The Coming of Deindustrial Society

From: Bob Zannelli


Sent: Sunday, September 16, 2007 5:36 PM

Subject: The Coming of Deindustrial Society: A Practical Response


This article is the reason I suspect that we humans are collectively no more intelligent than an exponentially expanding population of bacteria or mold on an agar plate.  Similarly closed physical systems approach maximal entropy on an extremal path.  The outcome of this is virtually determined.  Human populations made its increases by accessing more and more energy in the form of solar energy, first in the form agriculture, then the wind and water wheels, but later in the form of stored hydrocarbon forms from ancient plant life.  In the last couple of centuries our population increased ten fold in response to the hydrocarbon bubble.


The warnings about resource depletion and environmental decay have been sounded for decades and largely they have been ignored.  We carry on as if nothing is fundamentally wrong.  Yet we conduct wars and rampage every further into the future, largely as addicts to petro-drugs in a desparate search for the next ever bigger fix.  And the implicit assumption is that we can exponentially rocket forward into the future and all will work out for the best.  After all as Ed W puts it we are Homo inventis and we can always figure a way out, even in exponentially narrowing time frames.  The Club of Rome made its case in the early 1970s, and was tossed aside as we voted for Reagan and wore thick sun glasses.  We made the choice to take this path in 1980, and we can’t go back.  In fact many are kicking and screaming to keep us from reversing course.  The window of escape is narrowing, but our TV media keeps our eyes focused on nonsense news — OJ Simpson has been arrested for armed robbery, that’ll keep us distracted for the upcoming months.


The problem is that this collapse is different from past ones.  First off this will be a global collapse.  It will not be restricted to some region, such as the Roman Empire or the end of a Chinese dynasty.  It will also differ in that the tools we use now will no longer serve us.  After all with the fall of Rome people still managed to plant crops and carry on with more or less the same tools they had.  Not with this one.  As it brutally winds down we will no longer be able to use cars, whole suburbian regions will become stranded and economically isolated (eg no food shipments), and in the end the mother of all technology collapses will occur, the power grid will fail.  There is also the prospect that as aggressive competition for diminishing resources increases there may be a global nuclear war.  Finally as this collapse sets in the global ecosystem may collapse with us in ways unprecedented.  We may well have set up the next planetary mass extinction by the end of this century.  This means that after the human population collapses back to its pre-petroleum level of 250-500 million the planetary ecosystem may enter into an extinction phase where that remaining human population will face unsustainability and decline for thousands of years into the future.  In the end this collapse may not just be the end of a civilization, but the end of civilization in general, never to come back.  Further, if the planet enters into a mass die-off of life in a mass extinction we may simply go extinct.


The analogue with a sinking ship, eg the Titanic, is somewhat apt.  We are madly careening through the icebergs, while at the same time the hold is leaking and its stearage passengers are trying to escape to the upper decks (eg the immigration issue).  My big point of departure is with lifeboats and life jackets.  I am not sure there are any.  I agree that hoarders will simply be overwhelmed by the mob, guns won’t work in the long run as the ammo runs out and it will be harder to buy any.  A life boat implies “somewhere to go,” and frankly there may simply be no such place in the end.  Then again maybe there are ways to at least survive for a while, or maybe ways your children can make it through for a time.  But in the end we all appear to be on the same spaceship, and when the life support system goes down on us we all go down with it.


We need to figure out quantum cosmology and the origin of the universe, at least up to the limits of what is knowable in the time we have left.  It might in the end just be howling at the moon, but at least we can make some claim to ourselves, “What power we have is our minds and we did this.”  It will be our faint scratch on the face of universe in some attempt to hold back the curtain of absurdism.  Maybe before we begin to exit this little corner of the cosmic stage we in this age can at least sit back with some sense that humanity’s existence has not been a complete sham.


Lawrence B. Crowell




Source URL:

The Coming of Deindustrial Society: A Practical Response

John Michael Greer

With the coming of Peak Oil and the beginning of long-term, irreversible declines in the availability of fossil fuels (along with many other resources), modern industrial civilization faces a wrenching series of unwelcome transitions. This comes as a surprise only for those who haven’t been paying attention. More than thirty years ago, the Club of Rome’s epochal study The Limits to Growth pointed out that unless something was done, a global economy based on fantasies of perpetual growth would collide disastrously with the hard limits of a finite planet sometime in the early twenty-first century.

