Each month another number is described as the “worst since records began”. We are entering the second year of a rare economic depression, which at minimum is the worst for 50 years, and at maximum may be a once in a century occurrence.

In real-time it doesn’t feel like that. Most of us are still doing fine and waiting for the bombshells to drop. It’s a bit like the “phoney war” in Britain during 1940. Hostilities had been declared, but nothing outwardly was happening.

Book history concertinas major events so they appear to fizz in quick succession like fireworks. In reality, there may be months or even years between them.

Quite often the collapse of some political structure, clearly doomed, takes an age to manifest because so many people at the top have a stake in its survival. They pour in quantities of other people’s money to shore it up, or just lie about the real state it’s in. Think Soviet Union or the euro currency zone.

That’s why there’s an air of unreality about another Great Depression now. Various mental buffer zones are shielding us from events that may be truly awful. Politicians are saying one thing in private, while jollying us along in public.

So, given the almost impenetrable armour covering our medium-term futures, what might be the precise problem?

Actually, in my very humble opinion, I believe there is a high level of precision in the problem before us:

Assets prices are falling so fast, no financier can back them until a loan is guaranteed against loss.

What it means is that asset prices have to find a floor. Only then will the real economy find willing partners in the financial sector and lending start to flow. When a 90 percent loan is a safe proposition, i.e., when prices stop falling, the banks will begin doing what banks do again.

No amount of government cajoling will drag them out of hibernation until it happens. At that point the “green shoots” of recovery will be apparent to all, for it’s not the actual amount of money in the economy that counts, but the rate at which it is spent that creates the multiplier for economic growth.

Which then is the chicken and which the egg? If the banks are not lending, the deflationary spiral will rumble on and on. And while prices keep falling, banks will not lend. It’s a classic lock-in without a key.

Sticking my neck out, I think every downturn in asset prices probably has an inbuilt floor.

If official intervention aborts it before that floor is reached, it simply traps pain in the system which has to be purged anyway, prolonging the recovery.

More likely, government actions push the recession below the notional bottom by seeking to ameliorate the ills of the moment; or, as in the present case in Britain, by urging the populace to continue the conditions that caused it.

There is possibly a theoretical case for allowing a serious down-swing to hit its floor quickly, so that conditions return to normal sooner rather than later, leaving the public finances in better shape.

I may be approaching the problem too mechanically. I’m aware that it’s psychology that primarily drives economic activity. I just can’t see the point of uniting the ostrich with the sand by slowing down the inevitable.

If a quick bust has advantages, how might that be arranged without unleashing an unstoppable whirlpool to oblivion?

The fear of an abysmal collapse is overdone, in my view. Normal stop-loss conditions apply as the descent continues. Big investors with lots of cash move in to pick up historically cheap assets, even if the banks are holding back.

In 1981, Margaret Thatcher and Geoffrey Howe acted against the prevailing Keynesian tide in the face of a virulent recession in manufacturing industry, mainly caused by decades of trades union bad practice. Fury erupted. A total of 365 eminent economists, including the present Governor of the Bank of England, Mervyn King, wrote a stinging letter to The Times.

Within a year the economy was recovering. Britain went from strength to strength until once again the government threw it away by fixing the currency to the German mark. Will they never learn?

Is there a lesson there for us today? Hit the bottom quickly to avoid a dead cat bounce. Take the pain on the chin and work with the grain of events. Don’t repeat the mistakes that brought us here.

For that we need politicians with fortitude and talent. We don’t have them yet.

John Evans

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Those who speak for AngloSaxonomics are well and truly on the back foot. Curiously, Germany’s Angela Merkel is leading the charge for sensible government spending from within a continent notoriously prone to big government. The turnaround is complete with a return to sterile and ultimately dishonest Keynesianism in the free market transatlantic countries. “Topsyturvy” hardly begins to describe it.

This balance may improve with the election of David Cameron’s Conservatives here in the the UK sometime before summer 2010, but it doesn’t alter the fact that we are in the grip of ideologically-driven governance in key Western countries at a time of acute economic stress.

In times of panic, and we’ve had plenty of those in 2008, politicians revert to type. Gordon Brown’s evident delight in resurrecting the ideology of his youth is plain to see. Chancellor Alistair Darling’s mid-30s were dominated by a bleak Trotskyite outlook on life. In his 50s he’s managed to nationalize a goodly portion of the banking sector, whatever the reason.

