Global debt crisis:

Cause and effect of failing to live within one’s means

I wondered why, when I was watching coverage of the unfolding of the events that led to the debt crisis faced by Europe and the US on television, the Sri Lankan literary classic work of the Lowada Sangarawa (Towards a better world) came to my mind. Perhaps it is the stanzas;

Lipa gini molowana thek diya saliye Sapayak yayi Kakuluwa Diya Keliye (meaning “until the fire is lit, the live crabs in the pot on that fire go on making merry, unaware of the danger that is to befall them. The other two stanzas refer to the meaningless pursuit of our seeking sensual pleasures without seeking true purpose and meaning in life.)

Confidence drop

For the first time in the history of the modern world, the US dollar was de-graded of its confidence rating this week, by the prime rating agency Standard & Poor, from its perennial top AAA to AA+. It must be said that Fitch and Moody, the other twosome in the rating business have done no such thing. It could also be assumed that they have not had ‘reason’ to yet do it.

US President Barack Obama

For several weeks now, major sections of the US lawmakers, backed by extreme conservatives such as the ‘Tea Party’, have been at loggerheads with the Executive President of United States of America, on how to avert the nation’s debt crisis. On Sunday last, they struck a deal to allow President Obama some leverage to avert a crisis. The popular view of most is that it was grossly inadequate and the worst is yet to come. Some also feel that the real impact of the crisis will unfold in Europe, before it hits the US again.

Huge debt

The facts are that the US as a nation owes a huge US $ 14, 300,000,000,000 (14.3 trillion dollars), both within the country, to institutions elsewhere and to other nations in the form of debt. As is pointed out by many, this is a crisis created for US and the rest of the world for they/we have been living beyond their/our means for far too long. Greece and Ireland owe US $ 367 billion and 865 billion respectively to other European nations, while Spain and Italy owe one trillion each to France, Briton and Germany. Portugal, whose countrymen brought us our ‘Baila culture’, is another example. That country has defaulted on its national debt five times since the year 1800.

According to the US Treasury figures the nation is said to have a shortfall of US $ 5,656 trillion to support the Bills and Bonds issued by the Federal Reserve to banks, a $ 1,404 trillion to meet the obligations of the savings bonds issued to its citizens through the banks, $ 1.16 trillion to China as a buyer of Treasury debt, $ 882.3 billion to Japan, $ 801.7 billion in Pension Fund investments, $ 636.4 billion in Mutual Funds, $ 519.8 billion to States and cities within the US, $ 315.7 billion to depository Institutions, $ 271.6 billion to the United Kingdom, $ 253 billion to insurance companies, $ 211.9 billion to oil exporters, $ 186.1 billion to Brazil, $ 155.1 billion to Taiwan, $ 168.1 billion to Caribbean banking centres and $ 151 billion to Russia.

Wealth without conscience

Today, we live in a world with a dominant culture dictating to us that greed is good. Consumerism based on unlimited availability of choice form a corner stone of this economic system’s architecture. There is scant regard for thriftiness, austerity or real saving. The system encourages spending on ‘useless’ goods and services and making payments for them with funds that are non-existent. Speculative spending is encouraged and is portrayed as a sign of smart maneuvering. Undue risk taking is encouraged and bubbles of schemes are created to facilitate the availability of ‘funds’ for these. ‘Playing’ the stock market is made to look like a gaming pursuit, where easy gains are sought with little or no productive effort put into it.

Choice has replaced need and the young are wooed to take on activities that are far from creating beneficial or useful wealth like production of food and/or such essentials. Although technology has made it possible to make many goods in a rapid manner, the pressure it places on energy and other resources have been severe.

Only planet

The poor are often marginalized without access to even the basic resources. World’s population is ageing and the need for welfare and healthcare is increasing. There are less and less opportunities for young people to be productive in useful work for ‘convenient’ and ‘smart’ work has replaced ethical hard work. Today we communicate, entertain and indulge in luxurious pursuits than contributing solid hard work to make what we need in sustainable ways. Our planning horizons have shrunk to be very short-term and most of us live without realizing the finiteness of the natural resource base on this only planet we have for ourselves and other living species. Climate change, desertification and sea level rise have become real issues and scarcity of water is posing huge problems with famine and disease still impacting on some areas.

