SANDERS: Many-faceted maelstrom

ANALYSIS/OPINION:

If you were taking a trip to Mars last week, you may not have noticed the record-breaking New York stock market “bounce.” In microcosm, it reflected the growing combination of crises around the world brought on by galloping technological advances and some of the oldest tribal issues in human society.

When a trader mistakenly pushed “off” instead of “on,” he unleashed the pent-up nervousness. For whether they acknowledge it or not, the stock market players know they are sitting on dozens of powder kegs. Any one could blow and, if and when it did, would not only ignite predictable disasters but also set up vast unanticipated consequences. Luckily, this time it was only a rehearsal for what could come at any moment.

The possibilities are endless, as they always are in human affairs. But instantaneous communications (or persuading ourselves that we are in full command, as with the recent financial derivatives catastrophe) leads to a level of hubris the world hasn’t known since Alexander the Great. All the computers and all the financial regulations in the world can no more beat back the business cycle than the Viking King Canute could turn back the tides. That is why around the world a series of potential crises have unnerved those who have to deal with the global economy.

In Europe, politicians are finding out what was always self-evident: Greece and its fellow spendthrifts — Spain, Portugal and Ireland among them — threatened not just the viability of the euro but the whole idea of “the European project.” That project embodied the hope that, after two civil wars that almost destroyed their civilization, Europeans could construct a single state based on ever-closer economic integration. Furthermore, a soft pillow rather than a safety net (retirement at 53!), “population control” and imported cheap labor that refuses to assimilate are all bending traditional values to the breaking point. In Britain, where the European malaise is reflected, hosannas about having stayed out of the euro won’t be much help with a “hung parliament” after an election without political substance. Britain’s political and financial power centers are unlikely to be able in the near future to meet the same challenges facing the southern tier of the EU without a major revolution in thinking. But Thatcherism is ancient history.

In the economic powerhouse that East Asia has been for most of the post-World War II era — first Japan, South Korea and Taiwan, and more recently China — things are equally rocky. More observers believe the jerry-built Chinese export machine cannot keep functioning in a country that has neglected the overwhelming bulk of its population still in rural areas. Beijing may hold unprecedented quantities of American paper debt — being devalued by the hour — but unless the consumer markets in the U.S. and other industrialized powers recover more quickly than most observers believe possible, China is itself debt-bound and facing disaster. One-party authoritarianism cannot deliver the kind of turnaround needed to meet the growing unhappiness over widening income disparities and corruption that has again enshrined that old Chinese slogan “The emperor’s writ stops at the village gate.”

Tokyo, still running on what remains of “Japan Inc.,” is paralyzed by the worst leadership since Hiroshima. The failure of Western political party structures to take hold — the new democracy was created by bureaucratic fiat, first by Gen. Douglas MacArthur and later by Finance Ministry bureaucrats playing at politics — has come home to roost. Again, demographics are dictating a social disaster with a population dwindling faster than elsewhere, with fewer and fewer young people willing to maximize a technological treasure house. Among Tokyo’s many problems is what to do about an increasingly menacing China and North Korea, with Big Brother Washington tied down with two wars in the Middle East.

But a Chinese implosion would not help. It would, in fact, threaten its neighbors — who have learned to compensate partially for their own failures by shipping high-value components to assembly bases in China for re-export to third markets. A downturn in global commodity demand, already hinted at by the markets, will puncture everyone’s balloon. The pain would be felt from Australia, living relatively high on Chinese purchases and investment in its primary industries, to Russia, with its high-priced energy deliveries to world markets. A recent public acknowledgment by the Kremlin high command of its failure to reform its military since the Soviet implosion, in part the result of a demographic catastrophe with falling male longevity, shows just how much bluff lies behind Prime Minister Vladimir Putin’s helter-skelter politics. Lower energy prices might benefit the American economy, but they will create havoc in the Persian Gulf where more “Dubais” are waiting to happen.

Is Wall Street nervous? You can bet your bottom dollar it is.

• Sol Sanders, veteran foreign correspondent and analyst, writes weekly on the convergence of international politics, business and economics. He can be reached at solsanders@cox.net.