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DEFCON

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You may know DEFCON if you are old enough to remember the Cold War. The acronym stands for ‘DEFense readiness CONdition’. See Wikipedia for a detailed description of the five different DEFCON levels. Basically, DEFCON 5 means “chill out, man”, and DEFCON 1 means “We have 30 minutes. Get to a fallout shelter, now!”.

In 2008, some people applied the DEFCON scale to the financial crisis, saying that we reached DEFCON 2 at the end of 2008. This was meant to show that we got very close to an economic holocaust at that time. I was immediately fond of the idea of having a clearly defined scale for global economic risks. Both private investors and central bankers could profit from such warning signs, I thought.

So now we have 2010 and we know that we narrowly avoided economic disaster in 2008 for the price of endless amounts of government debt. If we had an economic DEFCON, we probably would have gone back to DEFCON 3 in Spring 2009.  I’m not sure whether we ever got back to DEFCON 4 in 2009, but sure as hell we are now at DEFCON 2 again. The debt crisis has replaced the financial crisis, and the banks are still as fragile as Portugese bridges after a long winter.

That’s why I decided to introduce my own global economic risk measure, the E.COL.I (Economic Collapse Indicator), based purely on scientific subjectivity, quality-certified by my sober alter ego. From now on you can see the current E.COL.I status on the bottom right hand side on my homepage. But beware of potential side effects: E.COL.I may stimulate your mental digestion, possibly leading to Economic Verbal Diarrhea (EVD). In some cases this may cause higher blood pressures for the people around you, who may also get an anaeconomic shock. Symptoms include sporadic stuttering of the words “hope and change”.

Disclaimer for the slow-witted: This is a satiric article.

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