The early twenty-first century is here, nothing was done, and the consequences are arriving on schedule. The road that would have brought industrial society through a transformation to sustainability turned out to be the road not taken. The question that remains is what we can do with the limited time we have left.

The Failure of Politics
There are specific practical things that can be done, right now, to deal with the hard realities of our situation. The problem is that most of them are counterintuitive, and fly in the face of very deeply rooted attitudes on all
sides of the political spectrum.
The first point that has to be grasped is that proposals for system-wide, top-down change – getting the Federal government to do something constructive about the situation, for instance – are a waste of time. That sort of change
isn’t going to happen. It’s not simply a matter of who’s currently in power, although admittedly that doesn’t help. The core of the problem is that even proposing changes on a scale that would do any good would be political suicide.

Broadly speaking, our situation is this: our society demands energy inputs on a scale, absolute and per capita, that can’t possibly be maintained for more than a little while longer. Sustainable energy sources can only provide a small
fraction of the energy we’re used to getting from fossil fuels. As fossil fuel supplies dwindle, in other words, everybody will have to get used to living on a small fraction of the energy we’ve been using as a matter of course.

Of course this is an unpopular thing to say. Quite a few people nowadays are insisting that it’s not true, that we can continue our present lavish, energy-wasting lifestyle indefinitely by switching from oil to some other energy source: hydrogen, biodiesel, abiotic oil, fusion power, “free energy” technology, and so on down the list of technological snake oil. Crippling issues of scale, and the massive technical problems involved in switching an oil-based civilization to some other fuel in time to make a difference, stand in the path of such projects, but those get little air time; if we want endless supplies of energy badly enough, the logic seems to be, the universe will give it to us. The problem is that the universe did give it to us – in the form of immense deposits of fossil fuels stored up over hundreds of millions of years
of photosynthesis – and we wasted it. Now we’re in the position of a lottery winner who’s spent millions of dollars in a few short years and is running out of money. The odds of hitting another million-dollar jackpot are minute, and no
amount of wishful thinking will enable us to keep up our current lifestyle by getting a job at the local hamburger joint.

We – and by this I mean people throughout the industrial world – have to make the transition to a Third World lifestyle. There’s no way to sugar-coat that very unpalatable reality. Fossil fuels made it possible for most people in the
industrial world to have a lifestyle that doesn’t depend on hard physical labor, and to wallow in a flood of mostly unnecessary consumer goods and services. As fossil fuels deplete, all that will inevitably go away. How many
people would be willing to listen to such a suggestion? More to the point, how many people would vote for a politician or a party who proposed to bring on these changes deliberately, now, in order to prevent total disaster later on?

John Kenneth Galbraith has written a brilliant, mordant book, The Culture of Contentment, about the reasons why America is incapable of constructive change. He compares today’s American political class (those people who vote and involve themselves in politics) to the French aristocracy before the Revolution. Everybody knew that the situation was insupportable, and that eventually there would be an explosion, but the immediate costs of doing something about it were so unpalatable that everyone decided to do nothing and hope that things would somehow work out. We’re in exactly the same situation here and now.
So while it may be appealing to fantasize about vast government programs bailing us out of the present predicament, such fantasies are not a practical way of responding to the situation. We have to start with the recognition that
the most likely outcome of the current situation is collapse: to borrow the Club of Rome’s formulation, sustained, simultaneous, uncontrolled and irreversible declines in population, industrial production, and capital stock.

Apocalyptic Fantasies
Now as soon as this is said, most people who don’t reject it out of hand slip off at once into apocalyptic ideas of one sort or another. These should be rejected; history is a better guide. Civilizations collapse. As Joseph Tainter
pointed out in his useful book The Collapse of Complex Societies, it’s one of the most predictable things about them. Ours is not that different from hundreds of previous civilizations that overshot their natural resource base
and crashed to ruin. What we face is a natural process, and like most natural processes, much of it can be predicted by comparison with past situations.
But fantasy is often more palatable than reality, and most of the apocalyptic notions in circulation these days are sheer fantasy. The idea, popular among Christians who don’t read their Bibles carefully enough, that all good Christians will be raptured away to heaven just as the rest of the world goes to hell is a case in point. It’s a lightly disguised fantasy of mass suicide – when you tell the kids that Grandma went to heaven to be with Jesus, most people understand what that means – and it also serves as a way for people to pretend to themselves that God will rescue them from the consequences of their own actions. That’s one of history’s all time bad bets, but it’s always popular.