Barack Obama and his team are an unknown quantity, but should not be expected to think too far ahead when the printing presses are in full flood. Obama’s role model, F. D. Roosevelt was a President of the left who was not afraid to bring out the big guns of public spending. Payment came later. His reputation rests on his actions during World War 2, especially after Pearl Harbor, which masked the disaster that was the Great Depression and the responses to it.

The enduring problem with the left is that it doesn’t understand human nature. Few liberal-left politicians seem even to know themselves, let alone the rest of the population.

Self-knowledge is the key to good governance. You can’t speak for all, if you don’t speak for yourself. Knowing how to exercise power is not the same as understanding those at the receiving end of your writ.

As a substitute for having a grip on reality, the left has an alarming tendency to fall back on a collection of failed shibboleths: the United Nations, global solutions, so-called human rights, more central government, higher taxes, collectivist policies in general. They don’t recognize that in troubled times most people feel helpless to help themselves. Their world has spun out of control and they need to take it back — not pass it on.

In a crisis, it is important psychologically to direct power to people in their own patch. To open up avenues to self-help, to understand the desperation of active citizens to be in charge of their lives and their families. Crises always seem to put them even more under the thumb of centralized authority rather than set them free to do what they do best in their own interests.

The Brezhnevian Gordon Brown foolishly imagines that the British want a Stalinesque “father of the nation” to lead them out of hard times. Nothing could be further from the truth. The current rehabilitation of Stalin in Russia is an eerie echo of a bad past and should warn us of trouble ahead.

What we now require from our leaders is human psychology, not “universal” human rights that only we respect, and the politically empty “brotherhood of Man”.

John Evans

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The River Exe in Midsummer

John Evans

Which proposition would you prefer?:

1. The Ineffable (name it as you will) enters every person at birth and is directly available to each, especially if the individual focuses upon it and requests access, or
2. The Ineffable entered one man 2000 years ago and his representatives on Earth today will negotiate your place in the afterlife, as long as you comply with a set of unbending principles and practices.

The first proposition is the “perennial wisdom of mankind”. The second is the view of the Christian church that arose within the last days of the Roman Empire.

In the 4th century AD the Emperor Constantine had an ulterior motive for his religious masterplan — the retention of political power at the centre. His church was therefore materialistic and authoritarian.

This is not to disparage the present-day Roman Catholic Church, or even the lacklustre Anglican version, into which I was baptized as an infant. On an individual level, many immensely spiritual people have made great contributions to human understanding from within the cupolas of their Catholic beliefs. I’ll cite just a few who appeal to me: Thomas Merton, Teresa of Avila, Meister Eckhart and John of the Cross.

They do, though, have one thing in common. Each got into trouble with the ecclesiastical authorities because they were perceived as “mystics”. Even the saintly Francis of Assisi’s Franciscans fell foul of the stern central authority.

What is a mystic? Someone who believes … no, “knows” … that the Ineffable is available to everyone. These are “Gnostics” — knowers rather than believers. Mysticism is really the universal religion of mankind, because when a person scales its heights there is no longer any need for the simplistic stories and precepts of evangelistic religion.

As Dr Johnson put it: “Example is more efficacious than precept.”

Let’s go back then to the early Roman church, which we now know took the uncomplicated Jewish version of the many Mystery schools around the Mediterranean and as far afield as Persia, and created the Western world as we know it. It’s useful to examine what Christianity was like before Emperor Constantine made it the prevailing faith of the Empire.

Christianity — and it was certainly not called that then — began a long time before the suggested birth of Jesus around 7BC. We know this from the Dead Sea Scrolls and other recently discovered sources.

It seems to have had Egyptian origins and arose among Jews in Alexandria from a Gnostic soup of practical teachings on how to have a direct, personal relationship with the Source of all things. It’s believed to have spread into the Hebrew lands through groups like the Essenes at Qumran — a sect that had at its centre a “Teacher of Righteousness”.

The Mystery schools of the Mediterranean region, including Greece, were mystical programmes of initiation, leading up to the all-encompassing Great Death Contemplation, in which a neophyte underwent a transformation of consciousness, directly experiencing the after-death state and stripping away the tyranny of the body (the cross we all bear in life).

In our terms, Near Death Experiences, reported in many hospitals, are quite close. They are, however, essentially different from the controlled, fully-alive, glimpse of what it’s like to be totally out of the body, while conscious of everything.

