Sunday, January 2, 2011

la Crise Financière I

    "Turning and turning in the widening gyre
    The falcon cannot hear the falconer;
    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,
    The blood-dimmed tide is loosed, and 
    The ceremony of innocence is drowned;
    The best lack all conviction, while the worst
    Are full of passionate intensity."
                              W B Yeats, The Second Coming

Since I want this blog to be about big ideas, large events--the heavy game, trapped in the mad woods, beaten to death by human fists, freshly stuffed in a grimy shed--I don't think it can be complete without saying something about the financial collapse hat punctuated the 00's.  And as Dubya used to say, I'm The Decider.

I work for a very large bank here in the U.S., and I have no desire to rip on my employer.  Furthermore, I don't want to get into the tawdry, petty, or political.  There's plenty of other places people can go for that.  Instead I want to look at a few of the patterns, some of the folklore, and try to outline some of the deeper implications.  Furthermore, this isn't the time for me to get into deep monetary theory, so that'll have to wait as well.

One of the best explanations of the proximate causes is by Dr. Lo of MIT.  I don't have the inclination to break his explanation down when he does it so much better.  Watch the video yourself and see what I mean.  There are all kinds of other explanations:  greed, hubris, lack of common sense, the older generation, the younger generation, deadbeats, the rich, the the United States many of us blamed President Bush while many others blamed the Democrats in Congress, as in other lands where political partisans blasted blame back and forth.  The problem is, this thing was global.  The capitalist societies suffered the same as the communist ones, well-regulated economies weren't spared and neither were the deregulated ones.  Fiscally responsible nations like Spain got pounded as bad as the spendthrifts.  There was no political party, religious entity, or age group whose members were exempt.  Furthermore, these patterns had been around for millenia before the train wreck, and it will be for many more.  The only folks that didn't get the horns (as far as I can tell) were in two groups:
  1. Societies too poor, or too hunter-gatherer, to notice
  2. Australia
The Australians got off easy because they're China's biggest raw-materials dealer.  China's policies had the effect of pumping up the Australians.  More on that shortly.

My second point:  the financial crisis, up to now, has actually catalized very little social change.  David Kotok remarks that investors and workers were scarred by the events, and many others join him.  It's certain that a couple billion people experienced negative impacts, but I've seen no evidence of cultural upheaval.  In fact, most societies responded the same way they always have, usually by doing more of what they were already doing.

We hear it often, at least in the US, that the Financial Crisis changed everything, that 9/11 changed everything, that the AIDS epidemic changed everything.  But really, little has changed.  If anything, these events have caused our preexisting prejudices and habits to become even more entrenched.  I think it's ultimately for this reason that the financial crisis of 2007-20?? is not unique and will be repeated; as Dr Harvey points out, they're endemic to capitalist (and many non-capitalist) systems.

At this point I have to stop part I.  There'll be a part II, if not tomorrow then the next day.  Cheers!

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