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Global financial system implosion begins

I am no financial whizz but if workers had more monies i.e. good pay rises. These monies could then start to buy things - workers feel more happy, businesses are selling, profits increase etc..Or maybe the finance problem is a whole lot bigger and the forthcoming recession is going to be very tough.

Some economists on the UK issue are advocating spend, spend, spend a sort of public expenditure Kensyian solution. May be even this is too late for the bankers nightmare.

Joke (sorry if u have heard it) what do u call a banker who irons five shirts a week - an optimist. Poor I know.
 
darkfibre said:
With a hollow state.

<snip> ]
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Heh, I haven't read any of that guy's stuff for ages. Pretty much since everybody lost interest in the US/UK's wars in Iraq/Afghanistan.

He's seeing things pretty clearly through his 'failed state' prism isn't he ... ?

The REAL market-state, the form of governance that that has truly embraced the global market system, is hollow. In effect, a state that doesn't place any barriers between itself and the global marketplace. As a result, the only real opportunities created by the emergence of the market-state are opportunities to steal extreme wealth.
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source above ...
 
I am no financial whizz but if workers had more monies i.e. good pay rises. These monies could then start to buy things - workers feel more happy, businesses are selling, profits increase etc..Or maybe the finance problem is a whole lot bigger and the forthcoming recession is going to be very tough.

Some economists on the UK issue are advocating spend, spend, spend a sort of public expenditure Kensyian solution. May be even this is too late for the bankers nightmare.
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This really isn't the solution to the problem though in my opinion. The government has two possible routes for finding the cash to do either:
1.) Tax people
2.) Print money.

Either will result in problems. Increase taxes on business or the wealthy will see them move offshore to elsewhere. Fair enough you might say about the CEO's, but at the end of the day they still run the company so nothing has really been achieved in this aspect, and they probably keep their funds tied up in the Bahamas etc. anyway.
The corporations who move off shore will obviously be cutting UK jobs, plus we lose some of the tax base they provide. Taxes are always passed onto the consumer/employee or shareholder (that means a lot of peoples pension funds), none of the CEOs etc. will feel the pinch that is for sure. It's the old concept you can't tax a corporation as it is a non physical entity, just a collection of people and some of those people will take the brunt, and it won't be those at the top of the pile.

Printing our way out of debt with more debt is obviously nonsense as this leads to inflation and at worst hyper inflation. I can't believe that the FRB system can carry on much longer at any rate in its current form. The obvious way of keeping the system running and those who control it in pocket is to abolish currencies when they reach their theoretical tipping point and create a new one. This happened with the Weimar republic due to hyper inflation. This is why I give some credence to the rumours of a North American unified currency. If the $US is abolished and the economies of Canada and the US integrated it will give a chance for the central bankers to "reset" the system and thus we start over again... and again... and again.

Our best solution now is to abolish the BoE get rid of the debt money system and revert back to using some form of sovereign currency system not based upon FRB or debt at the same time there needs to be a mass investment into providing a super cheap renewable energy supply not controlled by the current crop of oligachs.

In fact I see this as being the only way forward if we want to stop this cycle short of the complete abolition of money and I don't think human kind is ready for that yet somehow... :).

TomPaine
 
Bernie Gunther said:
Heh, I haven't read any of that guy's stuff for ages. Pretty much since everybody lost interest in the US/UK's wars in Iraq/Afghanistan.

He's seeing things pretty clearly through his 'failed state' prism isn't he ... ?
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:)

I've found some people put off by his background, (USAF special-ops pilot, etc.) which is a shame as he's had a fair amount of intelligent, relevant stuff to say lately...

I'd say his overall approach - applying 'systems thinking' - is pretty useful in this context. His stuff on 'resilient communities' especially.