The early Gnostic Gospels, such as The Gospel of Thomas give a very different version from the later compilations bolted together by bishops into the New Testament. For example, the female has an equal part to play — there is a Gospel of Mary Magdalene and links to Sophia, or wisdom. The chapter in Luke which covers the visit of Jesus to Mary of Bethany is strangely cut off, and the passage where Jesus says she has a higher calling than Martha — contemplative rather than “active” — doesn’t read like the Christianity that comes down to us via Rome at all.

What began as a Jewish allegory depicting the life of Everyman (Jesus), was turned by a French bishop into an ersatz historical record of a real person. Anyone who has studied spiritual literature around the world will immediately recognize the allegorical intent of the Gospels, despite the extensive editing job.

The main aim was to attract a large, popular audience and wipe out the Gnostics, the early Christians. That suppression continued well into the medieval period. The massacre of possibly millions of Cathars in southern France, simply because they were different and were descended from an earlier version of Christianity, still resonates blackly in Church history to this day. St Bernard of Clairveaux, founder of the Catholic Cistercian movement, commented on the Cathars, “They are better Christians than we are.”

Fyodor Dostoyevsky, in his deeply religious book The Brothers Karamazov, has a chapter called The Grand Inquisitor in which he depicts Catholicism as the very opposite of the church Jesus would have created.

A good illustration of the process of historicizing allegory is to take John Bunyan’s The Pilgrim’s Progress and imagine Christian as a real man and the story a true one. Nothing else quite explains why the Vatican goes to such lengths to suppress any archeological find that may cast doubt on its version of events. The postwar history of the Dead Sea Scrolls reveals an extraordinary attempt at censorship. The Nag Hammadi Gnostic discoveries in Egypt faced similar interference.

So where is Christianity in the 21st century? The main thrust of the churches seems aimed at keeping people adhered to a faith based on a misreading of an old allegory. The allegory itself, by contrast, offers precisely what it says on the box: “gospel” — good news.

The good news is that everyone can receive proof of their own immortality if they really want it: “The Kingdom of Heaven is within and without … seek and you shall find.” The most enlightening version of that saying appears in The Gospel of Thomas, inexplicably banned by the Church. If people don’t want direct proof, no matter, immortality is theirs anyway.

That mystical interpretation of the familiar Christian message was the original one before Rome politicized it. In reality Constantine was no saint but an early version of Mao Tse Tung.

In our democratic age we are more susceptible to the view that Christianity is available to us directly, not just through the intercession of men in robes.

Today, the Church is faltering, even dying, precisely because it won’t give up the rewriting of history that took place in its early days. Moreover, it should ask itself why so many popular books depict it as a dark, evil institution that will stop at nothing to retain its power, wealth and influence. Surely, self-preservation isn’t everything.

A return to so-called “primitive” Christianity that encouraged personal experience, not conformity, is the only way it can save itself from becoming a minor sect for a few diehards — which would be very sad given the power Christianity has for good.

The world is crying out for genuine expressions of spirituality now. Young people are embracing New Age sects in large numbers. Ominously, Islam is the fastest growing religion in the world.

Christians should stand against the decline of the religion and recognize it is based upon a massive untruth, especially as the original flowering of Christianity is just what the jaded West needs in these times of economic hardship and doubt.

John Evans

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This person, however, should exist, and we are the poorer because of the absence. So, who is it?

By all logical analysis it should be Barack Obama. Even he might agree, though, that he’s had quite enough publicity for one year already. Besides, The Times (London) has inevitably made him their choice.

You may have noticed we are not a downmarket tabloid so, contrarian as ever, we’ll resist the obvious, with ideologically correct genuflections in his direction.

During this year of wild oscillations of policy, prediction and actuality, one person was missing from the chattering soup here in Britain. Someone with national reach and influence who can say, “Hold on, we tried that in the 1960s/70s and back in the reign of Ethelred the Unready. It didn’t work then, why would it work now?”

We have a national statistician, a national poet, a national medical officer, a national musician, a national scientist, so why not a …

And here is Syntagma’s Person of the Year 2008:

The National Historian.

It may be a blank space now, but it would make some difference if we had one in the future. But who should it be?

The post could be decided by a BBC TV series of shows: Strictly Historical. Votes would come in turn from a panel of eminent judges, a studio audience and, yes, you at home. The comperes would be Vince Cable and Michael Portillo.

In the absence of that this year, we have held our own competition here at Syntagma Towers.

