“Insanity on a Global Scale - It’s a Mad World.”
Niall Ferguson Writes: “I was wondering why the antics of world leaders at the United Nations seemed so familiar last week. Then I realized it was just like a university faculty meeting. Extravagant, long-winded denunciations of the president are what professors do, not politicians. Sure enough, Venezuelan President Hugo Chavez couldn’t resist brandishing a book by Noam Chomsky — the United States-hating darling of all campus lefties.”

Of course, all that drivel about the devil and the smell of sulfur — quite apart from the tedious cliches about the evils of American imperialism — wouldn’t matter if Chavez really were just a professor of sociology. Unfortunately, he is president of a country that possesses more than 6.5% of global oil reserves and just under half of all the oil left in South America.

But that’s nothing. Compared with Iranian President Mahmoud Ahmadinejad, Chavez is just a clown. By contrast, Ahmadinejad’s speech the day before was seriously scary. Sure, he also heaped scorn on President Bush, not to mention the U.N. Security Council. But whereas Chavez cites Chomsky, Ahmadinejad has evidently been reading the works of Holocaust denier David Irving, imprisoned in Austria.

How else to explain the Iranian leader’s crazy comments in last week’s Time magazine? “As to the Holocaust,” he said, “I just raised a few questions…. Why only 6 million? And if it had happened, then … why do they not allow independent research? … They put in prison those who try to do research…. Where did it take place?”

Great. We have a Holocaust denier as president of a country with 10 times the population of Israel,11% of proven global oil reserves and a thinly veiled program to build nuclear weapons.

In other news, there was a military coup in Thailand against Prime Minister Thaksin Shinawatra, who made the mistake of attending the U.N. shindig. In Hungary, meanwhile, there was rioting in the streets after a tape was leaked of Prime Minister Ferenc Gyurcsany telling his Socialist Party colleagues that he and they had “lied morning, evening and night” to win April’s election. And let’s not forget that, only 10 days ago, Andrei Kozlov, the deputy chairman of the Russian central bank, was shot dead by a hit man in Moscow.

All of which might lead you to think that this must also have been a disastrous time in the world’s financial markets. There was a time when just one of those stories would have sent a spasm through emerging markets. Oil prices would have jumped. The Thai baht would have collapsed. Hungarian bond yields would have soared. The Russian stock market would have tanked.

Not a bit of it. The price of crude oil for November delivery fell 5% last week. On news of the coup in Bangkok, the Thai currency declined by little more than 1% against the dollar — nothing compared with its spectacular gyrations during the Asian crisis of 1997. Investors in the Hungarian stock market are not having a great year, but recent political events have barely registered. To see just how far politics and economics have parted ways, just consider which of the world’s stock markets have done best so far this year. In pole position is Morocco (up 58% in dollar terms since Jan. 1). Next is none other than Chavez’s Venezuela, up 49%. In third place at 34% is Indonesia, where three Christian men were executed Friday for their part in sectarian violence, sparking riots. Russia — where it is bankers who get the bullet — is not far behind at 32%.

In January, a prudent investor aware of the many political dangers that beset this mad world might have elected to invest in secure, developed markets. But the U.S. stock market has risen by less than 5% this year. That of the world’s next largest economy, Japan, is down more than 1%.

There are two ways of explaining this mystifying disconnect. One is that everything is going according to the dastardly plan of the infinitely cunning capitalist imperialist running dogs. In perfect unison, wacko demagogues from the developing world have been wrecking the credibility of the U.N. and making George W. Bush look like a model of sweet reason. What more could Republican Party strategists have asked for in the run-up to November’s midterms?

Well, maybe. The other possibility is that investors are continuing to mistake liquidity for security. Despite the much-trumpeted tightening of interest rates by the world’s principal central banks, the reality is that monetary expansion has barely slowed. That seems to be encouraging a rather cavalier approach to risk assessment.

Just where such an approach can lead was vividly illustrated last week by the calamitous losses suffered by the hedge fund Amaranth, which lost about two-thirds of its $9.2 billion in assets by making one-way bets on natural gas futures. Who entrusted their money to these guys? Investors included a London-listed Goldman Sachs fund and — wait for it — the San Diego County Employees Retirement Assn.

So much for the infinitely cunning capitalist imperialist running dogs. Like I said, it’s a mad world.

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Niall Ferguson is the most popular Scottish historian since David Hume.
He holds chairs both at Harvard and Oxford and is also a prolific columnist on both sides of the Atlantic.
He is the author of a series of books that include “Empire” (Basic Books, 2003) and “Colossus” (Penguin, 2004) that are polemical responses to the tendency to blame the American superpower and its British predecessor for all the ills of the world today. In his history of the World War I, “The Pity of War” he suggested polemically that humanity would have fared better if the Germans had won. It can be argued that such a victory would not have given us Lenin, Stalin, and Hitler.

Niall Ferguson’s new book “The War of the World: The Twentieth-Century Conflict and The Descent Of The West” (Penguin Press, 808 pages, $35) “brings us the notion that it is Islam which, having absorbed elements from Nazi and Marxist ideology, now poses the main challenge to the West. And it’s religion, not race or class, that now defines the global front line.” This last statement from Daniel Johnson’s review of the book. (Daniel, by the way, is the son of Paul Johnson another historian with insight, and Daniel himself is following the same path)

Mr. Ferguson has a formula to explain the exceptional violence of the last century:
ethnic conflict + economic volatility + empire states = genocidal war.
These conditions were most often satisfied on the imperial periferies, and these “fault lines” became the “killing spaces of the period of maximum destruction. 1939-1945. Further, according to Ferguson, Western civilization is now more vulnerable than before because what was once the frontier between West and East, located somewhere in the neighborhood of Bosnia-Herzegovina, has moved now through every European city, and he warns that while there is still a danger of a new war of the world, the greatest treat to the Judeo-Christian world comes not from its rivals, but from within.

At SustainabiliTank.info we are fascinated by Ferguson’s idea about what generates genocidal wars and how this is dependent on ethnic conflict, economic volatility and empire states. We find that this is exactly the description of the present day warfare in empires like Sudan, the Congo (Kinshasa) or Iraq.

We think it is the intrusion of the western economic interests that moved these societies into the column of worst effects of the industrialization that created the same havoc, last century, within Europe itself -  but on this some other time.