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The question of the next crisis

The question of what's going to happen in the next crisis seems to be going up on the zeitgeit charts; Graeber had one such piece; so (naturallly) does the Archdruid; here's another one from Project Syndicate; and here's an interesting one from Golem XIV, a UK finance blogger. The high points:

If you line up the S&L, the Junk Bond and the Dot Com bubble, America has had a major home-brewed financial crisis every ten years. If you consider that none of these events happened in isolation nor limited their effects to the country of origin then we have to conclude that the global financial system is prone to crises. You can, if you see the world through resolutely libertarian glasses, blame everything on interfering governments – it matters little. The fact remains that the system as is, is unstable and run by the myopic, the greedy and the corrupt. Where they draw their salary, which side of the revolving door they happen to be on, on any day seems to me irrelevant. The worst of them don’t understand and are easily bought. The best have no concern for anyone or anything beyond their next bonus.

And here we are being led by them.

Of course saying another crisis is coming is like saying we are due a large earthquake in Southern California. True, but it doesn’t mean one is going to happen tomorrow. What I think it does mean is that we should be thinking what our leaders, what the people they work for – the global overclass – might already have in mind or have already put in place, for what they want done next time. I think it would be foolish to imagine they have not thought about it and are not putting in place the things which will close off some futures and force us into others that they prefer. They have so very much to lose and so very much more they want to gain.

Ding ding ding ding ding!

The sudden explosion of European sovereign debt is the direct and indisputable result of all our political parties deciding they would safeguard their mates’ and their own personal wealth (it is the top 10% who hold the bulk of their wealth in the financial products which would be destroyed in a bank collapse. NOT the rest of us!) by bailing out the private banks and piling their unpaid debts on to the public purse.

So whatever the trigger of the next crisis may be, they know any solution which saves the wealth and power of the over-class will have to involve piling new, private-bank bad-debts on to already indebted sovereigns and that, our leaders must be keenly aware, will not be easy to force on an already angry public. They know a whole range of the assurances they might like to give us about what must be done when the next crisis hits and how those things will undoubtably save us, will not be so easy to shove down people’s throats.

“So what,” I can hear the 1% saying, “can we do?”

Here are some thoughts on what I think they can do, will do, are already begining to do and WHY they are doing them.

The over-arching thought that I have, which shapes everything from here on, is that this crisis is no longer primarily financial; it is now political. Any solution, no matter for whose benefit, is beyond the scope of financial ‘reform’ but will depend on radical political change. In my opinion, the era of reformist politics is over. The questions are: radical change in which political direction? in whose hands? and for whose benefit?

At the moment, I believe the radical thinking is almost all being done on the 1%’s side. They may talk about fixing, but what I think they mean is changing. When Obama spoke of change, he meant it. Just not primarily for you. The 1% are not stupid. They see the need for change and intend to control it.

I think one of the cleverset things the 1% have done over the last few years is the way they have created a relentlless public discourse, via their paid political front-men and women and their media empires, to insist on the need to ‘fix’ and protect the system, and the extreme danger to us all should the system not be ‘saved’. This has served as a perfect cover for making sure that not enough people have noticed that the system is, in fact, being gutted and replaced by something that better serves the interests of the 1%. We have not been fixing the banks, we have been feeding them.

Very, very active. Read it all!

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Jay's picture
Submitted by Jay on

The Golem XIV post is the most interesting, and is a must-read. I've had similar thoughts and have been wracking my brain to speculate on what the global elite wants out of the next financial crisis. The policy shops and think tanks in Washington must be brewing up some model legislation to be proffered at a moment's notice, much like the Patriot Act miraculously appeared by divine spontaneous inspiration. But the shitstorm would be so colossal, the politics so noxious, that I'm sure it's the reason Obama won a second term. They couldn't do something like that with George Bush in the oval office. The Tea Party originated from conservative disgust at bank bailouts.

My guess is that he--or better yet, during a presidential election cycle like the last one in 2008, where they could squeeze the major players for concessions--a successor will be left to peddle the following:

Liquidation of the Social Security Trust Fund. "Save our future by preserving our present." That would cover a lot of bad bets. W famously said the T-bills in the Trust Fund were "just a pile of paper."
Liquidation of all non-defense related activities.
Mandatory Bail-Ins of depositors' bank accounts.
Immediate privatization of all public property, services, utilities.
Sweeping deregulation of corporations and industries "to save jobs." Nobody tells me how to run my plantation!
Wholesale destruction of decades of settled, adjudicated law rulings against corporations.
Emergency police powers.
New ways to offshore wealth, avoid taxes. Like, you don't have to pay US taxes if your bank is in the Caribbean.
Before the next election, heavy handed ballot access issues, political assassinations, or even canceled elections.
Political death squads, a la Latin America. Preferably wrapped in the flag and carrying a cross.
Billionaire-funded goon squads to "take care of business," like their heroes the Russian oligarchs did in the 1990s.

I think what we're seeing in Detroit is a test case for them, much as Greece was for the EU. If they can slow the chain reaction down enough to devastate each state/municipality one at a time, piecemeal, the multi-year (multi-decade?) plan can eventually get them where they want. It seems like the only thing slowing them down is the social/political danger. What good is a privatized telecom system if the locals pull all the wires down? People might get that desperate/angry.

But if Trillions in dark money hidey holes, derivatives, junk bonds, and eventually equity wealth goes up in smoke over the course of a week, model legislation to address that is a bit like the palaver between them and their lawyers discussing a will on the deck of a sinking Titanic.

I've also been wondering if the final play is really to get Europe to devastate itself with austerity and sanctions against their own lifeblood of Russian resources, to chase the wealth into the "safer" dollar-denominated equities and Govt bonds. Also to trigger a Real Estate/business cycle bust collapse in China to effect the same. Where's a Chinese or European billionaire to park their money when the shit hits the fan? Nowhere in China or Europe. Japan is cooked, they're done.

jo6pac's picture
Submitted by jo6pac on

I love it and it's the same thing myself and a few friends have been watching for some time. Yes it is in slow motion at this time but started here http://www.bloomberg.com/news/2013-11-22/jefferson-county-s-bankruptcy-l... This is like the saving and loan thingy only this time the banksters have the laws in place to help them to steal Main Streets money legally. I do believe this action by the elite will speed up under the cover of the wars and other side shows in the lame stream news while the secret trade deals go down in the background. Then at the end of 2015 will be running at a fever pitch to make it a done deal on the black demodogs potus watch. He and family will reap in the rewards of the hard work he has done for the .001% and he still won't be able to play golf at select country clubs of the white pig state. Yes, the only way to save Amerika is to take every safety net away from the citizens so the elite can go on living the life of luxury on the backs of the sheeple.

Glad I'm old but I'm still not going to like this day. Sad

Submitted by lambert on

He essentially gives a playbook. I think all these examples fit in the playbook. What we as bloggers could contribute is giving the plays names and making the definitions crisper.

We need better tools so that we can recognize a play immediately and call bullshit. The overclass keeps running the same scams over and over again, and one reason we fall for them is that they seem new. But they aren't.