Here are the results:

In second place, Niall Ferguson, whose TV programme, The Ascent of Money on Channel 4, performed some of the tasks of a National Historian by reminding us how the credit crunch came about, and of similar situations and outcomes in the past. It was a creditable perfomance.

The winner, with greater support among our studio audience, was Andrew Roberts, the conservative historian deemed necessary as a counterweight to the prevailing Marxist drift of the nation.

Although the contest was very close, with major voting irregularities, by common consent there was no dance-off.

Congratulations to Andrew on his shadowy victory as the future National Historian of Great Britain and Northern Ireland, and Syntagma Person of the Year in reality in 2009.

Note of caution: You may think the above piece is meant to be tongue-in-cheek, but I can assure you, we are deadly serious!

John Evans

Hard times for all

That case is deflation, where the relative value of our debts rises while the price of our assets fall.

In a period of low indebtedness in the early 1930s, America’s debt burden is said to have risen by 40pc in comparative terms.

In 2008, the U.S. and Britain have massive debts in all sectors across both economies. Dealing with debt in a deflationary environment is the all-pervading burden laid upon this generation and the next.

By some calculations, the United States has already fallen into the deadly whirlpool of debt-deflation, a term coined in Irving Fisher’s suddenly much talked about 1930s book, Debt-Deflation Theory of Great Depressions.

In Britain, as the BBC’s Business Editor, Robert Peston, points out on his blog: “If you combine consumer, corporate and public sector debt, the ratio of our borrowings to our annual economic output is a bit over 300 per cent, or more than £4,000 billion [six trillion dollars].” The latest figures indicate that may be a serious under-estimate.

Deflation will inevitably cause that debt to become more burdensome. It will be decades before we get it under control, and it will be future generations who pay. The bonanza of the past decade, which Gordon Brown bizarrely boasted about, will pauperize the nation’s children.

Even so, we’re not supposed to discuss this in case we “spook the markets”, a laughable notion in the circumstances. Part of the problem was the paucity of discussion on the way up, when spooking the markets was a necessary “evil”.

There will always be business cycles, just as there will always be wars. Damping them down should be a priority, rather than “cleaning up after them”, to use Alan Greenspan’s complacent phrase.

Cleaning up after this mess is going to be a generational task. If you are over 40, don’t expect to experience a time of prosperity again in your lifetime. Great disasters build caution into the human psyche. We will become suspicious of the new, the innovative, preferring what we know and consider safe.

Strong voices will emerge, suggesting simplistic political solutions to our ills. The American historian, Philip Bobbit has already proposed passing shadow laws of a draconian nature in case something nasty happens in the future. A growing autocracy will become the greatest danger.

So what are the consolations of the worst case scenario? There are many. It will make us honest again. Recently, too many people have behaved like those low-income folk who win the lottery and haven’t a clue how to handle the money. They invariably end up more miserable than they were before.

Our view of the world will alter radically in the coming year. It will seem greyer and more hostile than we’re used to. We will be forced back onto older verities. Thoreau and Emerson may come back into fashion, as self-reliance becomes interesting again.

The evils of over-consumption: roads clogged with expensive gas-guzzling cars, epidemics of obesity, low personal fitness levels, strains on the world’s ability to produce enough resources to fuel the tide of plenty, will be gone sooner than we imagine.

In an age when we feel less free than we did, freedom itself should top our agenda. Authoritarianism always prowls the perimeter when times are hard.

Can we survive this new world of limitation? Of course, and tackling it may make Barack Obama a considerable President, not just a curiosity because of his background.

In the end, we have to fall back on philosophy and practical psychology. As Albert Einstein said: “We act as though comfort and luxury were the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about.”

John Evans

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There’s money in them thar trees

In America this is now happening on a grand scale at the Fed — electronically, at least. The practice will be coming to Britain before you know it. The Old Lady of Threadneedle Street is already gathering up her skirts and sizing up her lumberjack outfit.

Even the austere Trichet of the ECB has been caught lasciviously eyeing up the axe. The Black Forest may not have long to live.

Gordon Brown, who famously once shared a bed with a lady called Prudence, will soon adopt policies widely recommended by Robert Mugabe of Zimbabwe.

The world has succumbed to the Zen-like contradictions of Wonderland. Alice has finally gone through the looking glass.

Almost anything could happen … and probably will.

John Evans

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The Kraken Wakes
Depression looms like a yawning abyss

The poster child for this disaster is Baby P, who died at the hands of monsters who were meant to protect him. The Social Services department charged with preventing it, failed so completely that no confidence can be placed in any similar organization anywhere in the country.