The Future of Peace. Resilient communities. Our tightly interconnected global system is increasingly prone to large shocks from a variety of man-made and natural causes. These shocks can disrupt flows of energy, food, commerce, and communications to produce widespread wealth destruction (at best) and famine/death (at worst). The best way to mitigate these shocks is to build resiliency at the local level so that communities can enjoy the benefits of globalization without being damaged by its excesses. I am exploring what a community needs to do to be resilient.
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There's also a sub-blog to the Global Guerillas thing which is easy to miss...

http://globalguerrillas.typepad.com/johnrobb/
 
Well, what interests me is the evolution, from applying systems theory to e.g. the US disaster in Iraq, to seeing how the resulting analysis applies to the US itself, to ending up in a position in regard to the recent crisis of neo-liberal state that many marxists and anarchists would agree with.

The resilient communities stuff is interesting too, insofar as he starts where he starts and ends up in a position not unlike that of Kropotkin, systems ecologists like Folke Gunther and some fans of Chris Alexander ...
 
Bernie Gunther said:
Well, what interests me is the evolution, from applying systems theory to e.g. the US disaster in Iraq, to seeing how the resulting analysis applies to the US itself, to ending up in a position in regard to the recent crisis of neo-liberal state that many marxists and anarchists would agree with.

The resilient communities stuff is interesting too, insofar as he starts where he starts and ends up in a position not unlike that of Kropotkin, systems ecologists like Folke Gunther and some fans of Chris Alexander ...
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I'm assuming you mean evolution in the sense of 'how we get from the idea to the reality', rather than the evolution of Robb's personal thinking (which I gather was a lot to do with his work in information networks).

It's a big question. To my mind, it centres around the recognition that distributed networks (rhizome) outperform hierarchical networks.

It's easy to see this in such diverse examples as the internet or Japanese Knotweed, yet as obvious as it may seem, the shift in thinking required to internalise the idea is unlikely to be an easy or spontaneous one, since it's so anathematic to the current mode. A sort of 'Stockholm Syndrome' kicks in - witness the calls (regarding the current crisis) that those in authority 'do something', which result in the sort of actions we're seeing, where the states manoeuvres invariably tie itself to the same preordained fate as the institutions it seeks to maintain.

Perhaps total systemic collapse is the only way forward - the existing mindset needs to demonstrate it's failings beyond doubt, even and especially to those whom it serves the most - before a new 'pattern language' can evolve. Creative chaos, and all that.

I'm thinking of the existing constraints faced by anyone attempting to realise such ideas (relocalisation, etc.) in the form of planning laws, DEFRA regs and the like. That's in addition to the systemic constraints inherent to working within a system which views 'sustainability' as 'failure'.

At the end of the day, though, the change can only come from the grassroots - individual action taken regardless of the consequences.

At the risk of derailing the thread further, you might find Jeff Vail interesting - a recent post on Open Source Ecology especially. :)
 
sleaterkinney said:
$55 trillion in credit default swaps, the recent dip was caused by Lehman's, Iceland and Washington Mutual have yet to come.

http://news.bbc.co.uk/1/hi/business/7641528.stm
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Actually, the total notional amount of outstanding derivatives in all categories rose 15% to a mindboggling $596 Trillion as of December 2007. That's about $90 thousand for every man, woman and child on the earth.

Now ordinarily thse would settle for something close to their value but the problem is the kind of sharp shocks we've been seeing recently, companies going bust etc.
 
Well, you've got a sort of positive feedback loop relating to debt and power. The more debt governments issue, the more power finance capital acquires over what governments can do and when finance capital hits another of its all too regular crises, the bail-out causes government debt to increase yet further.

So you get a series of escalating crises each of which apparently results in an intensification of the conditions (finance dominating policy and sucking the productive economy into a black hole of ficticious capital) that enabled it to occur. Moreover the debt acts as claims against the unfortunate citizens of that government, enabling finance capital to loot, with the assistance of those compliant governments; their incomes, their savings, assets and so on.