But the Hollywood notion of an overnight collapse is just as much of a fantasy; it makes for great screenplays but has nothing to do with the realities of how civilizations fall. The disintegration of a complex society takes decades, not
days. Since fossil fuel production will decline gradually, not simply come to a screeching halt, the likely course of things is gradual descent rather than freefall. Civilizations go under in a rolling collapse punctuated by localized
disasters, taking anything from one to four centuries to complete the process. It’s not a steady decline, either; between sudden crises come intervals of relative stability, even moderate improvement; different regions decline at
different paces; existing social, economic and political structures are replaced, not with complete chaos, but with transitional structures that may develop pretty fair institutional strength themselves.

Does this model apply to the current situation? Almost certainly. As oil and natural gas run short, economies will come unglued and political systems disintegrate under the strain. But there’s still oil to be had – the Hubbert Curve is a bell-shaped curve, after all. The world in 2020 may still be producing about as much oil as it was producing in 1980. It’s just that with other fossil fuels gone or badly depleted, nearly twice as many people in the world, and the global economy in shreds, the gap between production and demand will be vast. The result will be poverty, spiralling shortages, rising death rates, plummeting birth rates, and epidemic violence and warfare. Not a pretty picture – but it’s not an instant reversion to the Stone Age either.
Equally imaginary is the notion that the best strategy for would-be survivors is to hole up in some isolated rural area with enough firepower to stock a Panzer division, and wait things out. I can think of no better proof that people nowadays pay no attention to history. One of the more common phenomena of collapse is the breakdown of public order in rural areas, and the rise of a brigand culture preying on rural communities and travelers. Isolated
survivalist enclaves with stockpiles of food and ammunition would be a tempting prize and could count on being targeted.
Equally inaccurate is the notion that stockpiling precious metals will somehow make the stockpilers exempt from the consequences of industrial collapse. This strategy has been tried over and over again in recorded history, and it doesn’t work. Every few years, for example, archeologists in Britain dig up another cache of gold and silver hidden away by some wealthy landowner in Roman Britain as the empire fell apart. They’re usually close to the ruins of the owner’s rural villa, which shows the signs of being looted and burned to the ground by the Saxons. As a working rule, if your value consists of what you’ve stockpiled, there will be an unlimited number of other people interested in
removing you from the stockpile and enjoying it themselves. However many you kill, there will always be more – and eventually the ammo will run out.
Communities of Survival. So what does work? The key to making sense of constructive action in a situation of impending industrial collapse is to look at the community, rather than the individual or society as a whole, as the basic unit. We know from history that local communities can continue to flourish while empires fall around them. There are, however, three things a community needs to do that, and all three of them are in short supply these days.

First, a community needs some degree of local organization. Our present culture here in America has discarded most of the local organizations it once had, in favor of a mass society where individuals deal directly with huge government
and corporate institutions. This has to be reversed. The recent move to reinvigorate civil society is a step in the right direction. Joining or creating a local community group, and helping to revive local civil society, will help provide your community with voluntary networks of cooperation and mutual aid in difficult times.

One often-neglected but useful resource is the old fraternal orders – the Masons, the Odd Fellows, the Grange, and so on – which once included more than 50% of adult Americans in their membership. Many of these organizations still
exist, and they’re far less exclusive than people outside them tend to think.
Joining such an organization, or some other local community group, and helping to revive local civil society is a crucial step that will provide your community with essential networks of cooperation and mutual aid in difficult times. The Stormwatch Project website is specifically aimed at helping fraternal orders and similar organizations get ready to fill such a role.
The second thing a community needs in the twilight of industrial society is a core of people who know how to do without fossil fuel inputs. An astonishing number of people, especially in the educated middle class, have no practical
skills whatsoever when it comes to growing and preparing food, making clothing, and providing other basic necessities. An equally astonishing number are unable to go any distance at all by any means that doesn’t involve burning fossil fuels – and almost no one in the developed world can light a fire without matches or a lighter from some distant factory. Survival skills such as organic gardening, low-tech medicine, basic hand crafts, and the like need to be
learned and practiced now, while there’s time to do so. Similarly, those people who cut their fossil fuel consumption drastically now – for example, by getting rid of their cars and using public transit or bicycles for commuting – will be
better prepared for the inevitable shortages.

