Will the current recession that led to recent stock market slumps revamp the global political map?

By Ihsane El Kadi, Algiers

The Austrian extreme right wing’s 30% victory in September reopened the wounds of horrible memories. Since then, the market’s “invisible hand” has parodied history itself, leading to the death of Jorg Haider, the poster child of neo-fascism in German-speaking Europe. The answer depends on the outcome of policies implemented to combat today’s financial crisis. If they fail, if distrust persists, and the depressive cycle becomes Kondratievan (*), it would usher in a political era.

Arsonists, in close proximity to the Halliburton oil tankers in the first instance and finance (Goldman Sachs) in the second, seldom make the best fire-fighters.  Finance historians tell us that it was the Great Depression that brought Hitler to power in forty months – from October 1929 to January 1933. There is room for some discussion about this. Firstly, it is not certain that the severe shortage of liquidities hitting the global banking market will worsen and turn into plummeting production of goods and services. Unlike 1929, central banks today have been working in concert to resuscitate the ailing industry. Secondly, there is the WTO to consider. This organisation is a solid levy against the flood of protectionist policies which would have signalled suicide in the early 1930s. Lastly, many countries today are no longer what they used to be. When they 1929 crisis struck, less than 10% of their GDP was in play while today it is more than 35%.

To buy up these questionable titles, States are much wealthier than American billionaire, Warren Buffet. The populist, xenophobic and ultra-nationalistic courts apparently would not have the time to glide on the distress of those people when it is possible to win their votes. This “economic patriotism” will subside and the Medvedev-Putin duo will still need its clients’ money to get its gas to Siberia. This perfect scenario for the rapid provision of natural gas after this period of turbulence is not so farfetched. It is conditioned by a transcendental political event – the one who identifies the pilot on the plane.

Small America is speaking out

Never before in history has the outcome of an American presidential election so closely coincided with the fate of the world’s prosperity. Certainly, this is quite flattering for a withering empire. But the reality is that the crisis is the fault of small American debtors who, according to Alain Madelin, well known for singing the gospel on French liberalism, were too eager to live the life of the wealthy. These are the people who must bring back reason on November 4. The last “stress-relieving” comparison is now apparent. President Roosevelt took office before a nation in ruins after three years of recession. Barack Obama could seize the reigns after two months of cleansing on the stock exchange. This is the work of the “invisible hand”. Is it an expressway out of the crisis? Without the shadow of a doubt it marks a turning point – one that is more powerful than the Bush-Paulson plan. Arsonists, in close proximity to the Halliburton oil tankers in the first instance and finance (Goldman Sachs) in the second, seldom make the best fire-fighters. It is a moral turning point that Wall Street still does not expect. Now in a full-blown period of critically low confidence, the polls themselves must be observed with a cautious eye as even with an 8 point lead in the polls at this crucial stage in the presidential campaign, experts still doubt that Barack Obama really has the upper hand. This is because of the “Bradley effect” – a reference to the highly favoured candidate in California’s 1982 gubernatorial race who, though a confirmed favourite according to the polls, lost the election once respondents found themselves alone in the voting booth. Then mayor of Los Angeles, Tom Bradley collided with a racial roadblock. He was African-American.

However, you need not look far to find the silver lining of this financial crisis. It has given Middle America a historically unprecedented opportunity to renew its political outlook after the derailment that the Iraq blunder instigated. An African-American of mixed heritage in the White House with strong social convictions and a calm international vision who would be committed to fighting lobbyists who created the “friendly regulations” to be able to endlessly optimise returns on financial placements would be a major blow to the values of “old America”. One can almost hope that, until November 4, the financial markets will remain in crisis.

(*) Kondratiev: A Soviet economist whose theory that capitalism always recovers after each financial crisis displeased Stalin. He died in a concentration camp.