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Global financial system implosion begins

Haven't had a chance to read the paper yet below, but it's on a similar theme - resiliance - to the above discussions, and comes highly recommended, so I thought I'd 'throw it out there'. One thing is clear is that promoting resilience and getting the message out there can create a counter-balancing, networked effect of preparedness (or at least preparedness awareness) in a highly interconnected, technology advanced, over-optimised and increasingly fragile globalised world. It's one example of where we can eschew the pure corporate or private profit motive, and how ideas and suggestions and giving them away free, like a scattering of seeds, has the potential to create a highly fertile kind of communal profit where everyone and community benefits.

Catastrophic cascade of failures in interdependent networks
http://arxiv.org/abs/0907.1182
 
Bifurcation in non-linear systems (a fine phrase) reminds of Prigogine and his self organising systems.
It's a good observation and one of the important points he makes---the complexity upon which we depend is self organising---we participate in the global system, but we don't control it. Which means we can't arrest its failure.
 
Why have parts for British made cars made (or anything for that matter) in far away places abroad - transferring jobs, wealth and making your company vulnerable to supply chain disruption - when there are plenty of able workers that could make them here?
Because we don't have the raw materials here. If you shut down the ports and airports, you could not construct a modern car in Britain even if you wanted to---many of the raw materials that are necessary are not found on the island.

You need more than raw materials and a boat. To get either the raw materials here, or components assembled elsewhere (in areas that also probably don't have the raw materials and need them shipped first) you need all sorts of things - a stable exchange rate, a currency that represents a store of value, a solvent bank capable of extended credit, an inventory system that relies on digital infrastructure, etc.
 
Yes, but why should profitability be (in general) the only acceptable basis for making decisions affecting our society?
Because it's the way the finance system works. The economy doesn't use debt---the economy is debt. The only money that exists, exists because it has been loaned into existence---if you paid off every outstanding loan in the world in the next two minutes, the entire supply of money would vanish and the financial system would collapse, taking society with it.

Profit is necessary to sustain that debt. That is why it is meaningless to propose that we run the system on a profitless basis.
 
<snip> to propose that we run the system on a profitless basis.

Did I say anything that sounded like
150px-Venn0110.svg.png
?
 
Since I'm having trouble understanding what you wrote, I'm going to assume you are being sarcastic.

Ok, if you feel that workers in the UK are overpaid, how do we in a western country compete with far eastern wages? Given that the basics of rent, food and clothes can cost tens of times more than in a third world country.

The only realistic virtually instant cut would, i'm sure you'd agree, be to just abolish private landlords and private rents and adopt the community ground rent proposed by the green party. That would immediately cut out unnecessary landlord profits - which for large landlords can be huge. And as I'm sure you'll agree again often for very little actual work.

The people who merely pay rents don't have the choice, though, so until the greens get in should you not be aiming your advice at private landlords?
 
Because we don't have the raw materials here. If you shut down the ports and airports, you could not construct a modern car in Britain even if you wanted to---many of the raw materials that are necessary are not found on the island.

But you couldn't construct a modern car in Britain without the parts that are manufactured abroad either. Seems it doesn't make any difference.
 
Ok, if you feel that workers in the UK are overpaid, how do we in a western country compete with far eastern wages? Given that the basics of rent, food and clothes can cost tens of times more than in a third world country.

The only realistic virtually instant cut would, i'm sure you'd agree, be to just abolish private landlords and private rents and adopt the community ground rent proposed by the green party. That would immediately cut out unnecessary landlord profits - which for large landlords can be huge. And as I'm sure you'll agree again often for very little actual work.

The people who merely pay rents don't have the choice, though, so until the greens get in should you not be aiming your advice at private landlords?

I didn't say that the UK workers are being "over paid".

You asked why the manufacturing was done off shore, and I answered cost of labour.

There are other factors involved when a company is deciding where to locate, but the labour costs are a factor.
 
Because we don't have the raw materials here. If you shut down the ports and airports, you could not construct a modern car in Britain even if you wanted to---many of the raw materials that are necessary are not found on the island.

