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The Crises Are Over — Now Back to Business-As-Usual?
The financial crisis is over: now the big banks can continue to treat money as the means to make money. The environmental crisis is over: now the industrial economies can concentrate on creating jobs using whatever means are the most profitable without undue concern as to what it does to the environment. In other words we are back more or less to where we were: business-as-usual. The rich can get richer and, one hopes, the poor will somehow manage to stay alive.
Why do people think these crises are over? In the banking world, it’s because investment banking continues to make money with money. That’s supposed to be good for everyone: is it not the case that a rising tide lifts all boats? In regard to the environment, the excitement of the Copenhagen summit is over: although the do-gooders still continue to rattle their paper swords, they can now be safely ignored. Besides, the scientific data about climate change is not certain: doubts persist. It would be foolish to let oneself be talked into making sacrifices. Safe are the tried and tested ways: best to continue securing our own interests.
How can the banking system keep going as it did in the past? First, because it’s still making money. It perceives its own interests to lie in making money, not just for clients and customers, but for the bankers themselves. But why can the bankers not be made to change their mind? Because the financial world of “making money with money” no longer has much if anything to do with the world of using money to ensure the being and wellbeing of people. The financial sector has become divorced from society, and it protects its own autonomy. Any attempt to bring it back into the fold of socially conscious and productive actors is considered an unwarranted, undemocratic, and inherently dangerous interference of the public sector in the free market of the private sector.
And why did the excitement about climate change die down? Because it appears to have failed: it didn’t produce real results. Copenhagen was just another talk-fest where powerless do-gooders pushed and pressed, but were successfully resisted by the holders of power. Now climate change is something we can discuss, but not something we need to do something about. So now we bravely (and blindly) continue doing more-or-less business-as-usual, even if many are beginning to feel uneasy about it.
What would really happen if we continued like this? That’s not difficult to tell—apart from the exact timing of the events. There will be more crises: bigger, but not better crises. The world’s financial system is intrinsically unstable: experts know that it’s ready for change, even for, as the IMF admitted, “abrupt” change. It’s only a matter of time. As long as we don’t know when the next crisis will come about, can we ignore it? The world’s ecology is likewise intrinsically unstable: it was stable for millions of years, but we managed to destabilize it in the last several decades. The next ecological crisis is likely to come with a high price-tag: millions without habitation as islands and low-lying areas are flooded; millions without safe and adequate water as water-tables are lowered and polluted; millions starving as harvests fail due to persistent drought as well as violent storms and extreme weather patterns. And those of us who remain relatively well-off can just complain with Mark Twain: everybody talks about the weather, but nobody does anything about it.
What is the alternative to the return to business-as-usual? It’s to learn. To learn that the financial world needs to be brought back to socially conscious and ethical behavior, and that it either comes back on its own, or has to be brought back kicking and screaming. Self-regulate, or risk regulation from the outside: the rule is familiar to business people. What do we learn regarding action in the ecological sphere? Not to entrust global projects to national actors. Governments represent nation-states, and nation-states are supposedly sovereign entities, pursuing only their own interests and responsible only to their own people. As long as governments perceive that their national interests are not fully aligned with the interests of the whole human family, national action will not serve global objectives. In Copenhagen we have been barking up the wrong tree. The result was not the failure of a conference, but the failure of the nation-state system. That system needs to be transformed to become effective on the global—that is, transnational—level.
These lessons speak to the need for an effective transformation: a WorldShift. This shift must transfer the responsibility as well as the capacity for action to civil society: to the people. This, however, presupposes that the people know how to act—that they are informed. Informing the people in regard to the dangers as well as the opportunities that await all of us in the coming years is something we can do already—and that we must do, in our own immediate and best interests.
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22 Comments so far
Show AllLaszlo is quite correct in all that he writes, but HOW do we go about creating a "WorldShift" (gotta love that term)? Informing the people may not be enough -- with the poo-pooers and the deniers in full volume mode. No, we don't need extra regulation, we need LESS regulation! No, the world is NOT warming up due to man's pollution -- that's just an amazing coincidence, it's due to a sun cycle (or some other cycle) that has nothing to do with human civilization!
So we don't need no f*cking change -- except LESS interference with the market.
Some of these nutballs are just that -- nuts. We see them all over the 'Net. Spuuting about how the US is (wait for it) going COMMUNIST! Woo-woo about magic crystals and astral travel. Illucid accounts about how they've repealed the law of gravity or conservation or even time-travel with just a few more bucks to finish their garage project.
Some are not that productive, they just grumble nonsense.
Some folks are just too mean and ornery to do anything for anyone else, not even to save the world they live in.
Some, however, do give a damn. Some do think beyond themselves. Some do have the potential of understanding the severity of the crises facing us. Laszlo picked the two most dangerous to us.
On financial institutions, reforming the banks is but a first step, and not necessarily the most vital. The entire corporate capitalism system is headed downhill fast and taking the world with it. It needs replacing.
Climate change may already be too late to forestall some of its more major effects. But we can demand our government actually DO something. Just as we demanded and got Clean Air regulations. Not wait until it is entirely too late.
