The Greek ‘No’ referendum vote has an element of the Hong Kong Legislative Council’s resounding defeat of the political reform bill about it – telling an unelected, arrogant, dictatorial, soulless, distant supra-regime to drop dead. Since the country is going to default anyway, and the people will be penniless whichever currency it uses, we can only assume that the vote was primarily a gesture of defiance.
Another parallel is that in both cases the self-serving, grandiose autocracy (the Chinese Communist Party and the European Union) will probably carry on as if nothing had happened. The CCP was founded to liberate downtrodden workers from poverty, while the EU aimed to replace a perpetually warring continent with a peaceful free-trade zone. Both succeeded, and can go away now – but of course they are just getting started in their missions to be big, overwhelming, almighty and generally presumptuous towards the gods.
Even if the Brussels bureaucratic machine is oblivious to it, Greece shows the rest of us that the EU and its neo-imperial single-currency project is broken. Perhaps similarly, China’s own debt problems are revealing the limits of CCP omnipotence. Specifically, the Great Patriotic Unburstable Stock Market Bubble Miracle looks like being Xi Jinping’s first visible and unmistakable screw-up.
The scales of the two failures seem to be quite different, so far.
The Euro was rooted in deranged megalomania. Euro-visionary elites salivated at the idea that their odd assortment of small-to-medium nation-states could be merged into a new, social-democratic version of the USA, so they could strut around on the world stage like American leaders, except sophisticated and pacifist. Since the populations of France, Germany, Italy, the Netherlands, etc irritatingly insisted on remaining sovereign, the utopians had to try constructing the new country backwards, starting with a flag (the easy bit) and then forcing them all to adopt the same currency and thus monetary policy. They are now locked in and uncompetitive with a voraciously mercantilist Germany, too ashamed to admit that it was a crazy idea.
China’s debt problem looks relatively minor in historical terms. Insecure and fearful of popular unrest, the CCP ordered a mega-stimulus in 2008-09 and beyond. Billions directed into infrastructure investment ended up going into land and property speculation and bubbles. That felt good for a while and then became dangerous. But efforts to curb the bubbles threatened an economic slowdown, so the (still insecure and fearful) government talked up the stock market late last year apparently to divert everyone’s attention and spread joy and happiness throughout the land. The index more or less doubled in six months, and by the time millions of housewives and cab-drivers were piling into margin-trading accounts last month or so, the smart money started to come out – and no prizes for guessing what happens next.
Except the Chinese government is using every desperate measure to prop the market up, from freezing new issues to forcing brokerages and government funds to buy, buy, buy. Every time they succeed in reversing the declines in share prices and the index spikes 5%, rueful, not-so-smart money makes a dash for the exit. Unless it buys up the whole market, the Chinese government cannot halt this fall in stock prices from absurd ramped-up levels. But the concept of not being able to control is alien to the Communist mind.
Both the Euro as ‘a political not an economic project’ and China’s central-planning micromanagement of bubbles reveal stupidity at top policymaking levels. That stupidity has a human cost somewhere down there among the masses and lower orders. In Greece, elderly people wonder how they will pay for food, assuming they can find any in the markets. The Shanghainese mother-in-law of someone I know lost RMB500,000 on stocks. Good luck in restoring such people’s faith in their leaders.
Maybe both Europe and China will just ride out these crises – a Greek default and a Chinese stock crash don’t have to be the end of the world. But maybe this is just the beginning, and these man-made mistakes are going to trigger bigger and bigger disasters, from which none of us are spared. All we know for sure is that we are all being run by idiots.