Whether it is a very old pre electronics era car, or a modern one with fancy gadgetry, the main material used in a car is steel. Steel is mainly iron ore, one of the commonest ores on the planet, and I suspect it is still largely plentiful in Britain. Plus, with a more stringent, energy prudent, recycling regime - including recycling steel here instead of shipping it abroad - we can be self-sufficient when it comes to steel.

As for smaller parts and materials that make up a car, I realise that modern vehicles have become very complex - choc-a-bloc full of hi tech gadgets, rare earth metals, largely to be found in China etc - but we need to start to engineer simplicity in cars and a lot of other goods. Things that become too complex invariably become technically impregnable to localised, low tech, DIY repair, which is an essential to building in resilience in a post peak oil world. Those who profit from the throwaway society, things being ineconomic to repair, and making people reliant on expensive experts and imports to repair things don't like it, but it is a win-win situation for people, consumers and the workers.

Additionally I am reminded of something you said earlier about the impact of a coronal mass ejection. It - on a very large scale - is of course a very low risk, high consequence event, but were the earth to be hit by one currently, could not such a scenario lead to the frazzling of electronics in cars? And of course, out with the occasionally temperamental peccadilloes of the sun, there are other circumstances in which this can happen on a wide scale. In such a scenario, the only thing left capable of driving would be vintage cars like VW Beetles, Ford Mustangs etc. And of course modern vehicles that have been stored in Faraday cage lined buildings. But outside certain quarters and corridors, contingency planning like that is probably few and far between, and wouldn't be much use to ordinary people and businesses trying to get back to normal and navigate their way through some semblance of civilised life in such a scenario.

The analogy is clear. Supply disruptions brought about by war, man-made or natural disasters, the information revolution and the proliferation of 'surround sound' communication creating a 'megaphone' effect leading governments into knee jerk reactions, the end of cheap energy or a combination of all. Ultimately, on a slow burn, step by step, creeping change basis, the end result of such events, and flash sudden disasters mentioned in the paragraph above, could be much the same.
 
Interesting argument here: (pdf!)

First, the social effects. At least in Sweden the “creative destruction” will only work half way, the destructive part. Industries have come and gone. In the 60's, Sweden's textile industry moved out, and in the 70´s and 80's the same thing happened to the ship yards. Other sectors grew, including, amongst others, the auto industry and especially the public service sector. Promoting this “structural change” became the official policy of the unions and the Social democratic party. Today no other industries are on the rise and the public sector is facing cutbacks. In an auto-dependent economy such as Sweden’s, this will mean disaster.

Secondly, an industry like the auto industry, is not just a bunch of machines and buildings. Above all, it is an organization of people. If you dissolve that organization it's like taking a car apart and throwing the wheels, the crank shaft, the wiring, and the axles in different heaps on a scrap yard. The parts would be the same, but it would no longer be a machine. The different heaps of parts could no longer be used.

So, as humanity faces its toughest challenge so far – to change an economy and production that has been built around fossil energy for 250 years – we need to use all the resources we can. It would be a completely irresponsible waste of resources to destroy an industrial complex that has been built and developed over nearly a century.

Instead ...
 
EIA oilcrash forecast

In case anyone is in the slightest doubt where this is heading, the Energy Information Administration is about as establishment as it gets, and this is their latest global oil forecast. They are no longer pretending that there is anything coming through the oil project pipeline of sufficient volumes to offset depletion after 2012.

You will recall that the only hope of avoiding the sovereign default intrinsic in our debt level and budget deficit was some GDP growth consistent with a 2/3% budget surplus. That was contingent on the "AEO2009 Reference Total Consumption" in the chart.

Lot of chatter in the US financial press now about the possibility of another financial market meltdown, with particular concern about the contamination of the global financial market by Greece's IMF bailout. It probably isn't all that long now ...

se54ps.jpg


(Original EIA Graph - PDF warning)
 
Rather appropriately considering peak oil issues seem to have left their own thread and are now mixed into the economic woe thread.....

http://blogs.ft.com/energy-source/2...-oilists-starting-to-speak-the-same-language/

Are policymakers, economists and peak oilists starting to speak the same language? A rash of papers, comments and interviews have made us think this recently. It’s not as simple as ‘policymakers are waking up to peak oil’, but that all those groups — and indeed, industry — are increasingly talking about the same issues looming in fossil fuel production, even if they’re using different terminology.

