The Debt Wars

When we were kids it was generally accepted that the next World War would be fought to stop the spread of Communism.  Then President Reagan won the Cold War--with just a few regional skirmishes over the years--and it wasn't so clear what would be the source of the next global conflict.  "Concerned Citizens" like Al Gore told us the next major war would be fought over natural resources--like fresh water, energy sources and tillable land--as the global population soared and those without would rise up to try and take from those who had such resources.  Then along came 9/11 and it looked like religion would be the source of the next World War--with the Judeo-Christian nations battling the Islamic World over what satirist Jonathan Swift described as the "correct way to crack an egg". 

But now it's beginning to look like the new source of international tension will be debt.  More specifically, sovereign debt owed between countries.  Like World Wars I and II, the seeds of this battle have already been sown in Europe.  Nations freed from the burden of self-defense by NATO and the US, embarked on unsustainable financial policies funded during the economic growth of the last three decades by borrowing money from their neighbors.  As the Bible says, "The borrower is slave to the lender".  Now that the sources of credit have dried up, the lenders are expecting some payoff from the borrowers.

The seeds of that discontent are about to get watered and fertilized by the measures agreed to in the Eurozone summit last week--as those profligate nations agreed to the debtor nations' demands to get their financial houses in order--even if that means budgetary oversight from outside agencies.  If there is one thing we have learned over the centuries, people don't like having other nations telling them what to do--especially when those demands mean they might have to work harder and longer.  The public unrest aimed at the debtor governments will soon turn against the lenders--and the drums of war will begin to beat.

Just like in the 1900's the dominoes are lined up to take the regional conflict global.  The oil producing nations of the Middle East will have to choose sides--likely joining the countries that actually have money to pay for that precious crude.  And then there is China--who has become the 21st Century superpower by buying up everyone's debt.  Who do they align with in the Debt Wars?  And will it be on the same side as the United States?  I tend to doubt they are going to keep loaning us money to do battle against them.

The one positive thing is that barren, radioactive wastelands tend not to repay their debts--so we probably won't have to worry about WW3 being a nuclear conflict.  Now we can just concern ourselves with learning the Mandarin language of our future masters.