Finance Crisis Granularity and Psychology

There are pundits who claimed to have forseen the finance crisis of 2008, but realistically the same as the internet bubble and not the least  the great depression in its time, realistically it is only with hindsight that it became an obvious catastrophe waiting to happen.



What is the problem which cannot be cured? At the core of this is that there is a high degree of granularity- different transaction orientated processes and employees. No one person or institution could see the bigger picture, the wood for the trees. Some macro economists could do the sums and say that western society had loaned itself too much money, even without the need to delve into the transactions at the bottom of the house of cards, the sub prime mortgage fiasco. That only served to precipitate the down fall, any flap of a butterfly's wing in the system could have shaken it down.

The fact is that no one person, be them chancellor or proffessor, and no one institution can understand enough of the "markets" at any one time to predict where it is going. Economists should admit to being like the native American tribe who saw themselves as travelling backwards through life, with their faces only exposed to that which had been experienced. All in front of them, was mystery they were blind to.

In legislating then the issues revolve around this transaction oriented granularity: the tiny fiefdoms of stocks, derivatives, commodities and the more complex financial mechanisms which are the rot in the whole system. You cannot make one set of rules which fits all, and cog in the machine will defend itself against new laws which they see as unduly straining their resources and making them less competitive.

In economics classes, talking about the gold standard was either taken in kind of being prehistoric, an extinct dinosaur of early global economics, or as a bit of a naieve joke for children's hour. However it was seriously suggested by some prominent economists as a cure to the finance crisis, and actual bone of confidence for banks and countries to hold as their bedrock of fluidity. A lot of money moved into precious metals at the finance crisis only to find demand was also eroded in value and being victims of that "listen with mother" law of economics.

Governments are being scared off further legislation than in fact a simple extension of the gold standard principle of limiting money supply and loaning to a credit limit which has some relation to a liquidatable value. For each powerful transactional level in the great casino, there is a lobby firm and owned politicians and political parties. Each clips round its territory and hopes that legislation wont affect their little value chain while sound and prudent financial management happens at national bank and government level.

So that is the nature of the beast perhaps: it is a medusa which has no single purpose, no collective conscious, no single direction and is only seen as cohesive by each head behaving in a similarily grabbing way, dragging the physical body of wall street and the city of Westminster with them. If you cut off one head, the others will round on you afraid they will be next.

The Society We Live In

I live now in Norway, a society which is actually at a possible turning point towards the more conservative, racist, self centered view on life. I can understand, we have had problems with immigrants especially from islamic countries and criminals from eastern europe.

However the beyond the obvious lose points like assylum seekers getting free dentistry while pensioners don't, there is a possible change to greed and everyone wanting more than their fair share: ie a move to more like the conservative support in the UK. "I'm allright jack, and go do with some more!!"

What society has the UK and the US become? I feel the uk is ever more like the US with a growing obese drudge working class and an under class, while the only way to make any money is to be a legalised crook.

What example does the invasion of Iraq and the financial crisis set for citizens? These were quasi legal crimes, with elements of illegal actions from institutions which are supposed to be respected and seen as leaders in society.

Back in my old home town, a mixed old place of rich, poor and day trippers going down the seaside, there have been drug wars and there is an increasingly large number of skanky looking types in their twenties and thirties driving flash cars and doing steroids: ie drug dealing on the side of a normal job, or ducking and diving on the wrong side of the law, or just cheating to get bigger loans than most people on those incomes.

The left wing parties who strove for rights to weekends free, breaks at work, safe environment in the factory or office, 40 hour week, equal pay for women and so on, are now reduced to a side show with some once strong labour seats struggling with party membership in the tens and not even boasting 100 members for the constituency.

However it is inevitable that social strife, criminality and inequality lead to a rise in community movements and collective action. The conservative dream of everything being privatised and a small state is just what we had pre-war in the UK and other now EU countries- a large minority of society living in poverty like a third world country. During the war almost a third of the population in the UK eat a BETTER diet during rationing.

Britain has always been at its greatest during times of collective action: in war, in home defence and in rebuilding society.

The Puppeteers- Religion, Politics and Sex all in One Pico Rant

Pico rant time again:

I wonder how much the USA evangelical TV channels and media spend is compared to how much the "churches" actually give away in Christian Charity?

Why are we such terrible remote controllers, wanting to spread our message by word and not actions? The puppeteers, wanting to control the strings in religion, politics and sex but needing not to get involved in practicing what we preach?

