On Mar 28, 2009, at 4:32 PM, Jim Devine wrote:
On Fri, Mar 27, 2009 at 6:04 AM, Max Sawicky <[email protected]>
wrote:
Anybody been following this guy? Seems pretty avant-garde for an
IMF
guy. Comments? I've stayed away from the nuts and bolts of policy
re: the financial mess, preferring to look more at the history
it's scary. It's as if he's saying "we at the IMF have saved the world
to the extent we've been successful at smashing governments, ousting
their power elites [actually, he comes close to saying we've never
been able to do that], and radically changing their policies. Now
let's
do the same to the US." It's not a call for democracy: it's more like
the concentration and centralization of capital applied on a world
scale in finance and government, with the IMF ending up on top.
In any case, this analysis has to be taken very seriously:
In my view, the U.S. faces two plausible scenarios. The first involves
complicated bank-by-bank deals and a continual drumbeat of (repeated)
bailouts, like the ones we saw in February with Citigroup and AIG. The
administration will try to muddle through, and confusion will reign.
Boris Fyodorov, the late finance minister of Russia, struggled for
much of the past 20 years against oligarchs, corruption, and abuse of
authority in all its forms. He liked to say that confusion and chaos
were very much in the interests of the powerful—letting them take
things, legally and illegally, with impunity. When inflation is high,
who can say what a piece of property is really worth? When the credit
system is supported by byzantine government arrangements and backroom
deals, how do you know that you aren’t being fleeced?
Our future could be one in which continued tumult feeds the looting of
the financial system, and we talk more and more about exactly how our
oligarchs became bandits and how the economy just can’t seem to get
into gear.
The second scenario begins more bleakly, and might end that way too.
But it does provide at least some hope that we’ll be shaken out of our
torpor. It goes like this: the global economy continues to
deteriorate, the banking system in east-central Europe collapses, and—
because eastern Europe’s banks are mostly owned by western European
banks—justifiable fears of government insolvency spread throughout the
Continent. Creditors take further hits and confidence falls further.
The Asian economies that export manufactured goods are devastated, and
the commodity producers in Latin America and Africa are not much
better off. A dramatic worsening of the global environment forces the
U.S. economy, already staggering, down onto both knees. The baseline
growth rates used in the administration’s current budget are
increasingly seen as unrealistic, and the rosy “stress scenario” that
the U.S. Treasury is currently using to evaluate banks’ balance sheets
becomes a source of great embarrassment.
Under this kind of pressure, and faced with the prospect of a national
and global collapse, minds may become more concentrated.
The conventional wisdom among the elite is still that the current
slump “cannot be as bad as the Great Depression.” This view is wrong.
What we face now could, in fact, be worse than the Great Depression—
because the world is now so much more interconnected and because the
banking sector is now so big. We face a synchronized downturn in
almost all countries, a weakening of confidence among individuals and
firms, and major problems for government finances. If our leadership
wakes up to the potential consequences, we may yet see dramatic action
on the banking system and a breaking of the old elite. Let us hope it
is not then too late.
Shane Mage
This cosmos did none of gods or men make, but it
always was and is and shall be: an everlasting fire,
kindling in measures and going out in measures."
Herakleitos of Ephesos
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