Just a few weeks ago the world was wondering if we were about to be pitched into a deadly Black Hole created by CERN’s Large Hadron Collider in Europe.

Relax. The machine has broken down and will not be cranked up again until the spring.

Strange then that another Black Abyss stretches before us today in the shape of a virulent debt deflation of almost unimaginable ferocity.

Take these words by Ambrose Evans-Pritchard in today’s UK Telegraph:

We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars.

In case you think that smacks of hysteria, this is a man who has called this crisis correctly ever since the late summer of 2007. He adds:

“During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. … Central bankers still paralysed by a misplaced fear of inflation – whether in Europe, Britain, or the US – have become a public menace and should be held to severe account by our democracies. The imminent and massive danger is now self-feeding debt deflation.”

What this crisis shows is that world prosperity was built on a giant illusion: that there was real value in other people’s promises to pay at some future date, and that you could pass the parcel at a vast profit.

Time has run out and a bubble the size of an asteroid has landed and exploded in the centre of our civilization — the banking system.

The Sage of Omaha, Warren Buffett agrees, “In my adult lifetime, I don’t think I’ve ever seen people as fearful.”

Evans-Pritchard is lascerating about the EU and its Central Bank. It offered no “cover” to the Fed when Ben Bernanke slashed rates to 2 percent. The ECB simply raised its rate to 4.25 percent into a steep downturn, making oil inflation even worse.

As a last resort, it seems, the American authorities will use Bernanke’s famous printing press “to expand the menu of assets that it buys.” In the worst case, that could lead to a massive run on the dollar by foreign creditors and no end of misery for us all. But it may be necessary nonetheless.

At home, I have absolutely no confidence in the British government under Gordon Brown and Alistair Darling. They have been woefully slow to act, their policy to hide their heads under a pillow hoping it will all go away.

If Brown had even a small slice of a leader’s courage he would give notice of Britain’s resignation from the useless European Union; disown the Basel 2 accounting agreement which forces banks into insolvency by estimating their assets on depressed valuations; take immediate control of interest rates by reducing them to 2 percent; and work closely with the Americans, who are, at the very least, fully aware of the immense dangers we face.

The Kraken is awake and bearing down on us fast. Over coming months and years we may wish that the Hadron Collider had swallowed us all up when it had the chance.

John Evans

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Hard times or better times?

Walking around an English town in Devon this morning, I was struck by how cheerful people still are.

There may be a credit drought on, possibly leading to another Great Depression or, more realistically, a rerun of the decade-long Japanese deflation of the 1990s, but most people are not noticeably glum or defeated.

Is it that, in our heart of hearts, we prefer the challenge of austerity to the runaway greed of endless prosperity? Are we still basically puritans always ready to slap the wrists of our hedonistic tendencies?

In May 2007, three months before the words “credit crunch” floated into the world’s consciousness, I wrote a short piece here in Syntagma called, These are the good times. It was a riposte against the floodtide of moaning minnies who were convinced “the end is (sort of) nigh … anytime soon”.

They included the “climuttchange” mob, the fearful, who thought Islamic terrorism would do for us all, the squeamish prophets of a world dominated by China and India, and the usual purveyors of various non-specific causes of doom.

Well, they got it wrong. Nobody foresaw the financial meltdown to come, even though it rested visibly on our horizon, awaiting its 15 years of fame.

So, here’s that piece in full. In retrospect, it seems more than a little prescient.

These are the good times
Syntagma, May, 2007
Are you getting tired of hearing the whining, depressive voices of the new prophets of doom? Listening to technologists, scientists, politicians, pundits and economists, you would think we were passing through a Dark Age.

The threat from China and India is seen as dire and growing. Climate Change threatens our entire civilization. Terrorism stands ready to murder the lot of us in our beds.

We terrorize our own children in schools by telling them that flood, fire and famine are just around the corner — unless, of course, they recycle their sweet wrappers and stay at home in the holidays.

We warn of catastrophic job losses because of a rampant China and a burgeoning India … and maybe Brazil too.

Jihadist Islam is plotting to turn the world into a gigantic Caliphate in which men will wear turbans and women will all but disappear beneath miles of black cloth.

These are the bad times, indeed.

What rubbish. We’re being manipulated by neurotic, self-serving attention-seekers with nothing better to do.

In fact, these are The Good Times. In the north, we’re entering a balmy period of clement weather similar to the Medieval Warming Period, which lasted hundreds of years. Then, we Brits could grow wine in the northern fastnesses of Northumberland.

In the Little Ice Age that followed, the River Thames through London froze over every winter. They were the bad times.

Soon Scottish Chardonnay will be on every menu, and bourgenvillea will grow wild all along the English Riviera from Lands End to the White Cliffs of Dover.

In a few centuries another cooling period will begin and the price of fur and fuel will rise. Make no mistake, these are the good times.

China and India are interacting with rich Western lifestyles with the only comparative advantage they have : low-cost labour. They send us cheap goods which keep inflation low and increase the standards of living of the poor. This should have the effect of driving us to become innovation societies, with highly educated and high-waged populations.

The new Tiger economies will reach that stage soon enough and things will return to normal. But, for now, these are the good times.

As for terrorism, no-one ever took over the world from a cave in Pakistan. In fact, in Britain we suffered far more casualties from the Irish Troubles in the 1970s and 80s than we have from Islamic terrorism. Our grandparents went through two world wars when countless millions were slaughtered and mankind went collectively insane. Not to mention the inter-war Depression.