I know that I spend right now more time blogging that doing anything for anyone in the wider community, but I feel very strongly associated to christian, egalitarian and very left wing views. Jesus was after all, a communist revolutionary.

The effort people make in influencing others by communication in the media or in the street rather than by action seems disproportionate and in fact at the root of the human condition- third reich and all in this one!

A quick Point about Dogmatic Ideologies

Dogmatic Ideologies have their day.

Naziism came and went as a political force for .

Communism too.

Now it is the turn for free-market-fundamentalism to face their own Berlin Wall.

They have had pretty much close to their logical ideal, but it became like the regime of Paul Pot to his ideology: The finance crash was a result of the very lack of controls they persuaded everyone would be good for us, and also that in fact the way it was, the free market in the west was dependent on state-planning in the far east.

Finally of course, the banks socialist style bail outs, as did failing industries in the 1970s.

The End of The Post-Democratic-Era

It became very trendy amongst the opinion leading dissafectionists in the Blair-Clinton era that we lived in a post democratic era. Their point being that Despite there being liberal leadership, the world had moved away from democratic influence to a global conspiracy of capital and the illuminatae.

I see that this view point was both vindicated by the subsequent  GW Bush administration's history, but also the apathetic view point of inevitability and all that, is now reversed.

That democracy had become even more of a media-surface for meta-politics under the GW Bush reign is something which is glaringly obvious. Unlike 1930s Germany, we aren't going to believe this vaneer any more.

We had indeed drifted into an era where "meta democracy" was more influencial than parliamentary, election sourced democracy. In other words, other institutions and influences were taken as more important in policy making, and in fact were able to direct policy making.  When I say "we drifted", we, the electorate allowed ourselves to drift into power being moved to capital and international federations or organisations. Much of influence and decision making went to the back door. This was far from a "drifting": this was very much directed in the interest of those organisations.

The most insidious wing of this all is the "small government" wing, who actually are funded by big meta-governance: corporates and the super-rich who want to steer the public away from the idea that electoral democracy can change anything.

My assumption now is that I have just an average level of intelligence, not by IQ testing, but by just how humans reason and propose and make opinions and actions which affect the world around us. The second is that the drift to anarchy in the stock markets and money markets was the symptom of their not being a big single nazi style reich of Davos super people trying to run the whole show in a Machiavellian way.

The wealthy and their wealth mongers, wanted more freedoms, and many of those were rightly so washing away years of tedious beaurocracy. However they created their own monster which is that with money on the table, people will lie and cheat when they see a way round the system and if there is NO system then people will only lie and cheat. Ipso Facto: Finance crisis soon to enter its sixth year.

My third assumption is really what is happening in the USA this last week, that people are in general common and decent and don't like meta democracy be it the Davos group or the National Rifle Association. As seen with the Five Star movement in Italy, people want democracy back and they want it to be different.

One aim of the big-meta-governance (corporates and super rich) lobby is to make enough of the population either (hopelessly) aspirational or apathetic:  to ensure that the ordinary joe and jane who would drift to liberal tendencies in the face of big-bad-capitalism as it used to be, that these ordinary joes are kept apathetic because parliamentary democracy is a castrated organ. To then ensure that the striver types and the bourgeois are then aspirational enough to believe that only their own efforts will better the world around them, and government is inherently bad news.

I believe we are now at a turning point: the best countries in the world to live in are all liberal countries, where even the right wing have to, or want to uphold values and rights for working people and the less fortunate in society. Democracy matters once again enough for it to be taken back.

I even have to admire wee Davey Cameron on this point: the Federal Europe of Brussels and back doors, needs to be re-examined. Politics also on the domestic front needs to make a change, although the scrooge tactics against ordinary people in periods of unemployment will back fire as they will now place probably over a million workers into that self same position by their other "austerity" policies: Also Davey Came'y did not like the attitudes of GW bush or Romney and said quite openly, tha Obama was someone he could work with: this because Obama at least respects the UK unlike Bush who saw it as "Airstrip One" , a poor country cousin state supplying troops and weapons and oil. 


Movements then as diverse as the Five-Star-Alliance to the UKIP then are all signs that people are taking democracy more seriously and want to grab back power before we have a descent into a fascist scramble for power from the elite, to fill the vacuous ideology of the never ending sunshine of the free market. If you let the free market run too free, it becomes anarchy.

Also what free market anyway? We get our gross margin made in China, which has a weird kind of command-capitalist-economy and a communist outlook on social planning. 