Finally.
 
Rather appropriately considering peak oil issues seem to have left their own thread and are now mixed into the economic woe thread.....http://blogs.ft.com/energy-source/2...-oilists-starting-to-speak-the-same-language/
Finally.


Quote from that FT blog:
"We’d venture that several things have kept talk of peak oil apart...[including]...a perception that many interested in peak oil simply predict overly dramatic, armageddon-style trajectories that sober-minded policymakers see as overblown.


Comparitavely speaking, it's interesting how scientific theories and apocalyptic predictions about the possible consequences of climate change (of which we've seen many over the years) aren't treated as overblown, or at least subjected to greater veracity, i.e. more stringent - and independent - scientific and public analysis. Care for the environment and global ecological systems and investigating how they might better be cared for does indeed have a degree of importance in terms of investment and action. However it is odd, given peak oil is backed up by much harder science and statistics, that it gets so little prominence. It seems to me that the climate change movement in terms of it's focus on more efficient use of energy, the importance of recycling etc, serves a purpose in helping achieve a reduction in oil use and demand. Ultimately - not that I'm arguing against it - but maybe focus on investment in peak oil issues in terms of cost/benefit and an ability to expand supply of what is a finite resource, isn't seen as having much of a point or a positive outcome? Supply of oil can't really be expanded significantly without causing further environmental degradation and increasing greenhouse gas emmissions (e.g. the Canadian tar sands, the possible future exploration and drilling of a [possibly] ice cap diminished Arctic). The main solutions seem to be in alternative energy technology [anyone know how to invent a 'flux capacitor'!? lol] and design improvements (e.g. in engines) that might extract greater and more efficient returns from oil.
 
...
However it is odd, given peak oil is backed up by much harder science and statistics, that it gets so little prominence

Chris Nelder has written a couple of posts this month about UK officials ‘waking up‘ to peak oil, which he says was generally considered a “tinfoil hat theory” just a few years ago.

Many people have been in denial, encouraged by others with a vested interest in keeping the world's casino tables er, I mean trading floors, open for business-as-usual for as long as possible. Add to this that world leaders like Bush and Blair prefer to believe in sky pixies rather than science and likely believe it is their duty to help hurry the apocalypse along a bit...
:rolleyes:

Not so odd, really.
 
Many people have been in denial, encouraged by others with a vested interest in keeping the world's casino tables er, I mean trading floors, open for business-as-usual for as long as possible.

Yeah that figures. I've read stories about a stream of hedge fund millionaires that have already cashed out their chips, and are now falling over themselves buying farms etc.

In parallel, I noticed that James Kunstler's Monday blog had a bleaker tone than usual, but John Michael Greer has a few recent essays with more constructive and highly topical words of wisdom: http://thearchdruidreport.blogspot.com/
 
A massive anti bank rally has taken place in New York.
Thousands marched in anger over lost jobs and ruined lives, demanding answers from Wall Street's money juggling parasites.

link
 
They really should re-instate something like the Glass-Steagall act all over the world and split off what I would call the "boring but vital" High Street banks that Joe Public uses to keep his savings, pay his bills, get loans for cars, homes and small businesses etc, from the high-risk "casino" part of banking.

And then legally prevent those "boring but vital" banks from then getting involved in anything much more complex than the plodding but necessary work of taking deposits, paying direct debits and cheques, running ATMs, and making loans.

At least that way, if an investment bank overreaches themselves, its a bunch of city boys that lose their jobs and money, which, although serious, could be treated like any other larg-ish business failing, rather than having single entities that cannot be allowed to fall whatever the cost of bailing them out.

Will various govrnments have the balls to do something like this?
 
They really should re-instate something like the Glass-Steagall act all over the world and split off what I would call the "boring but vital" High Street banks that Joe Public uses to keep his savings, pay his bills, get loans for cars, homes and small businesses etc, from the high-risk "casino" part of banking.

And then legally prevent those "boring but vital" banks from then getting involved in anything much more complex than the plodding but necessary work of taking deposits, paying direct debits and cheques, running ATMs, and making loans.