My thanks to Laszlo for his elegant article reminding us of what is important.
Gary
"Necessity is the mother of invention, it is true, but its father is creativity, and knowledge is the midwife”
-- Jonathan Schattke
Only until the next crisis.
In trying to understand this mess of investment banking I devised a little thought experiment but I need help with it.
Here's the basic premise. I want to make money.
So it takes my bank several days to cash a check and send it to the original bank to be debited to the account that it came from. I know this because there are days at the end of the pay period when I need to eat but there is no money to buy food. (I gave up credit cards) So I "float" a check from one bank to the other.
So what if I was to open 31 bank accounts and each day I write progressively larger checks from one bank to another? My accounts keep on growing. Wow!
Except that if I withdraw from any of the accounts I'm going to bounce something somewhere. So why do this if I can't get the money out?
How about if I just use those large accounts and borrow against them? Cool! New boat!!! Yay!
But now I have to make payments. Hmmm.
Ok, so I'll open more accounts and use those to make the payments and I'll just write larger checks to cover the payment on the boat.
This is getting complicated. I'll convince my buddy Ed to do the same thing and he can buy a new car and we'll write checks to each other. (of course he'll have to pay me a little bit extra for the idea) Now it's getting fast and furious so we'll need a good computer and a printer to keep making up checks and envelopes. But the postage is getting kind of large. Hmmm. More accounts. More money moving. Don't let the banks see where it's all going.
That's as far as I can get in my experiment without putting it to paper and doing some math.
Here's the point........it's all imaginary. But the boat is real and so is the car. And my net worth is HUGE. So the sky's the limit.
And if the game fails? Well, the boat and car are paid for by then. Ed and I can go fishing. None of those banks are gonna bother chasing me around for a few hundred bucks.
Change that to buying huge buildings and before u know it you'll be to beig to fail and be getting bailed out.
This process was exactly what Gretchen Morgenson was talking about, and explained, when I first caught interviews with her on the PBS Open Mind and Bill Moyers -- the money being created was all a house of cards, and at some point, it would all collapse. She was warning everyone -- but people didn't listen. Ms. Morgenson also made clear that the money the bankers removed from the house of cards -- the salaries, perks, bonuses, etc. -- that money was real. If the bankers continued to extract the real from the unreal -- well, that's what happened when the economy crashed.
Nomi Prins makes this point too: the banksters' ill-gotten gains-- the houses in the Hamptons, the extravagant furnishings, the wine cellar, the luxury automobiles, are real enough.
It's the bottom of this obscene pyramid that suffocates when the "real" is sucked away like oxygen from the atmosphere by this predator class.
· Yr Obd't Servant
Oh the racket is sweet. By law a bank can lend out (transfer) nine times what it really has on hand. And then that magic money can be put into another bank, and then they get to multiple it bu nine again. And on and on, until we get tens of TRILLIONS of magic dollars out there in cyberspace. No cash involved.
But there simply is not enough gold or silver or any other precious metal or stone (except maybe diamonds which aren't that rare) that can "back" all the "real" money (cash) out there, let alone the magic kind. So that is a no-go.
It is all a matter of faith -- and faith in the dollar is dropping away -- and the Chinese are making hay out of that.
Gary
"What this country needs is a good five-cent nickel."
-- Frank Adams
Kay,
Gretchen Morganson is one of many who believe that we are nearing the end.
Here's what Puru Saxena has to say: "In the not too distant future, the interest payments on the outstanding national debts in the overstretched ‘developed’ nations will become so large that their central banks will need to create money just to keep the Ponzi schemes going. When that happens, the game will be up and we will probably experience a total breakdown of the fiat-money experiment."
His article is worth reading and you can find it here: (http://www.financialsense.com/editorials/saxena/2010/0211.html) The day of reckoning is getting closer.
Hold on to your seats the current bubble is about to burst!
That's right. I've been reading what E.I.R. has to say about all this for 6 or 7 years now. They said the entire world financial system DIED in july of '07'. The wake-up call was the 87 crash. That was OUR "1929", but the monetarists d*cked around for TWENTY YEARS & didn't relinquish their grip on society.Like a cut-down tree thats still green for awhile, what we've been seeing is just this global private money power scrambling & hustling to save itself. It can't be done. No recourse but to pursue an FDR New Deal type recovery; possibly even a Lincoln "greenback" issuing action. Monetarism & money (as the private property of an owning/ruling class of financiers) itself is DEAD & disappearing, not to come back; EVER. We have to prevent a "dark-age" disintegration of the world in the aftermath of the inevitable death of these financial giants.
The recent Supreme Court Decision strengthens the alliance between Greed and Government. The level of corruption will match the level of power. The Alliance is pervasive at the highest levels of Government. The President embraces it by portraying a “robber baron” as a ‘savvy businessman” in an unfettered capitalistic environment.
"The President embraces it by portraying a 'robber baron' as a ‘savvy businessman' in an unfettered capitalistic environment."
That was a nice trick as Obombster managed to turn fraud and inappropriate influence into "savvy" business practices. I guess he thinks making secret quid pro quo promises in backrooms is a "savvy" political practice. He must think of himself as a very "savvy" guy.