De-growth and Natural Western Economic Downsizing

Growth in GDP has been the central mantra of all orthodox and respected economists in modern times, and quite possibly been the theme which was born when the term economy was first used.

Now we are currently and quite probably in a phase in western economies where there is contraction in the general economy, and GDP will fall in many western countries, or be subject to vagiaries of key commodities or economic activities such as the financial markets in actually determining any net growth on top of a more general down-sizing happening on several levels.

Firstly on the personal level, we see the example above of how modern products are down sizing demand. HTC in particular are victims of their own succsess- I own a 2 year old Desire and it is in very good working order, able to run all but the heaviest new software app's on the market and a sturdy multitasking phone with a great camera. Apple build in "style obsolescence  which is a massive intellectual and logtistics activity to get their brand bought when in fact the old product matches the physical needs.

I believe the economic recession is more than just a normal stage in the previous post war cyclical pattern I grew up with. Rather, the cause is the symptom and the reason change is so slow now: the west became increasingly locked into a financial system which was anarchic and the previous mechanisms for extracting value from the movements of money, commodities and capital evolved into a free-for-all where cheating became the norm, dressed up in ever more fancy language.

Basically western economies were not adding enough value to goods and services, while investment in the far east and emergent nations as  the providers of basic value-multiplication centres, was restricted by Chinese, Indian, Korean and Brazilian governance.

Some pundits talk of the sub prime social policy as being the root cause of this collapse, and point to governmental intervention and the butterfly-effect meaning that any distortion to a market can have these seismic ripples. However they are most often the same bankers and economists who support bail outs for failed, high risk and law breaking banks and austerity measures which will restrict growth further and place more western workers out of work, while also cutting demand for western products in the emergent economies in a viscous circle. Oil and gold this week are both down.

Rather I say that the over valuing of markets and the over stating of returns on complicated and often illegal financial products or vehicles, was inevitable and the sub prime was just the final catalyst for it all to happen.

De-growth is then actually not a consequence of the finance crisis, it is one of the causes and itself now is being exacerbated by austerity measures. It is a natural phenomenon that the west will drift into Keynesian cyclical service industry and higher intellectual value, lower employee per dollar margin activities such as finance and design within high technology areas. Also that the gross margin enjoyed form the early nineties to early nought'ies by western companies with their brand management and design, is now running over to Korea, Japan and China with the next layer building up in other BRICKS countries whose business graduates know the game: brand is king of margin.

On some of the governmental sides, the USA in particular and Europe will see a steady decline in defence spending, with the Right's own economic rottweilers questioning every dollar or Euro spent on this. It doesn't look great for many in defence: right sizing of armies as the west re-thinks invasive policies in Islamic countries, down sizing our navy due to advances in technology and the re-tasking they have in front of them, and then there is the biggest single project down size and potential catastrophe, the international F35 joint fighter which is down sized in orders, late and may not be the one size fits all it was billed to be.

Japan is the first major economy to turn its back on austerity: this is because it has had two decades nearly of slow growth. Germany will never need to follow suit? Well the austerity lead by the Germans will lead to far lower demand for the premium products and high quality technical expertise they have spent so long building as a brand and quality leader in the EU and internationally. The fact is that France, the UK and the low countries have not actually yet seen the real job losses which are a direct result of austerity that is being legislated now.

Many hark back to the cure of the mid to late 30s and a return to higher borrowing, higher cash flow and higher inflation as the only kick start to the west. Others say that recovery will be a natural result of good fiscal policy, but that is actually relatively speaking a hope-and-a-prayer versus established economic history. We are not in 1978 when an IT and liberalistaion revolution could be forseen and pushed through, we are in a time when the west is still loosing value creation to the far east without very much to liberalise without there being more basis for the same corruption and anarchy which lead us to this crisis.

The Party Political Broadcast Tomorrow, Including Silencing Big Ben, is Brought to you By the Right

Thatcher wanted to make a statement on her way out, and her advisers would have known the political capital to be had in a nationalistic, state funeral in all but title.

She is being extolled to the height of Winston Churchill, with Big Ben being silenced and the route being long and lined by service people drawn out of defending the country.

Like many of the long lasting ironies, this will be a state subsidised event, maybe costing the state about  the same it spends a week in one of the mining or steel communities devastated by her policies, or maybe just a few days of the housing benefit bill of a London borough, strapped by law to house people and while starved of council housing, has funnily enough masses of money to subsidise often rich landlords with poor quality accommodation