At least that way, if an investment bank overreaches themselves, its a bunch of city boys that lose their jobs and money, which, although serious, could be treated like any other larg-ish business failing, rather than having single entities that cannot be allowed to fall whatever the cost of bailing them out.

Will various govrnments have the balls to do something like this?
Did you miss all the Volcker Rule stuff? Bill currently being dismantled by Democrats and Republicans alike ...
 
Useful little summary of the numbers behind the UK's £1.2 trillion national debt, £43 billion interest bill, where the government is spending £671 billion of our money and some info on the difference between spending it on stuff that makes our lives better, and spending it on stuff that makes it worse.

Debt Bombshell
 
From the FAQ on that site:

About the author

This site is the work of a single concerned citizen of no political affiliation. I consider myself a libertarian, with a strong belief that human freedom and economic freedom go hand in hand.

No surprise there. A libertarian gold bug, bet Max Keiser is a fan.
 
Interesting article by Blanchflower in Bloomberg. For the UK at least, he says that public sector life support needs to stay on for now to prevent a UK double dipper. A hung parliament looks virtually a certainty. But if the Conservative power in a coalition is too strong or insufficiently watered down by their coalition partner (i.e. Labour or the Lib Dems), in my opinion I can't see their desire to roll back the state being sufficiently curtailed by fears about the consequences of a double dip recession. If anything maybe they want to see more businesses fail. They might see some advantages to it for sections of the business class who will end up being able to buy up bankrupted businesses cheaply and eliminate the competition.

Double Dip Beckons for English Patient: David G. Blanchflower

http://www.bloomberg.com/apps/news?pid=20601039&sid=aPwamaJTyRYU

Meanwhile, as the west is weighed down with problems over oil spills, Greek sovereign debt and faultlines in the Eurozone, and bogged down in the Iraq and Afghan quagmires, the signs aren't good in terms of tensions within the reclusive and repressive nuclear state of North Korea:

"North Korea masses 50,000 troops on border. North Korea has completed deployment of about 50,000 special forces along the border with South Korea, amid high tensions over the sinking of a Seoul warship.
http://www.telegraph.co.uk/news/wor...orth-Korea-masses-50000-troops-on-border.html
 

That's a VERY interesting article. It's a salient reminder of whats seldom said as the faultlines in the Eurozone unfold. What we are seeing is a Titanic struggle between the US dollar and the EURO for prime place as the reserve currency within the west. The recent sovereign debt downgrades of Spain, Greece and Portugal is a prime example. One that the EU is now seeking to remedy by setting up a more independent, pan European credit agency to assess and rate European debt.

http://www.theglobeandmail.com/repo...pe-considers-starting-its-own/article1556916/
 
Global Governance? he sounds like one of them there conspiracy nuts...

ECB President Favors Global Governance

The President of the European Central Bank, Jean-Claude Trichet, told Forbes that global governance is extremely necessary if we want to prevent another financial crisis. In his prepared printed and spoken remarks to the Council on Foreign Relations, Trichet emphasized that politicians, economists, and financiers must work across the Atlantic and collaborate on methods to create an international set of standards. It is his belief that through global governance, the resiliency of the global financial system can be assured, noting that ultimately it was governments’ use of taxpayer’s money, equivalent to around 25% of GDP on both sides of the Atlantic, that prevented another catastrophic great depression from occurring.
 
It's also an advert for a gold dealer :)
I saw that :) There is a lot of gold peddling going on round the internet right now. "The Market Oracle" is atrocious which is a shame because they have some good stuff. The data is sound, though, which is why I posted.
 
When Herman Van Rompuy came into power was talking about global governance as something that was actually occuring, got the impression he was talking about G20
Pure hubris. It stems from failing to recognise that the complexity of the global financial system has arisen through self organisation--we didn't design it, it evolved. That means it affects us but we can't control it, at least not through "global governance".

What we *can* do is accept some basic protocols at country level and implement them in each of the major financial systems. You could mandate 100% banking reserves and eliminate fractional banking, run a zero growth 0% interest system and allow banks only to make a profit from intermediary functions, introduce a fixed pricing system, and all that stuff. But you would have to ask people to say cheerio to the illusion of plasma TVs voluntarily rather than wait for them to disappear through violence, and that is probably unlikely.
 
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