We live in a “prosthetic society” in which most people have totally neglected their own innate abilities in favor of ersatz mechanical imitations. Even our schoolchildren use pocket calculators instead of learning how to add and subtract. All this has to be reversed as soon as possible. Those people who can use their own hands and minds to make tools, grow food, brew beer, treat illnesses, generate modest amounts of electricity from sun and wind, and the
like, will have a survival advantage over those who can’t. In a violent age, practical knowledge is a life insurance policy; if you’re more useful alive than dead, you’re likely to stay that way. The pirate enclaves of the seventeenth-century Carribbean were among the most lawless societies in history, but physicians, navigators, shipwrights, and other skilled craftsmen were safe from the pervasive violence, since it was in everyone’s best interests to keep them alive.
The third thing a community needs is access to basic human requirements, and above all food. Very large cities are going to become difficult places to be in the course of the approaching collapse, precisely because there isn’t enough
farmland within easy transport range to feed the people now living there. On the other hand, most American cities of half a million or less are fairly close to agricultural land that could, in a pinch, be used to grow food intensively
and feed the somewhat reduced population that’s likely to be left after the first stages of the collapse. What’s needed is the framework of a production and distribution system around which this can take shape.

The good news is that this framework already exists; it’s called the farmers market movement. The last two decades have seen an astonishing growth in farmers markets across the country – the latest figures I’ve seen, and they’re
some years out of date, indicate that farmers markets are a $16 billion a year industry, with most of that money going to small local farmers. I personally know organic farmers who are able to stay in business, and support their
families on quite small acreages, because they work the farmers markets. Every dollar spent on locally grown produce from a farmers market, instead of supermarket fare shipped halfway around the world, is thus an investment in
local sustainability and survival.

There are a good many other, similar steps that can be taken. Anything that provides functional alternatives to energy-wasting lifestyles lays foundations for the transitional societies of the late 21st century, and ultimately for the
sustainable successor cultures that will begin to emerge in North America in the 22nd and 23rd centuries. The important point, it seems to me, is to do something constructive now, rather than presenting plans to the government in the perfect knowledge that they will be ignored until it’s far too late to do anything.

Perhaps a metaphor will make an appropriate finish for this little essay. Imagine that you’re on an ocean liner that’s headed straight for a well marked shoal of rocks. Half the crew is dead drunk, and the other half has already
responded to your attempts to alert them by telling you that you obviously don’t know the first thing about navigation, and everything will be all right. At a certain point, you know, the ship will be so close to the rocks that its momentum will carry it onto them no matter what evasive actions the helmsman tries to make. You’re not sure, but it looks as though that point is already well past.

What do you do? You can keep on pounding on the door to the bridge, trying to convince the crew of the approaching danger. You can join the prayer group down in the galley; they’re convinced that if they pray fervently enough, God will
save them from shipwreck. You can decide that everyone’s doomed and go get roaring drunk. Or you can go around quietly to the other passengers, and encourage those people who have noticed the situation (or are willing to notice
it) to break out the life jackets, assemble near the lifeboats, take care of people who need help, and otherwise deal with the approaching wreck in a way that will salvage as much as possible.

Me, I suggest the latter. Life jackets, anyone?2004 October 5



—– Original Message —–

From: Bob Zannelli


Sent: Tuesday, October 21, 2008 8:41 PM

Subject: The Causes of the Current Financial Crisis by Steve Martinot


The article gets down to brass tacks when it starts off with:

But in a global context of over-production such as emerged from the 1990s,
productive investment was not highly profitable, and much of this
money went (and still goes) into financial speculation.

The shifting of our economy to a primarily investment economy has been a disaster.  The opening of hedge funds and derivatives, which amount to complicated “bets on money transfers on bets,” which are almost guaranteed to “win,” have lead to a situation where some $500 trillion in wealth is claimed by a range of investors.  Of course none of this actually exists, and the whole world market teeters on falling apart as soon as it becomes clear that “the emperor has no clothes.”