One of the interesting things about the various resilience and localisation ideas is that they represent a kind of refusal to be sucked into that black hole, and try to take the real productive economy and our means of subsistence in particular, bit by bit out of that neo-liberal system and rebuild them someplace where we can keep an eye on them, protected as far as possible from that sort of looting (or primitive accumulation some might say)

Unfortunately the sucking black hole of ficticious capital controls the coercive forces of your man Robb's 'hollow state' ... so things might get ugly if any of that stuff ever started to get adopted on a large scale.

Trouble is though, we know what positive feedback loops are like, so if we don't do that stuff or something else effective, then it gets ugly anyway ...
 
Well put.

One noteworthy and unfortunate aspect of our behaviour when confronted with such positive feedback loops appears to be a tendency to over-react, often intervening in such a way as to make the loop stronger.

To pick a totally random example - the 'bailout' - where nationalisation effectively makes participation in their ponzi scheme mandatory. :mad:

Sod it - I'm going to watch Nassim "The Black Swan" Taleb again to cheer myself up. :D
 
Well it's starting to come out that the yanks are using that bail out money from the govt to............ pay themselves more bonuses.

here


fucking great ain't it.
 
snadge said:
Well it's starting to come out that the yanks are using that bail out money from the govt to............ pay themselves more bonuses.

here


fucking great ain't it.
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Only to be expected really. Just drives home the point made by several people above about who our governments actually work for.
 
I suppose so Bernie, what sticks in my mind over it all is that the start of the fall of capitalism started in Newcastle.
 
Silvia Federici has this to say on the parallels between the current crisis and the debt crisis inflicted on much of the developing world since the late 1970's. I find it interesting that she's echoing from a left perspective, what your man Robb is saying from a quite different, mostly military 'civil affairs' perpective, guided by the study of collapsed states like Iraq and what people like Richard Douthwaite have been saying for years from a green perspective.

Through the lending mechanism, the massive flow of petrodollars that had been amassed in the aftermath of the 1974 embargo (the first attack on US wages, organized through a stiff inflationary wave) was redirected to the coffers of Third World nations, which, attracted by the bait of cheap loans, were soon hooked to the global economy, all dreams of an independent path to development foregone.

In other words, loans at the lowest interest rates were key to the creation of a global debt and the process of primitive accumulation (through structural adjustment) that was imposed on most of the workers of the world <snip>

Continuing with the parallel, we have to conclude that with this 700 billion dollar “bail-out,” coming straight out of our pockets and hides, the “structural adjustment” that since the 1980s has been imposed on countries across the world, is going to be extended to the US territory and the US working class. This time (after many beginnings and many deferrals) we too are being “adjusted.” I will discuss later what adjustment will mean at this time for us. For the moment we only want to stress that we are witnessing not only a financial meltdown, but also a great robbery, a macro-process of expropriation, an immense transfer of labor, this time siphoning funds to the US banking system not only from the Third World, as in the Debt Crisis of the 1980s, but from our households, through the classic maneuver of increasing the national debt. What we are witnessing is a capitalist coup, an example of capital’s historic readiness to destroy itself in order to regain the initiative and defeat resistance to its discipline. <snip>

There are at least three areas of resistance to the neoliberal accumulation project that the Wall Street collapse has to respond to. I will list them without an attempt to establish an order. First, the crash and the bail-out must defeat the attempt of the US working class to circumvent class discipline by using financial markets, rather than struggle, sweat and labor, to increase their wages. <snip>

The second target of the attack is the global resistance to capital’s appropriation of natural resources beginning with oil and gas extraction. <snip> ... There have also been bottlenecks in the exploitation of forests, waters, minerals, and lands which structural adjustment was to remove. <snip>

Third, global migration has developed in ways that make it difficult for governments to use it as a regulatory mechanism for the labor market. <snip>

Crises are always a threat and an opportunity as they break down business as usual, and reveal something of the inner workings and nastiness of capitalism. This one is not an exception and we can be sure that what will come out of it will be greatly a result of what people do in response to it. If the Great Depression is an indication, it took more than ten years for capital to organize a different social order. Much can happen in such a period.

