The financial markets are in melt down. Standard and Poor's decision to degrade America's credit-worthiness and the high interest rate for borrowing Spanish and Italian bonds have sent a message that those with free cash are less willing to lend to sovereign nations for fear of not getting their money back.
Who are those with money to lend? Above all, China, but also the Arab states with oil reserves, and Germany, with a successful manufacturing economy. The Arab states have money from an accident of history; they were primitive nomadic tribes that happened to wander over land under which the Western powers found oil at a time when the Western powers built an oil-based economy. There is no merit to their hegemony over oil and they can be seen as parasites on the back of the American and European beast. Were the American model to collapse, the parasites would die with it.
So much of Chinese industry is also parasitical on the West. It depends on raising its standard of living by selling to the West, even though it is getting paid in depreciating dollars. China is a country with 300 million middle class people and a billion peasants. There will be a clamor for all 1.3 billion to become relatively rich; a clamor fueled by the Internet. This is why the Chinese government keeps an oppressive lid on dissent and why, whatever snide remarks it makes, it is content to accept the barbs about human rights, swallow the dollar as a reserve currency and still keep lending to the USA and Europe. Meanwhile it counterfeits Western technology and brand names with impunity.
That is not to say there is no genuine technological advancement in China. There is an improving standard in its science and education. More people speak English in China than do so in Europe or in America. I have been impressed by the improvement in quality of scientific articles that I get sent from China now to Leukemia Research. To be sure we are still rejecting two thirds, but we were rejecting over 95%.
Meanwhile, for once, the UK economy is not in trouble. This is entirely due to the Coalition government's decision on taking office to reduce borrowing over a 5-year term. This was opposed by the outgoing socialist government which had spent its way to penury. The insultingly blind Mr Balls still persists in advocating spending his way out of trouble, but the point is you can't spend other people's money if they won't lend it to you and if you try and confiscate it by higher taxes, they take the money and run.
Mrs Thatcher was derided for trying to run a nation's economy like a housewife, but she had a good principle. Don't buy things that you can't afford! We have always run our household like this and deliberately avoided the temptations that neighbors and the crowd force upon us. Even then there are things that we own that we could well do without. I remember a book by Ron Sider, called Rich Christians in an Age of Hunger. I called out one Christian who was intent on buying a Prius to save the planet. In fact, it would do much less damage to the planet to buy and run an old clunker until it dropped. The cost of manufacturing a Prius would never be redeemed by the lower cost of running it. It follows that we really don't need 'growth' to keep our economies going. Be content with what we have and learn to share our prosperity. Communication has been eased by electronics; use them for that purpose rather than for mindless games. Skype is OK but I remember taking evidence from America from a witness by a professional communications set-up. It was as good as being in the same room and saved a huge amount of jet fuel.
China is buying up mountains in Africa and Australia full of rare earths for future technology. Are we doing the same or can we rely on secondary markets of recycling? I despair when I see people scuttling to the Indian Ocean for holidays; is there nowhere closer? Is it just because it is exotic?
The book of Ecclesiastes teaches us about the futility of modern life. It is like trying to confine the wind in a sheep pen. Step off the travelator and watch the world go by. It will all come round again next week and nothing much will have changed.