The people in charge barefacedly claimed they “followed procedure”, as if procedure were their only duty, not actual child protection. Failure of the procedure was the fault of politicians, not their own. Unhappily, that is mostly true.

The appalling rash of incompetence across most of Britain’s public sector, involving the police, child protection agencies, exam boards … and many other examples, highlights the need for a total reform of how Britain is governed.

Superdemocracy is an idea I had a long while ago while musing on the optimum hierarchy for any organization. It’s really a variation on meritocracy, so will be dismissed by followers of the postmodern tendency.

Imagine if you will the billions of decisions taken daily in businesses, agencies, governments, and other organizations up and down the country. Most of them will be made at nodal points where power has settled and accumulated over time, and where empires are ruthlessly defended. In other words, they will be taken well above the level of optimum efficiency — the Point of Maximum Competence.

A little thought reveals that almost all decisions are made at points where the decision-takers are not fully aware of the complexities of the task. In today’s technical society, that disjunction is growing all the time.

If each decision is depicted as a small arrow, it’s not hard to visualize most of them pointing downward, albeit by a tiny amount. Day after day, these billions of small decrements add up to a massive efficiency deficit, which can only be supported by vast quantities of public money propping up the whole edifice. They will also need statistical fallacies to claim success where failure is the norm.

Small businesses, by contrast, develop the expertise to avoid this tendency or they die, which is why they are usually the most dynamic elements in any economy.

Big businesses become more like governments as they mature, even creating social security and foreign affairs departments — look at Google and Microsoft.

But government is the principal problem. In the UK, central government operates the highly technical National Health Service, with predictably dismal, and costly, results.

Government also runs the State schools, transport and other big areas of public concern. It now appropriates getting on for 50pc of national income and employs 25pc of the workforce. Let’s call that, Decremental Drainage. The losses are huge and ongoing.

Governmental decisions are taken at the Level of Minimum Competence. In the UK, we also have the even more remote European level in Brussels — the Level of Maximum Incompetence. Why would any decisions, beyond essential cross-border issues, ever be sent to Brussels?

Conjure up a vision of decisions being taken much further down the food chain at the point where all the complexities and variations of the particular case are fully appreciated. Imagine all those billions of arrows pointing upwards by a small increment.

Jump forward a year or so and listen to that faint, distant rumbling of a tidal wave just visible on the horizon. It’s a tidal wave of MONEY. In the public sector that would translate as COMPETENCE, and hence lower public debt.

Look at any successful operation and you’ll see decision-making at the Point of Maximum Competence, or quite near to it. Examine any failing organization and you’ll discover decisions being made well above those levels by people miserably ensconced in positions of conceit and self-delusion. There is no exception to this rule. Decisions, like cream in a milk bottle, will always rise to the top.

All decisions therefore should be taken at the Point of Maximum Competence. The CEO role should comprise little more than shaking the milk bottles all day long.

Superdemocracy and representative democracy
Representative democracy, our standard political institution in the West, is vital for two reasons:

1. It spreads decision-making thinly, ensuring that power doesn’t concentrate in too few hands, and
2. It allows ordinary people to feel they are represented in the highest taxing and lawmaking councils of the land.

Point 1, of course, is easily bypassed by determined politicians with a decent majority in Parliament. Elective dictatorship is a curse of the British parliamentary system, caused mainly by “the Sovereignty of Parliament” — but that’s another story.

As Churchill may well have implied, you wouldn’t appoint a CEO of a major organization by a kind of X Factor televised beauty parade. “Democracy,” he said, “is a bad form of Government, but it’s better than any of the others.”

We have to recognize that most politicians are rank amateurs at what they do — and it shows. Seizing on a dangerously-small stock of information and experience, while being ignorant of the complexities of the case, they often make huge, irreversible blunders paid for by the rest of us.

Clearly, representative democracy is necessary. But it needs to be modified still further to limit the amount of decision-making available to the often hick-town amateur actors who rise to the top in the election process.

Using Superdemocracy as the principle of governance across a whole society would naturally rob the dilettantes of power and add a huge efficiency increment to a country’s earning power.

Simply passing power downwards — or sideways, in the case of “devolution” — is not enough. A root and branch examination of decisions, and who takes them, is vital to rebalance the system.

David Cameron, Iain Duncan Smith, and the next Conservative Government should put constitutional change on its agenda as a matter of urgency.

John Evans