The problem for us today is that workers are only organized around electoral politics at best. And many still place more hope in a racist and imperialist stance than in working class solidarity. We certainly don’t have a communist or an anarchist movement organizing rallies of the unemployed, fight against evictions, or organize “penny auctions” of farms as they did during the Great Depression. Nor do we have an anti-capitalist alternative as the Soviet Union was in the eyes of many. We also do not have the kind of solidarity that in the Great Depression led to invention of new commons, like the hobo movement and the creation of “jungle cities.”

Where to start then? This is what we need to work on in the coming months and years. There is no clear path to this kind of mobilization. But we need to start somewhere. On two things we can get people to agree with us: First, we better find alternatives, because, as things stand presently, we are so incestually connected with capitalism that its demise threats our own existence. Second, unless we organize to resist government planning, what lies ahead for us, after a cut of more than a trillion dollars of our “entitlements,” looks much more like some variant of fascism than socialism.
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source
 
Fears of Lehman's CDS derivatives haunt markets
17 Oct 2008
Ambrose Evans-Pritchard
Daily Telegraph

"It is a full week after bankers gathered in New York to start sorting out the derivatives mess left by the bankruptcy of Lehman Brothers. We still do not know who is on the hook for some $360bn of default insurance, or how much they will have to pay...Those on the wrong side of these Lehman debt contracts - known as credit default swaps (CDS) - must come up with the money by Tuesday, the next D-Day in the ever-fraught calendar of the credit markets. There has been a deafening silence so far."

http://www.telegraph.co.uk/finance/...of-Lehmans-CDS-derivatives-haunt-markets.html
 
Zeppo said:
Joke (sorry if u have heard it) what do u call a banker who irons five shirts a week - an optimist. Poor I know.
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Heh!


I read a comment out here that came from a trader:

"It's worse than getting divorced. I've lost more than half my net worth, but I still have a wife."


:D


Woof
 
Darios said:
Scarily prescient piece by Dmitry Orlov here, comparing (and predicting) the Soviet and U.S. collapses.
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Trust a Russian to pull off some perfect black comedy while talking eminent good sense. I like him ...

Certain types of mainstream economic behavior are not prudent on a personal level, and are also counterproductive to bridging the Collapse Gap. Any behavior that might result in continued economic growth and prosperity is counterproductive: the higher you jump, the harder you land. It is traumatic to go from having a big retirement fund to having no retirement fund because of a market crash. It is also traumatic to go from a high income to little or no income. If, on top of that, you have kept yourself incredibly busy, and suddenly have nothing to do, then you will really be in rough shape.

Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.

If the economy, and your place within it, is really important to you, you will be really hurt when it goes away. You can cultivate an attitude of studied indifference, but it has to be more than just a conceit. You have to develop the lifestyle and the habits and the physical stamina to back it up. It takes a lot of creativity and effort to put together a fulfilling existence on the margins of society. After the collapse, these margins may turn out to be some of the best places to live.
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source above
 
In any case capital has a veto on government policy while governments issue debt and allow unrestricted capital flows; so getting into politics is only going to permit a tiny bit of mitigation here and there, not any fundamental change.

I strongly suspect any real solution has to come from the grassroots level, constructing resilient and humane alternatives to the neo-liberal status quo.

On the one side, there would not have been a wage struggle unless there were waged workers. But waged workers are not natural beings, they have to be historically made (as indeed were unwaged workers). For if one has access to a common, i.e., plentiful subsistence and a powerful community around him/her, s/he is not likely to go to look for a miserable wage from an inevitable boss (much less accept unwaged criminalization, enslavement or dependency on a male wage). Waged and unwaged workers were created simultaneously by being driven out of subsistence (which we call “enclosures”). For you can not be an unwaged worker if the wage relation did not structure subsistence in your society.

