No Plan B - But Plan Crisis Default Is Coming

By: Andrew_McKillop

It is a truism, and a total consensus view among all analysts of the present sovereign debt financing and monetary meltdown that no Plan B exists. For starters, if there was or had been a Plan B, it would have been used, already, a long time ago. Plan A only has one solution: print money and forget. We now have a radically politicizing context where the bolt-ons to Plan A including austerity-type quick fixes are shorting out any prospect of economic recovery and aggravating existing social stress among the crowd of increasingly enraged victims, the working population, consumers and voters. No Plan B exists.

PLAN CD
This is the Crisis Default plan.
One de facto example is on public view with the emergency Greek CD plan or programme, basically federalizing Greek deficits across Europe and forcing the banks, insurers and other beneficiaries of State largesse, through 2008-2010, to hand back some of their ill-gotten gains. To a certain extent the almost certainly ineffective Plan CD in Europe has jumped one level up and 'gone political' already, but we can be sure it is set to become radically political very soon.

One basic implication of the European CD plan for Greece, to be extended to Ireland and Portugal is that national finances, from taxation to budgeting, will be federalized. Labour regulations and other previous 'national purview' decisions would increasingly be decided outside national parliaments. At present this is conjectural because, importantly, Europe's CD for Greece plan was a true default plan, forced by events under panic conditions and with little or no consultation at political level across Europe. The political fallout from this plan, followed by political refocusing, is coming.

In the USA it is possible that US Federal debt will be further 'mutualized', especially through full nationalisation of the Federal Reserve bank system, itself an action with extreme high domestic political implications. However the special role of the US dollar, the size of the US debt crisis and its impact on the global economy and equity markets makes it certain that political fallout will jump from the domestic national level, to international, faster and more clearly than the European crisis.

Obama is in everyday journalistic terms 'fighting for his political life' as US finances experience living death. While it is perhaps conceivable that Obama and his advisers might imagine they can muddle through, Keynesian-style and win the 2012 elections, events are running right against that 'happy ending' for the Obama team, for him but not for the victims of his government's gross economic mismanagement who want one thing: change. Obama promised change. Plan CD in the USA, probably without Obama or after he has made an 'agonizing rethink' will change things.

Next stage CD plans across the debt-and-deficit wasteland of the so-called 'Old Rich' countries of the OECD group will by necessity feature political initiatives - but these are unlikely to come from our current political leaderships. In all affected countries they have massively lost credibility and are held responsible by the voting public for the current endgame context, and unable to treat the dire financial and economic mess they have produced, with their one-only Plan A.

MAJOR POLITICAL INITIATIVES COMING
The networks and clubs of former presidents, prime ministers, corporate chiefs and power brokers including formerr chiefs of armed forces, like the Club of Madrid, Davos Forum and WorldShift Network allow and enable these former deciders, outside the media limelight, to discuss why and how things went wrong and kept going wrong. In private they explain how they had no choice, when in power, to enact the policies that through 'policy drift' and changing global economic circumstances are now heavily dysfunctional and harmful. Several members of these groups have made things clearer: any second time around, they would know how to make the right decisions. Also aided by age, they are less susceptible to everyday corruption and self-adoration, are not constantly forced to deliver media-friendly, voter-friendly false solutions that aggravate and intensify the present crisis.

Their solutions are necessarily radical and unprecedented. They start with the removal of current political decision making 'elites' and their support systems of policy and media advisers. Some argue, obviously off the record that a Senatorial coup replacing incompetent leaders is better than a Pretorian guard military coup.

The long list of stacked up but never resolved crises, from overpopulation and energy resource depletion to species extinction and water resource, food, and basic resource shortage are featured in the focus of former heads of state, for the simple reason these are real 'background' crises. Ignored as they have been over decades, they will now short-out any possible economic recovery: oil is a key example as shown by its price performance under near-recession OECD economic conditions through 2011. To be sure, this acceptance of reality is totally excluded by our current and fragile leadership elites.