Lawrence B. Crowell

The Causes of the Current Financial Crisis
by Steve Martinot

In the current financial crisis, there are three major
factors that can be used to map the trajectory of what is happening:

1- the rise in land and real estate prices, which is not
unrelated to IMF and World Bank policies of privatization of land
around the world, as a condition for corporate domination;
2- the government’s adoption of an ideology of non-
responsibility for its citizens.
3- the decline of the dollar internationally because it
depends on the financialization of oil, and oil is subject to
national sovereignty;

The second two contextualize the first. And all three express facets of the internal contradictions in corporate globalization, which is the situation in which this crisis is unfolding. Let us
look at these in reverse order.

The salient fact about the dollar is that it has been, up to now, the currency of stability (the currency of account) for multinational corporate operations. Previous to the end of the Vietnam War, the dollar was backed by gold in Fort Knox. This gold reserve was drained during the late 1960s due to enormous US military spending, as well as oil importation. This outflow of dollars flooded international money markets and foreign bank reserves. These foreign banks then sought to exchange those dollars for gold (under the Bretton Woods treaty). By 1971, that drain threatening to deplete the gold reserve beyond the level
required by law to support the domestic currency.

When the dollar came off the gold standard in 1973 the multinational corporations (MNCs) went into crisis. A stable international currency is their bloodstream; it is what enables them to coordinate their operations in different countries. To restabilize it, the dollar was placed on an oil standard through Kuwait in 1979. Kuwait amassed international dollars, invested them in industrial enterprises, and guaranteed their value through its own oil reserves. The 1991 war on Iraq was in reality a move to take control of Kuwait, a strategy that had been unfeasible while the USSR provided an international balance of power.

The dollar has again gone into crisis for a number of reasons. First, there is the rise of the euro economy, offering competition to the dollar as a currency of account. Second, Iran has proposed to open an oil bourse (for trading oil contracts) in the euro. This would seriously threaten the dollar’s ability to use oil as its backing. Third, there is the extreme over-extension of the dollar debt structure, making it very unstable.
But most important, there is the ever-present threat of a nation taking control of its own oil resources, and thus undermining the overall control of oil reserves that is essential for stabilizing the dollar. One need only mention Venezuela, Russia, Iran, and the Iraqi resistance against US occupation. Russia has nationalized most of the Caspian oil fields and its productivity.

The principle of national sovereignty thus becomes a threat to the an oil backed dollar. It was not for a gold backed dollar, since the gold was stored in Fort Knox. Bu oil can be reclaimed by those who live on that land that contains it.

Much that has happened in terms of US wars and foreign policy in the last decade has been to bolster or sustain the dollar through control of oil reserves. The invasions of Afghanistan and Iraq, and US involvement in the Orange revolution in the Ukraine were all focused on geo-political positioning with respect to the Caspian oil fields. The invasion of Iraq was also designed to provide control over Iraq’s oil. To control the oil is to control the industrialized world, as well as to provide the necessary economic stability for the MNCs.

What this amounts to is a financialization of oil to maintain the dollar as the international currency. It is not the use of oil that is at stake in the present US oil wars, but the control of its reserves.

In sum, the real contradiction in the dollar is the contradiction between neo-liberal corporate control of the world’s economy and the national sovereignty of other countries. The terms of the crisis of the dollar are the rise of the euro, the success of the Iraqi resistance, and the move toward national sovereignty on the part of many countries throughout the world. This move is, as we shall see below, also a threat because it
involves the control of the land by the people who live on it. All this contests the hegemony that the US had attempted to establish for itself and the dollar through corporate domination of local economies around the globe (the real meaning of privatization).

The second contextual dimension of the financial crisis is the US government’s ideology of abjuring and abandoning all responsibility for its citizens. It has replaced that responsibility with a responsibility toward the corporations (financial, military, banking, insurance, productive, service, all), prioritizing the MNCs.
The major forms this derogation of responsibility have taken are the dismantling of the social safety, the subsidizing of runaway shops, deploying the budget for military purposes, wars of aggression, disregarding health care and underfunding education, tax cuts for the rich, and the deregulation of the economic domain: energy, environmental protection, transportation and communications, lending and mortgaging, banking, and other industries. Deregulation has played a key role in the present crisis by fostering the housing bubble, by legitimizing speculation in oil, and by legitimizing the fraudulent mortgages and derivatives securities that have been at the center of the current economic collapse.

