Tuesday, 16 October 2012

Dangers in Oligarchy Sweeping In...

( As a follow on from the last Midi-blogg)

As I write before the deep roots of a new paradigm in our economic human culture are being forged in social media and communities in Spain, Greece, Ireland and the USA.

What we think will happen next is two fold:

1) Western capital will enter a negative spiral as the collapse in value of what they own continues.

2) Due to point one: Market economics and human reasoning will create a decoupling of human activity from international capital in large enough sections of the western populations as to further errode the value capital can extract from corporates and property.

This is where the danger lies in the USA, a federal Europe and the rise of fascism in the former communist eastern block countries.

National political parties and national traditional media will start to loose the attention of the "floating voter". Politics will either become more polarised as it is in the USA, or more of a technocracy from Central compromise and consensus in the EU.

In effect the spread of the new counter culture to a significant volume of the previously corporate working class and the educated middle class ( a line blurred now) will become a threat to the right wing oligarch oriented governance and parties.

As in Iran 30 years ago and  in the middle east now, this means that extremist right wing organisation can sweep in to capture the power vacuum and take more control. This has happened in Russia and the former republics of the soviet union. However it can happen in Europe and be accelerated in the USA.

In the now almost post democratic western countries we live in, I beleive the first shift in power will be exercised in two crucial parts of economic supply: power and housing. The oligarchs will attempt to manipulate these markets to create an artificial inflation by restricting supply and coercisive anti competitive agreements amongst oligarchs. Planning on the one side for the ordinary person or small builder, will become more beaurocratic and the beaurocracies will be slowed down to make building new houses to market demand far more difficult than even today.

Power companies will be freed from inflation controls and their boards of management will be given the green light to extract more money from the populace with price cooperation across competitors and price parity being the new status quo with high inflation. This has happened in the UK.  Goverments will be coerced into strangling local power delivery companies and sustainable personal home power by introducing new technocracy which will render these largely uneconomic, or as in Norway, force them to connect physically and fiscally to the national grids and capitalist quasi market.

More people will then be marginalised and in particular more people will no longer have a net economic outcome predictable by moving to the cities.  Thus  cities will become less attractive to live in, as people find the low wages and lower house prices in the smaller previously marginalised towns and villages create a better net economic effect and allow more for a life style where conspicous lack of consumer trinkets is more socially acceptable.

The rise of the right wing parties and extremism within them that the Oligarchs require, as we see in the increasingly right loony UK Conservative party, will lead to more stringent controls on immigration. This will be a counter productive policy: there will be less freedom of movement of labour which will result in a loss of supply of bottom level, illegal and subsidised labour.

These two phenomena of marginalisation and exclusion by economics and borders, will lead to a collapse in several levels of net value generation in the property market. The capital gains "wage" so many city dwellers benefited from in several up cycles is about to collapse now, and will later enter a stagnation and further risk of devaluation after an initial revival in revaluation created purely faith, will evapourate because there will not be enough money in the supply side.

No comments:

Post a Comment