We step down one level in the policy and programming system, to the program level, to find where and how political change will be likely executed under our present crisis conditions. Current political elites have failed to resolve current economic, financial, monetary, domestic social and internal security, environmental and geopolitical challenges. At the program level, starting with domestic internal security, the political and social blowback from this failure will directly concern security forces, including police, paramilitary, and related civil government entities. We can expect this level of government to act more openly, and increasingly in coming months in the majority of OECD crisis-crippled societies.

NEXT STAGE PLAN CD
The current crisis is international and OECD-wide calling for action from that level downwards. A large number of coordinating entities exist at this level, for example anti-terror coordinating groups with a wide-ranging purview extending up to the economic and policy domain. This also applies to police and paramilitary coordinating entities, distinct from the more directly-politicized NATO armed services coordinating level, confronted by the grave geopolitical blowback from recent and current unpopular and unwinnable wars 'over the horizon'. Both of these structures -  internal and external security - are by necessity forced to consider the worst-case potential from Plan A remaining the sole political response to the deepening crisis: the case of civil war.

It is reasonable to expect political initiative to arise from security forces and organizations most exposed to the fallout and blowback from failed policies. To be sure the one word 'treason' ensures this will be filtered to the media with high discretion, but at what we can call the 'senatorial level' of former heads of state the easily analyzed and forecast internal domestic collateral damage from ever-rising unemployment and social stress will be more openly placed in its political context. Increasing recourse to food aid in the civil population is one indicator, for example rapidly growing EU27 domestic aid programs and the US 'food stamps' program aiding some 44 million Americans or more than one-in-seven of the USA's total population. At some coming threshold, the internal security blowback from the failed policies of Plan A and due to current political elites will become a major problem. The affected levels of government will naturally act also against the cause, as well as the symptoms of this failure.

In several countries in the OECD group this threshold tipping point is close, for example in the PIIGS group of countries, with Arab spring-type semipermanent mass demonstrations. Entities like the Europol police policy coordinating organization has in recent weeks developed a more extended political analysis of security failure in Europe at the current time of crisis. The Europol organization's recommendations are more overtly political than previous.

Civil unrest is logical, in fact certain given the economic, political and social failure of incumbent so-called decision makers, ideologically equipped only with Plan A. This unrest can be multiform as witnessed by the Norway July massacre event and its sequels. Immediate political response from the PM's of Spain and UK have included a call for a radical rethink on the antisocial effects of existing one-only "free market doctrine", hiding the fact that this doctrine is a major root cause of present and coming civil unrest, due to political mismanagement and incompetent application of elementary economic concepts resulting in repeated economic failure.

Among the clearest negative blowback and collateral damage from Plan A, the attempt to force economic growth, and its social and environmental sequels or "diseconomies" are so massive and multiform that political failure in this domain is inexcusable. In coded language, published reports and statements from the Club of Madrid, among others, show this is a consensus view of the majority of former heads of state, worldwide. When such clear judgement on the failure of present ruling elites, or so-called elites becomes more widely known amongst the security forces charged with managing and controlling the dangerous results of this failure, it is very likely that political initiatives at this level of our governing hierarchies will rapidly increase and fully enter the public domain.

TIMING AND SEQUENCING
Outside the nexus of power, we are unable to identify what timing will apply to the removal and replacement of the current ruling political elites in OECD countries. To be sure however, natural wastage and the passage of time is an excluded option, due to time constraints.

Some signs indicate that the timelines for a Great Transition may be as short as 6 months from Fall 11, but this will tend to be confirmed or denied by real world political events, and particularly the number of, and reasons why resignations or retirements from office occur among the current ruling elites. Their non-replacement, temporary or interim replacement, reduction of powers, and other indicators of change will aid in the process of predicting the time required for a complete change of the current leadership system or class.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

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