The policy name for this ethical failure is Supply-side Economics (SSE). It was instituted as policy in the 1980s. SSE inverted the Keynesian program of using government spending for increasing aggregate demand (for instance, through social welfare programs). Instead, it aimed government spending at putting money in the hands of corporations and corporate investors to use as they saw fit. If they invested in production, it would increase production, and ostensibly (hopefully) create jobs. But in a global context of over-production such as emerged from the 1990s, productive investment was not highly profitable, and much of this money went (and still goes) into financial speculation.

In reality, this shift of government responsibility from humans to corporations was the logical extension of raising corporations to the level of persons (1886). To have given global citizenship to corporations has the concomitant effect of rendering real humans more or less irrelevant (as the social inverse of government abrogation of social responsibility); that is, humans have become irrelevant except to the extent they work.
Indeed, this ethos of abrogation is itself a reflection of the inherent nature of the corporation, which was devised to insulate investors from any responsibility for what the corporation did in its own name. What it means is that humans in the US do not have a structural connection to the government, neither through elections nor representation nor popular movements — which is why the two party system seems so unresponsive to popular needs.
The corporations have a structural connection, and for them, there are not parties, but one Congress, and one executive.
This replacement of human citizens with corporate citizenship has another effect. The economy has become divided between two levels, that of productive economic activity, which is the level of human beings, and the level of unending economic exchange, which is the level of corporate accounting, the stock markets — the trading in stocks, bonds, and other contracts and securities. For humans, that financial level of economic activity seems ephemeral and fictitious. For humans, it is the level of productive activity that is real; it is where the value of one’s living standard is determined. For the corporations, the stock
market is the real economic activity because it is where the value of their assets is determined. They enter into material production only in order to have securities to sell on the stock market; if they can enter that market without material production (as did the dot-com industry), the effect is the same.

The economy of stock and security trading has become primary, as an extension of having raised the corporations to the level of citizen. For the corporations and the government, human economic activity (production, meeting people’s needs, maintaining social standards of labor conditions, environmental protection, health care and education) has been reduced to a wholly ancillary consideration.

Originally, the regulation of industry was to preserve the stability of the economy for the benefit of humans. Deregulation of the economy was to open all avenues of making money to the corporations through securities trading, including land and resource contracts. Under deregulation, humans are no longer of account. They do not enter into a securities marketing (free market) economy. In the context of governmental abrogation of responsibility, it is natural that bailout funds will be used only for corporate interests — though there is enough money at stake to provide for the housing, health care, and education of
“human” citizens for years to come. The bailouts are consistent with supply-side economics.

The two aspects of contemporary economy examined above (the reliance of the dollar on the financialization of oil, and the primacy of the securities economy over human economy) come together in this financial crisis. That is, the real political contradiction revealed by this financial crisis is the contradiction between the human level of productive economy and the corporate level of finance, stock market operations,
contracts and securities, which politically becomes a contradiction between the people and the government. The crisis has been caused by these two levels of economy coming into contradiction with each other and clashing; the place where the clash occurred was the housing market. But it is not simply the US housing market; the clash involved the international character of the dollar and its weakening, and the global drive to
privatize and corporativize land and real estate, which had its reflection inside the US.

The neo-liberal policy advanced by the IMF of privatizing social services and resources, principally land, opened up vast new markets in land and construction for the exploitation of resources and labor by the multinational corporations. And it drove up the prices for land and real estate by greatly increasing the demand for land. As a natural concomitant to this increase in demand, there was an extensive increase in land
speculation. (One effect of years of excessive land speculation was the collapse of the Four Tigers — South Korea, Singapor, Taiwan, and Hong Kong — in the late 1990s.) Global speculation in land was the context for the extreme increases in real estate values in the US. The process began in the early 1980s when the policy of privatization and economic control by the MNCs was institutionalized. In the US, land speculation was aided by the deregulation of real estate financing.

One of the results of the domestic rise in real estate prices was a decrease in demand, and a slowing of the mortgage market. Fewer and fewer people could afford to buy a house. To compensate for the housing market contraction, the banks invented mortgage schemes that lower middle class and working class people could ostensibly afford. Here too they were aided by deregulation; lenders did not have to be as detailed about the future unfolding of their loans. Among these newly invented mortgages were the subprime, the variable rate, the no-down-payment loans, etc. Some of these newly invented mortgages were actually forms of predatory lending. The idea was to suck more people in.