Like oil, like money. We take it for granted because it's abundant. Oil prices went up very high and more people feared Peak Oil and ideas for traveling less and sharing transportation finally got attention but once oil prices went back down, then it was business as usual taking oil for granted. Unless a crisis were to last longer just like the Great Depression, most people are not as used to learning invaluable lessons as are quick learners. Even the author gets it wrong when he says that banks are making money. Banks are getting money from the fed that prints it out of thin air. That pushes the dollar to a much lower value long term. But that doesn't bother most people who still believe that money is coming. Adding it all up, we have a fiat currency. It may appear as if our financial system is not a closed system because money gets printed endlessly but in truth, it's more money for less value per dollar. As a result, who cares about the value of a dollar as long as more money being printed out even as we speak is on its way?
"These lessons speak to the need for an effective transformation: a WorldShift. This shift must transfer the responsibility as well as the capacity for action to civil society: to the people."
This is a tall order. The nature of power is to accrue ever more power unto itself. What you are suggesting is the reversal of that process. History has shown that this virtually never happens without blood running in the streets, the lone exception in our time being the devolution of the USSR into its constituent states, and even that was touch-and-go for a few weeks there.
Within our own social framework, the most effective way to achieve what you are suggesting is, sad to say, political action: federally-administered programs for funding programs that address these issues; regulations to rein in the abusive practices of predatory individuals and institutions. This is a piece-meal and sub-optimal approach, but the fact of the matter is that some of the needed changes are going to step on some powerful and well-funded toes, and the owners of those toes are going to make darn sure that their interests -- aka, their bottom line -- are protected at all costs. If you have trouble understanding what I mean by "all costs", let me spell it out for you. I.r.a.q.
Your main armament against this is not education. It is solidarity. The issues are already understood well enough to form the basis of sound policy. What is lacking is not information but policy backed up by muscle. The pen may be mightier than the sword in the long run, but in a might-makes-right world, it helps to have battering ram swinging menacingly in the background.
Just to get their attention.
This "WorldShift" or World Moment is getting closer by the hour. We will go from chaos to order, hatred to love, war to peace.
Philosopher Laszlo writes, "What is the alternative to the return to business-as-usual? It’s to learn. To learn that the financial world needs to be brought back to socially conscious and ethical behavior, and that it either comes back on its own, or has to be brought back kicking and screaming."
The great Laszlo would have more success waiting for manure to learn how not to stink.
Laszlo fantasizes a "WorldShift" (his neologism). Ralph Nader fantasizes super-rich folks who will save us. The Christians fantasize personal immortality. The dying Native Americans fantasized Ghost Dancers.
Grow up.
Ralph Nader never fantasized that super-rich folks will save us. He is technically correct though that in this current system, we are forced into being held at the mercy of the super-rich.
Marco: You err. The title of Nader's latest book is, "Only The Super-Rich Can Save Us." Check it out at your local library, or read some of the online reviews.
The key to all of these issues is honest information. We have allowed even that to be corporate controlled.
Even if the Arctic Ice cap became the size of an ice cube, the likes of the $50,000,000/yr Rush Limbaugh will still deny climate change.
Once the repeal of the Fairness Doctrine occured under Reagan the corporations built a powerful monopoly that reaches close to 30 million people per week across America.
91 percent of the talk stations propogate misinformation, propaganda, partisan rhetoric and lies to protect the status quo for Big banks, big oil, pharma/health and war profiteers. They are winning the message campaign. They choose the story, frame the debate and have more power than our elected leaders. I do not mean the hosts themselves. Rush, Beck, Hannity, Savage etc are basically highly paid corporate prostitutes that have sold their integrity for fame and money. Bottom line, profits and power win, people and earth lose.
There's only one thing to learn. Stop throwing money at industries who will only suck it up, do nothing useful with it, and then come asking for more. Else we're screwed again.
People think the crisis is over because everyday on CNN, Fox Business, CNBC, ABC and CBS They are told that the DOW is up over 10,000 again so there is nothing to worry about. But what they never mention is that gold closed just under 1,100 dollars an ounce yesterday. They crow that unemployment is starting to turn around because the economy only dumped 20,000 jobs in January. Do you really believe that only losing 20,000 jobs brought down the unemployment rate by .3%, or could it be that 1.1 million Americans lost their unemployment benefits in January? When you lose your benefits you are no longer considered as looking for work,or as being unemployed by the government anymore. Last but not least, on all of the above networks, have you noticed that all the people who told you that Adjustable Rate Mortgages were the place to be. These were the same people who defended George W. Bush's claim that our economy was robust, all of these losers still have jobs at these networks and are telling us what the government needs to do to make things better. That would be like Barack Obama appointing Tim Geithner, Larry Summers and Ben Bernanke to help fix the mess on Wall Street that they helped to create. Oh shit, that's right, he did didn't he? He must be watching CNN, Fox Business, CNBC, ABC and CBS too!
Money holds its value.
People do not.
Clear evidence that the game is rigged.