Then they had the Cold War to put up with, and possible instant annihilation or slow death by radiation poisoning.

So, here we are : great weather to come for a couple of centuries, comparative peace, and endless cheap goods and gadgets from the Chinese and Indians.

THESE ARE THE GOOD TIMES.

Get used to it!

* * * * *

So, even in a good period many of us thought we were in the bad times. Could it be that in the coming bad times, we’ll do the reverse?

We should. Mankind is not built for hedonism and idleness. We are provisional creatures designed for challenge and hard times. Our long, tough history proves that.

When times are good and enemies thin on the ground, we kill each other. As the above article demonstrates, we failed to appreciate how good things were historically as recently as the beginning of last year.

Let’s welcome the hardships to come, when we might just recognize our essential nature as evolving beings, and unplug our reliance on minor distractions and empty pleasure-seeking.

We could start by relearning self-reliance, and leaning less on politicians who seek to please our lower natures for their own benefit.

John Evans

Welcome to the first issue of a new, occasional feature of short pieces in a diary format.

I watched part of the American Vice-Presidency debate last night.

Today I sat through a TV summary with the sound turned off. I find you can catch more of the psychological quirks and nuances if you cut out the noise.

A voiceless Sarah Palin seemed animated, keen and fresh, while old Joe Biden looked like a ghost. His age is much more apparent than McCain’s.

On balance, I would give it to Palin because she had a mountain to scale and she did it.

Who would I vote for? I never vote for ghosts.

* * * * *

I note Peter Mandelson is back in the British Cabinet as a reward for his worldwide experience. His Sarah Palin moment, they say.

Now remind me what he did for four years in the European Commission?

Ah, yes, he presided over the failure of the Dohar Round of world trade talks. He had a blistering feud with President Sarkozy — poignant memories of home, perhaps. He also helped Tony Blair and the German Presidency engineer the Lisbon treaty as a referendum-free zone. And there was that funny incident when European ports were piled high with Chinese shoes.

I can’t help thinking a hockey mom would have done better.

* * * * *

Amazingly, Syntagma will be three years old on the 20th of this month. In the constantly-changing kaleidoscope that is the internet I never thought it would last this long.

At the very least, I supposed I would sell it on before tackling something else. In the event, I am doing other things, but the old warhorse is still breathing fire — if less brimstone these days.

So, will there be wild celebrations and dancing in the street? ‘Fraid not, alas.

These are very different times compared with the heady economic climate back in 2005 when we started out.

Then “new media networks”, as we grandiosely called ourselves, were the lipstick on the pitbull. Everyone adored us — we were to be the new generation of Beaverbrooks and Northcliffes (ancient British newspaper proprietors). One of our brethren even sold itself to AOL for around $30 million. We were Masters of the Pixelated Universe.

In fact, the Murdochs and Gates’s, with MySpace and Spaces, used the technology to reinforce their offline dominance. New media turned out to be the saviour of old media.

As a result, advertising deserted the small-to-medium online operator, although you can still make a six-figure individual income if you know all the tricks.

At the moment new media is suffering a hiatus like everything else, while jumpy politicians sort out the credit drought and its ghastly knock-on effects. I must say, I thought we would be in a better place on our third birthday.

Never mind, there’s still 17 days to go.

* * * * *

At the Conservative Party conference in Birmingham this week, Tory bigwigs were ordered not to drink champagne in the bars in case it was interpreted as premature triumphalism.

What did the rascals do? They replaced the conspicuous champagne flutes with paper cups, from which they consumed prodigious quantities of the bubbly stuff.

With enterprise like that, they are definitely ready for a return to Government.

John Evans

What a difference a week makes.

In what was surely one of the finest party conference speeches for years, David Cameron, Leader of the Conservatives, showed Gordon Brown how it should be done.

In place of last week’s straining for effect and amateur theatricals, Cameron produced a professional performance of flair and depth of character shot through with real passion. It was also politically and philosophically coherent.

To compare him with Tony Blair — regarded by some as “the master” — is to judge serious accomplishment against fraud and artifice.

No, Cameron must now be viewed as the genuine article, a fully-fledged Prime Minister-in-waiting.

He even managed a rousing peroration, conveying hope and excitement — and more than a few tears from an ecstatic audience in Birmingham’s Symphony Hall.

In a way it was eerily Thatcherite. There was the same scalding sense of challenge and mission, this time social as well as economic. After a period of “detoxifying the brand”, Cameron has moved rapidly onto traditional Conservative territory, daring to contemplate tax cuts while artfully not budging an inch from his earlier concerns.

He promised “sound money”, an end to political correctness, the health and safety neurosis, and, eventually, lower taxes.

A fierce attack on the educational establishment clearly resonated with the audience: there would be an end to the practice of “all shall have prizes” and of deliberate dumbing down. This was heady stuff. A catharsis after eleven years of poisonous frustration.

The Tory theme of the broken society was rehearsed at length. Old-style punishment was blended with concern for the causes of criminality. The work of former leader Ian Duncan Smith was well in evidence.

The speech was compelling not just because of the competent delivery but for its refreshing outlook, and the complete absence of the counter-intuitive nostrums of the Labour government that often sound as if they are made up by half-witted fantasists.

It was noticeable that the biggest rounds of applause greeted the most straightforward expressions of disgust with the present government’s worldview.

I imagine the Prime Minister is feeling rather bruised right now, especially after the tentative improvement in the polls last week.

On this showing, David Cameron can look forward to an even bigger bounce in coming days.

All he needs now is a General Election.