What characterized these loans was that their very low interest rates were strictly temporary. They would stay at a low rate for a year or two, and then jump to make up the deficit. The banks knew that this was unstable, and that a sizable proportion of these mortgages would go into default and foreclosure. They knew that ahead of time. So they hedged the loss that they would face at that future moment by packaging these mortgages in a new (and fictitious) security that could be sold and resold on an open market. By doing so, they got the money up front that they would have lost by waiting for default and foreclosure, and the
securitized mortgages would be traded down the line so that when default actually occurred and the mortgages became worthless, the securities they were packaged in would be far away. These securities (called collateralized debt obligations — CDOs) were supposed to protect the banks against losses, which is why they are called a hedge. And the investment institutions that handled them were what were called hedge funds.

But what these invented securities did was greatly expand debt. They were used as stable collateral for other loans, though they were unstable. Passed down the line through endless trading, they increased the possibility of collateral for loans at each step; and those loans were in turn transformed into new invented securities (derivative CDOs) in the same way. The sale of CDOs, originally profitable, easily became overextended. It got to the point where the total book value of these CDOs outstripped the GDP of the entire world economy. Thus, when the foreclosures did start to occur, and the CDOs started to become worthless, it wasn’t only the holders of the CDOs that lost; the other loans that had been based on them, and turned into derivatives in turn also became worthless. And the overall effect was catastrophic.

What started the crisis in 2005 and 2006 was the fact that the Federal Reserve raised its prime interest rate because the economy seemed to be in good shape, owing to all the money being made on the housing bubble and these fictitious securities. That raise in rate caused a jump in interest rate throughout the economy, and in particulat, for all the variable rate mortgages. Foreclosure started getting out of hand. Many banks and investment houses started losing a lot of money.

At first, they tried to stem the market contraction in value by speculating in oil. The hope was that by speculating in oil contracts, driving up the price of oil (and gas), it would bring in enough money to cover the losses suffered by the loss of value of the CDOs as they collapsed. But the rise in the price of oil weakened the dollar whose stability depended on it, and the decline in dollar value caused more financial losses
internationally, again generating parallel losses inside the US (recall, the debt structure is global). The rise in oil prices also decreased demand at the level of human economy, thus aggrevating the stress on the debt structure at the financial level, since most human consumption had been extended through the extension of debt.

Because the speculation in oil failed, the government, in its responsibility to the corporations, has had to turn to bailouts.

One could call this financial crisis a crisis of over-production because it was caused by the over-production of speculative securities. But that over-production caused a crisis not only because of the fragility of the debt structure. It was caused by the instability of the dollar (the financialization of oil), and the fact that more and more countries are joining the move toward retrieving national sovereignty by taking back from
the corporations control of their own land and resources. This move has been led by the nations of South America and by Russia (which is why Russia is now a major enemy of the US).

The hapless deregulation of the financial economy by the US government, the over-development of fictitious securities, the failure of their role as hedges, the decline of the dollar, the bursting of the housing and real estate bubble, the failure of oil speculation, have all come together. The result is the fall of stock market prices, the fall in corporate asset values, and the stoppage of real economic activity. This is the crisis now in effect.

If the bailout money could be used to support people’s needs, it would provide free education and health care, rent subsidies and public transportation for the entire nation for years, with a lot left over to aid those thrust into starvation internationally by IMF and World Bank policies. Furthermore, if the money was used in this fashion, the increase in employment by the institutions and services as well as industries that connect to people’s welfare would end unemployment. Criminal speculators would lose, but humanity would gain.

These are not even distant concerns for a government operating according to SSE and an abrogation of responsibility to its human citizens. The government is on the other side of the contradiction between the corporate financial economy and the human economy. If the people do not have a structural connection to the government, then they cannot control that money through the government. Thus, the real question confronting the people of the US is how to gain control of that money; that is, how to take it out of the hands of the government. Making proposals directed at the government for its better use is useless, because the government thinks and operates at the level of finance, and not at the level of the human economy.

What this crisis also points out is that the corporate structure itself is negative and destructive, as well as amoral and unjust. To resolve this crisis, and the contradiction between finance economy and human economy, the corporation as a structure would have to be expunged.

Ultimately, what corporate globalization cannot live with, and which is the primary weapon against it, is political and economic sovereignty on the part of subaltern nations, peoples, and regions. Sovereignty is the necessary precondition for democracy. All interventions in other countries by the US make democracy impossible because they destroy the sovereignty of the other country. And for us in the US, nothing will change until we begin to form our own organizations and movements, and assume a sovereignty over our own lives that will construct institutions for which we are not irrelevant.