Trading on Wall Street. Pic. courtesy: Google

During the last weekend, I was referred to a doomsday type, ‘You Tube’ posting of a film by a Face Book friend. It came with the comment “Frightening”. Produced by ‘New America Now’ productions, this phenomenon was called an “Economic Collapse: A mathematical certainty” and pointed to five places in the world where one must not be at the time, for they would feel the brunt of the crisis most. They were Israel, Southern California, England, New York City and Washington D.C. in that order (Refer www.youtube.com/watch?v=b3-vwYJiD8g). Another similar film used a humorous approach to demonstrate the nature of the crisis and was titled “World Collapse Explained in three minutes”. That can be found at www.youtube.com/watch?v=NOzR3UAyXao&feature=related.

What they say

Newspaper headlines in the US, Canada, European and Asian capitals said many different things. Some examples are; “Our financial system has become a madhouse. We need radical change” (The Guardian of the UK on Saturday) adding the by-line “As a new global crisis looms, and political paralysis worsens, genuinely bold solutions are required to overcome the malaise”, “The real US debt crisis is still to come” (The Vancouver Sun on Sunday), “Trust becomes a rare commodity when credit ratings go on sale”(Australia’s Sydney Morning Herald on Friday), “China: U.S. Debt Crisis Is Giving Democracy A Bad Name” (The Huffignton Post of the US on Saturday, quoting views of Chinese officials and academics) and “Asian stock markets sink after US credit downgrade” (Associated Press on Monday last).

Right effort

In conclusion, I would like to leave you to ponder on two very different and interesting points of view. The first is an article contributed by David Nichtern, a senior Shambhala Buddhist teacher based in the US in ‘The Huffington Post’, titled “The Debt Ceiling and The Law of Karma”. In his analysis, he says that there has to be right thought (Samma Sankalpa) and right effort (Samma Vayama) and goes on to elaborate “In Buddhism, the law of Karma describes how causes and effects interact in our world. The point of understanding how Karma works is to see the nature of things as they are, beyond any kind of delusion or wishful thinking”.

“What does the law of Karma have to do with the current economic crisis? Maybe our national economic policy could use a good healthy dose of seeing “things as they are”, and adds “In our individual meditation practice, there is no magic bullet, no fantasy transformation, no gimmicks - we have to work through our Karma, brick by brick - it is manual labour”.

“With meditation practice, we can see how our mind works - what creates positive Karma (compassion and wisdom), and what creates negative Karma (aggression, attachment and ignorance). That is how we get clarity about how certain causes, create certain conditions - how did we get to where we are and what we can do about it”.

Debt to nature

The other is a recent article published in UK’s The Guardian by Ros Coward titled “America’s other debt crisis: Amid the war of words taking place in Congress, nothing is said of the environmental cost of over-consumption”. Her position was that “Long before the current cuts, austerity was making a comeback here in the UK, associated with the environmental issues of recycling, cutting consumption and reducing our carbon footprint”.

“Indeed, the New Economics Foundation recently launched the New Home Front, arguing that wartime lifestyles are positive models for reducing our environmental impact. When we think growing our own vegetables, taking staycations rather than vacations, cycling rather than driving, it has a fashionable appeal” she claimed.

“Not so in the US” she says. “In the five months I spent there earlier this year, I never heard the word austerity in political discussion. The Republican discourse is all about how the government is spending too much. The government must tighten its belt. There was nothing about individuals living beyond their means and no suggestion that individuals have a role to play in the solution”.

“Yet the US deficit is founded on over-consumption, made possible by too much consumer credit and, less well recognised, too much environmental credit. In the current war of words in Congress, there are no references to the immoral lending that encouraged people who could not afford it, to invest in the American dream. That’s what led to the property crash and the financial crisis. That has disappeared totally from political argument”.

Lessons indeed for all humans and for those of us living in blessed environments the likes of ours, where our natural and cultural endowment is still not exhausted beyond hope and where words of wisdom of great teachers have shown us the way. What is left in our hands is to heed, without falling prey to the wild calls of the dominant ways.

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