Panic accelerates as markets look beyond ClubMeds to France.

The long-awaiting confluence of nasties seems to be upon us. The process has been ongoing for 48 hours really, but only late this afternoon BST did it begin to gather pace.

The Slog posted three days ago to suggest Gold would be a good move: it’s now at $1675. Yesterday I compared the situation to the timetable inevitability of the First World War. Since then, global indices have fallen a further 2.4%, and since a week last Tuesday, the Dow has dropped nearly 10%. Both the Japanese and the Swiss governments are frantically selling their currencies in a bid to make them less safe and more shark-infested.

There has been some cheer among idiots about the low cost of borrowing for us and the Americans. The grown-ups, however, know only too well that low yields right now reflect realism among lenders: given the utterly crappy outlook for our respective economies, their view is that the best way to ensure getting their money back is to make our debts manageable. Good God: a market sector is learning, I’m getting over-excited – quick, give me some ONS output to read.

There is a glimmer of news for patriots who invest in currencies: you can stop feeling guilty for a while, and pile into Sterling while making money too. Now the Pound has hit 1.15 euro equivalent, it has challenged a psychological market level, and should keep improving. It will be 3 steps up, two steps back – but it will be up. It may be purely a question of being less of a basket case than the eurozone, but it’s better than nothing.

Otherwise, the news is dreadful, and the epidemiology of fear is spreading like chicken pox on Tristan da Cunha.

With EU economies 4 and 5 in trouble, some investors are becoming jittery about the French finances. France is Europe’s second biggest economy, but spreads between their bonds and German bunds widened dramatically during the day. Without a huge expansion of the EU’s 440 billion euro bailout fund, using this to prop up Italy in the short term (and Spain later) will turn the screws on France’s fiscal situation, and almost certainly raise  its yields further.

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What we are seeing here is the end of Act Two in the Globalist Players production of The Tower of Babel. In this part of the play, the builders of the hubris tower are losing the ability to understand (or even listen to) each other. The many tongues quickly turn into forked tongues, as the strongest in the EU vie to survive, the weakest revolt, and the US is torn between helping for purely business reasons, or pretending not to hear the cries of ‘Help!’ for purely fiscal reasons. We see two tiers of safety emerge. In the first are genuine safe havens like precious metals alongside previously rock-solid currencies. In the second are ports of convenience (the UK, US and Japan). Being an odd hybrid, the Chinese Yuan is at first ignored.

German bonds and Swiss currency get overdemanded, playing havoc with their neighbours…and their exports. The neighbours go under one by one, collapsing the eurobanks and US insurance sector. Gold rises above $5000. Gold miner shares go through the roof, but other stocks collapse in panic…probably too quickly for a US Fed QE3 to be even organised, let alone have any effect. The second tier is seen to be no kind of safety at all, and the Beijing politburo panics as a newly-floated Yuan begins to overtake the value of the US Dollar.

Now the G20 meets as all holidays are cancelled. It talks, it debates, it goes round in circles. Gold is at $8000. The speed of panic overtakes any possible joint action: the banking system goes into meltdown. Sovereign defaults occur on a daily basis, bank collapses are almost hourly.

And then, The Interval. A pause for reflection in the bar, and further debate: what will happen in Act Three? Does anyone know if there’s an Act Four? Have we thought about a train home if there is one?

I have no idea what will happen in Act Three. I know what I would like to happen: the rejection of free-market economics and command economy economics, and a flourishing of rich, new economic thought – necessity as the mother of invention and all that. Above all, I’d like to see the abandonment of unbridled consumption and unsafe credit as the drivers of human commercial and community life. I’d like to see banks so regulated, they daren’t so much as fart without the say-so of their watchdogs: but the last thing I want is for their watchdogs to have anything at all to do with government.

I think the developing World will suffer a setback. I think African famine will continue – and more and more blame for these will be attached to global economic disaster – both dishonestly and unwisely. But most of us will suffer little more than a year or five of anxiety. Probably, we will learn that a lot of the crap we suffered before simply isn’t worth it. Very probably, we will sweep away most of the political practices we currently take for granted.

But most vitally, I hope to finally lay globalist bollocks to rest in a lead-lined casket of a similar formulation to that reserved for Newscorp. I want to see a world finally emerge in Act Four (and yes, there has to be an Act Four) in which there are neither siege economies nor mad mercantilist trade wars – but rather, nationalities seeking pride in self-sufficiency, and even greater pride in the appeal of their traditional products elsewhere in the world.

This would mean the end of One Size Fits All megalomania. And in reality, until Homo sapiens evolves properly, we will never get that. Which is why, inevitably there will be Babel II: Return of the Maniacs.

If you found this useful, you might like to see the full set at Crash 2.