The entire world, if it has a worthwhile ethic at all, should have leapt to the defence of the Icelanders and the Greeks. It should do the same for others who may suffer in similar ways at the hands of the moneymen.

The Greeks have trade unions and others determined at least to express their unhappiness on the streets. In a referendum for which a more courageous President was responsible, the Icelanders have now said “No” to the current deal of the moneymen and their supporters.

We can still only guess at the final outcome in Greece and Iceland. Sovereign debt problems loom in other European countries including the United Kingdom. They are severe also in the States of the United States.

The solution currently being imposed on Greece and until now demanded of Iceland will, if persisted with, intensify Depression and spread it more widely. It is not a solution. Instead, it will breed ever greater problems, not only economic and financial but also social, political and strategic.

In an already unstable, violent and heavily armed world, revolution and armed conflict are likely to spread.

For Greece, as for other European countries who may face the same dilemma, the choice should not be to pay off the moneymen or face destruction of the European Union or the Eurozone. Rather we should find solutions fair to the parties, creditors and debtors, which do not leave behind features which will threaten regional and global stability.

Particular study needs to be made urgently of the processes by which the indebtedness of Greece, Iceland and several other countries came about. Was there unqualified fraud on the part of the creditors, as well as perhaps the debtors? Alternatively, was there such reckless risk-taking and/or culpable negligence on the part of the creditors that they must share the burden of guilt rather the debtors or those citizens of the debtor's country who played no part in the negotiation or acceptance of the liability?

In any event, the impact of the liability should be moderated by extinguishing the debt entirely or in part or by easing the terms of payment.

Above all, we need to adopt measures which will moderate the intense threats to global stability. We need a clearer acknowledgement of the depth of the domestic and global economic and financial crisis. There will be catastrophic consequences if we do not get our policies to manage, moderate and reform the financial situation rationally.

Through a fundamental re-appraisal of domestic and global issues, we must free ourselves from the fatal embrace of the financial institutions which have operated with such deadly menace, especially over the last decade but in effect over the whole of the four decades since 1970.

If we do not do this, “times” will certainly be “hard” and will get harder.

It is not yet absolutely too late; but we cannot afford to fritter away further time in purposeless pretences or kowtowing to the moneymen.

Not only Obama and other world “leaders”, but all of us must contribute whatever we can to resolving what could prove to be the most challenging global crisis in human history.