Globālās problēmas.

  1. Sabiedrību dzīvē samazinājusies pamatprincipu lietošana. Tā vietā tiek apspriesti dažādi ‘viedokļi’ (vai arī tiek lietotas pagājušo gadsimtu reliģijas un pirmatnējo cilšu ticējumi). Rezultātā – masveidīga ētikas un morāles likumu atmešana, sabiedrības degradācija.


Risinājums. Progresa vārdā valsts drīkst un tās pienākums ir starp sabiedrībā izteiktiem viedokļiem un uzskatiem izvēlēties valsts atbalstītu filozofiju, kas balstās uz mūsdienu zinātnes atziņām (par indivīda un visas cilvēces dzīves jēgu, ētiku un morāli, un misiju Visuma mērogā), par kurām var teikt, ka to ticamība ir tik augsta, ka tās var uzskatīt par neapgāžamām, pierādītām atziņām, kas ir pietiekami tuvas īstenībai. Vienlaikus apzinoties, ka arī šīs pamatatziņas ar laiku tiks mainītas un precizētas, un dažas – pat atmestas. Bet tas nenozīmē, ka mūsu dzīves pamatjautājumos mēs esam spiesti atteikties no bioloģijas, evolūcijas teorijas, informācijas teorijas pamatatziņu lietošanas, piemēram, cilvēka rīcību (gadījumu notikumu izpildījumā) nosaka tikai tas, kas viņa apziņā ielikts.


  1. Iedzīvotāju skaita ierobežošana.

Tuvākā nākotnē risinājuma nav. Evolūcija ‘lietos’ savas līdzšinējās metodes: izdzīvošanas noteikumu atteikumu bada, slimību, dažādu katastrofu un karu veidā. Progresa veicināšanas skatījumā šī metode ir vislabākā: cilvēki savus uzskatus visātrāk maina tad, kad viņi iet bojā.

Tas nozīmē, ka globāla bagātības polarizācija turpināsies un t.s. elite (Bilderbergas konferenču dalībnieki) to atbalstīs. Cita (cilvēku skaita ierobežošanas paņēmiena) mūsu civilizācijai pagaidām nav.


  1. Vienīgais ierocis, kurš var izmainīt masu cilvēka rīcību, ir t.s. masu informācijas līdzekļi (MIL), kas parādījušies pirmo reizi cilvēces vēsturē. Problēma ir tā, ka šobrīd sabiedrību pārvaldošā elite tos izmanto nevis masu cilvēka apziņas veidošanai (atbilstoši priekšāstāvošiem grandioziem uzdevumiem), bet gan – masu cilvēka apziņas un rīcības noturēšanai bioloģiska automāta režīmā. Var teikt, ka 2.punkta izpilde šādu rīcību pat atbalsta.


  1. Mūsdienu tehnoloģiskajās sabiedrībās demokrātiska valsts pārvalde (tāda, kurā sabiedrības galvenos jautājumus risina ar vairākuma balsojumu) nav iespējama.  Nespeciālisti nespēj vadīt lidmašīnu, veikt ķirurģisku operāciju, veidot tirgus regulējošus likumus un noteikumus. Tātad, visās augsto tehnoloģiju nozarēs jāstrādā speciālistiem. Problēma ir tā, ka cilvēku masām ir gandrīz neiespējami izveidot šo speciālistu darba vērtēšanas, uzraudzības un apmaksas sistēmu tā, lai šajās nozarēs nesāktu dominēt homo sapiens instinktu diktētā rīcība – ņemt tad, kad var paņemt. Jo tādā gadījumā pašiem uzraudzītājiem arī jābūt speciālistiem.

Radikāla šīs problēmas risinājuma mūsu sabiedrībās nav. Izveidotās sistēmas liecina par nožēlojamu kompromisu – sabiedrības interesēm vairāk vai mazāk kaitīgu noziedzības un likumu ievērošanas līdzsvaru.

About basicrulesoflife

Year 1935. Interests: Contemporary society problems, quality of life, happiness, understanding and changing ourselves - everything based on scientific evidence. Artificial Intelligence Foundation Latvia, Editor.
This entry was posted in All Posts, Are We doomed?. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s