The simple logic of enclosures is engraved in “letters of fire and blood” in the basic texts of the anticapitalist tradition (not only Part 8 of Capital I). Indeed, one can say that the anti-capitalist struggle (in the form of a struggle to keep capital from becoming the dominant social force) began long before 1492 and the resistance to the enclosures, colonization, the witch-hunt and slavery in the sixteenth through the nineteenth centuries.

But in our travels we saw that this process was far from over. Indeed, it was being reintroduced in Africa by the World Bank and IMF in the form of structural adjustment programs as if it had never ravaged the continent hundreds of years before, first with the Atlantic slave trade and later with colonialism.

On the other side, waged workers have not been content to remain waged workers. They have continually attempted to recreate environments and networks of mutual support where they are not totally dependent on the wage. In fact, they have tried to recreate ways of subsistence and access to wealth that is not mediated by the wage. These efforts, when successful, give waged workers more power to refuse work and to shape a life that is beyond capital long before capitalism is transcended.

These two sides express a contemporary reality, but the first points back to the beginning of capital, while the second points to its end. This too is an element of the class struggle. Capital (in all its embodiments) is always anxious to extirpate the original subsistence existence and is continually carrying on search-and-destroy efforts to do so. Similarly, capital is ever watchful to enclose any new commons that has been constituted by workers.

In order to find a language that could express this deep structure of struggle below the wage we did not believe that terms like “autonomy” and “self-valorization” were appropriate. They were too freighted with philosophical assumptions we found questionable. The vocabulary of commons and enclosures were more evocative and historically rich for us, since it speaks of a place where Marxism, ecology, feminism, and indigenous and anti-slavery struggles (including the struggle against the prisonindustrial complex and the death penalty) meet.
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No Blood For Oil
 
Apparently "The government says it can afford extra borrowing because it has reduced debt over the past 10 years."

Uhm, no it hasn't:

Image2.gif
 
Darios said:
Scarily prescient piece by Dmitry Orlov here, comparing (and predicting) the Soviet and U.S. collapses.
Click to expand...

Orlov's stuff is excellent - he often highlights little details which I hadn't even considered... stuff like 'If you are going to buy gold, you're better off getting jewellery and trinkets, as if you end up in the street trying to barter with gold coins, you're basically advertising that you've probably got a hoard of them, making yourself a target... bartering trinkets makes it look more like you're simply trading your last personal possessions'. (can't find the article right now)

Anyway, interesting podcast from a couple of weeks ago (C-realm) featuring Orlov here: http://c-realmpodcast.podomatic.com/enclosure/2008-09-26T16_31_41-07_00.mp3

...and don't forget his blog: http://cluborlov.blogspot.com/

Anyone read his book (Reinventing Collapse)?
 
In another pertinent article from Feb '08, Orlov identifies '5 Stages of Collapse':

Stages of Collapse

Stage 1: Financial collapse. Faith in "business as usual" is lost. The future is no longer assumed resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out, and access to capital is lost.

Stage 2: Commercial collapse. Faith that "the market shall provide" is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm.

Stage 3: Political collapse. Faith that "the government will take care of you" is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance.

Stage 4: Social collapse. Faith that "your people will take care of you" is lost, as local social institutions, be they charities or other groups that rush in to fill the power vacuum run out of resources or fail through internal conflict.

Stage 5: Cultural collapse. Faith in the goodness of humanity is lost. People lose their capacity for "kindness, generosity, consideration, affection, honesty, hospitality, compassion, charity" (Turnbull, The Mountain People). Families disband and compete as individuals for scarce resources. The new motto becomes "May you die today so that I die tomorrow" (Solzhenitsyn, The Gulag Archipelago). There may even be some cannibalism.
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:eek: <-- Don't click.
 
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